
How a Radical Shift to "Self-Management" Left Zappos Reeling - pigpaws
http://fortune.com/zappos-tony-hsieh-holacracy/
======
a-priori
The thing that strikes me about it is how this article makes Zappos sound so
much like Scientology or other cults. Maybe it's just because I have a
paranoid, skeptical, anti-ideological streak, but the similarities are
striking to me. Let me count the ways:

You have the eccentric supreme leader, who claims to be just another equal
among the group, yet issues edicts that the whole organization must follow.
Scientology has Hubbard, Zappos has Hsieh.

You have the doctrine based on moving the organization and individuals towards
a pure state, untainted by the way the rest of the world operates. Scientology
has 'clear', Zappos has 'teal' and 'self-management'.

You have the lingo that only people within the fold understand. Everything
that everyone does is couched in terms that are invented by the group, or
especially words that are redefined with specific meaning, creating a kind of
dialect for group members that diverges from the mainstream. This makes it
difficult for them to communicate with outsiders or leave the group, and also
makes it difficult for outsiders to investigate and understand the group.
Scientology has words like 'tones' and 'ethics' and 'holidays', Zappos has
'circles' and 'lead links' and 'roles' and 'distractions'.

You have people who don't fit (i.e, accept and submit to the doctrine and
leadership) be driven out. If you're one of these people, it's treated as a
personal failing on your part: you haven't haven't been willing to accept the
doctrine, which is taken to be self-evidently correct and ideal, and cannot be
allowed to taint the group. Scientology has its 'suppressives', and Zappos has
'the Beach'.

Are there more? Maybe. Am I just imagining them, and it's really no stranger
than any other company that's a bit insular... like Apple for example? I don't
know. But reading this article definitely tripped my 'cult' alarm.

~~~
panglott
Rather, what strikes me is that for all the excitement over the buyout,
Zappo's seems to have survived with management-by-holacracy for surprisingly
long time with seemingly good results. One would have thought, based on the
conventional wisdom at the time, that without a sclerotic managerial
bureaucracy the organization would be completely unable to coordinate and
manage itself. This does not seem to be the case.

Holacracy a cult? Why not traditional management a cult? The difference being
simply that traditional management is broadly accepted as "normal" by society
at large.

Ostracism via "the Beach" is just a different kind of social power than the
traditional hierachical institutions, with different tradeoffs. Generally you
think of these kind of power-diffuse societies as unable to scale, but Zappos
has 1500 employees.

~~~
a-priori
I don't know if it's a cult. That's why I hedged my whole comment with "maybe
I'm imagining this but...".

It's too early to say whether it works. There's a saying I'm trying to
remember, something about 'you can only see the rocks at low tide'. Almost
anything will look wonderful in good times, and it's easy to attribute that
success to whatever you're doing at the time. It's not until bad times that
its flaws become visible.

Zappos was built to its current state on a hierarchical structure. They
haven't yet had its decentralized structure tested in any significant way. If
Zappos hits a slump in sales for whatever reason, how will the organization
respond? Will Holacracy survive a crisis like that? That's where you'll really
see if it's a useful system to govern a company.

~~~
panglott
Yep. But hierarchical bureaucracies are also rife with inefficiency and
dysfunction. Coordinating the activity of groups of human beings at scale is
just a hard problem. It could be that holacracy is effectively not much
different than hierarchical bureaucracy, but with different tradeoffs and
personalities. Then Zappos has to bear the weight of defending holacracy when
it is not demonstrably the case that a traditional management structure would
necessarily have done better.

~~~
sageikosa
Or it could be that it is significantly worse, and that the inertia of the
brand keeps the boat moving (albeit slowing?). A shift to a newer model could
be seen as a way to reduce headcount and contain costs.

------
TheGirondin
>Another beneficiary is Derek Noel, 30, a onetime customer-service employee.
Noel had wanted to transfer to Zappos’s culture team but found himself blocked
by his manager. “As soon as I found out about how holacracy worked,” he says,
“I was like, ‘Actually, my boss can’t tell me that.’ ” Noel’s ideas, which
included weekday events where employees watch a movie in the auditorium while
working on their laptops, gained traction. Now he works in the Fungineering
circle, a kind of events-planning/pep squad.

