Episode 19

#019 - Holacracy Governance and Leadership

Published on: 14th December, 2020

Today, Igor and Charles sit down to discuss the impacts of alternative organizational governance structures have on organizations - along with their benefits and difficulties associated with adoption at scale.

We also cover some leadership stories and how balancing the polarities all leaders encounter, empowering your team to take on more, and taking ownership for mistakes leads to better long-term results.

Thanks for joining us today and don't forget to hit the subscribe button or reach out at [email protected].

Transcript

Igor Geyfman 0:08

Hi, Charles, how's it going?

Charles Knight 0:09

Good man. It's a cold Thursday evening, and I'm here chatting with you. And that makes me happy, Igor. I miss Robert, though. I'm sad. He's not here.

Igor Geyfman 0:17

I miss Robert. We had to do this week's pretty crazy. We lost Friday.

Charles Knight 0:23

Yeah, yeah.

Igor Geyfman 0:23

because we have our annual conference that we do all day. It's the week following Thanksgiving week. And it's also smack dab in the middle of our performance review season. And so all these things have really culminated in a very what feels like a very compressed and tight week. And obviously, Robert had to make time for other things. So he can't join us. So it's just the two of us. And it's very sad. But also maybe cool, because we can talk about something that maybe Robert can talk about later, right?

Charles Knight 0:55

Yeah. Yeah. I have been jealous of you all's Apple talk.

Igor Geyfman 0:59

Yeah, I'm usually frivolously talk about the apple keynote when that happened? Because we're both total Apple nerds.

Charles Knight 1:07

Yeah, yeah.

Igor Geyfman 1:08

And you're not like we have a group text. And the group text is green bubbles. Because Charles has an Android phone, a pixel 5 now,

Charles Knight 1:16

Pixel five now brand new. As of yesterday, yeah.

Igor Geyfman 1:19

But it's come to this, that I joke about it. And it is a joke. But there's always a little bit of truth in every joke. I kind of judge people like when they first text me, and they pop up on my phone. And whether it's a blue bubble or a green bubble. And if you don't know an iPhone, when somebody texts you using SMS, if they are also on an iPhone, they will show up as a blue speech bubble. And if they're not on an iPhone, they'll show up as a green speech bubble.

Charles Knight 1:47

Yeah.

Igor Geyfman 1:47

And there's a little bit of judgment that goes on in my head. I'm like, really green bubble. I wasn't expecting that. Oh, but that's okay.

Charles Knight 1:55

I do own an iPad. So I could send you an iMessage. We can have a group iMessage I just need to carry around my iPad with me all the time.

Igor Geyfman 2:03

I wouldn't do that to you, Charles. Yeah,

Charles Knight 2:05

I'm okay. With the judgment, Igor.

Igor Geyfman 2:06

Hey, what are we going to talk about? We looked at some questions on Reddit, because why not? The internet's front page? After all, there are some interesting questions, probably questions that we don't want to talk about on this particular podcast. Yeah, the ones that are like at the top of like the Ask blank list. And then I think we've both had thoughts recently, on our governance, the governance system that we use, which was early on, adopted by Zappos, the people that sell shoes online, and whose CEO and founder unfortunately passed away last week, Tony Shea, and boy, did I have a lot of respect for what Tony Shea was doing. And I say, shoe company, I think, if I were talking to Tony, he would stop me and correct me and say, we're building a customer service company. And we just happen to sell shoes. And one of the things that Zappos invested in at one point is a governance structure called holacracy. Which I also think was like made fun of on the HBO sitcom show, it's on a sitcom, but it's HBO comedy series, Silicon Valley.

Charles Knight 3:10

I didn't realize that, but haven't watched the show.

Igor Geyfman 3:13

There's definitely an episode, where they make fun of holocracy and stuff like this. They I think they put it together with all the other kind of new agey, culty, West Coast software company fads.

Charles Knight 3:25

Yeah.

Igor Geyfman 3:26

And I think at one point, I would have agreed with them, right when we're first adopting it. I don't know if I was like a keen participant in the scheme.

