4 Steps to Release the Full Potential of Organizations

What would you say is the most crucial challenge that a manager faces these days? I would argue it is to release the true potential of workers. That’s what every Manager should be really concerned about, because everything else, be it arcane strategy or mundane day to day actions, follows from that.

Engaging workers, and releasing their creative energies needs more Self-Management. If you doubt that, just read the last couple of posts. Hell, even the late Peter Drucker, king of all management thinkers, recognizes this need. He states that:

dr2.pngDrucker cites 6 factors that determine Knowledge Workers productivity:

  1. A broad definition of the Task, as the question: “What is the task?” is much harder to define than in the realm of manual work. It’s really outside the ability of the manager to determine that, i.e., the manager needs to rely on the worker to find it out himself
  2. Autonomy of the individual to do what she deems best
  3. Continous innovation, with learning on individual, team and organizational level
  4. Learning: Reflection and iteration
  5. Quality, not just quantity
  6. Treat a person as an asset and recognize the intrinsic motivation

With surprising egalitarian swagger he concludes:


Now, that’s your case for self-management right here – for those not wanting to read the last posts. Now on to the model.

Big Bang vs. Gradual Adoption of Self-Management?

In the last post, I summed up the dilemma faced by anyone wanting to “max-out” the contribution of Knowledge workers as follows:


The good news is: I think there is a middle way.

Charting out the Middle Way

But first, let’s explore the criteria that a way to move organizations towards self-management can be measured against. I came up with 6 criteria and applied them versus the two approaches mentioned above.


1. Acceptability

The very starting position of any move towards Self-Management is that the approach to adopt Self-Management is acceptable to the ones in charge, owners, and managers. It is easy to agree on the overall target,  i.e., better results through innovation driven by an engaged workforce of knowledge workers. But going all out for Holacracy is thousands of steps too far for 99% of owners and managers.  Taking baby steps and try this or that agile work-out is, on the other hand, natural to accept.

2. Forcefulness

Even if the way to adopt more self-management is acceptable, the approach needs to be forceful enough not to peter out like so many other well-meaning corporate initiatives. Adopting Holacracy is as forceful as it can get, with all managers devolving their powers for good and basically ceasing to exist as managers. Doing agile exercises, while having really low really low barriers of entry into organizations, is as weak as it can get. Daily needs are sure to override, or worse hollow out the optional, “nice to have,”  work-out.

3. Realistic

The third condition is realism: Is it realistic to get more self-managed by adopting one of the three approaches? The Big Bang approach is the real thing. It can’t get any more practical than that. Agile Baby steps, however, are used to let some fresh air into organizations. To loosen the mental concrete and valuable for people to get to know each other better. But fundamental change? Maybe over very long periods, but are they enough to diminish the hierarchy significantly? I do not think so.

4. Measurable

Fourth, the approach needs to be measurable to be sure that progress is achieved. Both approaches are entirely quantifiable, for example by keeping track of the number of vigorous work-outs or processes in planning, tested and adopted per team or on an organizational level, on a KANBAN Board.

5. Manageable

The resulting transparency is a prerequisite for the transformation to be manageable. Clearly, Management stays in control of in the “Baby steps” approach. But by adopting Self-Management by a big bang, no single person is entirely in control. There is a leap of faith to be made. A chasm which is hard to cross for all: Owners, managers, and workers.

6. Cost-effective

The sixth condition is cost-effectiveness. Given the incumbent profit oriented hierarchy, no initiative whatsoever will be launched, without an expected payoff. Here is a major short-coming of nearly all self-managed approaches. While the link is made between employee engagement, more productive Knowledge work, Innovation and Self-management, the profit motive is somewhat hidden. Far more prominent are explanations about human health, human stages of development, happiness, and self-fulfillment. I think that these high minded aspirations fail to bring the typical, rational and cynical executive to sign up for self-management.

7. Outward-looking

That the seventh condition, an outward-looking focus on the customer, is neglected in most Self-Management Models is hard to understand. Yes, there is some lip service to customer centricity in those models, but 98% of the models are about explaining the inner workings of organizations. In these digital, customer-driven times, this is a critical neglect which can only be understood by looking at the origins of self-management, a theory called Sociocracy, Sociocracy was invented in the 1920’s by Kees Boeke, a Dutch educator, as a way to humanize and democratize command and control organizations. It was directed to fight the misuse of power, but not to deliver the speed and learning that succeeding in the digital revolution needs.

In summary:

  • With the Baby steps method of doing agile work-outs, nothing much will be achieved.
  • Going for a big bang of Self-Management (by Holacracy, Liberation or “Collegial enterprises” or whatever model) faces such high barriers of entry into the market, that it won’t happen except in the rarest of cases

Both approaches are so extraordinarily light or so extremely heavy-handed that I think there must be a third way: A gradual move towards Self-Management…

  • that makes it easier to convince owners and senior executives to sign-up for

  • that utilizes the current, profit-oriented way of thinking to get human development inside organizations going

  • that puts the customer in the center of almost all that a company is doing. To link Self-Management to the digital age, to the lean start-up and all its learnings

So how could this roadmap look like?

A Roadmap for the Gradual Adoption of Self-Management

In my discussions with clients and colleagues, I find it useful to think of organizations as being in a particular stage of maturity. The best-known model for describing organizational maturity is the Capability Maturity Model (CMM) which explains how advanced an organization is based on 5 Maturity Levels. Each Level is, of course, a simplification of reality, as the level of maturity might vary by individual, department or process. But it is a useful model to identify problems, potentials and get the discussion going.

So in the spirit of the capability maturity model, here is the sketch of a model for self-managed organizations in four maturity levels.

rI.pngThe rows criteria are aligned to the view that Corporate Rebels, a Dutch-based missionary consulting start-up spreading the word of self-management, has. I just added the second criteria “From Internal Focus to Customer Centricity,” which I think has to be a vital characteristic of any responsive, agile organization.

