This episode is hosted by Boundaryless Conversation Podcast host Simone Cicero with co-host Eugenio Battaglia.

The following is a semi-automatically generated transcript which has not been thoroughly revised by the podcast host or by the guest. Please check with us before using any quotations from this transcript. Thank you.

Simone Cicero:
Okay, we are ready. So, I’m so excited today to start this conversation with John from Zappos.

John Bunch:
Hello!

Simone Cicero:
And I’m with my co-host, Eugenio today.

Eugenio Battaglia:
Hello, everyone.

Simone Cicero:
So today we’re going to explore, let’s say, starting from the story of one of these companies, the companies that are most pioneering, in terms of how they organize and reorganize themselves, So John, when we started preparing this conversation we agreed that the question that Zappos also is trying to answer is the question that basically puts us in front of this transformation that we are seeing, from the age of hierarchies and most traditional markets into these age of networks. So, the question we can start from is: in your experience, how can companies move away from the traditions of hierarchies, and instead learn how to leverage at the age of networks?

John Bunch:
So for me that question really gets to, first, the thought that no matter whether or how you structure your company, networks will exist. So, even if you’re structured as a very traditional hierarchy, networks exist, networks of connections between people and their personal connections, different business connections, or how they work together — these networks exist. So, the question is really, given that they exist, how can you make the most of them? And so, you know, at Zappos we have a very specific way that we’re approaching that question and a very specific why. We think that it’s important to approach that question, but I think I would just start with the realization that: networks exist. And so, I think the question we need to be asking ourselves is, how do we structure our company to have the optimal setup for work to maximize the output of the work, of the effectiveness and the impact of the work? And my belief is that really trying to understand the optimal network and leveraging cross-functional teams to really align around the impact of whatever the team is trying to do, is how you should structure the work.

Simone Cicero:
And do you believe that we are being confronted with this pressure to restructure the work to some extent because the drivers and the technological drivers and the expectations let’s say, of the entities, like the consumers in the market, are asking us to organize the business in a different way or maybe the drivers are more internal to the organization. What are the drivers to these transitions from your point of view?

John Bunch:
I think the drivers of anything, start with the customers. And I think business today is evolving and changing at a faster and faster rate. If you look at the some of the research that we’ve looked at is that the lifespan of the companies on the S&P’s 500 or in stock market index is going down. So, companies are dying at a faster and faster rate. And what that shows, is innovation is speeding up in the world. And so I think one of the primary drivers is in order to be a long-lasting company — and that’s really what my purpose is at Zappos — is to try to make sure that we’re around in a 1000 years. And when you think about being around in 1000 years, whatever your business started at, as is probably not going to be around in 1000 years, so you have to innovate. And that speed of how fast you need to innovate is increasing. And so what that puts pressure on is: how do you evolve in and organize within a company quickly to respond to new market demands or new market opportunities? And I think they’re, the other research that we really leaned on at Zappos is, research shows that every time the size of a city doubles, productivity per resident goes up by 15%. So, as cities grow, people actually become more productive on them on a per resident basis. But the exact opposite thing happens inside of companies, every time the size of a company doubles, generally productivity per employee goes down. And, so what we’re really trying to do at Zappos is structure ourselves more like a city and less like a traditional company. And the reason why is, we believe that both innovation and resiliency for our company will go up based on that.

Simone Cicero:
That’s very interesting, I think you are, you’re giving us some kind of direction to look into an organization as a complex system. Now, when you talk about the city, why the city productivity grows, you know, better than traditional hierarchies is essentially because the cities are kind of chaotic, complex-oriented artifact. And why traditional organizations are much, you know, much more “complicated”, let’s say. So, I totally get this point. And, one reflection that I want to ask you is: why then market dynamics? So, when you engage into this network transformation, you have these small entities, and what do you guys feel there is a value in, for example, in injecting this idea of pervasive profit-and-loss inside the organization? So, actually transforming it into a marketplace, more than just a network.

