
Zappos CEO Tony Hsieh: Adopt Holacracy Or Leave - jcrites
http://www.fastcompany.com/3044417/zappos-ceo-tony-hsieh-adopt-holacracy-or-leave
======
briandherbert
Without more context than the title and the linked email, it's pretty easy to
call Hsieh's move brash or tried-and-futile. But the guy is often regarded as
the premier management CEO of his generation, and homogenous culture is
strongly enforced in his hiring process. Employees love Hsieh because they're
(largely) on the same page, not bc of a reality distortion field. After seeing
Hsieh's track record and reading "Delivering Happiness" (Zappos' story) and
"The Everything Store" (Parent Amazon's story where Zappos gets a vignette),
I'd rather watch and learn than shoot it down based on my engineering
sensibilities.

~~~
saosebastiao
> But the guy is often regarded as the premier management CEO of his
> generation

Erm...what? By whom? I only know of the incompetent Tony Hsieh that burned
through cash at such a rate that his investors thought it a miracle that
Zappos was still around when several large companies started looking to get
into the online apparel business at the same time. It is widely rumored within
Amazon that Zappos was a few weeks from bankruptcy when they were bought by
Amazon, and it is pretty well known within Amazon today that they still aren't
profitable. A match made in heaven?

Even if you don't see the same negative picture that I do, by every "track
record" objective measure you can think of, he is two orders of magnitude
worse of a CEO than Zuckerberg and Larry Page, and still not even in the same
league as Elon Musk, or if you want to stick to apparel, Kevin Plank.

It is one thing to take puff pieces seriously, and another thing altogether to
take autobiographical puff pieces seriously.

> Employees love Hsieh because they're (largely) on the same page, not bc of a
> reality distortion field.

His associate-level employees love him because they have a pretty good job
that they couldn't get elsewhere. His managers hate him because they view him
as incompetent and irresponsible. Everyone I know that works in or with Zappos
sees this as a clear power play. He's trying to cut them out of the picture.

------
PhasmaFelis
I have only skimmed the memo, so I may be missing something, but calling this
an "ultimatum" and saying things like "adopt holacracy or leave" seems awfully
overdramatic. If a CEO says "Hey, we're rearranging the org chart now," and
you can't can't bear the thought of working under the new org chart, then
unless you're in a position to talk him out of it, your only real option is to
quit. Nobody has to mention the option explicitly; it's understood. That's not
an "ultimatum," it's what being an employee means.

This guy is explicitly bringing it up because he's offering _extra benefits_
to anyone who chooses to quit. He's being _more_ accommodating than the
average CEO, not less.

~~~
lnanek2
It does flat out say anyone who doesn't like it will be given an offer. I
assume that refers to the offer you get when you first join where they pay you
to quit. So the letter does flat out say, join the holocracy, no more
management, if you don't like it, we have a retirement offer for you.

~~~
PhasmaFelis
Sure, but explicitly saying "if you don't like it, have a retirement offer"
seems a lot more pleasant than the implicit "if you don't like it, don't let
the door hit you in the ass on the way out" that comes with basically any
major corporate communication. Those are always your two choices when changes
come down from on high. All this guy's doing is making option #2 explicit.

------
cafard
In an essay collected in _The Hall of Uselessness_ , Simon Leys quotes a
Chinese writer's parable from the first half of the 20th Century, about a
government afraid of its people that create a massive volume of laws. It had a
blank first page, however, which only the initiated knew how to read. The
first three entries were "1\. Some cases must be treated with special
severity. 2. Some cases must be treated with special lenity. 3. This does not
apply in all cases." (Quoted from memory.)

What does it say on the blank first page of the Zappos employee manual?

~~~
fsk
>What does it say on the blank first page of the Zappos employee manual?

All employees are equal, but some are more equal than others.

------
jcrites
An summary of the article and the concept that Tony Hsieh wrote:

"We’ve been operating partially under Holacracy and partially under the legacy
management hierarchy in parallel for over a year now. Having one foot in one
world while having the other foot in the other world has slowed down our
transformation towards self-management and self-organization. [W]e haven't
made fast enough progress towards self-management, self-organization, and more
efficient structures to run our business.

"After many conversations and a lot of feedback about where we are versus our
desired state of self-organization, self-management, increased autonomy, and
increased efficiency, we are going to take a "rip the bandaid" approach to
accelerate progress towards becoming a [self-managing] organization. As of
4/30/15, in order to eliminate the legacy management hierarchy, there will be
effectively be no more people managers." He goes onto to describe more about
how this will work.

What does Holacracy entail?

