Dissertation - Holacracy - A Case Study of Dynamcic Governance for the Modern Workforce

HOLACRACY: A CASE STUDY OF DYNAMIC GOVERNANCE FOR THE
MODERN WORKFORCE
by
Bronwyn M. O’Shea
ANGELA BRUCH, PhD, Faculty Mentor and Chair
MIKE DOOGAN, PhD, Committee Member
JOEL WIDZER, PsyD, Committee Member
Andrea Miller, PhD, Dean of Psychology
Harold Abel School of Social and Behavioral Sciences
A Dissertation Presented in Partial Fulfillment
Of the Requirements for the Degree
Doctor of Philosophy
Capella University
September 2016

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Abstract
Leadership has taken many forms since the commencement of the organizational
structure and these will be discussed in detail in the literature review. Terms to define
leadership are abundant, confusing and often interchangeable. Dynamic governance, the
term HolacracyOne uses to describe their version of shared leadership, could just as
easily be called distributed authority, self-determination, cooperative leadership, and self-
management along with others, and these terms will be used interchangeably throughout
this paper as none is more accurate than the other. This study found that shared
leadership within organizations was the preferred option for all participants. A
qualitative approach was utilized to understand if holacracy could be a dynamic
organizational structure for the modern workforce. This modern workforce has
ubiquitous connectivity and is linked and online all the time. The intention of the
research was to focus on leadership and how leadership under holacracy might exist and
enhance current leadership theory. The dominant themes centered more on the
mechanics of holacracy than leadership attributes and qualities. The one theme that
underpinned all themes was that of emotional intelligence (EI) which was reflective of
participant comments on limitations regarding the people aspect of the holacratic model.
Lessons learned from this case study suggest that what organizational members think is
important varies, and future research of both qualitative and quantitative methodologies
are necessary in order to enrich the knowledge base on leadership theory and holacracy as
a dynamic governance structure.

iii
Dedication
A simple dedication to both my mother and father who thankfully are still alive at
the age of 87. They now have the pleasure of a having one doctor in the family from their
seven children. I can still recall them driving fifteen hours to watch me graduate when I
received my master’s degree. This is a significant accomplishment for me as I failed high
school and believed that I was not intelligent enough to go to university. I later learned that
I didn’t comprehend knowledge the same way others did, and I certainly didn’t fit into the
traditional model of school education. I started on this journey over seven years ago and I
did not fully grasp the impact this would have on my life and those around me until now. I
learned, if you put your mind to something it can be done, it might take longer than you
first planned, but one foot in front of the other, will keep you on your path. Recently this
quote has come to mean a lot to me,
She believed she could, so she did.
-R.S. Grey

iv
Acknowledgments
To my mentor, Dr. Angela Bruch, who has been on this journey with me for over
two years. With a rough start as I had to have a do over and change topics and change
committee members, Angela guided and supported my interest in this topic and encouraged
me at every milestone.
To Dr. Mike Doogan and Dr. Joel Widzer who served as committee members and
who added their wealth of experience to the success of my research.
To HolacracyOne and Brian Robertson, who graciously supported my research into
his organizational model and provided access to the participants.
To all the participants who gave their time and opinions freely and greatly added to
the process.
To my fellow students at Capella and the faculty at Colloquia who contributed and
kept me focused.

v
Table of Contents
Acknowledgments iv
List of Tables viii
List of Figures ix
CHAPTER 1. INTRODUCTION 1
Background of the Problem (Introduction) 1
Statement of the Problem 11
Purpose of the Study 12
Significance of the Study 14
Research Design 17
Research Question 18
Assumptions and Limitations 20
Definition of Terms 21
Expected Findings 31
Organization of the Remainder of the Study 32
CHAPTER 2. LITERATURE REVIEW 33
Introduction to the Literature Review 33
Theoretical Orientation for the Study 35
Review of Research Literature 62
Review of Methodological Literature Specific to Holacracy 71
Synthesis of the Research Findings 75
Critique of the Previous Research 75
Summary 76
CHAPTER 3. METHODOLOGY 77

vi
Purpose of the Study 77
Research Design 78
Target Population and Participant Selection 82
Procedures 83
Instrument 84
Research Questions 85
Data Analysis 86
Ethical Considerations 89
Expected Findings 92
CHAPTER 4. RESULTS 94
Introduction: The Study and the Researcher 94
Description of the Sample (Participants) 96
Research Methodology Applied to the Data Analysis 99
Presentation of the Data and Results of the Analysis 99
Summary 125
CHAPTER 5. DISCUSSION, IMPLICATIONS, RECOMMENDATIONS 127
Introduction 127
Summary of the Results 128
Discussion of the Results 129
Discussion of the Conclusions 135
Limitations 137
Recommendations for Future Research or Interventions 138
Conclusion 139
REFERENCES 141

vii
APPENDIX A. STATEMENT OF ORIGINAL WORK 172
174APPENDIX B. QUESTIONNAIRE

viii
List of Tables
Table 1. Summary of Evolution of the Management Models 39
Table 2. The Five Pillars of Modern Leadership 61
Table 3. Demographics of Sample 98
Table 4. Themes Ranked by Participants 114
Table 5. Themes Ranked by Relevance 114

ix
List of Figures
Figure 1. Google Trends: Interest over Time (%) of Search Term Holacracy 10
Figure 2. Basic Circle Structure 23
Figure 3. How It Works 24
Figure 4. Linking Circles 25
Figure 5. Corporate Structure – How We Believe It to Be 26
Figure 6. Corporate Structure - How It Really Works 27
Figure 7. A Progressive Focusing Model of the Qualitative Research Process 87
Figure 8. Changing Demographics in Workforce 94

1
CHAPTER 1. INTRODUCTION
Background of the Problem (Introduction)
Evolution as a word evokes an idea of a living being changing over time.
Organizations are considered to evolve in much the same way as organisms in nature and
as such would also change over time (Drew & Wallis, 2014; Pellissier, 2012; Wheatley,
2007). Ulieru (2014) expanded on this notion to suggest that like organisms, organizations
are both autonomous and tied to a larger system. All new theories regardless of what
branch of science take considerable time for the academic community to study,
scientifically examine, and find evidence to support a new theory. New theories
concerning organizations are no different.
While theories that tackle organizations as systems and sub-systems are not new,
the developments in the way technology has enabled information to flow within
organizations has created the need for change and ‘a better mouse trap’, or so is the thought
of many modern organizations (Collins, 2014; van de Kamp, 2014; Pellissier, 2012). Even
the military as suggested by Gen. Stanley McChrystal and discussed online by Howard
Schultz (Schultz, 2015), the CEO of Starbucks had demonstrated a need for new systems
thinking. This new thinking behind flatter systems and sub-systems such as holacracy,
have had little research as there has not been sufficient time for academia or for that matter
the business community to research outcomes (Carson, Tesluk & Marrone, 2007).

2
This research aims to start the conversation regarding dynamic governance which in
simple terms can be described as shared, distributed or collectivistic leadership as defined
by Avolio, Walumbwa and Weber (2009), and these terms will be expanded upon in the
definition section as well as Chapter 2. However there is nothing simple about it or the
implementation of such a strategy within an organization (Collins, 2014).
This introductory chapter is considerably longer than most as it contains non-peer
reviewed articles to set the stage for the topic. Holacracy has had little academic scrutiny
since its introduction in 2007. There has not been sufficient time in which to engage in or
add to the research base, given the contemporary nature and limited adoption of holacracy
by mid to large companies to service a significant sample population. Chapter 2 will
review the academic literature that forms the basis of the theories behind shared leadership,
self-management and the derivatives of management theory that are impossible to separate
from leadership. Many researchers (Avolio et al., 2009; Bangerjee, 2008; Kaag, 2008,
2011; Pratt, 2011) cited the 1924 work of Mary Parker Follett suggesting she started the
discussions about shared leadership. The form this shared leadership took was the notion
of self-managed teams or some self-determination interlaced with a traditional hierarchy
within the top-down management styled companies. Self-management has occurred in
nature for millennia and has managed complex non-linear and chaotic situations outside the
workplace (Laloux, 2014).
One of the modern organizations to embark on a new strategy of shared leadership
was Zappos, the online shoe company, now owned by Amazon. Zappos decided upon
holacracy, a system for managing the organization utilizing a very specific version of
shared leadership. Understanding what holacracy brings to an organization can only really

3
be appreciated by looking at the other models of shared or distributed leadership, as they
relate to the traditional models employed by the vast majority of companies (Ivanov, 2011).
Traditional Organizational Structures
The earliest form of organization as noted in the work by Ackoff (2002) was the
family working at home as a single unit which then segued to working in factories as part
of a production unit or system, and then lastly to where individuals felt they were part of
the system, and ultimately part of something bigger than the organization itself. These
structures were mostly managed by vertical leadership, where managers took a position
outside and above the team with authority and responsibility for the actions and results of
the team (Pearce & Sims, 2002).
Freidman (2000) along with Porter-O’Grady and Malloch (2003) reflected that
organizations prior to 2000 were all about process. Subsequently to the turn of the century,
albeit not that many by comparison to the total number of companies, numerous
organizations are evolving towards complexity. The linear approach of the traditional top-
down hierarchy does not manage complexity with the speed necessary for the “ubiquitous
connectivity” (Collins, 2014, p. 11) of the modern workplace.
Moore’s Law. Gordon Moore was the cofounder of Intel and his other claim to
fame was the understanding of change in technological times (Collins, 2014). Moore’s law
implies change isn’t a straight linear line on a chart, rather change takes place
exponentially. This thinking led to the concept of “ubiquitous connectivity” (p. 11) as
everyone seems to be connected to something or someone all the time.
Traditional hierarchy employs a stable and structured approach with the leader
having ultimate knowledge, wisdom and power (Geer-Frazier, 2014). Uhl-Bien, Marion

