Debuting holacracy: self-management for greater good

Zappos.com, the online shoe and clothing shop based in Las Vegas, declared it had no more “people managers” as of April 30 – a bold move and one that all ambitious, self-starting employees will applaud (or will they?).

Its new structure is a holacracy – a system in which authority and decision-making are distributed throughout self-organizing teams rather than being vested at the top of a hierarchy.

To better understand Zappos’ reasoning behind a truly disruptive move, consider the thought that went into the decision by its CEO, Tony Hsieh. He is an advocate of Frédéric Laloux’s 2014 book, “Reinventing Organizations.”

In his book, Laloux describes the historical development of high-potential organizations. He lists three breakthrough characteristics of top organizations:

(1) Self-management – Driven by peer relationships.

(2) Wholeness – Involving the whole person at work.

(3) Evolutionary purpose – Let the organization adapt and grow, not be driven.

Laloux’s book has a firm foundation in Gestalt psychology, which states that if you put a good person in a bad system, the system wins every time. Great attention is paid to how the most transformative organizations are structured and how they operate day to day.

Curiously, these organizations are not the typical hierarchical organization seen in pyramid organizational designs. There is a move away from static job descriptions and beginning-of-the-year employee performance goal-setting.

Rather, organizations are encouraged to develop new, innovative work practices that enable extraordinary productivity and more purposeful organizations. The objective is to change organizational structure from one that is autocratic and top-down to one that is more decentralized, more organic, fluid and bottom-up.