Agile Project

Management
Vol. 7, No. 7

Holacracy: A Complete
System for Agile
Organizational
Governance and Steering
by Brian J. Robertson
Agile methods have had a huge impact on the software industry
by evolving the way we think about software development,
and the results are hard to ignore. Now business leaders are
looking for ways to reap the benefits of agile principles in
whole-organization governance and management. This is
difficult without a tangible methodology to make agile
principles concrete and accessible. This Executive Report
examines the governance aspects of holacracy, which provides
a complete and practical system for achieving agility in all
aspects of organizational steering and management.

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Holacracy: A Complete System for

Agile Organizational Governance
and Steering
AGILE PROJECT MANAGEMENT
ADVISORY SERVICE
Executive Report, Vol. 7, No. 7

by Brian J. Robertson
The emergence of agile techniques fundamentally shook the
world of software development.
It changed not only the practices
of software development, but
also our understanding of how
to think about the process in the
first place. It helped evolve our
mental models of what software
development is really all about.
This shift has taken firm root in
the software industry and for good
reason. Successful agile implementations have reported significant results, including: greater
productivity, improved quality,
higher morale, and products more
aligned with market needs. Agile
methods make it possible for
software teams to systematically
harness self-organization and
embrace change, to incorporate
feedback throughout development, and to seize opportunities

that would otherwise be missed.

Agile software development
is truly a stark contrast to the
machine-like predict-and-control
methods of a waterfall approach.
For better or worse, agile methods
are also in stark contrast to the
organizational leadership, management, and governance
structures of modern day business, which like waterfall
approaches rely on autocratic
predict-and-control management
and tend to fight change. This
paradigm clash often creates
significant stress between agile
teams and the rest of the organization stress that sometimes
destroys the agile adoption effort
before it even starts. For organizations that do manage to integrate
the two paradigms and reap the
benefits of agile methods,

interesting questions often arise

such as: (1) can we run the rest
of our organization on similar
principles? and (2) what would it
take to make our entire organization agile?
Similar questions are being asked
in boardrooms around the world,
well beyond the software industry.
In an era of rapidly increasing
complexity and ever-shorter time
horizons to react, a more agile
approach to governing our organizations has significant appeal.
Those who have seen the possibilities of agile software development have a leg up on answering
these questions, though broadening the approach from individual
software teams to the entirety
of an organization is still a monumental task. Fortunately, there are
emerging methods that do for

2
entire organizations what agile
has done for software teams.
Executives and managers seeking
to harness agility throughout the
organization now have a starting
point.
This Executive Report examines
the governance aspects of
holacracy, a complete and practical system for achieving agility
in all aspects of organizational
steering and management. The
report begins with an overview
of the agile way of thinking before
reviewing the challenges of traditional governance methods and
then turning to an alternative
solution: holacracy.
WHAT IS AGILE?
Agile is not just about software
development. Agile methodologies include collections of specific
processes and best practices for
software development, but the
agile movement itself is tapping
into something far beyond how to
write code and manage releases.
At its core, agile is an emerging
way of looking at and being in the
world a new understanding of
the nature of reality and a new
approach to interacting with the
world around us. As Kent Beck,
creator of Extreme Programming
(XP) wrote, XP is about social
change [4]. The universal values

AGILE PROJECT MANAGEMENT ADVISORY SERVICE

and principles described in the
agile movement begin to capture
and elucidate this emerging new
worldview, this social change, and
the specific practices of the agile
methodologies follow from those.
The practices may get most of the
attention, though they are really
only the footnote of what agile is
all about: the output of a new way
of thinking.
The same principles and worldview behind agile software development are now taking hold in
other aspects of human society
as well. Many in the agile space
are already familiar with the lean
manufacturing movement
sparked in the automotive industry and agiles resemblance to it
[15]. Other similar movements
have arisen during the past few
decades in dozens of other industries as well each with its own
name and its own specific practices, but each with a core understanding and core principles
strikingly similar to what we call
agile. In fact, many researchers
studying human psychological
development beyond the transition to adulthood have described
an advanced stage or wave of
development that brings understanding extremely similar to the
principles behind agile. Notable
models include Don Becks Spiral

Dynamics [3], Ken Wilbers integral psychology [17], and Jane

Loevinger and Susanne CookGreuters exhaustive studies and
models of human self-identity
development [9, 14]. You can
even find a focus on what looks
like agile principles in the
development described by
many spiritual teachers, from
modern American guru Andrew
Cohen to the great Indian sage
Sri Aurobindo. While agile
methodologies may talk about
software development, clearly the
root understanding behind them
is anything but limited to the
software world.
Applying Agile Principles to
Organizational Governance

Can the principles of agile software development be applied to

organizational leadership and
governance? Of course, though it
will be neither smooth nor sustainable unless those principles
are reduced to reliable domainspecific practices. Jumping back
to software development for a
moment, it is one thing to apply
agile practices in a software team;
there are many agile practices
and methodologies that specify
concrete behaviors that anyone
can learn and apply. Agile principles on the other hand are very
difficult to apply directly as they

The Agile Project Management Advisory Service Executive Report is published by the Cutter Consortium, 37 Broadway, Suite 1, Arlington, MA
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Managing Editor: Cindy Swain, E-mail: [email protected]. Production Editor: Tara Meads, E-mail: [email protected]. ISSN: 1536-2981. 2006
by Cutter Consortium. All rights reserved. Unauthorized reproduction in any form, including photocopying, faxing, image scanning, and downloading
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VOL. 7, NO. 7

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EXECUTIVE REPORT
are abstract thoughts and projections of a new mindset. It is the
specific practices that are more
easily learned and applied not the
mindset. Often, folks new to agile
find it takes many years of applying agile practices to truly understand the principles and the
mindset shift behind them.
Before any specific agile methodologies came to be before the
term agile was even coined
there were bold individuals struggling to apply agile principles in
software development teams
that had entrenched waterfall
processes and practices. These
pioneers had to use their gut-feel
understanding of agile principles
and invent actual practices and
processes to capture them. Before
that happened, applying agile in a
software team meant individual
heroics: individuals who got it,
who had a feel for a better way,
pushed against existing systems to
make something happen. While
heroic and sometimes helpful,
such efforts rarely result in sustainable change, unless they
succeed in generating concrete
repeatable practices and supporting structural change. Fortunately,
some of those early heroics did
manage to make that breakthrough and give rise to what we
now call the agile methodologies.
Likewise, anyone can apply
agile principles to organizational
governance, though to move
beyond individual heroics, they
will first need to find concrete
organizational governance and
2006 CUTTER CONSORTIUM

management practices that

embody those principles, as
well as a structure that supports
their use and adoption. It is also
critically important to recognize
that an agile organizational structure and process is not at all the
same thing as no structure or no
process. As is the case with effective agile software development,
an agile organization requires a
more disciplined process than
the traditional model, not a less
disciplined one and certainly not
anarchy. Thriving on the edge of
chaos and surfing the emerging
wave of reality is extremely tricky
business; doing it without getting
swept away in the tide requires
significant discipline and a
carefully crafted structure
and process.
EXISTING GOVERNANCE
OPTIONS
Lets start by considering the
structure and decision making
of the modern corporation. There
is a limited democracy in place
externally: the shareholders elect
board members by majority vote
(weighted by how many shares
they own), and the board, in
turn, appoints a CEO by majority
vote. From there, all decision
making is autocratic, and the CEO
essentially has supreme power.
Typically, the CEO delegates some
of his or her power to managers,
creating what is akin to a feudal
hierarchy. This hierarchy steers
the organization through topdown, predict-and-control planning and management where
plans officially flow down from