John Bunch:
Yeah, so just to give a little history on where we’ve come from and where we’re at now. We really started thinking about evolving how we organize around six or seven years ago and at that time, this is when some of the research that we were looking into about cities got our mental juices flowing. And what we really emerged from that with, is the concept that we wanted to become a self-organized company. So, one where people can respond to tensions or opportunities, by self-organizing around the work. And, this is a property that exists within cities and other complex systems. And, so we started down this path of, we implemented a system called holacracy, which maybe some of your listeners are familiar with, which is a methodology to help move toward self-organization. And there’s a lot about that methodology that we like and we still operate with holacracy today. One of the things that we realized was not really working well for us was, out of the box and holacracy resource allocation or budget gets past top down. So, there’s a hierarchy of circles and budget and resource allocation goes from the top, down to the bottom. And, we realized like Tony, as our CEO really had no idea how much you know, a circle that was four layers down should have to do their work. And so this was very much leveraging networks, sorry, leveraging hierarchies. And, what we realized is we really wanted to move more towards networks. And, so we looked at how network resource allocation works in the real world? And how it works in the real world is by leveraging market based principles to allocate capital effectively, efficiently in an innovative way. And I think that’s one of the reasons why we see this exponential reality within cities, and when we looked for a model, we were not trying to recreate any wheels at Zappos. What we’re trying to do is understand these patterns that have emerged in society over the course of millennium and leverage those patterns within, inside a company. And so that’s more or less why we’ve moved into this concept of what we call market based dynamics at Zappos.

Simone Cicero:
Good, good. Eugenio you have a question, right?

Eugenio Battaglia:
Yeah. I was wondering, yeah. What’s your take on the right amount of constraints that enabled the self-organization? And how does it match the direction that the leadership wants to impose, but in a way that is not too directive? How does this relate to the hierarchies especially?

John Bunch:
So, you know, what was interesting as we moved into holacracy and really started to introduce this idea of self-organization within our company, one of the things that, you know, there were different people on the spectrum — employees on different parts of the spectrum — of how much they really move towards that or grasp onto it. But, one of the interesting patterns I saw with some people is that what they heard when they heard self-organization is that “I get to work on whatever I think is right to work on” or “I’m a sensor for the organization and whatever I think is the best thing to do is the best thing for me to do”. And to me, I mean, this kind of thought process is a type of self-organization. But I think if you look at any individual within the organization they lack, oftentimes, the full context of other things that are going on in the organization. And I think this is really where constraints come in. So, not necessarily just working on everything, but working within some constraints to maximize impact and productivity. And so for us at Zappos — and this is something that has kind of been developed and evolved over the course of a couple of years — we have something called the “triangle of accountability” and why it’s called the triangle is because it has three sides, but it really speaks to our constraints that we want everybody to work within Zappos. And so the three sides are: the first one is our core. These are in no particular order. They’re all equally important. But the first one is our core values. So we have 10 core values, anything that anybody that knows about Zappos knows that we eat, drink, and breathe our core values. And so we want everybody working at Zappos, everything that they do should be aligned with those core values. So that’s number one. Number two is that everything that we do needs to have customer service as a differentiator. And for me, this is really just part of our brand as a company. So, one of the things that we are known for is incredible customer service within our e-commerce business. And we really want that brand stance to be transferred over into anything that we do, both internally and externally. So, even if your customers are internal customers, one of the things that we want to align around is that everybody needs to deliver wow, through service, as we call it. So, that’s the second part of the triangle. And, the third part of the triangle is that every team needs to balance what we call their P&L. So, each team is like a small business and needs to not spend more money than they take in from their customers. And, another way of saying this is every team needs to be fiscally responsible. And, so these are the three constraints that we like to think of as enabling constraints. And, so getting back to that original idea of self-organization, it’s self-organizing within these constraints. So, if you think the best thing that I can be doing to help the organization is X, you know, you have full ability to pursue X as long as it aligns with our core values. X is the way that you’re doing it, is delivering “wow” service, and there’s somebody that’s willing to pay you either internally or externally to provide X service. And so that’s how we think about our ecosystem and how to enable self-organization within Zappos.

Simone Cicero:
John, this is extremely interesting. Eugenio, do you have a follow up question?

Eugenio Battaglia:
No, I just want to thank you.

Simone Cicero:
That’s it. It’s really, really interesting indeed, because I think you touched so many things in five minutes. So, one thing is the brand has to some extent, the thing that gives the coherence to this, you know, most self-organizing system, because you said of course, the core values are very important. I would say both the core values and the brand, but the brand is what the customer recognized and also as something coherent, you know, and this is very interesting. So, to some extent, we are saying, if you embrace full self-organizing in an organization, then the brand becomes really, really important. And this is your kind of flag, the flag that you bring to the market to the whole society at some point. And that’s very interesting, I believe. And so but I have another couple of questions. Let’s start from one that I think is really key. When you say everything needs to have this balanced profit and loss, in your experience, did you have any moment in which you said: “no, this doesn’t apply to that; we really need this even if it doesn’t have any profit or loss?”