4
and McKelvey (2007) further noted that traditional leadership controlled behaviors and
suggested this has been the best option for stable and unchanging environments.
Schraagen, Veld and DeKoning (2010) recommended something new is needed in complex
unstable environments.
Modern Organizational Structures
The seminal work by Frederic Laloux (2014), a former Associate Partner with
McKinsey & Company provided groundbreaking developments in organizational design,
with his book, Reinventing Organizations. The use of the color labels provides an easier
way of relating to the evolution of humanity, nonetheless each phase has an associated text
label to describe the sentiment of the period and the shift into a new paradigm. Colors
prior to red were pre-organizational corporate structures and so have little relevance in the
move towards teal. Red and amber are also both pre-present day and while interesting
from an evolutionary perspective also add little in the move towards teal.
Orange or the “achievement” stage presents the concept of “effectiveness” and that
“the better I understand the way the world operates, the more I can achieve; the best
decision is the one that begets the highest outcome” (Laloux, 2014, p. 24). Laloux further
expanded to illustrate the type of companies that represent orange organizations, for
example; Walmart, Nike and Cocoa-Cola.
Learnings or “breakthroughs” as he called them to reach this new paradigm are
“innovation, accountability and meritocracy” (Laloux, 2014, p. 26). This paradigm is
likely the one that cemented the premise of vertical hierarchy where the thinking was
“everybody should be put in the box of the organizational chart where they can best

5
contribute to the whole” (p. 27). Power was a good thing and no one’s background made a
difference to whether they could get to the top.
Green reflects the “pluralistic” approach where “fairness, equality, harmony,
community, cooperation, and consensus” are valued and “power and hierarchy” (Laloux,
2014, p. 31) are less than ideal. Breakthroughs into this paradigm are “empowerment, a
value-driven culture and inspirational purpose” in addition to a “multiple stakeholder
perspective” (pp. 32-33) and stakeholders are many-fold from investors to management, all
the way through the value chain to customers and society.
Teal is nirvana or the place to aspire to be. Laloux (2014) defined a new metaphor
for this stage “organizations as living systems” and the breakthroughs seen here are “self-
management, wholeness and evolutionary purpose” (pp. 55-56). Examples of the different
evolutionary stages can be summarized with descriptive terms; from the “Wolf Pack”
mentality of red organizations, the strictness seen in the “Army” persona of amber
organizations, to the “Machine” of orange organizations and then to the “Family”
atmosphere in green organizations (Laloux, 2014, p. 36). What is not clear is the term to
describe teal organizations as this concept is still in formation.
Twelve companies were included in Laloux’s research, however holacracy for the
purpose of his research was considered an “organizational operating model” rather than a
company and “provides perhaps the most elegant process to define roles and help them
evolve” (2014, p. 117). What is interesting to note is that many companies in the book are
based in the United States and are much larger than Zappos. Evident in Laloux’s work is
the lack of information that can be derived about teal organizations at this point in its
acceptance, and while Laloux presented companies in his book that reflect teal practices, it

6
is clear that with only half the number being based in the United States, this is not a
watershed migration to this new organizational paradigm. Laloux focused on MorningStar
and Patagonia as successful teal organizations that most people would recognize.
Dr. Gary Hamel, considered a management expert and co-creator of the concept of
core competences which he defined as “a harmonized combination of multiple resources
and skills that distinguish a firm in the marketplace” (Schilling, 2013, p. 117) reviewed
MorningStar’s approach to management in the Harvard Business Review. There he
described the differences between managers and managing and the lack of the word
empowerment in MorningStar’s vocabulary (Hamel, 2011). Hamel noted that the act of
empowering someone suggested a traditional top-down management approach with
someone having the authority to bestow this right upon someone else. He furthered, power
is given to a role or function rather than to a person. In the MorningStar scenario, people
manage themselves or more accurately the tasks they perform, not other people. Self-
management is the act of self-empowerment in its purest sense. Self-management in
organizations could be a simple extension of focusing on one’s own core competencies to
achieve a common goal. Collins (2014), Hamel (2011), Laloux (2014) and Schilling
(2013) add to the increasing amount of non-peer reviewed literature on the topic of
leadership and support further research to add academic rigor to their assertions.
Another company much written about (Collins, 2014; Hamel, 2010) and studied at
length is W.L. Gore and their “un-management” (Shipper & Manz, 1992, p. 50) style of
management which started in 1965. Bill Gore, the owner of W.L. Gore described his
organizational structure as a lattice and had four principles, these being; “fairness, freedom,
commitment and waterline” (Shipper & Manz, 1992, p. 52). The first three principles are

7
easy to understand, while the waterline principle referred to any activity in which the ship
was hit below the level of the ocean resulting in the ship sinking.
Rod Collins (2014) known as an expert in management innovation also created his
own new model for organizations in the 21st
century called “Wiki Management” (p. 17).
The term wiki was selected as it translates from Hawaiian to the English word quick.
Collins asserted the underlying premise of wiki management is that like technology,
organizations are network-based and this stands to reason as organizations are made up of
people, who for the most part are usually part of some network-be that as simple as a
family or church, or sporting group, or a Facebook collection of friends.
Many companies over the past twenty years have moved in this direction and
Collins (2014) cited Google, Craigslist, Wikipedia, Linux, Amazon, Salesforce, Whole
Foods, Valve, Threadless and both MorningStar and Zappos as examples of companies
switching to a nontraditional hierarchical structure. Collins paid special attention to W.L.
Gore and Toyota as larger organizations that have had this network approach introduced
and running for over 50 years.
Collins (2014) suggested “effective” (p. 21) organizations work with three models
that intersect between business, operations and management that exist on top of a structure
of values. The values within each model while separate from each other can be used in
multitudes of combinations that seem to reflect a dichotomy of values that support the other
values. These structural value choices are: “serendipity vs. planning, self-organized vs.
centrally organized, emergent vs. directed, simple rules vs. detail coordination” and
“transparency vs. control” (p. 21). In addition to the structural values, Collins proposed
value choices also exist when dealing with relationships, including: “customers vs bosses,

8
networks vs hierarchies, shared understanding vs compliance, leading vs lagging” and
“peers vs supervisors” (p. 49). A similar dichotomy would seem to underpin the
relationship value choices people would favor.
The final element to the wiki management logic defined by Collins (2014) was the
“resetting [of] their organizational principles, process, and practices in three critical areas”
and this took the form of “resetting the managers, resetting the meetings, and resetting the
measures” (p. 58). This directed less focus on what and more focus on people and is in line
with the teal approach to management.
The modern organization is less focused on structure as a physical construct, but
rather on the resources of leadership (Conger & Benjamin, 1999). McCall (1998) in
addition to Vicere and Fulmer (1998) predicted the best practice to ensure competitive
advantage was to focus on leadership at all levels. Katz and Miller (2014) advocated “an
entirely new paradigm” and one that happened rapidly and relinquished the mindset of “the
all-knowing, all-powerful leader” in favor of “an inclusive workplace in which
collaboration can flourish” (p. 40). They promoted that the swiftness of change made it
almost impossible for one leader to succeed and prosper.
Many contemporary authors (Baker, 2014; Laloux, 2014; Stack, 2014) are in
agreement with Katz and Miller (2014), that we are at the “tipping point” driven by the
consumer market on one side and the changing demographic of the workforce on the other
recommending organizations need to “adapt or fail” (p. 40). The former is the strategy
Zappos has chosen to adopt, as referenced by a quote from Tony Hsieh, the CEO of Zappos
that has been included in many online publications, “Having one foot in one world while

9
having the other foot in the other world has slowed down our transformation towards self-
management and self-organization” (Feloni, 2015, para. 6).
January 2014 started like any other month in a new year, with one exception.
Articles and blog posts started to appear with discussions about Zappos and their move to
holacracy. The adoption of this new self-management system had just been announced in
the press in December 2013. Zappos was well known for its corporate culture and if they
were trying something new in the way of management and organizational change, the
business community would no doubt take notice (Feloni, 2015).
Although holacracy as a new organizational design concept had been around since
2007 when Brian Robertson first created it, there had been few large and well recognized
names actually embracing it for the Human Resources and business communities to take
notice. When Zappos adopted the model it created a lot of interest from the media and
since then Zappos and by association holacracy and HolacracyOne, who provide the
implementation support, have all been under extensive scrutiny.
The most recent review of the interest in holacracy can be represented by the
change in interest when used as a search term in Google. Little to no interest was seen until
the peak at 100 in March 2014, with the next highest peak of 85 being registered in May
2015, when the Zappos employees were all issued the ultimatum to “adopt Holacracy or
quit” (Greenfield, 2015, para. 1). While this data is not presented as having academic
rigor, it does reflect change and interest in the larger community for holacracy.

