Brian Robertson on Holacracy and self-managing organisations (Part 2)

Lisa: Thank you Brian for coming back and for talking to us about some questions that people had on Twitter. So here’s the question from Twitter from @peri Tims, and it’s a meaty one. So he says: “Why does it appear that Holacracy is so enshrined and fixed in its methodology/application when most of us in self-managing mindsets love the natural adaptiveness of less hierarchical machine-like systems?”

Brian: So it’s an interesting one. “Why does it appear?” Well, because it is. And it’s more adaptable as well. It’s both. The thing Holacracy does, which is a little hard to grasp until you experience it, is it takes these pairs of what we think of often as opposites, polarities, and it integrates them, and it uses each side to get more of the other side.

So there’s something I often say when people are loving some part of Holacracy and pushing against some others. You know, the thing with Holacracy, whatever it is you value most in an organization, it’s likely Holacracy is going to give you more of that than the alternatives, but it comes at a price. And the price is you must be equally prepared to embrace its opposite.

Right? So if you value agility, spontaneity, I have seen more of that in Holacracy than even other self-management companies, self-managed companies. But the framework gives you lots of that, but it comes at a price, which is you must be willing to embrace a really rigid process.

But the thing is, and this is where people misunderstand, they think all processes in Holacracy are rigid, and that’s not true. There is one core rigid process around which everything else can be changed to anything. And the reason for that one core rigid process is because that’s what we’re shifting power into instead of the CEO holding power, which is true in most self-managed companies.

I had a great chat with the CEO of Morningstar recently, and he said, you know, the one thing they haven’t figured out yet is how to remove his own power as the CEO. The CEO office was still strong because ultimately when it came to how to change how they do self-management, it fell back to him, the CEO, to autocratically lead and change how they did self-management. And that was rock solid rigid.

We don’t see this in most self-management companies, often because the people looking are the CEO, and they don’t realize just how rigid that is. What Holacracy does is say, “Okay, no, we need to remove power from the CEO and put it into a process.” And because there is no CEO to fall back on anymore—and in Morningstar, the CEO is the ultimate arbiter, right? He’s the one that things fall back to when others can’t find a way to integrate—there is no CEO anymore with Holacracy. You’re falling back to the governance process to integrate.

And so that process is rock-solid stable. There’s a constitution, it’s defined exactly how power works, and that process, which is what lets the CEO let go… it lets the CEO say, “Instead of me dictating how we’re going to do self-management, everyone can get involved in how we’re gonna do self-management.” But the price is there’s a defined process. I’m gonna let go into that I trust to help us all integrate whatever it is we integrate.

So it’s an interesting one. It’s both—because it’s so stable at the core, it makes it easier to change everything around it. So when people think of self-management, they’re often thinking: how we hire, how we project manage, how we pay people, how we fire… Holacracy doesn’t give you a rigid process for any of that. None. It gives you just a process for how do you figure that stuff out. And beyond that, change anything to anything you can describe in language.

And it makes it easier to do that change. So yes, it’s counterintuitive, and yes, it comes at a price. And I find this even for myself—whatever it is I tend to privilege, right? If you like fast, rapid, workable decisions that move us quickly forward, Holacracy makes that easy. But if you like integrating lots of data points to get to the best result possible and taking your time to do it, Holacracy kind of makes you do that too. And it brings those together.

And in most companies, they’re at odds. So it’s constantly integrating these polarities, which is powerful and challenging.

Lisa: Yeah, that’s interesting. I guess it’s also interesting to notice what people resist in Holacracy and sort of interrogate that, like, “Hmm, where’s that resistance coming from? Is that me projecting something onto Holacracy that’s maybe more about me than the system?”

Brian: Yeah, I think that’s spot on. And I can tell you the anecdote I find hilarious. I’ve seen this happen multiple times now. I’ll be talking to an executive team after they’ve tried Holacracy in a real setting for a couple of days, and the team will all agree that most of Holacracy is right for them. They like most of it, but there’s clearly a few parts that are not right for them, they don’t like, they want to change, and everyone in the team agrees.

But then when they start talking about which parts they want to change, what they find is they’re all talking about different parts. Right? Because there’s different types, different styles, different talents. And for some people, it’s that strong stable core of governance that makes the whole thing safe, right? And they’re willing to accept that anything can change anytime rapidly as long as there’s a really core solid way to do it.

