If all goes well, by the end of this year Tony Hsieh won't be the CEO of Zappos. In fact, he won't be anything there, just another employee without a title.
It may sound like any other CEO's worst nightmare, but for Hsieh and Zappos, it's a bold new experiment in management. The Amazon unit will become the largest company yet to embrace a holacracy.
Invented in the early 2000s by entrepreneur Brian Robertson, a holacracy is a management structure based on the tasks a company needs to accomplish, rather than a standard reporting structure. Hence the lack of titles. As Robertson describes it, a holacracy is sort of like a game: Everyone in the organization sets up a constitution with rules to adhere to. The group decides to distribute tasks. Those responsible for tasks own them. There is no micro-management.
Additionally, no one has to be stuck doing one thing all the time. If you're a whiz at programming, for instance, you can make your job 100% about doing that, but you can also spend, say, 10% pursuing an interest, like helping run events or marketing, if you're so inclined.
When asked how this works in practice, Robertson gave the following example: Say your company wanted to set up a training day. One employee would be charged with picking a venue. If the venue turned out to be hard to find, inconvenient or otherwise lacking, then that would cause what Robertson calls "tension."
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To deal with the tension, the group (also called a "circle" or a "team") would agree on new "expectations" about the venue for the next training day. However, once charged with the responsibility of finding a venue, the employee would not be second guessed. However, if he or she failed again, then the group might decide to take the employee off that task and give he or she another one instead. (If the employee was incompetent at many tasks, then eventually the group might decide that a sacking was in order.)
The advantage of such a structure, Robertson says, is that it "generates organizational clarity." That is, in theory at least, workers are more concerned with the task at hand than trying to look good for the boss. Robertson says he discovered this structure by trial and error while running a software start-up in the early 2000s.
Though it's been around for a decade, the holacracy doesn't have much of a track record. That hasn't stopped Zappos from jumping on board, though. The company began phasing in a holacracy framework last April. Currently about 10% of Zappos employees operate under that structure. By the end of 2014, Zappos plans to expand it to all 1,500 or so employees. Zappos' embrace comes after Evan Williams' blogging platform Medium also initiated a holacratic leadership structure.
"Kind of the broad overarching theme about why we're adopting this is to try to scale agility" says John Bunch, a guy who works at Zappos. (The lack of titles makes attributing quotes to Zappos employees awkward.) "The point we're at as a company is we've gotten past where we can be like a small family and really adapt our business to real-time environments."
Divorcing the work that employees do from all the expectations bound up in a title will allow Zappos to be more agile, Bunch says. "One of the big changes in a holacracy is that the work that needs to be done and how it's being fulfilled is much more adaptable and quick changing. In a holacracy those bits of work are defined as roles and the leaders of the teams can assign and reassign people into roles as they see fit." In a traditional structure, Bunch says, you have to go through a long process to get a new person into a new role. At Zappos, that's happening a few times every week with the beta group, he says.
How's that going? It's too soon to tell. "It takes a long time to get and in see the fruits of holacracy," Bunch says. However, "we saw enough of the positives and enough of the vision of the positives to determine that it was something that we wanted to pursue for the entire company."
Similarly, Robertson couldn't say whether adopting a holacracy would help a company like Google or Apple: "It's not my place to tell Google or Apple how to run their companies," Robertson says. "But if they took a day running their company as if it were a holacracy it might be a valuable experience."
Image: Getty/Ethan Miller