It’s all about the work of the Organization
“So the Organization and the purpose are the most important. That’s where I started with Holacracy ten years ago. It was to upgrade organizations. Figure out how to make them self organizing, replace managerial hierarchy and to replace the fundamental structure of organizations’ work. I have been doing that for ten years now. But we’ve been seeing some loopholes. We left behind the people system and the legal system.
In the current world of work we’re being held personally, people can get trumped, we have employees that are slaves or servants to employers and we have labor laws. All kinds of authority out of our control. So what we want to do, as encode.org is doing, is to upgrade these two systems to get it more aligned with the Organization system.
Although in the model the three containers seem to be equally important, the Organization is the heart of this model. The legal structure and the people structure are supporting the Organizational structure. Also, for an Organization to express work, what does it need?
- Skill and talent (people resources)
- Assets (capital resources)
While they are secondary in one regard but also necessary because without them the Organization can’t pursue its purpose.”
“Just like for the Organization we have a ruleset for the people structure. A ruleset upon which we’re going to interact with each other as a collection of Purpose Agents.
It contains some core behavior norms and some Association specific norms. And it contains a tension processing agreement. You can see the Association Agreement as the rules of the road for the people.
Another Agreement here is the founding member agreement. This one is necessary if the organization starts from scratch. It’s an alternative pathway for founders to come together, dealing with the problems right from the start with owners, founders, ego, legal structures and ownership. It’s used to structure the launch of the for-purpose organization and deal with startup issues.”
“In order to be interconnected, everybody has to play by the same set of rules. So that no matter where you show up in the world working with whatever legal entity, you can pursue purpose.
There may be different legal underpinnings, for Dutch law for example, but the same capital structures, membership units, and the same basic principal agreements apply.
It’s what we call the Dynamic Capital Structure. It’s suitable for all For-Purpose Enterprises. The capital structure is defined by membership units, or classes of stock if you will. In a For-Purpose Enterprise, we have classified 4 units:
- Long-term capital interest (C)
- Profit interest (P)
- Deferred Interest (D)
- Dynamic Allocation Interests (A)
This allows for dynamic equity. The units are found in the Property Agreement and they’re used to manage the capital needs of the Company. Every For-Purpose Enterprise has these four units defined. So we’re creating a global business language for legal structure.”