HOLONOMY: the science of interacting parts within wholes.
Holos = Whole.
On = Part.
Nomy = Systematized Knowledge.
The Study or Science of Wholeness.
The balance between Self-Assertion and Integration.
by Bernadette Jiwa - Get free new post updates here
Traditional marketing, conceived for an industrial age asks us to believe in the wisdom of the funnel. Create something for most people, compete for the interest of some of them and convert a handful to customers.
Ironically what works in the connected economy, where our potential customers have access to information and choices, is the reverse. Create something that isn’t for everyone, focus on delighting those and only those people, then give them a reason to spread the story of how you exceeded their expectations.
We don’t win today by reaching the masses, we win by becoming meaningful to the few.
Zappos CEO Tony Hsieh shared a company-wide email on March 24 telling employees that the online shoe retailer would be moving toward less corporate hierarchy and increasing self-organization among employees.
Reported by Quartz, the company-wide email (which was more than 4,700 words) in March outlined that employees who don't want to stay on with the unconventional corporate strategy, and meet certain criteria, can opt to leave the company and receive at least three months' severance.
The system, called "holacracy," will involve self-governed "circles," or teams, as opposed to a pyramid of managers and employees.
"The tasks of management ― setting direction and objectives, planning, directing, controlling and evaluating ― haven’t disappeared," Hsieh wrote. "They are simply no longer concentrated in dedicated management roles."
"I think the drawbacks are people might not know where their job titles begins and where it ends," New York Times contributor Hannah Seligson told TODAY's Hallie Jackson. "I think only time is going to tell how this is going to play out."
Fareed Zakaria, a columnist for The Washington Post, is the host of “Fareed Zakaria GPS” on CNN and the author of “In Defense of a Liberal Education.”
If Americans are united in any conviction these days, it is that we urgently need to shift the country’s education toward the teaching of specific, technical skills. Every month, it seems, we hear about our children’s bad test scores in math and science — and about new initiatives from companies, universities or foundations to expand STEM courses (science, technology, engineering and math) and deemphasize the humanities. From President Obama on down, public officials have cautioned against pursuing degrees like art history, which are seen as expensive luxuries in today’s world. Republicans want to go several steps further and defund these kinds of majors. “Is it a vital interest of the state to have more anthropologists?” asked Florida’s Gov. Rick Scott. “I don’t think so.” America’s last bipartisan cause is this: A liberal education is irrelevant, and technical training is the new path forward. It is the only way, we are told, to ensure that Americans survive in an age defined by technology and shaped by global competition. The stakes could not be higher.
This dismissal of broad-based learning, however, comes from a fundamental misreading of the facts — and puts America on a dangerously narrow path for the future. The United States has led the world in economic dynamism, innovation and entrepreneurship thanks to exactly the kind of teaching we are now told to defenestrate. A broad general education helps foster critical thinking and creativity. Exposure to a variety of fields produces synergy and cross fertilization. Yes, science and technology are crucial components of this education, but so are English and philosophy. When unveiling a new edition of the iPad, Steve Jobs explained that “it’s in Apple’s DNA that technology alone is not enough — that it’s technology married with liberal arts, married with the humanities, that yields us the result that makes our hearts sing.”
Innovation is not simply a technical matter but rather one of understanding how people and societies work, what they need and want. America will not dominate the 21st century by making cheaper computer chips but instead by constantly reimagining how computers and other new technologies interact with human beings.
For most of its history, the United States was unique in offering a well-rounded education. In their comprehensive study,“The Race Between Education and Technology,”Harvard’s Claudia Goldin and Lawrence Katz point out that in the 19th century, countries like Britain, France and Germany educated only a few and put them through narrow programs designed to impart only the skills crucial to their professions. America, by contrast, provided mass general education because people were not rooted in specific locations with long-established trades that offered the only paths forward for young men. And the American economy historically changed so quickly that the nature of work and the requirements for success tended to shift from one generation to the next. People didn’t want to lock themselves into one professional guild or learn one specific skill for life.
That was appropriate in another era, the technologists argue, but it is dangerous in today’s world. Look at where American kids stand compared with their peers abroad. The most recent international test, conducted in 2012, found that among the 34 members of the Organization for Economic Cooperation and Development, the United Statesranked27th in math, 20th in science and 17th in reading. If rankings across the three subjects are averaged, the United States comes in 21st, trailing nations such as the Czech Republic, Poland, Slovenia and Estonia.
