No More Bosses For Zappos (A Cautionary Tale)

Tony Hsieh
Nan Paimero/FlickrZappos founder Tony Hsieh
How would you feel about collecting your paycheck from a company that got rid of job titles, stopped having bosses – and instead created lots of small work circles in which everyone simply carried out his or her duties the way they ought to be done? Does that sound like paradise? Or is it a disaster waiting to happen?

We'll find out the answer pretty soon. Zappos, the online shoe retailer known for its high-touch customer service, has decided to go the no-boss route. As Quartz journalist Aimee Groth recently reported, Zappos founder Tony Hsieh is getting rid of the company's traditional hierarchy in favor of this egalitarian new approach, known as a "holacracy." (Details about the term's meaning and origins are here.)

Collegial leadership
Hsieh and his organizational-change experts hope they have latched onto a winner. Coverage by Quartz and The Washington Post explains how the Zappos reorganization is aiming for a subtler, collegial style of leadership. Anarchy won't ensue, we're told. Instead, Zappos will create lots of small, self-governing systems where team members pool ideas and watch over one another.

On a day to day basis, that all sounds sweet. I like the idea of letting conscientious employees take charge of the little stuff. Such workers usually know the fine details of their jobs better than their bosses do. Trusting employees in routine situations is a wise idea, as long as there's some built-in way to keep standards high, so a slackers' mentality doesn't take hold.

Big-time leadership gets much trickier, though. When it's time to build a new warehouse, shut down a loss-making operation or negotiate a big acquisition, all those cute self-governing work circles become toxic. Someone needs to call the shots – quickly and decisively – before dithering ruins everything. That's why cities have mayors. That's why states have governors. As I learned years ago, when interviewing Army Special Forces soldiers, in a crisis it's usually better to have an imperfect plan than no plan at all.

Zappos says it will keep some structure, including an arrangement where "the broadest circles can to some extent tell sub-groups what they're accountable for doing." There's even talk of self-policing the slacker problem by having some culture-sensitive employees identify those peers that aren't a good fit.

I'd like to think that Zappos' energy and enthusiasm will carry the day. But recent history from similar experiments is far from rosy. In Seattle, online-game maker Valve has been championing a no-job-title work environment for years. Valve's engineers have built some great games as a result, but they've also had a terrible time meeting deadlines.

Like high school
Valve got a spate of bad publicity last year when it squeezed out some developers without ever explaining why. One of the departing team members, Jeri Ellsworth, said she felt that for all the company's supposedly egalitarian ways, Valve actually operated with a "hidden layer of powerful management," which "felt a lot like high school. There are popular kids that have acquired power."

At least high school only lasts for four years. Here's hoping that Zappos doesn't fall prey to similar problems. And if it does, there's no shame in going back to a more traditional approach.
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