above and accountability officially

flows up from below. Those
governed have virtually no voice
in the governance except by the
good graces of those above
and no official way to ensure
key insights or perspectives they
hold are incorporated into plans
or policies. At worst, this system
tends toward corruption and
domination. Even when the worst
is avoided, this system still tends
to be both inflexible to change
and incapable of artfully navigating the complexity most businesses now face.
The real challenge of course isnt
in articulating the weaknesses of
the modern approach theres
plenty of evidence for that it
is in coming up with something
worthwhile with which to replace
it. Some companies attempt to
skip an explicit power structure
or use only a minimally defined
one. That can work to a point,
though theres an insidious danger
to it. With no explicit power structure in place, one will implicitly
emerge over time since decisions
need to be made, and they will be
made one way or another
and social norms will develop.
The best you can hope for at that
point is a healthy autocratic structure of some sort, though more
often you end up with something
far more insidiously dominating
and ineffective.
So perhaps you try running the
organization via consensus? That
doesnt scale at all, and the time
and energy required is often so
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AGILE PROJECT MANAGEMENT ADVISORY SERVICE

impractical that the system is

bypassed for most decisions,
leaving you with the same problems as having no explicit structure. Even worse, sometimes
consensus can pull people toward
a narcissistic space. What about
some kind of internal democracy?
Democracy often results in the
same challenges and inflexibility
as autocracy but with a higher
time cost. To make matters worse,
the majority rarely know best, so
youre stuck with ineffective
decisions on top of the other

downsides of autocracy. While

all of these approaches have
some merit, none are highly
effective at harnessing true selforganization and agility throughout the enterprise.
Fortunately, there is another
alternative.
HOLACRACY OVERVIEW
The sidebar What Is Holacracy?
offers an in-depth definition of
this system. However, grand
definitions aside, holacracy is a

WHAT IS HOLACRACY?
The following in-depth definition of holacracy comes from its Web site [11]:
Holacracy is a next step in the evolution of human organizations. It
includes a set of interwoven models, principles, practices, and systems that
enable a fundamental transcendence of virtually all aspects of modern
organizational dynamics. Holacracy embraces everything weve learned
about organizations so far, and at the same time, represents a quantum
leap to a higher order of organization, one capable of artfully navigating in
a world of higher-order complexity and increasing uncertainty. The shift to
this new level of organization is as fundamental as the leap from the
monarchies of old to the democracies of today, and, as with any such shift,
it brings new possibilities, new challenges, and a vast stretch of uncharted
territory to explore.
From the root holarchy, holacracy means governance by the organizational entity itself not governance by the people within the organization
or by those who own the organization, as in all previous systems of governance, but by organizations own free will. With holacracy in place, the
natural consciousness of an organization is freed to emerge and govern
itself, steering the organizational entity towards its own telos, shaping
itself to its own natural order. Every organization has its own individual
voice, entirely and radically different from the voices of the people associated with the organization just as the organization persists even as
individuals come and go, so too does its voice. The subtle sound of the
organizational voice is always there, struggling to tell us its needs and pursue its own purpose in the world, but it is usually hidden by a cacophony
of human ego. It can be heard sometimes when individuals come together
in a transpersonal space a space beyond ego, beyond fear, beyond
hope, and beyond desire to sense and facilitate the emergence of whatever needs to emerge now. Holacracy requires that this transpersonal space
arise often and easily for organizational steering, and the many aspects of
holacracy all aim to facilitate this level of human dynamics.

VOL. 7, NO. 7

very practical system for achieving

agility in all aspects of organizational leadership and governance.
Holacracy includes an organizational structure and concrete
practices that fully embody agile
values and principles. The remainder of this report focuses on the
organizational governance aspects
of holacracy.1
Holacracy includes several core
practices for organizational structure and governance, most of
which are based on or came
from an earlier governance system called sociocracy (discussed
later in this report). The following
list offers an overview of these
practices:
Circle organization the
organization is built as a holarchy of semi-autonomous,
self-organizing circles. Each
circle is given an aim by its
higher-level circle and has the
authority and responsibility to
execute, measure, and control
its own processes to move
toward that aim.
Double linking a lower
circle is always linked to the
circle above it via at least two
people who belong to and take
part in the decision making of
both the higher circle and the
lower circle. One of these links
is the person with overall
accountability for the lowerlevel circles results, and
1Holacracy is a trademark of Ternary

Software, Inc. Readers interested in

aspects other than organizational
governance in the holacracy approach
can visit www.holacracy.org.

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EXECUTIVE REPORT

DEFINING HOLON AND HOLARCHY

A holon is a whole that is also a part of a larger whole. The term was coined
by Arthur Koestler [13] from the Greek holos meaning whole and on meaning entity and further expanded upon by modern philosopher Ken Wilber [16,
18]. Examples of holons are literally everywhere. For instance, atoms are wholes
in their own right, and they are also parts of molecules, which are parts of cells,
which are parts of organisms, and so on. Similarly, letters are parts of words,
which are parts of sentences, which are parts of paragraphs. In a company, specific project teams are parts of a broader department, and departments are parts
of the broader company. Each of these series is an example of a holarchy, or a
nested hierarchy of holons of increasing wholeness, where each higher-level
holon transcends and includes its lower-level holons. That is, each higher-level
holon is composed of and fully includes its lower-level holons, yet also adds
something novel as a whole and thus cant be explained merely as the sum of
its parts.

the other is a representative

elected from within the lowerlevel circle.
Circle meetings each circle
meets regularly to set policies
and delegate accountability
and control for specific functional areas and roles.

Integrative elections
people are elected to key roles
through an integrative election
process after open discussion.
The sections that follow address
each of these elements of
holacracy in more detail.

Decisions by integrative
emergence policies and
decisions are crafted in circle
meetings by systematically
integrating the core truth or
value in each perspective put
forth until no one present sees
additional perspectives that
need to be integrated before
proceeding under the thencurrent proposal.

STRUCTURE OF HOLACRACY

Dynamic steering holacracy

transcends predict-and-control
steering with dynamic steering.
All policies and decisions are
made based on present understanding and refined as new
information emerges.

A circle is a semi-autonomous
self-organizing team, which exists
within the context of a broader
(higher-level) circle that transcends and includes it; therefore,
each circle is a holon. (See
sidebar Defining Holon and
Holarchy.)

2006 CUTTER CONSORTIUM

The first two concepts introduced

above, circle organization and
double linking, are part of the
structure of holacracy. This section examines these two areas
and gives instructions for building
your own holarchy of doubly
linked circles.
Circle Organization

Like all holons, each circle

maintains and expresses its own
cohesive identity (it has agency),
in this case by performing its own
leading, doing, and measuring;
maintaining its own memory and
learning systems; and pursuing
its own aim (which is set by its
higher-level circle). The rules of
this circle organization apply at all
levels of scale. Some circles are
focused on implementing specific
projects, others on managing a
department, and others on overall
business operations. Whatever
level of scale a circle is focused
on, it makes its own policies
and decisions to govern that level
of scale (leading), it does or
produces something (doing), and
it uses feedback from the doing to
guide adjustments to the leading
(measuring), all in an effort to
continually reach toward its aim.
An Example

Figure 1 shows part of the traditional organizational chart (org

chart) for my company Ternary
Software, which has pioneered
much of holacracy. Note that this
typical view of the org chart is
still perfectly valid, although
with holacracy in place, it is
now incomplete.
Figure 2 adds Ternarys holarchic
circle organization to Figure 1,
and Figure 3 is a different and
more accurate way of looking
at the same holarchy. Although
these arent common org chart
views, the actual structure

VOL. 7, NO. 7

AGILE PROJECT MANAGEMENT ADVISORY SERVICE

Board of Directors

CEO

VP, Development

VP, InsideAgile

VP, Sales

Coordinator

Team Lead

Team Lead

Developers

Developers

2006 Ternary Software, Inc. All Rights Reserved.

Figure 1 Ternary Softwares traditional org chart.

