to what extent can staff be trusted?


In my last post I introduced the idea that organisations reflect the evolving consciousness of the societies in which they operate. The main ideas come from Frederic Laloux’s recent book Reinventing Organisations. This post is about one of the attributes we can expect to characterise organisations of the future, self-management.

So what does self-management look like?

In parenting, dad and mum know best. At work, ‘bosses know best’. It is held to be a self evident truth. At least operational processes are based on that presumption. Think about it. But increasingly we know that intelligence does not increase as one gets promoted, even if power does. As our organisational consciousness develops, it is not surprising that there are some emerging reactions to the concentration of power at the top of the pyramid. Progressive managers are embracing employee empowerment in one form or another. Managers are beginning to appreciate the value in consulting those who are affected by their decisions.

But according to Laloux, ’empowerment’ is a pale refection of what authentic self-management looks like. Empowerment still operates within a pyramid hierarchy with those higher up delegating power down the line. In the future, he argues, power will not be understood as a zero sum game. Self-managed teams will have the authority to make ‘all the calls’. Power will be distributed with an abundance mentality.

It’s not fantasy, many successful businesses already operate with self-managed teams. Laloux tells stories from his in-depth research with 11 organisations from around the world. These are not small innovative professional services firms (there are countless hundreds of these including the one I was involved with for many years) where innovation and creativity are relatively easy. His case studies are across industries. He discounted case organisations  if they were less than five years old and had fewer than 100 employees. Most actually had thousands.  Some of the patterns, the common observations of companies with self-management are:

  • They operate almost exclusively with autonomous teams, often as small as 10 or 12, occasionally more, up to 40 or 50.
  • Middle management was eliminated
  • There were no or minimum corporate services (eg AES which operates in 31 countries and with 40,000 employees has just 100 people in a central office with no HR, no central maintenance or safety departments, no purchasing, no internal audit.)

Note that these were practices that were adopted intuitively by these companies without following any management blueprint. If the fundamental assumption was that people self organise and make decisions for the common good, these are the natural consequences. If the foundational belief that has formed the power structures of organisations we are most familiar with today is ‘bosses know best’, what is the foundational conviction behind self management?

How about, “you get better outcomes when everyone’s intelligence is engaged.”?

At Sun Hydraulics there is no project management function, process, protocol or staff. They have taken Google’s apparently radical ‘20% of your time is your own to work on projects’ custom and applied it to the whole week.

There is no master plan. There are no project charters and no one bothers with staffing on projects. Project teams form organically and disband when work is done. Nobody knows if projects are on time or on budget, because for 90% of the projects, no one cares to put a timeline on paper or establish a budget.” (p84)

This is not being slack. This is a fundamentally new way of running organisations. Laloux says,

If the notion of trusting the collective intelligence of a system seems risky or outright foolish, think about this idea: the idea that a country’s economy would best be run by the heavy hand of central planning committees in Soviet style has been totally discredited. We all know that a free-market system where a myriad of players pick up on signals, make decisions, and coordinate among themselves works much better.” (p85)

Tony Hsieh (pronounced Shay) is the CEO of Zappos. Tony was fascinated by research that indicated every time a city doubles in size, innovation or productivity per resident increases by 15%. But when organisations increase in size, innovation decreases. He built Zappos into a company that runs more like a city than a bureaucracy. Zappos is a glimpse of the future.

The self management that will shape our organisations in the future is not a dialling up of employee empowerment. It will reflect an emerging consciousness that the unequal distribution of power in an organisational hierarchy expresses a stage of collective development unfit for future challenges and opportunities. Most companies are already experiencing the inability of current business practice to respond quickly enough.

Is this idea that employees in an organisation can be trusted, without all the conventional supervision controls, far fetched? Like most things, it can seem so before the tipping point. An increasing number of organisations are paving the way and I am confident it is the way of the future because there is so much pain associated with the way things currently work. When there is this much pain, change is inevitable. Every organisation I work with wants to be agile. But hierarchical decision making structures are cumbersome and centralised planning takes so much time and resource.  Companies that maintain these ways of doing business will become obsolete more quickly that we imagine. Self-management is a significant part of the solution.

Those in current positions of power will resist the shift. They have spent their careers climbing the pyramid, to dismantle it undermines their view of how the world should work. But unless leaders embrace the change, they will be putting their organisations under high risk over the medium term.