Charles Knight 3:36

Yeah, I think I remember that. And I think you and I talked early on about that.

Igor Geyfman 3:39

I was like, What the heck is this. And sometimes, we're very good about not doing kind of flavor of the month stuff, where we work and on saws on holacracy seemed like one of those things. And so I was like, very surprised that we're implementing it. Because it's also disruptive. Sometimes you make a little course correction for your business or your organization. And it's 1% 2%, maybe 5% at the extreme. Holacracy, as a governance structure for a company fully implemented, is probably 100% change. I don't know what remains the same at the end of a full holocratic transformation, and also didn't quite understand it when we first were talking about it. And Charles, I know you've been trained by like the Creator.

Charles Knight 4:24

Founder. Yeah. Founder creator. Yeah. Brian Robertson.

Igor Geyfman 4:27

Can you tell us a little bit about what holacracy is? I'm gonna assume some of our listeners don't know what holocracy is and haven't heard about it, or maybe heard a little bit about it and thought it was this zany thing that Zappos did.

Charles Knight 4:39

Yeah, I will certainly do my best. I think, you know what, let me just pull up the formal definition. So let me at least get that in right. I was a little jaded. First I was actually all bought in on holacracy. And then based on my early experiences, I got a little jaded but I but I'm okay, now. Okay. Holacracy is a method of decentralized management and organizational governance in which authority and decision making are distributed through a holocry. I don't know what holocry is, we can explore that a little bit, something related to holons, which I think is the prefix here to holacracy through a holocry of self organizing teams, rather than being vested in a management hierarchy. And that sounds like a bunch of malarkey. But I think the key here is in the very last part of what I just said, so self organizing teams, rather than being invested in a management hierarchy. And I think what holacracy is, it's a system like a management system that is meant to replace what we all typically think of when you think of a management hierarchy, which is a top down organizational structure, right, few people at the very top, being at the very tippy top, it's the CEO reporting to the board, and all of the cogs in the wheel at the very bottom. And there's this massive tree of people that report up to each other. And that's how companies are run. That's how work gets done. That's how the world goes around. And it has for since the dawn of corporations, probably, I think org structures are a function of the rise of corporations, which is a fairly recent phenomenon in history of humanity. And holocracy is an experiment to try to break away from this kind of top down hierarchy, which emerged, probably right alongside the Industrial Revolution, right? It's all about efficiency, productivity, work output, and stuff like that. Holacracy. It's pretty radical, actually, in terms of how they think about how companies can do business. And there's a lot of talk in the business world about transformations read about all day long digital transformations, when we talk about transforming embracing adopting holacracy. That is a stated from the founders mouth, it is at least a 10 year journey, no company in their right mind talk about disruption, but no company willingly will take on a 10 year transformation. That just doesn't make sense. And that's why it's so disruptive. That's probably why a lot of people react negatively to it. But I don't know if that clarifies for our listeners, what holacracy is, but it's a management system. Right? It's a set of there are tools, software tools, there are processes, there are rules, and constructs that determine how we make decisions about what we do as an organization and how we do it. I guess that would be my laypersons definition. How'd I do, Igor?

Igor Geyfman 7:58

I think you did pretty well. You said something that struck a chord because when something exists, before you're born, sometimes you might assume that it has existed forever. And corporate structures, they have some flavors, or corporate management systems have some flavors. And what you talked about is this top down organization, with top down reporting structures, there's little changes to that some, sometimes you have matrix organizations and so on, but at their core, they're all very much like top down command and control systems. But they haven't been around that long, like from a business entity. That sort of system, I'm going to assume, probably didn't exist at scale, until after the Industrial Revolution. So we're talking about maybe 100 years. And before that sort of top down and command control structure probably existed in the military. And how do you move and I'm going to go back to my Latin lessons, Charles.

Charles Knight 8:59

Do it awesome. Yeah.

