Sociocracy at Squads… Lessons Learned

In this article I'll try to shed some light on why Squads is governed differently from classical command and control organisation. By this I mean an amber to orange organisation in the sense of Reinventing Organisations (as opposed to the more evolved Teal organisations).

My engagement in this process is influenced profoundly by my personal background, and so I need to do a bit of a personal intro. Skip to 'How it works' if you feel hit by TMI along the way.

I have a bit of an authority problem since my childhood. But I'm also quite insecure about interacting with others. This means I thrive in situations where there is little to no direction, plenty of servant leadership, and interesting problems to solve. Most organisations score badly on those points. I found these things out about myself and organisations by failing miserably in several contexts in the first stages of my career. After more than a decade of trying to fit in, I started to notice that I wasn't the only weirdo that had trouble, and very carefully, I started to entertain the idea that it was not only me, but the culture that surrounded me could be broken. This led me on a rocky path, through many experiments, lots of rejections, and plenty of mishaps that in retrospect were entirely my own fault. I did learn a thing or two about collaboration, tribes, spirituality, culture. The things that make humans into humanity essentially. It was mostly a humbling experience, but I believe after going through it, I can share some useful advice to aspiring organisations and organisers.

The seeds

Just before I started my programming career I read the book eXtreme Programming explained (still relevant, brilliant work by Kent Beck e.a. btw). This set me on the path of Agile early on, and when I joined Accenture and got dropped into a death march project gone bad, I was very surprised that software development was very different from what I'd read. It was a royal mess of annoyances where nobody got to even 10% of their potential output. I was openly horrified, and mostly chastised for it. Don't get me wrong, I met some of the smartest people I know there, and they did have one of the best knowledge bases on good software dev processes I've ever seen, just that most of the projects were not run like that. I couldn't figure out why at the time, but it makes a lot of sense now. In short, it's not up to them, they're only a product of their shareholders and customers desires. Their ecosystem evolved them like this.

I've seen a lot of organisations large and small, but only very few of them do not have the affliction which I now address as 'command and control'. This is not because the organisations are flawed and should be fixed, but it is because humans want this culturally, and humanity has organised itself like that. The problem is much more fundamental and wide spread.

Still I was stubbornly trying to fix it, and the only way I know how to fix things is at small scale in tiny steps. Like refactoring a large rotten code base I was making small changes, without a fully crystallised plan, losing my way more often than making solid progres, learning along the way in tiny bits of insight, without an end in sight.

And like refactoring a large rotten code base, it finally dawned on me that I should plan on cleaning small bits of it without expecting a big visible result in the short term. This is basically going blind (without feedback) for a long time, and this is a very risky thing to do. But sometimes that is the only way out of a deep hole. And I firmly believe that humanity is in a deep hole, so I half-consciously took the risk about ten years ago.

My kids went to a sociocratic school at the time, and this got me in touch with the concept of sociocratic governance. At the same time I was focused on Agile methodologies and holacracy, giving sociocracy less attention than it deserved because I thought it was more of the same under a different brand. In retrospect, because sociocracy was used at school, I developed an unconscious prejudice that it was childish. A few years went by.

The germination of the seeds

In 2019 a friend of mine and myself cofounded voedselboskabouters.nl, initially a joke, that turned into a coop around agroforestry shortly afterwards. The last thing I needed was another project / company / community to play leader or boss over, so I decided I would do everything in my power to empower the community.

In a wild stroke of luck, two of our earliest community members, and cofounders of the coop where a game enthusiast with an MBA that turned to community gardening, (social) permaculture and agroforestry design AND a social media specialist with a master in social psychology and a master in sustainable development. With skills like that falling into the team we could nerd out on the topic of non-hierarchical governance like in a dream. And boy did we :)

Around that time I read Reinventing Organisations, and Entangled Life in parallel. It was a weirdly spiritual experience to imagine human organisations collaborating like natural ecosystems, instead of like armies under central command. Looking around and seeing how human systems of different complexity work, and fail to work, and how this relates to their centralized control, or the lack thereof, gave us a lot of ideas to play with, but the big question that kept challenging us (or me for certain) was how to translate these ideas into concrete actions or better yet: habitual behavior.

