Zappos, the online shoe retailer that revolutionized the way internet retailers think about customer service, is making its most extreme company change yet. According to Quartz, during the company’s Q4 meeting last month Zappos CEO Tony Hsieh announced that Zappos would be undergoing a major conversion into a Holacracy, a system devoid of job titles and managers. Zappos will be the largest company to date to go holacratic.
A Holacracy is a system of governance where decision-making is distributed between groups of employees rather than solely in the hands at the top of a hierarchy. By the time the holacracy rollout is complete in December 2014, Zappos employees will fill 400 such groups, termed “circles.” Within these circles employees can take on any number of roles.
One goal of the transition to Holacracy is to make sure Zappos doesn’t become bureaucratic and nonfunctional as its employee base grows larger, which can be a common problem for small companies as they scale up. “Zappos’ focus on core values and culture has done a remarkably good job of getting around the limits of a conventional corporate structure,” Brian Robertson, founder of the management consultancy HolacracyOne and advisor to Hsieh, told Quartz. “Leaders that already understand the limits of conventional structures are the ones that are attracted to Holacracy.” With its current 1,500 employees, it’s important that Zappos make this transition now before it loses sight of its company culture based in customer service.
Other objectives guiding Zappos’ transition to Holacracy are to increase transparency and encourage employees to be more productive and entrepreneurial. Since in a Holacracy employees have no defined roles, they are not limited to fulfilling set requirements and thinking inside the box. Holacracy should encourage them instead to seek roles that best fill their skill sets while setting a sky-is-the-limit attitude.
Do you think your company could benefit by transiting to a holacratic structure?
Featured image by Delivering Happiness Book
Very exciting stuff. Also scary, which makes the undertaking quite admirable. Will be watching this one closely to see how it turns out and what can be learned from it. Even though bigger corporations won’t be switching over in this manner, hopefully they will take lessons from the Holacratic model.
Most companies in business prior to 2000 will have difficulty accepting this concept. I, for one, think it’s a great idea especially in the field of marketing.
I think this may work better for small companies and start-ups, the sort of businesses where employee input is often highly valued.
I can see that system working beautifully as long as everyone is motivated, functioning and money is coming in–that is the business is enjoying success. My question is who is going to make the hard decisions about cutting back in certain ways, changing courses of telling a no longer motivated co-worker who is slacking off that he or she is not pulling his or her weight and should leave?
Based on my experience (ex-Nav’ Instr.) every circle-jerk needs a pivot man, or anarchy reigns.
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