Zappos, Teams & Pizza Pie

Zappos.Com, an online shoe and clothing shop based in Las Vegas, Nevada, offered employees three months’ severance pay to leave if they felt they could not get behind the company’s move to self-managed teams. The Washington Post reported that about 14% of Zappos 1,500 employees took the money and left.

The article reminded me of a similar story.

In the early 90’s, I was privileged to lead a business unit at the Star Tribune newspaper in Minneapolis, MN through a cultural transformation, which included the move to 15 self-managed teams in the Customer Service Center (we also added 15 self-managed teams in the Circulation department’s field operation spread throughout the newspapers Primary Market Area).

Our goals were to improve the quality of work life for employees, improve customer service, become faster moving and more creative and save millions of dollars. On top of that, we had to defeat a Teamster’s Union organizing effort in the Customer Service Center.

We wanted to downsize 100 positions without laying anyone off. We froze hiring in the Customer Service Center, the newspaper froze the hiring of outside candidates so our employees could apply for positions throughout the company and some employees accepted an early retirement incentive. And we offered an incentive similar to Zappos.Com for employees to leave if they wanted to do something else.

More people signed up for the incentive plan than we had anticipated. Nineteen employees who counted on the money had to be told they would not receive the severance pay. We scheduled a lunch and had pizza brought in.

The people were excited and filled with anticipation as they walked into the conference room. They thought they would get the severance pay. I welcomed everyone and invited them to dig into the pizza. I said I had good news and I had bad news. They looked at me expectantly. The good news was that we had achieved our downsizing goal through voluntary means. The bad news? They would have to stay.

The people were shocked, angry and disappointed. One married couple had booked a cruise. A man had bought a new car. They were critical of me. Some felt we were obligated to give them the money anyway. Some were critical of the process. I never thought I would be criticized for telling people they had a job.

We survived and went on to implement 15 self-managed teams, a skill-based pay system, reduced job descriptions from 25 to 12, eliminated most supervisors, reduced staff by 35%, improved customer service dramatically and saved millions of dollars. Employees told the Teamsters to go away.

The teams were engaged, empowered and morale was high.

I wrote the story of our transformation in my e-book, “Value-Driven Leadership: A Story of Personal & Organizational Transformation.”

The leadership experience changed me. I left the company after the transformation was finished. I completed a PhD in leadership and organizational change, wrote about life and leadership and consulted for 13 years before I retired.

What happened to the teams? Neglected by a mindless senior management, the teams faded away. A great opportunity was missed.

I  believe in the vision of organizations filled with engaged and involved employees who produce phenomenal business results. I’ve lived the experience.

I also believe that at this time in history we lack the number of leaders, at all levels, who have the talents, skills, maturity and experience to understand the difficulty of such transformation and lead such change.

My  prediction: Another transformation will prove unsustainable for lack of leadership.

Best wishes to Zappos.

I hope you prove me wrong.


P.S. to Zappos leaders: Knock off the jargon. It shows your lack of experience. It’s your job to learn the theory and explain it to employees in ways that they can understand. Realize that what you are doing is not new. Do your homework on self-management, employee involvement and past efforts to transform organizations.


Don’t Hurt the People


Nearby lay the wounded General Sickel, who had refused to be taken from the field before his turn and had watched the poignant scene from the shadows, “General,” he said, smiling benignly on his commanding officer, “You have the soul of a lion and the heart of the woman.”  In the Hands of Providence: Joshua Chamberlain & The American Civil War by Alice Rains Trulock


The business unit I led had moved to self-managed work teams. The workers were represented by the Newspaper Guild at the Star Tribune newspaper in Minneapolis, MN. We had been meeting with the Guild for several weeks in an attempt to resolve several longstanding issues. This negotiation would allow us to move forward in our redesign and culture change efforts rather than waiting a year or two for the contract to expire.

Discussions were not going well. The union that represented the Circulation district managers also represented the Newsroom reporters, and they had an adversarial relationship with their management. Through bargaining the publisher hoped to gain commitment from the reporters for a newsroom reorganization, and the reporters were trying to make up for a wage freeze.

We believed we could come to an agreement with the district managers. We wanted to break away from the newsroom and negotiate our own contract. We decided to try. The vice-president of Labor Relations and I would meet with the head of the union and Dave, the union leader from our business unit. We hoped to reach an agreement with the union, and then try to get the larger union membership to approve those agreements.

