Lean Startup and Holacracy, a Perfect Marriage?

In the media, we see and hear the word ‘startup’ more and more. Not Wall Street, but Silicon Valley appears to now be the economic centre of the world. Newspapers and online media seem to write about nothing but successful startups, and even our prince Constantijn van Oranje is committed to the Dutch startups as ambassador to Startup Delta.

This is a development that I can only applaud. I firmly believe in the importance of startups for a healthier, fairer and safer (economic) society.

A startup is a human institution, created to develop a new product or service under extremely precarious conditions (Ries, 2011). Due to this extreme precariousness, it is important for a startup to be flexible and dynamic. This doesn’t happen by following a strategic (marketing) plan, but by adopting an iterative approach and following a vision. Luckily, the idea that a startup is a smaller form of a corporation has become obsolete (Blank, 2012).

In education, the models of large corporations are mainly taught. Businesses and startups don’t know any different and continue to use these models. Even science has only recently started to look at other ways to make a startup grow. Fortunately, businesses, investors and science increasingly recognise that something needs to change; 40 to 60% of starting enterprises go bankrupt within 5 years (Static Brain, 2015).

A scientific management method – or rather, philosophy – that is gaining in popularity recently, is ‘lean startup’. By using a client-oriented, iterative and data-driven process, the startup works towards a product that their target audience is actually interested in. This process also cuts down on time and money.

Organisational forms like those by Mintzberg do not seem to fit with the fast-paced and dynamic environment of a startup any more. Holacracy does a root-and-branch reform of these forms of organisation, and defines a highly dynamic organisational form that surpasses the efficiency of current forms. Holacracy seeks a self-organising organisation without bureaucracy or autocracy, in which roles and structured (short) meetings are important. Managers are disabled and even the CEO doesn’t have a final say in decisions that are made (Robertson, 2015).

Both lean startup and Holacracy appear in the media increasingly. The largest startup using Holacracy is Zappos (one of the most innovative startups of this moment). In the Netherlands, Impact Hub Amsterdam and Springest are two companies that use Holacracy. Companies like AirBnB, Uber, Slack and Twitter have become big by using the philosophy of lean startup, but also the corporate world (Philips, Toyota and GE for instance) is showing more interest in the philosophy. Therefore, on the basis of this essay, I pose that

Holacracy is the most suitable form of organisation for lean startups that we know at the moment.

Before we substantiate this claim, it is important to elaborate on lean startup and Holacracy. I will explain them briefly and explore which Organisation & Management paradigms fit both movements. After that, I will explore whether Holacracy complements lean startup, and in which way, in order to arrive to a clear statement.

A Short Lean Startup Explanation

The term ‘lean startup’ was first used in 2008 by Eric Ries. In 2011, he published his book “The Lean Startup”, since then this management method is gaining popularity. The lean startup is a philosophy that looks at startups in a different way than we’ve been used to. For the essay, it is important to state and clarify the definition of a startup. According to the definition of Ries (2011):

A startup is a human institution, created to develop a new product or service under extremely precarious conditions.

This implies that it doesn’t only concern starting enterprises. It could also be about new departments of governments, a subsidiary of a large corporation or, for example, a joint venture. The critical part of this definition is: […to develop a new product or service under extremely precarious conditions]. When it’s about a product or service that is being developed in secure, stable conditions, it does not fit within the definition of a startup.

Lean startup is a management process that focuses on limiting the risks that are a part of these extremely precarious conditions. This is done by using an iterative, data-driven and client-oriented development process, with the ultimate goal of eliminating the wasting of time and money. This gives the startup a better chance of succeeding. This process is summarised in the build-measure-learn cycle, which looks like this:

Lean Startup cycle

The idea behind this cycle is that hypotheses (assumptions in lean startup terminology) are either validated or disproved by use of ‘validated learning’ (Croll, 2013). The hypothesis is developed into an experiment (build phase). Next, the startup conducts the experiment and performs various measurements (measure phase). From the data of these experiments, conclusions can be drawn. Subsequently, it is key to reflect upon and learn from the knowledge gained (learn phase). After that, the idea, product or service can be adjusted or adapted, and a new experiment will follow (Ries, 2011).

The end user of the service or product is the main focus while completing this cycle. Blank (2012) also calls this process ‘customer-development’. Not only does this validate assumptions about the product, but also about the end user.

