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Let’s Make a Holacracy

I like Tony Hsieh, the CEO of Zappos. He does brave, unconventional things that have produced enviable results.

Like forever changing the way people shop for shoes by offering legendary customer service, free return shipping and a 24/7 supply chain. (No kidding, all you have to do is think New Balance running shoes and you’ve got 15 styles sitting on your doorstep!)

And in the course of making Zappos a great place to work, Hsieh has recently undertaken an ambitious revitalization project in the transitional Las Vegas neighborhood where the company is based.

By making altruistic, decidedly anti-corporate choices, Hsieh has outgamed more risk-averse competitors. And the latest of his wild ideas is reorganizing the entire 1500-person company into a holacracy. No manager titles or typical chain of command. Instead, employees will be organized in small task forces responsible for specific goals.

Wow, so is this where the magic stops?

Because it’s easy to embrace altruism and lawlessness when you’re dealing with a responsible few – kind of like driving cautiously through a red light when you’re sure no one will get hurt. The thing is, these commonsensical things don’t scale well, because with volume inevitably comes fools. Critics of the Zappos re-org say it’s only a matter of time before someone takes advantage in the absence of authority and accountability.

Let’s see what Hsieh had in mind.

Turns out that Zappos thinks the holacratic way will make employees more accountable, not less.

First, a holacracy takes the decision-making power out of the hands of few and empowers workers at all levels to be part of the solution. “When the leadership function is distributed, the result is faster, more appropriate decisions by more engaged and autonomous workers,” says

Second, it’s harder to hide out in smaller circles that are co-dependent on each other. You are part of a team, sitting on a goal. Collaboration, nimbleness and leadership are won rather than forced or assumed. “Imagine an entire organization made up of innovative entrepreneurs – each one fulfilling one or more specific roles for which they are responsible.”

At least, that’s the way holacracies are intended to work. But in real life, I see at least two pitfalls:

1. Remember group projects from college? You were assigned to a team with various skill, interest and commitment levels and you all walked away with the same grade regardless? That sucked, didn’t it? The strongest leaders will pull the weakest in their circles, ultimately becoming disenchanted because there’s no advancement path or acknowledgement for their contributions.

2. Innovation and decision by committee don’t seem the likeliest of friends.  What’s to stop gutsy and creative ideas from being watered down by group think or politicking?

Could a holacracy work in the agency world?

Feel like shaking things up today? Go tell your manager you no longer report to them and prefer instead to operate as your own holacracy. (I’m here if you need a new job.)

To be fair, I’ve seen the concept of task forces achieve very effective results. A project or program needs to be delivered – like an onboarding plan for new hires or a summer internship program – but it’s not tied directly to revenue or job performance so there’s no incentive to assume responsibility. You create a task force and provide recognition and visibility. Viola, you’re a team captain. Isn’t that nice?

But I’d be reluctant to hang essential business functions or revenue-generating activities on the idea of distributed authority unless I was sure I was in the company of natural-born leaders.

I’m curious to see what happens. A holacracy will survive at Zappos if it’s going to survive anywhere. Zappos is already proficient at recruiting talent with an ownership mentality and it invests heavily in training and development, both essential get a 1500-ton holacracy to fly.

Now, who do I talk to about getting those running shoes?

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