10
Figure 1. Google Trends: Interest over Time (%) of Search Term Holacracy.
Coverage in an online article in January 2014 by Marcus Wohlson of Wired.com
seemed to suggest a positive feeling about the new direction at Zappos with the title, ‘The
next big thing you missed: Companies that work better without bosses’ and introduced his
readers to holacracy as being a system that structured work around what needed to be done,
rather than around the person who does the work. Wohlson also included other companies
who had adopted holacracy including a startup called Medium founded by a co-founder of
Twitter and a non-profit organization called Conscious Capitalism, established by the CEO
of Whole Foods. Other companies would follow, however none to date are as high profile
as Zappos which may be due in part to size as Zappos was by far the largest organization to
engage in such a major undertaking. Questions were raised about titles, compensation,
authority and accountability, which are understandably confusing elements for a new
organizational design.
The tone in many of the online articles that seemed to come out regularly suggested
that Hsieh was personally experimenting with holacracy. Richard Feloni (2015), who
writes for the online publication, Business Insider, and covers management strategy and
entrepreneurialism asked questions and made statements like, “What’s going on inside the
Amazon-owned Zappos? Hsieh is conducting one of the biggest experiments in

11
management history, but one in seven employees didn’t want to take part” (para. 9). The
flipside to this statistic is that six out of seven or 86% chose to stay and rejected the
financial incentive to leave the company, however this is a less sensational headline. Hsieh
had as his goal the transition from a green organization, where there is some employee
freedom but sits on the traditional hierarchy to one that is now teal, where problems are
fixed internally without managers (Feloni, 2015).
While Zappos was the inspiration for this research, being such a well-known
advocate of trying this new organizational design and having only recently started down the
path of change, it was decided not to include Zappos employees in this research. This
allowed for companies that had implanted holacracy for a longer period of time and
without media scrutiny to provide perhaps some valuable insights into this new domain and
create opportunities for more research into organizations utilizing shared leadership.
Statement of the Problem
Organizations have had many labels attached to structures that established rules or
conditions for interactions between employees at all levels. Romme (2003) and later
Chyung (2005) discussed these significant models that emerged from the early 1900s that
became the subject of future research. These models included scientific management
(Taylor, 1911) followed by the behavior engineering model (Gilbert, 1978), front-end
analysis (Harless, 1973) and the organizational elements model (Kaufman, 1988).
The structure of organizations and how to obtain best performance has developed
into its own field namely, human performance technology (HPT) based fundamentally on
the work of Gilbert, Harless and Brethower (Winieki, 2010). Brethower (1997) presented
the notion that “each person is influenced by the intellectual spirit of the times” (p. 29)

12
which is supported by changes in organizational structure as society has evolved. This
supported the creation of the different systems including; (a) mechanism - where society
moved away from home based work in favor of the factory system which viewed labor as
simply a replaceable part of the machine, (b) animate - where owners needed to relinquish
some control and incorporate non-owner management levels, and labor considered
themselves part of the system; and (c) social - where labor considered itself to be part of the
system as well as part of the external environment (Ackoff, 2002). In an attempt to better
understand diverse organizational models and management styles, labels were created to
identify the differences; systems used by organizations were now considered rational,
natural or open (Scott & Davis, 2007).
Purpose of the Study
Holacracy is an organizational design that flattens traditional hierarchy based on
dynamic governance. Holacracy expanded on the models of open circular design which
provided the underpinning to the concept of the collective and the humanizing of the
corporation (Levinson, 1977; Heller, 1985; Jaques, 2003; Romme, 2003). Romme (2003)
discussed Endenburg’s “circular organizational design” (p. 565) at the beginning of the
1970s that to some degree was a reaction to the work councils the Dutch government was
attempting to implement in corporate businesses. The circular design modelled on
cybernetics included a series of processes and feedback loops that enabled quicker
responses to issues (Romme & Endenburg, 2006). The label attributed to this new circular
design was sociocracy, however it became better known as “dynamic governance” (Buck &
Endenburg, 2003, p. 3).

13
Dynamic governance is an open system that emerged and solidified the social
system model and moved the organizational structure closer to that of a community as
argued by Handy (1995) and Ackoff (2002). The holacratic open system is described in
detail in the definitions section of this paper. The work of Mead from the 1930s to
Goffman in the 1980s and researchers in between were all interested in the interaction
between individuals and groups (collective), and how behavior was influenced by
environment and common causes (Styker, 1987). The significant difference between
dynamic governance and holacracy is that in other dynamic governance models the circular
design is placed on top of the existing hierarchy, whereas the design of holacracy is to
remove the hierarchy and make each circle autonomous (Robertson, 2015).
The inclusion of the experiences of employees moving to a holacratic model adds to
the research base of industrial and organizational psychology by extending the discussions
on dynamic governance approaches to organizational design and brings into debate
leadership styles in the knowledge workforce and how this may impact employee
performance. Open system models have developed in more recent years, nonetheless most
of the academic literature has focused on models prior to the 1990s (Grigg, 2010; Kaufield,
2006; Langfred, 2007; Proença, 2010; Scott & Davis, 2007; Zitek & Tiedens, 2012).
Robertson developed a model in 2007 which extended the idea of integrated
product teams (IPT) and self-directed teams (SDT) and offered a new alternative to the
traditional hierarchical structures of the past. Heller as early as 1995 and additionally
Ackoff in 2002, suggested to humanize the company and provide a community (Handy,
1995) and Robertson (2015) presented this with a system of dynamic governance and a
company constitution. While IPT and SDT research exists (Grigg, 2010; Kaufield, 2006;

14
Langfred, 2007; Proença, 2010; Scott & Davis, 2007; Zitek & Tiedens, 2012), there is no
research on the dynamic governance model as presented by using the holacratic
organizational design.
Significance of the Study
Corporate organizations have changed and adopted new practices and structures
over the decades (Blake & Moseley, 2010; Gilbert, 1978; Taylor, 1911) for predominantly
one reason: maximizing profit. Taylor focused on altering behavior “through scientifically
designed management methods, such as appropriate selection, incentives, and training”
(Chyung, 2005, p. 23) and to a certain degree offered some guidance on organizational
structure. Others (Ackoff, 1974; Butler, 1991; Davis & Blalack, 1975; Pane Haden,
Humphreys, Cooke & Penland, 2012) provided support for additional management system
approaches and introduced the newly coined term human performance technology (HPT)
based on Gilbert, Harless and Brethower (Winieki, 2010) to define this new field of
understanding employee impact in the company’s value proposition.
Dynamic governance could be compared to a living constitutional document and the
study investigated the impact organizational change, specifically increased autonomy or
dynamic governance through the holacratic structural approach, may or may not have on
the performance of a company. Higher levels in employee motivation and job satisfaction
have been linked to greater productivity (Hackman & Oldman, 1976; Langfred, 2013;
Langfred & Moye, 2004), which should increase profitability or at least improve other
measures the company determines to indicate success, as profitability is not always the
preferred metric.

15
Autonomy represents one aspect of dynamic governance, and as Heller (1995) and
Ackoff (2002) suggested the humanizing of companies reflected the move to a more
community (Handy, 1995) based model and providing autonomy to individuals offers a
sense of inclusion in outcomes. Organizational structure and optimum open system models
(Scott & Davis, 2007) have seen limited research and to date there appears no research into
the holacratic approach first introduced in 2007. Grigg (2010) along with others (Kaufield,
2006; Langfred, 2007; Proença, 2010; Zitek & Tiedens, 2012) presented research on
autonomy, hierarchical structures, integrated product teams (IPT) and self-directed teams
(SDT) that illustrated open system models. Checkland’s (2000) soft system methodology
came close to holacracy; specifically as most models appear at the team level as opposed to
a company-wide integrated system. This new approach to organizational structure and
leadership style adds to the scientific knowledge base by extending open system models
and leadership theory as they relate to shared or distributed leadership.
Open system models (Scott & Davis, 2007) sometimes referred to as integrated
product teams (IPT) and self-directed teams (SDT) along with many other terms to
represent distributed authority are at the fore front of organizational design research. The
theory underpinning these models is self-determination, however for self-determination to
exist in an organization, a change in leadership or management is necessary (Deci & Ryan,
2008).
Thorpe, Ryba and Denison (2014) contended that sociology is concerned with the
interaction between and within groups, with psychology more often focused on the
behavior of the individual. These two intersect in organizational psychology as the

16
behavior of the individual is influenced by the interactions of the group. Self-
determination theory was best defined by Deci and Ryan (2008) as;
a macro theory of human motivation, self-determination theory (SDT) addresses
such basic issues as personality development, self-regulation, universal
psychological needs, life goals and aspirations, energy and vitality, nonconscious
processes, the relations of culture to motivation, and the impact of social
environments on motivation, affect, behavior, and well-being. (p. 182)
The traditional hierarchy of the military with little self-determination was radically
changed when day to day activities in war zones no longer resembled the frontlines of
previous wars. The modern war called for radical thinking and Gen. McChrystal
documented this with some aptly real world experienced co-authors to reveal the military
had in fact presented its’ own longitudinal study on self-determination and shared
leadership that they called “team of teams” (McChrystal, Collins, Silverman & Fussell,
2015). Interestingly, the book only released in May 2015 is already a #1 best seller on
workplace culture suggesting that there is indeed a cross over from military to civilian
workplaces and HR professionals are interested in looking at the military for possible
change.
Many different innovative management or organizational models are surfacing with
most coming from the business community with little involvement from academia,
although the military had realized change was needed. While their effectiveness is not yet
scientifically supported, anecdotic evidence is cementing the necessity for investigation.
This paper provides one of the first studies into the holacratic model and makes
recommendations for future research.

17
Research Design
Creswell (2013) identified the rationale behind the use of case study methodology
as meeting the need of the researcher to investigate an activity within a bounded system. In
addition, these boundaries need to be clearly definable, and an in-depth level of inquiry sort
from the participants. Chenail (2011) suggested recent developments in qualitative
research methodologies presented little similarity to the studies of prior generations; and
posited that a mixed approach contributed to a more robust study with qualitative research
being valued because of the differences from quantitative and is not seen as having
shortcomings. Similarities exist between qualitative and quantitative methods insofar as
prior generations appeared to incorporate the linear process of quantitative into qualitative
inferring that a linear process contributed in same way to validity (Parlett & Hamilton,
1972; Sinkovic & Alfondi, 2012). Linearity has its place, however underpinning the
qualitative approach is discovery and the understanding that unforeseen situations may lead
to unexpected results.
A qualitative multiple case study has been deemed most appropriate as the
phenomenon currently has had little investigation and this research has at its focus the
understanding of the phenomenon and lessons learned which will contribute to the
appreciation of the positives and negatives of a holacratic approach to organizational
design. Participants provided in-depth knowledge regarding the topic which led to the
development of themes. In comparison to a phenomenological approach where data is
collected about one experience, the case study approach allows for multiple experiences
around one activity and this was the most appropriate to reflect upon the research question
(Creswell, 2013; Stake, 1995).

