Zappos recently made big headlines for announcing that it would massively overhaul its business structure, doing away with job titles and formal bosses. This unusual system, known as “holacracy” is a real gamble for the online shoe retailer. The method has never actually been implemented at a company of more than 50 people, and Zappos has 1,500.
Though Zappos CEO, Tony Hsieh is receiving criticism from plenty of business experts, his decision—though radical—is far from reckless. In fact, it is exactly this type of change that keeps a business from becoming stagnant. I’m not saying that that good businesses need to dramatically transform every few years. On the contrary, a business should make choices that keep it accountable to its founding mission.
When you apply that criteria to the decisions of other companies, a lot of them fall short. Just look at the changes that have been going on at Facebook. Whether you like them or not, these changes directly conflict with the often discussed goals of its world-famous CEO, Mark Zuckerberg. His mission: to digitally connect the world. He’s been quoted in the Washington Post as saying, “It drives me crazy when people write stuff and assert that we’re doing something because the goal is to make a lot of money.” But now that the company has gone public, it’s got a responsibility to investors. That, coupled with the fact that mobile devices are streamlining the way we interact with Facebook, has led to Zuckerberg’s decision to further integrate advertising into the site. This concession is huge since Zuckerberg firmly believes that ads compromise user experience. In short, Zuckerberg has compromised on his mission.
Now, compare that with the changes at Zappos. Zappos has always been an iconoclastic company. The ten core values that they list on their website focus on quirkiness and creativity, customer service, and open communication. In recent years, the company has attracted loads of attention (and business) with its radical customer service campaign that includes free shipping and an effortless return policy. As far as quirkiness goes, nearly every detail about the office culture at Zappos seems to fit that bill. Now, Hsieh is directing his attention to the open communication part.
The thing about Zappos’ move toward holacracy is that they’ll know right away if it’s working—and it can react accordingly. Zappos isn’t just changing to be better; it’s changing so that it can be better at being Zappos. Does Hsieh want his company to make more money? Of course he does. But that’s the major difference between Zappos and Facebook. Zappos exists to sell shoes (in a quirky, friendly way). Facebook exists for the purpose of connecting every human being on the planet. Its CEO actually balks at the idea of money. The moral of the story: it is way harder to stray from your mission if the mission is as clear as day.
I’m not saying that Zuckerberg is a bad leader. I mean, seriously—at 29 years old, he runs a company that’s worth $100 billion and has attracted 1.15 billion users worldwide. What I’m saying is that sometimes a mission is so big that it starts to contradict itself. Zuckerberg wants to reach the remaining 5 billion people on the planet in a move toward global connectivity that he believes is a human right. That sounds like the ambition of a well-funded not-for-profit organization, not the intention of a company that’s accountable to investors who are expecting to turn a profit.
There’s nothing wrong with having a streak of idealism. Hsieh has one too, otherwise he wouldn’t have adapted a system for his company that he calls “politics-free.” Even if holacracy is a success, anyone who believes a system can be “politics-free” places an oddly high amount of trust in human beings. But Hsieh is idealistic about making a business work; Zuckerberg doesn’t even like to think of Facebook as a business. Zuckerberg’s mission is irrelevant to the people who have invested in in product. That means every time he makes a compromise, he has to worry about Facebook changing into something he doesn’t even recognize.