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Holocracy on the Price Writers Podcast Episode 36
25 Plays1 month ago
🚫 An organisation without hierarchy?!
This week on the PriceWriters Podcast, we’re diving into Holacracy by Brian Robertson: a radical rethink of how organisations can operate without traditional management structures.
But could this bold approach work in the world of insurance pricing?
We unpack the principles, the potential, and the pitfalls, plus share some practical takeaways (no matter how many managers your team has!)
Julia Lessing's Podcast: https://www.youtube.com/playlist?list=PLdv6UDfPS5vpXnuppatdCCubaqT9ofY2F
#Podcast #Holacracy #InsurancePricing #OrganisationalDesign #Leadership #Innovation #PriceWriters
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Transcript
Introduction and Icebreaker
00:00:00
Speaker
you like the beetroot, parsnip or the sweet potato?
Podcast Purpose and Focus
00:00:13
Speaker
Welcome to the Price Writer Podcast with Katrin Townsend and me, Jeremy Keating. Join us as we explore and discuss the world of insurance-related books, offering our insights, recommendations, and crucially, how to apply them to an insurance pricing
Exploring 'Holacracy' by Brian Robertson
00:00:27
Speaker
role.
00:00:27
Speaker
Today, we're talking about Holacracy by Brian Robertson, and I think this is the most radical business book we've read. And it's all about leaderless organizations creating fat structures rather than vertical org charts.
00:00:41
Speaker
Katrin, this is not your usual kind of book. So what made you pick it up? I mean, the concept is so radical, isn't it? Not having any leaders in your organisations at all.
00:00:53
Speaker
And so that just really made me feel just a bit curious about how that would work.
Curiosity About Leaderless Organizations
00:00:59
Speaker
I know from being a manager myself that managers are so busy and it seems to get worse that the more senior you are. So are you was kind of curious on where does that work go?
00:01:11
Speaker
You know, does it just evaporate? Like, do we push it on someone else? like If we get rid of all the management structure, then who who is doing that work?
Book's Appeal and Inspiration
00:01:21
Speaker
Yeah, I picked it up from my local library and has quite a, don't want say, striking cover.
00:01:28
Speaker
It's quite a striking cover actually. So we've crossed out hierarchy. So, okay, so we're abolishing hierarchy. Yeah, yeah. And the foreword is by David Allen who wrote Getting Things Done, which is obviously like a best-selling book. So I kind of thought, well, you know, might be able to get stuff done without managers. That sounds certainly interesting.
00:01:51
Speaker
Yep. Because got it from the local library. I sneakily read the first like 25 pages while I was there. Yeah. um and So you're one these people that just sort of stands around in the library reading the books. i i after par but Yeah, I know. That's me. I'm the person who can literally spend like three hours in the library. Sorry.
00:02:08
Speaker
Not that sorry. Yeah, I'm actually on first name terms with my local librarian, which is awesome. Hello, David, if you're listening. i mean Yeah, so totally love my local library. And I literally just saw this one and I thought it sounded interesting. I read the first 20 pages and it just really hooked me because in the first 20 pages, he says that he had this near-death experience.
00:02:30
Speaker
Wow. And so,
Comparing Structures: Traditional vs. Holacracy
00:02:31
Speaker
yeah I know. So he was flying a plane and but all these like dashboard warning lights and there was one that was flashing, but everything else looked fine. And so he was like, oh, don't what that does. I'm just going to ignore it.
00:02:43
Speaker
So he basically crashed the plane because he didn't listen to this warning light, which apparently we're telling him that there was no electricity. in that Wow. I know. Of course.
00:02:54
Speaker
You have a near-death experience. What do you do? You write a business book. I hope he also learned how the plane works. i did't Just saying. He never says, but I don't think he flew again.
00:03:06
Speaker
hope he doesn't. Fair enough. um So I just, I thought it sounded really interesting and the kind of thing that if you've ever felt frustrated by levels of management oil difficult vertical bureaucracy. Yeah, lots of hierarchy. yeah Yeah, I can understand that. I just thought this was a book that maybe, maybe is too radical, but I've kind of wanted to hear it out.
