Brave New Work

by Aaron Dignan

  In the context of work, the implications are pretty simple. Increase autonomy, and motivation thrives. Decrease it, and motivation erodes. In a study by Cornell University following 323 small businesses, those that offered autonomy grew at four times the rate of top-down, control-oriented firms and had one-third the turnover.

  Of course, with great power comes great responsibility. In 1990, on the heels of the Gulf War, orders at FAVI took a nosedive. Zobrist knew there wouldn’t be enough work to go around, and the easiest solution would be to lay off the temporary workers who made up 10 percent of the company’s workforce. But he could imagine how his workers might react. So he stood on a stack of empty pallets and addressed the entire factory. He asked what could be done that might preserve the commitments they’d made to these temporary workers and one another. After a hearty session of Q&A, an operator named Gerard piped up, “And if we stopped working for one week [per month] without being paid, could we keep temporary workers longer?” Indeed, Zobrist confirmed, that would help. He called for a show of hands. The vote was unanimous—what amounted to a 25 percent pay cut to preserve the integrity of the community until the lull in orders subsided. Shortly thereafter, it did.

  We cannot do the best work of our lives under the auspices of an OS that presumes our stupidity, our laziness, and our untrustworthiness. When it comes to people, in many ways you get what you design for. Evolutionary Organizations know that if you treat people like mercenaries, they will become mercenaries. Treat them like all-stars and they will become all-stars. To be People Positive is to assume and expect the best of everyone.

  COMPLEXITY CONSCIOUS

  What does it mean to be Complexity Conscious? If you ask executives why the old ways don’t work as well as they used to, you’ll hear one response more than any other: complexity. Google searches for the term “VUCA”—an acronym that stands for volatility, uncertainty, complexity, and ambiguity—are up almost 1,000 percent since 2004. These words seem to show up in almost every board meeting, earnings call, and leadership retreat. Somehow, complexity has become a catchall for our problems. Subprime mortgage crisis? Complexity. Syria? Complexity. Facebook’s role in the U.S. election? It’s complex. Suddenly the world is full of surprises.

  We know what complexity feels like. But most of us don’t know what it actually means. We use words such as “complicated” and “complex” interchangeably, as synonyms for anything we find confounding.

  Picture the engine inside a car. Is it complicated or complex? Make up your mind, and hold that thought.

  When I challenge audiences with this question, roughly half the people confidently vote for complicated, while the other half vote for complex.

  Now, what about traffic? Complicated or complex?

  Again, I ask for a show of hands. Now, more sheepishly, about a third of them raise their hands for complicated. Another third vote for complex. The remainder suspect my trickery and keep their hands down. Sitting with their confusion, everyone starts to realize the point: we don’t know what these words mean.

  Contrary to popular opinion, among people who study systems theory, “complicated” and “complex” are distinct words with precise meanings. The engine inside a car is complicated. A complicated system is a causal system—meaning it is subject to cause and effect. Although it may have many parts, they will interact with one another in highly predictable ways. Problems with complicated systems have solutions. This means that, within reason, a complicated system can be fixed with a high degree of confidence. It can be controlled.

  This is not to say that a complicated system can’t be confusing or inaccessible to the layperson. Quite the contrary. Understanding a complicated system, such as an engine or a 3-D printer, requires specialized expertise and experience. Here, experts can detect patterns and provide solutions based on established good practice. This is the domain of the mechanic, the watchmaker, the air traffic controller, the architect, and the engineer.

  Traffic, on the other hand, is complex. A complex system is not causal, it’s dispositional. We can make informed guesses about what it is likely to do (its disposition), but we can’t be sure. We can make predictions about the weather, but we cannot control it. Unlike complicated problems, complex problems cannot be solved, only managed. They cannot be controlled, only nudged. This is the domain of the butterfly effect, where a small change can lead to something big, and a big change might barely make a dent. Here expertise can be a disadvantage if it becomes dogma or blinds us to the inherent uncertainty present in our situation.

  Complex systems are typically made up of a large number of interacting components—people, ants, brain cells, startups—that together exhibit adaptive or emergent behavior without requiring a leader or central control. As a result, complex systems are more about the relationships and interactions among their components than about the components themselves. And these interactions give rise to unpredictable behavior. If a system surprises you, or has the potential to surprise you, it is likely complex. Software is complicated. Creating a software startup is complex. An airplane is complicated. What happens between the people on board is complex. An assault rifle is complicated. Gun control is complex. Building a skyscraper is complicated. Cities are complex.

