by Aaron Dignan
But this approach to structure may not be right for your context and culture. Your approach may be more or less radical or aligned in spirit but different in practice. That’s fine. My only ideological prescription is that People Positive and Complexity Conscious mindsets have the power to reshape these spaces for the better. Every culture has elements of the traditional, the contemporary, and the idiosyncratic. The canvas is a tool for reflection and sensemaking, not judgment.
The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.
—F. Scott Fitzgerald
Further, this canvas is not intended to be mutually exclusive or comprehensively exhaustive. From a complexity perspective, reducing an organization to its independent parts is folly. The canvas simply highlights the areas that our research tells us are most in flux. Better to start in these dynamic spaces than to remain immobilized by the sheer intractable nature of it all.
At some point in this tour of the OS you’re going to start to wonder, How the hell do I lead my organization through a change as profound as these cases and stories suggest? And what if it doesn’t work? Don’t let that slow you down. The remainder of the book is dedicated to sharing all the lessons my colleagues and I have learned in the trenches with organizations trying to make it to the other side of the rainbow. The transition to a better way of working can be made. But not with the change management they teach in business school. You’ll need every ounce of your People Positive and Complexity Conscious conviction, and more than a few of the tips and tricks you’re about to discover.
As we dive deep into these twelve domains, just remember: The problem isn’t your leaders. It’s not your people. It’s not your strategy or even your business model. It’s your Operating System. Get the OS right and your organization will run itself.
PURPOSE
How we orient and steer; the reason for being at the heart of any organization, team, or individual.
In 1970 Milton Friedman famously said, “The social responsibility of business is to increase its profits.” To put it bluntly, the business of business is business. In the decades since, Legacy Organizations have internalized this to an astounding degree. As we’ve seen, this maxim has led corporations to optimize everything in society—the market, the law, even our attention—in order to drive short-term gain. At the same time, the cost to humanity and the environment has been profound. Unchecked growth has created the conditions for a climate crisis that is unfolding in real time. This singular focus has also led to rampant inequality and a level of worker engagement that is pathetic at best. A mission statement that places shareholder value as the definition rather than the result of success is uninspiring. Jim Barksdale, former CEO of Netscape, once quipped, “Saying that the purpose of a company is to make money is like saying that your purpose in life is to breathe.”
Instead we can elevate purpose above all. Given that we spend so much of our lives at work, wouldn’t it be nice if that work were worthwhile? If it delivered meaning and connection? Take Whole Foods, for instance. If you were to read its “Declaration of Interdependence,” originally authored in 1985 by sixty team member/volunteers, you’d see that the company’s purpose is to “Nourish People and the Planet.” Five words, but a lot of information. Now, what about grocery giant Kroger? Why does it exist? Its stated mission is “to be a leader in the distribution and merchandising of food, health, personal care, and related consumable products and services.” Yawn. Imagine showing up every day for forty years with that as your rallying cry.
Purpose can be socially positive or socially destructive. After all, the key difference between a charity and a terrorist organization is intent. Which is why Evolutionary Organizations aspire to eudaemonic purpose—missions that enable human flourishing. And what of profit? Profit is the critically important fuel that powers our purpose. It’s the air we breathe. Without it we can’t scale our impact or realize our vision. Which is why the vast majority of Evolutionary Organizations are quite profitable. In fact, the socially conscious and purpose-driven companies featured by professor and author Raj Sisodia in Firms of Endearment have outperformed the S&P 500 by a staggering 14x over a period of fifteen years, ten of which were after the publication of the book.
A great purpose is aspirational, but it’s also a constraint. It focuses our energy and attention. It places a boundary around our efforts by saying, Here is where we will build our dream. Too mundane (e.g., shareholder value) and we lack meaning. Too vague (e.g., change the world) and we lack focus. Too concrete (e.g., a computer on every desk) and we can find ourselves rudderless after the moment of victory. Done well, purpose unites us, orients us, and helps us make decisions as we go.
Thought Starters
Fractal Purpose. Every organization has a purpose. But not every organization ensures that its purpose is fractal—that it shows up at every level. While we want to avoid bureaucratic alignment exercises, teams should have a coherent narrative about how their efforts serve the whole, even if they’re intentionally pursuing a divergent path. The team’s purpose serves the same function as the organizational one. Even individual roles have a purpose that, if properly articulated, eliminates the need for lengthy job descriptions. If someone who onboards employees truly delivers “members who are informed, connected, and ready to contribute,” do we really need to specify the how?
