Adding Purpose to Scrum with Holacracy

Organisations passionately working with Scrum are still missing a key ingredient: Their organizational governance got stuck in the last century, argued Martin van Dijken and Jeff Kok. Holacracy can be a complete replacement for the traditional management hierarchy and can significantly increase motivation and productivity.

Martin van Dijken, agile coach and facilitator, and Jeff Kok, senior project manager and agile coach, gave the workshop " Experience how to evolve your team from purpose and feedback" at the XP Days Benelux 2016. InfoQ is covering this conference with Q&As, summaries and articles.

Scrum is a great tool to help teams improve themselves and get to real success. Scrum however offers solutions for the work done in teams, there are no solutions offered for the management and government of the entire organisation. A Scrum team therefore can only ever be as good as the combination of all managers above them can understand and handle.

Holacracy offers a completely new paradigm for the government of organisations. It allows an organisation to completely govern itself, based on the purpose that they desire to fulfil. There is no longer any need for middle or higher management. These two approaches can be combined to great effect, Scrum for doing the work, Holacracy for governing the organisation.

The workshop at XP Days Benelux consisted of a simulation game of four rounds played in teams. Each round was done as Scrum sprint starting with a planning, then doing the work, followed by a product review and a retrospective.

In the first round the teams received the goal to craft a zoo crowded with animals. The more visitors they will attract, the better they will score, said van Dijken. Since it's the first round he suggested teams to organize their feedback loop. Van Dijken and Kok stated that they are available to give feedback during and after the exercise when requested by the teams.

After a first round the teams shared their experiences. You need feedback to know how are doing, but it can be hard to get feedback and you need to organize it. There was a lot of uncleanness on what teams could do to attract more visitors, as they didn't know up front how many visitors having a certain animal in the zoo would attract. The facilitators explained that this is how it works in real life, you only find out when the animal is there if more people come to the zoo to see it, that is why getting feedback on the visitors is important. One team said that they felt chaos as they didn't know how to work together.

In round two the teams got a purpose: "Protect and preserve endangered animals, have many people experience nature, and inspire visitors and influence their behavior.” Teams reacted by having rare species from which only some where left or where they expected to be the only zoo in the area who would have them. When asking feedback it turned out that for some rare species they did get more visitors, where for others it didn't influence the number of visitors. The feedback that teams received helped them to know what to do, even though it didn't answer all of their questions (which is what also often happens often in real life).

After the second round teams mentioned that they had self-organized their way of working, some teams mentioned that they have found better ways to work together based on the retrospective that they did after the first round. Having the purpose supported collaboration as team members had a better understanding of what they had to deliver. Working according to the purpose did not always attract more visitors as some teams found out. The purpose might not bring more value, explained Van Dijken, it is the reason why the organization exists and gives direction on what to deliver but that doesn't guarantee that it will earn higher profits.

For the third round teams got a set of roles. Teams had to decide who would play which roles, where multiple people could play the same role or a team member could play multiple roles. People mentioned after playing this round that the roles supported collaboration in teams, it helped them to work together. Some team members mentioned that the role gave them more focus and made it easier to do their work.

In the fourth and last round the teams received a strategy. People mentioned that having the strategy further increased collaboration and the focus of people in the teams. One team decided to switch roles as they expected it would enable them to better serve their purpose.

During the game, the teams learned that adding purpose, strategy and roles from Holacracy complements Scrum and increases their team’s performance and improved the results.

InfoQ spoke with Martin van Dijken and Jeff Kok after the workshop about the teal way of thinking and how holacracy can be applied to help organizations to become teal, how holacracy and Scrum can be combined, and the challenges of becoming teal and how to deal with them.

InfoQ: What do you mean with "the teal way of thinking"?

Martin van Dijken: The teal way of thinking is a reference to the book "Reinventing organisations" by Frederic Laloux. In his book Laloux models how we, humans, have organised ourselves in the past and present. He uses several colours, going from Red to Amber, Orange, Green and finally Teal. Red is historically our first organisational form: an organisation driven completely on fear and personal control. Most organisations have evolved far beyond that and are now in a Green state: hierarchical management with empowerment of intelligent workers. Agile and Lean typically fit very well with this style of organising work.

