Did Zappos Miss the Mark?

Earlier this year, Zappos CEO, Tony Hsieh told his employees they could either embrace self-management or leave with three months pay. At last count, according Jena McGregor of the Washington Post, 14% of Tony’s team left the building and they are not coming back.
Based on what I’ve been able to learn, the idea is based on what Tony calls “circles.” This appears to be a new spin on the idea from 40 years ago called Quality Circles popularized by Deming, Juran and others, during the time when Total Quality Management (TQM) was just becoming fashionable in America.
The concept is sound and proven. The people closest to the work are most often the best ones to improve the work process and the output of the system. And, as Tony has said, the circles should speed up decision-making along the way.
What a great idea! Let people manage their own work and make all decisions as close to the customer as possible. What could possibly go wrong with this approach? A lot.
I’ve led self-managed teams for decades and although Tony does not want any hierarchy at Zappos, I believe leaders play a critical role in a successful self-managed team. Here is a partial list of what leaders contribute:
Vision – What is the organization trying to accomplish? Alignment on this issue alone creates power, unity and momentum. If scores, or even hundreds, of self-managed teams set their own vision, the result will be diffused energy at best, possibly chaos.
Values – What beliefs should drive your behavior as an organization? Do you want every “circle” setting their own independent values? I’m actually okay with this practice under the umbrella of corporate values. Who sets these? Senior leadership.
Boundaries – What is permissible and what is not? Who can spend how much money on capital improvements? Who establishes Human Resource practices? Who provides clarity and consistency on compensation practices? Without some consistency in these areas and others like them, people will be confused, or worse. Leadership steps in the gap on these issues.
Expectations – If cycle time needs to decrease or decisions need to be made closer to the customer, who sets this expectation? Leadership. If the expectations are clear the culture can thrive. If these things are uncertain, so are people’s behavior. Leaders who are clear on expectations don’t have to micro-manage.tweet_bird  The clarity can revolve around radical levels of empowerment and autonomy.
Resources – When the budget battles rage in most companies the front line workers are not in the meetings. Leaders make budget allocations. Granted, the enlightened way to do this certainly involves team members at all levels, but most organizations are forced to make trade-offs. These can be due to strategy decisions or resource constraints. Regardless, leaders secure resources for their teams to do their work.
Encouragement – The world is full of leaders who will tell you they desire a culture of encouragement. However, unless the leader is an encourager, the odds are severely stacked against them. Why? People always watch the leader. And, our words carry more weight than others. This is not necessarily good or bad; it’s just true.
Regarding those who chose to leave Zappos, according to a company spokesman, they left for a variety of reasons. Perhaps some left because they saw a leadership vacuum on the horizon. However, I’m not betting against Tony. He has an amazing track record. My guess is many who stayed are the leaders Zappos needs for the future – even if Tony doesn’t want to call them leaders.[GLS_Shield]


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