Question

Read the following case and answer the question at the end:

As Zappos made its push toward holocracy, Hsieh decided to ramp up the efforts to an even higher level: Teal. Hsieh sent out a 4,700 word e-mail to all employees entitled “Reinventing Zappos: The Road to Teal.” Teal, supposed to be the next stage of development after holocracy, is characterized as “A new kind of organization designed to enable ‘whole’ individuals (not narrow professional selves) to self-organize and self-manage to achieve an organic organizational purpose.” In the memo, Hsieh essentially told the remaining employees to get on board or get out. Hsieh was not happy with the progress that had been made up to that point and wrote, “in order to eliminate the legacy management hierarchy, there will be effectively no more people managers.” John Bunch, the employee in charge of the move to teal says, “Teal is the goal; holocracy is the system.”
Hsieh even went as far as to offer the equivalent of three months’ worth of salary to employees who would quit the organization if they didn’t feel they could fit in. Over 200 employees (14 percent) took him up on the offer—a massive number of people given Zappos’s normal turnover rate of 1 percent annually. Clearly, not everyone felt comfortable in an organization with no clear leadership structure and very little to no legitimate power. One departed employee called holocracy “a social experiment [that] created chaos and uncertainty.” Others felt like “more employees are feeling like favoritism [and management issues are] becoming a bigger problem.” CEO Tony Hsieh remains undaunted. Hsieh says, “The one thing I’m absolutely sure of is that the future is about self-management.”
The move has not been bad for everyone. Less experienced individuals with less expertise have felt energized by their ability to speak up and have a voice. One employee whose prior boss blocked a job transfer stated that as soon as he figured holocracy out, “I was like, ‘Actually, my boss can’t tell me that.’” Jake McCrea, who teaches new hires about Zappos culture, states, “Holacracy is like a sport or a new language. You can read about it, you can hear people tell you about it, you won’t understand it until you start using it.” Even through all the issues, Hsieh stated, “I’ve been surprised at how hard it is to let go of the psychological baggage. In retrospect, I would have probably ripped off the Band-Aid sooner.”

Can an organization run effectively without leaders having some form of organizational power?

Answer 1

The concepts of power and leadership have been and will continue to be interconnect- ed. While an individual may exert power without being a leader, an individual cannot be a leader without having power. ... In organizational settings, leaders must exert power to achieve individual, team, and organizational goals.

Abraham Lincoln. Winston Churchill. Nelson Mandela. We honor our leaders and always have. In both public and business life they are treated with almost godlike reverence.

I guess that’s why we compensate our corporate chiefs hundreds of times more than we do the average worker and then give them tens of millions more in bonuses, even when they are fired for cause. Mediocrity in leadership seems to pay as well as excellence.

All of this begs the question: Do we really need leaders? Is the small chance of getting an excellent one worth the high cost of the mediocre breed? Top management thinkers have begun to ask that question and, surprisingly, there are some prime examples of high performing organizations who are able to succeed without any leaders at all.

In the field of management, there’s no one more prominent than Gary Hamel, who The Wall Street Journal named “the world’s most influential business thinker” and who is the most reprinted author in the history of the Harvard Business Review. He’s pioneered popular concepts such as core competency, strategic intent and reinvention.

So it rose eyebrows when he recently published an article entitled First, Let’s Fire All the Managers and declared that, “Management is the least efficient activity in your organization.” He then went on to suggest that it gets even worse as organizations get larger, that there are actually diseconomies to scale when it comes to management.

As a counter example, he examines the company Morning Star, which is a $700 million enterprise that is in the capital intensive business of processing tomato products. Nobody has a boss, anybody can spend company money and employees negotiate salaries and responsibilities with each other.

Perhaps most importantly, Morning Star isn’t a collective, but a privately owned, rapidly growing, highly profitable business. Hamel says it succeeds because the “mission is the boss.”

Individual efforts are important to leveraging power in order to be a more effective leader, but organizations also play a crucial role.

While close to 60 percent of the respondents agreed their organizations empower people at all levels, far fewer (29 percent) agreed that organizations were teaching leaders how to leverage their full power. To better understand the organizational role in how leaders could more effectively use power, we asked participants in the post-program survey to respond to the following question: What support do you need from your organization in order to be more powerful at work? The responses tell an interesting story of organizational needs.