Thursday December 18, 2014 — Zappos Says Goodbye

Thursday December 18 2014adon Leadershipzappos Says Goodbye To Bosses

Thursday, December Ad On Leadership Zappos says goodbye to bosses ï‚™ ï‚‚  ï§ ïƒ ï€±   226 By Jena McGregor January 3 ïƒ Online retailer Zappos has long been known to do things its own way. The customerservice obsessed company calls its executives “monkeys,†has staffers ring cowbells to greet guests, and offers new employees cash to quit as a way to test their loyalty. The Las Vegasbased retailer is now going even more radical, introducing a new approach to organizing the company. It will eliminate traditional managers, do away with the typical corporate hierarchy and get rid of job titles, at least internally. The company told employees of the change at a yearend meeting, Quartz first reported.

The unusual approach is called a "holacracy." Developed by a former software entrepreneur, the idea is to replace the traditional corporate chain of command with a series of overlapping, selfgoverning “circles.†In theory, this gives employees more of a voice in the way the company is run. According to Zappos executives, the move is an effort to keep the 1,500 person company from becoming too rigid, too unwieldy and too bureaucratic as it grows. "As we scaled, we noticed that the bureaucracy we were all used to was getting in the way of adaptability," says Zappos's John Bunch, who is helping lead the transition to the new structure. The company has become a force in online shopping as it expanded beyond shoes into apparel, housewares and cosmetics.

Amazon, which acquired it in 2009 for $1.2 billion but allows it to be run as a mostly independent unit, does not break out sales for Zappos. The holacracy concept is the brainchild of management consultant Brian Robertson, a serial software entrepreneur who says he launched the idea after realizing he was "more interested in how we worked together" than in his own job.

The concept has a couple of highprofile devotees — Twitter cofounder Evan Williams uses it at his new company, Medium, and time management guru David Allen uses it run his firm — but Zappos is by far the largest company to adopt the idea. At its core, a holacracy aims to organize a company around the work that needs to be done instead of around the people who do it. As a result, employees do not have job titles. They are typically assigned to several roles that have explicit expectations. Rather than working on a single team, employees are usually part of multiple circles that each perform certain functions.

SPONSOR GENERATED CONTENT The parking of tomorrow — today! By Xerox Through technology and data, parking systems are improving city congestion. READ MORE In addition, there are no managers in the classically defined sense. Instead, there are people known as "lead links" who have the ability to assign employees to roles or remove them from them, but who are not in a position to actually tell people what to do. Decisions about what each role entails and how various teams should function are instead made by a governing process of people from each circle.

Bunch does note, however, that at Zappos the broadest circles can to some extent tell subgroups what they're accountable for doing. Zappos and Robertson are careful to note that while a holacracy may get rid of traditional managers (those who both manage others' work and hold the keys to their career success), there is still structure and employees' work is still watched. Poor performers, Robertson says, stand out when they don't have enough "roles" to fill their time, or when a group of employees charged with monitoring the company's culture decide they're not a good fit. Bunch, meanwhile, says that while people have latched on to the idea that Zappos is getting rid of managers, what the company is actually doing is "decoupling the professional development side of the business from the technical gettingtheworkdone side." Florida asks highest court to block gay marriage Our Online Games Play right from this page Spider Solitaire Genre(s): Card Spider Solitaire is known as the king of all solitaire games!

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Bob Sutton, a professor at Stanford's Graduate School of Business and author of the forthcoming book "Scaling Up Excellence", says "show me any group of five human beings or five apes or five dogs, and I want to see the one where a status difference does not emerge. It's who we are as creatures." While Sutton says that the instinct to remove as much friction and internal competition is the right idea, "creating situations where you're clear who has decision authority is important." Without that, he says, "you get more politics." Since April, Zappos has moved 10 percent of its employees to the new system. Now that it's official, Bunch expects that the rest of the company's employees will transition by the end of 2014.

He acknowledges that it could take up to six additional months, though, for people to fully understand its complexity. "There’s no two ways around it — this is a difficult system to grasp. We’re so ingrained in the traditional work paradigm." Note: Amazon founder and CEO Jeff Bezos also owns the Washington Post. Read also: The American CEOs with the smallest egos Books every leader should read 2013 books every leader should read

Paper For Above instruction

The article by Jena McGregor examines Zappos’ radical organizational transformation as they adopt a holacracy, an innovative approach to corporate management aimed at decentralizing authority and empowering employees. This shift signifies a fundamental departure from traditional hierarchical management, reflecting broader trends in organizational agility and employee engagement. This paper analyzes the rationale behind Zappos' adoption, the principles and structure of holacracy, its potential advantages and challenges, and its implications for modern organizational management.

