Holacracy – Large corporations reorganizing to eliminate bureaucracy

Karl McFaul Human Capital Leave a Comment

Holacracy is a social technology or system of organizational governance in which authority and decision-making are distributed throughout a fractal holarchy of self-organizing teams rather than being vested at the top of a hierarchy. Holacracy has been adopted in for-profit and non-profit organizations in the U.S., France, Germany, New Zealand, Australia, and the UK. [Wikipedia]

A famous example is Zappos, an online shoe and clothing shop acquired by Amazon in 2009 in an all-stock deal worth about $1.2 billion. Since its founding in 1999, it has become one of the world’s largest online shoe stores and was ranked 31 in Fortune’s annual Best Companies to Work For in 2013. [Fortune]

With almost 4,000 employees Zappos have moved away from traditional corporate hierarchy across its entire workforce. The company is reorganizing around “Holacratic” principles, which eliminate job titles and managers. In the place of a typical structure, employees will be placed into self-governing “circles”. The company today have more than 400 circles, and a more egalitarian structure. This is a far cry from parent company Amazon’s heavily regimented and closed corporate culture, which has caused its fair share of internal friction as well. According to the report, CEO Tony Hsieh wants to implement the system so that it’s possible to continue to scale the company without letting bureaucracy take hold. [Blair Hanley Frank, GeekWire]

“The Holacracy system was incubated at Ternary Software, an Exton, PA, company that was noted for experimenting with more democratic forms of organizational governance. Ternary founder Brian Robertson distilled the best practices into an organizational system that became known as holacracy in 2007. Robertson later developed the Holacracy Constitution in 2010, which lays out the core principles and practices of the system, and has supported companies in adopting it.

The term holacracy is derived from the term holarchy, coined by Arthur Koestler in his 1967 book “The Ghost in the Machine”. A holarchy is composed of holons (Greek: holon neuter form of holos “whole”) or units that are autonomous and self-reliant, but also dependent on the greater whole of which they are part. Thus a holarchy is a hierarchy of self-regulating holons that function both as autonomous wholes and as dependent parts.

In its emphasis on iterative governance, adaptive processes, and self-organization, holacracy draws inspiration from agile software development principles and the lean manufacturing process. Holacracy is highly compatible with stakeholder theory as its board structure allows for multiple stakeholders to be represented in the governance of an organization and for multiple organizations with shared interests to be linked at the governance level.

Essential principles:

Energizing roles – The building blocks of holacracy’s organizational structure are roles. Holacracy distinguishes between roles and the people who “energize” them in order to express certain capacities or potentials, perform certain functions, and/or pursue certain results on behalf of the organization. A role is not a job description, as one individual can hold multiple roles at any given time.

Circle structure – Holacracy structures the various roles in an organization in a system of self-organizing circles. Each circle has the authority to create, execute, and measure its own processes in achieving its aims. Circles conduct their own governance meetings, elect members to fill roles, and take responsibility for carrying out work within their domain of authority. Circles are connected by roles known as links, which sit in multiple circles and ensure alignment with the broader organization’s mission and strategy.

Governance process – Each circle uses a defined governance process to create its own roles and policies. Holacracy specifies a structured process known as integrative decision making for proposing changes in governance and amending or objecting to proposals. This is not a consensus-based system but one that integrates relevant input from all parties.

Operational process – Holacracy specifies processes for aligning teams around operational needs, and requires that each member of a circle fulfill certain duties in order to work efficiently and effectively together.


Holacracy is claimed to increase agility, efficiency, transparency, innovation and accountability within an organization. The approach encourages individual team members to take initiative and gives them a process in which their concerns or ideas can be addressed. The system of distributed authority reduces the burden on leaders to make every decision.” [Wikipedia]



Fractal Organisation

Fractal Organisation



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