Circle Structure in Holacratic Organizations: An Analysis of How to Process Tension into Change

Digital transformation fuels the complexity of our environment and thus requires high levels of adaptability from organizations. This evokes the need for new organizational concepts and Holacracy promises to fill this void. Holacracy is a management system characterized by a special organizational structure to deal with the increasingly complex social and business environment. One way to address this complexity in holacratic organizations is done through so-called tensions. Tensions are associated with a potential for improvement that once processed initiate change within the organization. The main purpose of this article is to explore how holacratic organizations manage tension to achieve fast adaptability. The research is based on an interview study with members from different holacratic organizations. In this article, it is examined how tensions may play out in the field of digital transformation. First, five types of organizational tensions – strategic, structural, operational, interpersonal and Holacracy-specific tension – are identified that occur in the context of holacratic organizations. Second, it is found that specific triggering events as well as uncertainty and the individual’s drive for improvement contribute to the emergence of tension. Third, a common pattern of coping mechanisms – corporate culture, awareness raising, channels, changes and reflection – is determined through which tensions are processed. These factors may need further elaboration on how they affect organizations that face the complexity of digital transformation.