Brave New Work

by Aaron Dignan

  Minimum Viable Policy. Maximizing freedom means minimizing policy. In their book Rework, Jason Fried and David Heinemeier Hansson of Basecamp warn that isolated incidents can too easily lead to bureaucracy. “Policies are organizational scar tissue. They are codified overreactions to situations that are unlikely to happen again. They are collective punishment for the misdeeds of an individual.” This is governing for the exception rather than the rule. At Basecamp, they institute a new policy only when something negative happens over and over again. Ask yourself, What’s the smallest amount of policy required to protect us while preserving the flexibility to learn and act with judgment?

  Decision Discipline. There is a surprising inconsistency in Legacy Organizations: while they are extremely restrictive about who can make decisions, they are positively lackadaisical about how those decisions are made. Behavioral economists, psychologists, game theorists, and others have learned a lot about how to make better decisions. We have the opportunity to internalize a more disciplined approach to decision making based on all this insight. This applies to how we define decision spaces, how we size decisions, whom we involve, how we decide, and how we evaluate the choices we’ve made. Take the time to find out more about decision science, so that when faced with a big decision you have a whole tool kit at your disposal.

  Authority in Action

  The Waterline. One organization that has famously challenged traditional authority structures is W. L. Gore, the maker of Gore-Tex (among many other technologies). Its guiding principles include Commitment (“We are not assigned tasks; rather, we each make our own commitments and keep them”) and Waterline (“Everyone at Gore consults with other knowledgeable Associates before taking actions that might be ‘below the waterline,’ causing serious damage to the enterprise”). While both principles speak to the company’s philosophy, the waterline is a particularly powerful metaphor. On a boat, a hole in the hull above the waterline is survivable. The boat can keep sailing. A hole “below the waterline,” however, will probably sink the boat. This kind of mistake is hard to recover from. So Gore associates use the advice process outlined below when they’re faced with these tough decisions. You can institute a waterline in your firm. What sorts of decisions can everyone make without consulting others? How much authority are you willing to distribute with no strings attached? Make this explicit and push back when colleagues come to you for permission on something above the waterline. Ask them what they intend to do.

  The Advice Process. What about decisions that are clearly below your waterline? The ones that are really risky? One approach is to grant those decision rights to specific people or roles. But it’s often more powerful to leverage the advice process. In many Evolutionary Organizations, anyone can make a big decision, but first they must seek advice from colleagues who have experience with or will be affected by their choice. That means they seek them out, sit down with them, and talk through all the implications of the decision. This takes time and discipline. For an advice process to work, the person making the decision must be humble enough to seek advice and really listen. And advisers must be comfortable with the idea that their counsel may or may not be heeded. This is not stakeholder management where dozens of leaders get to tweak the proposal until it’s truly average. This is advice, plain and simple. Once a decision has been made, it should be shared transparently along with the rationale and perspectives that shaped it, so that others can learn too. When it works, this process creates a sense of ownership and responsibility that is hard to replicate.

  The Consent Process. Sociocracy is a form of governance that came into contemporary practice in the Netherlands more than fifty years ago. Gerard Endenburg, who brought this philosophy into the workplace, had the realization that consensus is not only impossible at scale but doesn’t reflect how adaptive systems really work. Instead he proposed that consent should be the principle that governs organizations and communities. His argument was that all policy decisions—agreements, rules, roles, structures, and resources—should be made through the informed consent of those impacted by them. Interestingly, in Sociocracy members may consent to using other methods of decision making, including distributing authority to specific roles, teams, or elected representatives, provided they consent to the method itself. The process he developed has been refined over the years by practitioners of Sociocracy and was reintroduced in a more structured form by the creators of Holacracy as Integrative Decision Making or IDM. IDM contains a series of “rounds” that act as an algorithm for processing a proposal. Above all, the method prioritizes inclusion and forward momentum. The final round is the breakthrough: someone who objects to a proposal cannot simply veto it but must try to shape it further to make it safe to try. This process can be slow at first as we break some bad habits, but in time, teams are able to fly through an agenda packed with meaty decisions. Keep in mind, the creators of this process recommend using a facilitator to keep the group on track. Give the honor to someone on your team who can reliably corral the group.

  Integrative Decision Making Process

  Propose. Invite a team member to describe a “tension” they’re trying to solve, followed by a proposal or recommendation. Proposer speaks, everyone listens.

  Clarify. Going around the table, give each participant the chance to ask questions of the proposer to understand the proposal. Participant asks, proposer answers, everyone listens.

  React. Going around the table, give each participant the chance to react and/or make suggestions that might improve the proposal. This is their one chance to say whatever they want to say. Proposer accepts feedback but does not reply until the next round.

  Adjust. Based on the questions and reactions, the proposer may edit the proposal (or not) and clarify anything they felt was unclear. The proposer may also remove the proposal at this time if they no longer wish to pursue it based on what they’ve learned.

