Uncharted Waters

May 11 2015   8:00AM GMT

Holacracy Strikes Again

Justin Rohrman Justin Rohrman Profile: Justin Rohrman


In March, Zappos CEO Tony Hsieh sent a company wide memo announcing a change to a flatter organizational structure called Holacracy. Tony also offered a severance package for those that were not interested in The New Way. 210 Zappos employees took the package and will be leaving.

Zappos began making changes to have a flatter organizational structure over a year ago. It looks like they are getting serious now.

Holacracy is weird to me. It appears to have some of the tenants of the agile movement, bits of lean, but I can’t find any descriptions of the methods or reasoning. I can’t even seem to find a case study of a company or team conversion.

Secrecy like this scares me into thinking rude things about consultants that claim to have some sort of secret sauce to organizational change. I’d imagine they also have to have some sort of certification from these folks to claim they can implement holacracy, too.


It seems that this transition has been happening for at least a year for Zappos, the last time I wrote about this was early 2014. Large changes like this are interesting. Someone in charge gets an idea and suggests it to other people in charge and they look around and say “yep, that might be a good idea”.

And then nothing happens.

That is a pretty normal pattern for organizational change. Management suggests change that requires the people working under them to change their behavior and working conditions, but effects them as little as possible.

Something like holacracy can’t work like that, can it?

Holacracy would directly affect the people making the decision to change. It isn’t surprising that so many chose to take the severance package and move on to different opportunities. One credential used a lot for managers is the number of direct reports they have. Well, with something like holacracy, that number changes to zero overnight.

There is also the matter of having some people’s job made obsolete. Those people have the choice of making a career change by being shuffled into another role in the company or moving on.

One thing is clear now though. The people at the top are serious about really trying holacracy now. Rather than company meetings then months of forgetting about those meetings, actual changes are being made.

Offering money to people that aren’t interested won’t ensure that everyone supports the new organizational structure, but it probably does help some to stop and think a bit. The people they want are consciously opting in, and the people that they don’t want or may not be a good fit, have a chance to leave on good terms.

No Management Doesn’t Mean No Leadership

Removing the managerial title from the Zappos organizational chart doesn’t mean there will be no leaders. Staff in the technical parts of the company will still need to report up, down, and sideways on project progress. The entire company will definitely want to know who to talk to about raises. And of course someone will still have to be there to talk about performance and improvements with individual team members.


Zappos CEO Tony Hsieh

Shedding titles does little to change the day to day needs of a company, especially one as big as Zappos.

People will still fill the role, they may just not get the official recognition for that. Even in small development groups, there is usually a person that will take a lead role in the group of distributing work and checking up on people that need help. It is human nature for people to organize and assume different roles in groups.

Jerry Weinberg has a great book called Becoming a Technical Leader that goes into a lot of detail about leadership that has absolutely nothing to do with title.

This will be a massive change if they end up pulling it off. Either way, I don’t quite understand the end goal. Is it a cheaper, more efficient business? Is it higher product quality some how?

I suppose we’ll have to wait and see.

If you work with Zappos and want to talk more about your Holacracy experience, I’d love to hear from you.

2  Comments on this Post

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  • FTClark

    I agree. Holacracy sounds like a grand idea lacking substance and a clear definition that translates to details. Defining, implementing, and testing sounds like a grand experiment. This could be exciting and great fun but does it make good business?

    There is sometimes a problem with too much middle management. However, the typical solution to a problem is to fix the actual problem and not just change everything. Maybe the actual point at Zappos is to set a clear goal, scare out the slack (as you suggested), and actually only make small, simple, and specific changes to specific problems. Simply removing titles is silly but shifting the focus from titles to work is reasonable.

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  • ncberns
    I don't work at Zappos. And from this it appears there's no chance of it in the future. I'm not sure what this experiment might be though it's obviously too much of a secret to share.

    I suspect management is just trying to do something, anything and figure out the results as they go along.Keep the good parts, lose the rest. A very expensive game of 52 pick up.

    I don't want to see a chicken run around without its head any more than I want to have a head running with no chicken attached. I'm so glad my company can't afford grand experiments like this.
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