Tag Archives: Wall Street Journal

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.

 

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.)

Zappos Goes Democratic

An article by Jena McGregor In her column, “On Leadership,” appeared in the Washington Post today on Brian Robertson’s contract with Zappo’s, “Zappos Says Goodbye to Bosses.” Zappos is owned by Amazon but runs independently and has long been known for its unusual employee-responsive culture.

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, self-governing “circles.” In theory, this gives employees more of a voice in the way the company is run.

John Bunch, Zappos “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 leading the transition.

The article is not particularly clear in explaining holacracy and doesn’t make the connection to sociocracy or other egalitarian organizational methods like Ackoff’s circular organization or  Semler’s round pyramid. McGregor is also confusing when explaining the change from “managers” to “lead-links.” Holacracy’s lead-links are described very much like managers. No mention of policy setting by all members of the circle to guide the actions of the lead-link.

The article reports that “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.”

Robertson began his first company, Ternary Software in Exton PA, in 2001 based on the unique model of forming partnerships with many of the companies for which it developed software. This gave Ternary a vested interest in the performance of the software they designed and allowed promising but still developing companies to access to quality software. In 2006 and 2007, Robertson published two articles on his use of sociocracy at Ternary: “The Sociocratic Method,” in the 2006 strategy+business issue of Booz Allen Hamilton’s internal newsletter,  and in 2007 in the Wall Street Journal, “Can a Company Be Run as a Democracy?”.