In truth, though, the United States has never done well on international tests, and they are not good predictors of our national success. Since 1964, when the first such exam was administered to 13-year-olds in 12 countries, America has lagged behind its peers, rarely rising above the middle of the pack and doing particularly poorly in science and math. And yet over these past five decades, that same laggard country has dominated the world of science, technology, research and innovation.
Consider the same pattern in two other highly innovative countries, Sweden and Israel. Israel ranks first in the world in venture-capital investments as a percentage of GDP; the United States ranks second, and Sweden is sixth, ahead of Great Britain and Germany. These nations do well by most measures of innovation, such as research and development spending and the number of high-tech companies as a share of all public companies. Yet all three countries fare surprisingly poorly in the OECD test rankings. Sweden and Israel performed even worse than the United States on the 2012 assessment, landing overall at 28th and 29th, respectively, among the 34 most-developed economies.
But other than bad test-takers, their economies have a few important traits in common: They are flexible. Their work cultures are non-hierarchical and merit-based. All operate like young countries, with energy and dynamism. All three are open societies, happy to let in the world’s ideas, goods and services. And people in all three nations are confident — a characteristic that can be measured. Despite ranking 27th and 30th in math, respectively, American and Israeli students came out at the top in their belief in their math abilities, if one tallies up their responses to survey questions about their skills. Sweden came in seventh, even though its math ranking was 28th.
Thirty years ago, William Bennett, the Reagan-era secretary of education, noticed this disparity between achievement and confidence and quipped, “This country is a lot better at teaching self-esteem than it is at teaching math.” It’s a funny line, but there is actually something powerful in the plucky confidence of American, Swedish and Israeli students. It allows them to challenge their elders, start companies, persist when others think they are wrong and pick themselves up when they fail. Too much confidence runs the risk of self-delusion, but the trait is an essential ingredient for entrepreneurship.
My point is not that it’s good that American students fare poorly on these tests. It isn’t. Asian countries like Japan and South Korea have benefitted enormously from having skilled workforces. But technical chops are just one ingredient needed for innovation and economic success. America overcomes its disadvantage — a less-technically-trained workforce — with other advantages such as creativity, critical thinking and an optimistic outlook. A country like Japan, by contrast, can’t do as much with its well-trained workers because it lacks many of the factors that produce continuous innovation.
Americans should be careful before they try to mimic Asian educational systems, which are oriented aroundmemorization and test-taking. I went through that kind of system. It has its strengths, but it’s not conducive to thinking, problem solving or creativity. That’s why most Asian countries, from Singapore to South Korea to India, are trying to add features of a liberal education to their systems. Jack Ma, the founder of China’s Internet behemoth Alibaba, recently hypothesizedin a speechthat the Chinese are not as innovative as Westerners because China’s educational system, which teaches the basics very well, does not nourish a student’s complete intelligence, allowing her to range freely, experiment and enjoy herself while learning: “Many painters learn by having fun, many works [of art and literature] are the products of having fun. So, our entrepreneurs need to learn how to have fun, too.”
No matter how strong your math and science skills are, you still need to know how to learn, think and even write. Jeff Bezos, the founder of Amazon (and the owner of this newspaper), insists that his senior executives write memos, often as long as six printed pages, and begins senior-management meetings with a period of quiet time, sometimes as long as 30 minutes, while everyone reads the “narratives” to themselves and makes notes on them. In an interview with Fortune’s Adam Lashinsky, Bezos said: “Full sentences are harder to write. They have verbs. The paragraphs have topic sentences. There is no way to write a six-page, narratively structured memo and not have clear thinking.”
Companies often prefer strong basics to narrow expertise. Andrew Benett, a management consultant, surveyed 100 business leaders and found that 84 of them said they would rather hire smart, passionate people, even if they didn’t have the exact skills their companies needed.
Innovation in business has always involved insights beyond technology. Consider the case of Facebook. Mark Zuckerberg was a classic liberal arts student who also happened to be passionately interested in computers. He studied ancient Greek intensively in high school and majored in psychology while he attended college. And Facebook’s innovations have a lot to do with psychology. Zuckerberg has often pointed out that before Facebook was created, most people shielded their identities on the Internet. It was a land of anonymity. Facebook’s insight was that it could create a culture of real identities, where people would voluntarily expose themselves to their friends, and this would become a transformative platform. Of course, Zuckerberg understands computers deeply and uses great coders to put his ideas into practice, but as he has put it, Facebook is “as much psychology and sociology as it is technology.”