But other people are like, “No, we should drop that solid core. Let’s just keep it loosened, whatever.” And that works for them. And the irony is they’re sabotaging the thing they like if they kill its opposite, because they’re deeply connected. That’s just not usually visible. But I see this all the time where people are naturally just tuning in to different aspects. There’s no one area that gets resistant more than others. It just depends on the person and what they value, and they’re likely to see what they value in Holacracy, and they’re likely to resist its opposite.

Lisa: I’m also curious about your conversation with Chris. It’s Chris Rufer, isn’t it, the CEO or…?

Brian: Yeah.

Lisa: That’s often like one of the poster children of self-managing organizations. But I have heard that a lot of decisions or conflict resolution processes, for example, in the final stages, get escalated back to him. So were there any other insights from your conversation with him that you think are interesting in the context of this question?

Brian: Yes. In this way, I think this is probably why Holacracy can be challenging—it’s more self-managed than any of those other approaches because there is no CEO to fall back on. You have a self-management process even to decide how we do self-management, and for everything else.

So that makes it harder. I mean, if you talk about Frederick Laloux’s stage model or whatever, it’s not that I’m trying to label it or anything, but it’s more radical than a shift where the CEO directly retains that veto power and controls how we do self-management. It’s also more powerful, I think, because of that, but it’s hard.

And the other thing that I got from that talk with Chris, which I’ve seen in other companies that do self-management too—it’s really clear when you chat with them, it works really well for Morningstar. I mean, it’s such an inspiring example. I could talk to that guy all day. I’ve read pretty much everything he’s written. I just love that example. It was some of my original inspiration for doing what I did, came from him and a handful of other examples.

But then if you talk to the people that are trying to spread it—Chris is very much embedded in his company—if you talk to the people that are trying to spread Morningstar’s methods specifically, what I hear consistently is it’s really hard. And not just hard, it’s not very portable. It’s custom fit for them. It’s beautiful for Morningstar, but it’s really hard to take their unique blend of self-management elsewhere.

Which is why most people don’t try. They try to kind of pioneer their own approach to self-management in other environments. So far, the only thing that I think has dodged that challenge is Holacracy. It’s intentionally not custom crafted for one company’s culture.

And to connect to that conversation, the reason it is so broad is that it isn’t biasing for one set of values over another. It’s creating this integration of polarities in a more meta system, so it doesn’t bias. It’s not just appropriate for some cultures but not others. It’s bringing together things that are often at odds in cultures and getting the best of both and using each one to limit the downsides of the other.

Right? There’s a downside to rigid process, but if everything can change and there’s high adaptability built in, it limits that downside. And there’s a downside to high adaptability too, but if you have some kind of core process for getting there, it limits those downsides.

So most of the other self-management approaches, they work really well in the environments they’re created in. And that’s one option that I think is totally valid—an entrepreneur or CEO that wants this can go custom craft a self-management approach that works just for their environment. Or you can start with a framework that’s gonna get you more than just your values. It’s gonna embrace and integrate lots of things.

But it’s gonna be both easier and harder. It’s easier in that you’re not reinventing the wheel—you’re starting there—and you can still customize. You can customize anything with Holacracy, just about. So you shave off, I don’t know, five years of experimentation—a rough guess, but in my experience, about five years accelerated start.

But the downside is you’ve kind of got to get confronted with whatever it is you’re excluding in your value set.

Lisa: Yeah, I don’t know if you saw one of Frederick Laloux’s—he’s doing these “Insights for the Journey” videos, and he had one recently about, you know, should you go for a pre-designed kind of self-management system or should you create your own? And he said it kind of depends on how ready you are as an organization. That if you think you’re pretty ready and the climate is right and everything, then by all means go and sort of start from scratch. But if you think that that’s too much of a leap and it’s gonna take a long time, then something like Holacracy could be really helpful as a kind of replacement, like something to step into besides “let’s make it up as we go along” or, let’s see…

Brian: This is funny. I would’ve picked—Fredrik and I are gonna keep this on my agenda list, I gotta get together with him because I would have said the exact opposite.

Lisa: I’m quoting him right, I’m pretty sure that’s what he said.

Brian: Yeah, I’m guessing you are. There’s probably wisdom in each. The reason I would have said the opposite is: if you’re not really ready for the radical leap to decentralize power, which is really what self-management is all about… if you’re not ready for that leap, if you try to custom craft something, you can kind of try to custom craft something that gives you a little bit of distributed power and still retains a lot of power. Or I guess you can do it in stages, what feels comfortable right now, instead of kind of going all in and “let’s kind of remove the CEO.”

