Zappos sees more staff departures, but is Holacracy to blame?

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More departures at Zappos leads commentators to question if Holacracy is the culprit. Recall that Tony Hsieh offered employees a big payout if they decided to quit during the transition to Holacracy. But that’s not the only transition going on there. Zappos has been involved in a major web transition, moving onto parent Amazon’s back-end technology platform:

David Gelles, The Zappos Exodus Continues After a Radical Management Experiment

The latest departures came from a group of employees who were helping Zappos migrate to Super Cloud, a back-end infrastructure run by Amazon. The arduous, years-long effort to move Zappos to Amazon’s servers has effectively frozen the company’s website, and employees working on the project were offered more time before taking the buyout.

Mr. [Arun] Rajan [Zappo’s Chief Operating Officer] said that the migration to Super Cloud, which he had hoped to complete last year, was still ongoing. Meanwhile, 38 percent of those working on the Super Cloud transition took the buyout offer.

My bet is that a lot of these departures are folks that have burned out on the apparently difficult transition to Super Cloud, and the bail-out money simply makes leaving more attractive.


Bud Caddell of Nobl offers some light on what’s going on at Zappos, because he was asked by Zappos folks (*not* Tony Hsieh, specifically) to give an hour-long ‘Teal Talk’, referring to Frederick Laloux’s Teal organization concept. Afterward, Caddell remained in contact with some of the Zappos folks. This is causing me to rethink my initial read of the situation: Super Cloud might be the proximate cause of these new defections, but if Caddell is right, Holacracy is the real friction underlying the turmoil.

Bud Caddell, Teal Fail

For a long time now, I’ve felt like the little boy in “The Emperor’s New Clothes,” but others are finally realizing that, while Holacracy and Reinventing Organizations are compelling ideas, they are patently unsafe for existing businesses to adopt.

In fact, since meeting with Zappos, I’ve met with two other firms that have adopted Holacracy and are now struggling with the reality of its complication, rigidity, and lack of clear return on investment. Both had already spent hundreds of thousands of dollars in coaching and implementation services, and because of that investment, were afraid to dismantle or even question the rules of what they had purchased.

Cutting-edge management fads are causing great companies to bleed out. The distance between the theoretical conversation and the reality of work is just too far. The average employee is already overworked and undertrained; asking them to learn the management equivalent of Dungeons and Dragons on top of their workload is foolish, if not inhumane.

It’s not “ambitious” to issue an ultimatum. It’s not “brave” to put the livelihood of your people in jeopardy by introducing change that’s not justified or informed by your market or customer. All of us should be committed to human agency, to reintroducing choice back into the workplace experience, but those introductions have to be both safe for the business, and designed for the literacy and context of the workers themselves.

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