How the Facebook generation wants to be led

Interesting results from a Forbes roundtable discussing how young professionals want to be led at work. They boiled it down to five principles:

1. Empower us; don’t micromanage our talent

2. Sponsor us; serve as role models

3. Allow us to manage our own brand; don’t define us

4. Trust us; don’t question our intentions

5. Challenge us; don’t marginalize us

I think you could sum it up as just one thing: “Set us free” which is exactly the core concept of democratic business.

This is further evidence that workplaces based on democratic principles are the best placed to attract, retain and get the most out of the smart young people entering the workplace now.

How to be an awesome democratic manager in an old-school company

I usually write about transforming entire businesses into democracies. What if you don’t have the power to do this, but would like to realise the benefits to productivity and happiness in your team that democracy brings? Here are some tips for managers.

Old-school companies are secretive by default and only share information with employees when there’s a clear need. This breeds distrust because people fear the unknown. Democracies do the opposite. As a manager in any organisation you can adopt this principle, even if you can’t be as open as you would like to be. Go out of your way to be as transparent as possible about financial matters, strategy and decisions. Look for instances where information is not being shared, but not made explicitly secret and show employees what’s really going on in the company. Transparency breeds trust and avoids conspiracy theories.

Sharing your problems and opening up decision making is another powerful way to build trust. As a manager you don’t have to have all of the answers and solutions. A strong leader isn’t afraid to say ‘I don’t know’ and by doing this, you invite good ideas and a feeling of involvement from your team, plus decisions made with their input will be supported and faster to execute. Involve your team in the things that you are working on and you might be surprised at how much they can help. This is especially true of decisions that directly affect the people on the team.

Understanding what really motivates people at work is well proven by social science but little known to most businesses. Focus your team on these three principles and they will be happier and more motivated at work:

  1. Autonomy: People are most motivated when they have control over how to do their own work. Work with your team to decide what needs to be achieved, then get out of the way and allow them to figure out how to do it. Be there for them as a facilitator, helper and supporter. Not a supervisor.
  2. Mastery: Don’t get obsessed with objectives for performance. Whilst you will probably need success metrics and have to achieve some concrete goals, these are like a scorecard, not a strategy. Instead focus most of your attention on objectives for learning and improving your team’s skills on a path towards mastery. This is extremely motivating and a far more effective strategy for actually getting the best performance.
  3. Connectedness: People are motivated when they are contributing to a higher purpose, together with others. Discuss with your team how their work is helping to make the world a better place for people, societies or the environment (hopefully there is some higher purpose other than making money, otherwise it’s probably time to find a new job!)

Building an informal recognition programme is another very simple but powerful motivator. Take frequent opportunities to recognise great performance and effort as and when it happens, and in person as much as possible. Be very specific in feedback. Not just a ‘great job’ or ‘thanks’ but say exactly what they did well and why it’s appreciated. It has to be genuine. Lead by example to build a culture of feedback in your team by actively soliciting feedback from the team. Reward after the event, not by dangling carrots.

Encourage your team to create its own rituals like the Church of Fail or Ringing the Bell of Awesomeness. This helps you to build your own culture-within-a-culture based on better, more positive principles.

Lobby for change in the organisation. You can start by suggesting that one or two employees come to the board meeting each month, or if you’re not on the board, suggest that regular employees can come along to other meetings that are usually ‘above their paygrade’ to see what’s going on and provide input. The board or senior team will gain from the ‘reality check’ of having regular employees present, and it breaks down fear of ‘them upstairs.’ Question secrecy, making requests for more transparency and communication.

Whatever happens, and no matter how much corporate crap you’re putting up with, don’t ever allow yourself or team to fall into a spiral of negativity and complaining. Become a tribe of happy rebels, not whingers. Push the boundaries of the prevailing culture as far as you can; do things differently within your domain; and be a catalyst for change.

If you begin to work with democratic principles within your team or department, others will notice how much more productive, motivated and happy your team is. When they ask you what your secret is, this might just kick-start a change to make the whole organisation more democratic.

Good luck, and please post your own experiences, questions and ideas in the comments. I’m sure there are lots of other things you can do to be a great manager in a difficult culture.

I have a new job: Helping a billion people to work in freedom

I’m excited to let you know that I have been asked by Worldblu, the organisation that certifies the Most Democratic Companies in the World list, to help with their mission of seeing one billion people in the world working in free and democratic organisations.

As a BluAmbassador I will be visiting companies and speaking at events, explaining how democracy makes organisations more profitable, resilient, happier and able to do more good in the world. I will be speaking from my first-hand perspective of creating a democratic company myself, as well as sharing Worldblu’s extensive expertise on the subject.

Traci Fenton, the founder of Worldblu is one of the most inspiring people in the business world today. Her energy and passion for democracy is unbelievably infectious and I just knew even a year or more ago that we’d end up working together. I’m so excited to be getting started.

If you are interested in booking me to speak at your company or event from late September 2012 onwards then please see my speaking page or just get in touch.

The 4 most important things I have learnt about the future of business

Here are the big lessons I have learnt from the four books that have been most influential to me in my career in business.