Want to spend all day at work planning fun activities? No one can tell you no!

~~~
forgetsusername
> _Want to spend all day at work planning fun activities? No one can tell you
> no!_

And one day, perhaps due to bad luck or competition, Zappos won't be Zappos.
Sales will suffer, restructuring will be required, and layoffs will be
necessary. Inevitably, there will be comments here asking, "Why is it that
these common workers pay the price?"

~~~
coldtea
> _Inevitably, there will be comments here asking, "Why is it that these
> common workers pay the price?"_

Well, such comments will be much less "inevitable" if workers indeed have such
freedom in the shaping of the company's future.

------
cballard
This working environment looks like a cramped nightmare. How can anyone focus?

[https://fortunedotcom.files.wordpress.com/2016/03/zap03-15_b...](https://fortunedotcom.files.wordpress.com/2016/03/zap03-15_b.jpg?quality=80)

Compared to, say the Basecamp offices, which look open, airy, and peaceful:

[https://basecamp.com/about/office](https://basecamp.com/about/office)

~~~
michaelbuckbee
Looking at the Zappos office all I can think is "pieces of flair" with respect
to the cubicle decorations.

~~~
bkurtz13
It's so cluttered, it's giving me anxiety just looking at those photos. I keep
a fairly clean desk, I don't think I could function well in that
environment...

~~~
untog
But that's a person's own desk. If you wanted to keep a clean desk then surely
you could.

~~~
protomyth
Could you? I'm thinking michaelbuckbee[1] is right about the flair thing. I
would bet that if you keep a clean, organized desk with no decoration you
would get asked about your feeling working there and maybe not be seen as
Zappos material.

I'm not sure who's working PR as Zappos but that picture[2] cballard[3] linked
to is probably not a good corporate message given the sign in the upper left
corner.

1)
[https://news.ycombinator.com/item?id=11239602](https://news.ycombinator.com/item?id=11239602)

2)
[https://fortunedotcom.files.wordpress.com/2016/03/zap03-15_b...](https://fortunedotcom.files.wordpress.com/2016/03/zap03-15_b.jpg?quality=80)

3)
[https://news.ycombinator.com/item?id=11239584](https://news.ycombinator.com/item?id=11239584)

~~~
pakled_engineer
Many years ago I worked for a stint at ebay and I was definitely considered a
pariah for not flaring out my desk with juvenile toys. I did that in Grade 9
with my locker

------
IgorPartola
I can't tell if it's brave of Zappos to experiment with different company
structures, or foolish. I can't imagine this holocracy thing working long
term. It's a system, which means it can be exploited. Favoritism is one way.
Besides, saying that everyone is equal just means that there is no explicitly
defined power dynamic. Don't be fooled: just because you are told that as a
brand new employee you are equal to the senior-most team member who is also
the "team link" or whatever, you are in fact not. It's just that this way the
person who is actually more powerful in the organization to you will have to
exercise that power differently. Then again, the "normal" corporate structure
is less than ideal, to put it generously. Perhaps we need this type of
innovation. Personally, I wouldn't bet my whole business on it, instead maybe
having a small subset of the company doing these types of experiments.

What I do know for sure is this: I have never been a Zappos customer and am
not planning on it. All these experiments seem to be leaving them with prices
that are just much higher than alternatives. Even their parent company,
Amazon, often has better prices on similar products.

~~~
flush
I think it's both brave and foolish.

Zappos has been very successful and had a clear positive trajectory before
holacracy/Teal. Clearly foolish to jeopardize that to such a degree!

At the same time, you may believe that a new system could truly pay off and
take you to the Next Level. Maybe there would be a temporary setback, but you
have to grit your teeth and believe in your reasoning that it will work out in
the end, better than had you kept the status quo.