  And what about the organization itself? When ten or ten thousand people come together around a mission, what is the nature of that collective? Is it a complicated system that an expert can fix or change at will? Or is it a complex system—full of uncertainty and surprises—that we must interact with to understand and shape? The answer is intuitively obvious. While many of the activities and outputs of organizations are indeed complicated, the organization itself is complex. Accordingly, organizational culture isn’t a problem to be solved; it’s an emergent phenomenon that we have to cultivate.

  It is entirely possible that you get unpredictable behavior out of predictable rules.

  —Frank Heppner

  The mainstream view is that performance is the result of compliance. If we can just get everyone to do exactly as we say, we will achieve our goals. This translates into a culture buried in governing constraints—rules, policies, or processes for every imaginable scenario that dictate exactly what should be done. But Complexity Conscious leaders view performance as the result of collective intelligence, emergence, and self-regulation. If we can just create the right conditions, everyone will continually find ways to achieve our goals. This translates into a culture that is made coherent and free by enabling constraints—agreements that create freedom to use judgment and interaction in the vast majority of situations.

  We fail to recognize this on a massive scale. How many reorganizations and restructurings are rolled out with the sentiment “This time we’ve got it right”? How many leadership training courses have been steamrolled over armies of managers? How many companies have tried to change their cultural values with posters and polo shirts? Every five-year plan, every annual budget, and every fixed target is a public confession that we don’t understand the nature of our organizations. Our desire for control blinds us to the truth.

  Say you’re the CEO of a company where travel spending has spiraled out of control. Your CFO is pushing for a solution. What do you do?

  You could approach this issue like a signal-controlled intersection. Institute a travel freeze. Create a policy that sets a spending cap on short, medium, and long-haul travel. Require written manager approval on all travel before it’s booked. Partner up with a booking engine that can enforce this policy and offer only preferred airlines and hotels. You could set up an audit committee to flag violations and penalize those employees. That could work.

  Or you could try to create a solution that is a bit more like a roundabout. Share total travel spend by team (or by individual) with everyone in the company transparently, so they can see how they compare. Share industry averages and historical averages for your firm. Ask for everyone’s help in optimizing spend, il
lustrating how it will drive overall profitability (and thus profit sharing, if you offer it). Start a practice of frequent travelers sharing travel hacks and pro tips at your all-hands meeting. Model what good choices look like with your own behavior. Then stand back and see what unfolds.

  To the legacy leader, everything still looks like a factory. And all our problems can be fixed if we work long and hard enough. But our bureaucracies are no match for complexity. They can’t handle the surprises that we face every day, and worse, they’ll never surprise us with an unexpected breakthrough. If we continue to treat the complex like it’s complicated, we’ll spend our careers frustrated that control is always just beyond our grasp. Gripping so tightly, we’ll forget about the magic that can happen when we let go.

  BEING BRAVE

  You may know the story of Dick Fosbury, who at just twenty-one years of age won the Olympic gold medal for the high jump by going over the bar backward and headfirst. His unorthodox technique, known as the “Fosbury Flop,” would change the sport forever. No world record holder since 1978 has used anything but the flop.

  What you might not remember, though, is how his competition initially responded. By the time of the Olympics, his teammates in Oregon had been attempting Fosbury’s move for two years with no success. Even after his victory, the general sentiment was that this bizarre method worked, but only for Fosbury. It would never work for them. I face this every day when I share stories of Evolutionary Organizations with leaders struggling to unlock the potential in their teams.

  “That works for Buurtzorg, but it will never work for us. Must be a European thing.”

  “Netflix is a technology company. Of course they can do that.”

  “I don’t know how Handelsbanken gets away with that. Our regulators would never let us work that way.”

  Why do we reject innovative approaches when they are clearly better? Behavioral economists have a name for this: the status quo bias. Think of this as our tendency to like things to stay the way they are. For example, imagine you’ve inherited a large sum of money and have to decide how to invest it. Here’s the twist: It’s already invested in a specific portfolio of stocks and bonds. Will you make a change? Studies show you probably won’t. The same is true for employee participation in 401(k) savings plans. The investment company Vanguard found that if these programs were opt-in by default, participation after six months on the job was only 34 percent. But if the program was opt-out by default—the equivalent of unchecking a box—participation jumped to 90 percent. We may like to think we’re making rational choices all the time, but the fact is we’re biased. We prefer to stick with what we’ve got.

  It’s not surprising, then, that our way of working has a certain inertia to it. The status quo bias adds to the illusion that the current way is the only way. We strive for improvements—better bosses! simpler budgets! fewer layers!—but they’re inherently incremental. We tweak the recipe without ever questioning whether we should make an entirely different dish.

