No Managers Required: How Zappos Ditched The Old Corporate Structure For Something New

No more job titles. No more managers. No more hierarchy. By this time next year, Zappos’s 1,500 workers will be organized into something called a holacracy.

After making its move to the new downtown Las Vegas campus as part of Tony Hsieh’s Las Vegas revitalization quest, Zappos is making another radical change. By the end of 2014 Zappos will have thrown out its old corporate structure and replaced it with something entirely new.

No more job titles. No more managers. No more hierarchical decisions. By this time next year, Zappos’s 1,500 workers will be organized into something called a holacracy.

Holacracy is a little known organizational management system that’s is gaining a toehold in the business world. Zappos, so far, is its biggest adopter. Holacracy takes its name from the Greek word holos, a single, autonomous, self-sufficient unit, that is, at the same time, dependent on a larger unit. Think of a human cell’s relationship to the entire body.

Brian Robertson, founder of HolacracyOne and advisor to Zappos and other companies on how to adopt holacracy describes human beings as sensors who observe errors and inefficiencies in systems as well as intuiting possible fixes. He describes the gap between what is (current reality) and what could be as a “tension.”

In traditional corporate hierarchies Robertson found that employees who observed inefficiencies or had ideas for improvements would have to go to a boss, who would go to their boss, who would go to their boss and so on. Often this critical information that could lead the company to meaningful change simply slipped through the cracks. Robertson says, “When there is lack of clear and effective channels for processing tensions,” it can leave people frustrated, burnt-out, and disengaged.

So how does holacracy work?

Robertson’s 20-page Holacracy Constitution, which documents the rules, structure, and processes of the holacracy organizational operating system, is not easy reading. Kind of like leafing through the Congressional Record. You’ll have to wade through a lot of unfamiliar terminology. To simplify, workers are partners; job descriptions are roles; and partners are organized into circles.

Robertson admits that adopting holacracy can be difficult without support. But the idea is that this radical restructuring of an organization in which authority is distributed and everyone becomes a leader of their own roles will lead to much more effective problem solving and ultimately advance the company’s goals. Imagine an entire organization made up of innovative entrepreneurs—each one fulfilling one or more specific roles for which they are responsible. But every single one of these entrepreneurs is accountable to the larger organization and shares the same higher purpose.

Once again, Tony Hsieh has proven to be an avant-garde business person, unafraid to take risks and try new things. And if he and his 1,499 Zappos partners (organized into 400 circles) pull off this holacratic experiment, next on your reading list just may be the Holacracy Constitution.

[Image: Flickr user Mark Kelly]