This might seem pedantically trivial, but my first reaction to holacracy was 'why should I trust your system when you can't even build a word properly?' The <i>Hol</i> part is is from <i>Holos</i>, Greek for whole. You could talk about a holarchy (a previous attempt at this sort of system) because a 'holorchy' would suggest a whole ball and 'holoarchy' is unwieldy. But 'holacracy' is such a linguistic mess that it conveys an air diving into something without having thought out the underlying assumptions properly.
See Frank Herbert's <i>Dune</i> or <a href="http://en.wikipedia.org/wiki/Second-order_cybernetics" rel="nofollow">http://en.wikipedia.org/wiki/Second-order_cybernetics</a> for additional context on the limitations of fixed models.