The Teal organisation is the next step in evolution from Green. This organisation is characterised by organising around purpose and by the lack of bosses. It is an organisational form where individuals get a purpose that contributes to the company's purpose and get the complete authority needed to fulfil that purpose. Because of the authority being distributed, the boundaries continually need to change and the organisation itself becomes fluid. It starts to feel like a living organism. There are companies doing this, such as Morning Star and Buurtzorg, but the best practices are still developing very rapidly. Holacracy and Sociocracy 3.0 are methods that fit in this space and are rapidly gaining interest.

I have personally been frustrated and seen employees get frustrated in Agile organisations. Often this comes down to increasing responsibilities, but lack of authority. Imagine you have a great idea, it will help you get your job done. Someone above you in the hierarchy however decides that it is not yet the time or maybe even that you should be doing this according to their style. Demotivation and frustration are the results of these hierarchical decisions, even though the decisions themselves might be well intentioned. Wouldn't it be great if everyone could make the most of their given purpose?

Jeff Kok: Teal organizations are characterized by self-organization and self-management. Agile teams, and thus Scrum teams, are self organized  by definition. Experienced Agile teams mastered the art of self organizing. Holacracy provides a framework to self organize a composition of teams, formed around a purpose.

We often see organisations, moving towards Agile, struggling with the current management structures. The traditional management structures bites with the self organizing desire of Agile teams and instead of meeting in the middle, it could be an idea to restructure your management. For example with holacracy. The teal way of thinking puts Scrum and Agile teams in a bigger perspective, yet organized around the purpose of the “organism”, or organization.

InfoQ: How do Holacracy and Scrum go together?

Kok: Holacracy gives you a strict framework on how you can organize yourself around your purpose. Purpose is the answer to why you exist. So organizing yourself around purpose, starts with the intrinsic desire to fulfill that purpose. Like successful implementation of Agile, it starts with a top management decision: this is how we are going to do it. It also forces your employees to re-evaluate their (intrinsic) motivation. How soft or holistic this may sound, there are numerous researches performed about what motivates people: having a meaningful job where you can make a difference as an individual. Holacracy gives form to those desires, but in a bigger context.

Van Dijken: Scrum is typically implemented in hierarchical organisations and often only applies to organising the work at the level of one or more teams. Above and around the Scrum teams everyone still works in a hierarchical style and the team is therefore limited in authority and autonomy. As Agile coaches we implement Scrum and give teams a great tool to organise their work, only to find that they are still limited by the hierarchical systems around them.

Holacracy helps us govern our organisations and completely replaces the hierarchical systems. It helps us coming up with clear purposes and lets us evolve our organisation around that. Holacracy also has tools for getting work done, but in my experience Scrum is more suited for day-to-day cooperation within teams. Scrum offers concrete tools for visualisation, communication, setting goals, prioritising work, etc. Scrum on it's end is very flexible in what happens within the team: who does what? This is a space that can be filled with Holacracy.

To summarise, even though there is some overlap between Holacracy and Scrum, they complement very well. We can use Scrum to work IN our organisation and use Holacracy to work ON our organisation.

InfoQ: Can you give some examples how holacracy can be applied to help an organization to become teal?

Van Dijken: With Holacracy, the whole system is created to make your organisation Teal. As a first step to implement Holacracy, the CEO is required to transfer his authority into the Holacracy system. Authority is therefore by definition distributed to the people that will actually do the work.

Next to that, Holacracy's key concepts are roles and circles. The organisation itself is a circle which has other circles and/or roles within it. Each of these is defined by having a purpose and accountabilities. Purpose-thinking is therefore strongly embedded into Holacracy.

Lastly, Holacracy is a system which helps individuals create roles and put authority into those roles. The roles are then shaped and moulded based on the problems, or tensions, that the person working in the role encounters. There is a clearly defined process which facilitates this evolution of roles and therefore the evolution of the organisation.