And to be fair, Holacracy is in stages as well, but the stages—there’s stages of improving practice. It’s like playing soccer. If you want to get to the World Cup, you don’t start with one rule—you start with all the rules all at the same time. You just play it at a six-year-old level, and you’re playing soccer. The whole game is there, and it’s messy and sloppy, and that’s okay. And if you’re really committed to it, you get better and better by practicing it.

So if your company’s really committed to the experiment—to the point where you’re like, “We are ready for self-management”—that said, I should caveat: no company is ever ready for this. So by “ready,” I mean ready to get ready—ready to leap in and learn all this by doing and struggle and suffer and all the stuff that comes with this.

If you’re ready to take that leap, then something like Holacracy, I think, is gonna make it way easier, smoother, and it’s gonna accelerate the journey. You’ll get more people engaged in self-management faster, and you’ve got a framework you can also learn from. There’s so many case studies out there now, lessons learned with the framework of Holacracy. So you’re building on the wisdom of the crowd. You’re building on thousands of companies’ wisdom, tens of thousands of people living this, and at least hundreds of coaches that have written about this and shared some wisdom. So I think it’s just way easier to build on that.

But if you’re not really ready to take the leap, then I’d say Holacracy is too radical. It’s probably not for you. You probably want to integrate some little processes, and just don’t expect transformation—expect incremental improvement in management hierarchy.

Lisa: Interesting. I guess like following on from that then, if we take another question from Twitter. So this is @humansxmachines who asks: “What happened to Medium and Zappos?”

Brian: Yeah, so two very different stories, but let me start with Zappos. And what happened—there’s almost an assumption behind that, that something happened. Unfortunately, there’s a lot of press out there that doesn’t seem to connect to reality. I get very different stories when I talk to people in the organization than when I read the press. Not that there isn’t valid criticism or lessons learned there, but the press aren’t writing about those. They’re writing about sensationalized BS.

Like one of the terms I found fascinating was “the Exodus,” right? The massive numbers of people left. Before that, the articles were all positive, and then as soon as one press outlet reported it with the negative spin, others started adding on to it. And then since then, it was like, how do we further sensationalize it?

And then, of course, what happened? Well, let’s look at that specifically. The Exodus, right? And the Exodus was—what, they had 18% of the staff leave, I think it was reported? Except their call center—the average annual turnover of a call center in the U.S. is 77% of employees leaving every year. That’s average annual in that type of work.

And on top of that, the thing that press often didn’t report, and in fact I think it’s still mentioned in only one of many articles about this: Zappos offered an average of six months of pay for anyone who quit for any reason. It was a “here’s our offer, we want to kind of clean slate, we want anyone who’s sticking through a massive transition to be really committed.” So they offered an average of six months’ pay.

And a lot of people that left, they loved it there, and they just took six months’ pay. They wanted to start a business, they wanted to travel the world—all sorts of reasons. And I think the real headline, if the press were being genuine, was: “A call center, which has average annual turnover of 70%, offered six months of pay—that’s turnover without offering six months pay—they offered six months of pay, and 82% of people turned down the offer.”

I think that’s a shockingly positive rate. Like, in my mind, that was among the most positive statistics that came out of Zappos’s experiment with Holacracy. And I think, by the way, that’s to Zappos’s credit, not Holacracy—amazing, strong culture.

And to be fair, in most self-managing organizations I’ve read about or spoken to, it seems like it’s pretty standard for about 20% of people to leave because it’s not for them. And that is, you could say, a good outcome, to be like, “Okay, it’s not for them, it’s a win-win for everyone that we help them find something that’s better suited for them.”

Lisa: Absolutely.

Brian: And this is one of the things that started this whole press… I’ve learned a lot about journalism. I actually had reporters with major outlets like New York Times calling me, sending me a draft, and then I said, “Well, wait, this is factually incorrect. Here’s 10 references proving it,” and they print it anyway because it’s the narrative they want to share. Like, it seems to be the way the press works.

But so there’s that. Then there’s other press and bloggers that have looked at things that are challenging, and some of those I think are absolutely real, they’re fair. There are challenges with this, and not just Holacracy—any self-management.

There’s what at Zappos was called “the DACH,” which is like the experience when you’re new to this—it’s shocking and disruptive. You’re disrupting the way people are used to relating, the power they own and others’, right? You’ve got the shadow power structure of the old managers that will fight back and resist, often unconsciously, not intentionally, but it’s just them trying to get their job done.

So in the beginning—and I’ve seen this in lots of self-management approaches, it’s certainly true with Holacracy—there is a disruptive force. This is a disruptive innovation. And some of that is hard, and it doesn’t—you don’t smoothly get there in two months. This is not a short-term, quick fix. This is a long-term change process, and this is a many-year journey to get to self-management. Many years.