18
Nonetheless, while there are preconceived theories, this multiple case study has a
foundation based on abductive reasoning, that is the refinement of existing theory rather
than inductive or theory creation, or deductive where one has a somewhat preconceived
notion of the outcome. The data will ultimately determine the theoretical implications of
the research (Chenail, 2011).
Research Question
Niels Pflaeging (2015), an advisor on transforming leaders for complexity
explained leadership “Leadership is something natural to groups of human beings. Having
a leader is not” (www.nielspflaeging.com). Adding to the plethora of books released in
2014 on organizational change, Pflaeging (2014) simplified the understanding of traditional
hierarchy first formalized by Taylor in 1911, to the following; “Thinkers/Managers:
strategize, steer, control [and] decide” while “Doers/Workers: execute, obey [and] follow”
and even coined it “tayloristic management Alpha” (p. 4).
There was and still is a price to pay for this division of labor that exists in the vast
majority of organizations today, as is evident in the discussion about orange organizations
(Laloux, 2014). Pflaeging (2014) outlined this price as “systematic gaps” that are formed
and described these gaps as; “1. The Social Gap”, which contributes to “a bias towards
management by numbers and leadership by fear”, “2. The Functional Gap” where a “need
for manager/imposed coordination through process control, interfaces, planning, rules,
standards, hierarchical power etc.” is produced and “3. The Time Gap” which creates “the
division between thinking thinkers and non-thinking doers, between planning and
execution” (p. 5). He concluded with the overarching sentiment that “None of this feels

19
good. None of this creates value for people, customers, or owners: the three gaps all lead
to waste. That’s a high price for the illusion of control” (p. 5).
An interest in organization design and management / leadership led to reviewing the
latest developments and strategies in this field. There are an abundance of experts and
consultants ready to discuss, recommend and implement new ideas with the promise of
greater productivity and a happier workforce as the goal. Selecting only one method of
organizational strategy was difficult but the press around Zappos choosing holacracy as
their approach made it compelling and it seemed like this new approach could provide
interesting research results. The question at the center of the research was: What is the
experience of employees moving from a hierarchical organizational structure to dynamic
governance?
Every one of the companies selected to participate had been operating in some form
of hierarchical structure prior to implementing holacracy. All participants had been
involved with holacracy for a long enough time to understand the differences between top-
down versus shared leadership. A field test confirmed the initial set of questions, however
additional questions not originally included in the field test quickly emerged during the
interviews as relevant and were added in line with progressive focusing (Parlett &
Hamilton, 1976). These additional questions included whether the participant held a
management or supervisory role prior to holacracy and the thoughts regarding
bureaucracy’s impact on decision making.

20
Assumptions and Limitations
Assumptions
The biggest assumption in this research was that a wide range of people were
included, meaning the whole continuum from those who embrace holacracy to those who
were not supportive of holacracy were included in the sample. Honesty was another
assumption and for the most part it appeared to be valid as both positive and negative
feedback was forth coming and sometimes from the same individual. Even in the case
where the participant would not choose to work for another organization using holacracy,
they commented they still favored a shared leadership organization to a traditional
hierarchical one. Shared leadership in its purest form propels an organization towards the
nirvana of teal (Laloux, 2014); however none of the participating organizations were
actually fully immersed in teal behaviors. This assumption perhaps is the most influential
as without the benefit of true shared leadership, holacracy cannot be fully examined.
Finally, there was an assumption that participants were able to separate the
implementation of holacracy from the model or operating system (Robertson, 2015). This
proved difficult for some and muddied the results which could be seen as a limitation,
however as stated in the limitations, these limitations suggest a need for future research.
Limitations
Onwuegbuzie and Leech (2007) concurred that qualitative research is unable to
offer generalizations and this in itself was limiting in the present study as only a small
sample was interviewed. Only 11 participants took part and while multiple companies
were included it cannot be dismissed that only people who were happy with the change
volunteered to participate. There were in fact a number of people who provided negative

21
feedback, however this was a small percentage and so it could be argued the results were
skewed by the sample. Taking this into account, this does not take away from the results
and only strengthens the argument for further and more comprehensive research.
The biggest limitation to the research was time. Holacracy as an organizational
design and model for shared leadership has been around since 2007, nonetheless there are
few companies of any size that have adopted the model for longer than a couple of years.
All participating companies had been involved with holacracy for more than 12 months,
but less than two years and this time frame was not long enough to fully transition any
existing organization to a completely new and radically different management system.
Although several had made significant inroads toward green in Laloux’s (2014) model,
none appeared to have achieved the level of teal at the time of the study, once again making
the case for future research. A longitudinal research study may be the most beneficial
approach to studying holacratic organizational change over time.
Definition of Terms
Holacracy as a new organizational design is not well known and deserves a
comprehensive explanation here, as little academic literature is available to be included in
the Literature Review in Chapter 2. Therefore, prior to the definitions of the other terms
contained in this paper, holacracy will be explained separately.
Holacracy
The evolution of holacracy came about due to a lack of a system that seemed to
work for Brian Robertson when he had his own software company. Like many CEO’s,
Robertson looked to create an organizational structure that would function to meet the
demands of the time. He found little in traditional hierarchy that seemed to adapt quickly

22
enough and drew from the world of Agile and Scrum, both designs having been created to
meet the changing needs for software development. Robertson (2015) was looking for a
method to keep companies “evolving” rather than simply “evolved” (p. 7).
Keeping with the idea of evolution, Robertson (2015) used the analogy of
comparing a holacratic organization to a human body, insofar as there are many parts that
make up the whole. However it is almost impossible to suggest a hierarchy as it can be
contended that without a heart, the body would not function, conversely the same could be
said of a brain, so how can individual parts be presented in any hierarchical power implied
way? Rather they each operate synergistically with each other.
Robertson (2015) described holacracy as, “essentially, it’s a new social technology
for governing and operating an organization, defined by a set of core rules distinctly
different from those of a conventionally governed organization” (p. 12). Robertson
expanded this and suggested it included the following;
a constitution, which sets out the “rules of the game” and redistributes authority, a
new way to structure an organization and deﬁne people’s roles and spheres of
authority within it, a unique decision- making process for updating those roles and
authorities, [and] a meeting process for keeping teams in sync and getting work
done together. (p. 12)
Holacracy has its own unique terms and each is described below.
Authority. The most significant change to the traditional top-down hierarchy was
holacracy insisted on self-management by all. Managers were told “it’s no longer your job
to solve everyone’s problems and take responsibility for everything” while workers are

23
told, “you have the responsibility, and the authority, to deal with you own tensions”
(Robertson, 2015, p. 23).
Circles. Visually representing a holacratic organization had a fundimental flaw in
that most diagrams are flat and display in a two dimensional perspective. In this way,
people compare the cirlces within circles as simply a different way to draw boxes below
boxes and therefore in reality is no different to top-down box organizational charts.
Robsinon (2015) even suggested holacracy as illustrated in Figure 2, “looks like a series of
nested circles, like cells within organs within organisms”, however he further noted that no
“part is subjugated to those above it, but retain autonomy, individual authorty, and
wholeness”. (p. 46)
Figure 2. Basic Circle Structure. Reprinted from Holacracy: The New Management System
for a Rapidly Changing World, p 47, by B. Robertson, New York, NY: Henry Holt &
Company. Copyright 2015 by R. Robertson. Reprinted with permission.

24
Governance. The distribution of power within an organization still needed a
process and holacracy managed this via governance meetings which focused on the ‘how’
and sets out to define how the organization will look (Robertson, 2015). Integrated with
governance were the other elements and these are demonstrated in Figure 3. Each part
works in rapport with the others and even though it could be considered a bottom-up
structure if a direct comparison is needed, it has been captured with the work and tensions
at the top and the governance at the bottom.
Figure 3. How It Works. Reprinted from Holacracy: The New Management System for a
Rapidly Changing World, p 27, by B. Robertson, New York, NY: Henry Holt & Company.
Copyright 2015 by R. Robertson. Reprinted with permission.
Lead and Rep Links. The closest to a management role existing in holacracy is a
lead link who is a person responsible for assigning resources within a circle. This role
looks inwards and does have some authority, however this authority is controlled by the

25
governance process. In constract, a rep link is the conduit to the cirlces outside of their
own circle. Figure 4 reflects the interplay between the circles and the roles.
Figure 4. Linking Circles. Reprinted from Holacracy: The New Management System for a
Rapidly Changing World, p 51, by B. Robertson, New York, NY: Henry Holt & Company.
Copyright 2015 by R. Robertson. Reprinted with permission.
Roles. Extending the premise of moving from people to work, the organizational
structure contains roles and no longer reflects titles, departments and people. Holacracy
had been misunderstood as to be “flat”rather than “hierarchial” (Robsinon, 2015, p.48),
however this is incorrect. Instead the hierachy focuses on roles not people.
Structure. To fully appreciate or understand the circle structure of holacracy, the
rationale to deliberately move away from a top-down hierarchy is necessary. Most people
view a top-down traditional hierarchy as simplified by Robertson in Figure 5 as boxes that

26
are set and relationships exist across the dotted lines with clear division of authority. In
reality as clarified in Figure 6, a traditional hierarchy has many underlying influences, both
explicit and implicit. Reversing the perceived power or authority, will not guarantee the
removal of these influences, nonetheless it is presented as a way to mitigate them as the
organization is now role rather than people focused and decisions are made separate to the
individual (Robertson, 2015).
Figure 5. Corporate Structure – How We Believe It to Be. Reprinted from Holacracy: The
New Management System for a Rapidly Changing World, p 36, by B. Robertson, New
York, NY: Henry Holt & Company. Copyright 2015 by R. Robertson. Reprinted with
permission.
Tensions. Terminology within new design is nothing new and holacracy presented
several unique terms to better describe what was happening. One of these was “a tension”,
described or explained by Robertson (2015) as the “gap between how things are and how
they could be” (p. 5). Some would simply call these problems and opportunities, however

27
in an attempt to neutralize the term, a tension is neither positive nor negative, just
something that needs to be dealt with at some point.
Figure 6. Corporate Structure - How It Really Works. Reprinted from Holacracy: The New
Management System for a Rapidly Changing World, p 37, by B. Robertson, New York,
NY: Henry Holt & Company. Copyright 2015 by R. Robertson. Reprinted with permission.
The Game. Often people engaged in the holacratic process will refer to holacracy
as a game and HolacracyOne, the company created by Robertson to provide the
implementation and support for holacracy even use the term. In any game there is a set of
rules that everyone playing the game needs to comply with and abide by and sometimes
there is even a referee who takes on this role. There is little need for a referee in a
holacratic organization as the constitution provides the structure for the rule book which
like the United States Constitution is a living document with the flexibility to be appended
and added to by a well understood process.

