Zappos’ Holacracy: Would it Thrive in Bezocracy?
“Darwin said that it’s not the fastest or strongest that survive. It’s the ones most adaptive to change.”1
– Tony Hsieh, CEO, Zappos.com
Zappos.com (Zappos), the online footwear category leader, is all set to embrace the paradigm of the legendary King Arthur’s round table. As the legend goes, King Arthur’s knights congregated around the round table where no one headed the assembly. In other words, all assembled were equals. What Zappos contemplates to implement would be a contemporary practice – holacracy – of structuring organizations, characterized by the presence of self-managed teams.
There have been instances of companies embracing a self-managed style of organizational structure – Semco SA, Nucor Corporation, The Morning Star Company, W.L. Gore and Associates, and Medium, to name a few – yet the news of Zappos adopting holacracy created ripples in the media world and management circles as it would be the biggest company till date to be run on the lines of holacracy. The decision to adopt holacracy by a company often hailed by business academics for its unconventional organizational culture and outstanding customer service/experience indicates the latent meritocracy of the model and as expected several unanswered questions and challenges linger:
- • Would the proposed model affect organizational communication, decision-making and most importantly the accountability?
- • Will the new structure/model bring in a new meaning for all the external stakeholders, especially the vendors, customers and investors?
- • How would Zappos’ ‘holacracy’ model fit into Jeff Bezos’ old fashioned style of managing?
- • How would the new model improve Zappos’ well-talked about organizational culture and team dynamics?
- • Will the model of holacracy affect the morale and motivation levels of employees positively?
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Exhibits
Exhibit I: Management’s Three Concentric Circles
Exhibit II: Self-Management Model of ‘The Morning Star Company’
Exhibit III: The Four Dimensions of Culture
Exhibit IV: Zappos’ 10 Core Values That Drive Its Culture, Brand and Business Strategies
Exhibit V: How Holacracy Works
1 Steve Denning, “Making Sense of Zappos and Holacracy”, http://www.forbes.com/sites/stevedenning/2014/01/15/making-sense-ofzappos-and-holacracy/, January 15th 2014