Agile Organizational Governance and Steering: Holacracy™ and BPM

Janne J. Korhonen20.11.2007

What is agility?

¡ Fast reaction to the demands and opportunities of the environment

¡ Adapting internal organization to external circumstances

Think Big

¡ If you optimize the sub-systems, you sub-optimize the system

¡ In order to optimize the system, you must sub-optimize its sub-systems

HolacracyTM

¡ Includes several core practices for organizational structure and governance:l Circle organization

¡ A ”holarchy” of semi-autonomous, self-organizing circles

l Double-linking¡ Two people linking the higher and lower circle

l Circle meetings¡ Regular meetings to set policies and delegate accountability

l Decisions by integrative emergence¡ Policies and decisions are crafted in circle meetings

l Dynamic steering¡ All policies and decisions are made based on present

understanding

l Integrative elections¡ People are elected to key roles through an integrative election

process

Circle organization

¡ A circle is a ”holon”: a semi-autonomous, self-organizing team, which exists within the context of a higher-level circle

¡ It has agency; it maintains and expresses its own cohesive identity

¡ A circle:l makes its own policies and

decisions to govern that level of scale (leading)

l does or produces something (doing)

l uses feedback from the doing to guide adjustments to the leading (measuring)

Double linking

¡ A lower-level circle and a higher-level 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

Directing

OperatingMeasuring

Directing

OperatingMeasuring

Functionalleader

Electeddelegate

Circle meetings

¡ Regular meetings to set policies and delegate accountability and control for specific functional areas and roles

¡ The circle’s membership includesl the circle’s lead link (appointed from the higher-level

circle)l any “home” members of the circle (those who work on

this team)l any lead links appointed down to lead lower-level circlesl 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

Decisions by integrative emergence

¡ Autocratic control based on a single perspective runs the risk of missing important perspectives and information

¡ The best decision will emerge when the value in all relevant perspectives is integrated and harnessed

¡ Consent-based decision-making: if no-one knows of a reasoned and paramount objection, the proposed decision is proceeded with

¡ Sabotage and politics become obsolete and no longer useful¡ No voting, no need for consensus¡ Consent is not about personal support¡ Trust is an output, not input, of the process¡ Integrative decision making is usually faster than decision

making via any other means

Dynamic steering

¡ Incremental adaptation rather than up-front prediction.¡ Significant efficiency gains

l higher qualityl more agilityl increased ability to capitalize on ideas and changing

market conditionsl far more control

¡ Aligning the actions with the flow of events¡ Enabling structure: double-linked circle organization

and integrative decision-making¡ ”Good enough” decisions and continuous adaptation

based on feedback¡ Dynamic steering transcends and fully includes

predictive steering methods

Integrative elections

¡ Roles that must be filled in a holacratic circle:l a secretary to record policies and decisionsl a facilitator to run circle meetings and stick to the

holacratic processl a representative link to the next higher circle

¡ Individuals are elected to these roles exclusively through holacracy’s integrative election process.

¡ A template for the integrative election process:l Define the rolel Fill out ballotsl Public gossipl Nomination changes l Discussionl Consent round

Enterprise as a System

¡ Organization vs. Structure (Maturana and Varela):l Organization

¡ Defines the system’s identity in terms of inter-component relationships

l Structure¡ Realizes the category

specified by the organization

¡ Enterprise defined by its business processes

¡ Business processes encompass both organization and structure

Organization

Structure

System

Business Process as a Network:Private and Public Processes

¡ Private Processl Specifies the process

control logic within the context of a business process participant

¡ Public Processl Governs externally

observable behavior of business process participants by specifying the message exchange between them

Privateprocess

Publicprocess

Orchestration and Choreography specify private and public process, respectively

¡ Orchestration is an imperative formal description of the sequence and conditions in which an executable process invokes services and interacts with other processes in order to achieve its design objectives.

¡ Choreography is a declarative formal description of the coordination between multiple participants, specifying their roles and observable message exchange.

