ARCA Believes in Reimagining Everyday Transactions

Ignite, Science of Story December 8, 2016

ARCA Believes in Reimagining Everyday Transactions

Andy Swindler
Conscious businesses prosper through purpose-driven people-first practices, but many still struggle to tell their courageous stories. I help connect the dots.

Mort O’Sullivan was just 26 and working on his Master’s degree in brewing and distilling when the opportunity to create ARCA changed the direction of his life. In 1998 he made the bold move that would one day revolutionize the cash handling business. In less than a decade, ARCA was well on its way to becoming one of the strongest financial and retail automation companies in the world, reaching customers in more than 50 countries. ARCA makes hardware and software products designed to help other businesses handle payments more securely and efficiently.

GroceryARCA believes in reimagining everyday transactions – freeing people to focus on what matters most, which is their Why. If you’re wondering how ARCA affects your life, think of them the next time you move efficiently through your local grocery store self-checkout line. And if you think a successful company that was founded in a small Upper West side apartment by a budding brewmaster might have lost some of its unconventional style along the way, read what they posted on their website: “At ARCA we are dedicated to the science of making doohickeys and whatchamacallits work, so you don’t have to.”

Now that’s a comforting thought.

ARCA has long been known for its innovative technology, so in another bold and forward-looking move, O’Sullivan began exploring how to innovate the company’s management structure to improve efficiencies and prepare the culture for rapid growth. As Kevin Joyce explained it, “Mort is a generally reflective person who has a sense of the company he wanted to build. In the beginning, ARCA began as a founder-driven organization. But over time, O’Sullivan developed a general sense of what he thought would be the best way to run the company. He learned about Holacracy a couple of years before he decided the time was right and proposed it to us.” In 2014 a Holacracy team conducted a 2-day workshop to give them a taste of what it would be like. The consensus was that Holacracy was a good fit.

The two main things ARCA liked best about Holacracy are its clarity and its ability to distribute authority. Clarity gave them a set of rules that were accepted by everyone and it provided a structure that was easy to see and change. Distributed authority helped them retain and engage employees and extended decision-making throughout their organization. It also fit with O’Sullivan’s sense of what he thought would be the best way to run the company so they could be more responsive to customers’ needs.

WorkJoyce was asked to fill a role called Holacracy Lead so he was involved in the process of integrating Holacracy from the beginning. He recalls it was a challenging time. When ARCA first introduced Holacracy in July 2014, they had about 150 workers, but they foresaw rapid growth and, indeed, with the merger of companies in Northern Italy, they grew to 600 people almost overnight. The acquisitions were a success, but since they had just introduced Holacracy a few months earlier, it wasn’t an easy time for them and everyone had a lot to learn. To complicate matters ARCA was the first company to introduce Holacracy to Italy, so there were no consultants who understood the radical new framework and also spoke Italian. However, once the Italians had integrated the system, ARCA was able to get an extremely clear idea of what each person did. In a traditional organizational hierarchy, that would have been harder to do.

According to Brian Robertson of HolacracyOne, it generally takes about 6 months to integrate Holacracy into a company’s organization and during that time there are 3 main things people need to learn:

  1. The first is the language and the fundamental process of Holacracy. People have to learn what it means to have accountability or roles and what rhythms to use if they need to change. It takes repetition and practice and some people take longer than others to learn it, but eventually everybody does.
  2. The second thing people have to learn is how to use the software tools. Again, it takes time and effort, but people pick it up and do it.
  3. The third and hardest part of integrating Holacracy involves making a mental shift to make these things happen. Robertson explains it this way, “We try to teach people to recognize how broad their authority is, but it’s hard for them to realize how much authority they have and how much the rules allow them to do. People have more authority than they think and it’s interesting how hard it is for them to recognize that and act.”

Work HarderARCA can grant more authority to their people because they’ve made the boundaries of authority clear. Holacracy is a project-based system in which authority is not vested in any one person. Roles are organized in circles that are purpose-driven. Each circle consists of multiple roles assembled to solve a particular problem or assess an opportunity. One role in the circle is called ‘lead link,’ but that person has no authority over the rest of the team members. The lead link guides the circle in the right direction toward the purpose and gives the role holders feedback to try to help them enhance their fit for their role.

Holacracy is based on 3 structures: Extent structure, formal structure and requisite structure.

  1. Extent structures are the things that happen everyday.
  2. Formal structure is what the organizational chart says.
  3. The requisite structure, within their current goals and limitations, is the best way to achieve their purpose.

None of these structures is rigid. In fact, the key to Holacracy is that these structures are constantly evolving and interacting with each other. Multiple people constantly update the formal structure to keep it as close as possible to the extent structure. Through this, they are always getting closer to the requisite structure. Holacracy’s emphasis on clarity and using this process must be sufficiently consistent so that it really stands out when someone isn’t fulfilling the responsibility of their role. The idea is to change things that are out of sync so the organization will always be getting better.

Joyce admits that early on there was some resistance to Holacracy. ARCA was performing very well at that time and some people were intimidated by the change or felt it was unnecessary. Not surprisingly, it upset some people’s ideas of status and power. But one of ARCA core values is that they embrace change and that change is a big part of why they are a successful company. So, in the end, most people realized they needed to be willing to change and got on board with Holacracy.

wbxdgs_d17u-ilya-pavlovOnce the initial training was completed, ARCA used a variety of ways to support its people on an ongoing basis. A lot of coaching and teaching depended on the situation. So, for example, if some people need a refresher on the fundamental roles of team members in a circle, one of ARCA’s 13 Holacracy coaches might use video calls and written materials to strengthen the circle’s understanding of their roles. In addition, each circle elects a facilitator. This person cannot be their lead leader and is responsible for auditing their team’s progress and recording their meetings.

In general, ARCA measures their success in traditional ways. They use financial as well as employee metrics like engagement and retention to see whether they are performing as they want to perform. It’s hard for them to separate success or failure of the business from Holacracy since it’s fundamental to the company. At the moment they are collecting data and hoping to see some trends. If their hypotheses are correct, they’ll be able to see that they are heading in the right direction.

It’s still early and there isn’t much data, but there is some anecdotal evidence that points to how Holacracy helps people emerge and become more vocal and influential in the organization than they might have been in one more traditionally structured. Joyce has seen how Holacracy sets people up to be successful by exploring their ideas and finding ways to open up. As he explained, “you don’t have to say much if you’re shy or quiet or unprepared, but you have to say something at every meeting.”

ARCA also hopes to get benchmarks from other Holacracy companies. Since the community is small and supportive, folks who are doing this are interested in helping other companies to be successful. Another commonality is that these leaders have a long view and are willing to wait to see people become engaged with Holacracy over time. As leaders of farsighted and innovative companies, their eventual pay off will be fulfilling each person’s potential and each individual person’s own development.

And so, this onetime brewmaster has turned his attention from fermenting yeast to fermenting ideas. Starting with Holacracy’s original recipe, the people at ARCA are carefully adding ingredients and keeping an eye on the temperature and pressure, to brew up their unique brand of Holacracy. And they’re happy to share with anyone who wants a taste.