Read the information regarding Zappos in your book. Does the leader impact organizational culture or does organizational culture impact the leader? Explain. If you were the leader of Zappos, what new elements would you add to the corporate culture? Explain. How does the corporate culture impact vision, mission, and strategy at Zappos?
Tony Hsieh, CEO at Amazon’sZappos, the retail online shoe and clothing company with 1,500 employees, is again experimenting with a more radical extension of the current organization. The firm is now organized as a holacracy—“a management structure in which circles of equally privileged employees work autonomously in codependency with other circles, sometimes overlapping” (Feloni, 2015).
Hsieh plans on being manager-free with an even newer organizational form of self-management and self-organization based on Frederic Laloux’s Reinventing Organizations, which argues for peer-pressure, self-organizing systems. Hsieh noted that “For certain types of job functions where there are easy metrics to measure performance, a public leaderboard ranking will naturally create peer pressure by showing which teams are performing and which aren’t. For other types of job functions where metrics are more difficult to come by, regular peer-based presentations have been shown to be really effective, where each team presents to the other teams (once a quarter) what they are working on and why it is adding value to the company, and that will create a natural peer pressure” (Feloni, 2015).
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Tony Hsieh is an entrepreneurial innovating leader who is not afraid to take risks for large gains—and some losses.
Employees who did not support the new structure were offered severance packages if they resigned by last April 30, 2015. First, they had to either read the management book Reinventing Organizations or “just email a statement that they are not reading it.” Hsieh doesn’t want employees “Having one foot in one world while having the other foot in the other world” because that would slow down the transformation toward self-management and self-organization. The self-organizing, self-managing “business-centric groups” would eliminate the “legacy management hierarchy” and embed merchandising, finance, tech, marketing, and other functions in business-centric circles. Former managers in good standing keep their salaries through the end of 2015, but their old roles and responsibilities change. Hsieh informed employees that a new circle called “Reinventing Yourself” would help fit former managers into new roles that might be a good match for “their passions, skills, and experience.” Hsieh said in an email, “Self-management and self-organization is not for everyone, and not everyone will want to move forward,” thus he offered a 3-month severance package and up to 3 months of COBRA reimbursement for every employee in good standing. Two hundred and tenZappos employees—14% of the staff—took the buyout (Feloni, 2015).
Months before the employee buyout decision, several employees were disgruntled with the holacracy system (Groth, 2015). Some said it was too rigid and dogmatic, others said they were overwhelmed with role changes, especially since they were also being bought by Amazon. WhileZappos went through one of the most tumultuous years in its company history, Hsieh has integrated a remarkable culture embodied by its legendary customer service. Today, “The answer is yes—now what is your question?” is business as usual atZappos (Solomon, 2017). Both Jeff Bezos and Tony Hsieh are entrepreneurial innovating leaders not afraid to take risks for large gains—and some losses.
The Hsieh andZappos story is an experiment in leadership and management theory and practice that scholars and practitioners are watching with interest. The theories and approaches discussed so far have sought to answer the question “What makes an effective leader?”. (Remember, an effective leader is someone who works with, motivates, and helps followers to attain their common organizational goals.) Later approaches following trait theory shifted attention from who leaders are to what leaders do and how their styles, personalities, and traits fit with different situations and organizations, offering a far more complex answer to the question.