By validating assumptions before the startup develops a product or service, time and money can be saved. All around me, I see startups develop products or services (knowingly or unknowingly) according to the principles of the full stage gate process (Cooper, 2008). Only in a late stage do they validate the value of the product or service with the customer, spending a lot of money and time before discovering that the product doesn’t fit the market. This results in high rates of companies failing in the first five years (Static Brain, 2015).

The lean startup works according to a couple of principles, which I will describe briefly, namely:

  • Minimum viable product (build phase);
  • Innovation accounting (measure phase);
  • Pivot or persevere (learn phase).

Lean Startup & Minimum Viable Products

To prevent the waste of time and money, Robinson introduced the term ‘minimum viable product’ in 2001, which he defines as:

A minimum viable product (MVP) is a unique product that maximises the return on risk for both the vendor and the customer. (Robinson, 2001)

Ries (2011) and Blank (2012) have used the term in their literature as well, popularising it. Ries (2011) has formulated an adapted definition of the term MVP, which I find clearer:

An MVP is a version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least amount of effort. (Ries, 2011)

An MVP is a version of a new product or service that allows the startup to learn as much about the customer and the product or service as possible, with the least amount of effort. Most often, startups and/or companies develop an (end) product before they validate its market value. Any changes to the product are hard to make at that point. By starting with an MVP, it becomes easier to adapt a product based on ‘validated learning’. The adaptations or possible new design should not need to be expensive in that case.

By carrying out as many experiments with the MVPs as possible in the product-market fit phase, the startup is able to develop a product that customers are actually interested in (Croll, 2013). When there is enough evidence for an MVP, the MVP can be developed into a fully working prototype to be subsequently developed into an end product (Blank, 2012). By using MVPs and the corresponding experiments, the startup learns who their target audience is and how they can best be reached. This contributes to a more specific and effective marketing of the startup (Ellis, 2012).

Lean Startup & Innovation Accounting

The industry has standard reports that are released periodically (e.g. annual reports, quarterly reports, etc.). These reports represent the financial situation of the organisation, which the management uses to determine goals and strategies. For startups, this is different. Financial year reports and quarterly reports tell very little about the progress and learning curve of the startup (Blank, 2010). That is because most startups are (often) not profitable until the product-market fit phase (Maurya, 2012). Stakeholders, such as investors and donors, but also the entrepreneurs themselves, want to see growth of the the enterprise. The financial reports don’t provide sufficient information for that. The principle of Innovation accounting, introduced by Blank (2010), helps startups chart their growth. For this, it is important to show in figures what the startup has learned, and which adaptations were derived from that. I often notice that startups use McClure’s (2007) AARRR metrics for this.

Using AARRR metrics during the experiments creates a model with which the results of the experiments are more easily comparable. Through the use of five clear ratios, the startup can measure more effectively whether an experiment was conducted successfully and whether it creates more value than a previous experiment. Maurya (2012) believes that a daily or weekly reading is important for managing a startup. This way, the startup can remain flexible, and iterations can be made swiftly when needed.

Pivot or Persevere

The most crucial phase of the process is the ‘learn phase’, meaning: what the startup learns from the conducted experiments and how it adjusts its assumptions accordingly. The results will tell something about the direction the startup should be following. This way, decisions are based on ratio and less on gut-feeling (Croll, 2013). Ries (2011) has divided the decision process in two parts: pivot and persevere.

According to Ries (2011), persevere is when a startup has conducted an experiment successfully and validated its assumptions. The course that the startup has set out can be maintained. Many of the old growth and innovation models, but also strategic (marketing) plans are based on the persevere principle; they hold on to the original plan or idea.

A pivot is the opposite of persevere (Croll, 2013). A pivot is a structured course correction, designed to test a new fundamental assumption about the product or strategy. Pivots are made when assumptions are disproved, and results show that it’s better to set a different course. There are ten different course corrections (Ries, 2011), ranging from changing the target audience to the adaptation of the product or revenue model.

Being able to make pivots is crucial for developing a sustainable and scalable revenue model (Blank, 2012). It is exceptional for a startup to be able to validate all assumptions immediately. Fast and efficient course corrections help eliminate the waste of time and money.

Organisation Theories

Fast course corrections mean that the startup has to be as dynamic as possible. For instance, Groupon started out as an events agency, but soon came to the conclusion that spreading coupon tickets was a more lucrative business model for a startup. Most important, I find, is that Groupon continued to act within their vision, which goes for all pivots that are made. Without a vision, an enterprise could start out as a printing house and end up as a sawmill. A vision provides a framework. The example illustrates that the activities of the startup change quickly. A flexible form of organisation is crucial.