The three key concepts of a Teal organisation are therefore implemented by implementing Holacracy: distribution of authority, focus on purpose and evolution based on need.

Kok: I would say they complement each other. What Agile lacks, is given by Holacracy (purpose) and what Holacracy lacks, is given by Agile: organize the feedback loop and learn from it. Implementing Agile with Scrum gives you a head start, because part of the roles, strategies and team meetings are pre-defined. Another consequence of Holacracy might be that it will tailor your Scrum, due to the evolving aspects of it. But because you learn from the feedback loop, that is for the best. In my experience, it works best to Implement Scrum and then add Holacracy. It is ok to treat a Scrum team as a circle. The Agile principles do not conflict with the Holacracy rules, it just has a specific dynamic: Scrum teams deliver working software and every sprint they want more. Probably a Scrum team in a Holacratic environment is just more Agile.

InfoQ: What are the possible challenges if an organization wants to become teal? How to deal with them?

Kok: I would say all challenges you face when changing your organization plus at least 20 more. Going over them one by one would be too much, but in general: Find help, a good teacher and learn, learn, learn. Don’t be afraid of growing pains, not everyone will be able to keep up with the changes, some will even leave, because they feel they don’t fit in anymore, but you can also expect that some of the employees of whom you’d least expect it, will blossom!

Van Dijken: When implementing Holacracy in our practice, we faced a lot of confusion and frustration at the start. We tried implementing Holacracy ourselves, believing that as experienced Agile coaches and facilitators we could easily do this. It took us over half a year to get in control. To get there, we asked an external coach to help us out because of the complete mindset shift that is needed. Also, several of our team went to the Holacracy training and are now Certified Holacracy practitioners. The key here: it is hard! But ultimately fulfilling ;-)

The frustration we felt at first was mostly with the strict formats of the Holacracy sessions. We had no real experience in running them and all we knew was to follow the rules strictly. We have now learned that you can follow those strictly and still be kind to each other and still have fun in the sessions. We had to get more experienced on why these rules exist and what we can use them for.

Another challenge we faced, was that work was being done completely next to the Holacracy system. The system simply did not reflect what we were actually doing. This lack of transparency led to confused meetings, where the real meat of what we were doing wasn't actually present. Those sessions felt long and useless. These days they are short and fulfilling.

A final thing we hear and see a lot is that Holacracy requires employees to work like adults. If you get responsibility and authority, take those and make a difference. In some organisations people hide behind their roles and don't actually do anything. To get through that, requires a strong team with good challenging leaders in them.

InfoQ: If people want to learn more about teal organizations and holacracy, where can they go?

Van Dijken: Let's start with Teal, as I mentioned, it comes from the book Reinventing Organisations by Frederic Laloux. Holacracy is mostly run by HolacracyOne and it's creator, Brian Robertson. They give great trainings and taster workshops on Holacracy. There is also a community starting around Holacracy.  There is a meetup on Holacracy in Amsterdam, which has valuable sessions to exchange info. Also there are several organisations opening their doors for interested parties. As agile partners we sometimes welcome visitors, we ourselves have been around to Springest in Amsterdam and Voys in Groningen to see what it felt like there. Get in touch with any of us if you're interested!

About the Interviewees

Martin van Dijken worked as a software developer and team lead since 1997 and was always working "Agile". Martin mostly worked as a Scrummaster at that point, but always with a development role as well. In 2014 he decided to stop developing software and take up the role of Agile Coach. As a coach he is always pioneering new methods to help organisations even further. He loves to work with playful methods such as Lego Serious Play and complete approaches such as Holacracy. 

Jeff Kok started his working career as a physics teacher, and after made a career switch into ICT, his other love. Jeff started as a Visual Basic programmer and shortly after that, started to teach it. He has 20+ years of experience in ICT. The last 6 years with Agile and Scrum as a specialization. As an Agile coach and trainer he can help organizations delivering software faster and better. “Organized Flexibility” has been his credo ever since.