Self-Management at Zappos

Zappos Logo Several articles have appeared in the last month or so on the implementation of  self-management at Zappos. After having adopted Holacracy, which is based on the principles of sociocracy, Tony Hsieh, CEO of Zappos, sent a memo on 24 March 2015 to employees offering three months of salary to any employee who would read a book on Holacracy and quit if they were still not happy in an organization based on self-management.

It was a long complex memo, and not a simple command to “self-organize or leave” as it has been portrayed. Hsieh said:

Our main objective is not just to do Holacracy well, but to make Zappos a fully self-organized, self-managed organization by combining a variety of different tools and processes.

The full email/memo is on the Quartz site.

Zappos has regularly paid new employees if they decided the new job wasn’t for them and quit in the first month or so. But for this offer 14% of Zappos employees, 210 people, quit. Undoubtedly many were planning to leave for other reasons,  like the move in 2013 to downtown Las Vegas. This was just a convenient time to leave. Thus far there hasn’t been an analysis published on why the employees left. It may well have been poor implementation and confusion, not the expectations to self-manage and self-organize.

And we also don’t know why the 86% of Zappos employees stayed. It may also have nothing to do with liking the new system.

Why Self-Organizing and Self-Management Are So Hard

Why Self-Organizing is So Hard is a blog post by Bud Caddell, a founding member of the NOBL Collective. NOBL is a consulting network that works with organizations to empower “the creativity and capability required for a world of constant change.” They work to “to re-align teams, refocus products, and re-imagine work for the 21st century.” Caddell has worked in an organization using Holacracy and NOBL uses elements of sociocracy, Holacracy, and other self-governing methods in their work.

AntHill
People aren’t ants and organizations aren’t immune systems.

Caddell’s analysis compares Holacracy to a game of Dungeons and Dragons:

Holacracy, itself, is too complex, dogmatic, and rigid. It feels like playing a game of Management Dungeons and Dragons. Everything you already understand about working in teams is reinvented with confusing language (e.g. circles, tensions, IDM, etc.) and a confusing process. Because of this frustration, some companies are trying to pioneer a cognitively slimmed down version. Blinkist, for example, calls theirs Holacracy Lite.

The same can be said of sociocracy when people begin emphasizing structure before purpose, playing the language card—go directly to jail, do not pass go, do not collect $200—when someone says agree instead of consent. Or insisting on the distinction between a top circle and a board of directors. It diverts the emphasis from “a more humane way of organizing” to “the right  way.” As if the right language will produce accomplishment of the purpose.

Unless the right word means the accurate and commonly understood word that conveys meaning naturally, it is an impediment to those who are trying to get their work done.

Too often, right means “our word or your word but only in the way we define it.”

Ordered or Programmed?

It’s a thin line between order and homogenization.

An organization isn’t an operating system. It is like an operating system in that all the parts need to work together without conflict so they all contribute to  achieving the same purpose. That doesn’t make people plug-ins for a software program. A big difference.

The Place to Start

Caddell has four recommendations for the implementation of   governance methods based on self-organization:

  1. Focus on self-management first.
  2. Adapt your own model.
  3. Dedicate a Complexity Reduction Officer (CRO).
  4. Tell more human stories.

The last recommendation is a nice one. In the articles on Hsieh’s so-called command to self-organize and the people who left, there are no personal stories from the people who left and those who stayed. Maybe that comes next.

More articles related to self-organization and management:

Internal Memo: Zappos is offering severance to employees who aren’t all in with Holacracy by Aimee Groth on the Quartz website. Includes the full text of the memo asking that employees “take 30 minutes” to read it.

Inside Zappos CEO Tony Hsieh’s radical management experiment that prompted 14% of employees to quit by Richard Feloni on the Business Insider UK website. A history of Zappos unique company culture which is atypical to say the least, and the story of its adoption of Holacracy. A long article on the historical context of Hsieh’s leadership.

Is Holacracy Succeeding At Zappos? by Steve Denning on the Forbes  website. An excellent discussion of the contradictions in the implementation of Holacracy given the difficult language of the constitution and the many, sometimes contradictory premises. One being the ability of the CEO to take back his power as a CEO Includes links to several other articles.