Top Circle
Board of Directors

CEO

General Company Circle

VP, InsideAgile

VP, Development

VP, Sales

Development
Department Circle

Coordinator
Team Lead

Team Lead

InsideAgile
Circle

Developers

Team
Circle1

Team
Circle2
2006 Ternary Software, Inc. All Rights Reserved.

Figure 2 Ternary Softwares org chart with circle structure.

VOL. 7, NO. 7

Ternary Software has two primary

business lines: outsourced software development and agile
training and consulting. At present, the General Company Circle
has retained control of the outsourced software development
business for itself and delegated
control of the agile business line
to a subcircle (the InsideAgile
Circle). Both business lines draw
upon the expertise and resources
in the Development Department
Circle, where the companys software teams and agile leaders
reside (this department is further
divided into teams, per the diagram). There are other circles
beneath the General Company
Circle as well (for example, an
Operations Circle); they have
been omitted from these diagrams for space reasons.
Double Linking

Developers

represented is probably not all

that surprising. At the highest
level, the directors plus the CEO
form a Top Circle, which is comparable in scope and function to a

delegated to lower-level circles.

In practice, the General Company
Circle delegates much of its
accountability and control down
to department-level or projectlevel circles and retains key
crosscutting functions and
accountabilities itself.

typical board of directors. Below

that, the executive team forms the
General Company Circle, with
scope over all operational functions and domains except those

Decisions and operations of one

circle are not fully independent of
others, since each circle is also
part of a larger circle and shares
an environment with others at its
level of scale. So a circle cannot
be fully autonomous; the needs of
its higher-level circle and lowerlevel circles must be taken into
account in its self-organizing

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EXECUTIVE REPORT
process (its leading, doing, and
measuring). To achieve this, a
lower-level (more focused) circle
and a higher-level (broader) circle
are always linked together by at
least two people who belong to
and take part in the decision
making of both the higher-level
circle and the lower-level circle.
One of these two links is
appointed from the higher-level
circle and is the person to whom
the higher-level circle will look to
carry its needs downward and to
be accountable for the lower-level
circles results (this is called a
lead link role). The other half
of the double link is filled by a
representative elected from within
the lower-level circle (called a
representative link, or rep
link) and will represent the
context of the lower-level circle
within the broader circles decision making and self-organizing
processes. This linking continues
throughout the holarchy of the
organization and perhaps even
beyond, through double links
between the board of directors
and broader organizations, such
as industry groups or regional
governance groups.
Continuing the example from
above, the arrows to the dashedline boxes in Figure 4 show the
addition of Ternarys representative links on the org chart. The
lead links are simply the managers already in place in the
traditional hierarchy (i.e., the CEO,
the VPs, and the team leads).

2006 CUTTER CONSORTIUM

Top
Circle
General Company
General Company Circle

Development Department
Circle

Project Team
Circle

Project Team
Circle

InsideAgile
Circle

Project Team
Circle

2006 Ternary Software, Inc. All Rights Reserved.

Figure 3 Another view of Ternary Softwares holarchy.

ToTToToppTp CircleT
TT

Top Circle

Board of Directors

CEO

GenGeral Company CircleGe

General Company Circle

VP, Development

VP, InsideAgile

VP, Sales

Development
Development
DFDDepartment
Department
CircleCircleD

Team Lead

Team Lead

Coordinator

InsideAgile
InsideAgile
Circle
Circle
Developers

Team
Team
Circle1
Circle 1

Developers

Team
Team
Circle2
Circle 2
2006 Ternary.Software, Inc. All Rights Reserved.

Figure 4 Representatives are elected to the next higher circle.

The Challenge of Whole

System Self-Organization

The agile movement has long

recognized the value of selforganizing teams and for good
reason: self-organization is perhaps the most effective paradigm

available for thriving amidst high

levels of complexity and uncertainty. Indeed, it is natures way of
dealing with chaos. We need to
look no further than the natural
world around us or even within
us to see literally thousands of
examples of self-organizing

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AGILE PROJECT MANAGEMENT ADVISORY SERVICE

entities at work, at many levels

of scale simultaneously, all beautifully nested within each other in
natural holarchies.
Of course, the elegance of nature
isnt so easily captured in our
organizations. The big challenge
of self-organizing teams the
dark side of self-organization
is that too much autonomy at
one level of scale destroys the
ability to self-organize at a higher
level of scale. Self-organization
requires the entity in question
to have significant control over
the organization of its own work
and processes; indeed, thats
part of the definition of selforganization. When an agile software team has full autonomy in
the name of self-organization, that
can actually hinder the ability of
the broader business-level or

department-level holon to selforganize at its level of scale the

team is a part of it, and it needs to
be able to exert some control on
its parts to achieve its own selforganization. This is frequently the
fear seen around self-organizing
teams higher levels in the organization also have a reasonable
need for control of their parts. The
need for control is only half the
story, however. The benefits of
self-organization are also lost if a
higher-level holon dominates its
parts and interferes with their own
self-organization. That effectively
destroys the lower-level holons
wholeness and puts all of its
complexity on the higher-level
holons doorstep. Thats exactly
what happens in most organizations, and without the benefits of
self-organization throughout a

Leading

Measuring

Doing

Lead Link
Lead
Link

Representative Link

Leading

Measuring

Doing

2006 Ternary Software, Inc. All Rights Reserved.

Figure 5 Leading, doing, and measuring across circle levels.

VOL. 7, NO. 7

system, predict-and-control management is the only tool available

for trying to cope with the complexity (and it is a poor tool at
that).
The challenge then of achieving
whole system self-organization is
to provide the autonomy each
holon requires to self-organize as
well as the control and responsiveness to the broader holon of
which it is a part. This is precisely
the challenge solved by double
linking the circles in the organizational holarchy. Each circle performs its own leading, doing,
and measuring a complete
feedback loop for self-steering.
Yet to keep the overall system
whole, these need to connect to
the steering processes in the circles above it and below it (or
equally accurate, in the broader
circle around it and those circles
within it). More specifically, when
what one circle decides to do
(e.g., build this application)
is going to be performed by a
lower-level circle (for instance, a
development team), then the
higher-level circles doing links to
the leading process for the lowerlevel circle, to carry the needs and
relevant information downward.
Likewise, the lower-level circles
doing and measuring needs to
feed back into the higher-level circles measuring process, so it can
adapt based on an understanding
of the reality and needs of its
lower-level circle. As we see in
Figure 5, these connections are
the roles of the two links; the lead
link carries the doing of the higher
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EXECUTIVE REPORT
level to the leading of the lower
level, and the rep link carries the
doing and measuring of the lower
level to the measuring of the
higher level.
With these links operating as
conduits between levels of scale,
this structure ensures that every
circle in the organization can act
fully as a holon as both a whole
in its own right and as a part of
a broader whole. The result is a
beautiful fractal pattern that provides healthy autonomy and
ensures healthy communion at
every level of scale, with information flowing constantly up and
down through feedback loops
both within and across circle
boundaries. Just like nature.

so that each elected individual

then has a chance to take part in
the higher-level election. Youve
then got a full holacratic structure
from which to start. Alternatively,
larger organizations are often
advised to start small, with just a
subset of the organization or even
a single team, and use that subset
as a trial ground for the new
process.
So the real conversion challenge
lies not in a dramatic change to
the fundamental organizational
structure but in adding the holacratic processes, and thats good
news. It means you can add
holacracy incrementally and learn
as you go, while building upon
what you already have.

