Tony Hsieh, Zappos, Darwin and (maybe) the future of work

If you ask a woman anywhere north of about 16 right now to name a good company for customer service, I’d bet you $10 (and that’s a lot for me, if we’re being open here) that within the first three companies she names, she will say “Zappos.” (One of the other two is likely Amazon, and the third is a wild card that likely says a lot about her as a person. But let’s not get too deep.) Zappos became a billion dollar company off of customer service. Hell, you can argue they “saved” Christmas 2013. That’s the external stuff — they win customers, retain customers, and make money off their product and their service. All companies say service is their fundamental focus, but only a few companies make people feel this way. Zappos is one.

Internally, they’re pretty interesting. For example, they’re blowing up the conventional model of how we work. By December 2014, there’s no more job titles, no more managers, and no more hierarchy. It’s called “holacracy,” from the Greek holon, or “whole that’s part of a greater whole” (now we’re basically describing being in a relationship). The idea is self-governance. Rather than having a chain of command / “dotted-line reporting” type-stuff, instead there are 400 circles. Employees can play a different role in any number of circles. (The circles are kinda like projects.) The ultimate goal is transparency.

Here’s what the CEO, Tony Hsieh, said about it when it rolled out:

“Darwin said that it’s not the fastest or strongest that survive. It’s the ones most adaptive to change.”

Amazing quote, especially in the modern era — when 33 percent of people reject the basic ideas of Darwin.

Whenever something big happens in an unique/quirky company, someone writing an article about it needs to get a quote from someone at the company about the idealism of the execution. Quartz went ahead and did that, so let’s roll that quote about how this new structure could be perceived:

“We’re classically trained to think of ‘work’ in the traditional paradigm,” says John Bunch, who, along with Alexis Gonzales-Black, is leading the transition to Holacracy at Zappos. “One of the core principles is people taking personal accountability for their work. It’s not leaderless. There are certainly people who hold a bigger scope of purpose for the organization than others. What it does do is distribute leadership into each role. Everybody is expected to lead and be an entrepreneur in their own roles, and Holacracy empowers them to do so.”

Cool. Here’s my two cents.

This is an awesome idea. Here’s why. Hsieh said this at the “All Hands” meeting rollout, but at any company, there are literally about six different org charts. There’s the official one, there’s the one everyone really follows, there’s the secret backdoor one (how you get stuff done quickly), etc. If you try to meld all those things together and be transparent about it — so long as you’re getting the right types of people — then it’s going to be an interesting, creative, driven place to work. That’s awesome. That should be the goal for companies. If the economy keeps getting meh and then the Boomers start retiring en masse, you’re gonna have a green workforce with a millennial attitude and a tough change rate (trying to flip jobs is never easy). So why not focus on getting good people and keeping them around for years, and doing it via the culture and not just the cash? Most people would work for $5-10K less if the atmosphere and opportunities were significantly more. Focus on the culture to get the right people, then the people will be motivated and make you money. That’s how it should work.

I also like it because it challenges HR to be something other than HR expects to be — and that’s a good thing for the evolution of that world.

Here’s the thing: we did things the same way for a very long period of time, and only in the past 70 years or so have we seen drastic changes in terms of how we do a lot of basic functions — such as human interaction. (Try to imagine your grandmother telling someone, “Oh, I put it on Facebook. You didn’t see it?”) There are two major areas where it seems like we’re still doing things the 1800s way, and they need to be adjusted over the next generation: school and work. The higher ed model is dead. Blow it up. There’s no reason for a 22-year-old to be entering the workforce with $60K in debt. It’s ludicrous. There’s no reason to have geometry be mandatory for certain students, or for school to be out all summer. Adjust and adapt. Same with work. We worked for eight hours in 1907. It’s 2014 tomorrow. Why are we still doing things in the fundamental, hierarchal way? We shouldn’t be. So kudos to Zappos. It’ll be interesting to see how it works.

Ted Bauer


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