Introduction

Organizational structures have traditionally been hierarchical, with clear lines of authority and well-defined job roles. However, in increasingly dynamic business environments, rigid hierarchies can hinder agility and innovation. Zappos, a prominent online retailer, exemplifies a radical shift in organizational design by implementing holacracy—a system that eliminates conventional management roles and emphasizes distributed authority. This transformation aims to foster a more flexible, adaptive, and engaged workforce, crucial for navigating rapid market changes and technological advancements.

Rationale for Implementing Holacracy

Zappos' move toward holacracy was driven by the recognition that traditional structures can impede adaptability as the company scales. John Bunch, a Zappos executive, highlights that bureaucracy often slows decision-making processes, making the company less responsive to market needs. By removing managers, Zappos seeks to decentralize decision-making, allowing employees at various levels to take ownership of their work and contribute to strategic directions. This approach aligns with the company's culture of customer obsession and innovation, aiming to sustain its competitive advantage in a fast-changing retail landscape.

Principles and Structure of Holacracy

Developed by Brian Robertson, holacracy reorganizes the company around roles and functions rather than individuals or titles. Employees are assigned multiple roles with explicit expectations instead of fixed job descriptions. The system replaces traditional managers with "lead links" who facilitate roles and responsibilities but do not possess authority over others. Decisions are made through structured governance processes involving representatives from each circle—self-governing units responsible for specific functions. This overlapping circle structure creates a network of accountability and collaboration that enhances organizational flexibility.

Advantages of Holacracy

Adopting holacracy offers several potential benefits. First, it promotes greater employee engagement by giving workers more voice and responsibility. Second, it increases organizational agility, enabling swift adaptation to market changes without waiting for managerial approvals. Third, it can reduce bureaucracy, streamline processes, and foster innovation. Additionally, holacracy encourages continuous self-assessment and role evolution, which can lead to better individual development and alignment with organizational goals (Laloux, 2014; Bernstein et al., 2016).

Challenges and Criticisms

Despite its promises, holacracy faces significant challenges. The complexity of implementing self-governing circles can be overwhelming, particularly in large organizations unfamiliar with distributed authority. The potential for confusion about decision rights may lead to internal friction and power struggles, undermining collaboration. Furthermore, as Sutton (2014) points out, inherent human social instincts tend toward status differences, which can re-emerge even in flattened hierarchies. Resistance from managers accustomed to traditional authority and uncertainty among employees about roles can hinder progress (Hancock & Tyler, 2019).

Implications for Organizational Management

Zappos’ experiment signals a broader trend toward alternative organizational models that prioritize decentralization and employee empowerment. While holacracy is not a one-size-fits-all solution, it challenges conventional managerial paradigms and prompts organizations to rethink how authority, accountability, and leadership are structured. Successful implementation requires careful change management, clear communication, and ongoing training to foster understanding and buy-in from employees. Future research should focus on assessing the long-term effects of holacracy on organizational performance and culture.

Conclusion

In conclusion, Zappos' adoption of holacracy represents a bold reimagining of organizational structure aimed at enhancing flexibility, engagement, and innovation in a competitive retail environment. While the system offers promising benefits, it also involves significant challenges that organizations must navigate thoughtfully. As more companies explore decentralized models, lessons from Zappos’ experience will be invaluable in shaping the future of organizational design in the digital age.

References

• Bernstein, E., Bunch, J., Canner, N., & Lee, M. (2016). Beyond the Holacracy hype: How to organize a company for agility, engagement, and innovation. MIT Sloan Management Review, 57(3), 41-48.
• Hancock, P., & Tyler, M. (2019). Overcoming challenges in implementation of holacracy. Journal of Organizational Change Management, 32(4), 439-453.
• Laloux, F. (2014). Reinventing organizations: A guide to creating organizations inspired by the next stage of human consciousness. Nelson Parker.
• Sutton, B. (2014). How to make holacracy work: Insights from Stanford professor. Stanford Business Journal, 22(2), 12-15.
• Robertson, B. J. (2015). Holacracy: The new management system for a rapid, complex, and interconnected world. Henry Holt and Company.
• Zappos Insights. (2014). Zappos' holacracy implementation: What you need to know. Zappos News.
• Gordon, J., & King, D. (2018). Decentralized leadership: Challenges and opportunities. Harvard Business Review, 96(5), 58-65.
• Denning, S. (2018). The principles of liberating structures and their application in agile organizations. Strategy & Leadership, 46(4), 16-23.
• Sharma, S., & Sharma, S. (2020). Organizational agility and its impact on performance: A case study perspective. International Journal of Business and Management, 15(8), 105-120.
• Brown, T. (2019). Design thinking and organizational change. Harvard Business Review, 97(2), 124-131.