Building Your Own Holarchy

PRACTICES OF HOLACRACY

Most companies are already organized in a hierarchal fashion, and

getting from there to an initial
holarchic organization is trivially
simple, at least structurally. You
simply take the existing hierarchy,
the existing org chart, and draw
circles around each level, just as
is shown in the diagrams above.
That is, you draw a circle around
every manager and those he or
she leads, and you end up with
a series of overlapping circles,
which is your starting holacratic
hierarchy (whether its the right
hierarchy is another matter, and
that topic is discussed later in this
report, though its a concern with
or without holacracy). From there
you run elections to complete
your double linking, starting from
the bottom and working upward,

This section looks at the remaining practices introduced earlier:

circle meetings, decisions by
integrative emergence, dynamic
steering, and integrative elections.

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Circle Meetings

The members of each circle meet

regularly to set policies and delegate accountability and control
for specific functional areas and
roles. (See sidebar Circle Meeting
Agenda.) The circles membership includes the circles lead link
(appointed from the higher-level
circle), any home members of
the circle (those who work on this
team), any lead links appointed
down to lead lower-level circles,
and any representatives elected to
this circle from lower-level circles.

The primary role of circle meetings is to set policies and create

structure not to conduct specific
business or make decisions about
specific instances. For example,
when a member of a circle faces
a specific challenge on a specific
project, the role of the circle is not
to resolve the specific challenge.
Rather, it is to set up and refine
policies and roles that, at best,
move the team to a new level
where this kind of challenge
wont come up in the first place
or, at the very least, setup roles
and processes for handling the
specific challenge in question
outside of circle meetings (perhaps in another more operationally focused meeting or
perhaps just via individual action,
as appropriate). The circle does
this in part by crafting and refining
policies for how specific business
will be conducted (e.g., what software testing process will be used
or how we decide who gets what
programming task) and in part
through defining who has what
accountability and control
the two must always go together.
Limits must also be set (e.g.,
Bob has accountability and control for setting up and managing
our source control system, and he
must schedule system downtime
one day in advance and around
any planned releases).
To use a metaphor, circle meetings dont deal with instances of
objects, they define and refine the
class structure and interfaces of
the organization based on data
from running the program (i.e.,
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watching how the specific structure plays out in reality). Circles

act as programmers for the organization itself and are capable of
adjusting structure and roles as
well as interfaces in real time,
even while the program runs.
Decisions by Integrative
Emergence

Communication is a core value of

XP. It points out that the best decision comes from being maximally
informed. XP recognizes that all

stakeholders have important data

and important truths to contribute
and that bringing together and
integrating these insights from
multiple perspectives builds a
more encompassing understanding of our present reality. This
allows for more effective actions,
which take into account more
needs and more constraints of the
systems and projects around us.
In an organizational management
setting, the traditional feudal
structure allows autocratic control

CIRCLE MEETING AGENDA

The following is a template agenda for a typical circle meeting, taken from the
holacracy Web site [11]:

Check in the check in is a brief go around, where each person gives a short
account of his or her current mindset and emotional state to provide emotional context for others in the meeting and to help the speaker let go of any
held tensions. No discussion is allowed. An example is: Im a little stressed
out by my project today, but otherwise, I am doing fine.

Administrative concerns the facilitator checks for objections to the last

meetings minutes and explicitly highlights the time available for this meeting.

Announcements and updates circle members share any key information

relevant to this circle meeting. Questions are allowed, and additional relevant
information can be shared by others. Avoid discussion; instead, add specific
items to the agenda as necessary. An example is: Last meeting we agreed to
check in on the results of Proposal X; here are the results.

Agenda setup the facilitator lists preestablished agenda items on the

board and solicits additional agenda items for the meeting, then orders the
agenda items and quickly establishes consent for the order.

Specific items the group proceeds through each agenda item using the
appropriate decision-making process (see sidebars Integrative DecisionMaking Process: Short Format and Integrative Decision-Making Process:
Long Format), and the secretary captures all decisions in the meeting
minutes.

Closing the closing is a brief go around, where each person reflects and
comments on the effectiveness of the meeting, providing measurement feedback for the facilitator of the meeting process itself. No discussion is allowed.
An example is: We broke process a few times, though we did a good job of
getting quickly back on track!

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based on a single perspective,

which runs the risk of missing
important perspectives and information (often accidentally),
effectively killing agility. Just as
neither a customer nor the
developers can alone dominate
decision making and expect the
benefits of a truly agile approach,
so too must an agile organization
integrate multiple perspectives in
its key policies and decisions.
A core understanding behind
holacracy is that all perspectives
have some value to contribute to
organizational steering and that
the best decision will emerge
when the value in each perspective available is integrated and
harnessed. Thus, policies and
decisions are crafted by systematically integrating the core truth or
value in each perspective put
forth. The word used to capture
this integrated state is called
consent, and the measurement
of when you have achieved consent is that no one involved in
the decision-making process
knows of a reasoned and paramount objection to proceeding
with the proposed decision. All
reasoned and paramount objections must be addressed in the
decision-making process, giving
everyone involved in the process
a voice in their own governance.
That means the decision will be
within the limits of tolerance of all
aspects of the system, at least for
the time being. (See sidebars
Integrative Decision-Making
Process: Short Format and

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INTEGRATIVE DECISION-MAKING PROCESS: SHORT FORMAT

The following is the short-format integrative decision-making process (taken from [11]), used when a circle member has both a
tension to resolve and a specific proposal to offer as a possible solution:

Presentation the proposer states the tension to be resolved and a possible proposal for addressing it. Clarifying questions are allowed only to understand the proposal as stated; discussion and reactions are cutoff immediately by the facilitator, even those veiled in question form.

Reaction round the facilitator asks each person in turn to provide a quick gut reaction to the proposal (e.g., Love it;
It needs to account for X; No specific reactions). Discussion or responses of any sort are ruthlessly cutoff by the facilitator.

Amend and clarify the proposer has a chance to clarify any aspects of the proposal he or she feels may need clarifying
after listening to the reactions or to amend the proposal in minor ways based on the reactions (even if there were clear
shortcomings pointed out, no amendments are needed at this stage and no major amendments should be attempted).
Discussion is cut off by the facilitator.

Consent round the facilitator asks each person in turn if he or she knows of any objections that must be integrated into
the proposal before the decision is made. An objection is a reason why the proposed policy or decision is outside a paramount limit of tolerance of any aspect of the system. Objections are stated without discussion or questions; the facilitator
lists all objections on the board and ruthlessly crushes discussion of any kind at this stage. After the round is complete, the
decision is considered made if no objections surfaced.

Integration if objections do surface, the facilitator starts a group discussion about the objection, with the goal of swiftly
finding a way to integrate the core truth in the objection into an amended proposal that addresses both the objection and
the original tension. As soon as is practical, the facilitator (or another circle member) states an amended version of the proposal, and the process goes back to the consent round.

INTEGRATIVE DECISION-MAKING PROCESS: LONG FORMAT

The following is the long-format integrative decision-making process (taken from [11]), used when a circle member has a
tension or tensions, but no specific proposal to offer:

Form a picture the facilitator and/or proposer clarify the core topic to be addressed.
Explore views the facilitator asks for tensions and information from each circle member about the topic and charts
them (a mind map works well for this). The facilitator then quickly seeks consent that the group has a clear picture of the
tensions to address.

Generate proposals the facilitator starts a process to generate a proposal or a set of proposals that addresses one or
more of the tensions on the mind map. The facilitator may do this via any means appropriate; common techniques include
dialog and brainstorming or asking each person in turn, without discussion, what he or she would propose and listing
everything stated on the board. Once there are one or more concrete proposals, the facilitator uses the short format
addressed above.