"Holacracy is a social technology or system of organizational governance in
which authority and decision-making are distributed throughout a holarchy of
self-organizing teams rather than being vested at the top of a hierarchy",
according to Wikipedia.

~~~
golemotron
> "Holacracy is a social technology or system of organizational governance in
> which authority and decision-making are distributed throughout a holarchy of
> self-organizing teams rather than being vested at the top of a hierarchy",
> according to Wikipedia.

Yet there he is at the top of the hierarchy telling people to do it.

~~~
gadders
What if the holocracy decides they like hierarchies?

~~~
ph0rque
Brian: Please, please, please listen! I've got one or two things to say.

The Crowd: Tell us! Tell us both of them!

Brian: Look, you've got it all wrong! You don't NEED to follow ME, You don't
NEED to follow ANYBODY! You've got to think for your selves! You're ALL
individuals!

The Crowd: Yes! We're all individuals!

Brian: You're all different!

The Crowd: Yes, we ARE all different!

Man in crowd: I'm not...

The Crowd: Shhhhh!

~~~
rkuykendall-com
[https://www.youtube.com/watch?v=Zjz16xjeBAA](https://www.youtube.com/watch?v=Zjz16xjeBAA)

Quote starts at 1:20. One of the funniest movies I've ever seen.

------
dk1138
This is a push to up-end the company culture, which is its own steep
challenge. Kudos it they can do it.

Management has a role. Business politics is a real thing. Power struggles are
not stymied by an egalitarian approach.

Any company will have decision makers at all levels of influence and control.
In some situations, managers are those with time and wisdom to be able to sort
out what is a regular ask and what is going to be an uphill challenge.

One of my favorite quotes from one of my managers was "I'll finish the fights
you start." My autonomy in that role came from reinforcement from a wiser,
steadied hand. I believe good people managers have a distinct place in
employee growth.

Good people managers create employee groups that generate self-organizational
habits, self-manage based on goals, and have increased efficiency. Poor people
managers get in the way of this. Good people managers know when to step in to
advocate for business importance where inexperienced employees may be able to
generate good work product, but not be good advocates (yet!) They also
understand longer term missions that may have been disclosed to them, so that
they can prioritize correctly.

This prioritization is vital. I don't think the people lead themselves to the
verdict that their work/problem is low on the totem pole. Quite the opposite,
people own the role they are in and advocate as best they can. Self-
organization and self-management require a distinct understanding of the
business and where one's work lies in the scheme of things. Without management
acting as a buffer, this could create a lot of noise.

------
slowernet
Based on the "adapt or get out" tone and unironic use of jargon like "Teal
Organization", I picture their emergent culture landing somewhere between Lord
of the Flies and Scientology.

~~~
vanadium
Sounds like a case for some "Tension Processing."

~~~
a3n
I don't even know what that is, and I already know what it is. Been working
too long I guess.

~~~
gknoy
Reading the Holacracy page on "processing tensions" [0] feels like document
written by Dogbert. Poe's law resonates so strongly here that had I not known
that this was for real (since there's a book, and Zappo's is doing it), I
would have thought it was satirical.

I feel like I need to read it three times, and still it feels like mumbo-
jumbo.

0: [http://holacracy.org/blog/processing-
tensions](http://holacracy.org/blog/processing-tensions)

------
9999
So all manager positions have been eliminated. People that were formerly
managers have the option of staying on in some nebulous capacity. For those
former managers that do not want to work at a company in a nebulous capacity,
they are offering a severance package. This severance package seems more like
a legal maneuver to force resignations to avoid having hundreds of former
managers suddenly file unemployment claims, wrongful termination suits, etc.
against Zappos.

I find the language of the memo and the motivations behind it execrable. I do
not believe there is anything inherently wrong with flat organizational
structures and there's perhaps even some justification for using novel
terminology to describe them. Valve's employee handbook is a great example of
a flat org description done right. Eventually maybe Zappos will end up with a
similar document. It's maybe a little harsh to judge them based on a rambling,
incoherent, and cultish internal memo, but I know that I'm not inclined to
work for Lead Link Grand Wizard Hsieh if this is the way he communicates.

------
InclinedPlane
A counterpoint to "holacracy", "The Tyranny of Structurelessness" by Joreen:
[http://www.jofreeman.com/joreen/tyranny.htm](http://www.jofreeman.com/joreen/tyranny.htm)

~~~
pacala
Are you sure it's a counterpoint? The concluding "Principles of democratic
structuring" are very much a recipe for implementing structurelessness
effectively. The final words:

> When these principles are applied, they insure that whatever structures are
> developed by different movement groups will be controlled by and responsible
> to the group. The group of people in positions of authority will be diffuse,
> flexible, open, and temporary. They will not be in such an easy position to
> institutionalize their power because ultimate decisions will be made by the
> group at large. The group will have the power to determine who shall
> exercise authority within it.

