Problem: ZAPPOS' IMPLEMENTION OF holacracy is not going well. As a consequence, employee morale has plummeted, and Zappos employees are no longer as happy. In 2014, Zappos was ranked seventh in Fortune's "100 Best Companies to Work For" list (one of the highest ranking for a relatively young firm). By 2015, after it started implementing holacracy, Zappos had dropped to rank 86! In addition, more than 200 employees, or some 14 percent of Zappos' work force, accepted the offer of a three-month severance package if they didn't like the switch to holacracy and quit. Employees that remain with Zappos complain that the holacracy implementation removes clear career paths for advancement and wonder openly how hiring, firing, and promoting will now be done. They are concerned that relying on employee circles for making decisions will not only induce paralysis, but also make the organization more and not less political. In sum, they find that holacracy forces them to waste time in meetings rather than getting the actual work done. After the initial implementation struggle, Hsieh remains committed and is doubling down on holacracy implementation. He expressed his frustration about the slow process and lack of productivity gains in a lengthy e-mail to all Zappos employees, which was subsequently leaked to the business press. At the same time, the irony that Hsieh decreed top-down that Zappos would be implementing holacracy (or decided a few years earlier to sell the company to Amazon.com) wasn't lost on the company's workers.

Questions: 1. What elements of an organic organization are apparent from the chapter material on Zappos?

2. What is holacracy, and how does this organizational structure differ from the more traditional ones discussed in this chapter?

3. Why is Zappos experiencing significant implementation problems with holacracy? What else could Zappos do to help implement the new structure more effectively?

4. Do you think that holacracy is a good match with Zappos' business strategy? Why or why not? Explain.