Integrative Decision-Making
Process: Long Format.)
Note that this is not at all the
same thing as consensus. With
most consensus-based processes,

2006 CUTTER CONSORTIUM

everyone must be for the

decision, and someone can
block it, whereas consent
requires that all perspectives
be integrated into the decisionmaking process until no one

knows of an important reason

to continue discussion now. No
one can block a decision; an
individual can just add information to integrate into the decisionmaking process. This is a critical

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distinction: consensus tends to
focus on the individuals and their
personal wants, whereas consent
is about the decision or argument
itself and whats best for the
whole, while recognizing that the
best way to get the best decision
is to listen to and integrate the
information and perspectives
brought by the individuals
involved. With consent, the people involved dont make the decision per se; rather, they are the
vehicle for attempting to surface
the decision that wants to emerge
anyway.

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decisions related to keeping
the office up and running operationally, within certain purchasing
limits. Likewise, programmers can
be granted authority to make
autocratic decisions on how to
implement features in code,
within the limit that they need
consent of their team before
bypassing any agreed-upon
process (such as writing unit
tests). Should this authority ever
prove too broad or the limits too
restrictive, the policy would then
be revisited via consent, and the
team (the circle) would adapt
appropriately.

Consent as Threshold

As a rule in holacracy, all decisions must be made by consent

unless consent is first given to use
another decision-making method.
Thus, consent wraps and integrates other decision-making
styles; groups may consent to
someone having autocratic
decision-making power within
agreed-upon limits, to use democratic vote, or even to allow chance
to decide though consent is still
the threshold. Any decisions to
use another style can be revisited
via consent as new information
presents itself or the environment
changes.
For example, you wouldnt
want your office manager calling
a meeting every time he or she
wanted to buy more pencils, so
instead you might create a policy
(by consent) that grants this
individual autocratic authority
(and responsibility) to make

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On Sabotage and Stonewalling

One of the most common questions about consent is what happens if someone tries to sabotage
or stonewall decision making, and
for good reason. These are issues
that require significant concern
within the governance systems
we know. In contrast, companies
using holacracy tend to find sabotage and stonewalling just doesnt
happen in any significant way. Its
not that holacracy directly solves
problems of politics, it just helps
an organization outgrow the
need for such things in the first
place and helps individuals move
beyond fear-based reactions.
Sabotage and politics become
obsolete and no longer useful.
Aside from that overarching
answer, if or when these kinds of
behaviors do occur, the consent
process not only prevents them
from doing harm, but also actually

helps figure out where theyre

coming from and why, so the root
issue can be addressed.
On Votes

Another common question is

about the possible votes in integrative decision making. At first it
can sound like there are two possible votes on a proposed decision
consent or object though
thats missing a key point. Consent
isnt about votes at all; the idea
of a vote doesnt make sense in
the context of consent. There are
no votes, and people do not vote.
People do say whether they know
of a reason why the proposed
decision is outside the limits of
tolerance of any aspect of the
system, and then decision making
continues to integrate that new
information. This isnt the same as
most consensus-based processes
either in theory or in practice
although it does sound similar
at first, especially before an actual
meeting that seeks consent is witnessed. For example, in a boilerbased heating system, the boiler
has a natural limit of tolerance; if
the water actually boils, the unit
will cease to function and may
explode. That is a reasonable
argument against allowing the
water to boil. This valid argument
must be incorporated into the
decision making, because its
about something that wont work
well, not about the boiler wanting to keep the water below
boiling (if it had desires, it may
indeed want that but whats

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useful for decision making is why
it doesnt want the water boiling!).
On Personal Support

Another key concept is that

consent and the integrative
decision-making process arent
about personal support at all,
one way or the other they
are totally orthogonal to that. An
objection isnt a statement that
someone wont support a decision, nor is no objection (i.e.,
consent) a statement that someone will. It is just a statement
about whether or not someone
sees something that is outside the
limits of tolerance of any aspect
of the system. Most folks use personal emotions and feelings of
support (or lack thereof) as clues
to why a proposed decision may
really be outside a key limit of tolerance for the system, and youll
see others in the decision-making
process helping them try to
understand their emotions. The
emotions become information
valuable to the whole group as
clues to broader issues not
yet articulated but not as
decision-making criteria in and
of themselves.
Ironically, personal support is typically an output of the consent
decision-making process, even
though (or maybe precisely
because) it is orthogonal to the
decision-making process itself.
On Trust

The consent-based integrative

decision-making process relies
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upon trust less than any of the

more common decision-making
processes available. Again, trust
is an output of the process, not
a required input. In fact, a
consent-based process has
occasionally been brought into
extremely dysfunctional companies specifically to reestablish
and build trust, and several companies in Holland using sociocracy have seen impressive results
in this regard.
Support and trust are both very
personal, and integrative decision
making has an impersonal quality
to it. Its about reaching decisions
that do not fall outside the limits
of tolerance of the many aspects
of a complex system. It is quite
amazing how much personal trust
and support such an impersonal
process builds, largely by shifting
the focus from the personal to the
more practical, while still honoring emotions and treating them
as important information to be
understood and not hidden.
One of the most noticeable
differences between seeking
consent versus consensus is in
the actual culture or air of a
decision-making meeting. The
process helps people move
beyond fear and ego to meet
in a higher emotional and cultural
space, so a group engaged in
seeking consent has a palpably
different feel to it. Its sometimes
reported as feeling like the
group is tapping into a larger
collective understanding, which
is more than the sum of the

participants individual understandings (and not the least

common denominator of the individuals understandings, a feeling
often reported when seeking consensus). The process often doesnt feel like arguing or convincing
others, although it may look that
way from the outside; instead, it
typically feels like the group is
exploring a larger collective
understanding together, until the
right decision just emerges.
On Speed

When done well, reaching consent through integrative decision

making is usually faster than decision making via any other means,
including autocratic decision making. There are three main reasons
for this. First, there is an explicit
decision-making process; when
facilitated well, it helps a group
stay focused, avoid unnecessary
discussion, and move swiftly
through both exploration of an
issue and actual decision making.
Second, healthy autocratic decision making often requires some
degree of consensus building to
ensure buy-in, whereas consent
nicely dodges that need everyone can trust the process itself
to result in any buy-in needed.
Finally, and most importantly,
it facilitates a change in the nature
of decision making and process
control the steering of an
organization or team from the
predict-and-control model in
heavy use today to an experimentand-adapt model aligned with

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agile principles. That changes
everything.
Dynamic Steering

Most modern decision making

and management structures are
based upon attempting to figure
out the best path to take in
advance to reach a given aim
(predict) and then planning
and managing to follow that path
(control). Its kind of like riding a
bicycle by pointing at your destination off in the distance, holding
the handlebars rigid, and then
pedaling your heart out to get
there. Odds are, you wont reach
your destination, even if you do
manage to keep the bicycle
upright for the entire trip.
In contrast, if you watch someone
actually riding a bicycle, youll
see a slight but constant weaving.
Riders are constantly getting feedback by taking in new information
about their present state and environment and constantly making
minor corrections in many dimensions (heading, speed, balance,
and so on). This weaving is the
result of the rider maintaining a
dynamic equilibrium while moving toward his or her aim using
rapid feedback to stay within the
limits of tolerance of the many
aspects of his or her system.
Instead of wasting a lot of time
and energy predicting the exact
right path up front, riders
instead hold their purpose in
mind, stay present in the moment,
and find the most natural path to
their aim as they go. This example
and way of thinking are nothing
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new to the agile crowd; virtually
every agile methodology includes
some analogy or discussion along
these lines.
For organizations, replacing most
up-front predictions (of the right
policies, decisions, and so forth)
with incremental adaptation in
light of real feedback provides
many benefits, including significant efficiency gains; higher quality; more agility; increased ability
to capitalize on ideas and changing market conditions; and perhaps most ironically, far more
control. And holacracy achieves
all of this while meeting human
and social needs in a way most
workers would never dare dream.
Its important to note that transcending the predict-and-control
model is not at all the same as
just not predicting (no more
than riding a bicycle is a process
of just not steering). It is instead
about attuning to an appropriate
telos and being fully present in the
here and now and aligning actions
with the natural creative impulse
that then surfaces. Doing this
across an organization requires
an enabling structure and a disciplined process of continually taking in feedback and adapting,
even across multiple people and
multiple semi-autonomous teams.
The doubly linked circle organization plus the integrative decisionmaking process used in holacracy
provide such a structure and
process and, when paired with a
focus on staying present and
adapting continuously in a state

