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Zappos Firms Adoption of Holacracy and Its Impact
In 2013, Zappos which is an apparel retailer, announced that it was shifting its organizational structure a more fluid, less hierarchical form known as Holacracy (Nisen, 2013). The principle of Holacracy is that it eliminates traditional hierarchy by essentially removing all position titles, managers, and other means of subordination. Instead, it creates a flat and self-organized system which fosters flexibility and engagement (Holacracy, n.d). Holocracy is not a rigid system, and companies that adopt it can mold it to their needs and core values as has been the case with Zappos. The system was created with an emphasis on productivity, but Zappos has made it fit with their culture which is highly person-oriented (Zappos Insights, n.d.). The reason for adoption was that so Zappos could respond better and faster to customer feedback in their priority customer service operations. Holocracy as a system just provides a backbone with sets of rules and checks-and-balances in order for the self-managing company to function effectively (Bernstein et al., 2016).
Handy Model of Organizational Culture identifies four types of culture power, task, person, and role. Commonly the organizational structure leans towards one of these based on its values and to achieve organizational goals (OpenLearn, n.d.). Holocracy would best fit under person, or sometimes called personal culture typology as it is system which lacks both centralization and formalization. Instead, it is focused on a work-environment that is self-managed and self-driven, with individuals operating on a self-motivation basis with limited guidance and structure.
Meanwhile, the McKinsey 7-S Framework identifies seven internal elements of an organization that have to align in order for it to function effectively and successfully. Categorized as either hard or soft, the seven elements are strategy, structure, and systems (hard) as well as shared values, skills, style, and staff (soft). The model is focused on coordination and harmony of these elements rather than structure as the foundation to organizational effectiveness (McKinsey & Company, 2008). Therefore, analyzing Holacracy through the lens of this framework, it can be argued that the organizational system can be just as effective as any other traditional hierarchy. Since the 7-S model is not focused on structure but rather the harmony of the individual elements, which a company like Zappos can align within the context of Holacracy organization, the firm can demonstrate growth and productivity.
References
Bernstein, E., Bunch, J., Canner, N., & Lee, M. (2016). Beyond the Holacracy hype. Harvard Business Review. Web.
Holacracy. (n.d.). Explore Holacracy. Web.
Nisen, M. (2013). Zappos is getting rid of all titles and managers. Business Insider. Web.
McKinsey & Company. (2008). Enduring ideas: The 7-S framework. Web.
OpenLearn. (n.d.). 3.5.2 Handys four types of organisational cultures. Web.
Zappos Insights. (n.d.). Holacracy and self-organization. Web.
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