What Is Holacracy And Why It Matters In Business

A holacracy is a management strategy and an organizational structure where the power to make important decisions is distributed throughout an organization. It differs from conventional management hierarchies where power is in the hands of a select few. The core principle of a holacracy is self-organization where employees organize into several teams and then work in a self-directed fashion toward a common goal.

HolacracyHolacracy is a self-management and organizational governance framework developed by Brian Robertson and popularized by his company, HolacracyOne. It is designed to restructure traditional hierarchies in organizations and create a more agile, adaptive, and decentralized approach to management and decision-making. Holacracy is built on the principles of distributed authority and dynamic self-organization.
Core PrinciplesHolacracy operates based on several core principles: distributed authority, clear roles and accountabilities, circles and subcircles, transparent rules and processes, and a governance process that allows for rapid decision-making and adaptation. These principles are designed to reduce bureaucracy and empower employees at all levels.
Roles and CirclesIn Holacracy, organizations are divided into circles, each with specific roles and accountabilities. These roles are defined and regularly updated through a governance process. This clear definition of roles ensures that every member knows their responsibilities and has the authority to make decisions within those boundaries.
Governance ProcessThe governance process in Holacracy allows teams to continually update roles, policies, and processes. This process, known as a circle’s governance meeting, involves structured discussions and decision-making to evolve the organization’s structure and adapt to changing needs. It’s a key aspect of Holacracy’s flexibility and responsiveness.
Tension ProcessingHolacracy encourages individuals to bring up tensions, which are perceived gaps between the current reality and the desired outcome, during meetings. These tensions are discussed and either acted upon immediately or captured for future consideration. This process promotes ongoing improvement and adaptation.
Decentralized AuthorityHolacracy shifts decision-making authority from a few top leaders to many individuals and circles throughout the organization. This decentralized approach empowers employees to make decisions that affect their roles and domains, resulting in faster responses to challenges and opportunities.
ChallengesImplementing Holacracy can be challenging for organizations accustomed to traditional hierarchical structures. It requires a cultural shift, training, and ongoing commitment. Not all organizations find success with Holacracy, and it may not be suitable for all industries or business models.
ExamplesSeveral well-known companies, such as Zappos and Medium, have adopted Holacracy or elements of it to reshape their organizational structures. These examples showcase how Holacracy can promote agility, innovation, and employee engagement when effectively implemented.
BenefitsThe potential benefits of Holacracy include increased agility, faster decision-making, greater employee autonomy, improved adaptability, and enhanced alignment between individuals and the organization’s purpose. These advantages can lead to better performance and responsiveness.
ConclusionHolacracy offers a new approach to organizational management, emphasizing self-management and distributed authority. While it’s not a one-size-fits-all solution, it has demonstrated success in certain contexts and can be a valuable framework for organizations looking to foster innovation and adaptability.

Understanding a holacracy

The core principle of a holacracy is self-organization. Instead of having employees waste time waiting for a boss to give them instructions, they organize into several teams and then work in a self-directed fashion toward a common goal.

Indeed, a holacracy empowers employees with responsibility. While they are required to complete their work in a satisfactory time-frame, how that work is completed is left to the teams themselves. This has several benefits for businesses and their employees, including transparency, employee engagement, agility, and better company culture.

Shoe company Zappos and its 1,500 employees are perhaps the most notable example of a company adopting the holacracy approach. 

Valve Corporation, a video game software company, is also an advocate. Employees there can work on whatever interests them, but they must take full ownership of the finished product – whatever the outcome.

Advantages and disadvantages of a holacracy structured businesses


  • Purpose-driven. With the hierarchical management style removed, individual employees work toward the same goal which is soon reflected more broadly across the business.
  • Agile customer service. Zappos noted that as the company grew, they were unable to efficiently respond to customer queries because of a convoluted management structure. A holacracy allowed every employee to deliver exceptional customer service without the need to refer enquiries to more senior colleagues.
  • Sets clear expectations. Holacracies by their very nature set clear and transparent objectives, so every employee knows what is expected of them. This negates inefficiencies and the often hidden power struggles that exist in hierarchical organizations. 


  • Difficult to implement in large organizations. Although the transformation of Zappos into a holacracy was a success story, examples of similar businesses doing the same are uncommon. In some cases, vast amounts of resources must be devoted to re-training. Some managerial styles also become entrenched in company culture and are hard to remove.
  • Lack of accountability. Loosely defined roles in a holacracy without distinct performance standards make it more difficult for HR departments to measure employee capability.
  • Lack of focus. The focus on teamwork can lead to confusion and a lack of focus. Decisions may be debated ad-nauseam, leading to inefficient work practices and the wrong decision being made. Furthermore, some employees have skillsets or personalities that are better suited to solo work.

Holacracy examples

Zappos and Valve are two of the most well-known examples of holacracies. With that in mind, let’s take a look at some others that may be less frequently mentioned.


Medium is an online platform for amateur and professional writers launched in 2021 by Twitter co-founder Evan Williams.

Williams adopted the holacracy model to realize several important benefits such as increased productivity, more dynamic roles, better employee relations, and more directed freedom. 

In 2016, however, Medium abandoned the approach after just four years. Company representative Andy Doyle noted that the move was not made because the idea of holacracy was invalid or ineffective.

According to Doyle, the company moved on as “many of the principles we value most about holacracy are already embedded in the organization through how we approach our work, collaborate, and instigate change. Beyond that, the system had begun to exert a small but persistent tax on both our effectiveness, and our sense of connection to each other.

In other words, Medium’s holacracy was getting in the way of work and was simply too problematic for initiatives that required substantial cross-functional coordination.