of flow, true dynamic steering

can surface.
Dynamic Steering in Practice

Critical to both holacracy as a

whole and dynamic steering in
particular is the rule that any
decision can be revisited at any
time. To truly reach consent during integrative decision making
without getting bogged down in
fear, there needs to be a value
placed on making decisions
based on the aim of the circle
and the facts at hand, without too
much speculation and anticipation of what might happen and
then adapting when new information and understanding present
themselves. This leads to a lot less
agonizing over the perfect decision (predicting) and a lot more
just trying something and letting
reality tell you what the right decision actually is.
The rule that any decision can be
revisited at any time also removes
much of the fear of decision making. Predicting the future is scary,
especially if youre stuck with the
results of your prediction. In contrast, holding an aim in mind
while living fully and continually
in the present is not as scary. It is
much easier to move beyond a
fear when you know it is safe to
just try it and then revisit it as
soon as your fear actually begins
to materialize or when new information presents itself. This
changes the nature of decisions,
and that has the power to enable
much more fulfilling and useful

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EXECUTIVE REPORT
emotional reactions toward both
the process and results of
decision making.
The other practices of holacracy
come into play here as well. The
circle organization is critical to
effective dynamic steering, as
each circle owns and controls
its own decisions and policies,
performs its own work, and then
adapts its decisions and policies
based on real feedback. Double
linking, with representatives
elected via consent, enables adaptation beyond the level of a single
circle and in a manner integrated
with other circles. And circle
meetings provide a regular forum
guaranteed to honor the consent
threshold and allow individuals to
air and address their tensions.
An important corollary for achieving dynamic steering is that the
goal of the integrative decisionmaking process is not to find the
best decision but just to find a
workable one the best decision
isnt the one we predict in
advance, its the one that reality
points to over time. Dynamic
steering starts quickly with something workable, then reaches
great decisions by listening to reality and adapting constantly as new
information and understanding
arise.
Avoiding the trap of trying to find
the best decision up front frees
the circle to swiftly move from
planning a decision to testing it in
reality and integrating the resulting
feedback.

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Finally, note that there are times

when some measure of predictive
steering makes sense. Integrating
future possibilities into present
decision making makes sense if
both the probability of a costly
possibility arising is uncomfortably
high and if we cant safely adapt
later once we have more information to work with. These cases
are often best addressed by finding ways to ensure we can adapt
later, rather than reverting to
predictive planning. When the
situation absolutely calls for it,
however, sometimes the agile,

adaptive thing to do is to use a

predict-and-control model; in
this sense, dynamic steering transcends (adds to) and yet also
fully includes predictive steering
methods. It is a broader, more
encompassing paradigm, which
still includes all of the value in the
previous approach. (See sidebar
Agiles Focus on Dynamic
Steering.)
Integrative Elections

There are several key roles that

must be filled in a holacratic

AGILES FOCUS ON DYNAMIC STEERING

Like holacracy, the various agile methodologies all put a strong focus on dynamic
steering. The Agile Manifesto [1] lists a core agile value as responding to change
over following a plan a value about adapting as reality ebbs and flows and
new information and new contexts emerge. The Agile Project Leadership Network
[2] refers to it as continuously aligning to changing situations and maintaining
control through feedback, not prescriptive plans. Extreme Programming (XP) also
recognizes a core value on feedback [4]: feedback allows our plans to be imperfect at the start of a journey and quite good by the end; it gives us the data we
need to adjust our planned route based on the actual territory encountered,
rather than trudging forward blindly with nothing but a map of what we
thought the territory might look like.
The XP principles of failure, opportunity, reflection, and continual improvement
also relate to dynamic steering. We improve by continually reflecting on our
actual experience and progress, and XP recognizes failure as just new information
and an opportunity to learn and succeed in a bigger picture. As Thomas Edison
famously said of his early experiments, he didnt fail, he just learned a thousand
ways not to make a light bulb. Likewise, when a software developer compiles
code, he or she often expects failure and uses the resulting compiler errors to
quickly identify typos and other problems. Rather than spending time and energy
ensuring every attempt to compile is successful, the programmer simply puts an
emphasis on coding fast, failing fast, and learning quickly from the failure. Failing
fast at that level of scale allows the programmer to more swiftly succeed in the
bigger picture to get that new feature working faster and more efficiently.
Dynamic steering is a core theme in each of the agile methodologies and in most
writing on agile software development. Holacracys similar embrace of dynamic
steering beautifully meshes with and supports a core aspect of agile development
and helps make agile development an extremely well-suited complement to a
holacratic organization.

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INTEGRATIVE ELECTION PROCESS

The following is a template for the integrative election process (taken from [11]):

Define the role the facilitator describes the role the election is for and the term of the role (although, as with all
decisions, the election can always be revisited before the term expires as new information becomes available).

Fill out ballots each member fills out a ballot with his or her nomination, without discussion or comment. The ballot
uses the form of (nominators name) nominates (nominees name). The facilitator collects all of the ballots.

Public gossip the facilitator reads aloud each ballot and asks each nominator in turn to state why he or she nominated
the person shown on his or her ballot. Each person gives a brief statement as to why the person he or she nominated
could be the best fit for the role.

Nomination changes the facilitator asks each person in turn if he or she would like to change his or her nomination,
based on new insights that surfaced during the public gossip round. Changed nominations are noted, and a total count is
made.

Discussion if the facilitator senses a likely choice usually the person with the most nominations then he or she
skips this step and moves directly to a consent round for that nominee. Otherwise, the facilitator asks for discussion to
establish a likely candidate for the role then proposes someone and moves on as soon as is practical.

Consent round the facilitator proposes a specific nominee for the role and asks each person in turn if he or she consents to the proposed nominee filling the role, with the nominee in question asked last. If one or more objections surface,
the facilitator either facilitates a group discussion about the objection to integrate it or simply moves on and proposes
another nominee for the role. Once no objections surface, the election is complete.

circle: a secretary to record policies and decisions; a facilitator to

run circle meetings and stick to
the holacratic process; and a
representative link to the next
higher circle. In holacracy, individuals are elected to these roles
exclusively through holacracys
integrative election process (this
is not a democratic majority-vote
election; see sidebar Integrative
Election Process for more
information).
The circle may choose to use the
integrative election process for
other key roles as well (and for
other decisions entirely; at Ternary
Software, it is quite common to
see groups using an abbreviated
version of the process for deciding
where to go to lunch).