One of our team introduced Many Voices One Song, which almost reads like a recipe book for what we were trying to do. And she also introduced an expert in sociocracy to help us. This coincidentally turned out to be the former director of the sociocratic school my kids went to a few years back. I felt a bit clueless, but went along the ride.

From the book I found pointed me to https://sociocracy30.org/, which is currently my favorite candy store for organisational patterns. We took several of those, implemented them in voedselboskabouters.nl. At the same time I reconnected with Tiziano and we decided to start implementing these patterns at Squads as well. The main argument there was that having a single CEO is a risk, especially if that CEO is holding keys to the kingdom with little redundancy. We set out to empower the community to run Squads, without the need for a CEO (I'd still be doing the virtual dishes of course, so I would be out of a job just yet ;) ). Anyway, thanks for sticking around for this long intro. Let's get to the meat of the article, finally…

How it works

Inside Squads, anyone is equally important in principle. Together we own and maintain the community, our platform, and make our customers happy. There are different roles of course, but anyone is empowered to take up such a role, with consent.

The main authority in Squads, if there is such a thing, is the general circle, they are responsible for facilitating the process of creating the rules of a particular game called Squads. They're also responsible to make Squads run itself. It's tempting to think of the general circle as a replacement of a board of directors. To do this would not be in line with the intentions of sociocracy. I like to think of it instead like a main method in Java. No java program runs without a main method, however, it is bad practice and hopefully unusual, to put much business logic in the main method. A general circle is a way of bootstrapping the organisation, without taking centralised control of it. Of course a poor implementation of a general circle could take full control of a company. For example if you would call the general circle 'board of directors' and put a CEO, CTO and CFO in there, you'd be pretty much back to square one… obviously.

Since we're developers, we keep the rules under strict version control. In this way, you could see Squads sort of like a smart contract, governed by a DAO. Only we execute the rules manually and write them in text files, for now.

Anyone active in Squads can join the general circle, and have the privilege to govern Squads on an equal level to other members. What it means to be 'active' is clearly defined in the rules.

Decisions are made by consent, which means that after listening to all input, proposals are created and accepted after all material objections have been resolved.

Consent based decision making is fundamentally different from voting with veto rights, because it discourages using a veto for politics. It also makes the veto less powerful, because:

1. everybody has it, and

2. you can only use it with a properly argued objection.

I'm not going too deeply into the ways this system can be maliciously gamed, but I would emphasise that it is more sturdy than I initially expected. For example, if a circle would contain many members that overuse objections, the circle as a whole becomes less powerful, and another circle, or even individuals, can take over by using their own resources and mandates to make progress and become the de facto higher authority. In the most extreme case, nobody is stopping anyone from recreating Squads under a different brand and run it any way they see fit. (If you want to do that, please allow me to invest, I think it's a great idea :) )

We are seeing promising signs of circle members coming up with problem areas and influencing the path of solutions developed. This leads to the community members maintaining the community, which was the original vision and status of Squads. Still we also see plenty of challenges. In the next few paragraphs I'd like to look into that.

Challenge 1: old habits die hard

From an early age most of us are conditioned to be ideal workers. We learn to sit still, take orders, and follow predefined plans. "School is not a place for smart people" said Rick Sanches, and I do believe he was onto something.

Often people that are most hampered by organisational bureaucracy, implicitly or even explicitly ask for it anyway. And then they complain about it. The safe route I guess.

With great power comes great responsibility, and many people will gladly avoid responsibility by avoiding power. Simply by not running away from it fast enough, someone that is not necessarily scared of power can find themselves with full control over the bank account, domain, and all superadmin accounts. As long as they play nice, this is not a big problem, but people can lose their minds or worse, so we need to actively work to give real power to those that would otherwise stick to what they know.

Challenge 2: hidden power dynamics

Even if on paper power is adequately distributed, in practice there could be unhealthy power dynamics going on. For example, recently, someone admitted to me that the timing of their payments was making them feel uneasy. I'm pretty busy, and I don't care about money much, so I didn't even realise that simply by taking a break I could make someone feel like they were being pushed around. It's hard to know these things, and I'm sure I'm missing more of them than I see.

In very simple social structures, it already becomes quickly obvious that equality is not the default of human behavior. Humans will use all kinds of not necessarily very nice tricks to gain a small advantage. Power and control are useful tools to get your way.

