Precision Nutrition’s journey to Holacracy and the impact it had on their company

Brian: What was it like to adopt Holacracy in your business?

Phil: Holacracy has been transformative for me personally and for the company as a whole.

“Probably the best decision I ever made was to step back and seek some help rather than trying to do everything heroically and always be the decider, the leader, and the center of attention.”

Brian: What led you to adopt it?

Phil: About a year and a half ago, we were growing fast, which I’m sure you’re familiar with. It’s a mixed blessing. The company is working, it’s growing and getting big, and we’re doing what we set out to do. And then also, I’m at capacity.

I came to the conclusion that the way I had done things before, which had taken me up to that point, probably wasn’t going to take me any further. In practical terms, I was personally trying to do every new task for our entire company. For example, we didn’t have employment contracts. We realized we had personal data that people had access to, and that we probably needed to put some structure in place.

Of course I was the one who had to do it! I was going to need to find the legal help, and I knew we’d go back and forth, and it would turn into a two-month project. You know how it is — about a dozen of those things will come up in a week that the organization needs to do. Who’s going to do it?

Brian: It all falls to you; I’ve been there. It’s rough.

Phil: It’s probably the same for every person who comes into a small growing company in the early stages. There’s this entrepreneurial spirit; you just do what needs to be done. It’s all well and good until it isn’t, and it just stops working at a certain point.

The dilemma was: how do we maintain the spirit of this entrepreneurial company that set out to do things differently than all the companies in our field, and in some ways, all other companies in general. How do you do that?

Brian: Yes. What was it that stopped you from just taking the conventional approach? Why not hire managers and put a typical hierarchy in place? Why were you looking for something different?

Phil: I think it was a sense that this company is my life’s work. I guess that all work is someone’s life work, and so, how are we going to treat it? I already knew, having worked for some large successful companies that that wasn’t very prized in those places.

I guess I had some fundamental distaste for commodity or transaction work, “Here’s your paycheck. You do what you’re supposed to do.” That’s the transaction: “Here’s the money, here’s the work,” and that’s as far as it goes. It sounds great in principle as sort of a theoretical concept: you get paid and you do something. In practice, it just doesn’t work that way. It’s sort of disheartening on a really fundamental level, and I felt that personally. I knew I could never work in an organization in which that was the deal. I knew that our other co-founder, John, could never do it. Everyone on the team had that same aspiration for something else.

We had that “something else” in the early stage: I get to do what I love, I get to have some say in shaping the work, and I’m adequately paid. I can do great work. My work is respected. How do we grow while still making this a place where each of us can do our life’s work, not a place where each of us can get a paycheck to finance a meaningful life outside of work that you have to check at the door when you come in? That’s what I was looking for and that’s what I think we actually found.

In the adoption of Holacracy, John and I looked at each other and said, “Okay, here’s the possibility to do that on a larger scale than we’ve done before.” If we wanted to just artificially constrain the company to be small, which other companies have done — for example, “We’re only going to have six people” or “We’ll grow only to this point” or “We’ll focus only on this small thing” — we wouldn’t have to deal with the dilemma of maintaining the spirit of the organization in the midst of growth. But we thought that would feel like a missed opportunity.

What if we could maintain the spirit of the organization along with the growth? We felt that Holacracy was the framework in which to do that.

We knew it was still going to be hard, and that we’d have to get up every day and recommit to this and make sure that we didn’t just make a BS attempt at it.

Brian: Yes, I get it. If you haven’t really committed to Holacracy, if you’re just kind of playing with it, it doesn’t have the impact.

Phil: Yes. I feel like what we’ve gotten out of implementing Holacracy is that opportunity, and it’s done a lot of amazing things, but I think that’s the main one: how do you maintain the spirit of an organization, the DNA of the organization, in the midst of growth and forces that work to formalize it, and in formalizing of it, threaten to stamp it out? You’ve got new customers, new growth, and new markets expanding, and new people wanting to work with you. How do you maintain the spirit with those positive forces knowing that they also can carry a negative side?

Brian: What are the results as you’ve stuck with it and maintained the discipline of Holacracy? If there’s one company that should be able to maintain discipline, it seems like it’s Precision Nutrition, given what you do. That must take more discipline than Holacracy!

Phil: It’s tough and it’s rewarding. I think that’s the valuable part of it — everything you do in work is going to be challenging, and the question is, what’s the payoff? It’s allowed us to grow. When we first started toying with the idea of adopting Holacracy, we were 25 people and millions of dollars in sales. We’ve grown, in both people and revenue, somewhere between 25% and 50% every year since our inception. Then something just felt like it wasn’t going to work anymore, like there were things duct-taped together. The burden was too high for me, and for our other co-founders, and for all the people who were in the organization at that time.

Holacracy has propagated leadership throughout the organization, not in the managerial sense, like you’re the manager so now you technically lead a group of people. It’s given people a say in the governance and tactical meetings, and just in general knowing who does what and having a framework for resolving tensions.

It gives people a chance to shape the work they do, which I think is the fundamental thing that’s missing in the old hierarchical style of working, where it’s just simply impossible to shape the work that you’re doing without doing an end-run around the structure entirely. You see that organizations that do it well have a hierarchical structure and then a skunkworks break off. The old ways are not going to allow us to innovate or shape the work we need to do.