John Bunch:
There are some things, so I guess going back to thinking about an organization as a city, when you think about a city, not everything that happens there’s a direct customer payment for. And so, for instance, one of the functions of a government is funding — taking tax revenue — and funding certain things for the good of the city. So, these can be anything from infrastructure, like roads and courts and the legal system to, you know, maybe some charity or something that is for the public benefit. And we’ve brought that same construct within Zappos, where we have a group that is called funded shared services. So, these are services that regardless of who you are within the organization, you can utilize. But those services still have their own profit and loss. It’s just the way that they get funded to do whatever it is that they do is through kind of the — quote unquote — government. So, these are things like HR and compliance functions, things like our technical infrastructure. So, you know, the technical like providing computers to every employee or keeping up the internet, on our campus or even having a campus to begin with, we see as part of the part of the infrastructure. So there’s that. And then, you know, I think the other thing is, you know, at Zappos, we encourage people to pursue their passions. And so, oftentimes, people might work on behalf of some idea, just in kind of their spare time, even if they don’t have any official resources allocated to something to try to kind of get it off the ground. Similar to how if you had an idea for a business in the outside world you might not the first thing you do might not be going and looking for funding. It may be, you know, doing market research or it may be, you know, starting up a website or going ahead and producing your first product and then only, you know, it doesn’t really even take any money to do so. But you’re kind of bootstrapping your own business. And so we also see that pattern within Zappos where people have an idea and, you know, they try to get it a little bit off the ground before they go out and look for an official customer or official funding and we encourage that kind of behavior.

Simone Cicero:
That’s really interesting. Do you feel like, you know, because when you speak about this idea of infrastructure and shared services, do you think that at some point you’re going to tax your micro enterprises — and maybe even at some point to the future — to create your own internal monetary system like a government would do?

John Bunch:
It’s not sometime in the future — it’s already happened. So, yeah, we have a system for that, which is essentially that every circle within Zappos has a charge for their people’s costs, so how much the people within their team costs. And within, we actually don’t charge the true cost of the people to the circle — we charge more than that. And one of the reasons why we charge more than that is to bring in revenue to help pay for some of these services. And so yeah, we really look at, we really are trying to mimic a lot of a lot of structures that governments and cities utilize for how we structure internally.

Simone Cicero:
That’s amazing. And, what kind of structures are part of these shared services? What kind of, I would say, the question more specifically is: I understand that your organization is radically modular, radically divisional, let’s say, or at least it’s trying to be radically divisional. So, my question is: what are these integrated financial structures that you actually fund and run with these kinds of infrastructural system? You know, you mentioned I think, legal, or HR, can you give us a little bit more details on how these work and what services are part of this foundational infrastructure system?
John Bunch:
Yeah. So, I think the perfect example is our compliance functions. So, you know, we have as a part of a publicly traded company, we have to maintain our compliance with federal and state laws and so regardless of anything else, we have to do that. It’s not a want to do it’s a have to do. And, beyond that, I mean, if you’re thinking about a team within Zappos, a small business, if they had to officially pay for the compliance function, they may not see the value that that function adds directly to their group. Because it’s kind of a broader company value that gets added. And so, you know, I don’t really think that it makes sense to give teams the option of having compliance functions or not, it’s really a required function. And so it’s kind of the perfect candidate to put in this funded shared services, funded shared services model. The other one is, you know, one where you might need a little centralized controls. So, legal is an example is one where, you know, we need there to be kind of a central place for all contracts and things like that to get run. In order to, there’s a risk mitigation factor there. And, so we don’t just want anybody being able to sign contracts for Zappos. We need there to be some control over that. And so that’s another good candidate for this funded shared services model. But even within that there is the possibility of teams leveraging services outside of that, so I’ll give legal as an example. Even if there is a funded shared service like legal, if you want as a group within Zappos, if you want some sort of hire, like let’s say you went to legal and had a request and they said, “Okay, we’re going to only be able to get that to you a month from now” — and that didn’t work for your timeline — one of the things that you could do is find other people to help you do that work. So, maybe there actually are some other people within the ecosystem that has some legal knowledge or maybe you contract somebody outside the organization to help you with whatever, maybe it’s a contract that you need to get worked on, to help you with that. But then, once all that work is done, it still has to flow through kind of the legal approval process, but by leveraging outside entities, you’re able to speed up the work and just kind of have the final pass through go through that shared service. So even within kind of this centralized control model that exists in that part of the organization, we still look to leverage market based principles to help, you know, make sure that everything is going as fast as possible.