  But incremental improvement can be a trap. Scientific Management reveals only the best way to do what we’re already doing. True innovation often requires a departure from the safety of the status quo. Astro Teller, captain of moonshots at Alphabet’s X (formerly Google X), puts it this way: “It’s often easier to make something 10 times better than it is to make it 10 percent better. . . . Because when you’re working to make things 10 percent better, you inevitably focus on the existing tools and assumptions, and on building on top of an existing solution that many people have already spent a lot of time thinking about . . . But when you aim for a 10x gain, you lean instead on bravery and creativity—the kind that, literally and metaphorically, can put a man on the moon.” Sometimes it’s easier to start with a blank piece of paper and ask, What are we trying to do? But to do that, we have to release our white-knuckle grip on the present.

  Which brings us to one of the most important things leaders and teams need to internalize: our way of working is completely made up. This isn’t the way it has to be, or even the way it always was. Our way of working was created, brick by brick, by gurus, industrialists, robber barons, unions, and universities—generations of managers and workers who came before us. We can thank them for what is still serving us, and we can change the rest.

  Statistician George Box once said, “All models are wrong; some models are useful.” As we forge ahead, I invite you to discover what is useful to you. You don’t have to try everything I present to unlock a better way of working. You just have to go far enough to escape the gravity of the status quo. You have to go over backward and headfirst, even if it feels a little uncomfortable. There are ways to get the support you’ll need without politics or propaganda. There are ways to start small and strong. This is your chance to do the best work of your life. Don’t hesitate.

  Part Two

  THE OPERATING SYSTEM

  94% of problems in business are systems-driven and only 6% are people-driven.

  —Attributed to W. Edwards Deming

  Becoming a People Positive and Complexity Conscious organization can be overwhelming. It’s hard to know where to begin, or what matters most. But through the careful collection and tagging of hundreds of unconventional practices from around the world, I found that Evolutionary Organizations are converging on twelve domains as the proving ground for the future of work. It is in these spaces that the courageous few are taking risks. And it is in these spaces that struggling enterprises will likely find their faults. Together they form a canvas—an Operating System Canvas—through which we can see and shift our organizational identity.

  The OS Canvas

  PURPOSE

  How we orient and steer

  AUTHORITY

  How we share power and make decisions

  STRUCTURE

  How we organize and team

  STRATEGY

  How we plan and prioritize

  RESOURCES

  How we invest our time and money

  INNOVATION

  How we learn and evolve

  WORKFLOW

  How we divide and do the work

  MEETINGS

  How we convene and coordinate

  INFORMATION

  How we share and use data

  MEMBERSHIP

  How we define and cultivate relationships

  MASTERY

  How we grow and mature

  COMPENSATION

  How we pay and provide

  Each domain of the OS Canvas asks us to consider an aspect of our organization more deeply than we typically would. For example, what is authority? How should it be distributed? And how does that manifest (or not) in your culture? How do you make decisions? How should you? Is your approach to authority a signal-controlled intersection or a roundabout? Is it People Positive and Complexity Conscious? The canvas forces us to confront the deltas between our assumptions, our beliefs, and our reality. If we say we want to hear every voice but spend most of the day talking over others, that tells us something. If we say we value agility, but every decision requires a dozen approvals, the opportunity is clear.

  In the pages ahead, we’ll explore how each of these domains is changing, the provocateurs that are shaping them, and the emerging principles and practices they’re pioneering. Each domain is broken into five parts: an overview that introduces the concept, thought starters designed to challenge your assumptions, ways to take action and try something new, insights on navigating the domain in change, and questions to consider
as you reflect on and reinvent your own OS.

  You may have noticed that the domains of the canvas are generic and value agnostic. That’s intentional. We want to ensure that any organization can leverage the canvas regardless of its organizational philosophy. The Morning Star Company, for example, has found huge success in the domain of structure by revolutionizing traditional job titles and roles. Every year, four hundred full-time employees at the world’s largest tomato processor write their own job descriptions. They do this by authoring a Colleague Letter of Understanding, or CLOU, that contains their commitments to and agreements with one another. CLOUs are reviewed and challenged by colleagues who offer advice, not mandates, about what should change. Since this document changes every year, there’s no need for traditional job titles or promotions. But that’s okay, because everyone adjusts their own salary as they learn and grow. The math works out. While their industry grows around 1 percent a year, Morning Star has averaged double-digit revenue and profit growth for the past twenty years. Today it generates more than $700 million in revenue. In an industry that normally treats workers as expendable, it has managed to create a way of working that rivals any unicorn for innovative and human-centric design principles.