Certain aspects of classic theories by Weber, Taylor and Fayol can be recognised in the process management of lean startup, but in general, the classic theoretical paradigm is too narrow and doesn’t fit this any longer. By building structures, Weber and Taylor pose that almost anything can be managed according to meticulous processes (Clegg, 2011). However, lean startup requires a more dynamic form of organisation, that can adapt quickly to internal and external circumstances.

The definition of a startup and the corresponding insecurities make it easy to think that lean startup fits in with the contingency theories of e.g. Burns, Mintzberg and Thompson. The idea behind these theories is that the organisation will adapt to a number of unforeseen factors (Clegg, 2011). Nevertheless, I believe that for example the organisation forms as theorised by Mintzberg and Burns, quickly end up a bureaucratic nightmare, inhibiting flexibility and dynamism. This is also strongly represented in the institutional theories by Meyer and Powell for example (Clegg, 2011). However, the problem is that most organisations are so used to this institutionalisation, that there aren’t that many other forms of organisation. This keeps us locked in a bureaucratic system, which brings with it its limitations. Especially when regarding the dynamics and flexibility of the organisation, which, in my opinion, is imperative for a management philosophy such as lean startup.

Post-modern approaches of organisation theories are looking for less bureaucratic forms of organisation. At the heart of it, they still have a high degree of bureaucracy, but they are aware of this and are trying to gradually develop a less bureaucratic system as they are going along. These organisational forms are often team-based, and are mostly found in Japanese car manufacturers. This seems like a good paradigm to search for a new organisational form that better suits lean startup, than the widely used organisational forms of Mintzberg.

A promising theory from the post-modern approaches (or possibly even a new paradigm of experimental approaches), is Holacracy.

Holacracy

When starting and growing his enterprise(s), Robertson (2006) found that the way in which we organise organisations had a restricting effect on him as entrepreneur. Robertson was losing time checking and approving decisions, making his enterprise lose its efficacy and flexibility. This is characteristic for bureaucratic organisations. The dynamic that was there in the early stages of his startup was lost. Precisely the dynamic that he missed in the corporations he quit working at, was lost from his own organisation. Robertson fell prey easily to the bureaucracy and autocracy that he was opposed to.

The decision-making process of many corporations around us is a top-down bureaucratic one. The making of a decision is done by management teams and members of the board. They also bear the responsibility for these decisions. However, the CEO has the last word (characteristic of an autocracy). The board is responsible for decisions that they might have less knowledge and technical expertise about than employees in lower positions within the organisation. This particular decision-making process is often slower and less effective, making the organisation almost completely void from agility and flexibility.

Born from an aversion to bureaucracy and autocracy, but with the understanding that democracy in organisations doesn’t improve the efficacy of decision-making, Holacracy was introduced by Robertson (2006) and partners. Ter Steege (2015) defines Holacracy as follows: Holacracy is a framework for management, an organisational form with a different approach to division of labour, hierarchy and decision-making, designed to allow organisations to work together more effectively. Later on in this essay we will have a critical look at this definition, but first it is important to understand what Holacracy is.

Holacracy is based on four elements (Robertson, 2015), that I will briefly highlight:

  • Organisation form;
  • Monitoring within the organisation;
  • Core practices;
  • Shared languages & meaning.

Organisation Form

Line, line-and-staff or, for instance, matrix organisations are generally top-down organisation forms: Holacracy looks at the organisation differently and organises itself as a holarchy. The terms holon and holarchy were introduced by Koestler in 1967, inspired by a biological organism. A biological organism is an aggregation of other, smaller organs, says Koestler (1967).

A holon is a self-regulating, open system that displays both the autonomous properties of wholes and the dependent properties of parts (Koestler, 1967). A holon is self-regulating within a certain framework (autonomous), but remains dependant on a greater whole. A skin cell is a holon of the skin, the skin is a holon of the greater whole: the body.

Characteristic here is that there aren’t any forms of top-down or bottom-up management. Holons control each other and are greatly dependant on each other; there is no autocratic part that has control over all the holons (which is characteristic for a hierarchy). This cooperation and coherence of holons is called a holarchy (Koestler, 1967).

This is why Robertson (2006) proposes a new organisation form. Figure 1 shows an example of a Holacracy organisation. The autonomous holons are at the service of each other and together they form an organisation.

Example of a holacracy organisation

Example of a holacracy organisation

Roles in Holacracy

It is easy to think that a person or a department can be a holon, but that is a misconception. The holarchy is composed of various roles.

