There is a word in the air around management suites these days, and that word is “Holacracy.” The claims of its founder, Brian Robertson, and those who have adopted it, is that it’s a brand new method of increasing employee involvement and independence. It’s gained more prominence recently because of internet darling Zappos having adopted it. However, rather than a new thing, Holacracy seems to be the repeat of something that crops ups regularly in business.
W. Edwards Deming is better known in Japan than in the US, though he was an American who developed his theory domestically. He described a methodology for understanding and managing systems, often referred to a Profound Knowledge, where you need to understand exactly how your organization works to manage it. Part of the way of doing that was to give more power and authority to the employee rather than having a purely top-down organization.
It was post-WWII Japan that adopted Deming whole heartedly and drove a phenomenal economic recovery in part through Deming’s model. Quality Circles and other employee involved committees were then brought to much of the rest of the world in the 1980s and early 1990s based on that success. That transference also coincided with the slowdown in the “Japanese Miracle,” in part because too many committees made decision making slow and burdensome.
Also in the 1980s, a young Brazilian took over his father’s business. Richard Semler created a more democratic organization which he credits with helping turn around the family run business. That is described in “Maverick,” his 1993 book about his experience.
While executives from many companies visited Semco, to see Mr. Semler’s theory in action, we still haven’t seen a major transition along those lines. What we have seen is smaller yet still valuable change.
Today, twenty years later, there is far more communications within companies, not just up and down but also across groups. The web, social media and other modern tools are helping increase the ability for people within companies to see more of the big picture and help each other.
When we hear about Holacracy, it sounds like it might be valuable but it fits within an existing context. One of the things people who have grown up with the speed of the high technology industry feel is that everything they think of must be revolutionary. Evolutionary just isn’t impressive enough. However, the claim that “Holacracy is a new way of running an organization that removes power from a management hierarchy and distributes it across clear roles, which can then be executed autonomously” sounds like what has come before.
As absolute as the claim to “remove power from a management hierarchy” seems to be, it is pointed out in Forbes, “At the same time, Holocracy is explicitly and strongly hierarchical. If you read the introductory article or the Holacracy Constitution 4.0 (2013), you will see that holacracy is hierarchy on steroids: the hierarchy is spelled out in more detail than in any conventional organization you have ever seen.”
The decision circles defined in Holacracy are each at their appropriate level, with hierarchies of circles. Nothing impinges upon the power of the Board of Directors and, role rather than title regardless, Tony Hseih is still the CEO and is still imposing an organizational theory from the top down.
Hierarchy and Autonomy: A Balance
There are a plethora of examples where too much hierarchy has damaged organizations by missing business changes through lack of communications. There are also examples of too many committees slowing down reactions to change as group think takes over. While it’s clear that many companies can be improved by increasing the communications within the organization, there also seems to be a need to have a way to make quick decisions when conditions warrant.
What the media rush to view Holacracy as some brand new way of management misses is that it instead seems to be using 21st Century terminology to repeat much of the committee focus from the Japan’s past. However, we’ve learned much since then and companies learned the limitations.
Most companies are not tech startups, they don’t have the freedom to massively change because their organizations have existing infrastructure, customers and partner relations. They live in market ecosystems where titles and relationships are understood to mean certain things. Understanding that the ecosystem matters, that you evolve within it, and that modifying your organization to take advantage of the benefits provided by both hierarchy and autonomy means finding a balance that is right for each company.
Communication is key
The key message to take from Holacracy is that many companies still have a long way to go in order to improve internal corporation communications to use technology and processes to help employees learn more of the overall picture of the firm and to trade ideas with each other in an open forum. It is an evolution of management theory that should be viewed for its ideas, not in a way that requires adherence to a specific set of processes but for the positive intent of better communication that can improve corporate decision making.
In our brave new world of technology, many devices or “things” we use in our everyday life are quite intelligent. They are no longer single-purpose, designed to just “do their thing” and then sit idle, waiting for someone else to use them again. Each of these “things” connects to each other. They interact and relate to each other. These intelligent devices are collectively known as the Internet of Things (IoT).
So what is the Internet of Things? Technically, it is a network of physical objects, embedded with some form of electronics that enables them to exchange data over the internet. Often their users can communicate and interact with them from afar.
The name had not yet been coined, but the first IoT device was invented in 1982. Coca-Cola modified one of their machines at Carnegie Mellon University to become the first internet-connected device. At regular intervals, it reported back to Coca-Cola the inventory it had on hand, and whether its drinks were cold. These vending machines may seem primitive now, but they do meet the modern definition – some “thing” that is attached remotely to the Internet and is, therefore, able to provide useful information to the user.
Gardner Inc. estimates that there will be nearly 26 billion devices connected to the Internet of Things by 2020. It is a growing trend that companies cannot afford to ignore.
Examples of the Internet of Things Many households now have utility smart meters, which send relevant information about power or gas usage direct to the utility company. There is no longer a need for meter readers to take recordings. The communication is two-way, and the companies can send messages, data, and instructions to the meter as well.
Technically the RFID-powered Smart Cards that we use for many of our financial transactions are examples of the IoT in operation. A card reader can see how much money you have stored in your account and provide various services as a result of it.
There are now remote health monitors in devices such as Fitbits and Nike Shoes. The data collected from these are sent to an app and often centrally collected and stored. When we run, we are using the Internet of Things in our everyday life.
If you have an intelligent air conditioning system, you can use an app on your smartphone to send a message to turn your air conditioning up to a set temperature before you come home. Some fridges can keep a track of what you put in them and can remind you if you are going short of something.
As time has progressed, the Internet of Things has become more common in other sectors too. For instance in healthcare there are blood pressure and heart rate monitors that medical staff can check remotely, as well as keeping an electronic eye on specialized implants like pacemakers and advanced hearing aids.
Billing With the Internet of Things There is, of course, much variety in the Internet of Things applications.
In some cases, the application is simple, and there are few resources used. The cost of providing these is probably negligible – and often it would be covered by an organisation’s marketing budget.
Other devices are much more complex, however. In some cases, it is not straightforward as to who gains the benefit from the new system. For instance, electricity meters are generally installed because they save utility companies money – not because they provide substantially improved services to the consumers. In that case, who should fit the bill for the installation of the new meters, and any running costs involved?
New Zealand continues to go through this discussion in relation to their electricity company smart meters. The Consumer’s Institute has recently written about how the electricity companies have benefited from making most of their meter readers redundant, yet consumers have been unable to benefit because the smart meters are not smart enough. “The majority of installed smart meters are basic models that only send data back to the power companies and display aggregate energy use (just like the old analogue meters), which means consumers miss out on many of the potential benefits like cost-reflective tariffs and real-time monitoring of their power use”.
Some firms charge a subscription for their services. However, subscriptions tend to be a standard rate for access to a service, unrelated to usage. The Internet of Things makes it much easier to determine usage of something. Therefore, is it not fairer to develop a billing model that reflects that usage?
Possibly more providers will modify their billing system to be more like a telephone system, which charges users by the minute – a definite correlation between usage and payment. Will air conditioning firms, in time, charge an amount for every instruction from afar to alter a temperature?
One thing seems clear. As more complex IoT models emerge, billing solutions must be agile enough to support the changing needs of a business as technology rapidly evolves. If you are charging for usage of IoT devices, you will have a recurring revenue stream – not just a one-off charge. You need to develop a robust system that avoids usage revenue just vanishing, through lack of accountability.
Billing for both usage and the initial capital cost of Internet of Things devices is still very much a work in progress. One thing is certain though. Somebody is going to have to pay … somehow.