When Usha Gubbala reached out to interview me for her blog “A Facilitators Guide to Transforming the World” I thought we would have a quick 20 minute phone chat. It turned into an hour long coffee talk and she gathered some pretty important insights about this work and it’s impact on people, if I do say so myself. Below is the (shortened) transcript. Oh, and Usha, an Org Change Consultant in the Bay Area, is the bomb. Love to see super sharp lady org nerds. My people. But without further ado…
U: How would you describe Holacracy?
A: It’s a fairly complex solution, but in its simplest form, it is a system that distributes authority meaningfully to people that are all working towards the same purpose. So it allows each person in an organization to be a sensor of what data is out there and then to translate that information into meaningful change within the organization. So, it’s really, at its core a system of distributed authority and self-organization.
U: How did you find your way into this work?
A: I sort of stumbled my way into this work. I was part of the pilot group at Zappos.
It just resonated with me, this idea of ownership and of being able to work across teams and add value to multiple different projects in a company and the ability for every person to have a voice. These are things that really excited me.
I quickly jumped onto the Holacracy bandwagon at Zappos and just started helping out. The cool thing about Holacracy is that you have the freedom to jump onto projects and do that, and overtime it became clear that this was what my main focus was and I got to officially move to the Holacracy team. I did that work for two and half years at Zappos before I left.
U: That’s very cool. So what do you find yourself doing these days?
A: I came to the Bay Area and decided to start my own consultancy. I run a company called Thoughtful Org. My business partner still works at Zappos and he’s still leading the transition over there. We work with companies to implement different shades of self-organization. Some companies that are interested in Holacracy proper, the constitution and the rules, and the structure of it, and then other companies that are just dipping a toe in the water and want to get a sense of what self-organization looks like. We work with companies of all backgrounds and sizes to see what solution would work for them.
U: How did you see this transform the organization at Zappos? What were some of the cool success stories that have come out of it?
A: The first thing that I noticed that was really inspiring was the potential of people being freed up across the organization.
So I saw folks who had long been clamoring at the opportunity to provide more value to the company, who were interested in expanding their scope of influence and expanding their responsibility, who were constrained by traditional org chart or silos, immediately this group of people started reaching out and beginning to add value in other parts of the organization. That was the first quick win that we saw.
Longer term we saw change happening faster. The time cycle for a decision in a company of 1500 people can sometimes take weeks. People would labor over these decisions for weeks and gain consensus, and now we saw company reorganizations happening in a 90 minute meeting. That pace of change and the ability to experiment and create, that I think has been a longer term benefit we’ve seen in the system.
U: What are some of the common challenges that you’ve seen?
A: It is incredibly hard to make this transition. At the core I think why it’s so difficult, is because it’s an intensely personal decision for people. We have become accustomed and acclimated to an environment where it is punishable to step out of line, out of the hierarchy and to share your tensions. I think for people, even though the system of Holacracy grants you the authority to do things, it’s very much a personal decision of- ‘am I willing to put myself on the line, what degree of risk am I willing to accept on behalf of the purpose of this company to come forth and process tension and create new work’? That’s hard. Because as humans we have come to rely on a very complex web of interrelations to get work done and Holacracy requires us to unlearn some of those habits and to completely relearn new habits about working with people. That’s probably the greatest challenge, some of the mindset changes that are required.
U: How do you help people build muscle around that, around owning their autonomy and agency?
A: It takes a fair bit of counseling and coaching, being open to meeting people exactly where they are. I think encouraging people and sharing stories of change becomes really important so when you do have a win and when someone processes something into meaningful change, making sure that everybody knows about it and is celebrating these things to build that culture.
And finally it was about erasing the last vestiges of that shadow, legacy leadership structure so people could really feel comfortable speaking up.
One of the questions that was unanswered at Zappos for a long time was, who can fire me? Holacracy is all cool and wonderful , but at the end of the day if I speak up and my manager can still fire me, because they don’t like me, then that makes me uncomfortable and I don’t want to speak up then. So coming up with explicit systems for hiring, firing, compensation is important, and then it’s about helping people reshape the stories they’re telling themselves in their heads around those things.
U: So how did Zappos navigate compensation, hiring, firing, etc.?
A: They’re still working on those things, but a few of the systems they’ve come up with that they’re pioneering right now is a system called People Points. So People Points are a number of points that get assigned to a role, and you as an employee have a responsibility to maintain a hundred people points, whatever you do. So if you dip below a hundred people points, if you get removed from a role, it’s up to you to go back into the market of roles and to find where else you can add value to the company. It’s neat because it empowers people to choose their own adventure and guide their own journey at Zappos and take on whatever work they need to add value to the company.
The badging system is another one for compensation. So skills are now being badged, literally like an electronic girl scout badge that you earn for certain skills. So you can have the Java Coding badge as an example, and those badges help determine what you’re compensation is. Again, getting rid of the middle man, the manager who determines how much you’re worth and instead giving everybody access to this library of badges that they can earn and then get compensation as a result of that. So finding new systems to replace the old structures is important.
U: And how does hiring work?
A: There are two aspects of hiring that are different. The first one is how you interview and select people, because when you work in a holacratic company, you have to select for different attributes than you would if you were working in a traditional company. We found that the people who thrive in Holacratic environments are people who have strong indicators that they can be entrepreneurial, like taking ownership over work, leading work, solving problems on their own, etc.