Challenges in Regulated Industries
00:03:34
Speaker
Yeah. I mean, I think having, we both work for multinational insurers, so I know what it's like to have several layers of management up to directorship. And then you've got your country level and then you got your international and global and group level above that. So it can be a bit like, wow, there are a lot of layers between me and sort of the lead the genuine leader of this organization and even then within international insurance even though there is like a global ceo a person who's right at center of things they answer to a board and and shareholders anyway so actually it's quite a long way up to work out where the power resides okay so you've already said the concept is a leaderless organization i'm gonna have to ask how how does that work
00:04:19
Speaker
So the idea behind the book and idea behind the name of the book is all about Hollands, which basically means whole in Greek. He doesn't really refer to this concept much.
00:04:32
Speaker
But the idea is this instead of having a vertical pyramid, you have little circles. And so a circle would be a little team of people and everyone's like a point in this circle.
00:04:45
Speaker
And for each of those points and each of those circles, there is defined authority. So you're not going up the chain. You're not going to your manager or your manager's manager to say, hey, is this okay?
Holacracy: A New Learning Curve
00:04:59
Speaker
Your authority is defined. So as long as it sits within that thing, you can do what you like. As long as it's not harmful to the business. It's the only rule. And so...
00:05:11
Speaker
Then what happens is that any issues or tensions that you have, any like this person didn't deliver this thing to me, or we're getting blocked because of this deployment issue or, you know, whatever it is, all of those things are just the case of explicitly defining authorities and responsibilities. And he says that they're like the two flip side of the same coin.
00:05:36
Speaker
It's making me feel like I need to ask who it is that's defining these things. There's governance committee that meets every two weeks. He says the whole thing is like learning a new game.
00:05:48
Speaker
And he uses a sports example. But I feel like it's more like learning a new board game. And at first you're like, wait what are the rules? The first couple of turns you keep referring to the rule book and you go, hang on, do I have do I use my whatever vortex here?
00:06:01
Speaker
You know, Yeah. And after after a few times you've played. This one roll the yellow dice or the blue dice or yeah. Yeah. All right. Yeah. And then after you've done it a few times, you're suddenly not thinking about and then you are actually being able to crack on.
00:06:15
Speaker
So he he very much makes the point that this is a go slow to go fast later. Okay.
Hypothetical Application in Insurance
00:06:21
Speaker
Right. So I'll give you an example of how this All right. Yeah. I was going to say, what's what's an example in say a pricing team?
00:06:28
Speaker
What does that look like? Okay, so maybe the head of pricing says we need a quick win to improve our profitability. So the head of pricing tells the manager, we need this quick win.
00:06:40
Speaker
yeah And so the manager has to think and tells their analyst, go look at this type of vehicle or whatever it is. Go look at these things. An analyst does that and then passes it back to the manager who checks and reviews the work, says, yeah, this is an okay proposal, but I've got to pass it back up to the head of to to get this proposal approved.
00:07:04
Speaker
Okay. Under holacracy, The authority of the head of is to set the best practice and say proposals must adhere to consumer duty.
00:07:16
Speaker
They must be profitable. They, you know, X, Y, and Z, whatever it is, right? Statistics. Yeah. So they set some criteria to follow. a And that's their authority. yeah then the manager's authority would be to check and approve the proposal that they're given.
00:07:36
Speaker
So they then have complete authority on whether that proposal goes live or not. But then the analyst has complete authority to decide what they investigate and how they do the analysis.
00:07:50
Speaker
So it might be for them, you have complete freedom to do analysis and make a proposal as long as it fits into the best practice guidelines set by the head of, right?
00:08:01
Speaker
So the idea here is that analysts have an authority to make any proposal they want. The manager has the authority to accept or reject that. And the head of has the authority for the best practice.
00:08:15
Speaker
Okay. And the benefit of this would really be that you're not asking for consensus all the time.
Streamlining Decision-Making
00:08:24
Speaker
And you're also not, I'm going be careful how I say this, but subject to the whims of one person.