Igor Geyfman 9:01

Corporation comes from the Latin word corpus, which means body. You know, when you call someone corpulent, it means they have a lot of body. So corpus, or ghosts are non corporeal beings.

Charles Knight 9:13

Oh, okay. Yeah.

Igor Geyfman 9:16

Corporation comes. So it's the body and how do you govern the body to move in the same direction. And it's a series of management systems. And there's subsystems underneath that, for example, there's a lot of companies that run their business with MBO's are management by objectives. It's a very common management system. And it's a way to move the corpus, the corporation, the body in the same direction. Lately, there's a lot of companies trying out OKRs objectives and key results. And that's something that came from Intel, and Andy Grove, and has been popularized by Google who runs their entire corporate system through objectives and key results or OKRs all sitting within the overall governance structure. Have a top down corporate hierarchy. The CEO controls the various c suites, the C Suites have senior vice presidents reporting to them, who have directors reporting to those people who have managers reporting to the directors who have so on however many levels your corporation tends to have. And that's like a new way of working for people. Because for a long time, people worked on the farm, or people worked in the factory, or people worked as clerks in a small office. And so there's no need for a corpus to be established to then be moved like a large ship, everything was pretty small, pretty nimble, or you maybe had five or six different roles on the farm. Everybody knew what their role was, you come in every day, you perform your role, whatever it is, and everything gets going for you to be able to sow and harvest and so on. And so this top down command and control structures pretty new for human beings, and probably one of the things that the founder is railing against with holocracy, because it sounds like he wants it to be the other way around. He wants it to be bottom up. Is that a fair way to represent what, you know, is the basis for hypocrisy?

Charles Knight:

I think so. I don't know if he would agree it's bottom up. I think it's just wipe away the old and install something new, is how he would probably think about it. And here's why. Because top down, especially at scale, like when you have large corporations, at scale, those top down management hierarchies become slow and rigid. And especially now, exponential rate of change as a result of technology, creating disruption, those old management hierarchies will doom the current corporations that are out there. And what's like the nimble startup versus the the 100 year olds corporation, is that kind of story. And so I think holocracy is a management system that has to try to merge the agility and the speed and the innovation that you get with small teams who are highly focused on a mission or a purpose, like a startup and bring that into large enterprises, like Zappos or fortune 100 companies. And I think the thing that I will, that I keep in mind all the time is that it's all still a grand experiment. All of this is really an experiment.

Igor Geyfman:

Including top down corporations.

Charles Knight:

Exactly. We're just gonna set including top down management hierarchies, except with top down management hierarchies, that experiment has been running for at least 100 years.

Igor Geyfman:

That's right.

Charles Knight:

Holocracy, maybe a few years. Yeah, it's at the time when we rolled it out. I believe we were one of the companies that had the largest implementation of holacracy. I don't know if that's still true today. But it's one grand experiment that I have really been enjoying. And I had a moment during the training, where I finally understood the vision that the founder had of the world, if holacracy was adopted, at scale throughout the world, and it's a world in which individuals, no matter where you are in an organization, are empowered to do what they believe is right. Like they have the autonomy, they have the authority to make decisions to do what they think is right within the context of whatever organization that they're in a corporation, government, nonprofit, it applies anywhere. And

Igor Geyfman:

That sounds pretty uncontroversial Robert, Charles, I'm sorry.

Charles Knight:

Yeah, yeah. I see who your favorite is, Igor. I see you

Got all Robert, on the mind.

Igor Geyfman:

We love you, Robert. And miss you.