And so some of them were just looking at teams that were in the early part of that. And yeah, it’s painful, it’s hard. If you look at other teams in Zappos, you’ll see people that have seemed pretty comfortable and fluid, and it’s comfortable and it’s great. And then you’ll see everything in between.

I think some of the lessons learned—if I had to do it again, and we haven’t been involved with them in a couple of years now, a few years, but in the beginning days we were coaching them, and I learned a ton of lessons. There are definitely things I would do differently next time. And I think that’s probably fair to say for them, that there were things they would probably do differently next time as well.

I think it could have been a better supported transition in a number of ways, including on how we supported them, their own internal support. I think we’ve learned a lot about how to support that journey in the many years now since they did this. And so there’s that.

There were other things in some of the press. It got all over, or at least some parts of Europe, that Zappos had supposedly stopped doing Holacracy, which is not true at all. That’s just more press spreading a rumor mill.

And yeah, you see other things in there, like—oh, I think I mentioned this in our last chat—the reporter that wrote the headline “Holacracy’s not working at Zappos because humans are meant to work like robots,” and we invited her to a training, and she came up to me afterwards and said, “I was dead wrong. This is a really human system.”

She still saw challenges at Zappos from her work internally, but she didn’t think they were about Holacracy. She thought they were typical struggles that have to do with culture, and especially culture built around kind of a heroic figure, which a lot of companies have, not just Zappos. So it’s challenging.

Medium is a totally different case. An interesting one, and I saw that coming a mile away. They did stop Holacracy, and what they tried to do was adopt the meeting method of Holacracy but not the power shift.

Right? So for example, and anyone who knows something about Holacracy knows there’s this role called Lead Link. In Holacracy, in the actual Holacracy practice, that role is nothing special. There’s no significant authority there, not a manager. You might have moral authority. You will see people regularly turning to a Lead Link of a circle and saying, “Thanks for your advice, I’m gonna go in another direction,” and you have no authority to tell me otherwise, right? Like, it’s not a privileged role; it just has a specific job to do.

But at Medium, they adopted the meeting methods of Holacracy, but in their case, Lead Link was considered a full-time job. And in typical Holacracy practice, it’s a 5% time job; it’s a tiny little part-time thing. For them, it was a full-time job. They would celebrate promotions to Lead Link roles, and Lead Links still had all the authorities that you would expect from managers, with very minimal checks. I don’t think it’s a sustainable way to do Holacracy.

Yeah, I wouldn’t even call that doing Holacracy. I would call that adopting some of the processes of Holacracy within a management hierarchy. And I don’t think that’s sustainable, and I told them that. And they said, “You know what? Hey, we’ve gotten so much value out of these meetings, we just want to continue doing it this way. We don’t want to take that next leap,” which is totally fair, and I wish them absolutely good luck. Reach out at any point, you know?

And sure enough, eventually they found that the trouble with the meetings is: if your governance output from the meeting isn’t truly holding power, if it just falls back to people just trying to please the boss, then all of these meetings start becoming waste. They start becoming bureaucracy, which is exactly what they experienced. I’m not surprised those meetings were wasted time. They were using them to create a new design for how their company should operate, and then they were ignoring it and going back to just trying to please the boss, which doesn’t work.

I wasn’t sure of that beforehand, though. I mean, I wasn’t 100% sure. I suspected it wouldn’t have worked, but I didn’t know, so I was really curious to see the result of that experiment. And it kind of confirmed my hypothesis, which is that’s not very sustainable.

That said, there are other companies trying it out, and I tell them the same thing. I don’t think this is sustainable. I don’t think it’s gonna work. And some of them so far, it has not worked. Some of them are still doing it, and they seem to find it valuable for now, although I question how long that’ll work.

But yeah, it was a great lesson learned. Don’t adopt Holacracy without the power shift. The core of self-management is a change of how power works in the organization, not just new meeting practices. That just doesn’t do it.

Lisa: Thank you for sharing that. That’s really interesting to hear those two examples, and I think, yeah, widely misreported and misunderstood actually. Next question then, from Rich Decibels. He says: “How would you compare and contrast Holacracy and Sociocracy?”

Brian: Oh yeah, so almost different categories. It’s an interesting one because if you look at some of the mechanical processes, they look similar. The names of the steps are very similar. But if you look at the actual rules within those steps, it’s night and day different. And then if you look outside the meetings, it’s night and day.