00:08:30
Speaker
Yeah, understand. So you could do some really excellent statistical analysis, but if the person who wants the proposal really wanted the number to come out as 20%, not your 15%,
00:08:40
Speaker
youre fifteen then you might end up changing it to 20, right? and so Yeah, I understand. So we tend to say that perhaps there's a bit of initial bias going on or or perhaps an a priori in someone's mind that they're expecting to see in the results.
00:08:55
Speaker
Yeah, i don't care that's a very, very nice way of putting it. But also you're not taking this number to a committee where everyone's looking at going, oh, I know you've submitted 15, but I really think it should be higher. I think this bit of the curve should be a bit more steep and...
00:09:12
Speaker
You know, long as the announcement is statistically sound and not harmful to the business, then this proposal will be accepted. So the idea is that you're not waiting on those consensus points all time.
00:09:24
Speaker
And sometimes those committees can take a lot of time, but also slow up proposals as well, particularly if there are a lot of changes that come through in the committee. say people have the authority to get stuff done.
00:09:38
Speaker
The only rule being that it has to be their authority And it can't cause any harm to the business. So if someone can show or can someone can object and say, that's going to cause harm because this group of customers or whatever, then it won't go through.
Skepticism About Practicality
00:09:56
Speaker
But they're the two rules, I guess. Okay. Seems really hypothetical to me if I'm brutal. It might be something quite difficult to actually make work on the ground. As someone who's managed people, it's quite hard to actually even communicate stuff that's going on to a fairly sizable group of people without then expecting them to have sort of consensus on these things as such a large group.
00:10:21
Speaker
Well, think the benefit with this, or what he's trying say, is that you don't need consensus. The idea is that it's whoever has the authority to approve it, they are the only person.
00:10:32
Speaker
kind of really matters. And the only way that other people can stop it going hard is if they can show there is harm to the business. So as long as it's neutral or better, then it is...
00:10:46
Speaker
It's quite hard for anyone to know all that's going on though. It's just a recipe for ah bit of a chaotic system to me. And I do agree with you. Sometimes committees and things do slow things down. Then on the flip side, we're working in sort of heavily regulated industries. We do need to take a deep breath sometimes actually make sure we're doing things properly.
00:11:08
Speaker
and not going to overstep kind of any lines and so on. And that can sometimes require the input of people that just know things that other people in the organization don't or have responsibilities that other people don't.
00:11:20
Speaker
One of things for me that's jumping out as well is that as a manager, I do you spend quite a lot of time on things that i I can understand do seem a bit bureaucratic, but, you know, giving people their...
00:11:34
Speaker
objectives for the year or doing their appraisals or just generally coaching them or even doing the admin stuff or dare I say some occasionally the HR things which can have a range of nice to not so nice about them where do those go he would be doing that The other is that those responsibilities still exist because obviously that work has to be done.
00:11:57
Speaker
But it doesn't necessarily have to sit with your line manager anymore. But also because your line manager isn't doing so much, passing things up and down the chain, maybe they would have time to do it.
00:12:11
Speaker
Yeah. And I think this, and it could be really beneficial, particularly for insurance pricing where you have technical and individuals. We talked about this last week. We've got technical individuals who haven't really had very much management training.
00:12:24
Speaker
Yep. And is it and therefore more ah efficient, effective, I don't know, to say, well, focus more on the technical stuff because that's your thing.
00:12:37
Speaker
And, you know, this the goal setting, for example, weaken we can move that responsibility.
Key Takeaways: Roles and Responsibilities
00:12:44
Speaker
They talk a lot about that. He does mention later in the book that you'd need to totally restructure how your HR team looks.
00:12:52
Speaker
Yeah, yeah. Because if you perceive that someone is in charge of your progression, you're always going to want to do things their way and defer to them. Okay.
00:13:03
Speaker
And so he does mention it. Yeah. I mean, he does mention it. An example where there's a committee and the secretary of committee say officially she has the authority to you schedule the meetings and cancel the meetings.