Charles Knight:

We do we do? Yeah, I think you're right. I don't think people would say, that's a bad thing. I think people would generally say that's a good thing. I will tell you, though, I had a reaction, I had a strong, immediate visceral reaction to that when he shared that he didn't say that. But when I had that insight of Oh, my gosh, this is the vision that he has. I like it, I want to fight for it. I want to bring that to our company. And yet, I believe that the vast majority of humanity doesn't want that. They don't want the power and the autonomy and the authority and the responsibility that comes along with it. That's the big part, right to say, Okay, let me see what is being asked of me. Let me interpret it. Because that's all we all have to interpret what we're supposed to do, whether we have a job description or not. In holacracy, they talk about purposes. Every role has a purpose. And I don't think the vast majority of humanity wants to sit there and say, Okay, I need to interpret this purpose. And I need to make my own decisions about what I do and how I do it. Nah, that's hard. Let me just go back to plowing the fields. Like That was my like, Whoa, grand vision. We're fighting against human nature though. And I will point, okay, yeah, but let me point a put out Supporting fact, right? What percent of the population would you say is like a leader, like a true leader, not just a manager with a title, but who has a vision, who wants to inspire others to bring about change in the world? And it doesn't need to be a exact percentage.

Igor Geyfman:

I'm going to turn the question around on you.

Charles Knight:

Oh,

come on, Igor. Fine.

Igor Geyfman:

And I'm gonna ask you, what percentage of the population Do you think has the potential to be a leader,

Charles Knight:

I would say, all of them, everybody has the potential to be a leader. And I, I 100%, believe it without a doubt, in my mind, everybody has the potential to be the leader. In human history, beyond just corporations, though, leaders are a fraction of a percentage points of the total population. And what I believe holocracy is trying to do is to allow everybody, every individual who's operating in this structure to be leaders, not just doers, not just cogs in a machine in the industrial sense of how we talk about corporations today. And so while I think it's an interesting question to explore, everybody has the potential to be a leader, and yet so few are. And why is that? And is, is holacracy, an effective tool to try to equip people to become leaders better, faster, cheaper than they would have otherwise?

Igor Geyfman:

You know, I'm an immigrant. And so I forget a lot of the specifics of these kind of idioms and, and stories, and so on. So I'm sorry, if I use the wrong one. And correct me if you remember what the right one is. But basically, it's the story of it's either a dog or an elephant, I don't remember. But imagine a stake in the ground, being hammered into the ground, a chain being attached to the steak. And then the other end of the chain being attached to a collar on, let's say, it's a dog.

Charles Knight:

I actually think it's an elephant, but I think it is, yeah, yeah, I think it's an elephant. Yeah.

Igor Geyfman:

So, let's say an elephant, right, which is an unwieldy animal. If I can physically wrestle and control a dog, which is already hard, there's no way that I can do that with an elephant. But you chain that elephant to that stake in the ground. And you nurture them to understand that their range of movement is limited to what you know, the radius allows, and then you can take the chain off, and the elephant doesn't wander past, what they've been nurtured to understand their limitations are. And that's why I asked you the potential question, I think people aren't naturally born to not be leaders. I think they're nurtured, sometimes intentionally, sometimes unintentionally. And it has nothing to do with their potential. It has to do with their circumstances. And those circumstances predate corporations, those circumstances, exist in tribal times as well, right before, let's say civilization, and like the accumulation of wealth, for example. But I do think it's a nurture thing. Because when I asked you that question, and I deeply believe your answer to be true as well, if somebody says, Hey, does every single human being have the potential to be a leader? I can say yes to that question, without hesitation, I really believe that. So why do 100% of people not practice being a leader, and I don't think it's a matter of nature's gift to them, or their ability, I think it's being taught that it's easier, or better or whatever, to not be a leader. And, and I think that leads to some level of dissatisfaction, and dysfunction and pain. I saw a little chart the other day, because I was looking at engagement as it relates to work. And the number one thing that positively correlated with engagement was autonomy, which is, maybe to me is basically another word for empowerment. And one of the goals of holacracy as a management system. And if I asked any CEO or manager, do you want your team to be less engaged or more engaged, or the same level of engaged, I think 100% of leaders, managers would tell me, I want them more engaged. I want to be more engaged myself. And if autonomy highly correlates with engagement, and we can have a management system in place that maximizes autonomy and empowerment, why wouldn't we try that out? So I'm going to go back and answer your question because it was. And in my experience, I would say probably 20% of people exhibit leadership on a regular basis, but 100% of those people have the potential to be leaders and to exhibit it. And so that 80% is our like, net loss in productivity, and engagement, and achievement, and human progress. And so, can we get to 100%? I don't know. We can do better.

