Design principles for long-lived circular organization: An Ostromian perspective

Circular organizational templates such as holacracy and sociocracy have gained popularity. In such organizations, all members have rights to participate in decision-making. Which factors enable such organizations to sustain their circular form? We investigate 18 highly diverse circular organizations to answer this question. Our findings show that Elinor Ostrom’s design principles for avoiding the tragedy of the commons may also explain circular organizations’ longevity. With regard to their relevance, we sort these principles into three groups: indispensable, queasy, and quite unproblematic principles. Our main theoretical contribution is to show that circular organizations can be understood as commons, and thus to make research on the governance of commons fruitful for the design of circular organizations. We show that implementing circular forms has to mind especially the queasy design principles of monitoring, graduated sanctions, conflict resolution mechanisms, and balancing individual contributions and rewards. • Ostrom’s design principles - especially congruence, monitoring, graduated sanctions, and conflict resolution - enable circular organization (e.g. Sociocracy, Holacracy). • For congruence, benefits and costs of participation must be balanced. • For monitoring, people must take responsibility to point out unpleasant problems. • Rules for graduated sanctions increase people’s willingness to monitor. • For conflict resolution, not only social skills but also sufficient objective evidence are needed.