So I wouldn’t actually call Sociocracy a self-management framework, for one. It’s still a management hierarchy. It’s just wrapped with this policy-setting function. So every team does these circle meetings to set policies that then do bind the manager.

But if you look at John Buck, who writes about Sociocracy—and in one of the handouts he writes, it’s really clear—in the meeting, you use their consent process, which I’ll come back to. Outside of the meetings, managers make decisions. That’s right from the literature that they publish.

And there’s nothing wrong with that. I think if you want to stick with the management hierarchy but you want something that gets more people involved in setting policies in a more egalitarian way, Sociocracy is a really interesting choice for that. But it’s not self-management.

Outside of those meetings, you have a manager. You have an operational manager that has a manager job. And in Holacracy, you don’t. It is a distributed authority system. At the end of the day, those meetings break up who has what authority outside the meetings and who makes which decisions outside the meetings, and there is no manager to fall back on. So in that sense, it’s a kind of a different category.

The other thing that’s different is Sociocracy’s consent process is different. Holacracy sometimes gets misreported as using a consent process. It does not. I wouldn’t put it that way at all. I don’t think it’s accurate to describe the governance process in Holacracy—we call it integrative decision-making—it’s not a consent process.

And what I mean by that: consent is a variation of consensus. It’s looking for everyone involved to say “I’m personally brought in” in some level, or at least “I can personally live with it.” Holacracy is not asking any of that. In the governance meeting, we’re not asking “Can you live with this? Are you okay with this? How do you personally feel about this?”

In Holacracy, it’s a role-based system. What we’re asking is: “Do you see any reasons why adopting this proposal will get in your way of expressing the purpose of your work?” That’s what we’re asking. And it needs to be an actual example, a logical reason, like it’s in the way of you expressing the purpose of you work in your roles—you might have many.

So it’s actually a fundamentally different question. And it’s a subtle nuance, but in practice, it is a massive difference. It’s the difference between a consensus-based system—I would put Sociocracy more in the Green camp with Laloux’s color model, right? It’s a consensus-based system intended to be egalitarian, to give people that sense of voice, of inclusion, first and foremost, and a management hierarchy underneath.

Holacracy is a shift of power structure. There is no more management hierarchy or anything like it. And it’s not, first and foremost, intended to be egalitarian. The purpose is expressing purpose. Everything comes back to that. It’s what gets in the way of expressing a purpose.

Right? In that sense, it’s not really about giving everyone a voice. It uses that as a means to an end. If you want to express a purpose, recognizing that different people sense different things for that purpose is really useful, but it puts it in that context. It’s not just about you and are you willing to go with it. It’s about, “Wait a minute, is this gonna get in the way of your purpose, your piece of this purpose? And if so, we need to integrate that.” So it gives you a voice, but as I call it, without the tyranny of consensus.

When I first adopted Sociocracy, which I did way early in my journey—and actually published the history of this, including Sociocracy and what Holacracy got from that, so you can read that on our website—but when I first adopted Sociocracy, I found I really appreciated the “giving everyone a voice” bit, because people have different perspectives, and those are useful for our purpose. But I really didn’t like the consensus swamp that we got stuck in.

It was better than consensus—I’ve done that before—and at least had some rules around that and process around it. But it was still that. And then outside the meetings, it had still a management hierarchy, which is not what I was looking for.

And so those are some of the differences. You can read more on our website. There’s a video where I talk in depth to a Sociocracy consultant who is now a Holacracy consultant but did years of Sociocracy consulting.

Lisa: I think I’ve watched that video.

Brian: Yeah, it goes back years.

Lisa: Yeah, I remember watching that, and it was really interesting because I read your book first and then kind of stumbled across Sociocracy, I think, a year later or something. I was like, “This sounds kind of familiar,” and Sociocracy was really old, which is interesting, and I was wondering what’s the connection? So I started doing some research. So that’s interesting that that person is now a Holacracy coach.

Brian: Yeah, that’s true. It’s also a huge credit to Sociocracy. I think they pioneered a lot. I wouldn’t call it self-management or Teal, but I think it added tons of value, and I directly have learned from it myself and integrated some aspects. We changed the meaning of the process, but the steps of the process mechanically worked really well, so we use those.

The two now are more different than they look at first glance. At first glance, you’ll see process steps named the same, so it looks the same. But the underlying meaning and rules are very different between the two.

Lisa: I guess if you were wanting to use Sociocracy in a self-managing organization, you would need to introduce something else perhaps to account for what’s not addressed in Sociocracy in terms of making sure that the management hierarchy doesn’t stay?