00:13:18
Speaker
But the CEO sends her on an email saying, I'm away next week. Let's cancel the meeting. Actually, it's not the CEO's authority to do that, according to this, those rules, the secretaries.
00:13:30
Speaker
Now, if the secretary wants to consider that request, she can, but also she's well within her right to just say, now we're going to do it anyway. and Yeah. side And he says that he saw this situation and what ended up happening was the secretary said in the next meeting, I would like...
00:13:50
Speaker
to propose that it happens anyway, that we never reschedule it, that it just happens with whoever's here. And he said what that actually showed was... That even though but they're playing within the rules of this game where there is technically no vertical structure, clearly that secretary felt that there was a vertical structure between her and the CEO, because otherwise she wouldn't have felt the needs to put that in writing if she felt confident in her own authority.
00:14:20
Speaker
and that there wasn't going to be some kind of negative repercussion for her progression or performance or whatever yeah and from the CEO, then then she wouldn't have had say that. So he does kind of flag that.
00:14:33
Speaker
It does feel to me like even though you say things are flat, naturally you will evolve structures of hierarchy around things. i'm I'm feeling a bit Lord of the Flies about it if I'm honest. I'm sure, yeah, most people will get the reference to the book where the boys are left alone on an island and end up building their own structures of leadership. um That's the best way I can put to it.
00:14:58
Speaker
My view is i'm I'm struggling to see how this would work in a regulated industry or in a particularly large organization where there's sort of thousands of staff. I think it could be very chaotic. So what do you, what would you say? Is this something you would recommend?
00:15:15
Speaker
Yeah, I would not recommend this book for insurance companies. He gives some really good manufacturing examples. And I think that for manufacturing physical products, he's got some really good to use cases.
00:15:29
Speaker
But I don't think this works in insurance companies. So save yourself the time for reading it. However, I do want to say, though, there are some things that I think you can implement from it. Even if you're not going to, you know, go full, like...
00:15:42
Speaker
Abolish. You know hierarchy. You know you're caring. So there are something. I'll run these down in a bit of detail so you don't feel you have to read the rest of the book. All right. So the first thing is defining roles and responsibilities in a really detailed way.
00:15:56
Speaker
And obviously this is the foundation of this. If there's an issue, it's usually down to unclear responsibilities. And I think lots of pricing teams have this. yeah a team of maybe seven to 10 people might have one mission statement.
00:16:12
Speaker
And, you know, that's fine, but they probably do a whole lot of other stuff. And I do think that if there's an issue, whether that's an error in deployment or or even just a relationship issue, it's usually down to unclear responsibilities.
Task Assignment in Holacracy
00:16:29
Speaker
So I would say really try and firstly to find a clear mission statement for even the smallest team, even if you've got just three people, give them a clear, this is what you do.
00:16:41
Speaker
Julia Lessing's podcast, when I went on her podcast, we did a really good session on that. I felt like she had really good questions for how to elicit a ah good mission statement.
00:16:52
Speaker
We'll put a link in the comments. Thank you. So yeah, keeping those up to date and and you're referring to them as well and just get really detailed, even to the extent of who tells governance that we're about to start doing this kind of project.
00:17:06
Speaker
Someone needs to tell them. And that is probably not something that you have currently, I would say, a mission statement in your job description. But if you don't tell them, that's going to cause an issue.
00:17:17
Speaker
So get detailed, get your post-it notes out and and really drill into it. Similarly, the book is very clear that you assign actions and responsibilities to roles, not people.
00:17:32
Speaker
So if you want... Yeah, I can get with that. I understand. You know, if you want something doing, ask a busy person. but Yeah. But probably it's that busy person can end up with a whole load of stuff that doesn't really make sense for their role.
00:17:47
Speaker
Maybe it made sense for their role two years ago. Or maybe... It didn't even make sense there. But it can distract from their main objectives and can cause some of these issues later on, you know, maybe if they leave or even if someone new comes and say, why is that person doing it? Why why aren't I doing it? You know?
00:18:05
Speaker
So, for example, if we're talking about a pricing deployment and we say, who should be responsible for scheduling and running the post-deployment retro? Maybe the answer in your organization currently is Sarah is really good at running retros. We'd ask her. and Yeah.