At Zappos, Banishing the Bosses Brings Confusion by Rachel Emma Silverman on the Wall Street Journal website. I wasn’t able to read this because I don’t have a subscription but it begins with a story from the personal experience of an employee at Zappos so it may be promising. (With all my software programs and online journals going to monthly subscriptions, my budget is blowing in the wind.)

Preferential Voting and a Sociocratic Democracy

Bingo balls which represent what many people feel about voting. It doesn't matter what they think.
Bingo balls which represent how many people feel about voting. It doesn’t matter what they think.

Because our Council Member, Muriel Bowser, was elected mayor, Ward 4 in Washington DC is having an election to replace her. There are so many candidates, eight at last count?, that knowing who would be the best representative is very hard. My neighbors are speaking on behalf of almost all  of them. With so many votes splintered, unless some drop out in the remaining 3 days, there is likely to be a run-off election with no representation until it is resolved.

This is the perfect situation for using one of the several systems called  Preferential Voting.  The two that are most familiar are  Instant-Runoff and Range Voting. Preferential voting is gaining ground in many governments and other organizations globally. It is even discussed in the 10th revision of Robert’s Rules of Order as preferable to a plurality.

Why Is Preferential Voting Important to Sociocracy?

Because the primary form of decision-making in sociocracy is consent, meaning no objections. Consensus as a voting threshold is impractical in large diverse groups, in groups that do not share a common aim, or are not willing or able to sit together long enough to resolve  objections.

If sociocratic values, principles, and methods are to move into the public arena, alternative methods of decision-making will need to be adopted. Of the choices, I think Preferential Voting is the closest to a middle ground between consent and majority vote.

To insist on consent as a foundation for civic decisions, even to insist on consent to another system of voting, will certainly be self-defeating unless people change dramatically.

Instant Runoff

Instant Runoff Voting (IRV)  is the most widely used form of preferential voting. With variations,  Instant Runoff is used globally for government elections, in political parties, the awarding of prizes and awards, etc. In India it is used by the parliament for the election of the president, in the Czech Republic to elect the leaders of the Green Party, in New Zealand to elect mayors,  and in the United Kingdom by the  Labour Party and the Liberal Democrats to elect their leaders.

Instant Runoff Ballot

The Instant Runoff process:

A rather conventional ballot includes all the candidates names and the process is similar to runoff elections.

  1. All the candidates are ranked by each voter — 1st choice, 2nd choice, etc.
  2. The ballots are counted and the candidate with fewest 1st choice rankings is eliminated.
  3. The 2nd choice on the ballots for the eliminated candidate are counted and the votes added to the 1st choice of the other ballots.
  4. These rounds are repeated until one candidate has a specified majority of the #1 + #2 + #3, etc. rankings.

Instant Runoff avoids the expense and delay of runoffs in separate elections and also ensures that everyone’s vote counts. Otherwise, only the votes for the most popular candidate would count.

Instant Runoff voting is supported online by Fair Vote: The Center for Voting and Democracy,Instant Runoff,  Accurate Democracy, and many others.

Range Voting  or “Five Stars”

Range Voting is the newest system of Preferential Voting and many consider it the best in representing the preferences of the voters. In Range Voting, each voter uses a range of points, usually 5 or 10 to rate each candidate. This avoids a forced choice of yes/no or ranking candidates as 1st, 2nd, 3rd, etc. A  voter can rate more than one candidate as deserving the highest number of points, or rate all of them as deserving the lowest. It isn’t either/or.

When more than one candidate is acceptable, this can be shown in range voting when it can’t in other voting systems.

Movies and restaurants are often rated with stars. More than one can be a 5-star or a 2-star. In Olympics-level ice skating, the range is 10 points allowing more subtle distinctions.

The process in  Range Voting:Range Voting Ballot

  1. Ballots include the names of all candidates and a specified method of marking the rating — circling stars or numbers, etc.
  2. Each voter rates each candidate individually according to their preference for each candidate.
  3. The points given to each candidate are added, and usually divided by the number of people voting.