Brian: Yeah, yeah. And if you did that and you really experimented with that, you’d probably hit somewhere very similar to what we did with Holacracy. It’s kind of funny.

But yeah, check out Holacracy and see if that does it. If at the same time, if you really don’t want to leave behind the management hierarchy and you really do just want more consensus in your organization, Sociocracy is a great tool.

Lisa: Okay, so @twinfalls asks: “What have been the pros and cons of making Holacracy a paid-for kit [brackets: I come from open source]?”

Brian: So the first thing I think I’d like to say is Holacracy is open source. It’s an open source method. The core of Holacracy is rules, a power structure for how power works in the company, and includes how the governance process works and what you create in that governance gives you a language for describing distributed power. That document is our Constitution. That Constitution is an open source document. It’s on GitHub. You can fork it if you want to try to improve on what we did. Go for it. That said, maybe understand why it is the way it is first, and then improve on it.

But it evolves like open source software. There’s a whole community that contributes back. It’s on GitHub. You can find it there. So that is open source, and anyone can go and use that Constitution. Anyone can go adopt Holacracy and just sign that constitution and adopt that power structure, and then there’s no charge.

And where the restriction comes in—which I’d like to make a parallel here—I think people sometimes confuse copyright and trademark, and I think it works well to separate those two. They’re really different structures.

So Linux, Wikipedia—these are trademarks, right? And actually, I assume Linux is—I haven’t looked at that one. Wikipedia for sure is. And if you created a website and you called it Wikipedia, they’re gonna come after you and say, “Stop doing that. You’re confusing our market.” They have a trademark. It is not an open-source brand in that sense. But it is an open-source platform, all the content on there.

So you can think of Holacracy the same thing. The brand name itself is trademarked, just like Wikipedia, right? Just like Java, by the way—same thing. And what that does is make sure somebody buying Java services knows they’re getting it from somebody that is authorized to use that brand, because there’s a level of quality, right? And the same is true with Holacracy.

So you can use Holacracy. There’s no pay needed. Now there’s good coaching out there, but that’s true with many open-source things, right? If you want coaching, you go to coaches. But if somebody wants to give coaching for free, they’re absolutely free to, and there are people who do that. Actually, as a volunteer, to help their own learning, I’ve seen many of our coaches just volunteer and give away coaching. That’s great.

But if you want to charge money as a Holacracy consultant, you want to use that brand and represent yourself as an official representative of the brand, and now you need a license. And the point of the license is, the fee is just a percentage, right? It’s whatever revenue you make—there’s a percentage that comes back to HolacracyOne. And that’s partially how we fund the development of Holacracy itself, which we spend a huge amount of time and energy on.

We do outreach. Most of our materials, our process cards, our Constitution—all of these are free or open source. We give away as much as we can. There’s a free version of GlassFrog that has all the basics you need—our software tool to use Holacracy—and it’s free for life, any size company. So we give away as much as we can, and we fund that partly by that revenue stream.

And this is—you’ll see similar movements in—my background’s in the Agile software space, and it was interesting to note that the software methods that won in those early Agile days were the trademarked ones, like Scrum. Because what happened in the early Agile days, when Agile got popular, everyone started saying, “I’m an Agile consultant,” and about 80% of them didn’t know what the hell they were doing at all. And they gave actually really bad advice.

And what some of the methods did, like Scrum, was controlling who could say, “I’m a Scrum Trainer.” The method is open-source, but if you want to say you make money and charge as a Scrum trainer or consultant, you need to at least pass an assessment. And that’s all you have to do with us—pass an assessment and then the License Agreement. And there’s a fee for that. There is for Scrum too.

And it works because you have quality control, which was the point of trademark law. It’s completely different than copyright law, completely different than patent law. People lump those together.

Trademarks originally came from medieval blacksmiths that would stamp a mark on a sword so that knights knew that blacksmith’s reputation, and they were getting a sword made of quality steel that wouldn’t break in battle. It’s there to protect the consumers of the goods, right? Not to create an empire for the blacksmith—it can do that well if Holacracy has a good reputation for good reason—but it’s not stopping anyone else for making swords.

So I hope that clears it up. We get that question a lot. We have a page on our website.

Lisa: That’s interesting. Is that always the case? Has that always been the case? Because I don’t know why I had it in my head that GlassFrog was paid or…

Brian: Oh, many, many years ago, but many years ago we had—it was only paid. And then we got to a point where we split it, so we still have the premium version that is paid and has all sorts of extra features and coaching features. We actually added in some of our coaching, and we took a program we had previously been charging clients a lot of money for, and we built it into GlassFrog at a tiny, tiny price point. But there’s also a free version that has all of the basics you need. And there’s never any fee for that. But you’re right, that was maybe a couple years ago that we made that shift.