1. Being nice is the best approach to business.

I began my business career with a hang-up that business is a selfish game and that success has to be at the expense or failure of someone else. I believed that people who had succeeded in business had all done so by trampling on others on their way up. I don’t know where this belief came from and I feel kinda embarrassed about it now, but it wasn’t until I read Stephen Covey’s 7 Habits of Highly Effective People back in 2002 that I finally got it. Being nice pays. This book spawned so many business clichés like ‘WIN/WIN‘ and ‘Synergize‘ but a cliché is only a cliché when it has been so over-used that it loses its original meaning, and this book looks deeply at what it means to be a good and principled person. It’s as relevant today as it was when it was first published in 1989. Sounds quaint? Perhaps when a company like Google has a guiding principle of ‘You can make money without being evil’ then perhaps this is still a lesson that many in business still need to learn.

2. Giving power to the people is the ultimate business strategy.

In 2003 when Will left a print-out of this article from Inc magazine on my desk with the words ‘Fucking amazing – READ THIS’ emblazoned on it, I was about to discover the concept of organisational democracy – giving power and freedom to the people in a company instead of controlling them from the top-down. It wasn’t long before we both read Ricardo Semler’s book Maverick – a story about changing Semco, a medium-sized command-and-control company into a large, democratic powerhouse. We implemented many ideas from Semco as we built NixonMcInnes like having open seats for ordinary employees to attend board meetings, voting on company decisions and open book accounting so there are no secrets around anything money-related. Fast forward a decade and organisational democracy is still generally seen as quite extreme, yet more companies are finding democracy is the key to unlocking the potential of their people to drive the entire business forward.

3. The current capitalist system is fundamentally unfit for purpose and doomed. But there is a better way.

In the mid-naughties, I began following economist Umair Haque’s blog. What I will always remember from this time were his posts about the coming economic crisis. He called it the Macropalypse – the collapse of the global macroeconomic system. This was way before mainstream media and most politicians picked up on the crisis and in fact many didn’t see what was inevitable until it actually happened in late 2008. Haque still argues today that the crisis was systemic, not just cyclical and that we have not fixed the underlying causes of failure, merely propped up our failing institutions and systems through enormous debt provided by ordinary people. His thinking is laid out in his book The New Capitalist Manifesto which not only explains the causes of the problem, but sets out a wonderful and optimistic future of a better and sustainable capitalist system, using examples from large companies today like Walmart and Nike who have a very long way to go, but are starting to work towards this future in exciting new ways.

4. Employee ownership is the logical conclusion of democratic business.

When I read David Erdal’s Beyond the Corporation recently I had a sudden realisation that most democratic companies, whilst giving a lot of freedom and power to their people, are actually benevolent dictatorships. This is because the people’s freedom and power is not enshrined as enduring, inalienable rights, as they might be in a country with a democratic constitution. This means that the owners of a business still hold all of the ultimate power and can change the rules of the game on a whim, or sell out to new owners who can revoke their rights. The current situation is deeply engrained in our current economic system where there are business owners who have all of the rights and control, and then employees who are merely rented like machinery in return for a salary, with very few rights. Most of us accept this as ‘the way things are’ but there is no reason why the current system must endure forever, and with employee-owned businesses like John Lewis, Arup, Carl Zeiss and the Mondragon Network offering evidence of the power and success of employee-ownership I believe that this is the future of mainstream business. In fact I have a hunch that it could be a sweetspot between the socialist ideals of a very fair society with workers ‘controlling the means of production’ and capitalism’s promise of innovative, free trade without the need for a large clunky state.

So that’s my list. What are the books that have given you your big lessons in business?

Networks and employee ownership: The future of the corporation

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.

Building a team from the bottom up

I’m working on a business plan for a new venture at the moment which I’m hoping to get going next year once I’m settled back in the UK (disclaimer: all plans are subject to change, especially whilst I’m still travelling!) I will make the plan publicly available for comment soon (the anti-non-disclosure-agreement) but I can tell you now that it includes setting up a large cafe/restaurant.

I’ve got a fair bit of entrepreneurial experience, but the hospitality business is completely new to me. So I figured that the first team member I need to get on board is a restaurant manager. Then I got to thinking, I wonder if you could run a restaurant without a manager at all and instead share the responsibilities with everyone working there. It would be unusual (I think) for a large restaurant and you would need to carefully implement some democratic systems and processes to make sure that the place runs smoothly, but I think it could be do-able.

My next thought was that to build a new team, instead of starting with the traditional approach and recruiting a manger first who then hires the rest of the team, how about hiring some junior employees first then working with them on the business plan (after all, they will be in the front line of actually delivering it and I’m sure will have some brilliant idea of their own too.) Then together with them you could talk about the management responsibilities and see if they could be effectively distributed. And if not, then the employees could hire their own manager. Not as their boss, but as an equal, just with a different set of responsibilities.

I think the benefits of this could be enormous. The employees would see that they really are the most important people in delivering the service to customers. They’re not just working ‘for’ a manager who has the real responsibility. And who knows how it might lead to a better team and customer experience if all front-line staff share the responsibilities and power of a manager.

What do you think? I would particularly like to hear from anyone who has worked in a restaurant but all views are welcome.

10 crazy town ideas for extreme organisational democracy

Crazy Frog

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.

2 Transparency

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.

5 Accountability

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.

7 Choice

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.

8 Integrity

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.

9 Decentralisation

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.

DALAI LAMA