MIT Sloan Management Review - 09.2019 - 11.2019

SLOANREVIEW.MIT.EDU FALL 2019 MIT SLOAN MANAGEMENT REVIEW 17

It was introduced by management at
Zappos, the online shoe retailer, in 2013,
where it was used to scale back hierarchy in
favor of flat, cross-functional groups. In the
course of the experiment, Zappos discov-
ered that it needed an elaborate rule book
to guide people on how to use the hola-
cratic method. In fact, it was much more
complicated than the hierarchy they’d
started off with. When the CEO, Tony
Hsieh, gave employees the option of
accepting the new system or leaving the
company, one-third of them walked out.^3
Since then, Zappos has made a bunch of
changes but has maintained some aspects
of the system. Although I think ideas like
holacracy have value, in my view imposing
rigid schemes is the wrong way to go.
As for other approaches, there are
aspects of agile that have shown promise.
But companies still need to figure out

how to allow for moments of hierarchy.

Members of agile teams still need to coor-

dinate and find ways to resolve conflicts.

Even if you’re not using hierarchy, you

always need a decision-making role. The

question is, how can you encourage work-

ing together and coordination in a simple

and elegant manner?

So where does this leave managers? Do they

keep looking for good alternatives to hierar-

chy or focus on the flexible flattening you’ve

described?

GREER: Until we have an alternative model

that is established and has been shown to

work, the simplest and safest approach for

companies is to use hierarchy but also to

train leaders to use it well: to be able to flex

and adapt how they use it. This means

selecting leaders who have the skill sets to

foster teams that are empowered and

hierarchical, while training both leaders

and teams how to adapt the hierarchical

structure to handle the demands.

Frieda Klotz (@friedaklotz) is a freelance

journalist and correspondent for MIT Sloan

Management Review. Comment on this

article at http://sloanreview.mit.edu/x/61110.

REFERENCES

1. L.L. Greer, B.A. de Jong, M.E. Schouten,
   et al., “Why and When Hierarchy Impacts Team
   Effectiveness: A Meta-Analytic Integration,”
   Journal of Applied Psychology 103, no. 6
   (June 2018): 591-613.


2. F.R.C. de Wit, L.L. Greer, and K.A. Jehn,
   “The Paradox of Intragroup Conflict: A Meta-
   Analysis,” Journal of Applied Psychology 97,
   no. 2 (March 2012): 360-390.


3. A. Groth, “Is Holacracy the Future of Work or a
   Management Cult?” Oct. 9, 2018, http://www.qz.com.
   Reprint 61110. For ordering information, see page 4.
   Copyright © Massachusetts Institute of Technology,


4. All rights reserved.

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