Steering Metrics. Legacy Organizations are obsessed with measurement, often using it as a form of control—to find and punish weak performance. But when we obsess over metrics, we fall victim to Goodhart’s law, which states that a measure that becomes a target ceases to be a good measure. Why? Because human beings will manipulate the situation in order to move the numbers. Instead, we should think of metrics as guides for steering toward our purpose. If we make an app that has a purpose of helping people lose weight, then average time in app is interesting, but only insofar as playing with the app translates to healthier users. It’s also worth pointing out that steering metrics should, in fact, result in steering. You’re looking for quantitative and qualitative signals that will help you sense and respond. If you aren’t making decisions and taking action based on your metrics, you’re doing it wrong. At my company we used to track how many followers we had across social media. We got worked up about it. Then one day we asked ourselves, Have we ever made a change based on these metrics? Nope. We stopped tracking them that day. Last time I looked they were still going up.
Proxy for Purpose. Don’t confuse your customer with your purpose. Customer obsession has become a popular theme of late, modeled to the extreme by Jeff Bezos and Amazon. And it’s needed. To ignore the customer or lose sight of their needs, as many large corporate teams have, is deadly. But simply making the customer our purpose is also dangerous. If we act on customer feedback without judgment, we run the risk of regressing to the mean, to our basest tendencies. Henry Ford’s supposed quip “If I had asked people what they wanted, they would have said a faster horse” illustrates the idea that sometimes our purpose is to take humanity to new places, places they can’t yet see for themselves. The truth is that our customers are a proxy for our purpose. They’re our partners in solving the tension between our virtuous intent and their actual needs. Whole Foods can’t tell if they’re nourishing people writ large. But they can tell if more people chose to buy organic fruit last week, or purchased items that contained less sugar, or submitted more positive feedback about their experiences in the store. And that information might be enough for the brand to take a few more steps in the right direction.
Purpose in Action
Essential Intent. Purpose statements, even when they’re done well, are sometimes hard to translate into the here and now. In Greg McKeown’s best-selling Essentialism, he put forth the breakthrough notion of an essential intent, a goal that sits between your ultimate vision and your quarterly objectives. He says that an es
sential intent “is both inspirational and concrete, both meaningful and measurable. Done right, an essential intent is one decision that settles one thousand later decisions.” Think of essential intent as a stepping-stone. If we achieve it, we move further along our path to purpose. Tesla’s mission is “to accelerate the world’s transition to sustainable energy,” which doesn’t really help an engineer make a decision today. If their essential intent is to create the first affordable and desirable electric car—and ship 500,000 of them before they run out of money—that gives everyone involved a lot to go on. They’ll make trade-offs to achieve affordability, but not at the expense of desirability. And they’ll focus on production, knowing that delivery is make or break. Of course, time will tell how well they deliver on these ideas.
Ask every team in your organization to articulate their essential intent. What has to happen in the next six to twenty-four months to keep us moving toward the organization’s purpose? Share and discuss over drinks one afternoon. Resist the urge to make them all fit together perfectly. Instead, notice and discuss divergence and convergence. Offer everyone the chance to revise and refine their essential intents regularly, and keep them somewhere everyone can access them.
Six Months or Thirty Years. Here’s a slight twist on the same theme. In 2012, around the time Facebook reached a billion users, it published a little red book for employees that contained a lot of the stories, principles, values, and folklore of the business, memorialized for the next generation. Tucked inside was a page that read, “There is no point in having a 5-year plan in this industry. With each step forward, the landscape you’re walking on changes. So we have a pretty good idea of where we want to be in six months, and where we want to be in 30 years. And every six months, we take another look at where we want to be in 30 years to plan out the next six months.” While Facebook may have changed these time frames over the years, the spirit of the exercise remains. Clarify your purpose so that you can see it three decades down the line. Then tighten up your road map for the next half year.
Purpose in Change
While OS change is anything but linear, we have found that other dimensions are often dependent on a clear and compelling purpose. For example, distributing authority without clarity on what we’re trying to accomplish can lead to empowered people launching projects aimlessly. This results in emergence at best and chaos at worst. Don’t start that way. Ensure that any group in transformation—whether it be a team, a unit, a function, or the whole organization—has a strong sense of their collective purpose.
Questions on Purpose
The following questions can be applied to the organization as a whole or the teams within it. Use them to provoke a conversation about what is present and what is possible.
What is our reason for being?
What will be different if we succeed?
Whom do we serve? Who is our customer or user?
What is meaningful about our work?
What measures will help us steer?
How does our purpose help us make decisions?
What are we unwilling to compromise in pursuit of our goals?
Can our purpose change? If so, how?
What does it mean to be People Positive about purpose? Recognize that motivation is connected to a sense of purpose, meaning, and belonging. Take the time to discuss the connection between each individual’s calling and the organization’s collective purpose.