Twenty years ago, tech companies might have survived simply as product manufacturers. Now they have to be on the cutting edge of design, marketing and social networking. You can make a sneaker equally well in many parts of the world, but you can’t sell it for $300 unless you’ve built a story around it. The same is true for cars, clothes and coffee. The value added is in the brand — how it is imagined, presented, sold and sustained. Or consider America’s vast entertainment industry, built around stories, songs, design and creativity. All of this requires skills far beyond the offerings of a narrow STEM curriculum.
Critical thinking is, in the end, the only way to protect American jobs. David Autor, the MIT economist who has most carefully studied the impact of technology and globalization on labor, writes that “human tasks that have proved most amenable to computerization are those that follow explicit, codifiable procedures — such as multiplication — where computers now vastly exceed human labor in speed, quality, accuracy, and cost efficiency. Tasks that have proved most vexing to automate are those that demand flexibility, judgment, and common sense — skills that we understand only tacitly — for example, developing a hypothesis or organizing a closet.” In 2013, two Oxford scholars conducted a comprehensive study on employment and found that, for workers to avoid the computerization of their jobs, “they will have to acquire creative and social skills.”
This doesn’t in any way detract from the need for training in technology, but it does suggest that as we work with computers (which is really the future of all work), the most valuable skills will be the ones that are uniquely human, that computers cannot quite figure out — yet. And for those jobs, and that life, you could not do better than to follow your passion, engage with a breadth of material in both science and the humanities, and perhaps above all, study the human condition.
One final reason to value a liberal education lies in its roots. For most of human history, all education was skills-based. Hunters, farmers and warriors taught their young to hunt, farm and fight. But about 2,500 years ago, that changed in Greece, which began to experiment with a new form of government: democracy. This innovation in government required an innovation in education. Basic skills for sustenance were no longer sufficient. Citizens also had to learn how to manage their own societies and practice self-government. They still do.
Fareed Zakaria writes a foreign affairs column for The Post. He is also the host of CNN’s Fareed Zakaria GPS and a contributing editor for The Atlantic.
Zappos CEO Tony Hsieh offered his nearly 4,000 employees an ultimatum last week: accept Holacracy or leave.
While the word may conjur images of a new-age cult, Holacracy is an alternative organizational structure that has been adopted by companies around the world—including Medium, the alt-publishing platform from Twitter cofounder Ev Williams, and the David Allen Company, the productivity consultants. It sheds traditional hierarchies for self-governing teams that get work done through tactical meetings. Zappos is the largest company to have adopted the system, and the transition hasn't been entirely smooth. By multiple reports and now an admission in an internal memo, first posted by Quartz and obtained by Fast Company, people don't love the idea of relinquishing their manager titles.
Nevertheless, Hsieh is anxious to fully embrace Holacracy, and is going all-in on the new structure by offering three months severance to people who don't want to adapt. "We've been operating partially under Holacracy and partially under the legacy management hierarchy in parallel for over a year now," Hsieh writes in the memo. "Having one foot in one world while having the other foot in the other world has slowed down our transformation towards self-management and self-organization."
Adopting Holacracy isn't cheap or easy. The system has its own set of rules and lingo, and is complicated to implement. The Holacracy parent company, HolacracyOne, helps companies transition by offering consulting services that run from $50,000 to $500,000, depending on how long it takes to achieve self-sufficiency. Even for much smaller companies, like Medium, which implemented Holacracy when it was just a couple dozen people in 2012, the journey takes multiple years and has a steep learning curve.
Holacracy was invented by Brian Robertson, a 35-year-old former programmer with barely any management experience. He created Holacracy in 2007 because he had a "burning sense that there has to be a better way to work together," he said in an interview with Fast Company. Robertson, who describes himself as a coding savant, says he taught himself to program at age 6. By the time he was 13, he says he was charging $25 an hour for software development through the Sierra Network, an early competitor to AOL. "They had no idea how old I was" Robertson said. "I didn’t even know enough to name my business."
