- Research: What Google found from a study into successful teams
- Kickstarter: Beautifully designed journal to get men writing about their thoughts and feelings
- Org structure: Holacracy ‘gets in the way of work’ at Medium, so they’re moving off it
- Motivation: To anyone who feels like they’re falling behind in life (lovely counterpoint to throwaway motivational messages)
- Article by me: Supercharging a lifestyle business with IMPACT.
I’m at the early stages of working on an idea to see many more cooperative businesses in Brighton. I’m at the International Summit of Coops in Quebec to learn more and make some new connections in this area.
Coming from the traditional private ownership business world – even though I have long been a fan of democratic business – I’ve realised how I naturally gravitate towards top-down thinking. People smarter than me keep correcting me and getting me to think bottom-up. Here are two examples:
1) Thinking about how to go about building a network of cooperatives (like the enormously successful Mondragón in Spain) I thought I needed to put together a group of people to work on a constitution, then recruit or set up coops to join the group. Classic top-downness. I did have a nagging doubt about the approach – it felt like I was creating a bureaucracy. Actually, the best way to do it is to start with people: The needs of the people in the local community and with people in existing and potential new coops. Once you are fully engaged with the people involved you can start setting up a network from the bottom, with one coop, linking to the next one and so on, and eventually build whatever group structure might be needed.
2) Ownership & Finance. I’ve mused about innovating business ownership models before – how you can structure ownership of a business in a combination of employee, customer, community and private ownership. In top-down fashion, I’ve been trying to figure out the most optimal model which could then be applied to coops in Brighton. Again, the far better approach is to accept that there’s a lot of flexibility and many possibilities and to work with the people involved to find the best route as needed. For example, more capital intensive businesses like manufacturers may require more private investment; those in service sectors could be more employee-owned; and those selling to consumers may benefit from greater customer and community membership.
I’m sure there are many more examples of where bottom-up thinking will provide a better approach, and although cooperatives may formally delegate power for some centralised decision-making which at times may be more effective, I’m going to make it a rule to make bottom-up my default approach.
I believe that the draw towards democracy in organisations will prove to be just as irresistible as the draw to freedom and democracy in dictator-led countries. Like an Arab Spring at work. Why? Because I believe that humans have a fundamental desire to be set free. Freedom unlocks our potential making individuals happier and organisations perform better.
On the Worldblu list every year there are examples of how leading companies implement democracy, and I have shared a few crazy town ideas for taking it even further. But aside from the individual democratic systems and processes, what will the organisations themselves look like?
I think that the evolution of organisational democracy will lead to two super-species which will dominate the business world.
The first type of organisation, which I touched on previously, doesn’t even have a single entity. It will be a loose connection of individuals – a network – that creates connections and works together on projects. In a network there is no hierarchy, but you still have very clear roles, responsibilities and accountability in order to get a job done. These networks will make heavy use of technology. For example LinkedIn to find new connections and keep your network of collaborators alive; Etsy.com to organise the means of production; group collaboration tools like podio.com to communicate and manage the work; and telepresence to help alleviate the need for physical proximity.
The advantages of networks are enormous. You can put together the very best team for each project, instead of being forced to use the team that you happen to employ – a dream team for each and every assignment. They can also be highly efficient too because you don’t have a huge amount of company overhead – both financial and bureaucratic getting in the way of the actual work.
For individuals, they can have the ultimate personal freedom of deciding what they work on and taking breaks between projects whenever they like. Rewards are much more directly shared, with everyone on the team benefiting directly from their work. Performance is reviewed by peers not by a boss and success will speak for itself: Do a good job and you will be more sought after for future projects. You will be able to pick and choose the most interesting projects to work on, and your rewards will increase. No political struggles for a promotion or a pay rise. The ultimate meritocracy.
In the future I think we will be surprised at the size and scope of what informal networks, outside of traditional corporate structures are able to achieve.