Moving forward, the company looked at ways to incorporate holacracy principles into its functional systems and horizontal management structure.


Book subscription company Blinkist claims it was interested in holacracy before the term was made fashionable.

Despite its obvious benefits, however, leaders at the company noted that the adoption curve was higher than some other approaches because of specific lingo employees needed to understand and embody.

There were also instances where terms were open to interpretation with no mutual understanding of how tasks should be approached or indeed who was responsible for performing them.

In response, Blinkist implemented a unique structure which it called Blinkracy – a scaled-back version of holacracy with a core focus on employee autonomy and even power distribution.

Over time, holacracy created an ideal company culture but Blinkist still felt there was too much structure to their operations.

The company believed aspects of the holacracy were too visible and that the best organizational systems tended to be those that were somewhat invisible.

Moving forward, Blinkist developed seven core values: champion self-empowerment, default to transparency, strive to learn and grow, communicate directly, support each other, leave egos behind, and embrace failure.

It then built a set of value-based processes and principles and dropped the parts of holacracy it believed were causing a lack of clarity.

Holacracy was critical to the early success of Blinkist, helping it grow from a passionate team of 4 to 40 people with an enviable culture.

The company admitted that it could have stuck with the “traditional” holacracy indefinitely, devoting more time to implementation and working longer hours .

Ultimately, leaders recognized that the specific structures and processes of holacracy were more than the company needed at that point in its evolution and simply made it inefficient.

Case Studies

  • David Allen Company
    • The organization behind the popular productivity method “Getting Things Done” implemented holacracy. The model’s emphasis on clarity and action aligns well with the principles of the GTD methodology.
  • Washington Technology Solutions (WaTech)
    • As the central technology service provider for the state government in Washington, WaTech experimented with holacracy in some of its teams. The intent was to foster more innovation and responsiveness.
  • Springest
    • A Dutch platform that compares training programs and courses, Springest adopted holacracy as a way to stay agile and innovative. The company believed in providing a platform for individual growth, and holacracy was seen as a management model that supports personal development and autonomy.
  • Arca
    • This company, focusing on digital payments and commerce solutions, adopted holacracy. It allowed them to streamline their processes and be more adaptable to the ever-evolving digital commerce landscape.
  • Precision Nutrition
    • A company offering personalized nutrition coaching, Precision Nutrition adopted holacracy to align its organizational structure with its philosophy of individual empowerment and personal growth.
  • Starlite Holdings
    • A group of companies focusing on print, packaging, and paper trading, Starlite Holdings implemented holacracy to foster a more innovative and responsive organizational culture.
  • The Moment
    • A Canadian innovation design consultancy, The Moment shifted to holacracy to support its mission of helping other organizations innovate. They believed that by practicing what they preach, they could deliver better results to their clients.

Key takeaways:

  • A holacracy is a non-hierarchical governance structure characterized by self-organized groups who hold an equal share of authority and voice.
  • A holacracy empowers employees to become more invested in their careers through open communication and flexible work practices. This strengthens company culture and allows a business to reach its goals. 
  • A holacracy creates a purposeful and agile workforce that understands what is expected from them. However, it will not be suited to large organizations with established cultures. The focus on teamwork and loosely defined roles can also lead to substandard employee performance.

Key Insights

  • Core Principle: The central principle of holacracy is self-organization, empowering employees to take ownership of their work and make decisions within their teams. This fosters transparency, engagement, agility, and a positive company culture.
  • Examples: Notable examples of companies adopting holacracy include Zappos and Valve Corporation. Zappos found that holacracy improved customer service by empowering employees to respond to queries without hierarchical approvals.
  • Advantages: Holacracy promotes a purpose-driven workforce with clear and transparent objectives. It allows for agile decision-making and reduces inefficiencies caused by power struggles in hierarchical organizations.
  • Disadvantages: Holacracy may be challenging to implement in large organizations due to the need for re-training and the entrenched managerial styles. The loosely defined roles and lack of distinct performance standards can also lead to a lack of accountability and focus.
  • Medium’s Experience: Medium, an online writing platform, adopted holacracy but later moved away from it due to challenges in cross-functional coordination. The company incorporated holacracy principles into its management structure instead.
  • Blinkist’s Approach: Book subscription company Blinkist implemented a scaled-back version of holacracy called Blinkracy. They focused on employee autonomy and power distribution but felt the need to drop certain aspects of holacracy to maintain clarity.
  • Suitability: Holacracy is well-suited for purpose-driven organizations that value employee empowerment and collaboration. However, its success may vary depending on the size and culture of the company.
  • Empowerment and Flexibility: Holacracy encourages employees to communicate openly and be more invested in their work, fostering a positive company culture. It allows for flexible work practices and adaptability to changing circumstances.
  • Purposeful Workforce: With clear objectives and a focus on teamwork, holacracy aligns employees towards a common goal, promoting efficiency and innovation.
  • Challenges in Implementation: Holacracy may face resistance in larger organizations with established hierarchies and cultures. Proper training and understanding of the principles are crucial for successful implementation.

Types of Organizational Structures

Organizational Structures

Siloed Organizational Structures


In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.



Open Organizational Structures




In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.

Connected Business Frameworks

Portfolio Management

Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.

Kotter’s 8-Step Change Model

Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.

Nadler-Tushman Congruence Model

The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.

McKinsey’s Seven Degrees of Freedom

McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

Mintzberg’s 5Ps

Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.

COSO Framework

The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.

TOWS Matrix

The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

Lewin’s Change Management

Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.

Organizational Structure Case Studies

Airbnb Organizational Structure

Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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