Lisa: Yeah, with both of these conversations we’ve had, I’m getting the feeling like a lot of people in my field, like me, haven’t really looked at Holacracy recently—that we discovered it a few years ago and sort of haven’t upgraded or updated our knowledge about it. So it’s been really helpful to shed some light. And it seems like Holacracy has evolved a lot as well.

Brian: Yeah, it definitely has. And I think some of what people are seeing—one of my goals with building Holacracy and HolacracyOne was to really bring business entrepreneurial wisdom to it because I want this to spread. So there are things we’ve done that—could we give away more for free? Yeah, but I think it’d be unsustainable.

I think long term, we’ll be able to give away less for free if we don’t have a sustainable revenue stream to support this. If we don’t have a licensing program and we just let anyone use the Holacracy brand, I think the same thing happens that happened in the early days of Agile.

So a lot of, I think, what people see is an attempt to bring solid business discipline in order to serve a purpose. And for me, it is about the purpose. I don’t—frankly, I don’t need the money I get from this. I am motivated much more by the purpose than anything else here. And what I’m trying to do, though, is harness the business side.

And I think that’s something that often gets missed in the self-management world. There’s a lot of people that are really inspired that don’t necessarily know yet how to integrate solid business discipline into the purpose that they’re trying to serve. And I think magic happens when you put those two together. You’ve got solid business discipline for a purpose.

I’m not saying I do that perfectly. I’m sure there are times where my own ego gets in the way, or I just make a bad business decision. There have been a few in the past that I kicked myself for. But yeah.

Lisa: I think a lot of people in the field that we’re in are starting to do like money games and things like that, because I think it is a struggle sometimes for people who pushed money away. They’re prickly, you know, have projections onto money or making profit or some things. So I think it is worth looking at.

Brian: Yeah, and I think profit is among the best tools we have. It’s profit that funds investment. And by making profit, we can then redeploy that profit to invest in our purpose. And I generally advocate—I coach, I’m on the board of a couple nonprofits and coach other affairs, and one of the things I’m often telling even the nonprofits I work with is, “Get profitable as soon as you can.”

Right? Now, the profit doesn’t go to your investors—you don’t have them—but that profit is how you fund investment in your purpose. So generate capital.

I think what people confuse is what we do with capital, right? There’s lots of things you can do with that capital you’ve generated, but capital is what funds investment.

Lisa: A question popped into my head that I’ve been wondering about self-management in general, but I guess it also applies to Holacracy, is that do you think that there’s any sort of bias with systems like Holacracy or self-management in general towards certain types of people? Or like, I’m wondering if it’s exclusive for certain types of people, you know, whether it’s because… obviously, the types of people that I guess can adopt Holacracy more easily are probably going to be knowledge workers, you know, maybe the kinds of people who work in IT companies. What are your thoughts about that?

Brian: They’re among the hardest to use in practice. They overthink it. And instead of just getting practice and diving into the experience, they overthink it.

I had one of our companies that’s out there doing Holacracy—it’s a kind of a university, but for prison inmates. And really interesting… they’re running the university program with their paid staff with Holacracy. And then part of what the university does is staff prison libraries with inmates. And they’re using Holacracy among the inmates in, like, maximum-security prisons.

The interesting thing they said: “Guess which group has a harder time adopting self-management—the prison inmates or the university staff?” It’s the university staff, right? Too smart for their own good. They overthink it. They… you know.

Whereas the inmates—I just heard this—one of the things that happens in Holacracy practice in meetings is at the end of each agenda item in a tactical meeting, one of our structures is the person with the agenda item—and it’s all about meeting their needs. The whole meeting structure is to keep us focused and not drifting and other people taking over, but to focus on that person’s needs. And there’s an element of NVC in it, too, and we’ve built that right into it. And at the end, we simply ask, “Did you get what you need? And if not, then let’s keep going and stay with you.”

We’ve had—what I heard was the impact on somebody in a prison population, and one of the guys, when he was asked, “Did you get what you need?” almost broke down and said, “I’ve never in my life had somebody actually pay attention to me for that long and ask me, ‘Did I get what I need?’”

Those people have an easier time adopting this. So as far as coming back to your question, though—in my experience, the people that have the hardest time: management consultants, software engineers, although often they make the most brilliant Holacracy people when they get there. But it’s the overthinking it happens a lot, especially with men.

