Zappos and Holacracy
Self-management made a condition of employment, and a third of the company left.
OpenView Partners analysis of the Zappos transition and 2015 attrition
2015 figures
Contemporaneous reporting on the 2018 move away from pure Holacracy
2018
Zappos adopted Holacracy, a self-management system of circles, roles, and explicit governance meetings. When Tony Hsieh offered severance to anyone who did not want to work under it, about 18 percent of employees took the offer. With normal attrition on top, the company lost roughly 30 percent of its workforce during 2015. By 2018 pure Holacracy had been quietly replaced by a market-based ecosystem model.
The lesson is not that self-management fails; Buurtzorg and Semco say otherwise. It is that self-management without explicit governance has a headcount ceiling, with research placing the strain somewhere around 250 to 500 people.
What is the smallest unit that can own a customer outcome end to end?
Which decisions may an agent make alone, and who is able to stop it?
What synchronizes the work when there is no room and half the team is not a person?