But what about businesses that require more capital investment such as expensive machinery, and where the work is more ongoing rather than project based? Networks my not be ideally suited in these cases (although I wouldn’t rule out what a smart group of networked individuals might be able to pull off.) I do think though that networks won’t completely replace larger corporations altogether, but these corporations might look radically different to the ones we see today.
I believe that the future of the corporation is employee ownership. It’s not a new idea, and it’s one that has already proven to be a more productive, innovative, faster moving vehicle for long-term success. For example, see John Lewis (most successful retailer in the UK), consultants Arup (leading engineers of projects like the Bird’s Nest stadium in Beijing) or supermarket chain Publix (winner of the best customer service award in the US every year since 1995.)
Despite their undoubted success, when it comes to large companies, the employee owned variety are still a very small minority in an economy dominated by large publicly listed companies. I believe it’s inevitable that this will change – the free market will force the issue.
Employee-owned companies perform better because unlike listed companies there is no pressure for short-term financial results from the markets at the expense of building long-term value. Shareholder interests are not put before employees because they’re one and the same. It’s hard to have a more engaged workforce than one that actually owns the business, and that leads to high productivity, faster innovation, better products and services and happy customers. All of this leads to better performance in traditional terms like profit and capital gain.
Employee ownership is rarely considered as an exit option for entrepreneurs starting businesses who usually opt for a trade sale or IPO but I believe this will change over time. Many economists and business advisors still shun employee ownership based on incorrect assertions in the face of the evidence. It’s hard, although not impossible right now to fund employee buy-outs (we looked into it at NixonMcInnes.) I believe that this will change as faith in public companies and the stock market declines and employee-owned companies continue to thrive.
Within employee-owned companies, the structure will look very different to traditional corporations. Power is completely subverted with the most senior executives accountable to the employees instead of external shareholders and analysts who pass power down via the directors and managers.
We may also see organisations that internally look and function more like the loose networked model. They have all of the freedoms to self organise, but the resources of a larger corporation to call upon. Just look at software company Valve who already work in this way and are enjoying enormous success.
I believe that we are set to see a bright future as the short-term profit dominated world is gradually replaced by work with people at its centre.
More on employee ownership in my next post.
Here are 10 ideas that take the principles of organisational democracy to the extreme. In the context of mainstream business today they seem far-fetched but there are organisations in the world who are pushing the boundaries of democracy every year. If you think that these ideas are just too radical for your business, imagine how you will attract and retain the very best employees if you have a competitor who is bold enough to do these things. Will you be able to stand out and remain relevant when someone in your market is doing this? Welcome to the world of extreme organisational democracy.
1 Purpose and Vision
The radically democratic company has a vision and mission that transcends itself and its people. It describes a world that is richer not just for its shareholders but for all of humanity, and the planet. How about a soft drinks company that sets out to alleviate the problem of thirst and water shortage in all of its forms for every human and animal on the planet. Now that would be a real purpose.
Radical transparency can build an incredible level of trust both within an organisation and with the outside world. It shows you have nothing to hide and beyond that you invite criticism and input into your business. How about publishing every single line item of expenditure in the business? How about turning the 20th century wisdom of ‘secrecy and closedness unless there’s a very good reason to do otherwise’ on its head and publish every item of income, profit, loss, remuneration and even decisions by default – available to all employees, and anyone else in the world including competitors to see. Opening a pandora’s box? Certainly. But who wouldn’t trust an organisation brave and open enough to do this? And what new insights would the company gain from having their inner workings opened up for others to analyse?
3 Dialogue & Listening
What would happen if you invested in training every single person – from the cleaners to the CEO in an organisation – to a professional level as relationship counsellors? OK it might fill you with fear to think of a business full of shrinks and endless meetings on comfy chairs with tea and biscuits. But what would the outcome be when you have truly professional standards of listening and understanding other human beings and a deep ability to forge and maintain great relationships. What would it be like to work somewhere like this? What would relationships with customers and other stakeholders become?