Conventional organisations are made up from functions with a corresponding job description. The functions consist of responsibilities and duties, for which there is a certain remuneration. The higher the function, the more responsibility and decision-making power. These functions and job descriptions don’t exist in Holacracy.

Instead of functions, Holacracy works with roles. A role has a purpose, a domain and is comprised of responsibilities (Monarth, 2014). A role is given shape in so-called ‘governance meetings’ (more about this later). A role can be accepted by a single employee, but can also be represented by multiple employees. The startup teams are often small (especially in the early stages). This means that an employee will often carry out multiple tasks within various domains. Often, these tasks don’t correspond to the function for which the employee was hired.

Monitoring within the Holacracy Organisation

The act of monitoring in a Holacracy organisation is spread across the entire organisation. A role has decision-making power over the domain that it manages. When you compare this to the autocracy in which the board and management teams make decisions, it looks like an organisation out of control. After all, there are many decision-makers. However, in practice this proves to be different. As is reflected in a biological holarchy, the upper holon stipulates what the authorities of the lower holon are. This shows that there is an interaction between top-down and bottom-up management.

In a Holacracy organisation, the distributed decision-making power ensures that decisions within a domain can be made faster. The holon doesn’t need to get approval for these decisions from higher up.

However, for many this evokes a scary image: the board and managers give up a large part of their control. It is exactly that giving up of control that goes against the principles of managers as described by Taylor, for instance. Managers are, bluntly put, a tool that the board uses to monitor, organise and structure employees, in order to have them perform certain tasks well. You could argue that managers and a board become obsolete in Holacracy. Talks with the Dutch organisation Springest confirm that the fear of the relinquishing of control is founded; several managers resigned when Holacracy was implemented. The same thing happened when Holacracy was introduced at the startup Zappos (Groth, 2015). The distributed decision-making power therefore only works for a certain type of employee, manager and entrepreneur. Carefully selecting employees before they are hired is incredibly important for organisations that want to implement Holacracy.

Shared Languages & Meaning in Holacracy

When one glances at the theory of Holacracy, it is easy to conclude that it’s a ‘laissez-faire attitude’, but appearances can be deceiving. It takes a number of structured processes to make Holacracy work. The search for a proper implementation of structured processes, without making it a bureaucratic system, is very characteristic of the post-modern approach to an organisation Groth, 2015).

In Holacracy this is expressed in the ‘Holacracy Constitution’, which is signed by all members of the organisation (Taube, 2014). I’ll admit, the word constitution feels pretty intimidating. However, it is necessary to organise the members of an organisation. You could compare it to a boardgame: without rules, it is impossible to play the game. That is why I personally see it as building a framework within which Holacracy and the organisation can function. It makes the rules to Holacracy clear for everyone involved in the organisation. The constitution of Holacracy is constantly being adapted. When implementing the organisational form in various companies, some processes turn out to not work, making adjustments necessary. This makes sense, because this form of organising is still in its initial stages.

Core Practices in Holacracy

One of the things described in the Holacracy Constitution are its ‘core practices’. These are the cogs in the wheels of Holacracy. In order to have Holacracy work optimally, various frequent meetings are necessary (Robertson, 2015):

  • Governance meetings: Governance meetings are devoted to the perfect cooperation. During these meetings, holons, roles, domains and responsibilities are established. A governance meeting is one of the most important gatherings in the Holacracy organisation. This is where the startup decided what the organisation is going to look like. The meetings take place every three months. The most important goal is to solve and prevent tensions within the organisation. Because of the high rate of iterations, restructuring of the organisation is unnecessary. You could say that Holacracy is an ‘agile organisational form’, a structure that would fit well with the dynamism and flexibility that the lean startup philosophy requires. However, I wonder if having meetings once every three months is enough in the early stages of a startup. Particularly when many pivots are still being made, and new roles and domains are possibly needed within the startup.
  • Strategic meetings: The goal of strategic meetings is to chart the recent history and current context of the holon, as basis for developing a strategy for the following period. This won’t be a specific plan, it’s more about finding the rules of thumb to make decisions about strategy. Robertson (2015) uses the metaphor: A strategic meeting gives the team has a compass to guide them during their future travel. Looking at lean startup, these meetings could be useful in a later stage, when a product-market fit has been established.
  • Tactical meetings: Tactical meetings are meant to inform the roles within a holon about respective tasks and to streamline cooperation within the holon. The meetings help solve problems that are standing in the way of progress of the work. Holon members receive operational information about projects of the various roles within the holon. Should help be necessary, it can be asked during these meetings.
  • Daily meetings: The short daily meetings are all about the tasks for that day. Additionally, any tensions can be discussed here. The daily meeting clarifies the goal of that day and the tasks that every role within the holon will be working on.

