What can happen if one decides to adopt Holacracy, the most structured alternative to the pyramid, that distributes authority across all Roles? The Eco-Counter experience.
L’IMPRESA, N°4, 2018, GRUPPO24ORE
Enrico Durbano, aged 41 and born in Saluzzo, was the General Manager of a Breton company of the Eco-Counter group, world leader in cyclist and pedestrian counting and data analysis, for measuring and monitoring flows of sustainable mobility in the city. 120 people, 45 countries, 15 million euros in 2017, a growth rate of around 15%, 5 billion people tracked in one year.
In August 2017 his Role in Eco-Counter becomes “Lead Link of the General Circle” and he sheds around thirty previous roles, that he begins to distribute to others.
In 2017 the company decided to adopt Holacracy, the system that distributes authority across all the Roles present in an organisation: the most structured current alternative to the pyramid (see L’IMPRESA issue n.3 / 2018 “Holacracy: turning purpose into system”). In this article we follow the fundamental steps that Eco-Counter has experimented in the process of adopting Holacracy. Such experiences in the world are still few and far between. The small size of this company helps us to better see the possible dynamics of this epochal change.
Why did Eco-Counter opt for such a decision?
Enrico became Director General in 2016 when Eco-Counter acquired Quantaflow, a company specialized in counting visitors in shopping centres, to whose integration Christophe Milon, 52, Chairman of the Group, had dedicated himself. Christophe had always been one to place the person at the centre of the company’s business operation. Initially he was inspired by the cultural movement of the Entreprise libérée, based on the idea that if you free people’s energies, you create the conditions for improving performance thanks to everyone’s contribution, well-being and creativity. Christophe had therefore encouraged a very participatory management culture in an organisation which, however, still remained pyramidal. But there were important growth projects and Eco-Counter needed an agile structure, capable of evolving rapidly to capture business opportunities, which the rigidities of the pyramidal structure did not allow.
From his new position as DG, Enrico observes the company for a few weeks. His focus is more on systems than on people: he has always been motivated to “make them work”. He realises that managers take into account the wellbeing of people, but that even if the latter are able to participate, they don’t actually do so, because the processes are not clear and the breadth of autonomy given to collaborators is the result of the arbitrariness of their superiors, who are ultimately the main information holders. Furthermore, the processes are not clear to everyone and the structure struggles to respond with adequate speed. That’s when he comes across an article that talks about Holacracy, and the light bulb goes on: in order to liberate, it’s necessary to create structure. There is a need to structure processes and procedures, and put them at the service of people’s skills and potential. Participatory culture in itself is not enough if information remains concentrated in the hands of the few, responsibilities and processes are unclear, and people are not allowed to control their operations with the support of indicators. The manager uses the latter to understand business trends. But the indicators are intended mainly for the benefit of the worker, who far from becoming a slave to the process, must be enabled to use them realtime to auto-correct.
Enrico discusses the idea with Christophe and persuades him. Holacracy frees the person through structure and process, providing a clear framework of rules through which governance is explained and distributed. All the necessary information is made accessible, additionally supported through software.
In January 2017, Christophe and Enrico decide to try it out. First they organise a two-day Holacracy workshop because you can’t do things for people without first getting them on board. The workshop is mandatory for the members of the Steering Committee, and other people are invited to participate. Altogether there are twenty attendees. On this occasion, in addition to being introduced to the Holacracy model, participants experience the two operational milestones of this approach: the Governance Meeting, which works on the organisation, and the Operations Meeting that focuses on execution. Both have the task of resolving the tensions perceived by the individual Roles (the difference between reality and how things should be), which limits their effectiveness. The basic principle of Holacracy, indeed, is to Get Things Done. Make things happen. And it’s precisely the ongoing perception, on the part of everyone, of the tensions between desired and actual that makes up the true evolutionary engine of this approach. After the workshop, off the cuff, participants map risks and opportunities. They have been warned. In a pyramidal company, the biggest risk in adopting the new model is that those most attached to power will not readily adhere to the new system. But Eco-Counter has already taken several steps in this direction, which turn out to be preparatory. For example, in 2015, cross-functional working groups were set up to find a way to co-participate in profits that was as “just” as possible, and thus transitioned the company from a salary percentage model to a division in equal parts model, which works very well. The mapping of opportunity versus risk does not bring to light such obstacles as to convince them to change direction. Also because, they say, “if it does not work, let’s go back”.