  Consent. Going around the table, give each participant the chance to voice an objection, if they have one. An objection is defined as “a reason this would be unsafe to try or would cause irreversible harm to the team or organization.” This is a high bar by design, as the goal here is progress—a safe step toward resolving the original tension.

  Integrate. Ask objector(s) to work with the proposer to edit the proposal, making it smaller, faster, better, cheaper—whatever is required to achieve consent from both parties. Once all objections have been addressed, the proposal is accepted. Congratulations, you’ve made a decision together!

  Decision Stack. Everything above, from the waterline to the consent process, is about defining the decision rights in your organization. In combination, I often refer to these approaches as a decision stack. Here’s a simple process for creating (or refining) your decision stack collaboratively. Gather everyone on your team together and dive in.

  Roles. Ask: What are the roles that we each hold? Try to think beyond job titles and go one layer deeper if you can. Create a roster of roles with basic descriptions in a shared space.

  Waterline. Ask: What decisions can any of us make without advice or permission? Generate as many answers as you can and then discuss them as a group. What do they have in common? What role do monetary risk and social risk play in defining what is safe? Record your observations and takeaways.

  Advice Process. Ask: When should we seek advice? Using the overview above, define an advice process that will work in your culture and context. Specify expectations for advice seekers and advice givers. Generate a list of the kinds of decisions you’d expect to see engaging the advice process.

  Consent Process. Ask: What decisions should be made only by consent? Identify decision spaces where the integration of multiple perspectives is crucial. Major changes to policy and structure are good places to start. Clarify whether you intend to use IDM or another consent process.

  Rights by Role. Ask: What decisions
should be made exclusively by one of our roles? Identify decisions that should be entrusted to specific roles with expertise, experience, or other qualifications. Take the time to map these decision rights to your roles in a format that will be accessible and editable going forward.

  Optimize. Ask: Can we make this simpler? Reflect on your freshly minted decision stack and look for opportunities to increase the number and kinds of decisions that fit above your waterline or in your advice process. Finally, take a moment to gather consent for the whole proposal. When everyone agrees its safe to try, you’re ready to go.

  Authority in Change

  The problem in most cultures isn’t a lack of evolutionary principles and practices. Those bright spots are there hiding in plain sight. The problem is that they don’t spread. And they don’t spread because the vast majority of teams don’t feel they have ownership over their way of working. From the roles they play to the meetings they attend to the tools they use, everything has been dictated to them for far too long. Before you run headlong into changing the big stuff, offer your teams the authority to change a few things about how they work together. It’ll go a long way.

  Questions on Authority

  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.

  How is authority distributed?

  Who can tell others what to do?

  What kinds of decisions do we make?

  How do we make important decisions?

  How do we approach risk?

  What is safe to try? What is not?

  What decision rights do all members have?

  What decision rights are reserved for specific roles or teams?

  What does it mean to be People Positive about authority? Recognize that freedom and autonomy feed motivation. Create an environment where it is safe to try and safe to fail, and teams will learn and grow in extraordinary ways.

  What does it mean to be Complexity Conscious about authority? Accept that we are operating in a complex and rapidly changing world where centralized control is simply too slow and disconnected from reality. Push authority to the edge of the organization—where the information is—so teams can adapt and steer continuously.

  STRUCTURE

  How we organize and team; the anatomy of the organization; formal, informal, and value-creation networks.

  A few years ago, Haier CEO Zhang Ruimin was worried that his teams were too slow and far removed from the customer. The internet had transformed their industry, and only companies that were responsive and adaptive to change would survive. So he broke up the company he’d been running since 1984. Except he didn’t do it with spin-offs and private equity. Instead, Ruimin introduced a revolutionary new structure called rendanheyi, which translates to employees, user value, unity, and system awareness. Describing the model in strategy+business magazine, he said, “The enterprise is transformed from a closed system to an open system, a network of self-governing microenterprises with free-flowing communication among them and mutually creative connections with outside contributors. Employees are transformed from executors of top-down directions to self-motivated contributors, in many cases choosing or electing the leaders and members of their teams.”

  In practice, this meant Haier reorganized its roughly sixty thousand employees into two thousand zi zhu jing ying ti, or independent operating units. These ZZJYTs have full P&L responsibility and all the talent and skills they need to create and deliver products to customers. Leaders are elected, and team members move fluidly across teams as the business and their skills evolve. Not only has Ruimin succeeded in transforming his own organization, but when Haier acquired GE Appliances in 2016, the rendanheyi model was applied there as well. While there was some initial resistance, the results speak for themselves. In 2017, after a decade of decline, revenue and profits at GEA increased by 6 percent and 20 percent respectively. A sense of potential is coming back to life. Today Haier is the world’s largest and fastest-growing home appliance company, leveraging its unconventional structure to thrive amid uncertainty.