Simone Cicero:
That’s intriguing really and the natural question that comes to my mind is: as this system resembles a lot this governance model — the government’s model, sorry — is that also a formal democratic governance process? Is there a way for example for the employees to amend the system? Or it’s more like a benevolent dictatorship, like where maybe Tony or you or someone else comes up with new ideas, so who is that to reform the system? Who is taking this, you know, dedicated decisions about how do we manage these complex entrepreneurial ecosystem they are trying to build?

John Bunch:
Yeah, so we still use holacracy at Zappos for our governance. So the quick answer is yes. It’s not democratic. It’s holacratic. So, it’s not like we vote on every specific, you know, decision or somebody can bring a proposal and then there’s a companywide vote. It runs holacratically. But essentially, you know, that means that and without diving too much into the mechanics of holacracy, every circle has a lead and a, what’s called a lead link and a rep link. So a rep link is a representative from a group to represent their intentions in the broader group. And so everybody has a voice through their rep link. And so they can, if they have an idea for a change in structure or a new policy, they can get that processed via their rep link. Taking on that tension, or any individual can also request an invite to any governance meeting. So they can also just say, “I’d like, I have this idea. I’d like to request an invite”. And, for the most part, anybody that requests an invite to come to a meeting at Zappos is granted that even if it’s at the broadest circle, at Zappos.

Simone Cicero:
Very interesting. Eugenio you have a question, I guess, right?

Eugenio Bataglia:
I was wondering — and this notion of hiring the right people and making sure that the culture that you set will eventually attract the right people — how this notion resonate with you and how do you actually hire people? How do you make sure that in hiring people you get to attract, you don’t spend then too much time down the road to actually align them in with the current culture?

Simone Cicero:
Like to who you give this citizenship, in this system?

John Bunch:
Yeah, that’s a really that I’ve actually not thought of it that way. Who you give citizenship to? But, yeah, our hiring practices were really set up from close to day one within Zappos. And, and so this predate even a lot of what we’ve been talking about today holacracy and market based dynamics and so forth. But, you know, Tony, our CEO, he wrote a book called Delivering Happiness where he talks a lot about kind of this: the origin story of Zappos. One of the things that he talks about in the book is the hiring practices at Zappos. And so, first and foremost, kind of the number one hiring practices at Zappos is regardless of the position and there are two interviews that happen. One is for technical fit, and the other is for culture fit. And if either of those two interviews do not go well or the people who are doing them do not think that this person would be a good fit at Zappos, then it’s a no. So what this means is, somebody could be a rock star at whatever it is that, you know, the position is open for say it’s a software developer, a rock star software developer, but if in the culture interview, and they find that maybe there are some red flags around the culture, then the answer to “are we going to hire them?” is no. So that’s kind of the first practice. You know, along with that practice, we also, so, we hire for culture, we also fire for culture. So once somebody gets in, you know, we have a processes where people, if they’re doing something that is misaligned with the culture can be terminated. For that, again, even if there’s no other performance challenges with the person. So, that’s kind of: those go hand in hand. The other thing as far as it goes to helping make sure that there’s a good fit with the culture. We invest a lot into new hire training. So once somebody does come on, each employee goes through a month long new hire training process, and this is everybody. There are no exceptions to this rule. And the month long training process really helps people amongst other things, to understand the core values and really get a good sense for what they are. And at the end of that new hire training process, everybody is given an offer to quit the company so we actually pay people if you’re in new hire training will pay you and I think it started as like a week’s worth of pay or maybe a month’s worth of pay, but now it’s gone up to, I’d have to check but something like three months’ worth of pay to quit Zappos. So, and the reason why we do that it might sound crazy, like you just spent all this money to hire somebody, you know, maybe something that was a long recruiting process, you found what you thought was a good fit. And then right away, you’re going to offer him three months’ salary to leave, that sounds crazy. But the reason is, is because we really want people at Zappos who are committed to what we’re trying to do and align with our core values.

