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Why Zappos got it right about holacracy

In an effort to accelerate the Zappos' move to holacracy, CEO Tony Hsieh sent a lengthy email to employees, offering buyouts to those against the switch to the so-called self-management system. Just over 200, or 14 percent of the work force, took the money. I thought more would leave.

Building and innovating a decentralized "self-managing" organization is hard, especially if the organization already exists and is of substantial size. It requires dedication and vision. It can take years. Mr. Hsieh should be commended for his efforts and for his fortitude to do what he believes is best for Zappos and its employees.


Workers sit at their desks in the couture department at the offices of internet retailer Zappos.com Inc. in Henderson, Nevada.
Ronda Churchill | Bloomberg | Getty Images
Workers sit at their desks in the couture department at the offices of internet retailer Zappos.com Inc. in Henderson, Nevada.

Zappos, a unit of Amazon, will take a onetime hit for payouts to employees who opted to leave. But, ultimately, it trimmed millions of dollars off the payroll and will be able to use that money to add back the resources that are needed for continued success in the marketplace. Despite critics skepticism, last time I checked, the website was still up and products were still going out. But now, employees can continue to build an amazing company that will be an incredible place to work.

Read More Zappos employees not cool with 'Holacracy'

Eating pie versus growing the pie has come up a lot in this context for me lately. The 86 percent of employees that are left are the proud owners and workers of an organization that will be vastly more rewarding. They will have greater fulfillment and a path to accelerated learning and personal development that was never possible in a traditional hierarchical organization.

I've been studying self-managing organizations for some time and have visited Zappos once. My firm, Ekho, like Zappos, is building a self-managing organization so I'm deeply interested in its progress. Critical parts of what we do are based on the excellent work of Brian Robertson and his team at HolacracyOne, which is spearheading the development of the management method.

I sincerely think that people will be surprised ultimately at what Zappos and other companies (and the list is long) will be able to do as "self-managing" organizations. Ample material shows how powerful this can be. Here is a set of resources available for research so you can form your own opinion.

Holacracy: Constitution in Plain English

Reinventing Organizations

Exponential Organizations: Salim Ismail on building Exponential Organizations site and the book.

Commentary by Kent Langley, CEO/CTO of Ekho, a real-time marketing, data activation, and product development platform and customer information exchange.