Zappos is an online shoes company who implemented a holacracy system in December 2013 (Kamp, 2014). According to Holacracy.org (n.d.), holacracy is a comprehensive practice for structuring, governing, and running an organization. It replaces today’s top-down predict-and-control paradigm with a new way of achieving control by distributing power. In 2009, Zappos became a subsidiary of Amazon.com and since that day Tony Hsieh, the CEO of Zappos announced that they wold implement a holacracy system because he was inspired by “the work of Frederick Laloux and his study of Teal organisation” (Burke, P.2, 2016). However, during the implementation, Zappos faced some challenging such as some employee still were not familiar with it and thus grapple the holacracy system. In order to tackle this issue, Zappos provided 3 days training for all employees within 12 months which introduce and familiarize the employee with the holacracy systems (Bernstein et.al, 2016). Even though their annual employee turnover increases 30 precents in 2015 which is 10 percentage points above their annual turnover (Lam, 2016), Zappos still decided to utilize the holacracy system. It is caused that Tonny Hsieh as the CEO of Zappos create the culture within his company that employee’s tasks not only deliver a report and being commanded by their manager but they need to be self-direct their tasks like entrepreneurs (Zappos Insight, n.d). On the other hand, Medium is the digital publishing company who decided to not utilize a holacracy system anymore after 4 years usage since they found it is difficult to coordinate efforts at scale (Bernstein et.al, 2016). The company found this system will not be effective anymore and against its believe in terms of thriving, as Medium is the company that has a fast-flow working style.
The major issues that Zappos has been facing towards the implementation of the holaracy is the lack of determination and motivation from each employee. Some employee tends to consider the implementation of holacracy as a difficult thing to be done and are dubious the success thus they do not have enough determination and motivation towards it. Determination and motivation from individuals are the foundation and intrinsic factors to prescribe whether holacracy’s implementation will success or not. Moreover, it also supports the other activities such as training to prepare employee towards the new working culture which then they can work productively and efficiently. Thus, even though Zappos has provided training 400 employees completed the 3 day holacracy training for one year which resulting in 90 employees become certified facilitators of governance and working meetings, it is not enough (Bernstein et.al, 2016). Moreover, lack of determination and motivation create a tension and pressures for employee within the new holacracy environment. All this thing definitely obstructs them to thrive, as people that are allergic to the change will never want to step out of their comfort zone. Accordingly, some of them are giving up with their job which are proved by a growing number of employee turnover in Zappos which is accounted for 30 precents in 2015 that 10 percentage points above their annual turnover (Lam, 2016). Regardless of all the things above, Zappos is still considering they are doing well with the business.
On the other hand, Medium, an online publishing platform, has another experience in terms of implementing holacracy. The company has decided to make a major change to their management system and will no longer use the holacracy system. The misconception that leads to the job confusion and ineffective work environments that are not fixed gradually are the factors why the company finally called it off. The conflicts are started to arise before they even realized it. Without fully commit with the system, it might be hard for the company to achieve the results they expected, according to Brian Robertson in interview with Yu-kai Chou (2017), “I’m not surprised it was getting in the way for them.” The company wasn’t doing it right, he said. “If I have a screwdriver and I keep smashing nails with it, I’m going to think it’s a pretty shitty tool. On the other hand, if you use it for what it’s designed for, you might end up with different results.” Holacracy might work the best for the company that are fully set up and ready to implement the system from the beginning, which was something that Medium never prepared for and it seems that the company is impatience with the slow changes as it takes years for the system to align with the company’s expectation. Medium’s principles and the work culture did not suit the system well. With the unclear authorities and some certain limits, the employees found it hard to distributed the responsibilities and had no clue what their job was. Although they admitted that they have a set of excellent employees, the ineffectiveness that caused remains unavoidable.
All these issues above are driven worse impact since there is no more a traditional leadership role in this system. If the employees are ever given a chance, almost anyone is willing to do things outside their role, especially the one they are passionate about, but when it takes energy to figure out what their roles are day to day within a tricky and rigid but also dynamic structure, they will have less energy to do the works and be overwhelmed with all the things that going around their jobs. Since there is no more specific leader’s role there to tell them what to do and how to get their job done, the employees have a tendency to be messed up the responsibilities between one work and another. This situation leads to different perceptions in both company. In Zappos, they have seen this system as a win-win-solution to almost issues they are facing and might face in the future as if the company will get bigger.