28
Non Holacracy Terms
Terms that are independent to holacracy and reflect the broader understanding of
leadership, management and organizational design are highlighted. Definitions of terms in
this study include the following:
Collectivistic Leadership. Yammarino, Salas, Serban, Shirreffs, and Shuffler
(2012) introduced the notion of “we” (p. 382) leadership and identified this as occurring
when individuals take on and relinquish leadership both formally and informally.
Distributed Leadership. English (2008) proposed that “some of the functions of
leadership can be delegated or embedded in other persons or roles in an organization”
(p. 115). Harris (2008) in the same year as English added to the definition by contributing
that the “core assumption is that each member has some leadership abilities that will be
needed by the group at some time” (p. 174).
Dynamic Governance. An open system that emerged and solidified the social
system model and reflects more of a community orientation within governance (Ackoff,
2002; Handy (1995).
Green Organizations. The “pluralistic” approach where “fairness, equality,
harmony, community, cooperation, and consensus” are valued and “power and hierarchy”
are less than ideal (Laloux, 2014, p. 31). Key attributes are “empowerment, a value-driven
culture and inspirational purpose” in addition to a “multiple stakeholder perspective” (pp.
32-33) where many organizations overlaid the concept of shared leadership on top of a
traditional hierarchy.
Laissez-faire Leadership. Described by Bass and Avolio (1994) “Laissez-faire
(LF) style is the avoidance or absence of leadership and is, by definition, the most inactive

29
as well as the most ineffective according to almost all research on the style” (p. 5), thus
making it less relevant to this study. It has however been included as one of the three
modern leadership styles found in studies and so will also attract some if not limited
conversation in Chapter 2. It has been labelled by Wegner (2004) as “a nontransaction
between leaders and followers” (p. 24).
Leadership. Many authors provided definitions about the various forms of
leadership that have existed and many are interlaced with the management style of the time
and will be discussed at length in Chapter 2. One of the earliest modern comprehensive
definitions of leadership to be widely included in research studies is that of Burns (1978)
who stated leadership was; “the reciprocal process of mobilizing, by persons with certain
motives and values, various economic, political and other resources, in a context of
competition and conflict, in order to realize goals independently or mutually held by both
leaders and followers” (p. 425).
Management. Rose (2005) provided a substantial explanation to start the dialogue;
First, there is a ‘technical’ explanation – that management arose to solve the
functional problems of large-scale organization. Secondly, there is an ‘elite’
explanation – that management arose to define and defend the interests of a
particular group, namely managers. Thirdly, there is a ‘political’ explanation – that
management arose in order to control and discipline workers. (p. 55)
Management as a theory will be fully reviewed, compared and contrasted in Chapter 2. It
will be deemed for the purposes of this study to be interchangeable with leadership as an
overarching concept as many of the management theories involved leadership and follower
elements.

30
Orange Organizations. The majority of organizations maintaining traditional top-
down hierarchical structures would be considered orange with “innovation, accountability
and meritocracy” (Laloux, 2014, p. 26) as key attributes and power being directed from
above, however with power and position being determined by performance and ability
rather than some noble title bestowed by birthright.
Shared Leadership. An umbrella term for all types of leadership originating with
the thought that leadership is “simultaneously multidirectional based on a dynamic give-
and-take relationship” (Pearce, Wassenaar, & Manz, 2014, p. 277). Small and Rentsch
(2010) pronounced it as “an emergent process of mutual inﬂuence, in which team members
share in performing the leadership functions of the team” (p. 203) based on the earlier work
by Pearce and Sims (2000). Multiple terms are used interchangeably and will be afforded
greater scrutiny in Chapter 2.
Teal Organizations. Presented “organizations as living systems” and key
attributes of “self-management, wholeness and evolutionary purpose” (Laloux, 2014, pp.
55-56) revolved around the individual first and then the organization.
Transactional Leadership. One of the modern leadership labels to emerge to
support the top-down management style (Bass, 1985). Some shared the thought that
transactional leadership was more about the leader than the follower (Burns, 1978;
Northouse, 2004), but was also focused on punishment and rewards (Avolio & Bass, 2002;
Northouse, 2004), where intervention was for the purpose of quality control of output and
could take a passive or active position (Rowold & Rohmann, 2009).
Transformational Leadership. Not a new concept, Burns (1978) explained the
idea of the transformational leader suggesting a focus on the follower, rather than the

31
leader. Bass and Riggio (2006) concurred that the transformational leader will inspire
followers by unifying values to modify attitudes.
Ubiquitous Connectivity. The last of Collins’ triggers influencing change.
Recognizing the other two, “accelerating change” and “escalating complexity” are
important; he suggested the always on premise of the “digital revolution” (Collins, 2014,
pp. 8-11) amplified the others and we are almost unconsciously unaware of our
connectivity and instant availability.
Expected Findings
Qualitative methodology can be used to further recommend additional research and
this study aims to be one of the pioneers in research on holacracy, just one of the shared
leadership models emerging in the 21st
Century. The significant difference between other
models that allow some self-determination via self-management or shared leadership is that
holacracy proposes to remove the top-down hierarchy and replace it with an organic self-
regulating organism. Difficult to represent in a 2D flat manner, holacracy is sometimes
considered simply a hierarchy of circles instead of boxes. Organizations who engage in a
dynamic governance approach may need to modify their talent management practices due
to the behaviors necessary to fit with the new structure.
Robson, Schlegelmilch and Bojkowszky (2012) included the elements of
competence, relatedness and autonomy reflected in Deci and Ryan’s self-determination
theory and it is anticipated these will interact with dynamic governance within the
organization. Self-determination is only an option if the opposite to top-down management
style of leadership is embraced by the existing leadership. It is expected that some

32
resistance will be presented by those not only losing their title and authority that goes along
with that title, but also those that no longer have any lead role in the new structure.
Organization of the Remainder of the Study
Holacracy as an organizational design has little academic research and so Chapter 1
contained more than a typical introductory chapter due to the inclusion of non-peer
reviewed literature to set the stage. This study had as its purpose the examination of people
who have experienced the move from traditional hierarchy to shared leadership and the first
chapter used industry experts to illustrate the change needed to move to complexity
Chapter 2 presents the peer reviewed literature on the theories supporting and intertwined
with organizational design and shared leadership. The methodology is outlined in
Chapter 3 with the discussion about data collection and analysis captured in Chapter 4.
Results, conclusions and recommendations are contained in Chapter 5.

33
CHAPTER 2. LITERATURE REVIEW
Introduction to the Literature Review
Karl Marx noted the industrial age created the factory system as larger corporate
structures began to emerge based on technological advancements of the time, bringing with
it significant impact to the working class (Mokyr, 2001). Transportation and
manufacturing led to the development of organizational structures to control the output and
profits for owners. Mokyr (2001) remarked that the introduction of best practices were an
unforeseen consequence of the factory system. Early in the 1900’s Taylor presented his
system of scientific management which evoked strict standardization of methods and best
practices to foster greater productivity. The industrial age has been replaced by the
information age and by the knowledge worker for a large percentage of organizations as
technology has removed the need for the production lines of the past in favor of robotics,
and the rise of the internet factored in a completely new set of considerations not
previously even imagined. As jobs change, so typically does the organizational structure.
Wheatley (2007) suggested organizations evolved in much the same way as
organisms in nature; whereas organizations were previously considered a separate physical
construct, they were now widely viewed as a collection of people who came together to
achieve mutual objectives. Sennett (1980) and Ackoff (1981) were pioneers in the early
eighties of what could be today referred to as corporate culture. Both authors wrote
seminal books on the topic, long cited by their contemporaries. More recently Ackoff

34
(2002) himself moved from his long held belief of the ‘God’ theory describing the ultimate
power of one individual as a relic of the past. Instead, Ackoff (2002) suggested as large
public companies shifted power to shareholders and other stakeholders, the organizational
structure shifted more to the sociocractic approach or in other words governance occurred
by a group of like-minded individuals driven by a common goal (Buck & Endenburg,
2003).
Scott and Winiecki (2012) outlined the migration from system models offered by
Ackoff to the typology of the new field of human performance technology (HPT), however
HPT offered “systemic thinking” and for the most part “mechanical, rational systems”
(p. 85). What is deficient in HPT is the discussion concerning open systems and inclusion
of personality or humanity within the organization. Checkland (2000), the pioneer in soft
systems methodology (SSM), came closest to holacracy insofar as SSM offered roles,
norms and values; however SSM suggested more of a framework for problem solving than
a complete organizational structure. Integrated product teams (IPT) or self-directed teams
(SDT) form the basis for the open system organizational framework holacracy presents,
and while research exists on IPT, SDT and hierarchical structures (Grigg, 2010; Kauffeld,
2006; Langfred, 2007; Proença, 2010; Zitek & Tiedens, 2012), there is no significant
research on holacracy specifically and its impact to employee efficiency.
The literature review provides some academic perspective on the theory behind
holacracy, which is for the most part, a non-peer reviewed extension of shared or
distributed leadership. Multiple sources, both peer reviewed and seminal books on shared
leadership were at the center of sourcing relevant authors who contributed to the topic.
Google Scholar was utilized to obtain a wider source than simply relying on the databases

