Aimee Groth: Holacracy at Zappos: It’s either the future of management or a social experiment gone awry (2015/01/14)
Aimee Groth’s review of Zappos’ transition was still before 4,700 word email of Tony Hsieh to the Zappos staff in urging them to either fully embrace on the Holacracy journey or to accept a buyout. Groth points out the visionary path Tony Hsieh is following with the establishment of the Holacracy model:
“We want Zappos to function more like a city and less like a top-down bureaucratic organization,” Hsieh tells Quartz, saying that when cities double in size they become 15% more productive, but when companies double in size, productivity declines. “Look at companies that existed 50 years ago in the Fortune 500—most don’t exist today. Companies tend to die and cities don’t.”
Hsieh’s experiments with corporate organization make Zappos an important laboratory for confronting some of the plagues of large companies, including employee disenchantment and inability to take risks, move quickly, surface problems, and tap into the full staff’s best ideas. A wave of other companies, many of them tech startups, are similarly trying to reengineer management practices.
Many discussions on the Holacracy model are mainly focussing the elimination of the job titles and responsibilities. Also Rachel Silvermann starts her review on Zappo’s journey with this but also explains the key elements of the replacements within the Holacracy model – hierarchical command and responsibility structures are bundled to the circle structure and control mechanisms are implemented by the formalization of the feedback process. The substitution of the hierarchy of positions by the hierarchie of “circles” and the impersonalization of the feedback routines reduces the “noise” in meetings and focus to solve the business tensions.
Holacracy-driven employees establish their own priorities and raise problems with the rest of their “circle.” Meetings end with an opportunity for employees to say whatever is on their minds. Ms. Jimenez says she has heard employees say: “We got a lot done” and “I can’t wait to eat my leftover pizza for lunch.”
Each employee’s roles and circles are cataloged in a database where Zappos workers can look up the right contact person for a given task.
Laura Reston jumps on the bandwaggon of critical reviews – at least for the catchy headline. In her article she reviews some more articles from NYT, Quartz and other sources and points out to some specific challenges of the Holacracy model that Zappo is facing:
“Holacracy” is one of the most radical methods for reworking the office experience. Rather than simply shaking up workplace bureaucracies, it dismantles them altogether. The concept is simple. No one has a title. Everyone can work on whatever they like. To ensure that employees have some direction, they are assigned to “circles,” and team meetings can last for hours every day.
The irony is that holacracy is supposed to be a great leveler, tearing down red tape and formal bureaucracy that supposedly stymie creativity. And yet to make it work, holacracists have to attend hours of regimented meetings conducted with a procedural formality that seems antithetical to the original freewheeling intent.
Gelles’ article seems to be the impetus for Reston’s review- as it is been referenced in the earlier. Gelles seems to see Zappo’s CEO trapped to some kind of utopian vision that the author cannot really agree on. Most of his critics are aligned to the very formalized feedback structures of the “tactical meetings” of the Holacracy model and the value of the democrization of all voices in the company:
At Zappos, this means traditional corporate hierarchy is gone. Managers no longer exist. The company’s 1,500 employees define their own jobs. Anyone can set the agenda for a meeting. To prevent anarchy, processes are strictly enforced. At the June meeting, a trained facilitator, in this case a young bearded man wearing a blue baseball hat, followed the Holacratic method by asking attendees to “get here, get present, get now,” and encouraged everyone in the room to briefly check in.
The idea that all voices in an organization are equally valuable is antithetical to the way most companies are run. Inexperienced employees, the conventional wisdom goes, should learn from managers who know what they’re doing.
By contrast, Mr. Hsieh and other proponents of Holacracy argue that by marginalizing large swaths of the organization, important issues go unresolved and potential goes untapped.
Though not a specific review on the Zappo case the Linkedin post of Hilary Gallo is for me the by far best explanatory article on the core principles and its challenges of the Holacracy model. He clearly points out the key elements of the model:
- “Dynamic Steering”.
- Governance by Evolution.
- No Managers.
- Needs based.
- Role Clarity.
- Structured Meetings.
- Integrated Decision Making.
- Personal Development.
Mentioned in this article is also a recording of a tactical meeting at Springest, a Dutch training aggregator, that is also running the Holacracy model:
In a review in the preparing discussions for E20 SUMMIT 2014 by the title “Holacracy: Is this the logical step for the evolution of the organization?” Rogier Noort pointed out that you need a “open minded, flexible and progressive working culture” first to embrace with these techniques. In the same article Rogier also listed some views of some other experts like Jon Husband, Larry Hawes or Lee Bryant. The latter, Lee Bryant, brought up the following interesting aspects – that also give a little explanation for the struggle of Zappos:
There are other aspects of how people can collaborate and get work done in an environment with E2.0 or social business platforms that are not strictly part of the model, and I think these are also worthy of consideration, but what Holacracy seems to get right is the pure focus on tasks and resolving tensions that get in the way of their fulfilment, which I find refreshing compared to models of bureaucratic management.
Concluding the recap of the Zappos case study I come to the following open issues about Holacracy:
- For me the Holacracy processes are very much about the substitution of the command & control structures of the hierarchical management – by circles and meetings. It’s a transparent and agile way of managing projects – but what about gaining new insights, ideation and innovation processes or knowledge sharing processes. I might not be fully informed about the Holacracy model but I still missing references on how to organize these important processes.
- Furthermore – the feedback principles by “tactical” and “governance” meetings are still demanding quite some time of “sitting together”. What about multinational and decentralized teams that cannot sit together as seen in the meeting at Springest? Certainly there are possibilities of networked enabled meetings – but these might not create this intense moment of feedback routines as seen in the video.
- The “Getting Things Done” culture being set in place by the Holacracy model is just a management style culture – not the company culture. Also for Holacracy to be successfull a “purposeful” vision of the company is need and from this vision there must be a corporate culture being derived – in the case of Zappos this is the “wow the customer” culture.
- Last but not least – the impersonalization of the project management needs a “safe haven” – a place or process to breathe life into the corporate culture – especially when the company is decentralized.
So in many ways I come to the conclusion that Holacracy might be an interesting management approach that even more needs a connected and social network enabled organization underneath.
Looking forward to your comments and views on this.
Some more interesting links on the topic: