Zappos and The Dark Side of Leadership

Zappos CEO Tony Hsieh described a dramatically new design for the company and told employees to get on board or leave the company with a severance package. He made this announcement via a 4,552 word email. The email was long, directive, jargon-filled and overwhelming.

Approximately 14% of Zappos employees left the company.

One paragraph from the email:

As of 4/30/15, in order to eliminate the legacy management hierarchy, there will be effectively be no more people managers. In addition, we will begin the process of breaking down our legacy silo’ed structure/circles of merchandising, finance, tech, marketing, and other functions and create self-organizing and self-managing business-centric circles instead by starting to fund this new model with the appropriate resources needed to flourish. Functions that were previously silo’ed will be embedded inside these business-centric circles instead — this structure will require fewer roles that primarily manage expectations and drive alignment across legacy silos. We will continue using Holacracy’s systems and processes for prioritization and resource allocation, so it’ll be extremely important for all of us to keep Glass Frog up to date.

Say again?

I imagine that in the beginning Zappos.Com, like almost all organizations, operated from a mechanistic/paternalistic model: linear, hierarchical and compartmentalized organizations with functionalized departments with detailed job descriptions and rigid rules and boundaries.  A machine where managers tell workers to follow directions and leave the thinking to management. Mechanics (supervisors) with metaphorical wrenches tighten controls in search of consistency and predictability. Not a place of self-management, self-organization or humanistic values–anti-human places where conformity is the first rule.

Here’s what happens too often: Smart executives want to transform their enterprises from  mechanistic/paternalistic systems to various forms of employee involvement/engagement such as self-managed teams or self-organization for the bottom-line benefits of fully engaged employees. Suddenly the company talks about valuing employees. Leaders get excited to get going. They begin to put self-managed teams or self-organized teams in place. But their deeper beliefs and perhaps the only model of organizations they have ever known–often unconsciously–remain mechanical/paternalistic. With good intentions, they unconsciously fall victim to what author Peter Block defined as the dark side of leadership, “The very system that has patriarchy as the root problem uses patriarchal means to try to eliminate its symptoms.” We recreate what we want to change. Befuddled employees might feel crazy.

We cannot create organic–relationship based–organizational forms (self-management) with the thinking and skills used to manage mechanistic organizations.

Was Mr. Hsieh’s email an example of the dark side of leadership?

Before they rush into the fads (fads not because the theory is bad; fads because leaders like quick-fixes and move on quickly when change gets hard) of the day, people must have what Peter Senge called “moments of Metanoia.” Their inner shift opens them to a new and more expansive world view. Their underlying beliefs and assumptions about people, leadership and organizations change. The light bulb goes on and they “get it.”

Organizational mechanics can still use the mechanistic world view and tools of Newtonian physics for machines and linear work processes but now organizational artists can use the living system worldview from chaos theory, quantum physics and other natural sciences–where relationships are fundamental–for people.

This shift in thinking, required for self-management to succeed calls for new thinking and new skills not generally common  in mechanistic organizations. For example, systems thinking, emotional intelligence, conflict management skills, facilitation skills, a tough-love mentality. Evolved people must be developed or found. People with the courage and character to live by their personal and organizational values. Self-directed and assertive people who will take risks and who want to learn. And leaders must love people.

Most efforts to transform organizations fail. Real transformation is hard and rare. Few leaders have the skills, ability, wisdom, maturity or experience to lead successful organizational transformation. And many leaders, at all levels, are needed.

Instead of a paternalistic top-down memo, the leaders at Zappos might have used their imaginations to find a way to engage directly with employees about the vision for the future.They might have invited employees to engage in examining and charting the future course of Zappos.Com.

People comply and conform to top-down orders and threats; they support what they help create.

See Value Driven Leadership: A Story of Personal and Organizational Transformation.

3 thoughts on “Zappos and The Dark Side of Leadership

  1. Sounds like the Libertarian plan for this country.  No Fed government, just 50 states all doing their own thing.  A ship needs a captain same as a sport needs a captain and they all need rules by which they operate or play a game.  People need a leader, but one they can respect and who respects them and this guy seems to be severely misguided.  Judy From: Tom’s Thoughts To: Sent: Thursday, May 14, 2015 10:22 AM Subject: [New post] Zappos and The Dark Side of Leadership #yiv9327094861 a:hover {color:red;}#yiv9327094861 a {text-decoration:none;color:#0088cc;}#yiv9327094861 a.yiv9327094861primaryactionlink:link, #yiv9327094861 a.yiv9327094861primaryactionlink:visited {background-color:#2585B2;color:#fff;}#yiv9327094861 a.yiv9327094861primaryactionlink:hover, #yiv9327094861 a.yiv9327094861primaryactionlink:active {background-color:#11729E;color:#fff;}#yiv9327094861 | Tom Heuerman posted: “Zappos CEO Tony Hsieh described a dramatically new design for the company and told employees to get on board or leave the company with a severance package. He made this announcement via a 4,552 word email. The email was long, directive, jargon-filled and ” | |


  2. I think it’s *always* important to keep Glass Frog up-to-date. 🙂 I also think it’s important — as you say — to give employees a role in shaping their own futures. But even if you don’t involve employees, you should at least articulate your plan clearly, honestly, and succinctly. After reading just an excerpt of that memo I’m surprised only 14% took the buyout.


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