The Great Zappos "Circles" Experiment And Why It Really Matters

@giorodriguez  The New Year’s Day hype is deserved, but for reasons that may not yet be visible

Funny thing about us humans: we are vulnerable to stories that are framed simplistically. A story with a clear arc — and a great headline — will get our attention.  And the hero of the story will earn buzz, often at the expense of the facts.

I wrote about this phenomenon — which should be familiar to anyone in the communications industry — late in 2013, when Facebook was the recipient of both positive and negative hype after reporters got wind that it was building a “company town.”  Problem with the story: Facebook wasn’t the builder of the town, and Facebook employees were not necessarily the residents of the town.  More problematic:  reporters failed to get at what was really interesting — what may in fact have been most newsworthy if not most buzzworthy. A gathering and analysis of the facts would have revealed a far more interesting story about the shifting demographics in hot economies and their impact on business and government.

Now we have another interesting story to deconstruct, one that surfaced at the beginning of the new year (a great time, by the way, to frame/misframe a story; we are so vulnerable this time of year to narrative about change).  The story here is one you should have heard, for it played everywhere from NPR, major newspapers, and lots of the buzz-generating tech pubs. The headline was that Zappos — the innovative e-tailer, based in Las Vegas — was getting rid of managers and titles in a groundbreaking HR experiment.

As was true with the Facebook company town story, the real story, to paraphrase the poet, is “more strange than true.”  And when it’s fully baked — Zappos says it will roll out the project by end of year — it could be worthy of a bigger story. Until then, a few key pointers for how to watch the story  unfold in 2014:

Zappos is not really getting rid of managers. Speaking with Business Insider, someone close to the project reported, “despite their lack of titles, those execs will have broader responsibilities — including setting the pay structure for the people who are not officially beneath them.  And there will be special set of HR staff, who obviously will be signing off on wages and salaries.  The Holacracy is thus more about transparency and entrepreneurship inside the company than it is about equality among staff.”

Zappos is not really getting rid of titles. The Zappos project is the largest experiment to date with a management framework called Holocracy, which eschews formal corporate hierarchies in favor of functional self-organizing “circles” for company operations (Zappos will have 400-plus circles). The objective? For employees to find their way “to the right part of the job,” as CNET’s Don Reisinger noted.  So, maybe no more titles, but certainly there will be roles, and they will be better defined.

Zappos may in fact be creating more “managers” and “titles.”  What the hype seems to obscure is what is truly hypeworthy about the experiment:  Zappos appears to be entering the business of creating more leaders across more areas of specialization.  Let’s not let words like “managers” and “titles” confuse us — whether they are used formally or not, the very specific leadership roles that employees will be expected to play is what’s interesting here.  And that’s where I think the real challenges will be for Zappos and for any other organization looking to follow in their … uh … footsteps.  It’s perhaps the logical next step in a story we’ve been watching over the past few years:  the so-called coming of the leaderless organization is actually the coming of the leaderful organization. It feels inevitable, but it won’t be easy. In my own work as an organizational consultant, I’ve encountered some of these challenges. Some people like hierarchy.  Some people find collaboration uncomfortable.  But already I’ve seen how designing for these challenges — addressing them head on, with a view of what would motivate people to change — can yield positive results.  But what about Zappos, and the circle construct?  What special challenges will the company face?

Last night, I checked in with Chris Bennett, a friend and colleague who also works with the Stanford Persuasive Technology Lab, a home for research in behavior design. Chris and others see the circle as a construct that might soon shape the way we all approach all parts of our life. In other words, the challenge is to design for the consumer, which will inevitably need to live in a world of circles.

Think of circles as the Venn Diagram of your life, where you choose the overlap. You may have a good overlap between your friends who are wine lovers, and those in your book club. But maybe no overlap at all between people you run a 5K with, and those who are also dealing with a tough divorce, for example.

But circles don’t just exist to segregate. A certain discovery phase will occur. You will go swimming with someone from your 5k group, and they will introduce you to their swimming buddies. And now you have access to a whole new circle.

The important piece here is that circles can exist for any personal or professional relationships, or a mix of the two. And circles can happen directly through digital technology such as Google+, indirectly with things like email or texting lists, or they can happen completely offline.

I’m with Chris on this.  Rigid hierarchies are on their way out, and circles are on their way in, and it will pay for everyone to learn how to navigate them.  And Zappos — which has innovated before — has a second opportunity to learn at scale and then help educate the market on how business is done in the age of the consumer.  It first went there at a time when businesses were looking for what was next in commerce in the age of digital.  Since then, we’ve been waiting for the other shoe to drop.  Expect it to drop sometime after 2014, after we know more about what really went down in Vegas.

Source: Forbes Business

About The Author