00:18:25
Speaker
Yeah. Well, maybe she is. But actually, if if Sarah is technical pricing manager, is it really her remit? Is that really job that you would assign to a technical pricing manager?
00:18:39
Speaker
So if you use the role name, so if you say who should run the post-deployment retro, The technical pricing manager, but does it fit? but You know, maybe not.
00:18:50
Speaker
say So using the roles, not the names, can highlight those discrepancies, which I thought that was a really good tip, actually, but trying to work out who should do this task. Yeah, I do quite like that, actually. There is a habit to give things to people that they want or they're good at, definitely. i think a good way to set up a pricing team is to have the chain where you've got risk pricing and market pricing and deployment. But that can become tricky with some of the actual jobs and responsibilities. If you do have an error in the risk layer, then was it a deployment problem or was it actually because of the risk pricing and so on? So I can understand
Pros of Hierarchical Structures
00:19:27
Speaker
how it is better to talk about kind of roles and responsibilities for the actual work right and tasks rather than just dividing things up to who fits doing the work, which I think is probably what people do more more and more.
00:19:42
Speaker
I think it works as well because insurance pricing, there's so much churn. Yeah, true. Some companies cycle through analysts every two years. That's one of the things that was coming up to me is that difficulty with this holacracy method though is that people come and go and I can imagine it's quite a nightmare to keep a record of who's responsible for what in that situation where it's not hierarchical.
00:20:09
Speaker
i mean the thing about hierarchy is that you've ultimately got a single person responsible for pricing and below them you've got people responsible for parts of pricing so it makes it easier to know who to go to at least just to start the ball rolling on where some a task fit in that kind of cascade downwards Yeah, so
How Circles Function in Holacracy
00:20:28
Speaker
you'd still have that. So the idea is that you can have circles within circles, within circles, right? So it it' some kind but so in to some extent, you still have that.
00:20:36
Speaker
You might have a technical pricing circle, for example, and that has seven dots in it. Each one is a person. And that might sit in a wider circle of the overall pricing team.
00:20:49
Speaker
But there are places where that circle needs to... So interface, which is a very weird term, but you know, yeah and sometimes that circle will need to talk to another circle. And the idea is, is that it's one person's responsibility to be the barrier of the circle, almost the gatekeeper of what comes in, what goes out.
00:21:12
Speaker
And so it protects the people. Inside the circle, they can still focus on it. But I mean, that's kind of what managers, I think good managers do, you right? Good managers act as an umbrella for their team and an amplifier for their team. If you do good things, you want your manager to shout about it.
00:21:28
Speaker
If there's stuff coming in, you're under heavy flack for whatever reason, you want your manager to act like an umbrella. And so this this barrier kind of does a similar thing that. So it's not abolishing...
00:21:40
Speaker
Oh, who should I go to? You know, anything's up for grabs. It's, it's really about what are the specific authorities that individuals have.
Strategy and Decision-Making
00:21:50
Speaker
yeah think I mean, I still don't think it works for insurance pricing.
00:21:53
Speaker
Great. No, I see those, those kind of barrier or connection points as probably being where a lot of the power is going to end up residing, although it isn't necessarily said to be in that position.
00:22:05
Speaker
And that, for me, that's kind of a negative of the whole system because I can see starting off and saying, yeah, this great because we're getting rid of all of these layers and that's going to make things much more efficient because, you know, sometimes senior management getting time with them can be a blocker to getting things done.
00:22:22
Speaker
But it feels to me like the blocker is going to become passing messages to someone so that they can talk to another team. I have worked in multiple other countries and there's a particular one which is very hierarchical, but in a very particular way. So if you want to talk to someone who works in a different department, you aren't really meant to go and talk to them.
00:22:44
Speaker
What you're meant to do is tell your manager up the line, and then they will tell somebody who's in the same hierarchy as that person at roughly the same level, and then they will take the message downwards.