And the hardest I’ve ever worked with: spiritual teachers. I’ve worked with several of them, and interestingly, the hardest group by far.

That said, one of the things I think—this is also a little different between Holacracy and other self-management methods. I think many other homegrown methods end up having a bias in them against a type. Like, for example, the question we started with, if there is a bias built in to—let’s say everything’s flexible, flow, agile, anything can change anytime, which is great, it’s valuable—but if that’s against the value of stability…

If that shadows the value of stability and structure, which it often does, with people that value that, now you have a type bias. And now you might look at that company and say, “Self-management, at least in this company, is really only for people that are really fluid and all that.” And the risk is you’re excluding a type, a difference, and then you’re excluding the benefits that that type has.

And that actually limits the very thing you want. If you want agility, you need stability. If you want flex, flow, adapting, and changing, you need some kind of structure and stability behind it to support it. So if you bias against that and throw it out, it limits what we do value.

In most self-managed companies, it does, to me, look like they have a bias for certain types of people. When I look at Holacracy, I think that’s less true. I’m not saying it’s perfect—we’re continually iterating on the design of it itself—but it’s much, much less true because it does integrate these opposites, these polarities.

So from a type perspective, it’s pretty neutral. And actually, if people read that history I wrote of what led to Holacracy, there was a lot of wisdom that I got from a colleague and mentor of mine who looked at specifically type differences. That was a test case in early Holacracy, in the development of it, to make sure we had a system that didn’t exclude a specific type of energy.

Where I do think, though, there’s some relevancy is maturity. And that I think there is a bias, even in Holacracy, across the board. It takes a certain maturity, at least on the part of the leaders at the top who adopt Holacracy. Others, it helps to have that. But if the CEO is really clear—“We’re doing this now, and I’m no longer holding power as a CEO, and you’re either gonna get on board with this or you’re just not gonna be able to function here”—when that’s really clear, other managers will often get through their bias against forward, but it takes at least the person who’s adopting the Constitution, who could sabotage the whole effort… that person has a pretty high bar for maturity.

And I think the more you have maturity in the organization, the better. And by maturity here, I’m not talking about a horizontal difference; I’m talking about a capacity. And the more you have the capacity to see systems and work with systems, the more you have the capacity to see multiple perspectives… things like that do help.

And I wouldn’t say it’s required, and I’ve seen plenty of people that are very early in their own developmental journey thrive in this environment. But it’s usually led by people who have brought in Holacracy and coached Holacracy, who have quite a bit… have quite a remarkable capacity.

Lisa: Would you say that a lot of the cases where Holacracy fails, then, or is sabotaged, are because of an “unenlightened leader,” you could say, or a group of leaders who end up sabotaging it, whether consciously or not?

Brian: Yeah, I’m really cautious with that because I feel like as soon as I let myself think, “Well, yeah, that’s probably true,” that blinds me to look at, “Well, no, what was it about either Holacracy or, more likely, our rollout and support method that didn’t support them enough?”

So to me, that’s kind of like looking out the window and saying, “Well, it’s clearly their fault. They’re not enlightened enough.” And even if there’s truth in that perspective, I think it serves me and the Holacracy movement far better to look in the mirror and say, “Alright, what did we do or not do that was off here? How can we support this better? And how can we lower the requirements on the leader to be perfectly enlightened?”

That doesn’t happen. Now, that said, I’ve seen a correlation. I think people that have some more development of capacity tend to have higher odds of succeeding with it. People that have… not always, though—sometimes those spiritual teachers have a ton of development but also its own shadow. So I also see people that seem to have dealt with their own shadow; they’ve done some practice themselves to integrate and heal shadow parts of themselves; they’ve done some kind of shadow work practice or have done some kind of work on themselves in that regard… those people tend to have a higher success rate.

So I think there’s truth in what you’re saying, and I think it’s still much more useful for me or anyone who’s in a consulting role or coach role to just assume it was all us and look in the mirror and say, “What can I do better?”

Lisa: I respect that. I think that’s a very generous response, a useful response, at least. Well, I think that’s a really good follow-up conversation. Thank you so much for coming back and jamming with me on these other questions. I think we’ve touched on some really interesting areas and answered a lot of questions that I know a lot of people have out there. So I think it would be really useful for people. Thank you.

Brian: Yeah, thank you. I love getting the word out. There are some misconceptions out there, and maybe the Sociocracy thing is worth exploring. So I appreciate you helping us tell our story, not the press’s version of it.