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Taking IT reorgs to the extreme

Kim S. Nash | March 31, 2015
IT departments are constantly reorganizing, but a few companies have gone so far as to break the traditional IT department into pieces.

To remind Zapponians just how different they are expected to work now, the company renamed its traditional departments. Marketing is now Life Cycle. The core retail business is Flywheel Operations. IT is Unicorn, after Hsieh's favorite creature. As Cromley explains, "We stayed away from tech or IT because they put you in the mindset of legacy organizational structures."

And losing legacy thinking is critical to making the new plan work.

Most of Unicorn's 350 staff members are organized into work circles, such as Zappos Labs for performing untraditional retailing experiments and SuperCloud for the extensive implementation of Amazon's cloud computing services. At least 50 circles exist within Unicorn, but the number isn't permanent: Reorganizations occur weekly, as projects shift, roles change and power is redistributed. The goal is to keep cross-pollinated thinking in play. "We want people to know [that] nothing's stopping you," Cromley says.

Holacracy isn't easy to get used to. Anyone can propose a change. Everyone can see what changes are happening in any circle.

Initially, Zappos hired an outside consulting company to teach holacracy principles in a four-day program. Zappos soon assumed responsibility for training, cutting the session to three days and offering employees ongoing, targeted classes and webinars.

When Unicorn members fall into old patterns, perhaps asking Cromley to approve an idea, he reminds them that he's there to guide, not dictate. "Some people are afraid of owning decisions or giving up control," he says.

Knowing whether holacracy is working isn't easy either. Cromley says he'll recognize it when he sees big innovations enacted without knowing they were even in the works. "We've seen glimpses of that but haven't seen the breakthrough yet," he says.

For example, there have been some promising user-experience experiments from a circle that spontaneously emerged to create a consistent Zappos digital experience across all customer contact points, including fulfillment, shipping, Web, email and marketing. "This is a self-organized group passionate about solving this problem," he says.

Split Personality
If holacracy sounds unruly, there are other ways for CIOs to make dramatic changes in IT mindset and performance.)GameStop, a $9 billion gaming retailer, last year split IT into four groups: Delivery, which includes application development and support services; Architecture, responsible for orchestrating cloud providers, among other tasks; Enterprise Strategy, which figures out how to implement major new technologies; and GameStop Technology Institute (GTI), which is focused on customer experience and product innovation.

GameStop split IT into four groups, says Jeff Donaldson, the company's former CIO and now head of one of those groups: GameStop Technology Institute.

After studying the many roles a modern CIO is expected to assume, GameStop decided that carving IT into defined portions and installing a leader for each would be a more effective approach, says Jeff Donaldson, senior vice president of GTI and the company's former CIO. "We came to the conclusion that it's really ridiculous to expect that one professional can operate effectively across all of those personas," he says.


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