These meetings are process-driven. The processes of these meetings are recorded in scripts, which are described in the Holacracy constitution. A mandatory role within Holacracy is the ‘facilitator’, this role monitors the process of the meetings. Each holon has a facilitator. The ‘secretary’ role records the progress and results of the meetings. Aside from taking minutes, they also plan the meetings. Taking minutes of the commitments that are made in the meetings is essential for the organisation. Because of its inherent flexibility and agility, the organisational form can quickly change, with new holons being created and others disappearing. If changes aren’t meticulously recorded in the minutes, the startup loses oversight of the shape of its organisation.

Communication in Holacracy

Effective communication is crucial in Holacracy. In the Holacracy constitution is described how communication within the organisation should transpire. This requires three important roles (Robertson, 2006):

  • Lead Link: The Lead Link is the link to the holon above it. The Lead Link keeps the goal of the holon clear, appoints roles that aren’t decided in the democratic process and determines priorities for the holon. Additionally, the Lead Link defines the metrics, or KPIs (key performance indicator) for the holon. It is essential that this role does not have decision-making authority over operational, tactical or strategical decisions.
  • Rep Link: The Rep Link is the connection between a holon and its sub-holon. The Rep Link ensures that tensions, which arise from policies determined by a higher holon (and passed on by the Lead Link), are made known from the sub-holon to the higher holon, so a solution can be found.
  • Cross Link: The Cross Link is the connection between two parallel holons. The responsibilities of a Cross Link are the same as those of the Rep Link, but with the focus on the adjacent holon, not the higher holon. This way, communication between holons that fall within a higher holon will remain optimal.

The roles described are mandatory within each holon. They are a solution to a bureaucratic system in which approval from higher up has to be requested regularly. In a top-down structure, decisions have to be communicated back again. The organisation often loses speed and flexibility this way.

Role of the Board in Holacracy

Now that we’ve clarified the theory of Holacracy, we can take another look at figure 1. What stands out immediately, is that there is still a board. This board has a different role than we’re used to though. The board only has one sub-holon: the organisation. This has consequences for the number of mandatory roles. Because there is only one sub-holon, the board only has one Lead Link. Cross Links represent the stakeholders of the organisation and play an important role in the board (Robertson, 2015). The board is the link between the external surroundings and the effects of these external surroundings on the organisation. Traditional Boards of Directors often represent the economic interests of shareholders (for-profit organisations), or the social goal (non-profit organisations). Many boards have picked up on this new trend, but neglect to adapt the structure of the board, causing tensions. It makes sense, because representing various stakeholders within a traditional board is nearly impossible and often results in an impasse. However, this can be solved with Holacracy: in the governance meetings where tensions of the stakeholders can be addressed. The job of the board is to assign these tensions to holons that can deal with them.

The most important task the board has in Holacracy, is working according to and representing the goal of the organisation (Birkinshaw, 2014). Hence, they do not represent the interests of shareholders and stakeholders towards the inside of the organisation. Instead, they outwardly act upon interests and goals from within the organisation. This is an important difference with traditional boards.

Holacracy and Criticisms

Any theory can be criticised; this is no different for Holacracy. After having had various discussions with professors, fellow students and companies that have implemented Holacracy, plus an elaborate literature study, a couple of questions have remained unanswered for me. Starting with the remuneration system.

Clegg (2011) states that the motivation to work is composed of various aspects. An important aspect is the reward for the work done. In conventional organisations, an employee’s function and job description dictate in which pay scale they fall, because this is linked to certain responsibilities the employee has. In Holacracy, there are no job descriptions, instead an employee can take on various different roles, each with completely different responsibilities. Within Impact Hub Amsterdam, there are certain fixed roles that can easily be remunerated according to the old function system. The employee that I spoke to about this could nevertheless not tell me how this works for roles that aren’t fixed. Mr. Bogers (2015) confirms this for me: the remuneration systems within Holacracy are still very experimental, often using the 360-degree feedback model. Ms. Pluk (2015) told me that Impact Hub Amsterdam often makes use of outside workers that are paid per assignment. If Holacracy wishes to become successful, this is a crucial point for which a solution must be found urgently. As Clegg (2011) explains, remuneration is one of the most important reasons for being employed.