I can't help but think of Hsieh as a kind of artist. He isn't trying to just
make money or "be successful" like most people. He wants to create something
new and exceptional. And will reach for it while paying little mind to the
risks.

~~~
michaelchisari
Starting with a single department as a test case, and then moving out from
there probably would have been a way to meet foolish and brave inbetween.

~~~
jcoffland
That's actually exactly what they did. If you read the whole article they
started with the HR department.

------
jerf
So, honest question: How does all this Holacracy stuff square with the many
and several seemingly-likely-to-be top-down initiatives mentioned in this
article, including the switch to "Teal", the refocusing of the sales
priorities, the apparently high-touch structures implementing the holacracy,
the badges payment system, and the software migration?

Is holacracy's scope confined, where there are still execs above it that can
make those decisions? Were these decisions actually decided "holacratically",
meaning my expectations of making it difficult to do such sweeping changes in
such a system are wrong? etc.

Again, let me emphasize, honest questions. I clearly have preconceptions in
those questions but I'm trying to avoid opinions, as I don't have enough data.
(And I am suspicious of the tone of the article, admittedly. But still, honest
questions.)

~~~
kevinmchugh
there's definitely a migration period where the people who originally held
power continue to hold it. One of their tasks is delineate those powers and
delegate as appropriate. Certainly a founder or formerly c-level executive
will continue to hold lots of power. Holacracy asks/empowers participants to
admit that there are informal groups, cliques, cabals, who hold lots of cachet
and at least document their existence.

I worked in a partially "holacratic" organization for about six months, and
had a lot of good experiences, but remain something of a skeptic. Certainly
it's problematic that the companies most likely to adopt it are already in the
bad state that necessitates a major shake-up. I think a lot of the criticism
of Zappos by outsiders and message-board nerds is misguided or ignorant, but
they seem to be in a bad spot no matter what.

------
Semiapies
I'm torn. The premise of holacracy is _really interesting_. On the other hand,
for all the talk about how this idea is a human-centric thing and about the
people and their happiness, everything sounds like Zappo's focus is on the
_system_ , with the actual workers a very secondary consideration. _We 're
totally about the workers, we've just had to get rid of a lot of them._

------
sremani
Why is Self-Organization such a bad thing? Why are we hitting it over and
over, esp. in the traditional offices where people are spending time in busy-
ness instead of business productivity. I swear, 90% of traditional workers
work 2 hours of their 8 hour day and middle management is lucky to be 50%
right or worse, parrot what ever the megalomaniac who works higher in the
hierarchy says. What is really Zappos doing, at least unlike many people in SV
they do not claim to put a dent in the Universe. They are SouthWest on
steroids, where employee happiness is central to the mission. Even if Zappos
fails in its mission, there would be great lesson. I would love to work in a
Halocracy, it will have its downsides, and people pretending to be busy and
important does not seem to be one of them.

~~~
ergothus
From the outside, I think a lot is demonstrated by comparing Valve and Zappos

Namely, Valve just did it, Zappos made a big deal about doing it

( I know that Zappos consulted Valve about their organization, at least
according to a friend that works at Valve, but no idea what Zappos took from
that consultation )

~~~
aetherson
In all fairness, Zappos has about 5x the number of employees as Valve,
according to a quick Google. That's the kind of thing that matters a lot.

------
programminggeek
Many people aren't trained or interested in self management. Also, most
companies who preach self management are in fact not self managed
environments.

It is no surprise that this is a difficult and long process. They are breaking
some longstanding, fundamental human processes at a large scale. This is a
hard thing to do and it might not be possible.

Hat tip to Zappos for trying.

~~~
drzaiusapelord
This sounds similar to the Valve model and they've been an incredible success.
Maybe it only works in certain industries, with certain personality types, or
certain types of work. Game dev and shoe sales are two very different beasts.

~~~
_Codemonkeyism
Do you have more information about Valve? I would be interested.

I've only found in the past the Valve employee handbook, some people raving
about Valve and some people talking about highschool style bullying.

