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Blog : Do businesses even need leaders?


Do businesses even need leaders?

Given the innumerable blogs on the web, it might seem hard to believe, though an estimated 80% of all popular blogs, tweets, posts, other social media interactions and business conferences focus on leadership.

Every business magazine focuses on it, political republics, democracies and, unsurprisingly, even dictatorships are based upon it. It seems sometimes that societies revolve around leaders. And some leaders – think Steve Jobs or Mark Zuckerberg - even develop a cult status.

Yet in March, Reuters reported that Tony Hsieh the CEO of Zappos, a highly successful online shoe retailer now owned by Amazon, will completely remove all managers and management hierarchy in his business. Even he will no longer actively ‘lead’ the company.

Zappos is in the process of adopting Holacracy; designed to make companies ‘self-organising’. The company is breaking down its structures and departments to create self-managing business-centric ‘circles’.

There will be no more people managers. Instead a ‘circle’ called Reinventing Yourself has been created to help guide former managers to new roles which match their passions, skills and experience. Hsieh admitted that, until now, managers had been necessary in growing the business and those who are in ‘good standing’ will receive their salaries until the end of this year, however all management duties would be gone.

In a memo to his people, Hsieh confessed he wasn’t yet sure how performance would be measured or how conflicts would be resolved and it would be a learning curve.

So will a lack of managers lead a company into anarchy?

Frederic Laloux, the author of Reinventing Organizations, talks about self-organising companies and explains that peer-pressure based systems work best. For example, job functions where there are easy metrics to measure performance, a leaderboard ranking can create peer-pressure by highlighting who is and isn’t performing.

For functions where metrics are more difficult to identify, regular peer-based presentations have been shown to be effective, with each team presenting what they are working on and why it is adding value.  

The idea of Holacracy, or the self-governing organisation, is not new. The Morning Star Company, a tomato farming firm formed in California in 1970, was built on a philosophy of self-management. Its founder, Chris Rufer, believed in an organisation of self-managing professionals who could communicate and coordinate activities with fellow colleagues, customers and suppliers without directives from others.

Rufer says the purpose is: “For colleagues to find joy and excitement utilising their unique talents and to weave those talents into activities which complement and strengthen fellow colleagues' activities. And for colleagues to take personal responsibility and hold themselves accountable for achieving our mission.”

In self-organising companies, form follows need. Roles are picked up, discarded, and exchanged. Power is distributed. Decisions are made when they need to be made. Innovations can spring up anywhere. Meetings are held when they are required. Task forces are created spontaneously and disbanded again.

The point is not to make everyone equal; it is to allow all employees to grow into the strongest, healthiest version of themselves. Traditional hierarchies are replaced with hierarchies of development, skill, talent, expertise or recognition.

Times have evolved and with millennials and generation Z shaking up the traditional workplace, command and control is arguably a thing of the past, as is the need for complex hierarchies.

Even at Governmental level in the UK, leadership debates have proven that no one political leader has all the answers and a coalition is no longer seen as a weak, indecisive Government - but the preference of the electorate in bringing the best ideas forward and nurturing discussion.

Zappos’ new structure will not work in every company, however the lesson here is that leaders are important – but not singular leaders and not unnecessary management structures; instead many people working together to set the vision and inspire others. And of course you have to recruit the right people, helping them to understand what’s needed and be prepared to let go and let them do it.


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