The other aspect is, from a process stand point, using people points to determine which circles have more work than they have people and where there’s a need to hire somebody. The first line of defense is always asking the company- is there somebody who wants to take on this role? In a holacratic company, somebody can come from across the organization and fill a role. The second line of defense is- do we have more work than we have people and the company isn’t able to fill that need, and that’s when you open one position and hire somebody.
U: Are there certain organizations where you think this kind of self-management model would not work?
A: I think there are principles and practices that can work in any context. If you look at the trajectory of where organizations are going, it arcs towards self-management, no matter what kind of business you’re in. I think businesses have to be free to scale up or scale back these different practices to meet the needs of the company. There are some organizations that I work with that are 50 folks, 30–50 people that have a startup mentality. They’re very entrepreneurial and they can really go all the way in self-management because they are innovative and that model works for them. There are other organizations that are more process driven. So for example, I was talking to the largest transportation company in France recently and they run all of the train systems in France, and there is a degree of consistency needed across that experience for people. In that sense you might want to introduce some more structure to ensure that that environment is safe for everybody, but then introduce self-organization into other parts of the organization. It’s not a one size fits all strategy, you have to be able to scale it up and scale it back depending on what purpose you’re trying to achieve.
U: One of the key misconceptions I keep hearing is that Holacracy is about having no structure, but in reality what I’ve observed is that Holacracy is actually way more structured than a traditional management hierarchy, just differently so.
A: Yeah, so Holacracy is just the operating system. You can introduce policies and domains and structure into Holacracy that make it a very structured environment, where there is tons of clarity about what you should do. You just have to understand what degree to scale this sort of structure of your company so that it can best achieve its purpose.
U: What are some common criticisms you’ve heard about Holacracy and how would you address them?
A: The main one is just about people- people can feel like it’s a very individualistic environment. It can feel very isolating for some folks. The people aspect of Holacracy can sometimes get lost in the rules; the structure of the system can feel very impersonal. So I think we as a community of people who work to get companies to implement this have to do a better job of figuring out how to create a human element to Holacracy and how to create safe space for people to connect with each other because it risks being a very impersonal environment for folks.
U: Have you seen that happen in practice?
A: Yeah, absolutely. It’s easy to feel all hunky dory when there are implicit behaviors going around, but when you make those things explicit, it’s sort of very uncivilized for people. Even though that’s the way they’ve been operating forever, no one said it out loud. There’s that human element of feeling offended or taken aback by how explicit things have to be.
You have to get back to that loving place where you’re allowing people to connect as humans.
U: I’m surprised by that because it seems to me that because Holacracy removes some of the politics by making everything explicit, that this would make the environment more cordial.
A: That’s a really good point. I think politics, as harmful as they can be, are also though, some of the strongest reasons for relationships to come about. In an organization where you have to rely on politics to get things done, it’s your job to align yourself with similarly minded people. In many ways, there are a lot of fruitful relationships that come out of that. You’re taking that away and providing people with a very civil, objective way of getting things done. There’s good and there’s bad in everything and it’s just about finding good ways to connect with people in Holacracy, and relearning that.
U: What is a practitioner’s role in creating and facilitating containers in which the true vision and potential of Holacracy can come alive?
A: I’ll return to my original statement that, shifting management structures is an intensely personal choice for people. It is, for many people, not as easy to have a new set of rules to play by. It brings into question their very identity and ego. ‘I have been in this company for ten years, I’ve earned my way to this position and now my title’s being taken away’? That is an intensely personal thing for people and as practitioners, it is our job to both think big picture organization-wide, but also come up with ways to support individual people making individual decisions about their work. That segues into the second thing that I think is really important, which is, at its core, Holacracy is a Deliberately Developmental Organization. Holacracy is a structure, it’s an operating system, and it doesn’t work unless people are feeding tensions into the system. Through that process of building that muscle of sensing tensions, processing those tensions, proposing solutions, and integrating with other people,
you are working critical thinking muscles that you maybe have never been asked to work before, because you spent your whole life deferring those decisions into somebody else’s hands, and so the goal of Holacracy is that you leave that organization smarter, more courageous, more organized, and a better person than you were when you got there.
So again, to keep that in mind, it is an intensely personal decision, it is a developmental opportunity for people to take on the work of leadership. That is really important to remember and to keep in the back of the mind as you implement these systems.
U: Any last thoughts?
A: The last thing that I’ll add that I’ve been doing some thinking about is the diversity of our organizations and the role that Holacracy plays in introducing diversity of thinking, of background, into the decisions and direction of our companies.
I think if you’re doing it really well, you are inviting people to participate in the organization in ways they’ve never been able to participate before and that can be a really empowering thing for minorities, for women, for people that have traditionally been pushed to the periphery of strategic decision-making in the company.
For example, if you look at the internal board at Zappos, for a long time it’s been this main six people that had been there forever and Holacracy introduced such diversity. So don’t lose sight that this could be a really important diversity and inclusiveness tool that can get better minds and more diverse minds into the most important decisions of our company. If you do it with that intention of taking care of people, of making sure that everybody has a voice, and that our company is getting stronger too, the diversity and inclusiveness piece is a neat area of possible strengthening with Holacracy.