1. Have You Heard of Holacracy?
Me Either.
Ariane Macdonald
November 23, 2016
Many companies are often organized using traditional, cross-functional, hybrid or matrix
structures. Factors such as size, product/service offerings, and even the company culture affect
the internal structure of the organization. Common structures used by organizations today have
proven easy to implement and successful in maintaining and controlling the entirety of an
organization. As changes occur throughout the business environment, even in the most
seemingly established part of an organization, its structure, an innovative practice is emerging.
What is Holacracy?
Holacracy brings structure and discipline to organizations aiming to solve problems that
traditional hierarchy or flat management structures create. Though the idea of Holacracy has
been around since 2007, there may be a need for it now due to the changing business
environment. Due to the emergence of a peer-to-peer workplace, Holacracy has been another
option in organizational structure and design. A peer-to-peer workplace refers to the revolution
started by large organizations such as Uber, Airbnb and Lending Club. These peer-to-peer
organizations use online platforms to create easy communication between the business and its
customer by cutting out the need for a middle party. In other words, these organizations follow a
decentralized model in which two individuals interact to buy or sell goods and services directly
with each other, without a third-party intervening. The usage of online enabling technologies has
immensely increased over the years requiring companies to be more adaptable and resilient to
meet consumer demand.
Holacracy is a complete, packaged system for self-managed teams. It is an
unconventional way to restructure organizations replacing the traditional management hierarchy.
Focusing on a superficial level, Holacracy is about authority and getting the job done through the
means of defining roles. In an Holacratic organization, employees are treated as individuals in
which not one person has the power to tell anyone else of their duties and responsibilities. There
is no need for a typical organizational that dictates specific responsibilities in the company. To
be effective, the roles, responsibilities and expectations for group members in a Holacracy are
clearly defined, but flexible.
This is when everything gets a little more fluid. Instead of job titles, people take
on flexible, constantly changing roles according to their knowledge, skills and abilities as well as
the business needs of the company. 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. Depending on the area of authority, each individual in a role is the leader and the
follower of those roles in circles they are involved in. These circles demand an immense amount

2. of self-governing since the roles that are assigned require individuals to be accountable for their
areas within the organization. Additionally, roles that connect, 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. Authority is distributed among all team members and meetings
are held to establish responsibilities and focus on the key issues at hand regarding the
development of the organization.
Advantages
If an organization implements Holacracy, it will see an increase in agility, efficiency,
transparency, innovation and accountability. Holacracy is highly adjustable and adaptable
business strategy allowing for quicker corrections of imbalanced workloads or responsibilities.
This unconventional organizational structure focuses on the people aspect of the organization, a
very employee-centric approach. For instance, individuals are encouraged to take the initiative in
addressing their concerns or problems. Holacracy provides everyone a chance to speak up
increasing the amount of ideas present in the organization allowing for more opportunity for
innovation. Removal of all job titles prevents the risk of clashes between employees and
managers which is caused by tensions and inefficiencies in a company. Since the Holacracy
system distributes authority, the burden of leaders to make decisions is decreased also translating
to a faster decision-making process. Additionally, Holacracy is perceived to stress a higher staff
commitment. The thought behind this idea is that engagement levels of the workforce will be
higher if all the employees are equally responsible and empowered. The higher commitment of
employees will translate to increased productivity and competitiveness. An added bonus is that
clarity to the purpose of work and who is responsible for the completion is determined.
Disadvantages
The Holacracy model raises concerns regarding its feasibility in implementation. A
challenge of Holacracy is if it can be implemented on a much larger scale. It also seems that only
specific type of organizations can use the Holacracy model successfully. Pre-conditions have to
be met by the organization in order to implement, maintain and sustain the Holacracy model. The
transition from hierarchic to Holacratic can also be difficult due to the disruption of the current
processes and habits of the entire organizations and its people. Additionally, organizations that
have already adopted Holacracy are fast-growing businesses which poses the question of how it
would react to a downturn of an organization or the economy. Due to this, the biggest challenge
that Holacracy faces is the sustainability of the model. The core of Holacracy is the human
element of choice. A large dependency of Holacracy is the individual people in the organization.
A potential problem that arises is when the incapacity of the teams to self-regulate becomes
evident. Employees will need to be independent thinkers. Basically, Holacracy faces the
possibility of someone not having the necessary discipline required to manage themselves. If
someone cannot be self-managed, it will invalidate the self-management effort at the core of the
Holacratic revolution.