35
available in the Capella University online library. Once found via Google Scholar, the
articles were then accessed for academic integrity and only included if they met the peer
reviewed criteria. Many articles were utilized simply for the definitions of the different
terminology and labels attributed to leadership styles over the years. Additionally, 25
studies were reviewed to ascertain the positive and negative impacts these styles had on
performance.
Search terms used to source articles were shared leadership, distributed authority,
integrated product teams, transactional leadership, transformational leadership, laissez-faire
leadership, collective leadership, culture, management styles, teams, dynamic governance,
organizational citizen behavior, organizational performance, complex adaptive systems.
When looking specifically at the models of dynamic governance, additional search terms
were entered both into the Capella psychology database libraries and Google Scholar and
these included; appreciative inquiry, cellular networks, conscious capitalism, deliberate
democracy, lattice, public value approach, sociocracy, wiki management, wise democracy.
Additionally the terms that describe green and teal organizations along with holons that
describe the concept behind holacracy were engaged in searches. Further articles resulted
from reviewing the reference list in each article found and sourcing the original and
assessing the scientific merit and relevance.
Theoretical Orientation for the Study
There are multiple sub-theories that address changes in organizational structure;
these being leadership, classic organizational, self-determination, motivation and human
relations, nonetheless they all can place their roots back to management theory. It can be
argued that they are all intertwined and none exist in a vacuum. The fact that is significant

36
is that all these sub-theories have developed over time and evolved to meet the needs of the
society at the time (Kulesza, Weaver & Friedman, 2011).
Management and leadership at the organization level and managers and leaders at
the individual level, mirror the dichotomy illustrated by Antonakis and House (2002) who
suggested the first is bureaucratic-transactional and the other charismatic-transforming.
The prior has “control, contracts, rationality and stability”, the other has as its focus
“creating visions, promoting values, risks and changing the status quo” (p. 6).
Understanding the difference between management and leadership has been the topic of
many scholars, however most current or modern scholars writing from the turn of the 21st
century agree that “leadership has always been focused on behavior” and two separate
distinct constructs exist (Hyldelund & Fogtmann, 2011, p. 5). Hyldelund and Fogtmann
further noted that in order to achieve results and guarantee things get done, a hierarchical
structure was implemented. In contrast, “creating excitement and enthusiasm” (p. 5) in
order to achieve results was the key difference when defining leadership. A “paternalistic
relationship” (p. 13) was suggested and reflected the familial hierarchical structure where
the father was the head and all family members were under his control.
Viewpoint (2011) concurred with this in so far as the punishment and reward
system often seen in families and that managers were responsible for the direction,
implementation of objectives and the solving of problems. Managers, it seemed were not
held in high regard with Zaleznick (1978) commenting that it “takes neither genius nor
heroism to be a manager, but rather persistence, tough-mindedness, hard work, intelligence,
analytical ability and, perhaps most important, tolerance and good will” (p. 4). In contrast,
leadership was forward thinking and not so much concerned with the day to day, rather

37
instead of punishment and reward, the leader had “power to influence the thoughts and
actions of other people” (Zaleznick, 1978, p. 2) and created followership. In addition, the
leader had other qualities which were coined “emotional intelligence” or “self-awareness,
self-management, social awareness and social skill” (Goleman, 2000, p. 80).
Leadership style seemed to be influenced by whether the followers were indeed
ready to follow (Hersey & Blanchard, 1969). Earlier, Fiedler’s (1958) work discussed the
effectiveness of a leader as driven by style and situation, noting that true effectiveness
required both. It took many years to expand on his theory (Fiedler, 1996) and furthered the
belief held by Hersey and Blanchard (1969) in a correlation between an employee’s rank
within the organization and the ability to perform autonomously. The lower the employee
resided, the less autonomy the employee was capable of handling, in addition the
confidence in the leader and routine nature of the job impacted the effectiveness of
leadership (Fiedler, 1996). The growth and adaption of theories over time supports the
notion that management theory is not static, even for the same author and is in a continuous
state of transition.
Management theory over time has provided rigor and structure for organizations to
follow and holacracy as an organizational model is no different. In looking to the future, it
is well advised to review the past. Almusaileem (2012) suggested there were really three
distinct management theory periods that reflected changes over time; these being classic
which included bureaucratic, scientific and administrative management styles; human
relations which reflected the need to include the behavioral elements and was also known
as group dynamics, and contemporary which introduced the notion that not one style was

38
suitable for all occasions and managers were there to obtain the best from the workers
using the method or style best suited to the individual and the situation.
Pellissier (2011) had earlier reflected on management theories over time and while
concurred with the first two, suggested contemporary methods extended well past the
simplistic notion presented by Almusaileem. Table 1 illustrates the migration from
scientific management in the early formation of businesses through the behavioral
approaches during the war years, system or contingency approaches of the seventies and
eighties, the operational or lean manufacturing focused in the late eighties and early
nineties to the business improvement or key performance indicator period made possible by
technology and finally to the most recent complexity era that sees the return to the family
oriented framework which existed in the very beginning prior to Taylor.
Complexity and collaboration sees leadership driven by the needs of the worker and
the purest form of shared leadership or distributed power. It can be seen that many
contributors have taken part and the economic environment definitely was a contributing
factor in eliciting change in leadership style (Pellissier, 2011). In Table 1, it is necessary to
note that each period is not a clear number of years and the theories overlap from one
period to another as not all businesses were at the forefront of change. These periods and
their contributors’ theories are discussed in order to understand the development of
management to leadership and beyond. Each has their strengths and weaknesses and
contributes to why shared leadership or distributed power may or may not be a viable
leadership model for the next generation of workers.

39
Table 1. Summary of Evolution of the Management Models
Period Focus Contributors Environment
Scientific management
(late 1700s to early
1900s)
Specialization,
Functional Approach
Work Study
Assembly lines
Administrative Theory
Planning and Control
Systems
Smith, Watt, Babbage,
Taylor, Fayol, Galbraith,
Ford, Sloan
Industrial Revolution
World War I Depression
Professional Managers
Behavioral Sciences
(1940-1960)
Participation, Incentive
Schemes, Ergonomics,
Hawthorne Studies
Mayo, Barnard, Drucker World War II
Unionization
Reconstruction
Management Science
and Systems
Engineering (1960-
1980)
Operations Research
Simulation Modeling
System Dynamics
Systems Engineering
Logistics,
Total Quality
Management
Forrester, Deming,
Juran, Blanchard
Economic growth
Rise of the defense
industry
Cold War Oil crises
High Technology
Investments
Vietnam War
Operations Management
(1980-1990)
Manufacturing
Planning and Control
Just-in-Time,
Business Logistics
Productivity
Management
Lean production
Ishikawa, Taguchi,
Shingo, Juran
Competitiveness Rise of
Japan
Large military spending
Economic recession
Business
Transformation (1990-
2000+)
Strategic Management
Business Reengineering
Theory of Constraints
Benchmarking
Information
Technology,
Organizational Learning
Hammer, Davenport,
Martin, Senge, Goldratt,
Porter, Prahalad, Hamel
Transformation of
various governments
New world order
New socio-economic
problems
Dominance of IT sector
[And, more recently]:
Complexity (2000+)
Complex adaptive
systems (CAS)
Non-linearity
Collaboration
Resilience
Innovation
Emerging Networked environment
Pattern seeking
Follows questions
Technology is intrinsic
Business as an organic
collective
Reprinted from The Implementation of Resilience Engineering to Enhance Organizational
Innovation in A Complex Environment, p 162, by R. Pellissier, 2011, International Journal
of Business and Management. Copyright 2011. International Association of Organizational
Innovation.

40
Management Theories
Scientific Management (late 1700s to early 1900s)
Frederick Taylor is undoubtingly the founder of management theories in the United
States, as many of the modern theories on leadership can trace their roots back to Taylor.
While Taylor endeavored to study the employee process to improve performance and pay a
fair wage for a fair contribution, he lacked the understanding that modern leadership
theories have captured; that is that financial rewards are not the only incentive needed for
employees to be engaged and effective (Cheretis & Mujaba, 2014).
Scientific Management Theory. Scientific management in its simplest terms was
a theory that would lead to “increased productivity, lessened costs, enabled lower prices,
and, as a result, more sales and greater profits” (Crainer, 2003, p. 48). Taylor wanted to
make things better, and while attractive to employers as they could accurately predict
outcome, it resulted in manufacturing workers being reduced to working in a system of
payment per piece which led to a reduction in pay for many employees. The government
even got involved in 1912 with the banning of stopwatches in government facilities
(Crainer, 2003).
Taylor was somewhat an idealist and wrote in his book, The Principles of Scientific
Management that, “The principal object of management should be to secure the maximum
prosperity for the employer, coupled with the maximum prosperity for each employee”
(Taylor, 1911, p. 17). This rarely came true unless all companies operated under the same
principles. The downside of Taylor’s approach if one has to be found was that the role of
manager or supervisor was to measure the results of output, not necessarily contribute to
the output; the upside to measuring output was that management knew exactly how long it

41
would take to make something and that the output would be consistent (Drucker, 1998). In
addition to the downside noted above, the more pressing downside was that ethics often
limited efficiency.
Administrative and Bureaucratic Theory. Henri Fayol and Max Weber being
French and German respectively contributed to their work being ignored in their times, as
their works were not translated into English (Cheretis & Mujaba, 2014). Cheretis and
Mujaba (2014) explained that the administrative and bureaucratic approaches for the first
time were focused on the structure of the organization and not the process to increase
efficiency. Crainer (2003) suggested Fayol was responsible in making the term
management a discipline in its own right and the Frenchman perpetrated that management
was universal to all businesses, regardless of what type of business. A fundamental
extension of Fayol’s work was that management if defined as a principle, could therefore
be taught and this is proven in the western world all these years later by the fact that a
Master of Business Administration degree exists (Crainer, 2003).
Fayol’s 14 ‘general principles of management’, as outlined in Crainer’s 2003 work
were described as:
the universal characteristics of management included the division of work; authority
and responsibility; discipline; unity of command; unity of direction; subordination
of individual interest to general interest; remuneration of employees; centralization;
the scalar chain; order; equity; stability of personnel; initiative; esprit de corps.
(p. 42)

