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CIRCLE OF LIFE

Zappos has quietly backed away from holacracy 

Courtesy of Zappos
Thinking outside the box again.
  • Aimee Groth
By Aimee Groth

Journalist, Author, Strategist

Published Last updated on

Six years ago, Amazon-owned Zappos began upending its traditional management structure. In lieu of a typical corporate structure, with power concentrated at the top, the online shoe retailer would adopt a decentralized system with “no job titles, no managers, no hierarchy.”

CEO Tony Hsieh was originally inspired by the idea of creating a city-like environment without central planning. “Every time a city doubles in size, productivity per resident goes up 15%,” he has said. “The whole system just works, and it’s really resilient and flexible—whereas companies see productivity per capita fall as they grow.” He saw holacracy, a new kind of management structure predicated on decision-making authority being distributed throughout the organization, as the tool to access that kind of resilience and hyper-productivity.

Holacracy is a radical departure from the way most companies are run. Its adoption can be disorienting, even for people who already buy into the philosophy behind the idea. In March 2015, Hsieh gave employees an ultimatum to either fully commit to being a genuine participant in Zappos’s holacracy or leave; 18% took a generous buyout offer.

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