Holacracy has allowed us to make the whole company kind of a skunkworks. Here’s how we can rapidly adapt based on what people are actually seeing and doing on the frontline.

For example, if people feel like the sort of reporting process that we have to do kind of sucks and is slowing them down, they can just propose a change. This opportunity happens once a month in governance meetings, and more frequently than that if necessary. There are many pathways to resolve tensions. That’s so woven into the fabric of our company now that I think the whole organization is agile. The whole organization in its DNA is now built to adapt. That’s the biggest payoff, because that gives me some sense of confidence about going forward for the next three to five years. We can grow this thing while maintaining the spirit of the organization, and not throwing that out the window.

How do you manage the tension between keeping this core of what made the organization special in place, while at the same time adapting to the ever-changing reality of the world outside the organization? I think Holacracy is the framework to do that.

In practical terms, we’ve grown at least at the same pace we were growing before, with one fundamental difference: I now feel like the organization can keep going without requiring so much from me! Since we started the organization in 2000, I’ve never been able to take a real vacation. Last September, I took three weeks off in the middle of probably the most profitable product launch in the history of our organization. I don’t know what that says about my personal contribution, but I think what it does say is that the organization has grown to the point where it is its own thing. It is something that can grow and shape itself. The early adopters of the organization, the people that were there in the early stages, can make valuable contributions to it but they’re no longer the essential game-breaking components upon which the whole thing rests. I think that’s been a huge change.

Brian: That’s awesome. What was the biggest challenge for you personally in the adoption process? Where did you find yourself having to change habits or patterns? Where was it challenging?

Phil: I think the most challenging part of adopting Holacracy for me personally was simply learning to let go. I know that’s become a cliché, “Let go, let go”, but in practice, where the rubber meets the road, is when you have something you’ve always done that is part of who you are, and not just part of the job you do, and you step back and let someone else do it in their own way, possibly forever more — whether it’s a particular role you served in the organization, or part of a role with an area of focus. You just simply say, “You know what, this is for someone else to do.” Just letting go of entire chunks of the organization and allowing other extremely capable people to take that on is the hardest thing to do. It sounds trivial because it’s something that I think you’d imagine every organization has to face as it grows. But in some organizations, they really don’t face it.

There’s a sense that only the people at the very top have the final word on everything. That’s very different in Holacracy. There really isn’t a top. There are different perspectives, and they’re not necessarily hierarchical.

I can’t say “I’m a founder of the organization, so no matter what part of the organization we’re talking about, I’m the final word on it. I get to decide.” That’s not the way it works. That is a fundamental difference in Holacracy. This is an opportunity for people in every area of the organization to have not just lip-service authority, but genuine authority. That took a commitment from me. I think the hardest thing to do is make this mental shift. Other people are going to have genuine authority. They will be the authority, not me, on X, Y or Z. I will be subservient to them in these various functions.

Those are things that don’t come easily, and I think what Holacracy did is enforce or sort of make it really obvious when I wasn’t doing that. There’s always a way to try to do an end run around it, but what Holacracy does is shine a light on it when you’re doing it.

Holacracy forces people to yield to the authority of others, and the payoff of doing that is the opportunity to have real authority over your own work in the places where you can be the most valuable to the organization and make the biggest difference.

Brian: Hearing you talk, I could be talking about my own experience with it too. There’s something about founding an organization; it’s such a creative act, and there are forces that just crush it. If something is able to protect it and help you differentiate from it so that it stands on its own, so that not even you can kill what you’ve created, and the specialness of it, there’s something kind of cool about that.

Phil: In the midst of this whole startup culture, that’s what no one tells the entrepreneur. You can actually kill your own specialness, and you probably will, unless you go out and solicit some advice from people who have done this before. I think that’s what you’re onto here, by giving people a framework in which to do this. It gives you, as the custodian of that specialness, enough to keep it. You’re not going to delegate that part of the organization. As the founder, that’s my primary role and task: “How do I keep that?” Someone else is going to help you with the rest; someone else has to develop that authority, and Holacracy is what can foster that. In the last year and a half, we’ve seen so many people take on real leadership roles in the organization. That was never the case before.

When it comes down to it for me personally, I’d say Holacracy is a life-changing thing. I don’t think that’s overstating it. I came to your one-day workshop in New York on the recommendation of someone whose opinion I trusted. I left thinking that we need to seriously look at this, because this is a fundamental problem, the idea of how can we function in the modern world. The old ways aren’t going to work anymore. Everyone knows it, just like you know in your heart of hearts; the world can’t go backwards. We can kid ourselves and pretend, but in practice, you know when you come in to work on Monday morning at 9:00 that you’re doing something that just doesn’t feel appropriate anymore. There’s something amiss. I came out of your workshop thinking that you people have thought about these matters a lot more than I have. I felt Holacracy was something worth experimenting with, and I’m glad we did.

I’m very grateful to you guys for what you’ve done, because it has made a big difference not just for me personally but for the organization and for the people within the organization. I think they get it. First, it was like, “What is this?” “What the hell are they talking about and what am I going to do now?” Then later, they realized, “Oh, okay. I can’t claim that I don’t have a say in this thing because I obviously do.”