42
Wren and Bedeian (1994) used Fayol’s own statement:
All employees in an enterprise participate to a degree in the administrative function
and have occasion to exercise their administrative faculties and be noticed for them.
Those who are particularly talented can climb from the lowest rung to the highest
levels of the hierarchy of an organization. (pp. 213-214)
to illustrate Fayol’s emphasis on organizational structure. While Taylor was focused on
process, it is clear from this statement Fayol was beginning to move away from simply
process and towards people, although in reality it was more about rules the people would
adhere to and less about providing any autonomy to the workers.
Like Fayol, Weber had principles that were fundamentally based on rules and many
authors (Albrow, 1990; Du Gay, 2000; Hennis, 1988; Kalberg, 1980; Scaff, 2000)
discussed these in their works on management theory. They described these rules as being
something that was inherent in the human condition; in some way a social force that
conditioned a hierarchy or a rationale for contributing to society through work behavior
even if decisions made within the organization differed from the individual. This was only
true when the individual felt the organizational decisions were legitimate. Cheretis and
Mujaba (2014) along with others (Ostrom & Ostrom, 1971; Ostrom, Tiebiut & Warren,
1961; Savas, 1987) reflected some limitations to an organization that became too
bureaucratic as while engaged employees could assist in company growth, too much red
tape or levels of hierarchy in decision making could quickly act as a demotivating force for
once-engaged employees.
Bartels (2009) concurred and suggested that bureaucracy encouraged “mindless
implementation of hierarchical orders, which leads to justiﬁcation of inhumane action and

43
misplaced social outcomes” (p. 456). Osborne and Plastrik, (1997) discussed and defined
bureaucracies as:
systems designed by a genius to be run by idiots. That may be a little harsh, but it
contains a kernel of truth. In the soul of the bureaucratic machine there lurks a
control freak. Employees are cogs in a highly regulated machine. Their work is
broken down into different functions and described in great detail. Managers do the
thinking; workers do the task they are assigned. Detailed rules and procedures
specify behaviors. (p. 17)
Behavioral Sciences (1940 to 1960s)
The individual or worker as a separate entity and not an automaton began to appear
after World War II and the concept of motivation was introduced as significant in reaching
organizational goals (Jones & George, 2011). Taylor being the previous pioneer in
management theory had a challenger in 1913 when Hugo Munsterberg’s human relations
theory (HRT) started to replace his theory of scientific management and HRT could be
seen as the dawn of industrial psychology (Almusaileem, 2012).
Péter and László (2008) discussed the influence the world wars had on management
theory and while Taylor had become a success in Europe even more so than French born
Fayol; the impact of the Second World War (WWII) can be seen as far more influential in
the evolution of management theory in the United States. Peter Drucker was a Fayolian
advocate and brought these theories to the United States during the migration of Europeans
after WWII.
Human Relations Theory. Kurt Lewin, Chester Bernard and Mary Parker Follett
followed Munsterberg; however the most notable perhaps was George Elton Mayo who ran

44
experiments to determine scientifically the impact to production when including behavioral
facets. Mayo began his work in Australia and travelled to the United States in 1926 and
contributed significantly to the establishment of what is now known as organizational
behavior. Morsi and Idris (2001) presented the results of Mayo’s research which described
workers as having the following qualities:
the individual is a human being who has both a psychological and social
composition; the individual is a member of an informal group whose behavior is
influenced by the values and behavior patterns of that group; the individual's
productivity is affected more by the increased attention, recognition, and
appreciation on the part of supervisors and management, and not by the increase of
wages and other material factors; the management should be aware that the
improvement of human relations, social contacts, and moral rewards are important
factors for work motivation and increasing productivity. (p. 66)
The human relations movement gained much by the contributions of Mayo,
however as Rose (2005) argued, HRT had many other pioneers prior to Mayo and even the
Hawthorne Studies of the 1920’s and 1930’s could not take all the credit in leaping to a
seemingly diametrically opposed alternative to Taylor’s vision. The Hawthorne studies
illuminated the influence modifying the environment had on the workers; nonetheless the
simple inclusion of the control group had an increase in production output (Halpern,
Osofsky & Peskin, 1989; Rose, 2005). Rose furthered there had been evidence of the
Quakers and other religious groups wanting to “meet the moral needs of workers” (p. 45).
In contrast, Taylor was seen as wanting to devoid the organization of the human or
informal aspects, whereas that wasn’t entirely the case, he simply wanted to “overcome its

45
effects” (Rose, 2005, p. 45). Taylor’s vision fell considerably short of the behavioral
movement in many respects, nonetheless it reflected a style to “avoid human relationships”
while HRT reflected a style to manage “through human relationships” (Rose, 2005, p. 46).
While Scientific and HRT perhaps considered a dichotomy which presented an either or
scenario, contemporary theories expanded to illustrate the need for context and not one
approach for all, as was the case with the classic and human relations periods of
management theory.
Lewin was the first psychologist to label management styles and included
“authoritarian, democratic and laissez-faire” (Péter & László, 2008, p. 189) in the results of
his research into group leadership. Follett is most representative of a holacratic approach to
management as the term democratic governance was first introduced in her work. Cheretis
and Mujaba (2014) reflected on comments made by Follett and Graham in 1995 about
Follett’s earlier works:
Follett’s brand of democratic governance cannot be achieved by the mere transfer
of formalized powers or by passive acquiescence to what is done in our name. It can
be created only through the decisions of the individuals directly involved in a
situation. (p. vii)
They furthered when they remarked that Follet’s work “indirectly corrected flaws in
that theory by taking a horizontal instead of a vertical chain-of-command approach to
authority and understanding the importance of employee empowerment to creating value
for a company” (Cheretis & Mujaba, 2014, p. 6).
X&Y Theory. Douglas McGregor, the notable author of Theory X and Y or the
punishment and reward management practices added to the conversation around behavior

46
and attitude and their impact on performance (Cheretis & Mujaba, 2014). These authors
remarked that McGregor’s Theory X and Y could also be the foundation to “value-driven
management” (p. 6), with the treatment of employees directly contributing to their actions.
This value-driven style can be reflective of the thoughts and drivers of the employers, with
micro-management and little autonomy being given to employees as the key element to
theory X and the view that people were lazy and only contributed through fear of
punishment. Theory Y in contrast, found employers showing trust in employees to
contribute and rewarded them and viewed employees as wanting to contribute and have
some autonomy.
Managers who functioned under a Theory X style operated using assumptions about
the employees that included; “people dislike work and will avoid if possible” and “the
average human prefers to be directed, wishes to avoid responsibility, has little ambition,
and wants security” (Bobic & Davis, 2003, p. 244). McGregor (1960) himself suggested
people needed to be “coerced, controlled, directed, and threatened with punishment to get
them” (pp. 33-34) to work. Other authors, (Tausky, 1992; Wilkinson, Godfrey &
Marchington, 1997) proposed that perhaps if a worker did not know how or did not have
the skill to perform a task, this could be construed as laziness; whereas what was needed
was initial direction, rather than ongoing micromanagement.
McGregor had identified the management style that had emerged as a result of the
Great Depression and the world wars and named it Theory X. In the 1950’s after studying
enterprises for the last 30 years, he reflected upon other assumptions made by another
management style and named this Theory Y. Assumptions McGregor (1960) concluded
that contributed to this new management style were:

47
the expenditure of physical and mental effort in work is as natural as play or rest;
external control and the threat of punishment are not the only means for bringing
about effort toward organizational objectives. Man will exercise self-direction and
self-control in the service of objectives to which he is committed; commitment to
objectives is a function of the rewards associated with their achievement; the
average human being learns, under proper conditions, not only to accept
responsibility but to seek it; the capacity to exercise a relatively high degree of
imagination, ingenuity, and creativity in the solution of organizational problems is
widely, not narrowly, distributed in the population; under the conditions of modern
industrial life, the intellectual potentialities of the average human being are only
partially utilized. (pp. 47-48)
The basis for these changes concentrated around how the idea or work had changed from
the 1920s to the 1960s with the resemblance to Maslow’s (1943) hierarchy fading as the
basic needs of individuals were met and now people looked at other aspects in their
working life.
The significant changes were noted by Bobic and Davis (2003) and career paths,
job security and satisfaction along with the preference of creativity over security were the
issues important to the current worker. Bobic and Davis also noted that while there were
emerging changes from the employee perspective, there was the long-held belief a worker
could be guaranteed a job for life with a company, should they want it. This is not the case
today. McGregor himself had surmised that Theory X wasn’t necessarily the best or most
productive management method and commented in 1960, “Only the management that has
confidence in human capacities and is itself directed toward organizational objectives