After dropping out of the Stevens Institute of Technology, 17-year-old Robertson managed to get a job at Analytical Graphics, an aerospace company known for its perk-laced work culture. "You couldn’t beat the benefits, the environment, the culture. From a conventional view, they were really cool" he said. They had free meals, a gym, and a game room. Robertson had a great boss, who he still considers a friend and mentor. Analytical Graphics even won an award for being one of the best small companies to work for in the U.S. by the Great Place to Work Institute.
Robertson hated it.
"The bureaucracy seemed to be set up in a way that people couldn't use their gifts, their talents," Robertson said. In 2001, he started his own company to figure out a better way to run one.
Robertson certainly isn't alone in his disdain for top-down order. Holacracy comes out of and operates within a milieu of unconventional ways to work that have become more popular in the last decade as younger and more visionary CEOs eschew tradition and seek out a new way of working. Among the options are sociocracy, Freedom at Work, the Morning Star Self Management System, and the Results Only Work Environment (ROWE). Each of those systems, including Holacracy, has a distinct approach to the same general problem. "The industrial age operating system is no longer compatible," said Traci Fenton, the founder and CEO of WorldBlu, which preaches the Freedom at Work method used by hundreds of companies worldwide, including Zappos before it adopted Holacracy. (Zappos still uses WorldBlu's services, which aren't incompatible with Holacracy.*) "You have to move into the new age to realize we've outgrown the clothes."
The hierarchical organization dates back to the industrial revolution, when companies wanted to preserve accountability while employing large numbers of people. "It was a way of organizing labor such that the division of labor would be more productive and would be able to do tasks better repeatedly in a predictable way," says Ethan Bernstein, who studies organizational behavior at Harvard Business School.
As the American workforce moved away from the assembly line and into the cubicle, work no longer required people to repeatedly complete specific tasks. The information economy prizes ideas, creativity, and collaboration—all of which gets stifled by hierarchy. One Stanford study that looked at 80 different teams, both real world and lab simulated, found that hierarchy led to conflict at higher levels of management. "I found they didn’t reach as good of a collective or a group solution," says Lindred Greer, who studies hierarchy at the Stanford School of Business.
As a result, the relationship between manager and employee has organically shifted over the last few decades. Almost half of the CEOs interviewed for a 2015 report by the London brand consultancy Wolff Olins said they had structured their companies to give employees more autonomy. The modern company is more of a conversation than a mandate.
But while the hierarchy may be flattening in many companies, the latest wave of non-traditional structures argue for more radical changes. The video game maker Valve, perhaps the most extreme example, forgoes titles and managers altogether. In an ideal Holacracy, it's impossible to tell who the CEO is.
Robertson spent six years exploring these different alternative organizational systems, picking and choosing the aspects he liked best—and trying them out on the 12 employees who he hired to build software products. He borrowed theories from the agile software movement and David Allen's Getting Things Done. By 2007, Robertson took the "early embryo" of Holacracy and along with his business partner Tom Thomison, a former management consultant, founded HolacracyOne, the Pennsylvania based organization that acts as a kind of consulting firm for companies that want to adopt the system.
Along with the personal consulting services, HolacracyOne offers seminars that can cost up to $4,000 a seat, and it sells an organizational software application called GlassFrog that runs $500 a month. The software is optional, but both Medium and Zappos use it. HolacracyOne also has a healthy business training third-party coaches. Robertson is writing a book slated to come out this summer.
Unlike some of its contemporaries, Holacracy doesn't advocate for a flat organization. Holacracy organizes work (and people) around circles within circles within circles. People within those circles have "roles" that give certain team members complete control over their domains. Someone at Medium, for example, is in charge of fonts and makes all font-related decisions. Contrary to headlines (including one on this website), Medium still has managers, because each circle has a leader. But unlike a traditional manager, not all decisions have to go through that one person, and that person can change—the structure of a Holacracy is very fluid. That's why people don't have titles, they have roles that often do change. The main objective is to distribute authority throughout an organization. Fewer decisions bottleneck through a boss, meaning faster decision making and in theory faster innovation. All of that makes Holacracy particularly appealing to companies that want to retain the benefits of fast-moving startups as they grow.
"Holacracy is not going to take a bad business idea and make it succeed. It’s not going to take a team that doesn’t have the skills and make it brilliant," Robertson said. "It's more of an accelerant," he said. He likens Holacracy to getting a new computer. Generally, self-management systems promise happier employees, healthier workforces, and as a result a more successful company. Hsieh is so eager to ditch hierarchy because he wants his company to operate with the efficiency of a bustling metropolis, not a clunky corporate behemoth. Cities when they double in size get 15% more productive, companies lose productivity as they grow.
