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DEFINITION of 'Holacracy'

A holacracy is a system of corporate governance whereby members of a team or business form distinct, autonomous yet symbiotic teams to accomplish tasks and company goals. The concept of a corporate hierarchy is discarded in favor of a flat organizational structure where all workers have an equal voice while simultaneously answering to the direction of shared authority.

In a holacracy, instead of hiring a person to fill a pre-defined role (such as that outlined in a job description), people opt to take on one or more roles at any given time and have flexibility to move between teams and roles if they have skills or insights that would prove beneficial to the organization. One example of a holacracy is the video game software company Valve Corporation, maker of the Steam video games platform. At Valve, employees are allowed to work on whatever interests them, but also requires that they take ownership of their product and any mistakes they may make along the way. Experts have argued that this structure works well for some but that there are plenty of great employees for whom this type of organization is a terrible place to work.

BREAKING DOWN 'Holacracy'

Arthur Koestler, author of the 1967 Book The Ghost in the Machine, coined their term holarchy as the organizational connections between holons (from the Greek for "whole"), which describes units that act independently but would not exist without the organization of which they are a part. For example, if a farm were to adopt a holocratic structure, it may look something like this: one team may be responsible for land management. Within that team, there may be individual roles for soil composition, irrigation, land management, and so on. Another team may be assigned to tools and vehicles, with individual roles for operation machinery, selecting and purchasing new equipment, performing regular maintenance checks, and so on. Workers may play multiple roles (driving a tractor and testing soil samples) should they have expertise to sufficiently complete those tasks.

Brian Robertson developed the concept and dynamics of holacracy while running a software development company named Ternary Software in the early 2000s. In 2007, he and Tom Thomison founded HolacracyOne and published the Holacracy Constitution three years later. Companies that have publicly adopted holocracy in some form include Zappos.com (AMZN) and Medium.

Critics have pointed out that holacracy as a corporate management doctrine does not mean the end of corporate hierarchy. Hierarchy is still an integral part of holacracy; in fact, hierarchies and the rigidity it creates in different actors' roles may be more pronounced in holacracy.

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