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Tip of the Spear Ventures

Venture Capital | Private Equity

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The Leadership Challenge: Holacracy (like Zappos) – 5 Tips!

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The Point: What would your organization be like if your employees lead themselves? Would it be better, or would it be worse? Tony Hsieh of Zappos after hearing Brian Robertson (a software company CEO and therefore people expert) bet that his organization would be better… Considerably better! In the short term, Holacracy at Zappos appears to be a recipe for chaos, calamity, and turnover in its ranks (In other words, the opposite of success). So the question remains “Will the success-ship be righted at Zappos in the long-term?” In this post we’ll take a look at the leadership challenge of Holacracy along with 5 tips… Enjoy!

The Leadership Challenge: Holacracy (like Zappos) – 5 Tips!

Zappos Holacracy

The Zappos Culture can be described as an obsessive focus on creating a culture that embraces the idiosyncrasies of each individual should leave few wondering why they’re continually a stalwart on Fortune’s annual list of the “100 Best Companies to Work For.” However, many are now wondering how to implement their human resources ranking system simply known as “Holacracy” (a system that has replaced hierarchies and bosses with “self-management” of organizational teams and individuals therein).

While securing “100 Best” attainment would be viewed as “Great” or even “Good” for most organizations, Zappos is looking to identify how they’ve slid from 48 to 58 (Digging deep into the results yields two particular questions showing dismal results: Do employees think management has “a clear view of where the organization is going and how to get there”? And do managers “avoid playing favorites”?) Seems like a small problem (“Who cares?” or “Pigs get fat, hogs get slaughtered” should come to mind!)

Teal replaces Orange (Which replaced black, right?)

Zappos can, and should be looked at as an enterprise that embraces risk-taking. Having taken the “tour” last year (You can too if you plan a visit: https://www.zapposinsights.com/tours), I can honestly say that the place is ripe with transformation. Memories of stuffed animals, ball pits, and individualization were everywhere… Think of it as if Willy Wonka transitioned from making candy to selling shoes!

5 Tips to Holacracy Success?

After viewing the Holacracy in play at Zappos, I offer the following 5 Tips to Holacracy Success:

Tip #5 – Embrace Change

While huddling up and having meetings is nice, identifying where change is at (Along with Where it came from? What you are doing about it? Where you want to go?) is crucial to short/long-term success. While you can’t guarantee successful outcomes to each/every change episode, properly diagnosing and setting a course of action can guarantee shorter episodes of change failure.

Tip #4 – Someone Must Lead

While it’s a nice idea to have zero leaders in an organization (as well as establishing high expectations), expecting peers to hold each other accountable can/will lead to moments from “The Lord of the Flies” to be played-out. If leaders do what others won’t, someone must step-up and lead.

Tip #3 – Recognize Shortcomings and Correct

If you don’t measure, you can’t manage effectively. Whether you take on a task such as Holacracy or not, managing by measuring is a must. “Measure what?” you might be asking… The answer is “Yes” (Measure everything important to driving towards your organizational mission/vision/values).

Tip #2 – Turnover Kills People Businesses (You Do Have People, Right?)

Zappos reports 29% employee turnover during their Holacracy efforts. Now whether that is high/higher than normal, one thing is shared and that is the majority of that number was made up for the first-time by leaders looking to lead (only this time somewhere other than Zappos). Do the right thing when facing turnover and conduct exit-interviews (Interview those exiting the organization to identify why they are departing, and modify if necessary).

Tip #1 – Recognize Performance (and Individuals)

There is no “I” in team, but there is in “Win”… While recognizing performance that drives towards aforementioned mission/vision/values for your organization should be considered a given, is there really no-need to recognize individual team member contribution to said importance?

SUMMARY

In this post, we’ve examined the leadership challenge of Zappos Holacracy, along with 5 tips to Holacracy Success. I loved my time at Zappos, and I think that if you go on the tour or work with the organization you will too! The culture is one that I only wish existed when I started my career (In case you’re wondering, I could see myself spending considerable time in the ball pit!) The challenges of the future of your business could very well be in adopting similar Holacracy moments (However, I would imagine first-to-market leaders such as Zappos will establish a solid benchmark to measure from).

