Free up time, energy and motivation of employees
Zappos is an American e-commerce giant known for its remarkable approach to customer service and employees. The company does not treat customer service and experience as an expense but as an investment. The WOW effect that customers experience is supposed to bring the company many new customers with the chain of referrals. And it happens this way.
This approach to customers needs requires constant adjustments, innovations and freedom of action among people who work directly with clients. Hierarchical organizational structure was for Zappos a barrier to work this way. Hence, the company decided to make a radical move toward a tale, self-organizing and customer centric organization. It has adopted a holacracy.
Network structure & culture
Zappos is working in network alike structure to become an open operating system. Power needs to be distributed throughout the network - that is the philosophy behind holacracy and they way open systems works. Scientists show that cities operates as open systems, in opposite to companies that works as closed systems. When cities grow, the productivity and innovativeness of their citizens grow too. Unlike companies which are closed systems. When companies grow, decreases the productivity and innovativeness per employee.
The more hierarchical organizations grow, the more and more people coordinate the work of others handling bureaucracy, processes and policy. These people spend time on managing the work of other people and not on doing their own work - and that is the source of productivity decrease according to Zappos.
Hence, Zappos makes its own organizational structure as flat as possible to free up time, energy and motivation of employees. In practice it means that employees take ownership of their work - they can decide what action to take. They work on their own on a small scale. When the task get bigger, they invite other employees to work as a team.
The effect? No one knows the effects yet, probably even Zappos himself. It is a company that has introduced such a radical change of the organizational system as one of the first in the world.