Charles Knight:

Yeah, absolutely. Yeah.

Igor Geyfman:

And so I think I'm more on the side of The founder of hypocrisy, and I tend not to be like a, I don't know, sit around the campfire Kumbaya. Everyone is great. Let's eat some granola dude. But boy, I just, I believe we waste so much human potential. And it's the thing that probably brings me the most pain is seeing human potential being discarded.

Charles Knight:

Maybe you'll like my perspective here because I'm with you. And let me make it clear. I'm an advocate of holocracy, and other systems like it, right, there's sociocracy. There's all different flavors of these kind of self organizing teams. And I do think it's a good thing. And yet, I think there's a better way to achieve this future vision faster and at scale, then then a holocracy or something else like that.

Igor Geyfman:

I think there's maybe a financial argument. This is just something that I feel. But I think that I feel that people who are leaders tend to outperform people who are not leaders, they tend to get better salaries, they tend to get more autonomy in their jobs, they're more engaged and happier at work, they tend to get position, more positions of influence, and so on. And leadership is I'm going to assume is correlated with better objective outcomes, money and things like that. I teach this class, if you want to think about it that way workshop on creativity. And my big question during that class to the group is, what is the opposite of creativity, if we have a spectrum, and creativity is on one end of the spectrum, what lies on the other end of the spectrum? I get a lot of answers and really good answers, actually. But the answer that I give not that it's the only right answer is conformity. The spectrum is conformity and creativity. And here's the thing, neither of them are good in of themselves. Because without conformity, nothing gets done. Nothing gets done. If you're sitting around, and everybody else is sitting around all day long, being creative, amazing. Nobody does anything else. And nobody connects with others, conforms themselves to the group and moves things forward. Everybody's just thinking about creative things to do. And so my point in that workshop isn't, you have to only be creative. My point is, most of your life, you've been taught to not be creative, that you're not creative, to conform, you've been on this end of the spectrum, and your boss wants you to be creative. When I talk to executives, and they're complaining about their teams, one of the biggest complaints that I get is I wish my team was more creative. And that's when I go and have that conversation with them. And then it's like, you don't need to be creative 100% of the time, just like you don't need to conform all the time. What you need to understand is how to wield both of those things. And know, right now it's appropriate for me to conform. And right now it's appropriate for me to not conform and to be creative and be ambidextrous.

Charles Knight:

Yeah, yeah.

Igor Geyfman:

So that's the deal. You've got to learn both, then you also have to learn the good judgment of when do I employ leadership and questioning and creativity and things that are makes people uneasy out of the box? And when do I say yes, when do I conform? When do I connect with others and subjugate myself to the greater good to get things done? Also really important, both of those things have to work. And it's hard because the people that I talk to about creativity are all adults, they're not kids. And boy pulling them from the conformity of this is quite a job. Would be much easier if they were your daughter's age.

Charles Knight:

Women are a couple of we talk about polarities. But there's nothing inherently wrong with leading and following. They're neutral, right? There's nothing inherently wrong with and there's nothing inherently good about creativity, or conformity. But if you have too much of either, that's when the system starts to get dysfunctional. It's, you're right, it absolutely applies to managers and their teams. But so much of it is seeking to understand where the other person is coming from, and sharing and taking the time to explain why you're doing certain things. If we just did that more, just imagine how much conflict would just fall away.