Averaging the number of points awarded expresses the result  in the same range of points that were used in ratings. With a range of 1-10,  averaging the total will record the vote within the range of 1-10.

Range voting is advocated online by the election reform sites RangeVote.comThe Center for Election Science, and the Center for Range Voting. Guy Ottewell, who helped develop the system of approval voting, now endorses range voting.

Beyond Determining the Top Choice

Preference voting can do much more than determine the top choice. It can also:

  1. Show the level of support for each candidate in more nuanced terms than 1,2,3,4 or just 1 and none
  2. Allow a ballot to be counted no matter what the vote
  3. Elect a candidate that is the 2nd or 3rd choice of more people rather than the first choice of a few.

In range voting, for example, if 1000 people are voting and 400 vote for Mary as the first choice, that means 600 preferred someone else. If the second choice of many people was also Mary, Mary will be elected with a clear majority.

But if Mary was the first choice of 400 and she wasn’t even 2nd or 3rd on other ballots, she is less likely to be elected. If 600 people have voted for Nancy as their second choice, Nancy will win and in the end have more support because many of the people who voted for Mary as their first choice are likely to have voted fro Nancy as their second too.

Similarly in Range Voting, Mary might receive 5 stars from 400 voters but only 1 or 2 stars from 600. Mary is unlikely to win if Nancy also receives many 5 stars and many 3 and 4 stars.

A Sociocratic Democracy

The reason I like preference voting when consent isn’t possible is that it produces a decision as quickly as majority vote but it also represents the voters better. It can also eliminate the need to limit the number of political parties and candidates to ensure a clear majority. Perhaps most importantly, it gives those constituencies that are not in the majority a chance to influence an election.d

Range voting also gives more nuanced results — even when there are only two options. If a 5 star system is used for a choice between two options, and no one gives either of the candidates more than 2 or 3 stars, it indicates a weakness in that person’s ability to govern or the quality of their award.

In many democracies, particularly those over 100 years old, only a relatively small number vote. Often this is because eligible voters believe the candidates have been predetermined by the political parties or the establishment government. Or they know their candidate will never win even in an open election. Why bother?

In preference voting, something other than support for the majority can be recorded and even influence an election. Even if a voter doesn’t like any of the options, their preference will be recorded. When dissatisfaction or lukewarm support can be measured, the majority will no longer be the majority. Candidates and political parties will be more likely to pay attention, and new candidates may be encouraged to join in the next election.

Because it would include more voters and allow greater expression of objections, using Preferential Voting would bring us closer to a deeper democracy — a sociocratic democracy

Followers Make Movements

How to start a movement?

A fabulous 3-minute video by Derek Sivers on how to start a movement.

The first follower is an underestimated form of leadership in itself… The first follower is what transforms a lone nut into a leader.

The leader has to have the courage to stand alone, and then make it easy to be followed, to share openly. The leader must support the first followers as equals, not as subordinates.

Followers Make Movements

New followers emulate the followers, not the leader…. Nurture the followers because that values the movement, not the leader.

The lone nut becomes a leader because there are followers.  The followers of the followers create the movement. Leadership, in this context, is over-rated.

A movement has to be open to attract followers.

About Derek Sivers

Derek Sivers on TED
Derek Sivers on TED

Derek Sivers was a professional musician when he started selling his own CDs on his website in 1998. Friends asked if he could sell theirs, too, and he founded CD Baby. It became the largest seller of independent music on the web, with over $100M in sales for over 150,000 musician clients. In 2008, Sivers placed his company in a foundation and now lives on 5% of the sales from the company. A minimalist, Sivers thrives on having less.

Sivers also started MuckWork, where teams of efficient assistants help musicians do their “uncreative dirty work.”

A Sociocratic Movement?

I sat in on a conference call with the SociocraticConsultingGroup-en last week on forming an organization for sociocracy. I found the discussion to be about the same issues we had several years ago, when Socionet tried to form. It’s the same problem that the NVC organization has had, and that the Austin Belly dance group discussed on the [email protected] list many years ago. The problem of conflicting aims and energies between professionals and enthusiasts.