Completely restructuring a company from the standard org chart tree to circles is one of the reasons the transition to Holacracy tends to be rocky. To create circles and roles requires a very regimented process, called a governance meeting. Then, there's a separate, also very systematic meeting for assigning particular people to particular jobs. Holacracy doesn't have any rules for firing or compensation. Some companies, like Medium, create special circles that handle HR. Another approach is to give people roles that empower them to fire and promote. Companies can spend a lot of time thinking about their structure, rather than doing actual work, especially in the beginning.
All of the confusing rules and terminology tend to scare people, but that's intentional. Obscurity, Robertson says, is part of a strategy to hook the right converts. "My sales approach is to try to talk people out of it," he says. The Holacracy website doesn't make it easy to understand what a company might be getting into. The "in plain English" version of the Holacracy Constitution is multiple mouse scrolls long. Robertson likens his method to that of Nigerian email scammers. "They are filtering out all the people that are not ridiculously gullible, only the ones that are really good targets are left. For us, it's the positive version of that." Robertson wants to attract people that get it, like Hsieh and Medium CEO Ev Williams.
Of course, just because bosses can overlook the eccentricities of Holacracy for its potential, employees aren't always as open. The name alone is off-putting. When Williams first introduced Holacracy to Medium, multiple employees thought it sounded cultish. "I think it used to be Holawhat? That sounds like a cult," Jean Hsu, an engineer at Medium told me.
Accepting Holacracy is like learning a complicated strategy game, like Settlers of Catan, says Robertson. "If you've ever learned to play a complex board game, all you see are a bunch of rules," he says. "That said, if you play the game with people who have played it before they walk you through it, eventually the rules totally fade to the background." Similarly, the best way to learn Holacracy is by playing. For new converts, Holacracy runs a taster week, during which a consultant simulates tactical and governance meetings.
Medium, which implemented Holacracy about three years ago, had a rough adjustment phase, too. Governance meetings can take hours. People got stressed about understanding the system, and began neglecting their jobs as a result. "Being bad at something is frustrating," Williams told me. "To do that something else that we're good at actually, we have to do this thing we’re bad at. As a group, we’re going to do this awkward dance. It’s hard and messy and it causes stress, and you’re like, 'why are we doing this?'"
The tactical meetings, a replacement for your standard, generally very painful weekly team gathering, won over Medium's staff—and it's easy to see why, they're fast and efficient. This February I sat in on one at Medium's San Francisco headquarters, and while from the outside it looked like a normal meeting, the process was incredibly regimented. An engineer with a clump of curls named Koop facilitated, ensuring that conversations stayed on track. The heart of the tactical meeting is a process called tension processing, where, one by one, team members talk out their "tensions," which in Holacracy land means any issue someone might have. In Medium's case tensions ranged from the design of the site to the circle's name. Because of Koop, the group stayed on track, getting through 20 issues in about 25 minutes. The meeting also moves quickly because "processing a tension" just means deciding on a next step, not coming to a solution.
Over half a dozen current and former employees I spoke with—even ones who didn't like Holacracy in general—mentioned the benefits of tactical meetings. Having sat through one at Medium, I can confirm that they are way better than standard team meetings. Stuff gets done, fast.
At this point, it's too early to tell if Holacracy is working for either Zappos or Medium, says Robertson. Holacracy, however, uses the David Allen Company as a case study. Although, even CEO Mike Williams considers it "a work in progress." Unlike Zappos, Medium has a less dramatic relationship with Holacracy. Most people I talked to at the company like it. (Although they're very self conscious about how weird it sounds. Questions about Holacracy are often met with awkward laughs.) "We could be organizing a different way, but I kind of couldn't imagine it given what we're trying to do," Kate Lee, a senior editor at Medium, told me. Then again, the company is much smaller (about 80 people), implemented Holacracy early on, and has a few more years practice. Also, Medium isn't successful by the most standard of metrics: it makes no money. "It's [Holacracy] not a complete system. It's not the answer," in and of itself, added Bernstein.
By Hsieh's standards, Zappos hasn't reached its potential. The journey takes about five years and chaos at the beginning is expected, says Robertson. "When I see everything that's going on at Zappos, it's all part of the shift."
This post has been updated to clarify Zappos on going relationship with WorldBlu.