Igor Geyfman:

One of my proudest management moments, Charles is my team was working on a project. Most of them were just out of university, and they're on assignment at a client's office, doing work and so on. The client sent me an email. And it was probably the most embarrassing email I've ever received from, like professionally. And basically, a laundry list of things that the team is doing that are bad. I got to tell you, my first instinct was to go nuclear on the team. And the reason it's the proudest moment for me is because I chose not to do that. And it was like, this is my fault. And the reason I'm so embarrassed, the reason I'm so angry. It's not these kids that were doing these things. I'm embarrassed and angry at myself. And if I go nuclear on them, that's not going to help anything. It's like some weird south, maybe for my ego, and handled that situation a different way still had a conversation with them. Right? But objective, not nuclear, not blaming, not guilting just the discussion, really about the future, and how we're going to make positive progress. Because the past is the past. And, and it was a big moment for me. And you're absolutely right, you can very much practice that with your team. And because of moments like that, I developed a really great relationship with that team. And we made a lot of positive progress. And not only that, I created opportunities for a much more positive relationship with that client, if that thing didn't happen. And we didn't start resolving and working on it. And I didn't engage with the person that complained, that relationship wouldn't have gotten any better. Not by a lot. But because this bad thing happened. And we started resolving it. And I respected the client, and we worked together to create safety for everybody, everyone is better off, I didn't have to be angry, which anger causes a lot of physical maladies, I could let go of negative emotions, I could get let go of anger, I created a more positive relationship with a team, I created a more positive relationship with the client who was very upset. And the team made progress and got better, and the client got better work. And like this holy crap, like wins all around to what could have been a pretty crummy, disastrous thing that could have hurt everybody. I could have leaned into my anger, I could have hurt my relationship with the team, the team wouldn't make progress. And the client would be like, still be angry about what are these people just messing up. So you're right, you can practice this anytime.

Charles Knight:

Yeah, and I think maybe we end on this, I think it's our responsibility to practice that every chance we get, as there are people in this world, a lot of people in this world, Igor, who in your situation, wouldn't even stop to think, Hey, I could handle this one of two ways, I could fly off the handle, blame my team, or I can take responsibility, I could take ownership, we talk about ownership a lot. And use this as a learning opportunity as an opportunity to grow, turn it into a win all around sort of thing. There are so many people out there who don't see any other option than to just fly off the handle. And I have through luck, really, all of this is just luck, through luck, I have come to develop a lot of empathy for them. And that situation, because I've been in those situations before, where my default in only is to fly off the handle. But through sheer luck of when and where I was born, I see that I have a choice. And so I feel a great responsibility in all areas of my life, with my kids, with my team, with my clients in the community to exercise that responsibility, and show that there is another option. And I think there's, there's just something really important in that, right. Like we have a responsibility as leaders to do these things. And we all have, because we are lucky you and I we've done the work. But we are here through random chance. And we have to, we have to recognize that, right? It's and let the ego go away and say, Hey, there are people suffering in this worlds. If we have another way that may help people, we need to share it. And I think that's why we were inspired to do this podcast to try to help people. So thanks, man, who knew we didn't know here, but we should have known.

Igor Geyfman:

We started out with a pretty fringe topic, that would have been probably uninteresting to 99% of people in this world, which is like the efficacy of holacracy as a governance system for a company. And I think where we ended up today, this isn't no way to toot the Horn of this podcast or our discussion or anything. But I think this is something that's important for every single person to listen to and think about what is their mode in life? What kind of work do they need to do? And how did they want to interact with their kids, with their colleagues, and with other people in their life that they affect and love and so on?

Charles Knight:

Yeah.

Igor Geyfman:

So I'm personally I'm going to share this episode with a lot of people because I think this was an important discussion. I don't think there's anything groundbreaking here. It's all been said before by other people much smarter than I am. But it's not bad to have a reminder. And to think about it.

Charles Knight:

Anyway. Igor, as usual.

Igor Geyfman:

Man, thanks.

Charles Knight:

Yeah, we could go on for hours but and we have before

Igor Geyfman:

and nobody wants to.

Charles Knight:

Nobody wants to and I do want to eat dinner, too.

Thanks. Thanks for the chat, Charles. I really enjoyed it.

Yeah, alright friend.

Igor Geyfman:

Take care. Bye. Bye.

Bye.

Robert Greiner:

That's it for today. Thanks for joining and don't forget to follow us on Twitter @wannagrabcoffee or drop us a line at [email protected]

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