In May 2017, Christophe and Enrico decide to initiate the process that will affect 40% of the company by September. It always starts like this, with Holacracy: the model is applied only to one part of the organisation. The Eco-Counter Management Committee, Sales Department and Marketing Department are to be involved in the transformation over three months of experimentation. Then they will decide whether to extend the model to the whole company.
August 2017. Enrico, top managers and advisors start the encoding, the transcription of the organisation exactly as it is in the present, starting from what people actually do within their existing Roles. In Holacracy this is the starting point for redistributing powers. It’s forbidden to think about the organisation as it ought to be. Also prohibited to initiate from the formal structure, because it never coincides with the actual one. The Eco-Counter encoding team therefore starts from there. Management become Circles and the Roles within them are described based on what they actually do. Then the purpose of the Circles is made explicit. For example, the Commercial Circle has the purpose of “guaranteeing growth through the effectiveness of commercial actions”. According to the purpose of each Circle, it is decided what to leave, remove, add, or move from one Circle to another. The aim is not to seek perfection at first shot because, from the moment of kick-off, each Circle will be able to improve its purpose, modify, create and cancel Roles at any time, through the Governance meeting.
During the encoding activity, the managers of the Steering Committee are also asked to describe what they actually do. Enrico, who is the General Manager, is surprised when mapping what he actually does: the list is very long. He is getting his hands dirty just about everywhere. Thinking about the growth underway, Enrico wonders how he would ever have managed to stay at the head of the company: “As soon as I began the encoding activity, I realised that I had many Roles, too much to keep up with, it was impossible. In fact, it was a constant stress. Then I started to distribute responsibilities over to other Roles, a process that even today isn’t yet finished. The fact of having identified them, however, has made me more conscious and, having explained them, it’s easier to understand who to entrust them to”. Among his Roles, Enrico has the one of Lead Link of the General Circle, the Circle that contains all the others. Each Circle within it has a Lead Link, which embodies its purpose and must ensure that the structure is clear and crystalline (in addition to assigning people to Roles, allocating resources, defining strategies, priorities and indicators). In Eco-Counter the Role of Lead Link of the various Circles is embodied by former managers who, however – please note – have distributed many of their other former powers to Roles within that same Circle or, if useful to the organisation, into other Circles. They no longer have authority in these Roles, unless they are modified through the Governance meetings, in which all the Roles of the Circle participate. In Holacracy this is how things work: every Role is a small business, aligns its purpose to that of the organisation, handles responsibilities and freedom without the possibility of outside interference. People are assigned multiple Roles. Some of these belong to different Circles and therefore, the same person can be found to operate in several Circles (for example, both the Commercial and the Marketing).
A Circle called “Holacracy Adoption” is then created with six people including Christophe and Enrico.
September 2017. Holacracy kicks off. It begins. All the people involved participate in a three-day training, eight people continue to become Facilitators (the Role that facilitates meetings and is the custodian / guarantor of the process), two become Coaches to support the adoption of the model.
The first month and a half of experimentation is difficult. “There were these three Circles spinning,” says Enrico. What worked least well was the Steering Committee. “In the first Governance meetings, you have to think about the structure. Not understanding how the new model was supposed to work, everyone felt quite lost. The greatest difficulty was the selection of tensions: our habit of being operative made us bring low impact tensions to the table. It took us two months to learn how to work on the organisation, to distinguish governance changes from practical activities. Even in operational meetings, we did not know where to put our hands because, until then, we had always been used to managing operational issues with our collaborators and not between ourselves. In short, we all seemed hampered by the mechanisms of Holacracy, we were lost in the tool rather than using it to work normally.”
Within the first month and a half, one person left. This is something that must be taken into account when adopting Holacracy. She had become a Facilitator, but her intense involvement in the topics being dealt with made her tend to want to direct meetings– instead of facilitating the process. The Commercial Circle, on the other hand, takes off well immediately. At the first Governance meetings, only Enrico speaks. Then people begin to understand that they can bring the perceived tensions in the exercise of their Role, whatever is close to their heart, to overcome them. Even Enrico perceives a great benefit. “Before Holacracy I had interrupted business meetings between branches because I was unable to manage 17 people in different places, in two languages, all in an hour and a half. I was doing business meetings for each area, with loss of knowledge sharing. Instead, with Holacracy, I could do it!
