zappos logoTony Hseih’s letter to staff about taking up Holacracy (r) or taking the well paid exit at Zappos prompted some exchanges on Linked In.

http://en.wikipedia.org/wiki/Holacracy explains what is meant by Holacracy – self governing groups. The Fast Company post about Tony’s ultimatum to staff is at http://www.fastcompany.com/3044417/zappos-ceo-tony-hsieh-adopt-holacracy-or-leave. And Forbes Magazine gives context and has a good challenge to what’s happening, with a whole year’s attrition of 14% occurring on one day, the 30th April http://www.forbes.com/sites/danpontefract/2015/05/11/what-is-happening-at-zappos

So here’s a thought or two from experiments in organisational design which we developed in my previous 2 businesses, Aspen & Round. I’d love to hear your thoughts, especially if you were in these businesses.

In those businesses there were many things that worked very well creating a culture of excellence, strong bonds great results. Here are 5 features of the organisational design that may help people experimenting with self managing teams: 1) discretionary budgets, 2) hats 3) role definitions 4) 80/20  5) headhunter league tables.  I’ll try and explain.

1) Budgets are meant to enable people to be free to get on and do stuff without referral back up the line. They are a way of building a facade of stability in any business’ economic model. In practice many managers take 25-30% of their time building, tracking and explaining budgets. Not to mention getting signatures to re-approve the actual use of the budget when it happens. Then budgets drive behaviours and decision making. In our business we worked out that most things in our economic model were driven by one thing: recruiting people. And that it was better to free more time to recruit, induct and train great people well so we got great results – rather than chasing numbers. So budgets were reduced to ‘discretionary budgets’ or bids i.e. as long as we made profits (or strictly speaking surplus cashflows) anyone could bid to spend money or time on something that made a difference. If we didn’t generate cash then there was nothing to spend. The money goes into the most effective ideas at that time. Simples?

2) Hats was the analogy we used to explain who was in what role at any one time, or who had picked up a task or role. Self management is fine, but it can be chaos. You could put the hat down, pick one up. As long as two things occurred: a) people had the skills to fit the hat(s) they picked up and b) all the hats required to get something done, were picked up. This could be as simple as when running a meeting: chair, timekeeper, minute taker, bidder, participant, expert and so on. Or when running a change project. Simples?

3) Role definitions were in fact quite simple. Any client work (the core economic value generated by the business) had 3 specific hats: lead, review or resource. The trick was that anyone (within some common sense limits) could wear any of the hats and so be in any of the roles. This levelled the playing field, increased communication and skills transfer. One day you could be reviewing a team’s work, the next day they could be reviewing yours. The reviewer could be very junior or very senior. Teams had to look after that. The cross pollination was crucial to stretching people and learning.

4) 80/20 is now better known as Google have since done this. Your personal objectives allowed you to take up to 20% of your time on a personal objective – personal could be unrelated to work. Passing your sailing exam or learning a language were as legitimate as acquiring a new job skill. This had a number of effects in what was a hard working, high performance culture. People’s outside interests were publicised and talked about. It was ok to be in late or go home early, in fact to flex without it being seen as less than good. People enjoyed being beaten up for not making their outside commitments. Work commitments rarely slipped, but motivation increased.

5) Why headhunter league tables? In any high performance culture, the best people are in demand. Your responsibility was to make yourself ’eminently employable’. Openness in sharing head hunt calls helped people judge themselves and how well they were doing. Openness kept headhunting from being a problem and made it useful in motivating people.

Zappos' CEO Tony Hsieh Speaks At Clothing Industry Trade ShowOf course all these elements were of that organisational model, to fit that culture, to serve that purpose. They took time to develop and morph and mature. They can’t necessarily be picked up and helicoptered in somewhere else.  “It only works when it all works” is somebody else’s quote, but it fits.

And that’s what’s probably wrong at Zappos – helicoptering in someone else’s model as a religion, as a method that has to be applied in a particular way.

Please let me know your thoughts & observations on self managing teams