~~~
dalke
> I've only found in the past...

Your description succinctly summarizes the 7 references in Wikipedia for that
topic
[https://en.wikipedia.org/wiki/Valve_Corporation#Organization...](https://en.wikipedia.org/wiki/Valve_Corporation#Organizational_structure)
.

------
aidenn0
I know I'm lucky in my work environment, but where I work, the majority of
people explicitly _don 't_ want to be managers. It's a lot of extra non-
engineering work and meetings. Holacracy makes it sound like all employees
have to go to the equivalent of what here would be manager-only meetings,
which I suppose is great if you don't trust your manager, but is a big
negative if you do trust your manager.

------
littletinman
The one thing that stuck out to me is the "resident artist". I'm curious is
that the person's only role? Will more companies look at the talents of their
employees and enable them to pursue their real interests? Is this even
feasible to propose?

My dream job is to be a resident Game Developer for a non-game development
company. Literally paid to make whatever games I want, no manager micro-
managing me, no committee telling me what to make or what "they want int the
game." This article gives me a small amount of hope that one day I could do
this, but my question above is the big "speed bump."

Thoughts?

~~~
nathancahill
Sounds like you should start your own game company. Which would indeed be a
big "speed bump."

~~~
littletinman
With the current instability of the entire industry, and my genuine
disinterest in console or mobile development (one market is fading and one
market is too cluttered) no matter how I run the numbers it would take at
least 5 years before I would see profit.

I'll keep running numbers however and figuring out timing and niche!

~~~
rifung
What about PC indie development? I think one of the top games on Steam right
now was made by one person (Stardew Valley). Admittedly it did take him 4
years to make; I don't know if he worked on it full time.

------
TrevorJ
I admire the experimentation, I'm sure there's room to innovate on things like
company structure, but you have to balance the desire to experiment with the
wellbeing and security of your staff, and this particular example seems to
take that responsibility way way too lightly. It's all well and good to play
around with things when you have capital and can live in an RV for the novelty
of it, but your employees are working because they need to work. Participating
in this experiment isn't optional for a lot of them. At some point it can
become cruel.

------
egypturnash
why does this page have self-playing video

why can't i make this page stop playing its video

why is there a text element sitting over a flash video player blocking me from
being able to make it stop playing

did you know that safari's 'reader' functionality will hide self-playing flash
elements, but will not make them stop? now i know this.

oh, and now i know that clicking the blue speaker icon in safari's title bar
_will_ make this page STFU.

------
Rainymood
"Failure of experimentation leads to stagnation."

I think it's very brave to take this decision and I'm very curious to see how
it plays out in the following 5-10 years - maybe they've struck gold, but it's
still covered in some dirt.

------
bsder
Um, IIRC, weren't Zappos numbers in the trash even before this management
crap?

Once the brick and mortar retailers started taking online returns, Zappos lost
its biggest differentiator--its no hassle return policy-- _and_ had to eat the
return cost of shipping.

------
dreamdu5t
Another puff piece about self-management with no details o how it actually
works. calling teams "circles" and managers "leaders" doesn't change the org
chart.

~~~
sleepybrett
It's funny but none of the circles mentioned in the article seem to have
anything to do with selling shoes. I would be concerned if I was a
shareholder.

------
coldcode
As long as they make money they can do whatever they want. What happens when
sales tanks (for whatever reason) and layoffs are necessary that it will
become interesting.

------
mrbill
Every Zappos article I've read has the vibe of "YOU WILL ENJOY WORKING HERE OR
WE WILL PAY YOU TO LEAVE. OR ELSE."

------
Zigurd
Amazon is having issues with strict hierarchical management and stacked
ranking. Everybody has issues. Zappos is, at least, trying something that has
a good chance of creating a disruptively different outcome. Good or bad, we'll
see, but there is little point in tweaks on the margins.

~~~
pinewurst
Amazon has far more problems than hierarchy and review process:

[https://sites.google.com/site/thefaceofamazon/](https://sites.google.com/site/thefaceofamazon/)