48
rather than toward the preservation of personal power can grasp the implications of this
emerging theory” (p. 160). Early management theories continue to be examined and used
as a basis for development of current theories, whether consciously or subconsciously, as is
the case of holacracy as McGregor’s Y theory can be seen in its distributed authority.
Cheretis and Mujaba illustrated this when they commented in their article printed in
an Advanced Management Journal in 2014 about Theory Y as being a “form of
management [that] leads to higher employee satisfaction and productivity in the long term”
(p. 6). Bobic and Davis (2003) earlier than Cheretis and Mujaba argued against the
wisdom of Theory Y as being the magic panacea for maximum performance and Theory X
as being archaic due to human nature. While a decade could make a significant difference,
Bobic and Davis made a rational argument insofar as the more creative the individual, the
more they would be in favor of a Theory Y form of management. In opposition to that,
Theory X was in a lot of ways based on Maslow’s theory of needs and the authors and
other scholars (Fernando, 2001; Staw & Epstein 2000) suggested that Theory X is still
prevalent, not because of its superiority over Theory Y, rather that Theory Y is lacking in
understanding of basic human nature.
An argument could be made that using Maslow (1943) as a foundation of his
management theory presented limitations as Maslow’s research into motivation was at a
personal level and did not reflect the work context (Bobic & Davis, 2003). In addition, the
ability for an individual to reach the peak of Maslow’s pyramid is highly questionable in a
work setting (Hansen, 2000). Bobic and Davis further noted there was a suggestion that
Maslow’s work had a cultural bias, and there is little evidence that this management style
will be valid for a culturally diverse workforce. Lastly, Rowan (1999) contributed to the

49
conversation about the limitations in basing Theory X on Maslow due to the nature of
movement up and down the pyramid and the different needs necessary depending upon the
direction being taken.
Management Science and Systems Engineering (1960 to 1980)
The wars fundamentally changed the makeup of the workforce as women had taken
on roles previously considered the domain of men. In addition to this, soldiers needed to
readjust to being workers and not soldiers. The United States had thrived under the
influence of Taylorism in many industrial factories and this furthers the notion that there
was not a clear cut division of one management theory at a time as McGregor’s Theory X
and Y was evolving in parallel, along with the other behavioral based theories born from
HRT. Mele, Pels and Polese (2010) asserted that as far back as Aristotle, knowledge was
the contribution or understanding of the total entity rather than that of the single units.
With that being said, there were many that struggled with this as it related to management,
as previous theories had been more focused on the individual elements in the process as
was the case with Taylorism and the individual person in HRT.
A new approach dubbed systems theory reflected the interest in the dynamics
between the system and its parts (Bogdanov, 1980; László, 1996; Meadows & Wright,
2008; von Bertalanffy, 1968). Capra (1997) reflected on a holistic approach which was not
that different to the work of Follett and cited the work of others (Checkland, 2000; Jackson,
2003) that commented that a “shift in attention from the part to the whole” (p. 126) was
necessary to truly uncover what each individual part contributed. Management along with
marketing authors and scholars (Aldrich, 1979; Lawrence & Lorsch, 1967) adopted,
whether they consciously knew it or not, a perception of the organization as a system and

50
began to investigate how the organization and its environment were related. Mele et al.
(2010) discussed the earlier 1968 thoughts of von Bertalanffy where it was emphasized it
was not possible to accurately appreciate the phenomenon unless perceived from “a higher
level: a holistic perspective” (p. 126). This holistic approach differed from holacracy as
systems theory merely engaged in the departmental structure and one person one job,
holacracy has its core, roles and not jobs and that one person can fulfil multiple roles across
different departments.
General Systems Theory. A “complex of interacting elements” was how von
Bertalanffy (1968, p. 14) defined a system. Systems theory developed across multiple
disciplines as an organization is not that dissimilar to nature, nevertheless there were
nuances peculiar to some (Drew et al., 2014; Mele et al., 2010; Pellissier, 2012; Wheatley,
2007). Von Bertalanffy’s approach isolated the similarities and “focus[ed] on interactions”
(Mele et al., 2010, p. 127). Fundamental to the similarities were also the differences
individual elements would contribute with different interactions. Three distinct systems,
these being, open, closed and isolated were identified by von Bertalanffy and Mele et al.
(2010) explained the differences in that open systems combined “exchanges of energy,
matter, people, and information with the external environment”; closed systems reflected
“no exchanges of information and matter, just exchanges of energy” and isolated systems
presented “no exchange of elements” (p. 127).
Many of the sciences contributed to systems theory and have relevance to the
development of open systems; from psychology and sociology we obtained cognitive
aspects (Clarke, 2013) and cybernetic aspects were born from information technology
(Beer, 1972). The result of this contribution is many systems perspectives are still present

51
today, although many have been adapted over time. The viable system model and viable
system approach were notable additions to open system theory. What is of importance to
this phase of management theory is with the wide spread introduction of technology away
from just the factory or production floor, feedback is now available in a timelier manner.
Open Systems Theory (OST). Boulding (1956) along with Katz and Kahn (1978)
discussed the attributes of OST as they related to the ability of an organization to acclimate
to conditional changes in the environment. These changes redirected the energy exchanges
insofar as OST saw the organization as “a system built by energetic input-output where the
energy coming from the output reactivates the system” (Mele et al., 2010, p. 127). OST
suggested an organization able to entertain the notion of external drivers would be more
adaptable and recognize better results as a consequence.
Viable System Model (VSM). The viable system model as the name suggested
was focused on surviving and being adaptable to change (Beer, 1972). It had at its core
cybernetics or information technology that was able to provide feedback and then make
changes based on that feedback. In 2010, Mele et al. reflected on the work of Beer (1972)
and others (Christopher, 2007; Espejo & Harnden, 1989) and condensed how an
organization might use a VSM to restructure for improvement to three components, these
being; “ i) change management; ii) understanding the organization as an integrated whole;
iii) evaluating the essential functions of implementation, coordination, control, intelligence
and policy” (p. 128).
Viable System Approach (VSA). Organization and management combined in a
VSA approach and deliver sub-systems and supra-systems. It almost could be argued that
OST looked externally and VSM looked internal with VSA being the best of both. The

52
analyses of internal component relationships were at the heart of sub-systems and the
systemic influences and the contextual connections of the enterprise were the domain of
supra-systems (Barile & Polese, 2010; Spohrer, Golinelli, Piciocchi, & Bassano, 2010).
Systems Theory Application. Thinking in terms of systems presented the
evolution from independent thought and isolationism to the understanding of the
interrelationship between the organization, its workforce and its environment. The
organization as an entity could be seen to have its own personality and behavior (Mele et
al., 2010). Italian scholars Formisano, Fedele, and Antonucci (2015) were published in a
Chinese business journal and cited their fellow country people, Gatti, Biferali and Volpe
(2009) who mostly wrote in Italian. Gatti et al. (2009) were convinced the intersection of
individual lifestyles, motivations, conditions and social relationship dynamics all
contributed to organizational success. Polese (2010) another Italian scholar, echoed the
earlier thoughts of Gatti et al. (2009) when he stated individuals were important to a
business’ performance. Components of systems theory were applied directly to
management and are included in no particular order of relevance to organizational success.
It needs to be noted however that the concept of a system is reflective upon the perspective
of the observer and is contextual and may lack objectivity.
Senge (1990) was interested in how knowledge became part of the core personality
of an organization, similar to the ability of an individual to learn, develop and grow; an
organization has the capacity to develop. The ability to learn and develop its own
knowledge is created by the organizational system of skills and competencies (Nonaka &
Tacheucki, 1995). Value became a word associated with businesses and the act of value
creation was maintained both at the sub-system and supra-system levels as the organization

53
is viewed at the holistic level (Mele et al., 2010). Quality was reflected in management
with the Total Quality Management (TQM) movement and combined the notion of
knowledge directly into the process of relationships.
The environment is interesting as it relates to system theory as Brownlie (1994)
suggested it is merely a “mental representation embodied in a cognitive structure which is
enacted in retrospect and fashioned out of the discrete experiences of managers” (p. 147).
Moreover the environment is an intertwined network of relationships between stakeholders
(Pfeffer & Salancik, 1978). These authors attempted to define an organizational
environment as an elusive construct rather than the corporal notion understood when the
term is used to explain a concrete or physical structure. This constructed concept is more
useful than a physical one in that the interdependencies embedded into relationships
provide a better and clearer understanding into system thinking.
Relationships are between internal and external, both animate and inanimate within
and without the organization. The engagement between information, functions and people
is critical to system thinking. Mele et al. (2010) remarked moving from “static structural
relationships into dynamic interactions with other viable systems” (p. 131) is what will
make an organization competitive. An organization will limit its ability to be viable and
stable if it is unable to adapt. While adaptation and stability seem counter intuitive, Mele et
al. suggested it is the ability to adapt to “continual dynamic processes” (p. 131) that will
make organizations viable, stability is garnered by learning to adapt. Finally, complexity
as it relates to system thinking redirects the attention to networks and the interaction
between multiple systems. Networked systems combined variety, variability and

54
indeterminacy. It wasn’t until the early 2000’s that complex adaptive systems (CAS)
became part of the management theory conversation.
Total Quality Management. Pellissier (2011) included TQM as part of the
Management Science and Systems Engineering (1960 to 1980) period in part to move it
away from the behavioral aspects of the previous period, as it was much more focused on
process then behavior. Deming and Juran cited as being the fathers of Total Quality
Management (TQM), took the principles of Taylor’s scientific management approach to
Japan after the war in an attempt to rebuild the nation’s industrial sector (Péter & László,
2008). Shiba, Graham and Walden (1993) defined the 1950’s phenomenon rather
succinctly,
TQM is a learning system: Through TQM every size of unit, from individual to
team to company to region and nation, can learn how to learn. TQM can be thought
of a system for learning new skill for the benefit of society ….TQM as a system for
developing individual, team, company and national skill. (p. 534)
Leadership styles in Japan morphed the United States version of Taylorism into a
significant competitive advantage with modern analytical systems adding to defining a new
management methodology. United States scientists had developed “mathematical, logical
and statistical models and techniques” as a result of the war to assist with “long-term
military analysis, forecasting and planning” and when adjusted to business by Ansoff in
1965, created the new and separate discipline “strategic planning and strategic
management” (Péter & László, 2008, p. 190). In addition to the change in process
management theory, the inclusion of human aspects brought the dawn of the discipline of
Human Resource Management.

Dissertation - Holacracy - A Case Study of Dynamcic Governance for the Modern Workforce

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