Only if we actively work to notice and improve these hidden power dynamics can we hope to avoid the organisation being slowly poisoned by them.

Challenge 3: inefficiencies in decision making

I very much enjoyed the talk 'One hacker way' by Eric Meijer, which is a beautiful rant against SCRUM/Agile because its too much talk, too little action. It's from 2015, when Musk and Zuckerberg were still cool, so a dated on many points. The suggested alternative to Agile is the Hacker Way, which through some very smart ideas, and some handwaving magically fixes everything, I guess. He makes some great points, is very entertaining, but ultimately doesn't solve the problem. More on that later.

Inefficiencies in decision making demotivate and stall adoption. This is true for Agile, and also for Sociocracy. When we know the recipes, but don't understand the taste, we can cook up something that's hard to swallow. The hard problem is to adapt recipes to real world situations, and use them at exactly at the right time. While we're still learning the ropes, it can feel impossibly hard to do this. It is essential to both understand the problem that needs to be solved, AND the value of the solution in theory as we struggle towards it. Doing this without the invented solution becoming a religion (when we're no longer willing to admit we are on the wrong path), is even harder. While the going is tough, it is very hard to distinguish between valid objections and unfounded complaints. I don't have the answers for how to deal with that, but I do know we have a real problem to solve.

The problem with the state of software development, in particular the full-stack hackers, where this One Hacker talk was most popular, is that 85% of those fans are white men, that couldn't scale a development organisation if they tried. In order to scale even a little bit, we need to create a safe and inclusive environment to make decisions collaboratively. Or we end up with a hellscape of cubicles on a death march to enshittification. This is exactly what happened to all the big companies that Eric Meijers mentions in his talk. I decided long ago that that is not a place I would be in, and it is most definitely not going to be a place I helped build. That's a hill I'm prepared to die on.

And so Squads is becoming sociocratic, and it's an interesting ride so far.

As we work through these challenges, I'm getting more confident that this will work out in the end. And as we move forward, the utopian future that I would like to see Squads be a part of becomes more clear. Let's look at some things we still need to implement and why.

The future is bright

Squads was founded without very deep thought of the organisational changes we're doing right now. This means the shareholders of Squads have default power over the organisation through voting. The board has statutory power to act on behalf of the business. We need to ensure the sociocratic community cannot be overruled by a shareholder. Right now Dmytro and I, as directors, comply voluntarily with the directives of the general circle. This works, but it would be better that the organisation is steward owned. We're not very far off with our current structure.

Right now the biggest share holder is the Squads Member Fund, which has set limits on the voting weights of certificate holders (no certificate holder ever has more than 20% weight to their vote, regardless of their shares). Right now the fund has a majority share, and the founders have a majority of the certificates in the fund. If three fund members would buy themselves a 20% vote, they could act against the interests of Squads. This would be rather expensive, would make the existing members quite rich, and nothing would stop the community from rebooting under a different brand. I don't think anyone would be interested. Because of the unique rules of the fund, and the fact that it controls a majority share, it is impossible even for the biggest individual shareholder and majority certificate holder to overrule the fund members. The general circle members, are automatically also fund members, so they ultimately also control the majority of shares and could for example fire the directors. This makes the community really the highest power, and that's kind of cool I think.

I've written earlier about the need to decentralize everything. Decentralized decision making, which sociocracy supports quite well, makes organizations more stable and intelligent. This makes investing in this kind of organization logically more attractive in the long term.

I firmly believe that in a just world, consent is key. Under a command and control regime, people are confronted with decisions that they did not have an opportunity to consent to. This often vexes me when we collaborate with customers that have not adopted our ways. It could happen for example that the customer decides that they want one team member to change their working hours, another should show up in a particular meeting, and yet another is kicked off the team. All of this without asking the poor team members for their consent of course. This usually results in a lot energy and time invested to keep the team happy and productive, which imho should have been spent achieving business goals. That's why we decided to include organisational coaching into our offering, although I must confess that the organisations that need it most are usually the least likely to ask for it.

I see more and more groups and organisations that actively work towards decentralization of control, and increased respect for diversity and consent. This leads directly to empowering people to do what is best for them, and for the world around them. Often with impressive and unexpected results. I have hope that modern leaders will have more and more courage to avoid becoming dictators. Let me know if you want to do this, especially if you need some help with that!