3. Implications of Holacracy on Supply Chain Management
Behind the growth of Holacracy is an employee-centric model which promotes individual
growth. As mentioned earlier, a discerning problem that Holacracy faces is the implementation
of the model in larger organizations. To date, Zappos, an online shoe and clothing shop owned
by Amazon.com is the largest organization to implement Holacracy. Prior to the transition,
Zappos CEO Tony Hsieh offered severance packages to all employees who choose not to adopt
the self-management approach. Eighteen percent accepted the offer, six percent of those
individuals citing it was due to the implementation of Holacracy. Success or failure of Holacracy
at Zappos still remains to be seen.
Holacracy cites many benefits in increasing the effectiveness of the organization; it seems
that it shares many similarities with the agile and lean supply chain management approach. For
instance, Holacracy breaks work into sprints just like agile development. Agile projects use
sprints in order to serve as a time frame in which clients’ needs are developed and transformed
into working products. This effectively identifies and reduces errors throughout the development
process, preventing over planning upfront. Additionally, the structure of Holacracy frees teams
allowing them to move swiftly from discussion and planning to actually testing decisions in
reality and learning from the results. The shift from command and control organizational systems
to self-organization creates greater transparency and a more effective and empowered labor
force. While agile methodology has been fundamental to software development, Holacracy
offers an approach for achieving agility in throughout an organization.
Ultimately, Holacracy is an example of a system that uses peer-to-peer self-organization
and distributed control in lieu of more traditional approaches to achieving order. Is Holacracy the
next coming of agile supply chain management or is it just a fad disguised by a fancy term?

4. Works Cited
Apello, Jurgen. "Holacracy Is Fundamentally Broken." Forbes. Forbes Magazine, 16 July 2016.
Web. 23 Nov. 2016.
Berstein, Ethan, John Bunch, Niko Canner, and Michael Lee. "Beyond the Holacracy Hype."
Harvard Business Review. N.p., 20 June 2016. Web. 23 Nov. 2016.
Blinkist. "Holacracy, Explained: An Illustrated Guide to Management-Free Organizations."
Medium. N.p., 19 Aug. 2015. Web. 23 Nov. 2016.
Denning, Steve. "Making Sense Of Zappos And Holacracy." Forbes. Forbes Magazine, 15 Jan.
2014. Web. 23 Nov. 2016.
Greenfield, Rebecca. "Zappos CEO Tony Hsieh: Adopt Holacracy Or Leave." Fast Company.
N.p., 24 June 2016. Web. 23 Nov. 2016.
Nath, Trevir. "How Agile Principles Are Used in Holacracy." Investopedia. N.p., 11 Aug. 2015.
Web. 23 Nov. 2016.
Russo, Sergio. "Holacracy: Pros and Cons..." HRreview. N.p., 31 Jan. 2014. Web. 23 Nov. 2016.
WhatIs? "What Is Holacracy?" WhatIs.com. N.p., n.d. Web. 23 Nov. 2016.
Wyld, David. "Hola-what? What Holacracy Could Mean for Organizations and Your Career."
Spend Matters. N.p., 14 Apr. 2014. Web. 23 Nov. 2016.
Zywien, Josh. "What Is Holacracy and Is It Right for Your Company?" OpenView Labs. N.p., 23
Jan. 2015. Web. 23 Nov. 2016.