Discuss about the Interpreting Impact of Culture on Structure.
Change management is a vital area of any business. In order to increase the number of customers and maximize the growth of the organization, change management is crucial. Change management is a discipline, which guides the management about how they equip and support the individuals to adopt a change in their organization[1]. Change management provides a structured approach to the individuals in an organization. This leads the individuals to move from their current state to the future state. Tony Hsieh is an American internet entrepreneur and venture capitalist. He is the current CEO of Zappos, which is an online clothing and shoe company. However, in the early stage of the business, Zappos had been faced issues in their profit and sales. During the time of Tony Hsieh, Zappos began starting to grow. He brought change in the culture and system of this organization, which leaves a significant effect on the growth of this organization. This study deals with the change management in the process brought by Tony Hsieh in Zappos.
Zappos is a popular online shoe and clothing organization. Tony Hsieh is the CEO of this organization. In the recent years, the business environment is characterized through a hyper-competitive market. However, Tony Hsieh has been decided to moving towards Holacracy[2]. As a result, he has introduced Holacracy culture in Zappos in 2013. It is important for an organization to bring changes in their existing structure to maximize the growth and to enhance the sale[3]. Holacracy is a philosophy, which focuses on the self-supported structure. This philosophy leads the organization towards the self-engagement. This change is brought by Tony Hsieh to improve the structure and bring a new culture in the organization. Various reasons are associated with this new change in Zappos. Both external and internal reasons are associated with the change management. Dynamic failure is a big internal reason that leads the organization to bring changes in their existing system. However, dynamic failure occurs due to the poor strategic framework, process, relationship, and values.
One of the major reasons of this new change is the huge competition in the market. In the recent years, the global market includes huge competition. In order to survive in the global market, an organization needs to modify its existing system and organizational structure[4]. Online marketing is a common and popular trend in the recent years. Many fashion organizations are involved in improving the feature of their online marketing. This creates a huge competition in the global market and it brings a threat for this organization. As a result, they have faced high competition in the global market, which leads Tony Hsieh to introduce Holacracy culture in their organization. The strategic framework of Zappos was strong, which facilitates this new culture in this organization. This is the major strength of this organization. This culture encourages the employees to do their work properly, which brings an opportunity for this organization to boost their employee engagement. On the other hand, such Holacracy culture is a unique culture, which makes Zappos unique in the competitive market and this organization is able to bring success.
Poor shopping experience is another reason that leads Zappos to as well as Tony Hsieh to introduce Hocracy culture in their organization. The operating process was not effective in Zappos, which hampers their growth. In the year 1990, Zappos had faced a frustrating shopping experience in their organization. This left a negative impact on this organization. This is due to the less employee engagement in this organization. Tony Hsieh has identified in order to improve the organizational culture and to maximize the growth employee engagement is crucial. Based on the previous experience Tony Hsieh has decided to change their organizational culture[5]. Another reason of establishing Holacracy structure is to encourage the employees. Tony Hsieh wanted that employee should act more like an entrepreneur instead of doing what their managers say. However, Tony Hsieh wants to ensure that productivity and innovation still take place as the company grows. This is the major key driver of implementing this model in this organization. For an organization, it is important to encourage their employees while bringing a change in an organization[6]. This factor leads Tony Hsieh to implement Hocracy structure in Zappos.
In Zappos as the sales continued to grow the company has established its warehouse in Kentucky to manage their own inventory. Zappos is considered as the Amazon of shoes. However, the customers are more delighted and they received their order within a couple of days. Despite this effectiveness, the profit of this business is very low, which is a growing pain of this business. This organization failed to give value to their stakeholders and to maintain a proper strategic framework. In order to deal with this situation more employee engagement is crucial[7]. Therefore, this organization needs to improve their communication process with the customers. To do this Tony Hsieh has introduced the Holacracy culture, which gives right the employees to carry out direct communication with the customers through telephonic conversation. One of the vital reasons of implementing the new change in Zappos is the inefficiency of the previous culture of this organization. Organizational culture plays an important role in fulfilling the business objectives[8]. However, the previous culture of Zappos was not effective to maximize its growth and establishing a good relationship between the managers and the employees. The previous culture in this organization is weird.
