Zappos: An Organization with No Boss

What is Holacracy? [1]

Any organization responds to the issues identified by humans to serve their clients better. Most of the time, it is one human who identifies a problem which no one else could. The old hierarchical models always tend to have some bureaucracy and long communication patterns. The hierarchical model also gives rise to unwanted power struggles within the organization that take up many resources that can be used elsewhere.

Holacracy gives equal importance to everyone’s talents and nuances. It is designed to remove obstacles so that work can get done faster with more clarity and more autonomy. Instead of following the usual hierarchy to get any change done in the organization, the employee can ask for the authority to make that change on his own. In this process, there is no need for consensus building, only a disciplined approach of a discussion focused on a problem. This method empowers everyone in the company to solve the issues and motivates intrapreneurship within the company. No one serves a boss, but everyone tries to achieve incremental improvement for each problem. This system doesn’t encourage static job descriptions, but instead, there is a dynamic role description which an individual would decide after interacting with his colleagues to make sure that maximum work is done. Delegation is absent; instead, the authority is distributed amongst individuals. Instead of large reorganizations, Holacracy suggests that there should be micro-adjustments regularly.  

Implementation at Zappos [2][3]

Holacracy at Zappos gives every employee the motivation to be innovative, identify problems, and suggest solutions for the same. Zappos, as an organization, has believed in customer-service since its inception. They believe in a concept called WOW service. As the organization’s strength increased, they found it challenging to respond in an agile way to customer feedback and suggestion because of the complexities that the hierarchical structure provided. Enter Holacracy – a self-management practice which they implemented in a phased manner for running pilots. Looking at the success, they tailored Holacracy to their own needs to solve their problem. Zappos CEO feels that one of the best parts of Holacracy is that it comes as a package that can be customized to suit your purposes. For example, Zappos has had a people’s culture, whereas Holacracy is based on task culture. Zappos integrated its values and vision in the Holacracy constitution, and that has evolved with the company.

Interesting Features

1)   Innovation: Due to the focus on the organic structure in the organization, the pace of change and the quality of innovation is better. The performance freedom helps the creative juices to flow and bring up better and unique solutions.

2)   Get things done attitude: The focus is on fulfilling customer requirements. The final goal is satisfying the customer. This helps generate better customer relations, which helps in increasing the brand value.

3)   Straightforward Communication: Lack of hierarchy suggests the communication is simpler. This removes the need for an idea to move up the ladder before implementation.

4)   Focus on growth and productivity: When cities grow, their productivity increases. But the same cannot be said about companies. According to a report, when the size of cities doubles the productivity increases by 15%, whereas, for an organization, it reduces. Zappos challenged this by shifting to Holacracy and achieved higher than industry productivity. [4]

References

[1] https://www.youtube.com/watch?v=tJxfJGo-vkI

[2] https://www.zapposinsights.com/about/holacracy

[3] https://www.forbes.com/sites/stevedenning/2014/01/15/making-sense-of-zappos-and-holacracy/#1c0d03ff3207

[4] https://www.process.st/organizational-structure/