Zappos, the Amazon-owned online retailer, has been operating as a “Holacracy” since May. It’s an alternative management system that was created by a software developer in 2007 and has since been adopted by about 300 companies worldwide, the largest by far being Zappos.
In it, there are no traditional manager roles, power typically reserved for executives is spread across the organisation, and job titles are replaced by “roles” that an individual acquires. A pyramidal hierarchy is replaced by a series of “circles” dedicated to specific functions like marketing and customer relations. Holacracy is in the vein of self-management systems that have existed for decades, but “lead links” of each circle maintain a level of control over their colleagues.
It’s a system aimed at maximizing efficiency and the flow of ideas, but it requires years of patience and willingness to adapt in order to master. In May, Zappos announced that 210 of its 1,503 employees — nearly 14% of the company — decided to take a severance package after CEO Tony Hsieh sent a 5,000-word internal memo in March stating that employees needed to commit fully to Holacracy or else choose to leave. The company had been transitioning to the system since 2013 but was only 85% of the way there. Hsieh likened the final step to ripping off a bandage.
The media took notice of the wave of departing employees, and Zappos’ leadership told Business Insider they have found much of the coverage to be sensational and misleading, as if the company were about to shut down.
The Zappos Insights culture training team decided to respond to the negative press with a sense of humour. They recently produced a satirical video that features Hsieh. In it, exhausted by dealing with the press, he has a nightmare that his company has devolved into total anarchy under his new management system.
After passing it around internally, Zappos shared the video exclusively with Business Insider:
Earlier this year, we spoke with Hsieh, Zappos leadership, Hsieh’s self-management advisers, and some current and former employees to see what was going on inside the company.
A coup d’etat didn’t break out like it does in Zappos’ video, but we did hear from several employees who felt betrayed by Hsieh and his executive team and were tired of participating in what they deemed misguided experiments.
At the time, Hsieh said, “With a company of our size it’s easy to find people with negative perspectives.” He said he believed the company would be invigorated by a team that was committed to making Holacracy work.
Christina Foley, Lead Link of Zappos Insights, said she and her team made the satirical video after being inspired by a particularly “crazy” press interview that made them think, “these people need to settle down and do some research.”
When asked if she worried that former employees who had genuine issues with Zappos management would be offended by the video, Foley replied, “Not at all. The video isn’t a response to our amazing colleagues who may have opted to make a change, and I don’t think anything in it could be misconstrued that way.”
“We just wanted to play, in our Zappos fun and weird way, on what our office would look like if everything the press was reporting was actually happening,” she said.
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