Zappos and the “holacracy”: Will it work for you?

Oh, the media are all abuzz about Zappos and its announcement to adopt a holacracy organizational model.  It’s an interesting concept, and I wish them all the best in pulling this off.

It’s a unique and potentially powerful innovation.

There’s a very real danger, though, in considering this independently of the rest of the company’s culture and business model.  Let me give you another example.

Back in the 1950s, Hewlett-Packard adopted the new Peter Drucker concept called Management By Objectives, affectionately known as MBO.  It was quite powerful, and for decades became the way that employees and managers achieved organizational goals.

Other companies noticed this success, and started copying the MBO practice.  This was surprisingly short-lived, however, as they didn’t experience the kind of success that HP had with the practice.  They moved on to the next management fad.

Why the difference in results?  Because HP had a culture which was entirely consistent with MBO, where trust between management and employees was at a high level.  Teams generally functioned very well, and organizations (at the time, divisions were limited to 200 employees) had tight relationships and great morale.

From the outside, it may have looked like MBO was responsible for creating this culture.  But instead, the culture was responsible for letting MBO flourish.

This became clearer to me over the subsequent decades, where HP’s culture started changing.  As the company passed 10,000 employees and then 100,000 and divisions grew to 1000 employees or larger, relationships changed.  The level of trust between managers and employees gradually diminished, as did the relationships between management levels.  The vast population no longer felt that they had any contact with executive decisions.

I’m not saying that it’s bad to be a company that large.  It’s just different than in the days which supported concepts like Management By Objectives, Management By Wandering Around (MBWA), and so on.  HP’s management culture today is hardly unique as it once was.

When you look at adopting innovative structures and methods for YOUR company, look at the rest of the culture and ecosystem which supports those who make it a success.  That’s rarely reported by the press, as they breathlessly flit from fad to fad.

But when you find something which is good AND fits into the way your company thinks, then go for it!