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In 2014, Zappos CEO Tony Hsieh began shifting his company's management structure from a standard hierarchy to a holacracy, a decentralized system meant to distribute decision-making throughout the organization. Predictably, this transition wasn't exactly drama-free--and over the years, Hsieh has repeatedly doubled down on the self-management experiment.
Now, the experiment seems to be evolving. On Wednesday, Quartz's Aimee Groth reported that Zappos has spent the past few years "quietly" moving away from holacracy. In its place, the company is allegedly instituting a market-based system, wherein teams operate like independent small businesses--even managing their own individual profit-and-loss statements. Here's how it works, according to Quartz's sources:
Teams (or "internal small businesses") within Zappos are incentivized (through unspecified means) to develop new products and services for the company and its customers.
All teams--even ones like R&D that aren't typically profit-focused--are told to find their own ways to fund their expenses.
They function daily in a marketplace-type setting, selling their skills and services--both to one another and Zappos customers--to earn the budget money they need to operate.
It's a much more detailed explanation than you'll find on the Zappos website, which simply notes that in March 2017, the company "began adapting our internal systems to more closely resemble real-world markets." It sounds intriguing, no? Zappos has thousands of employees. Small businesses, usually by definition, are more nimble than large corporations. Enabling teams to function independently could certainly decrease bottlenecked decision-making and help prevent the company's growth from plateauing.
On the other hand, the downsides sound potentially chaotic. One can easily imagine a scenario in which two teams, say, try to tackle the same project. At best, it's an unnecessary duplication of resources. At worst, it could escalate to full-on departmental war as they try to best one another. Cultures that are too competitive can rip themselves apart from the inside.
Maybe that isn't a big concern at Zappos: The company has been owned by Amazon since 2009, and Jeff Bezos has never been one to shy away from cutthroat competition. Rather, this latest evolution in the Zappos workplace structure seems to show that Hsieh is nothing if not adventurous. He has no qualms about ripping up the rules--even if he created them.
It doesn't guarantee success, by any means. Here's what it does guarantee: If you follow Hsieh's journey, you'll almost never be bored.