What does it mean to be Complexity Conscious about purpose? Accept that purpose is recursive—it shapes us, and we shape it. Purpose enables freedom and autonomy by ensuring coherent action. And yet it’s also an emergent property of the collective. It may morph and shift as we learn and grow.
AUTHORITY
How we share power and make decisions; the right to make decisions and take action, or to compel others to do the same.
When you join a Legacy Organization, the default assumption is that you don’t have the right to do anything unless you are given permission. This stems from a theory of control that believes the best way to eliminate risk is through compliance. It all starts innocently enough. In the early days, everyone scrambles to get the business off the ground. If they succeed, the established enterprise attempts to protect itself by standardizing approaches, policies, and structures—it discovers and mandates the one best way. Over time, red tape builds up until hardly anything interesting can be done without three different approvals. Only very senior managers and people willing to lose their jobs are able to act freely. The rest of the workforce, unauthorized to solve their own problems, develops a sense of apathy and learned helplessness. Engagement dips. Mistakes are made. And more red tape is wrapped around the handle. Stories of mistakes and failures create a culture of fear. The sense at the bottom is that leadership doesn’t trust anyone. The sense at the top is that even more compliance is needed—that everything must be specified.
Meanwhile, in Seattle, a game developer called Valve produces regular hits and industry-defining products and platforms. The company generates more than a billion in revenue with a head count of around four hundred people, making it more profitable per employee than almost anyone else. Valve accomplishes all this with a highly unconventional approach to authority. It simply lets its employees decide what to work on. No bosses. No reporting. No oversight. Just “vote with your feet” by choosing projects and tasks that you think are worth your time. There are no official job titles or descriptions at Valve, just two high-level expectations that the company outlines in its internet-famous employee handbook. First, it asks everyone to help find more stunning colleagues. Everyone is a recruiter. And second, it points out that every desk has wheels on it. The message is clear: go find something meaningful to do.
Evolutionary Organizations ensure that everyone has the freedom and autonomy to serve the organization’s purpose. The default assumption here is that you can do anything, unless a specific policy or agreement prohibits it. We’re starting from a position of trust. Rather than centralizing power in a few senior positions, we aim to distribute authority as much as possible to teams and individuals at the edge, where the action and the information are. Teams take full responsibility for their work and their way of working. If something is causing tension or stopping them from achieving their purpose, they can attempt to change it, whether it’s a line of code or a massive equipment purchase. This is made possible by new forms of decision making that leverage purpose, principles, consent, and advice to ensure that the choices being made are informed and sound. That means taking the time to define the decision rights held by each member, role, and team. Who can make a decision and how it should be made are critical components of your OS, and can’t be left to chance.
What’s being asked of our colleagues here is no small feat. The emotional maturity and professional mastery required are significant. But, counterintuitively, more freedom leads to more learning, and more learning leads to better performance. Of course, when everyone is used to taking orders, they may need a nudge. When David Marquet took over the USS Santa Fe—a nuclear submarine and the worst-performing ship in its fleet—he vowed to never give another order, only to share his vision for the ship. Every request for orders from the sailors under his command was met with “Well, what do you intend to do?” And at first they were unsure. No one had ever asked. But in time, they came prepared. “Captain, I intend to submerge the ship.” Marquet would simply reply, “Very well.” He primed his people to think for themselves and claim the freedom and responsibility to run the ship. In the years that followed, the USS Santa Fe went from worst to first, setting the bar for retention, operations, and promotions.
How many people in how many roles lack the authority they need to do their jobs well? In a dynamic and fast-changing world, preventing people from using judgment and making decisions is just too slow. A client recently told me the story of an initiative th
at required sixteen individual sign-offs before proceeding. This is our addiction to control masquerading as “risk management.” What firms like this fail to recognize is that the true risk they face is that bureaucratic immobilization will make them irrelevant.
Thought Starters
Freedom to Fail. The vast majority of leaders I meet believe that their job is to ensure perfect execution. Mistakes are verboten. Failure is unacceptable. And so we use our considerable experience (and energy) to run our teams like well-oiled machines. There’s only one problem: they are not machines. They are complex, adaptive systems—human systems—in an age of rapid change. By focusing on execution, we limit the potential for growth in the system. By making ourselves indispensable, we make our teams and organizations less resilient. In complexity, our job isn’t perfection, it’s building a culture that is always learning. And that requires letting go. Of course, clients often respond that they can’t trust their teams to make decisions and take action. I remind them that one of two things is true: either they’re wrong and their teams are capable of far more than they realize, or they’re right and they need to make an immediate change. What is not okay is to linger in a state of distrust and second-guessing. Have the courage of your convictions, one way or the other.
