Zappos: An Experiment in Holacracy (Authors: Bryan Golden, Anusheel Pandey & James S. O’Rourke )

Holaracy at Zappos

The organizational management design adopted is a decisive determinant of the success or failure of a company. The design meshes or disrupts the smooth flow of operations between the organization and culture. The impacts of such influence are evident on the growth in performance and the overall work environment. Zappos establishment is praxis for the ideology carried forward through successive years, strategies, and change. The growth from a struggling Shoesite, rebranded into the multi-billion dollar name embodying the struggle, strife, and passion that gave its rise. Substantial growth from 2003 through to 2012 emanated from the close-knit customer focussed culture at Zappos. The change in structure disrupted the culture and setting, culminating in performance and enthusiasm attrition.

Problem Statement

Although Tony Hsieh’s visionary ideology of a city-like organizational growth worked in theory, it only resulted in goal readjustment and performance attrition. The transition to Holacracy disrupted the Zappos culture that spurred growth and enthusiasm and now constitutes attrition.

Conceptual Analysis

The task-oriented culture at Zappos differs significantly before and after the adoption of Holacracy. Although the ideology behind the system is to deviate from traditional bureaucracy and hub an environment of unlimited continuous growth, the system institutionalized unprecedented bureaucracies that disrupted the task-oriented culture at Zappos. The concept of task-oriented organizational culture prescribes the approach to task delineation. It also highlights the attitudes, values, expectations, and beliefs inscribed into the culture of task management in an organization. Task-oriented cultures in an organization prescribe who, how, and when structures are adopted across the operations. Zappos observed a deep and enthusiastic task-oriented culture that focussed on customer service. Recruits were offered the opportunity to take a $2000 stipend if not thrilled by the culture and work. Evidence also highlights a concise traditional hierarchical system with clearly-defined roles and tasks before Holacracy.

The 18% employee population had valid reasons to leave. The advent of an unfamiliar system adopted in a radical approach gave them little room to adjust to change. The insecurities noted by Nox Voortela, Tyler Williams, and Charles Kim highlight the disgruntlement, panic, and confusion brought by Holacracy.  Tony Hsieh also failed to adopt the leadership unfreeze, change, and refreeze process to institutionalize the adjustment.

Possible Solutions

Tony Hsieh has several tentative solutions to the task-oriented culture problem at Zappos. He could opt to revert to the traditional management system and capitalize on the established culture. Although the move would readjust the entity, the random change would ensue insecurities, disgruntlement, panic, and confusion in the disruption. Alternatively, Tony Hsieh could work to iron out the setbacks and match forward with Holacracy. The option would however limit the possibility of change and adaptability. Additionally, Zappos could adopt a hybrid of the traditional system and Holacracy, an option that could necessitate integration and adjustment.

Proposed Solution

Adopting a hybrid of the traditional and Holacracy systems is a viable solution to the task-oriented culture problems at Zappos. Although the adoption would necessitate integration and readjustment, it would culminate in reduced strife. Additionally, the hybrid system could restore the customer-focussed culture, facilitate innovation, flexibility, and adaptability, and ensure clear task assignment. The adoption could also resolve the unstructured bureaucracy and task uncertainty developed by Holacracy.


Zappos's adoption of Holacrcacy is visionary, but failure to follow leadership approaches in the transition sparked uncertainty and dissatisfaction. The current standings highlight disgruntlement, confusion, and dissatisfaction in the alterations to the traditional task-based culture. Adopting a traditional-Halocracy hybrid could resolve the problems and channel Zappos to growth.