One positive effect of this controversial management style could be getting more people used to the idea of having more power as an employee and less of traditional structure. I have no doubt that wages won’t become much fairer between current management and lower level employees with this change, and Zappos is still owned by Amazon. That said, getting these kinds of ideas in people’s heads could lead to startups that do them more honestly, perhaps even equity wise, and this probably does provide a better workplace experience. That’s why I feel it’s important to get more than just glowing views about holacracy out there. It may be better than a traditional corporate setup, but workers should be made aware where the power and money still truly is. It’d be impossible for Zappos to actually become a worker owned business at this point, so no one should expect that of them. Zappos has a history of being good employers, so I doubt the motive behind this is to keep employees docile as others have suggested. It remains to be seen whether this will actually improve company efficiency or not. If anything, there’s more focus on hierarchy with Holacracy than in a traditional setup. The following quotes have been selected to give a diverse picture of the pros and cons from multiple viewpoints.

Opinions

Steve Denning via Forbes

When so much time and effort is spent on the micro-details of the internal decision-making mechanisms and absolutely no attention given to any external feedback mechanisms, one could easily get the idea that the internal mechanisms are supremely important while the customer is irrelevant. Unless and until this “gap” is rectified, holacracy risks being a distraction from the central organizational challenge of our times, namely, how to make organizations more able to add value to customers through continuous transformational innovation.
For most organizations today, particularly big organizations, the problem is the very opposite. The organization has in place all the procedures it needs to deal with administrivia. Its central problem is the weakness of its external focus. Instead of delighting customers through continuous transformational innovation, it is focused on improving internal efficiency and meeting its quarterly targets and maximizing shareholder value. To resolve this problem, holacracy in its current form will be of no help.

Gregory Ferenstein via Vox

The experience convinced me that something like holacracy is the future of management. For years, Silicon Valley’s famously collaborative management style has seemed like a haphazard extension of the anti-authoritarian, novelty-seeking personality of first-time tech CEOs. It was only a matter of time before someone came up with a system that codifies these values and practices.
The constitution in holacracy works like the constitution in some fledgling democracies. The president could declare martial law and rule by fiat, but things work better for everyone if he abides by self-imposed limitations.
So that’s the only unilateral decision he’s allowed to make: dictatorship or self-governance
Holacracy would rather govern through forgiveness than permission, and lets people act without the need to lobby colleagues for support. But, if someone screws up, then it requires hauling everyone back to a meeting.
Holacracy is closer to what political scientists call epistemic democracy, where decisions are based more on persuasion and expertise than majority rule. There’s lots (and lots) of discussions in holacracy, but elected individuals are given permission to act how they please until they screw up.

William Tincup via Fistful of Talent

Holacracy is a clever attempt to create homogeneity—likeness… and I’m not talking about white people. I mean people that are really similar to one another. They will argue that it’s an efficient system, a lean system, and it will be at the expense of diversity. Make no mistake about it, this is a new religion. Dropped at our feet is a new Mormonism, new Catholicism, new Judaism. Leaders, ahem, prophets will emerge. Believers will emerge. Doubters will emerge. Those that believe in holacracy will create an “us-versus-them” mentality. On purpose. Mostly, they are ferreting out the weak-minded, the non-believers. That’s how folks will hire. If you understand what holacracy is all about, then you are one of us. If you don’t then, re-join the cavemen and cavewomen.

Catherine Bracy

Holacracy always smelled to me like a naive reaction to bureaucracy, without really understanding how and why bureaucracies end up like they do. It also has this implicit disdain for people in organizations who are responsible for the softer skills that keep things running smoothly. You know, things like communication, empathy, human resources management, etc. I see these skills getting devalued in the tech world all the time. If you can’t build shit you’re not worth anything.
Channeling Marshall Ganz, the absence of structure is a structure in and of itself. When you allow a power vacuum to emerge someone will fill it, and it’s usually the people who have traditionally held power (rich white men).
In the wake of this, I’m starting to think all of the problems we’re seeing with Silicon Valley these days—the ineptitude at politics, the clumsiness with handling inequality in SF, the lack of gender and racial diversity in the industry—are actually rooted in a systemic failure to understand how power works.
The problem with management isn’t managers, the problem with management is bad managers. And it’s not hard to imagine that people who don’t understand how power works aren’t going to be very good managers.

rednblac via /r/anarchism on reddit

Worker control without worker ownership doesn’t mean anything. Bottom line is, any “innovation” that happens within the company will benefit the company, the CEO, the president, the owners; and not the workers themselves.

Sequoyah via /r/Business on reddit

I worked at a company with this sort of “flat” structure awhile back. In practice, it wasn’t flat at all. Gossip and office politics were the new hierarchy, and there was also a somewhat secret core group of senior management who wielded the authority of traditional management without having to execute the responsibilities of traditional management. Anyone who couldn’t build alliances would either be fired or quit in under a year. Needless to say, turnover was through the roof (in excess of 30% annually). Actually changing anything meant getting buy-in from sometimes dozens of people, each of whom was naturally risk averse because endorsing any change could have negative political ramifications for them. All in all, it was something of a bureaucratic nightmare, despite there being no official bureaucracy. The fact that people like the idea of this system is understandable, but I don’t think it’s compatible with human nature. Traditional management theories indicate that this sort of flat structure would not scale well past a certain size. My company was suffering from it with just 90 employees. Valve is doing a bit better with 300. But I seriously doubt this will work out well at Zappos, with its staff of 1,500.

Todd Wasserman via Mashable

As Robertson describes it, holacracy is sort of like a game: Everyone in the organization sets up a constitution with rules to adhere to. The group decides to distribute tasks. Those responsible for tasks own them. There is no micro-management. Additionally, no one has to be stuck doing one thing all the time. If you’re a whiz at programming, for instance, you can make your job 100% about doing that, but you can also spend, say, 10% pursuing an interest, like helping run events or marketing, if you’re so inclined. The advantage of such a structure, Robertson says, is that it “generates organizational clarity.” That is, in theory at least, workers are more concerned with the task at hand than trying to look good for the boss. Robertson says he discovered this structure by trial and error while running a software start-up in the early 2000s.

Vindalfr via /r/anarchism on reddit

The main thing is that these are better companies and systems than what you’re going to find in most of the corporate world. As someone else mentioned, they’ll also get people used to the responsibility of actually having a voice in the work environment.