The problem appears when trying to build an organization that can’t decide if it is promoting sociocracy for all or promoting professional consultants. The energy now is largely in the consultants. This is because the people who most see the need and opportunity often are consultants already or become consultants. That’s good because they can train people who will be most likely to apply the method in their organizations.

A Peer-to-Peer Sociocratic Movement

I’ve never seen mixing of professionals and enthusiasts work in one organization to serve everyone’s needs. It can’t be built around classes, mostly because enthusiasts and sociocrats don’t want to join an organization in order to be marketed to. But it is also because professionals have different needs. They need to ask questions at a more complex level than people who are just learning about sociocracy. They need to discuss professional issues relating to the implementation in situations that they may need to discuss confidentially. They need to ask questions related to building their practices as sociocratic professionals.

The general population may want classes but they also want peer-to-peer interactions and information in a different form. Written materials and tapes. DVDs. Ideas and experiences to discuss with each other, not in teacher-student interactions. Enthusiasts will pull away from professionals and professionals pull away from them.

Ironically, the sociocratic organization has not managed to produce equality in sociocracy.

Discouraging a Sociocratic Movement

The global organization has been supremely afraid of letting the method go viral and still has not released its norms. The fear is that the method will be badly applied by anyone except certified experts and thus reflect negatively on sociocracy.

Professionals have also not encouraged a movement of enthusiasts to form. One negative reaction from professionals to people seeking information and association as other than clients is that such people are asking them to work free. That kind of attitude will dampen any movement. A movement needs the support of experts, but enthusiasts want to join an organization of equals who share information and experiences freely.

What Associations Do

Associations are usually non-profit, dedicated to charitable and public service purposes. They form around a purpose and draw members in to help them accomplish their purpose. They may maintain a speakers bureau that will speak anywhere for low or now cost. They distribute flyers to the public at no cost. Generate books and other materials that can be purchased. Members receive benefits to encourage them to further the purpose, usually a discount on publications, invitations to meetings of various kinds, and a newsletter.

Public Dissemination of Ideas

Business people and government officials have informal groups that meet for lunch and have a speaker. Sometimes the speakers receive an honorarium and sometimes only a free lunch. If the roundtable is for business people, sometimes a gift or gift certificate donated by one of the members. These are networking lunches of highly committed and ambitious people.

How many people have been prepared to speak at such a gathering about sociocracy? What resources are available to help them do so? Outlines and public speaking guides.

When Tony Robbins was beginning his career, he spoke anywhere. Other speakers would only speak to certain groups or if they were paid. Because Robbins accepted any request he spoke several times a week. He was able to hone his message and understand his audience. This is one thing that Malcolm Gladwell discusses in The Tipping Point: that success depends on the frequency of performing, speaking, running, etc., usually from a young age.

Bill Gates had access as a teenager to computers and programming. Access others didn’t have. The Beatles were performing on a circuit for years before they became famous. When Tony Robbins developed his motivational speaking skills, he was working as a janitor and , if I remember correctly, took the opportunity to discuss ideas with the executives whose office he cleaned.

Leadership

Movements also need leaders. Extroverts who love talking to people and being out front. The skills that make good politicians. I don’t think such a person has surfaced in the sociocratic community. Possibly because such a person doesn’t fit in with the global organization which is fairly rigid and closed. The new website is a huge step forward but has been years in the making. The current version has been under consideration for over a  year.

While a leader needs to understand the method, the requirement that they be certified is counter-productive and anti-movement unless the purpose is to organize certified people.

A sociocratic movement will not be successful until the needs of professionals as consultants are separated from those of enthusiasts and practitioners, and a leader emerges.

Elizabeth Warren on the Social Contract

Elizabeth Warren, American   Harvard Law School professor and United States Senator from Massachusetts
Elizabeth Warren, American Harvard Law School professor and United States Senator from Massachusetts

There is nobody in this country who got rich on their own. Nobody. … You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless. Keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.

Elizabeth Warren

Quoted in  Elizabeth Warren Meets the Ted Kennedy Myth by Tom KeanePolitico, 29 March 2015

A Deeper Democracy