In the call center of Zappos, there is no incentive for the employees and no upselling is encouraged in this culture. On the other hand, the employees were forced to maintain the management direction and they did not take part in the decision-making process. The relationship between the employees and the managers was not good in the previous culture. In an organization, the employees need to take part in the organizational decision-making process to improve the business[9]. Tony Hsieh has found out the necessity of establishing a personal emotional connection between the employees and the management. To do this he has introduced Holacracy culture in the organization. Holacracy is considered as the self-governing structure[10]. In this structure, the employees do not have any fixed job and they have to carry out a simple and temporary role. On the other hand, the employees are more flexible in this structure. Therefore, the employees are not forced to follow the management rules and they do their work independently. It can be said from the above analysis that poor employee relationship and inefficiency of the previous culture are the major weaknesses of Zappos. In order to overcome these weaknesses, Tony Hsieh has established the Holacracy structure in this organization.
This structure helps the employees to utilize their full skill and work collaboratively. Holacracy structure reduced bureaucracy from the organization, which was the major problem of the previous culture of Zappos. In the previous structure if of Zappos the employees had to do their work according to the management’s instruction. To change this process Tony Hsieh has introduced Holacracy structure, which leads the employees to think as an entrepreneur. The external factors include political, social economic and technological factors. In the context of Zappos, the stable political and economic environment of USA is good, which facilitate the new change in this organization. On the other hand, the social life of Las Vegas includes high-class people, which support the Holacracy culture. Moreover, emerging technology also facilitates the Holacracy structure by improving the skill of the employees.
Force-field analysis can be done to identify the sources of the change. Force-field includes binding force and driving force to bring change in an organization[11]. In the context of Zappos, the binding forces or restraining forces resist the changes in the organization. This includes managerial challenges and employee resistance. On the other hand, the driving forces are the positive forces that facilitate the changes in this organization. In the context of Zappos, the driving forces are the accountability and strength of Tony Hsieh, who brought change in this organization.
Change management includes some challenges as well as some barriers. In order to bring change in an organization the manager or the leader has to face various challenges[12]. One of the major challenges is the declining situation of an organization that occurs during the change management. In the context of Zappos Tony Hsieh wanted to improve the economic performance of the organization. Hence, recovery of a firm’s economic performance follows a declining situation of this organization. The implementation of Hocracy structure in this organization leads the firm to face a declining situation of their existing system. This is often difficult for an organization to overcome. Poor employee morale, major customer failure are the major indicators of the decline. Change management can create major customer failure if the customers are not happy with the new changes[13]. This is a big barrier to change management in Zappos. On the other hand, employees often show resistance towards the new change, which is another barrier of change management. In the context of Zappos, some employees have shown their concern regarding this new change, which creates difficulties to implement the new structure in this organization. Apart from this managerial challenge is another barrier to change management. Changes in the managerial behavior, managerial bias, and CEO orientation were the major challenges that were faced by Tony Hsieh during the change management in Zappos.
Tony Hsieh has introduced the Holacracy structure in Zappos to maximize the employee engagement and to enhance the economic performance of the business. In order to bring the change in a proper way, the leader can follow Lewin’s change management theory. This theory includes three stages that are unfreeze, move and freeze. To implement the change in a right way these three steps need to be followed. In the unfreeze stage individuals realize the importance of the change in an organization. In this stage an effective communication is required, which highlights the importance of change in an organization[14]. In the context of Zappos, Tony Hsieh has made a clear communication with the employees. He has sent a long mail to the employees regarding the proposed change and has given detailed information about the change. This communication highlights the importance of change in the context of Zappos. However, the communication process of Tony Hsieh was good but not effective. Tony Hsieh has used written communication but he needs verbal communication to create a urgency among the employees regarding the change.