------
coldpie
I've only worked for small companies. My current company has roughly 30
employees. My eyes glazed over during the 2nd paragraph. Is this what it's
like when you have a lot of employees to manage? Sending Half-Hour Emails with
Capitalized Words I've never heard of?

Holacracy? Glass Frog? Teal Organization? Reinventing Organizations? Huh?

Just let me do my work, damn.

~~~
corysama
When it's just you and a couple dozen other people, just letting you do your
work is a pretty safe bet. But, when its you and a few hundred or a few
thousand highly variable people, just letting you do your work has a strong
risk of setting you up for failure. Somebody in that huge mass of people is
going to screw up your work by running full speed in the wrong direction. That
somebody might be you -not out of incompetence, but because you were
mis/uninformed.

So, how can I repeatedly communicate dense ideas about how to keep hundreds of
people aligned in dozens of dimensions using only extremely low-bandwidth
channels such as weekly emails? One option is to use shared-dictionary
compression in the form of a custom vocabulary of capitalized words. Of
course, the messages will be inscrutable to anyone outside the org because
they won't have the dictionary. But, that's not my concern.

~~~
ryanobjc
books about internal corporate communication dont exactly advocate "Dense
ideas" at the executive level.

After all, who is going to read a 30 minute long email? Only if you are
threatening their jobs (and Tony is!)

------
smoyer
"Holacracy is a social technology or system of organizational governance in
which authority and decision-making are distributed throughout a holarchy of
self-organizing teams rather than being vested at the top of a hierarchy.[1]
Holacracy has been adopted in for-profit and non-profit organizations in the
U.S., France, Germany, New Zealand, Australia, and the UK." \-
[https://en.wikipedia.org/wiki/Holacracy](https://en.wikipedia.org/wiki/Holacracy)

~~~
engineerDave
LOL using the root of the word you're looking up to define the word you're
looking up, classic!

~~~
smoyer
Wikipedia's "top notes" says "This article has multiple issues".

------
mgkimsal
" Self-Management is not a startling new invention by any means. It is the way
life has operated in the world for billions of years, bringing forth creatures
and ecosystems so magnificent and complex we can hardly comprehend them. Self-
organization is the life force of the world, thriving on the edge of chaos
with just enough order to funnel its energy, but not so much as to slow down
adaptation and learning."

I think he's referring to evolution here, but it has no end goal in mind. It
just happens, and just as often as organisms adapt over time, many simply die
off.

------
jcrites
Similar ideas are expressed in Valve's Corporate Handbook, which describes a
company culture where there is no hierarchy, either:

[https://www.valvesoftware.com/company/Valve_Handbook_LowRes....](https://www.valvesoftware.com/company/Valve_Handbook_LowRes.pdf)

~~~
bozoclownn
There is always a hierarchy. Either it is explicit or it is implicit (which
does not mean I'm pro explicit hierarchies)

~~~
scott_s
That's the stance taken in a famous feminist essay from 1970, "The Tyranny of
Structurelessness":
[http://www.jofreeman.com/joreen/tyranny.htm](http://www.jofreeman.com/joreen/tyranny.htm)

HN discussion:
[https://news.ycombinator.com/item?id=7409611](https://news.ycombinator.com/item?id=7409611)

------
mg1982
Management theory is like cottage cheese - they keep finding surprising new
ways to make me hate it.

~~~
Rainymood
Yet, it's surprisingly high in protein, and it makes me fart.

------
anonymousDan
The really interesting part of this article for me is that they are adopting
such an approach even though they are a public company. The previous adopters
that I'd heard of were all private, and I never could quite figure out how
they intended to handle the compliance requirements that come with being a
public company (e.g. to prevent insider trading).

~~~
jacobolus
Zappos is a wholly owned subsidiary of Amazon, not a public company itself.

------
maxxxxx
How do salary raises get decided under this system? To me it looks like he
wants to have top management, a few superstars, and the rest of the company
are totally interchangeable. Does your salary get reduced when you change
roles?

~~~
angrow
Holacracy is not a system for determining salary, or any specific tactical
question, in the same way that "Agile" isn't a system for determining what
programming language to use. Holacracy just says how an organization can
decide how to apportion responsibility and authority. Different organizations
reach compensation decisions in a wide variety of ways, no matter their meta-
organizational framework.

Commonly, salaries are decided in a way very similar to the process at a
"normal" company.

> To me it looks like he wants to have top management, a few superstars, and
> the rest of the company are totally interchangeable.

As I said, not much different.