Simone Cicero:
That sounds crazy, really, but I think it’s very much aligned with this very process. And also basically it looks like you invite someone to become citizen of your kingdom and then you figure it out for you — and if it’s a staff — that’s not the right person to have in your city. So you might want to spend some money to get them, you know, back into where they’re coming from. So, I think I really understand why. So, let’s move into another shade and other lines of this conversation, which is much more related to growth and related to, you know, growing a business at the end of the day. So, I guess that also Zappos has this in mind, you know, when they think about why we transform the organization into a self-organizing system, because maybe you guys want to create some new business, you want to grow the business, you want to evolve the business. And my question is, normally, when we talk about marketplace, like Zappos in general, digital companies, it’s all about leverage, you know, it’s all about doing more with less employees and aggregating markets. And you’ve been, you know, creating these network effects and growth dynamics, while I was looking at your video lately, you mentioned this amazing project adaptive…Zappos adaptive, which looks like a way to expand the business that is a bit more thoughtful I would say. But it’s still a very interesting market opportunity because I found if I’m not wrong in the video you mentioned something like 50 million US citizens that have, you know, adaptive is essentially from what I understand providing clothing and solutions for people with disabilities. So, my question is: how do you see the role of self-organizing systems in generating new engines of growth for the company, and how also this effects their typical, for example, employee to revenue relationship?

John Bunch:
Yeah, I think Zappos adaptive is a great example of somebody identifying customer needs and creating something to help both address those customer needs and provide revenue for Zappos. Revenue and profit for Zappos. So, yeah, it’s a great story. And, you know, I think it’s great that we’re doing something for the special needs community within the US. As far as creating new growth, you know, I think the mental model that I really like to think about is anti-fragility. And so I think most people think about the goal being we want to create as much growth as possible. But actually at Zappos, what we’re trying to create is the most anti-fragility so let me explain that concept. Which, by the way, comes from a book from Nassim Taleb. I highly suggest reading it if you haven’t. But the idea is that, you know, a lot of people optimize for growth. But what sometimes that doesn’t optimize for is resiliency. And so, you know, what we really want within organizations is to be resilient. And anti-fragility really takes that one step further, where the concept of anti-fragility is when there is a stress put on a system, that system can actually grow or become stronger from whatever that stress is. And so you can think about it like somebody’s taking a punch, but instead of getting hurt, actually getting stronger from it. And so that’s really what we’re trying to do. And one way to do that is to increase our diversity within the organization. So instead of just having one business line, having many different business lines are different ways that we are providing value into the organization. Because, if you know right now, and I will say right now, our biggest, by far business line is our e-commerce business, which is what we’re known for. And so if something happens to that e-commerce business, we need to be able to adapt, and we need to be able to move forward if we want to be around in 1000 years. And so having different lines of business different ways, different customers and ways that we’re providing that value is crucial to doing that. So to become a resilient or anti-fragile organization, it’s imperative for us to have diversity of business and that’s something that we’re trying to build. And you see outputs like Zappos adaptive and others that are doing that.

Simone Cicero:
That’s great. So before, you know, this is another point on anti-fragility it’s really interesting and it brings a lot of new ideas for questions. But I want to piggyback on Taleb’s concepts, because it makes total sense. And he is also famous for this idea of having skin in the game. And so my question is, as your employees are asking it to some extent to be balanced that in profit and loss, to create sustainable businesses, do they also have skin in the game? You know, basically, do they own, for example, part of the new ventures that they create inside Zappos?

John Bunch:
Well, we’re moving in a direction that is, is in that direction. And so, right now, compensation at Zappos, so how people get compensated runs I would say relatively traditionally, where we have a compensation committee and every so often they look at what a person is doing and what the market rate for those skills, whatever the skills are that they’re doing. They look at that and they assess what the person’s compensation should be, and if they merit a raise, for instance. And so this is similar to how most companies do it. The only difference is, you know, most companies have this traditional hierarchy. So how people move up, oftentimes, they need to, you know, kind of become whatever role they’re bosses and move up and get a promotion. In our case, you know, it could be taking on new roles outside of the circle that you were hired in for, but where we’re moving to is trying to get more to what we call the 50.50 cub split model, which is essentially this idea that your circle is a small business and you have revenue and expenses in your business. And then, at the end of the day, you have some profit into your business. And one of the things that you might want to do with some of that profit is disperse it out to the people, your circle members who have helped you gain that profit just as a business would. And so, but at the same time, Zappos as an entity needs to create profit for our shareholders, which is essentially, Amazon. We were acquired by Amazon in 2009. And we need to show profit to Amazon. And so it’s just actually how the math works out, traditionally is that for every dollar that we pay an employee, we tend to get about $1 worth of profit to the organization. And so we’re extending that model where if your circle has profit, you have the ability to split that 50.50 between kind of like a bonus or employee compensation and to the profit of the company. And so in that way, we’re encouraging people to have skin in the game where, you know, if they’re working on some new business, and that new business, whether serving internal or external customers, does really, really well, they directly can benefit from that value that they’ve created.