By using verbal communication such as an open discussion could be helpful for Tony Hsieh to make an effective communication with the employees regarding the change. This could create the urgency among the employees and they could understand the importance of the Holacracy structure for Zappos. The next step is the moving stage, which needs to follow to implement change in an organization. In this stage, the change is implemented within a short period of time[15]. The employees can increase their awareness in this stage and they can understand the importance of the change for this organization. To implement the Holacracy structure Tony Hsieh has created a circle by replacing the team. A strict governing process is used to design the circle. Hence, it can be said that the Tony Hsieh has involved the employees successfully in implementing the Holacracy structure. Besides implementing the Holacracy structure Tony Hsieh has removed the team, which could affect the overall performance of the organization as the team works based on a common goal. However, implementation of the circles is effective to increase the employee engagement in an organization. Thus, the second stage of change management is carried out properly by Tony Hsieh.
The third stage of change management is the refreeze stage. In this stage, the change is established properly and solidified[16]. Tony Hsieh has established the Holacracy structure in Zappos. Therefore, he has tried to stabilize this change. However, the shift of Holacracy is combined with the software project, which is known as Super Cloud. This does not include any effective business strategy, which makes the employee confused. Implementation of the Holacracy structure replaces the bosses and the hierarchies with the self-management[17]. This process is done successfully but the employees get confused about how to work in this structure. Hence, proper monitoring could be helpful for Tony Hsieh to gain success in this new structure.
On the other hand, Kotter Eight steps model is important to understand the way through which the change management can be implemented[19]. Kotter change management model includes eight steps. The first step is to create an urgency among the individuals to accept the change. Tony Hsieh has created the urgency among the Zappos employees by generating the importance of Holacracy structure. The next step is to develop a powerful coalition. In order to bring a change in an organization it is crucial to convince the employees regarding the change[20]. Tony Hsieh has successfully convinced the employees to bring the new change in their organization. Therefore, the leader needs to create a vision of change while implementing the change in an organization. Tony Hsieh has developed a vision of change by sending an email to the employees. This email contained the importance of Holacracy structure in this organization. After creating the vision the change agent needs to communicate with this vision. However, Tony Hsieh has tried to communicate with the vision through written communication but he did not use effective verbal communication in this process.
Communication is required to bring change in an organization. In the context of Zappos Tony Hsieh has used only written the communication to introduce the new change in this organization. The fifth step of Kotter model is the reduction of obstacle[21]. To give shape a change management process it is important to reduce the barriers that are associated with the change management model. Managerial issue, behavior change and employee resistance are the major barriers of the change management that are mitigated by Tony Hsieh effectively during the implementation of the Holacracy structure. On the other hand, the leader should have the capacity to change under the pressure. Tony Hsieh has the capacity to bring change under the extreme pressure. In order to give shape a new change in an organization creation of short-term goal is crucial. Tony Hsieh could be made his change management process by creating a short-term goal. Kotter argues that the leader often declares the change early, which is a major reason for the failure of change management process[22].Tony Hsieh failed to maintain this concept as he declared the change early without consulting the employees. As a result, the new change has created conflict among the employees. Finally, Tony Hsieh has anchored the change in the corporate culture of Zappos, which ensures the effectiveness of Holacracy culture in this organization.
From the above analysis, it has been received that Tony Hsieh has approached the new change in a right way. He has maintained the principles of change management theories that are Lewin’s three-stage theories and Kotter’s eight-stage theory. One of the major elements of these two theories is the development of the urgency among the individuals regarding the new change[23]. However, Tony Hsieh has created the urgency among the staffs of Zappos. This helped him to implement the Holacracy structure in a right way. He has the capacity to bring change under the pressure. Therefore, he was able to convince the employees to accept this new change as support from the employees is required while implementing a change in an organization. However, Tony Hsieh has established the communication with the employees while implementing change but he did not focus on the verbal communication. Despite this, it can be said that Tony Hsieh has introduced the change in a proper way. Therefore, application of the effective verbal communication could be helpful for Tony Hsieh to reduce the conflict during the change management.