Indeed, Holacracy meetings are very rigorous and focused. Operational ones start with a precise question “what do you need?” And, in the course of the meeting, future actions and / or projects are born to answer and dissolve the operative tensions in this way; in fact, one typically ends up with another question: “does this respond to your need?” In Governance meetings, on the other hand, to overcome the tensions, the Roles of a Circle can be changed as often as needed. “This ongoing adaptation of the organisation to actual realisation requirements”, says Enrico, “generates a wonderful feeling of transparency, clarity and inclusion. All conspiracies disappear and nobody feels left in a corner”
The meeting process is hyper-structured and this greatly increases productivity. Everyone speaks only for their Role, one topic at a time. Discussion is not allowed, only questions. Even the objections are managed through a precise process because it is always the process that guides and helps one stay focused and essential. Everyone must follow the rules. As Christophe writes in his blog, https://www.Eco-Counter.com/blog/category/hola-hoop/, it’s “a bit ‘radical but in the end we have dealt in an hour with more than thirty real topics, obviously they have not all been solved but everyone has a clear vision of the next steps”. When process is not the driver, the talkative tend to invade the space of others.
October 2017. Snapshot after a month and a half of experimentation. A structured collection of feedback on how things are going is drafted. “We begin to understand what we need to improve: we were focused too much on the technique of the instrument and too little on the people. We have organised individual coaching for those who are more reticent to change, but also open discussion sessions on specific topics of Holacracy in such a way as to give everyone the opportunity to feel heard and express themselves. We had underestimated the support needed for people”.
After that, a mechanism is triggered that makes the model more and more familiar. Great success is experienced at operational meetings. People feel more effective, there is an increase in information exchange and a rapid overcoming of problems. Everyone feels entitled to bring the tensions that limit the effectiveness of their Role. They understand that they are able to do it. “The model helps a lot”, says Enrico, “talking about the Role is much clearer and more concrete than talking about Functions. Since the governance of each Role is made explicit, it becomes easy and normal to ask oneself: do we have a Role to carry this out? If it does not exist, it is brought to life. Each person can ask another: why do you tell me this, is it a responsibility of your Role? If it is not, the dialogue immediately stops there. Nothing personal. And if someone says there’s a problem, others can say, it’s you who must solve it because it’s part of your Role. It’s a very healthy language”.
January 2018. A decision is made to extend Holacracy to the whole company. And here another great benefit emerges: the knocking down of the silos, the “dark evil” that the pyramidal companies cannot get rid of. Enrico gives some examples. Whomever plays a Role within the Quality Circle, also plays a Role in other Circles, so quality is not separated from the rest. “We had several problems with the launch of new products” continues Enrico “now we have created a dedicated Circle where there are PM and people who have Roles in the Circles of Marketing, Sales, Customer Support, R&D and Production. We have also created a Circle called Happy End, which manages the end of a product’s life.”
Naturally, when working on Roles, the message is very powerful. “If you remove a Role, people will be upset at first,” says Enrico. Because we are used to identifying ourselves with the Roles we play. On the contrary, constantly modifying them is a way to reflect every day on the adequacy of the governance structure and to make the actual organisation coincide with the formal and the desired one. But the discomfort caused is compensated by the great inclusive strength of the model. “I saw this particularly amongst the most operational people of the Commercial division, those who follow orders, payments, shipments. They were never put in the centre before, although their work is essential for the organisation. Now, however, the process involves them in a structural way, not only within their Circle but also in others”.
Of course, there are difficulties. The most important have to do with the change of approach by people who in recent years have played an operational Role with little interaction, and now embody one in which there are “elements” that were previously their leaders. But preciseley herein lies the essence the Holacracy bet. As Christophe writes in his blog, “it’s not about removing managers, it’s about making everyone a real manager, a real entrepreneur within their own Role”.
Nowadays in Eco-Counter, guided by the solution of the tensions that gradually emerge, the first sub-Circles are being born and, therefore, other Roles of Rep Link will emerge, whose purpose is to bring the tensions found in the Lower Circle to the upper Circle where, they cannot be solved according to relevance. “The Rep Link took decreased my workload” says Enrico “you have fewer things to do because other people will make useful requests emerge from the bottom, which arise from real needs because they come from those who experience them: the system makes them visible and the Rep Link takes them to the largest Circle”. Transparency, employee inclusion and autonomy are the main benefits seen so far.
Eco-Counter continues its growth. Christophe and Enrico have the intention to use Holacracy also as a tool to integrate into acquired companies. First, however, they want to consolidate their learnings. What company leader wouldn’t like to find an organisational solution that in just nine months is capable of infusing people with entrepreneurial impetus, and make the company grow?
In the meantime they have renamed the model, and called it HOOLAHOOP. At the end of the day, it’s about playing with circles.