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REQUISITE ORGANIZATION
Once an organization adopting
holacracy has all the basics in
place, a new series of questions
about holacracys structure often
arises. How do you know what
specific circles an organization
should have, and how many levels
these should be organized into?
Does it matter? The answer is a
strong yes, it definitely does.
This is an issue in any organization, with or without holacracy,
but with holacracy in place there
is dramatically increased ability to
both find and harness an effective
structure.
Requisite Structure

Building on the work of Elliot

Jaques [12], holacracy suggests
that, at any given point in time, an

organization has naturally ideal or

requisite structures that want
to emerge. The closer the explicit
tangible structures are to these
natural structures, the more effective and trust-inducing the organization will be. The most obvious
structure (and among the most
critical) is the actual organizational hierarchy, though there are
others as well. In addition to requisite structures, there also seem
to be requisite processes and policies. Getting any single structure,
process, or policy requisite often
requires adjusting multiple others,
each in the context of the others.
It can be quite a puzzle!
Said another way, the organization
consists of natural holarchies that
have emerged over time and
evolve with time. It is extremely
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valuable to discover these natural
holarchies, and align the organizations explicit structures and systems with them as closely as
possible. This is not an arbitrary
choice; for any given organization
at any given point in time, there
seems to be one right answer and
only one right answer. Finding it
is not creative work, it is detective
work; the answer already exists,
it just needs to be uncovered. This
process feels a lot less like explicit
design than it does attuning to
what reality is already trying to
tell you. The closer a company
gets to finding its unique requisite
structure, the more the organization tends to feel natural and
the easier self-organization
becomes. Circles will feel more
cohesive. They will have healthier
autonomy and a clearer identity,
and the natural functions within a
circles identity will be more easily
handled by it without creating
conflict with other circles identities or autonomies. Each circle
will be able to more easily do its
own leading, doing, and measuring, with its higher-level circle
able to more comfortably focus
on the circles aim and specific
inputs and outputs rather than the
details of the processes going on
within. Power and accountabilities
(i.e., rights and responsibilities)
will be very clear and explicit,
both for each circle and each individual within each circle. Aligning
with requisite structure and
process dramatically eases and
enhances everything for which
holacracy already aims.

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In the case of Ternary Software,

the structure depicted in earlier
figures represents the staff s best
understanding of the organizations requisite structure as of the
writing of this report. Note that
Ternarys staff didnt invent
this structure; no one logically
concluded what it should be.
Rather, they merely listened
to what naturally wanted to
emerge what was already true
but not yet recognized and
simply aligned with that. Again, it
was detective work, not creative
work, and the requisite structure
detected has evolved over time
in true holacratic spirit.
Patterns in Requisite Structure

The specific requisite holarchy

will vary heavily in different organizations and will evolve over
time; circles come and circles go
(theres still one requisite holarchy
for any given organization at any
given point, it just changes over
time). But while the natural
holarchy will vary, there are
underlying patterns to requisite
structure that apply in almost all
situations. These general patterns
seem to relate to natural laws
of holons and holarchies that
dont change with time or situation, even though the specific
holons and holarchies do.
One key pattern in requisite structure is that the levels in the holarchy will correspond to natural
levels or stages of development
of the individuals working at each
level. In other words, a lead link

(manager) will have reached a

broader stage of development
than the people in the circle he
or she leads in one or more key
areas of development (primarily
cognitive development or the ability to hold and use perspectives of
varying complexities, though other
areas of development are sometimes relevant as well, such as
morals, self-identity, or technical
skill). Furthermore, this developmental difference between the
lead link and those he or she
leads will cross one major stage
transition along the relevant lines
of development. Keep in mind
that this is referring to an average
level of development along only
a few lines of development.
Development is a messy affair;
there are many areas of development that can be at many different levels simultaneously and,
even with a difference in the average, any given individual will still
be more developed than his or
her lead link in at least some
areas (perhaps mathematically,
musically, aesthetically, and
so forth).
Thats a lot to digest, and this is
just scratching the surface. The
short version is that each rung on
the corporate ladder will contain
people capable of cognitively
holding and using a broader perspective than those below not
just incrementally broader, but a
good, full rung higher. Those who
have had the misfortune of having
a boss who wasnt capable of
holding and using the same level
and complexity of perspective as
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18
themselves know firsthand how
frustrating a non-requisite structure can be! The developmental
difference makes the corporate
hierarchy meaningful and natural,
as opposed to the more common
case of largely inconsistent or
arbitrary hierarchies, which often
result in dysfunctional politics and
domination. Hierarchies where
each tier is separated by one
developmental level seem to be
ideal. Those separated by more
than one level seem better than
same-level leadership but not
ideal.
This rule was empirically discovered, not logically concluded,
though we can hypothesize many
possible explanations for it. It is
critical that a lead link be able to
connect the context in the lowerlevel circle to the broader context
in the higher-level circle, and
that requires the ability to take a
broader perspective. It is also easiest to be coached day-to-day from
someone one tier above your own
level of cognitive development;
these individuals still remember
the stage youre at quite well,
and you can more easily find
value in the broader perspective
they bring.
From the leaders point of view,
helping someone just one rung
lower in cognitive development in
a day-to-day capacity is likely to
be more challenging and more
enjoyable than helping someone
several levels lower. Finally, this
one-tier difference of cognitive
development at each hierarchal
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AGILE PROJECT MANAGEMENT ADVISORY SERVICE

level creates a major gravitational
force for personal development
throughout the organization it
pulls people upward.
Related to that, in a requisite organization the person watching out
for your broader development
watching to see when youre
ready to take on a role in a higher
level circle with all of the added
complexity that entails wont
be your immediate manager but
rather your managers manager
(your manager once removed).
When accountability for guiding
someones overall development
rests with his or her manager
once removed, there is a lot less
dysfunction and a lot more trust in
the culture, and it helps accelerate individual development to
boot. Its hard for managers to
know when someone they lead
day-to-day is ready to be their
peer. Even more relevant, its easy
to recognize a level of development significantly lower than your
own, but once someone gets near
or above your own level of development, it becomes increasingly
difficult to accurately and fairly
identify when that person is ready
to take on a higher-level role.
There are other requisite patterns
in addition to these as well,
though they are beyond the scope
of this report. Interested readers
are invited to review the materials
given in the References and For
Further Reading sections at the
end of this report for more
information.

HISTORY OF HOLACRACY
Holacracy emerged amidst realworld trial by fire at Ternary
Software, an outsourced software
development and agile consulting
company founded in 2001. The
organizations charter was partly
to serve as an experimental
ground for new methods in
human organization a living
laboratory. The founders meticulously sought out, tested, and integrated new models and methods
in human dynamics and organization and pioneered new practices
where existing ones were lacking.
Fueled by the founders backgrounds in agile software development, the company steered
toward models and processes that
captured the agile mindset in tangible form and systematically integrated each new model and
practice with the others, resulting
in the overall approach now
called holacracy.
Although holacracy as a whole is
a relatively new model, it is largely
an integration and extension of
existing models, many of which
have rich histories. Much of
holacracy is a refinement of
sociocracy [8, 10], an organizational governance system
originally envisioned in the
Netherlands in 1945 as a way to
adapt Quaker egalitarian principals to secular organizations.
Sociocracy was refined for corporate use in the 1960s by Gerard
Endenburg, a Dutch electrical
engineer who enhanced the
model with principles from

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19

EXECUTIVE REPORT
cybernetics the science of
steering and control and used it
to successfully manage the
Endenburg Electrotechniek company. The system designed by
Endenburg was so successful that
hundreds of companies have now
adopted the process. Dutch companies using sociocracy can even
get an administrative exemption
to labor laws otherwise requiring
companies over a certain size to
use a works council (similar to a
union) the workers are already
represented through the sociocratic method on a day-to-day
basis.
In addition to its roots in sociocracy, holacracy incorporates
numerous other models and
processes as well. Much of the
understanding and practices
around organizational structure
and management came from
Jaquess work in requisite organization [12], and the understanding and language around holons
and holarchies came from
philosopher Ken Wilbers work
[16, 18]. The focus on human
dynamics and the importance
of integrative decision making
in holacracy came largely from
Linda Berenss work in interaction
styles, psychological type, and
temperament theory [5, 6, 7].
Ternarys founders incorporated
the work of these pioneers and
others, along with their own innovations and advances to each,
while simultaneously interweaving them all together into a whole
that is more than the sum of its
parts holacracy.
2006 CUTTER CONSORTIUM