  In the early days of a startup, there’s only one team and it’s all hands on deck. While we may have different skills and experience, we come together in a fluid way, jumping in and out of tasks as needed. But with success, the workload becomes too great, and we have to bring on more people. Suddenly it’s harder to keep tabs on who is doing what, and the work gets more specialized. So we start defining roles. You are the CFO. I am the CMO. And so on. In time, those roles grow to become functions, and those functions become silos. We have to work together to actually accomplish anything, so projects often require a marathon of communication and coordination. When that alignment proves too challenging, we default to a strong chain of command, losing some of our entrepreneurial spirit to make our structure work better. Now everyone reports to someone who reports to someone who reports to someone.

  Chasing scale, we expand globally, launching new teams in new countries. But over time we notice duplicative teams cropping up in multiple places. How wasteful! So we centralize and streamline them under one leader. Now no one can do UX unless they go through Marcy, for example. Sure, it’s slower and a bottleneck, but look how efficient we are! We press on. One day we look up and find that we work in a bureaucratic functional matrix, built brick by brick with our own hands. Structural mediocrity has an inertia all its own.

  Instead we can aspire for our organizations to act like dynamic networks, not unlike Hollywood. Members of a system that works this way have the freedom to organize (and reorganize) around projects and programs in order to seize opportunity and accelerate their personal growth. They can hold multiple roles in multiple places at the same time. They can maintain a more interesting set of relationships across the network—bringing to light the social structure that is present in the shadows of every organization. In place of central command and functions, we see decentralization and federalization. Teams of teams operate as “cells” in the network, each with their own purpose and their own user(s). Talent and information flow freely. Over time the whole thing comes to look more like a marketplace than an org chart. Sure, hierarchies still emerge, but they are hierarchies of influence, reputation, and the work itself. They are messy. They are dynamic. And they are held lightly.

  Thought Starters

  Three Structures. Author and self-proclaimed “management exorcist” Niels Pflaeging has a transformative view of the inherent physics of organizations. He claims every organization has three structures: The first is the formal structure, the realm of hierarchy, which exists purely for compliance with the law. The firm must be owned, operated, and accountable, whether it’s a corporation or a cooperative. The second is the informal structure, the realm of influence. This is the social network that exists behind the org chart, always present and often leveraged to get things done behind the scenes. And finally, the value-creation structure, the realm of reputation. This is perhaps the least well understood, because most firms confuse their formal structure with the way they create value. When we talk about organizing and teaming in new ways, about the inner workings of Evolutionary Organizations, it is their value-creation structure that we’re talking about. All three structures are always present. The only question is how they are developed and emphasized. In the end, structure is about trade-offs. When we conflate the formal structure and the value-creation structure, we end up with an anatomy that maximizes control at the expense of speed, learning, and collaboration.

  Centralize vs. Decentralize. One pattern that will be very familiar to denizens of any large organization is the pendulum swing between centralization and decentralization. This plays out in cycles for almost every activity or function in the business. Take sales as an example. Decentralization creates a lot of action at the edge, but also a lot of vari
ation and duplication. Two different regions compete over the same deal. Multiple versions of sales materials emerge. One hand doesn’t know what the other hand is doing. Gasp! So we centralize: one global sales function, all our ducks in a row. But now we’re slow. No variation (and thus less innovation). No local flavor or customization. Customers are unhappy. So we decentralize. And on and on. Instead of constantly overreacting, we can use theory to make a more nuanced choice. In a complex world, decentralization offers many benefits, but we need to maintain collective coherence. To achieve this, we can leverage transparency, social pressure, and principles. What simple rules would have to be in place to allow local or decentralized authority and action in perpetuity? And when centralization seems to make sense—as with some software platforms or shared data sources—I use one question to clarify my position: which structure will make us faster and more adaptive? Whatever that is, centralized, decentralized, or somewhere in between, I’m for that one.

  Functions vs. Integration. As we saw in the startup example above, it’s easy to end up with massive functional silos if you’re not careful. Unfortunately, centralized functions (as we currently conceive of them) are not compatible with complexity. They are too slow, too far from reality, and working under misaligned incentives. The alternative is functional integration. Create teams that have as much capability built in as possible. How is Buurtzorg able to support 14,000 nurses with such a small headquarters? Simple: the teams do a lot for themselves. Take recruiting as an example. Who better to recruit and interview a candidate than the team that person will be joining? They have infinitely more information about the skills and style they’re looking for. The same is true for sales, service, you name it. Evolutionary Organizations favor units or “cells” of 10 to 150 people who are self-sufficient. As it scaled, W. L. Gore actually practiced a kind of cell division. When factories exceeded 150 people, another self-contained factory was built next door. Larger companies often pine for the glory days when they were 80 people and had the ability to get shit done. What most massive organizations seem to forget is that we can operate as a marketplace of tribes, serving the customer and one another independently and responsively.