In order to assess an individual as a change leader, it is crucial to measure his or her activities that are carried out during the change. In the context of Zappos, Tony Hsieh has established the Holacracy culture to improve the employee engagement and to maximize the business growth. By following the concept of network secrets of great change agent the effectiveness of change agent can be addressed. According to the network secrets a change agent needs to build a network to deal with the employee resistance[25]. However, often the employees are opposed to the change initiatives. In the context of Zappos, Tony Hsieh made him a successful change agent as he was in the central of informal network and he is regardless of his position in the formal hierarchy. He made a similarity between the natures of the change and the network. Therefore, he has made a close relationship with the employees to highlight the change in Zappos.
One of the major characteristics of the change agent is having a clear vision[26]. In the context of Tony Hsieh, he has a clear vision of the Holcracy culture. However, he wants to maximize the employee engagement through a self-governing structure, which can be done by the Holcracy structure. On the other hand, the change agent should be flexible in any environment. Tony Hsieh has much knowledge in online marketing and organizational culture. This makes him flexible to tackle the self-governing structure in Zappos. Therefore, a good change agent should be relational. A good change leader or gives value to the perspectives of other people and establishes a collaborative working environment[27].Tony Hsieh understands the employee’s value thus; he wants to establish a Holacracy structure. Tony Hsieh has delivered the information regarding the change management process to the employees and gave them a scope to express their viewpoints. For a change agent, it is important to combine organizational learning with change management process. In a change management process, the skill of a leader needs to be used. Tony Hsieh has used its skill and experience in the change management process in Zappos. He avoids the loss of knowledge during the change management process.
Tony Hsieh has established a supportive learning environment in Zappos, which facilitates the implementation of Holacracy culture in this organization. On the other hand, the change agent should be creative. In order to bring change in an organization, the change leader needs to develop creative thoughts[28]. In the context of Zappos, Tony Hsieh has used his creative thoughts to implement Holacracy structure in this organization. He has identified that to increase the employee engagement empowerment is necessary. Based on this creative thought he has decided to implement Holacracy structure, which empowers the employees to think like an entrepreneur. One of the major characteristics of the change agent is the ability of strategic thinking[29]. In order to implement a change in an existing system, a change agent needs to develop strategic thinking. In the context of Tony Hsieh, he has developed strategic thinking while implementing the Holacracy culture.
As per the above analysis, the characteristics of an effective change agent have been addressed. It has been identified that Tony Hsieh includes the major characteristics of effective leadership. However, at previous Zappos had a hierarchal structure, which has created conflicts in the employee management system. Therefore, the employee engagement was poor in this organization as the employee did not have the power to show their viewpoints and they were forced to maintain the instruction of hierarchy. Hence, the establishment of the Holacracy culture is an effective approach of Tony Hsieh. This brings change in the existing management system of Zappos[30]. Implementation of the Holacracy structure leads replaces the hierarchical structure into the self-governing structure. Therefore, the employees can utilize their skills properly and work independently. This positive outcome is received from the proposed change, which ensures the work of Tony Hsieh as a change leader. Therefore, Tony Hsieh has brought Holacracy culture in Zappos successfully. This change has brought significant growth in Zappos, which highlights the effectiveness of this change management process. Hence, it can be said that Tony Hsieh has brought change in Zappos effectively and proved himself as an effective change agent.
Conclusion
The entire study highlights the change management process in the context of Zappos. Tony Hsieh is the CEO of Zappos who brought a new culture in this organization. He has introduced the Holacracy structure in this organization to maximize the employee engagement. Such self-governing structure reduces the bureaucracy from the management system. It has been found that such structure is effective for this organization to improve the performance of the employees and to maximize the growth of the organization. To implement this change both internal and external factors are assessed. Therefore, Tony Hsieh has followed the three-stage process and Kotter change management process to implement the change in a proper way. Therefore, Tony Hsieh has exhibited him as an effective change leader by implementing the new organizational structure successfully.
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