We met and talked; the strategy might work. The executive secretary of The Newspaper Guild and the vice-president of Labor Relations sent Dave and me away to work out the details.

Dave was a rotund man in his late forties. There is nothing phony about him; what you saw is what you got. Slow to anger, when upset his face turned beet red, and he tells you what he thinks in no uncertain terms. Dave gives his all for the people he represented. The two of us fought over the years and had developed a mutual respect. I liked Dave.

We went to my office. We reviewed the components of a settlement, which would include the unions support in a job redesign process, which could change the job of the district manager.

Dave was very concerned about this possibility. He looked at me, and with love for his people in his voice and tears in his eyes said, “Please don’t hurt the people. Don’t destroy the work they do.” My heart went out to him. To me, his deep emotion and concern for his people were the essence of leadership. Dave was getting the best deal he could for those he represented and plead with me to be just.

The negotiations fell apart eventually, but the love in this leader’s heart for the people he represented will stay with me for a long time. In the years ahead, I would meet many union leaders in different industries. I never met one who didn’t care deeply for the people they represented. I wish I could say the same about the executives from top to bottom who I would meet.

I was told that when I left the company someone asked Dave to access my time as leader. “Well,” he said, “The job is better when he left than when he came.”

A few years later, the “job” and this union group would be destroyed.

Excerpted from my e-book, Value Drive Leadership: A Story of Personal and Organizational Transformation available at

Team 7

When we created our teams in the Star Tribune’s Circulation department field organization, we tailored our efforts to fit the union environment, and the culture of the organization. We reduced the number of supervisors and moved those who remained to a centralized office where they worked as a team. We changed all incentive plans to be team-based instead of individual and competitive. We created team roles. We began to shift work from the top of the organization down through the layers of management and staff and empowered district managers to make decisions about their work. Teams established work schedules. Teams assumed some budget management authority.

District Managers felt a great deal of ownership for the districts they alone were responsible for. They felt afraid to give up their districts and work solely as a team responsible for the larger area. We decided not to force this change—it would not work if we mandated the shift. The union would fight us, and the people would be angry and resistant. To be a true team, we felt we had to eliminate the individual districts that set up artificial competition for resources. Eliminating districts also seemed to be the most efficient way to utilize the time and talents of the staff. We let teams know that we would like a team to experiment and give up district boundaries. Team Seven came forward.

A couple of months later, the team leader, May Worker, came to me with a plan she and the team had devised to eliminate district boundaries. I rejected the plan and sent May back to change it. The plan did not fit my concept of how the work should be organized.

A few months later, I asked Steve Marine—May’s boss—how the plan was coming. He said fine. I told him to be sure that the team and May followed my instructions. I did not know that Steve had met with the team and heard their presentation on how they wanted to do the redesign. Their plan was different than what I had directed. They knew that I expected my instructions to be followed and would be angry that they weren’t; Steve was afraid to tell me. I was busy, and a couple of months passed.

One day, I asked Steve what was going on. He told me the truth. I got angry. I chewed him out—along with May Worker and Diane Olson. I told Steve to get a meeting scheduled with Team Seven. I would be the bad guy and tell them that they could not do the redesign the way they wanted.

We met at Team Seven’s office. All of the team leaders and union leaders were there. We listened to Team Seven for one and a half hours. They had written a mission/vision statement for the team. They explained their job redesign and how it would work. The team figured out how they would handle workload issues. They talked about how the redesign would affect the people who worked for them and how issues would be handled. Team 7 talked about their weekly team meeting and how they handled conflict.

One team member courageously told a story of how the team was upset with him and confronted him. The team members went to May for advice on how to talk to him. May volunteered to talk to the man for them. They said no, they wanted to handle the situation. They just wanted May’s advice on how to confront their teammate. The man spoke of what he learned from this experience.

I asked many questions and the team had good answers for all of them. Their pride in their work was evident in their voices. Their commitment was powerful. We were moved by what we saw and heard.

I said, “I have to eat some crow. I told you that you had this wrong. You defied me. That took courage. You did what you believed in and you were right.” I felt proud of the team, May, and Steve. I learned much that day about listening to those closest to the work.

Excerpted from my e-book: Value Driven Leadership: A Story of Personal & Organizational Transformation available at