00:22:57
Speaker
And the funny thing is... that this feels similar to that to me except we're doing lines instead of pyramids yeah or circles it's kind of circles rather than triangles to me it's like i'm still going to be passing messages to somebody to interface to someone else to have it come back round and it feels like that's going to be a blockage progress Yeah, I mean, on the one hand, yes.
00:23:24
Speaker
On the other hand, I think the idea is that you're going to be passing messages a lot less because if you imagine a normal pyramid type structure and maybe the head of pricing has a team of 50 people, any of those 25 analysts could make a proposal and that needs to go to the head of pricing for their review.
00:23:43
Speaker
So the head of pricing could be inundated with these proposals all the time. Yeah, that's true. So you're passing, so the managers then are passing things up and down and, you know.
00:23:55
Speaker
And the idea with this is that you're passing less around because you work within your own authority. I don't think it does work for insurance, I'm going to honest. But I think that assigning responsibilities to roles in particular, I do think there's a really good point about roles and responsibilities that I don't think insurers do.
00:24:14
Speaker
that well,
Caution and Alternative Focus
00:24:15
Speaker
partly because the pricing system is so complicated and interconnected. Roles responsibilities, big theme in this book. I think the other thing that people could learn from this book is how to define this strategy better.
00:24:29
Speaker
So one thing that really comes out of this is that if you want people to have authority to make good decisions, they need to know where they're trying to get to. They need to kind of backtrack of what is a good decision. so one thing they say is define your strategy.
00:24:45
Speaker
And to find it really clearly, and I think most companies will say, yeah, I've got a really good strategy. to find it really clearly. that The strategy is simplification. Yeah, okay. Yeah. Okay.
00:24:56
Speaker
Cool. So if it's centrifugation, then would be good if we start removing products, if we consolidate products. Oh, no, i' I don't want you to do that. well ah you And so it becomes kind of ah a difficult thing. And and I've been in teams before where they've said, it's going to be one of our values this year to Focus on documentation.
00:25:20
Speaker
We want really good documentation. And so you get to a point and you think, oh, I need to do two weeks worth of really good documentation on this, hand over. Oh, you don't have time for that. We've got to move you on to the next thing.
00:25:33
Speaker
And then you think, well, hang on. That's the stress. Is that? No, it's not. It gets really confusing, right? In the book, they say, define a strategy in terms of X ahead of Y. Where Y is a good thing.
00:25:47
Speaker
Okay? So they both got to be good things in themselves. So if for example, you could say documentation ahead of getting new analysis out.
00:25:59
Speaker
If ever an analyst is thinking, I'm at the NMI project, should I spend the two weeks properly documenting or should I move on to the next quick win? They're going already have ah way to orientate themselves.
00:26:10
Speaker
In the book, he uses the example of creating scalable processes ahead of launching new products. So this is like a manufacturing example, obviously.
00:26:21
Speaker
I think that works really well because then instead of someone just, they get a customer query and they just... whip off a quick response and it's done. But then two days later, they get another similar question. In the book, he was saying it's better t spend the time to create a template for that response.
00:26:41
Speaker
Yeah. I think the reason this works is because you can't possibly foresee all of the possible decisions and scenarios you'll face. But if you know that your general principle is X ahead of Y, and you can have multiple of these statements, that people are much better placed to make their own decisions instead of passing these decisions up the chain and back.
00:27:07
Speaker
Yeah,
Next Episode Preview
00:27:08
Speaker
I i think and now you've explained more, I think I do understand it better. So there are some valuable points in this book for insurers, but honestly, ah i wouldn't recommend people in insurers pricing read it.
00:27:19
Speaker
Save yourself time. Maybe have a think about roles and responsibilities and strategy in your team. All right. Next time we have a book that I know you'll recommend, Katrin, because you'd already recommended it to me. So it's Pathfinders by Will Erdale. I am so excited about the next one.
00:27:38
Speaker
It's not directly insurance related, but i think there are some absolutely amazing lessons in it. And I think it's a great book as well. It is a really fantastic book. Yeah, it really is. I'm really looking forward to next time. So thank you ever so much for joining us and we will see you then.
00:27:59
Speaker
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