Simone Cicero:
So that happens at the circle level and also at the team level, to some extent.

John Bunch:
Yeah. At the circle level, but remember, that people may be a part of many, many different circles at Zappos. So, you might be receiving a sub portion of your compensation from circle A, and then a difference portion from circle B and so forth.

Simone Cicero:
And do you foresee the idea that an employee can also create a new unit or circle?

John Bunch:
Yeah, so and it’s super easy to do so in the current context, people can just propose a new circle. And essentially, by doing so, they’ve started a new small business. And we’ve also seen an interesting pattern emerge with what are called circles of one where a person kind of spins up a new circle, which is they’re kind of like an independent contractor. They’re their own entity within Zappos. You know, they don’t have any other circle members, and they’re just providing value to different areas of the company. And all they have to make sure that they can do is cover their people cost, or their cost to the organization by the service agreements that they have with the rest of the organization.

Simone Cicero:
Great, great. I see that there are some parallels also with our Chinese friends of the Haier, you know that our listeners, I think they’re getting used to because we tend to refer to them quite often. So that leads me to another question that I think I want to share with you that is, once you move into this very entrepreneurial context now where you basically have this organization that makes it possible for people to start new ventures, and that provides background but you know, backing services like support services, like you mentioned, and then the question that comes to my mind is, how do you keep someone to belong to your organization, no, because they’re pretty much entrepreneurial so they could be sustainable even on the market, no. So, that and also I think I saw you in some videos you are pointing out to a direction where you think that your circles will need to do more business with the outside now so. So, the question that comes to my mind is then: what is the identity of the organization? Where are the boundaries of the organization and especially in one organization like Zappos, that is deliberately saying, you know, what, we are building our organization for the next 1000 years or so. So, it looks like there is a strong identity, values, brand and also, Zappos is one of the most recognizable brands. So, the question is really: what do you see happening to the identity of the organization, through this revolution that you are putting in motion?

John Bunch:
Yeah, I think the answer to that is that puts pressure on us. The idea that an employee could go and leave and, you know, if they’re strongly entrepreneurial can open up a business outside of Zappos is true. And it puts pressure on us as an organization as an entity, to make sure that we are providing enough value to our employees to make them choose to stay within the walls of Zappos, rather than go out on the outside of the walls of Zappos. And so what value are we providing? So, I think there’s some in the culture and the core values, right? Like we want working at Zappos to be a fun, inspiring opportunity. And so, you know, for me, I’ve worked at Zappos for 10 years, and I have always felt like that working at Zappos was something that I found a lot of passion in. And so, you know, that has been something that has retained me over the years and so for many other people. But also we need to provide other services that help make people, help make it easy for people to get businesses off the ground. So things like, and these are things that we currently have. So things like training, and mentorship on entrepreneurship. You know, services, talked about funding shared services, internal service providers, that make it easy to start a business where, you know, when you go out on your own, you may not realize it, but there are a lot of things that it takes to run a business. Which can be a good learning opportunity, but also is a challenge. So you know, I think the way that we think about that question at Zappos is, we have to be providing enough value as an organization for people to choose to become part of or stay part of the Zappos ecosystem. Because there is always the option for people to go outside and do whatever they’re doing in the outside world.

Simone Cicero:
And what is the impact on the brand? John, so again, Zappos is such a famous company in terms of brand, you know. And so, the question that comes to my mind is: do you see these new companies that start new ventures that start inside Zappos and maybe you can stay as part of Zappos system to share the same brand, allways, or maybe there are some cases which even the brand is something that you can sacrifice on the altar, let’s say of a very much anti-fragile and self-organizing organization? And then maybe as a further question and reflection that I offer is: if the brands gets sacrificed, let’s say, what really makes Zappos in this case?