Orchestration

Choreography

Requisite Control Structure and decision-making horizons in an enterprise

Strategic Level: Contract

¡ Focal point: relatively stable distillation of the corporate strategy

¡ Strategies aligned with the focal point

¡ Identification of systemic structures and their relationships

¡ Specification of high-level business processes

¡ Contract for coordination within the processes

¡ Realignment of organization to the strategy

Tactical Level: Coordination

¡ Optimize end-to-end business processes

¡ Define local targets and performance measures for the operational level

¡ Assign appropriate decision rights to the operational level

¡ Realignment of systemic structures to the changed organization

Operational Level: Control

¡ Operational decisions are made within the structure

¡ The control over resources is limited by the coordination and decision rights assigned to the structure

¡ Structural changes are in conformance with the existing organization

Real-Time: Model

¡ The model of the enterprise reflects how it perceives the reality of its business

¡ It consists of the vast repository of “sources of truth” dispersed in enterprise information systems and databases

¡ This knowledge needs to be elicited as a canonical operational and information model

Jaques (1998): Requisite Organization

OperatorDeclarativeI

First Line ManagerCumulativeII

Unit ManagerSerialIII

General ManagerParallelIV

Business Unit PresidentDeclarativeV

Corporate EVPCumulativeVI

Corporate CEOSerialVII

Super Corporation CEOParallelVIII

RoleMental Process

Sratum

Sym

bolic

Ver

bal

Con

cept

ual A

bstra

ct

TimeSpan

50 Y

20 Y

10 Y

5 Y

2 Y

1 Y

3 M

Requisite Control Structure in organizations with one to four strata

Requisite Organization of eight strata employing Requisite Control Structure

BPM Governance Structure with a circle organization

¡ Steering Committee

¡ Center of Excellence

¡ Process Initiative

¡ Project

Steering Committee

¡ Specifies the strategic contract: the collaborative process models for end-to-end business processesl These process models communicate the strategic

intent to the tactical level¡ Represents the executive sponsorship and

ensures business commitment¡ Aligns BPM efforts to strategic business and IT

goals¡ Establishes and prioritizes required Process

Initiatives and development programs within CoE¡ Reviews and approves roadmaps, project plans

and budgets made by Center of Excellence and Process Initiatives

¡ Ensures that proper budgets and funding for BPM are in place

Center of Excellence

¡ Coordinates process-specific BPM efforts at the tactical level in accordance with the strategic intent

¡ Leads the execution of building and sustaining a process-managed enterprise under the sponsorship of Steering Committee

¡ Coaches, guides and facilitates Process Initiatives¡ Builds a business rules and process architecture¡ Develops standards that facilitate reuse and interoperability¡ Enforces best practices¡ Documents the architecture standards and the regulatory

compliance requirements¡ Helps Process Initiatives with their business case creation and

delivers them process training and education¡ Has authority over technical artifacts such as architectural

blueprints, business process models, business rules and services

Process Initiative

¡ Also operates at the tactical level¡ Has the ownership of a business process and

coordinates the projects in its realm¡ The process owner

l discovers the units of work in the core of its respective horizontal end-to-end business process

l imposes responsibilities to elementary processes that execute these units of work, and

l decentralizes the implementation of each such process to a respective project at the operational level.

¡ Process Initiative schedules, resources and prioritizes the elementary processes and manages the project portfolio accordingly

Project

¡ Has control over implementing (“shipping”) a discrete part of the business process as specified by Process Initiative

¡ Multiple simultaneous Projects are usually run under Process Initiative

¡ Each Project is aligned with one Process Initiative

Interactions in the BPM governance structure

Conclusions

¡ BPM promises to bring about in-built agility that enables an enterprise to rapidly reassemble its business processes

¡ This requires an appropriate governance mechanism to facilitate interorganizational coordination – Holacracy

¡ Requisite Control Structure (RCS): a hierarchic, repeating pattern of four control mechanisms: contract, coordination, control and model

¡ RCS in BPM governance:

Service FabricReal-TimeModel

ProjectOrchestrationOperationalControl

Center of Excellence, Process Initiative

ChoreographyTacticalCoordination

Steering CommitteeCollab. Process ModelStrategicContract