Recently, I was reading about Zappo’s transformation to a Holacracy model, which essentially means it has become a flat organizational structure without the traditional hierarchy of “boss-employee.” The employees form workgroups or circles based on tasks or processes that need accomplishing. As you may know Zappos has a history of doing things differently and getting great results. They have a culture of innovation, empowerment and customer service that led to fast growth and their acquisition by Amazon.
So, I was curious, why would they adopt this model now? What problem were they trying to solve? What is the purpose? I couldn’t find one other than CEO Tony Hsieh’s need for “new, change, different, exciting,” which have been themes in the past that have worked for the company. Holacracy is a belief system that says we are all equal and capable of doing anything and we don’t need to be micromanaged to do it. My question is, was there micromanagement going on? Did employees feel disempowered? Were things such as deadlines and processes not working? From all news reports, the answer is “no.”
Holacracy as Culture
Holacracy becomes the culture of an organization, and a belief system all must abide by. The training for the new culture process is 4 weeks for every employee, so cost savings were obviously not the goal. And it turns out, Zappos lost 200 employees who said “not for me” and left with a nice severance after this new culture was put into place. I wonder if they believe that productivity will go up and by when? What is the ROI on the process change? As with any organization, that has to be a factor. What is the expectation after having the company completely shifted over to this model?
I don’t know if Holacracy is good or bad. I know it’s different, however, and different without a stated purpose can be referred to as “Bright Shiny Star Syndrome” that all entrepreneurs are tempted by at some point in their evolution. Zappo’s culture likes change, they like bright new shiny objects. However, change for change’s sake usually leads to more chaos and less productivity. A lot has been said about the X, Y, and Z generations of workers preferring the flat organizational structure vs. the typical hierarchy. I think it’s more a matter of finding a company whose purpose and values they believe in, where they are recognized for their work and can make a difference. Ultimately, some employees will be drawn towards a holacratic structure, just as many were drawn towards communes in the 60s and 7’s. There is something very socialistic about it.
Until someone can show what the stated purpose, outcome, or goal is for moving to this structure and the results against those purposes, I will be wary of its “fad” nature. Unlike Deming’s revolutionary management practices and Lean Management results, Holacracy has yet to show results against purpose.