John Bunch:
Yeah, I guess I would go back to the triangle of accountability that we talked about before, which is to say everything that you do need to have customer service as a differentiator and be aligned with our brand. So, that’s not something that we’re willing to sacrifice. And I think it’s a going back to your previous question that is a value added benefit to small businesses that are starting up at Zappos. So, for instance, I helped to start one called Zappos expertise. You can go to Zappos expertise.com to check it out. But, it’s essentially a consulting arm within Zappos, where we have these internal experts on whatever it is, whether it be marketing or customer service or technology. And we want to partner with other organizations and help to bring that those expert internal experts to your company, and it’s called Zappos expertise. Because, among other things, we want to be able to leverage that brand and we want people to know that we are going to do our best to try to wow you as a client of Zappos expertise. And that brand means something, you know, within the world, and so, it would be foolish of us not to leverage the brand and that’s one of the benefits of being an entrepreneur within Zappos, is that you have that big name behind you.

Simone Cicero:
But then, to some extent, let’s say that the brand becomes the organization, also becomes a representative of the core values that you guys will see in the world. So to some extent, wherever in the world that is impersonating embodying those 10 values — if I’m not wrong and it’s open to resonate with your brand — and it has a balanced profit and loss. So it’s a sustainable business can be part of the example family, or maybe it is, to some extent, part of the Zappos family and it’s just a matter of getting them to use and to participate to the systemic, you know, the systemic network that you are putting in place, right?

John Bunch:
Yeah, so, is your question that companies outside of Zappos could..?

Simone Cicero:
So exactly, that’s the thing, you know, if you’re transitioning towards becoming an ecosystem organization and what makes the difference is your brand, your values, and being a sustainable business. It means that pretty much everybody that resonates with your values and your brand, and has a balance of business can be part of the ecosystem. So the matter is, how do you make them part of the ecosystem? What would you mean?

John Bunch:
Yeah, it’s an interesting question. And it’s certainly something that we’ve thought about. And what it really points towards is maybe some sort of licensing or some sort of some way of plugging external companies into the Zappos platform. And we’ve thought about that. I don’t think we have progressed enough to really plug people in yet, but it certainly is something we see down the line as a possibility. We would certainly need some systems and processes put in place to continually check whether those external partners were staying within the triangle of accountability. And that’s just something we haven’t had time to prioritize working on yet. But certainly something you know, I see as a possibility in the future.

Simone Cicero:
That’s very interesting, you know, it basically marks the transition from platforms of consumers and producers or suppliers and employees and consumers into platforms of organizing to some extent. Platforms of entrepreneurship and it’s really, really interesting. John, is there anything else that you believe it’s really important to share in terms of your process, your story, something that you believe all the companies need to understand to really be attracted towards this transformation that you guys seems to be pushing so passionately?

John Bunch:
Yeah, I mean, I guess my reflection on that would be stepping into this has a lot of opportunity to really help evolve and push forward your company. And also, it’s hard. You know, a lot of the things that we’re talking about today are new ways of working and new ways of contextualizing work within an organization and these are things that you know, we can sit on your podcast and maybe make all the sense in the world but as an employee within the organization these are hard concepts to grasp and hard concepts to grow and learn into. So we’ve been at market base dynamics for two years at holacracy for something like five years. And so we’re on a long journey to do this. And, you know, one of our core values is embrace and drive change. So it’s really core to who we are, that we expect employees to really embrace and help to drive changes forward. And, at the same time, it’s just really hard. And so I guess the other thing I would say to listeners is, if you’re thinking about doing even a small portion or a small experiment in this direction, you have to understand that you know, there are really some great benefits. And also it’s something you have to commit to working towards over a span of potentially a number of years depending on, you know, how big the changes that you’re thinking about doing. So yeah, that’s something also I don’t think we’ve touched on.

Simone Cicero:
Great. And are you enthusiastic about this, John?

John Bunch:
Yeah, very enthusiastic. You know, I think it’s a model that has the possibility of really transforming the way that the world works. And so it’s really exciting to be on the forefront and to be able to an organization that dares to innovate and change.

Simone Cicero:
It certainly is, I think if we base on all the questions that we raised in this amazing conversation, it certainly is, you know, a hint that this direction is the future of organizing. John, it was amazing to have you in this conversation. I think our listeners also will enjoy so much. So again, thanks very much for being with us tonight, today.

John Bunch:
Thank you Simone.

Eugenio Battaglia:
Thank you.