The implementation and terminology of Holacracy aren’t easy. The Holacracy Constitution consists of more than 30 pages of rules. The implementation process is a lengthy one in which each employee completes a required course or training with the company Holacracy One. The philosophy is in fact intellectual property. Robertson (2015) explains that this is because he wishes to prevent Holacracy from starting to lead its own life, thereby missing its goal. His explanation makes sense, yet for startups, these courses and trainings aren’t always affordable (costing about €150 to €3500 per course) (HolacracyOne, 2015). For a successful implementation, it is advised to hire an outside supervisor, which also brings along extra costs that not every startup can manage. The implementation of Holacracy is a costly affair.

The disruptive idea of Holacracy isn’t interpreted correctly by everyone. If we look again at the definition that Ter Steege (2015) gives, “Holacracy is a framework for management, an organisational form with a different approach to division of labour, hierarchy and decision-making, designed to allow organisations to work together more effectively”, this is confirmed. The words ‘organisational form’ and ‘framework’ evoke an incorrect image of Holacracy. They make it seem like a structure is devised that is similar to other, existing variants. To prevent this misconception, I’ve used the word ‘organisational form’ in relation to Holacracy throughout this essay, instead of ‘organisational structure’ or ‘framework’. The disruptive nature makes defining such a new organisational form difficult, and thus the definitions are quite susceptible to diverging interpretations.

Nevertheless, organisations that have implemented Holacracy express that they are happy with the decision. In the early stages, it is a difficult process to determine all the holons, roles, domains and responsibilities. Once the groundwork has been laid, the organisation is much more flexible and efficient than when bureaucratic systems were used.

Conclusion

Lean startup requires a dynamic and flexible form of organisation, because of the many course corrections that are made. From my observations of startups, I’ve noticed that the bureaucratic organisational forms from the classic organisation theories, but also the contingent theories, do not fit any longer. Holacracy’s post-modern approach seems to offer a solution.

The manner of organising within Holacracy ensures that decisions can be made faster, and that the organisation can change quickly, without needing heavy reorganisations. Making quick decisions is inherent to the lean startup process; by quickly going through the build-measure-learn cycle, the startup saves time and money when realising a scalable and sustainable business model, says Ries (2011). This is where Holacracy and lean startup are a good match. The organisational form of Holacracy makes quick decisions that can be implemented efficiently easier.

Making a large pivot requires flexibility of the organisation. When a different target audience, business model or possibly even a different product has been found that works better for the organisation, it needs to be able to adapt quickly. During various meetings on strategic, tactic and governance level, tensions that come along with the iterations can be swiftly and accurately solved. In a bureaucratic system, it would take months before a decision has been made, implemented and optimised. With a small change to the frequency of the governance meetings (from once every three months to possibly once a month) in the early stages of the startup, Holacracy and lean startup prove to be a good match as well.

In startups, job descriptions are often vague and don’t cover the actual duties of the employee. This can only lead to more confusion, putting the responsibilities at risk, especially when they haven’t properly been communicated. The division of roles in the holons and their domains resolves this. It is no longer a problem when an employee performs different tasks in different domains. That is because the roles have complete responsibility over a certain domain, which has been established in the various meetings. This way, there is less confusion, decisions are made faster and communication becomes easier. Additionally, the qualities of an employee are used more efficiently. An employee can have multiple qualities that don’t necessarily all fall within their function. Especially in the early stages of the startup, this is an important aspect.

For all that, there is one more crucial point that makes it difficult to implement Holacracy in a lean startup, aside from the remuneration system. This is the cost aspect for implementing Holacracy. Until the product-market fit phase, it is not clear for a lean startup in which way it will enter the market and which business (and revenue) model corresponds. If a large investment has to be made in the early stages for implementing Holacracy, a large part of the budget will already have been spent. This money could better be used researching the problem-solution fit and the product-market fit in those early stages. In my opinion, it is necessary that HolacracyOne finds another business model for this. When this crucial issue has been solved, I am very willing to pose that Holacracy is the best fitting form of organisation for lean startups that we know at the moment. During implementation, several lean startups will no doubt experience multiple problems, but the nature of Holacracy makes it easy to solve these tensions within the organisation itself. Holacracy won’t be the same in every startup. Every startup will work with an adapted version that works for their internal and external environment.

During our PreXLR program, we answer a lot of similar questions on the topic of Lean Startup and how this methodoligy its organisation.

 

Leave a Reply

Het e-mailadres wordt niet gepubliceerd. Verplichte velden zijn gemarkeerd met *