CONCLUSION
Organizations are increasingly
adopting agile software development practices because of their
ability to harness feedback,
adapt rapidly to changing realities,
and navigate successfully
amidst greater complexity and
uncertainty. While agile software
development practices forge
ahead and gain industry momentum, the corporate governance
structures they exist within lag
behind. Until recently, there have
been relatively few cohesive
whole-organization systems for
harnessing agility. Holacracy is a
complete and practical system
for achieving agility in all aspects
of organizational leadership and
management and includes concrete processes and practices that
fully embody agile values and
principles. It integrates seamlessly
with existing agile software development methodologies, filling in
gaps in process control and
decision-making systems not
directly addressed by most
agile methodologies.
Holacracy also lays a foundation
upon which other organizational
processes and systems can be
built or refined from an agile
mindset. At Ternary Software, for
example, there are systems for
salary and compensation, strategic planning, hiring and firing, personal development, performance
reviews, and much more, all elegantly aligned with an agile worldview and agile processes. Starting
from the groundwork of holacracy

opens possibilities for other supporting systems that dont exist

with a base of predict-and-control
management.
The Next Evolution

At a more theoretical level, the

holacratic structure and governance system integrates the
distinction between for-profit and
nonprofit companies and between
public organizations and private
enterprise. Holacratic entities integrate both social and economic
responsibilities at the board level,
and the process of organizational
governance happens everywhere
throughout the system by everyone at the level of scale they operate at, not by a large separate
government or by separate
management.
The holacratic structure and governance system also blurs the line
between separate organizations.
As more organizations adopt a
similar structure, they can easily
intertwine into a fractal, chaordic,2
multi-entity organization. Once
this network gets big enough, it
has the potential to transcend
what we currently think of as
government with a new type of
worldwide integrative power
structure, all without a messy
revolution.
This structure has the potential
to profoundly advance human
society, and it completely transcends many of the massive
2Chaordic refers to a system that is

both chaotic and ordered.

VOL. 7, NO. 7

20
geopolitical and environmental
challenges we now wrestle with
many of them just dissolve,
and others at least become possible to address with such a system
in place. Better still, this worldwide holarchic meshwork is
built on top of the governments
and legal systems that already
exist. That means it can emerge
incrementally, in its time, until a
new integrative governance web
spans the world, with every holon
at every level of scale honored
and accorded appropriate rights
and responsibilities. What this
might mean for the individuals
who live and work within these
social holarchies is also quite profound: suffice it to say, the potential for individual transformation
such a structure could help spark
is truly amazing.
Why Business?

The business world is often the

last place people look to spark
massive social change, yet business drives the economy, government, and education and wields
immense power in todays world.
More than half of the 100 largest
economies in the world today are
corporations, a type of entity that
didnt exist just a few hundred
years ago. Most people spend a
massive percentage of their waking time involved in a business of
some sort; it is the container for
much of the culture we exist
within, and it has a dramatic
impact on our lives and our personal development. Business is
the first type of truly global social

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AGILE PROJECT MANAGEMENT ADVISORY SERVICE

organization to emerge in the
world; it crosses geopolitical and
ethnic boundaries and has the
real potential to unite our world
in a truly global communion.
None of this is meant to ignore
or excuse the atrocities committed in the name of business, and
there have been many. If we
threw out early nations once we
saw their dark side, wed be back
to living in tribes, warring with
and enslaving our neighbors.
Whats needed is to move forward, not backward, and that
means embracing the business
world and helping it evolve.
In Closing

As movements like holacracy

gain momentum, the pioneers
at the forefront of this next sociocultural evolution will face new
challenges and tough problems,
ones there are no answers for yet.
Fortunately, they dont need to
have all the answers in advance;
they just need to hold the question and be present in mind, body,
and spirit. Then its not a matter of
creating the right answers, but just
listening to what they already are.
And its amazing what emerges
through us once we get out of our
own way and truly start listening.
REFERENCES
1. Agile Alliance. Manifesto for
Agile Software Development
(www.agilemanifesto.org).
2. Agile Project Leadership
Network. Core Principles
(www.apln.org/resources.html).

3. Beck, Don, and Christopher

Cowan. Spiral Dynamics:
Mastering Values, Leadership,
and Change. Blackwell Publishing,
1996.
4. Beck, Kent, and Cynthia Andres.
Extreme Programming Explained:
Embrace Change. Addison-Wesley
Professional, 2nd edition, 2004.
5. Berens, Linda, V.
Understanding Yourself
and Others: An Introduction
to Interaction Styles. Telos
Publications, July 2001.
6. Berens, Linda V., and
Dario Nardi. Understanding
Yourself and Others: An
Introduction to the Personality
Type Code. Telos Publications,
July 2004.
7. Berens, Linda V.
Understanding Yourself and
Others: An Introduction to
Temperament 2.0. Telos
Publications, 2000.
8. Buck, John A., and Gerard
Endenburg. The Creative
Forces of Self-Organization.
Sociocratisch Centrum, 1987
(www.sociocratie.nl/).
9. Cook-Greuter, Susanne.
Making the Case for a
Developmental Perspective.
Industrial and Commercial
Training, Vol. 36, No. 7, July
2004 (www.harthill.co.uk/
publications.htm).

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EXECUTIVE REPORT
10. Endenburg, Gerard.
Sociocracy: The Organization of
Decision-Making. Eburon, 1998.
11. Holacracy Web site
(www.holacracy.org).
12. Jaques, Elliot. Requisite
Organization: The CEOs Guide
to Creative Structure and
Leadership. Cason Hall & Co.
Publishing, February 1989.
13. Koestler, Arthur. The Ghost in
the Machine. Penguin, June 1990.
14. Loevinger, Jane, and
Augusto Blasi. Ego Development:
Conceptions and Theories. JosseyBass, June 1976.
15. Poppendieck, Mary, and
Tom Poppendieck. Lean Software
Development: An Agile Toolkit for
Software Development Managers.
Addison-Wesley Professional,
8 May 2003.
16. Wilber, Ken. A Brief History
of Everything. Shambhala,
6 February 2001.
17. Wilber, Ken. Integral
Psychology: Consciousness,
Spirit, Psychology, Therapy.
Shambhala, 16 May 2000.
18. Wilber, Ken. Sex, Ecology,
Spirituality: The Spirit of Evolution.
Shambhala, 2nd edition, 2 January
2001.

2006 CUTTER CONSORTIUM

FOR FURTHER READING

1. Powell, Gareth. Informed
Consent. Agile Development
Magazine, Spring 2006.
2. Robertson, Brian. Enlightened
Business blog, 24 June 2006
(www.enlightenedbusiness.
blogspot.com).
3. Sociocracy Web site. Guide to
Principles and Methods for Circle
Meetings. Sociocracy (www.
sociocracy.info/MeetingGuide.
pdf).
4. Wilber, Ken. A Theory of
Everything: An Integral Vision
for Business, Politics, Science
and Spirituality. Shambhala,
16 October 2001.
ABOUT THE AUTHOR
Brian Robertson is the founder
and CEO of Ternary Software,
Inc., an award-winning provider
of agile training and consulting
services and project-based outsourced development. In the five
years since its launch, Ternary has
ranked as one of the 50 fastestgrowing privately held companies
in the Philadelphia region for several years and won awards for its
high growth, its sustainable environmental practices, and for being
among the 15 best places to work
in the region.

Behind the scenes, Ternarys

unique organizational design
and management practices have
forged new ground in human
organization, and Mr. Robertson
is known internationally for pioneering holacracy, a system for
harnessing agility in all aspects
of organizational leadership.
Mr. Robertson frequently speaks
at conferences, occasionally as
a keynote, and his published
writings have been translated
into several languages.
His 20-year background in software spans many roles, and he
was pioneering agile processes
before agile was coined.
Software has been a passion for
most of Mr. Robertsons life; he
began programming at age six
and launched his first softwarerelated business at age 12.
He can be reached at brian@
ternarysoftware.com.

VOL. 7, NO. 7

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