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holacracy

Contributor(s): Ivy Wigmore

A holacracy is a governance structure characterized by a distribution of power among self-organizing groups, rather than the top-down authority in the typical hierarchical corporate culture model.

A holacracy provides a flat management structure that distributes authority. The goal of a holacracy is to ensure that those responsible for completing work are given the authority to decide how that work should be carried out. According to proponents, holacracies lead to greater efficiency, agility, transparency, accountability, employee engagement and innovation. Critics argue, however, that the model doesn't allow for sufficient lateral communication. To be effective, the roles, responibilities and expectations for group members in a holacracy are clearly defined, but flexible. Connecting roles, sometimes called link roles, sit in multiple groups and ensure that those groups are operating in congruence with the organization's overall mission and objectives.

The word holacracy comes from "holon," a term Arthur Koestler coined in his 1967 book "The Ghost in the Machine." A holon is an autonomous unit that is nevertheless a dependent/interdependent part of a larger whole. The suffix -cracy means "ruled by." Accordingly, a holacracy is an organization ruled by self-contained groups, just as a democracy (from the Greek "demos" for common people) is a system ruled by the people and a meritocracy is a system in which those individuals who demonstrate their worthiness have the power.

Organizations that have organized or reorganized as holacracies include Zappos, Amazon’s footwear retail subsidiary; Medium, a social content sharing site developed by Twitter founders Evan Williams and Biz Stone; and Conscious Capitalism, a non-profit organization created by Whole Foods CEO John Mackey.

How does a holacracy work?
Within the holacracy, individuals perform in one or more roles on behalf of the organization. Roles are part of self-organizing circles which may be overlapping, separate or contained inside other circles within the larger circle of the overall organization. Each individual in a role is the leader for that area of authority and the follower of those roles in circles he is involved in. Circles are self-governing; they assign roles and are accountable for their areas within the organization. Connecting roles known as links sit in multiple circles and ensure that those circles are operating in congruence with the organization's overall mission and objectives. 

Fig. 1: Circles in a holacracy

The name Holacracy is a registered trademark of HolacracyOne, which prohibits unauthorized entities from using the word for products or services. However, there are no restrictions on the holacratic model itself. The model is specified in the Holacracy Constitution, which is made available under a Creative Commons Attribution Non-Commercial No Derivatives 3.0 license.

Watch a brief introduction to the concept of holacracy:

This was last updated in May 2015

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I’ve seen a limited type of this in organizations that adopt an agile approach to software development in the sense that the self-rule was limited. Valve Software was one of the first companies I saw that actually tried to implement a holocratic environment in an attempt to create an environment where innovation flourishes. I think their employee handbook (http://www.valvesoftware.com/company/Valve_Handbook_LowRes.pdf) sums it up nicely by referring to it as a “fearless adventure in knowing what to do when no one’s there telling you what to do.”
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