~~~
maxxxxx
"These are hierarchies of influence, not position, and they’re built from the
bottom up. At Morning Star one accumulates authority by demonstrating
expertise, helping peers, and adding value. Stop doing those things, and your
influence wanes—as will your pay."

Form the company's perspective this is probably a good thing but I think it
results in a hyper-competitive situation for the regular employee.

------
pesenti
So does that apply to the CEO as well? Is he going to drop his title?

~~~
talmand
Not only that, will he take a pay cut like the existing managers will possibly
have to do as they explore their new roles in the company?

~~~
maxxxxx
No problem for him to take a paycut with his equity.

~~~
talmand
I would include that as part of his compensation.

------
mfringel
While my eyebrows are raised past the top of my hairline right now, kudos to
him for giving it a shot at a large scale.

Whatever the outcome, it's going to be a very interesting case study.

~~~
a3n
I'm glad I'm not a subject of the experiment.

------
talmand
It'll be like the first season of Survivor, the one that figures out the
unforeseen strategies and rules of the new game first will win.

------
boothead
This is the most important part for me:

    
    
      And precisely for that reason, lots of natural, evolving, overlapping hierarchies can emerge
      ―hierarchies of development, skill, talent, expertise, and recognition

------
bshimmin
I wonder what proportion of Zappos' 1500+ employees actually spent 30 minutes
reading that email.

~~~
Rainymood
Imagine this line 80% in

"Good job that you've made it this far reading the memo. Please send me back
an e-mail with your name + banana in the title, and attach an image of a
banana or else you're fired. Thank you!"

I wonder how much staff they would have to fire ...

~~~
jkot
I would not respond even if I read that email. Such company would be broken,
and this seems like good way out.

~~~
JanezStupar
Which would be exactly what he wanted.

~~~
oblio
And it wouldn't work because 1% of the employees would read the whole email
and then tell all their friends to send an email with a banana image attached.

On a parallel note, say hello to games in the age of internet.

~~~
Nullabillity
Different code-word for each recipient?

------
jonsterling
Wow, this sounds like an incredibly unhealthy way to work. I look forward to
seeing the inevitable, expensive failure & blowback.

------
timdellinger
I applaud his boldness! I think that this will be a test of the strength of
Zappos's culture as a driver of human behavior, and a test of how well they've
been able to hire and retain only those people who fit in with and drive that
culture.

To quote Larry Niven, "Anarchy is the least stable of social structures. It
falls apart at a touch."

------
ryanobjc
When I saw a missive which is commanded to take 30 minutes to read... my
immediate thought is, ok they're doomed.

Every book on business management and communications repeats the "keep it
simple and clear" over and over. Considering the words of the CEO are repeated
by dozens if not hundreds of people, you don't want the message to shift.

I read the article about holocracy, and frankly anything that is described as
"difficult" and "painful to transition" and "takes years" just seems like it
better delivers huge benefits. And from the origin stories of holocracy, I
have my suspects of why.

In the end, management is all about human dynamics. All the advantages and
disadvantages of being human. You have to lean in to the advantages and
minimize the disadvantages.

I would probably be net negative on holocracy for my own consideration
however.

------
dang
The concentration of middlebrow dismissal in this thread is appalling, and not
at all in the spirit of intellectual curiosity.

Fortunately there are at least a few comments that didn't act like know-it-
alls, and they did get upvoted.

------
6d0debc071
It might help this email made it easy to visualise quite how the teams are
supposed to approach a problem under this new paradigm. As it is, I've read
the thing and I have no idea how it's meant to work. It might be a great idea,
it might be a terrible one... either way, it's got a lot of buzz words, which
is rarely a good sign.

Uncharitably lots of it sounds like giving up on managing - we'll set the
strategy and the rest will somehow work itself out.

~~~
MetaCosm
It seems like using "glassfrog" or something equiv is required. Makes more
sense when you look at a "glassfrog" example:
[https://glassfrog.holacracy.org/organizations/5](https://glassfrog.holacracy.org/organizations/5)

------
TheSpiceIsLife
I'm a bit pressed for time right now but wanted to leave a like to Ken
Wilber[1] who did a lot to popularise the term holarchy. If you haven't heard
of him or read any of his books ya'll might find him interesting.

1\.
[http://en.wikipedia.org/wiki/Ken_Wilber](http://en.wikipedia.org/wiki/Ken_Wilber)

------
kbenson
Whenever I read something that starts a sentence with "Leading scientists
believe...", I immediately question my choices that led me to that point, and
whether I want to continue reading, which I usually don't.

I'm not sure I've _ever_ read those words outside a critique and found the
document they were in worthwhile.

------
JonFish85
Well this reeks of consultant.