Each employee need to gain more motivation from internal and external in order to adapt themselves with the new holacracy system. Firstly, in terms of internal motivation, each employee needs to trust Zappos and Medium that the implementation of holacracy is good and can be a successful. Employee must have a self-efficacy or the sense of determination that arises from the sense of confidences within the workplace. Accordingly, it will produce a flexibility which mean that employees are willing and able to move from the old situation to more complex situations or holacracy environment. Moreover, employee need to have an open communication especially the leader of the sub circle towards the employee within the cycle. By having open communication, they can encourage the other to take a decision which is never done for some employee. It also makes the authority become clearer that clarify each employee what are their tasks and responsibilities which prevent from the overlapping work. Beside open communication also makes the employee be confident since they can support each other and share their difficult tasks to be solves together. Furthermore, when the employee can share their feelings and the works together, each of the can have feedbacks towards their performance from their mates. These are important for employee to know how well they have done their works and they can fix and be better in their performances. Another form of external motivation is seminars provided by Zappos and Medium. The purpose of it is to equalize the holacracy perceptions among the employee thus they can be empowered equally. As a result, a positive working environment is created and employee feel comfortable with their tasks. This situation encourage employee to work productively and efficiently since they are happy with their jobs and do not have any tensions.
Action learning can be implemented since the new holacracy system required solve the problems faced by the organisation and learning about the teamwork and collaboration simultaneously (Lemke, 2016). Teamwork learning is an important thing in the holacracy system since it eliminates the hierarchy system and encourage a teamwork process by having a circle and sub circle (Bernstein et.al, 2016). Moreover, action learning also engages employee to implement all the knowledge that they have learned. Subsequently they will not be passive learning but they are considered as active learning who learn and implement their knowledge directly which resulting to an effectiveness. During the process, the circle within the holacracy system encourage the sub circle to work and discuss the issues together as form or collaboration works which eliminates the hierarchy. Each employee in the sub circle has to share their difficulties of their work responsibilities, discuss and solve together creatively based on the knowledge or experiences they have gained during the training which followed by the constructive feedbacks. The frequency of learning itself can be done weekly or monthly based on the preference due to holacracy system is flexible and there is no a chain within the system. By having action learning within Zappos and Medium, the employee can be accustomed with the new holacracy system that require individuals to have responsibility, self-management, collaborate working and importantly each person in the subcircle can create own decision making without rely on the circle within the complex work’s tasks. Importantly the employee can speak up their opinions and ideas which make the accustomed to the holacracy system.
Furthermore, the leader of each link can adopt the collective leadership style. The application of this principle needs active contribution from all the team members to make thing works since this leadership style is built upon an influence relationship among leaders and followers (Cullen et al, 2014). In order to reach the goals, they need a strong team that opens to being influenced and being influential in their views expression. This style is effective to kill the fear of rejection that may come from the member that want to share the idea as this kind of leadership usually does not have a strict relationship between the leaders and the followers, which what the holacracy system all about. Open sharing is likely held. The purpose is to inspire and to get inspired that leads to self-improvement.
Considering all the problems and solutions that are intertwined above, action learning is the most possible and less risky that the both company can do. With this approach, it is believed they can achieve their target within times. Action learning solves problems and develops leaders simultaneously because its simple rules force participants to think critically and work collaboratively (Wial, n.d.). One of the point of the holacracy is to make the flattened organizational structure with creating the employees that have an authority based on their role and let them take part in decision making process. It is impossible to get the expected results instantly, as each individual has different perception towards this system.
The action learning coach helps the team reflect on group interactions and learn from each other in a safe and neutral environment. Leaders can be developed in real time as they tackle the problem at hand. The coach and members feedback on their contributions to the team. Theories like systems thinking, appreciative inquiry, and learning styles are embedded in the process. Each session ends with an identified set of committed actions to be carried out by the team before the next session—making it result-orientated (Warrier, 2013).
There are benefits and drawbacks for Zappos and Medium when they implement our recommendation above. If the action learning with the coach is implemented by Zappos and Medium, the benefits are employee will have bounded each other which will affect the whole working environment. Since the action learning encourage a teamwork and collaboration the employee will interact and communicate with each other more than before that create a bonding each other. Thus, it makes the employee’s works are easier than before and easier to achieve the Zappos and Medium goals. Besides, it also creates a transparency of works since each employee can see other achievements which can become a motivation for them to complete their tasks better. On the other hand, if they fail execute the action learning, it will create a tension among the employee especially when there is a social loafing or an individual who exert less efforts compared to the employee within the sub circle when doing their works. Furthermore, transparency can trigger a tension among the employee due to at the point of time, when employee feel stress towards their works, they will compare themselves to the others employee who have completed their task successfully. As a result, the purpose of the holacracy will not be achieved since the empowerment is not distributed equally.
However, when our recommendation above is not implemented by both Zappos and Medium, the employee cannot achieve the goals within the holacracy environment. It is caused by the lack of teamwork for solving any issues arise within the workplace. On the contrary, Zappos and Medium can have a positive impact towards their company when they do not apply our recommendation. When there is no an action learning which emphasize a teamwork and support each other, there will not be any a dominant employee. Some employee will feel superior than another employee within the sub circle especially for those who performs well than the others and provide a construction feedbacks for individuals who has not performed well. When they have a dominant sense, they tend to take decision and carry the tasks based on themselves while at the same time, they do not give opportunities the others to speak their voices. In fact, holacracy needs a cooperation among the circle and sub circle in order to be successful.