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Banishing The Bosses Brings Out Zappos' Hidden Entrepreneurs

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Encouraging employees to come up with new ideas and ways of thinking can broaden business scope and boost performance. Taking it a stage further and allowing staff to manage themselves can uncover a wealth of latent entrepreneurial talent. Doing away with managers altogether, and letting people run with their ideas is a high risk move that could either destroy the company, or set it up for long term success.

This was pretty much what Zappos CEO Tony Hsieh did last year when he introduced a new management style, a boss-free workplace, known as ‘holacracy’. Free from management control, he believed the organisation could be more agile and adaptable to the changes that he saw as necessary to create a better workplace within a profitable business.

The idea prompted the inevitable speculation and predictions of chaos and business implosion, but that doesn’t seem to have happened. Instead, with the dust settled and the staff who rejected holacracy now ex-Zapponians, what is emerging is an organisation where people with bright ideas are making them happen.

Tyler Williams is a case in point. He joined the company in 2011, answering customer phone calls in the Customer Loyalty Department. He had lots of ideas, but he also had a manager with a clear vision of the work that needed to be done, who would constantly rein Williams back in.

With holacracy, everything changed, including his job. The marketing department spotted his skills, drew him in and he is now involved in planning internal company events, managing the largest marketing budget in the company, working side by side with 40 other people. And turning his best ideas into company policy.

He knew that many of his co-workers were dog owners and that they would love to have their pets with them at work, so he instigated a scheme that allowed them to do just that.

He says: “Under the old system, you would get everyone, from human resources to health and safety, saying it couldn’t work. With holacracy they have to prove that it can harm the company.”

Naturally, not every member of staff was in favour, and there were potential problems like allergies and phobias to consider. So they started brainstorming; those in favour and those against and came up with the solution of opening particular places around the campus for dogs and developing best practices around employees bringing their dogs.

“It has evolved into a really good system, everyone’s happy, especially the people who can now bring their dogs to work,” says Williams.

Holacracy hasn’t been an easy system for staff to learn. Hsieh recently likened it to learning a new language - and it can take a long time to become fluent – but it has also transformed working life for those who embraced, it. For those who didn’t there was a severance deal, a minimum of three months salary, or one month for every year worked. Just over 200 people took the deal, however, only a third said they based their decision on holacracy.

The reason why the new culture is working, says Hsieh, is because giving workers more power is effective for employees who have the company’s back.

He says: “Folks like Tyler are able to move around and progress more quickly within the organisation, new teams are able to be spun up more quickly, and while I’m sure not 100% of it can be attributed to holacracy, we posted record profit numbers in 2015.”

The people who are thriving in holacracy appear to be naturally entrepreneurial and innovative, yet still very team-focused. Personality traits have always been central to Zappos’ famous hiring strategy; so has that changed to reflect what is a very different way of working?

“We still hire for core values fit,” says Hsieh. “But we try to emphasise more the traits that are found in research on successful entrepreneurs, including being comfortable with ambiguity and a strong sense of curiosity.”

The best thing about working in this entrepreneurial culture, says Williams, is that he can take his ideas somewhere.

He says: “Employees who desire control find holacracy makes their lives so difficult that they leave. The people who are thriving here have a service mindset, and by that I mean they view themselves as a service to an organisation. I can offer my knowledge and skills and create something of value with them. It’s like lots of little entrepreneurs being innovative within one big enterprise. I couldn’t go back to the old way of working.”

Hsieh says the biggest personal challenge in implementing such wholesale change has been having the patience required for the change to occur.

“That is change along with other big changes in the company that are not holacracy-related, given the size of our organization, currently over 1500 employees,” he says.

If the staff are hitting their stride in holacracy, flexing their creative muscle and enjoying the satisfaction of self management they’ve never experienced before, the CEO seems at ease with it as well. When I asked him what he thought of Tyler's 'bring your dog to work' scheme idea, Hsieh said “I actually don't think I knew about it until after it had happened, but I thought that was a great example of leveraging holacracy's ‘sense and respond’ philosophy instead of going the more traditional ‘plan and control’ philosophy.”

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