 

Sam Palazzolo

The Leadership Challenge: Culture

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The Point: You know how when you think about a business and you get that “vibe” that resonates with your sole (and it’s a good vibe)? That’s a company’s culture, and it’s what we want when people think of Tip of the Spear! So in this post we’ll take a look at company cultures and how they can make (or break) customer experiences (both internal customers – employees – and external – customers)… Enjoy!

Are You Leading at the Tip of the Spear?

Zappos Culture is a Fantasy!

One of the clients I’m working with on a large-scale change management/customer experience initiative is attempting to get their arms around company culture. Know this much: This is a HUGE redwood tree to attempt get your arms around. But how do you go about eating an elephant? That’s right, one bight at a time!

So if company culture is what you’re after, where would you head to benchmark what is truly best in class? We compiled a short-list and Zappos was at the top. Now you might have red about Tony Hseih and his book on Zappos (“Delivering Happiness: A Path to Profits, Passion, and Purpose”). I know that I read the book several years back and recall what one of my clients said about it: “Zappos Culture is a Fantasy!” In other words, they believed that there is no way that employees could manage themselves in relatively “flat” organization structures. They also believed that a company would go broke if they pulled all the shenanigans that Zappos purportedly pulled in the workplace (Free snacks, frequent all company meetings, etc.)

What are Your Cultural Core Values?

So it was with this framing that I went to Zappos, a pilgrimage of sorts to a clandestine cultural Mecca where dreams could come true, and fantasies were reality in business. What exactly was the leadership challenge I was in search of solving? After all… This was Las Vegas! Anyway, I registered for a tour, showed up at the given time (There is great communication prior to the tour regarding directions on where to go, how to get there, etc.), and checked-in in preparation for cultural lift-off (Yes, in case you’re wondering I was overdressed. I had come from a meeting wearing a suit/tie… But something about a 100+* day in Las Vegas had me lose my tie. Good thing… They cut them off at the door!)

The tour began and closed with something that I’ll never forget (No, not the ukulele playing tour guide… Come to think of it, I won’t forget him either!) What was unforgettable was the “vibe” this office place had. With what can only be described as minimal “management” present, everyone seemed to lead their own way throughout the tour. Furthermore, there was the sharing of 10 Cultural Core Values and even an annual yearbook authored by Zappos associates regarding what this culture means to them. With nearly every state and continent represented by the Zappos associates, this meant that there was a somewhat diverse culture present (if only in as much they were operating in Las Vegas, when it could have been a trendy LA neighborhood).

The bottom line of the visit was that not only was the Zappos culture a reality, but it was about to have an impact on 100+ people from my daily tour alone. Multiply that quantity by about 10 tours a week and you get some pretty exponential numbers regarding other companies/people looking to identify how they can make their place of work more like Zappos.

The Zappos Cultural Core Values… Easy to Replicate | Hard to Implement

In case you’re wondering, here are the 10 Core Values that every Zappos associate must abide by (They’ll actually pay you to depart from the onboarding training if you identify that you can’t uphold them!):

  1. Deliver WOW Through Service
  2. Embrace and Drive Change
  3. Create Fun and A Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships With Communication
  7. Build a Positive Team and Family Spirit
  8. Do More With Less
  9. Be Passionate and Determined
  10. Be Humble

They’re listed proudly on the company website under the “About Zappos Culture” page. So if everyone interested can see these, pickup Tony’s book for under $20, and take a tour (tour cost was only $10) why then is it so difficult for others to replicate this culture?

Here’s why it’s difficult to replicate the Zappos Culture – It’s hard work and it takes leadership. In leadership development programs and ensuing executive coaching sessions I hear time and again how leaders want the right culture, the right people, creating the right customer experience. However, this takes effort and energy as a leader. Perhaps not always leading from the front (sometimes supporting while not leading the charge), there is a gap between how to implement/execute such a culture. Most leaders get frustrated, throw their hands in the air after adopting a few of the cultural gems from Zappos, and simply give up.

SUMMARY

In this post we looked at the Zappos Culture and how while few can imitate, even fewer can replicate it. What is your organization’s culture like? Is it like Zappos? Is it far from it? What do you want it to be as a leader/stakeholder?

 

Sam Palazzolo

The Leadership Challenge- Culture