4 Fairness & Dignity
Decisions that impact fairness happen every day in businesses, from allocating work to setting pay. Typically its people with power (managers, directors) who make these decisions and others have to live with being treated fairly or not. How about having a rule that states that any decision made in the company which could impact feelings of fairness or dignity to a group or individual must be scrutinised by a peer-selected group of their colleagues. Yes, it will slow down some decisions, but the gains in loyalty and the removal of the politics of favouritism or discrimination will more than make up for it.
Democracies are not soft. As Worldblu puts it, ‘they are crystal clear about who is accountable to whom and for what.’ In most businesses, employees are accountable to their managers. In an extreme democracy, people are accountable to everyone they work with or even influence indirectly, AND the outside world. 360 degree reviews don’t go far enough, especially for senior managers. People need to be able to hold anyone to account where necessary, regardless of who they are. Local communities and even activists can be brought closer to the organisation to create deeper accountability with the outside world. But accountability isn’t about blame. In extreme democracies, accountability creates a tight support network.
6 Individual & Collective
Google and other companies famously have ‘20% time’ where they are able to work on projects of their own choosing for one day per week. How about upping this to, say, ‘100% time’? In other words, employees choose ALL of their tasks and projects. To get this right, the collective mission of the company will have to be not just well-defined and understood, but genuinely bought into so that all work supports the mission. You also need to have good accountability in place from peers.
Throw away the rulebook for dress code, working hours, work location, pay reviews and holiday entitlement. Take a punt on assuming that employees can be trusted to make decisions that are fair to them, the business and their colleagues and customers. Crazy right? Not really when you think that this is how millions of freelancers and self-employed people work. Many of the most talented people in the world opt out of the corporate world because they have more choice by going it alone. It works because they are ultimately accountable and have direct alignment with the purpose of their 1-person business. But if we can create this alignment and accountability in a larger business, then why not give them this freedom and choice? The business that is brave enough to do this may never lose a talented employee to a competitor again.
Google started a change in the corporate world with their mantra ‘Do no evil.’ But that’s just the foundation. ‘Extreme integrity’ is about doing GOOD in all your actions, not just avoiding evil. Imagine a company that has a set of ‘values’ that are more than just filler on the boardroom wall. Values that were created by, and truly believed in by every person throughout the organisation. What if in your culture, every decision and idea is checked against these values as a matter of everyday routine such that it becomes instinctive and automatic. Could you build extreme integrity such that a company can be trusted as much as a close family member or friend? Businesses are made up of human beings with the capacity for enormous integrity so I believe they can.
Do away with the ‘centre’ or ‘top’ of an organisation altogether. A network structure is the ultimate in decentralisation. It is possible to create an organisation that has no ‘top leaders,’ board of directors or even any sort of legal entity. In the extreme democratic future there will be large organisations with the power and impact of large publicly listed companies today that are a mesh of individuals and relationships. The network can swarm together around projects and customer needs, then disassemble and re-form as needed. No formal ‘lines of responsibility’ or control, just agreed roles, responsibilities and accountability that are completely dynamic. Networks are incredibly resilient. That’s why it’s hard to fight al-Qaeda and BitTorrent because there is no ‘head’ to cut off.
10 Reflection + Evaluation
Why not reverse the current trend of business needing to become faster, faster, faster and instead spend more time reflecting and evaluating than actually ‘doing?’ Sounds hopelessly inefficient? Well how about all of the rushed, high-pressured years of ‘doing’ that led to the effective collapse of the global banking system? What would the world look like now if more time had been spent reflecting and evaluating? Perhaps sanity would have prevailed. At Mindvalley, a company in Malaysia, they already hold group meditation sessions to envision the future and reflect on what they are doing. Sounds almost cult-like, and it’s uncomfortable to expose our souls at work, right? But imagine the wisdom and breakthroughs that could surface if we slowed down more, and became more mindful. Perhaps not so crazy after all.