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Zappos and Holacracy - the Ultimate Flat Organisational Structure?

Jim Riley

19th February 2014

Students who joined us in looking at successful organisational cultures in 2013 will remember Zappos. Now part of the Amazon empire, Zappos is a high-performing online retailer with a distinctive corporate culture that has been encouraged by its enigmatic founder and CEO Tony Hsieh.Zappos has taken this unconventional approach to organisational design a step further in recent months through the introduction of a style of organisational structure called "holacracy".

Business students some become familiar with the core concept of organisational structure. They learn that the organisational structure determines:

  • Authority and responsibility – who is responsible for whom and who is in charge?
  • Individual job roles and titles
  • The people to whom others are accountable
  • The formal routes through which communication flows in the business

They are introduced to the concepts of span of control, hierarchy, accountability, responsibility and also consider the relative advantages and disadvantages of different shaped structures. More advanced students consider the potential benefits of delayering - ie, removing layers of the hierarchy.

But what happens if all the layers of hierarchy are removed? Is that what has happened at Zappos with the implementation of holacracy?

Take a look at the videos below for an introduction to what Zappos is trying to do.

As you watch, try to pick out the key points and identify what you think are the most significant advantages of the approach and potential downsides.

e.g.

  • The organisational hierarchy has been removed
  • Formal job titles and roles have been removed
  • Managers have been asked to distribute authority to their teams
  • Is this the ultimate flat management structure - no layers at all
  • Employees have complete control about how they organise their work
  • Employees manage themselves, but they each have "accountabilities"
  • Employees are expected to take ownership of their work
  • The aim - improved productivity in the business

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Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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