Management Free Falling! Why The Zappos & Valve Model is Terrifying

In this 4th installation of an 8 part series, Brad Szollose and Rob Hirschfeld invite you to share in our discussion about failures, fights and frightening transformations going on around us as digital work changes workplace deliverables, planning and culture.

It doesn't make sense to hire smart people and tell
them what to do; we hire smart people so they can
tell us what to do. 

           — Steve Jobs, cofounder of Apple Computers

Do You Trust Your Workforce?

Trust, not stability, is the new management contract. Digital workers interpret strong management as a lack of trust.

Before we can talk about how to manage digital workers, we have to talk about trusting them to do their jobs. Why? Digital workers largely adopt Millennials' unwillingness to follow directed leadership. If we want to succeed in managing them then we need to foster mutual respect that is built on bi-directional trust.

20th Century business models were based on “if you can’t measure it, you can’t manage it” thinking that went along with mass manufacturing control, discipline and predictability. Physical goods were sold to a passive marketplace with minimal feedback from markets and internal workers; consequently, decisions could be made by a few leaders as long as workers did what they were told. All out-of-the-box decision had to go through a leader. The bigger the decision, the higher up that decision needs to go for approval. Like in our symphony analogy, control and discipline is the main ideology.

In a 21st Century business, there is no script just as there is no score for a Jazz concert. That does not mean it's a worker free-for-all! We still need to deliver products. But instead of top-down control, we talk about collaboration, shared mission and team work. This change is critical because digital work as so much situational content that it is impossible to proscribe it's exact results in advance. Like Jazz, you can create a general framework and guidelines but the exact composition has a degree of improvisation because it must reflect the players' situation in the moment.

Since you have to trust people to make decisions, you'd better create an environment
where they want to make the
best decisions for your business! 

  
Glassdoor’s multiyear study discovered that the “Best Places to Work” from 2009 to 2014 outperformed the S&P 500 by 115.6% while a similar portfolio named Fortune’s “Best Companies to Work For,” outperformed the S&P 500 by 84.2%! That is impressive.

What does trust look like? Leading gaming software maker Valve has thrown out the traditional employee handbook and replaced it with a 37 page breakdown of what they expect from an employee. The manual tells people their desk is on wheels so they can just roll over to a new team if they want to change jobs. The trust implied in that type of follow-your-passion enablement is unheard of in most workplaces.

Zappos, recognized 6 years in a row by FORTUNE’s 100 Best Companies to Work For®, pays employees $4,500 to quit if not satisfied with the culture. Zappos CEO Tony Hsieh advocates for a no management whatsoever model called Holacracy. Like Valve, Zappos counts on their hiring process to find workers who thrive in a self-led model where leadership is fluid and people organize themselves to solve problems and deliver value.

If our undirected Jazz model scares you, Holacracy will terrify you.

However, it's critical to understand that neither Zappos nor Value are “wild west” work environments. Like a top Jazz ensemble they provide trained performers, concrete structure, appropriate tools and clear expectations. By giving your teams the right tools to know what to do when they are working on their own, you will see a different workforce, striving to make your company better than even you thought possible.

Why does this work? In digital work, we have to give up the idea that the knighted leaders make the best decisions.

 

It's not just a question of good decisions, we also need to improve quality and speed of action. Check out Navy Submarine Captain David Marquet's talk on Greatness, based on his book, Turn The Ship Around! He explains quite well why people should be allowed to think and take responsibility for their work.

In the end, it's simply physics. Without trust, all decisions must flow downward and the entire organization is limited by the leadership. Our information economy makes it simply impossible for leaders to sufficiently learn and react. When people are trusted to think for themselves and take control for the products they create there is a psychological shift. They take ownership in their work. That means quality and output go through the roof as they get competitive with creating a wow product.

So, how can you create a company culture that taps into the skills sets of a new digital worker yet engages everyone for the long haul? Let’s dig in and instead of giving you rules or regulations, let’s start with a few principles to create the right environment.

Tune it for our next post:  
Setting Direction - How Too Much Freedom is Bad Too.

Thank you for following along.

Here is Navy Submarine Captain David Marquet's talk on Greatness...enjoy:

And Click Here for Valve's Employee Handbook.

Our point of view: About the authors

Rob Hirschfeld and Brad Szollose are both proud technology geeks, but they’re geeks from different generations who enjoy each others perspective on this brave new world.

Rob is a first-generation Digital Native. He grew up in Baltimore reprogramming anything with a keyboard—from a Casio VL-Tone and beyond. In 2000, he learned about server virtualization and never looked back.

As founder and community lead of the OpenCrowbar project, Rob is the CEO of RackN, which provides support, consulting and commercial extensions to the community project. 

Rob is also a board member for the OpenStack Foundation. A position he was elected to fill in 2012, 2013 and 2014 and the chair of DefCore committee.

Brad is a Cusp Baby Boomer who grew up watching the original Star Trek series, secretly wishing he would be commanding a Constitution Class Starship in the not-too-distant future.

Since that would take a while, Brad became a technology-driven creative director who cofounded one of the very first Internet agencies during the dot-com boom. As a Web pioneer, Brad was forced to invent a new management model that engaged the first wave of Digital Workers.

Today, Brad helps organizations like Dell and MasterCard close the digital divide by understanding it as a cultural divide created by new tech-savvy workers ... and customers.

Beyond the fun of understanding each other better, we are collaborating on this 8 part blog series for different reasons.

• Brad is fostering liquid leaders who have the vision to span cultures and to close the gap between cultures.



• Rob is building communities with the vision to use cloud products that fit the Digital Native culture.