Let’s continue to explore what the different maturity levels are like.

I. Hierarchical (Status-quo)

I do not really need to describe the workings of the hierarchy in a company, do I? Every one of us knows how to work in those environments. Do not get me wrong: It’s not that bad. Work can be productive and usually is. Even some element of fun can be found here and there, and there are various forms of social engagement.

The fundamental issues with the hierarchy can be reduced to seven main points. These, I think, are so fundamental that I put them in a graphic.


That said, the hierarchy has its place: Execution in predictable environments. It still is a useful human invention. Even with the movement to self-managed organizations hierarchy won’t go away. There will always be hierarchies of knowledge, informal and formal leader-follower arrangements. It will still be there, on a back-seat, but it will no longer be the dominating driver of future organizations.

II. Empowered

Empowered organizations are created by delegating more and more responsibility to workers.  Organizations move from a command and control to a mission control style of leadership. There is more thought spend on purpose, strategy, customers, agile teams, participation, learning, values and ideally on data-driven decisions.

This is typical for today’s mainstream, knowledge driven company. Time is spent doing agile team work-outs, SCRUM projects, Lego building exercises for a change of perspectives in a design thinking workshop, setting up Kanban boards and product logs. All under the confines of the hierarchy.

This is all well and fine. Getting more “Startupy” is nice. Here come the downsides:

A. Empowered or Agile practices don’t align well with the hierarchy

Agile relies on autonomous groups making their own decisions. It relies on a safe environment to participate and contribute. It relies on Managers stepping aside and getting into a coaching role, refraining from direct interferences, and learning to rely on giving subtle nudges instead.

Alas, experience has shown that the workings of the hierarchy systematically undermine any vigorous exercise over time:

  • Managers fail to step aside and intervene, thereby destroying the sense of responsibility the autonomous team had. Destroying the very core of Agile.
  • Managers are often awful coaches: People will not open up to someone who has vast power over them, who fails to ask open questions and tends to tell and not listen. They will rather stick to their role as a courtier trying to please the manager
  • The velocity of teams, i.e., the ability to deliver quantitative results fast, will, over time, become all that is important. Quality is only an after-thought. The hierarchy re-establishes itself with its long-held norm: Valuing efficiency higher than effectiveness

B. Empowered or Agile Practices are just a “bolt on” to the organization

Agile Exercises are viewed as features. They do not change anything about values, behaviors and worst of all the hardest of all facts, the organizational hierarchy. To flatten the hierarchy by removing some layers, by increasing the span of control of each manager, to decrease the total number of managers and management layers, is almost always neglected.

C. The dominant Parent-Child relation between Manager and subordinate is maintained

Over time, Empowerment is felt by employees as just a bluff. A maneuver of managers to deceive Employees. The fundamental contradiction in terms is: “You are empowered because I say so.” This empowerment is entirely arbitrary and can be revoked at any time.

In fact, Managers adopt the role of a well-meaning parent to a child. And we know how fraught with problems this relationship can be.

Conclusion: Empowerment is useful if done right

Still, empowerment is helpful if the tough questions are tackled at this stage of organizational maturity, too:

  • Flatten the hierarchy, increase leadership spans, reduce the number of managers
  • Reduce the Rules, the number of “strict,” disenfranchising processes that a company has
  • Change the organization structure to give each unit a clear line of sight to the customer. for internal units that means to mirror their organizations to the internal customer’s organizations to create direct accountability

Very few companies do Empowerment right. They just talk about values, dabble in an occasional agile work-out and provide some well-meaning leadership exercises. They should get real and face the hard facts, too. Without addressing them, they are just rearranging the deck chairs on the Titanic.

III. Self-Organized

The Self -Organized Stage is reached when organizations did work on the hard facts listed above. They flattened the hierarchy, they reduced the management tax ( see  Big Tax Cut! Flatten the Management Hierarchy).

Out of necessity, fewer managers means more self-organization. The team takes over much of the work. They might be “seeded,” i.e., set-up by managers, but how they work is up to them. Even what teams are working on is decided by the teams themselves as they begin to “pull-in” work instead of having work “pushed” to them by managers. People and teams learn to actually look for the work that is to be done because they care about their part of the company.

More and more critical decisions are delegated to teams of non-management individuals. In fact, more and more people become “defacto” managers, in all but name.

In such an environment, the fundamental relation between manager and subordinate shifts towards an “Elder- Citizen” Relationship. The Elder is treated with respect, and her advice is appreciated, but the Citizen is much more free to pursue her own path.

In this stage, it becomes crucial to think in Memes, i.e., coherent sets of cultural ideas that organizations introduce, maintain, adapt or discontinued. This is the stage where culture needs to grow to such an aligning force that a reorganization acts in unison without required much direction from the – still existing, but reduced, hierarchy.

Haphazard introduction of Agile exercises won’t be enough to reach this state. Senior management needs to have a plan where the organizations should grow into and what are the steps to get there.

Crossing the Chasm

So far so good. The Hierarchy has relented its iron grip and thinned out its ranks and layers. Stage III “Self- Organized” is a status that is seen by innovation leaders such as the iconic IDEO, AirBnB or Netflix. There the hierarchy is still there, but managers stick to the sidelines of the organization, i.e., they adapt their leadership role to that of an Explorer, Gardner, and Coach.

To go further into self-governance means to be crossing a chasm: It means to get rid of the organization entirely. This is a leap of faith that few owners are willing to make. Here is a list of those how did.

Is it worthwhile to do this step? Empirically, no one knows. But it is doable and realistic. There are a lot of successful Stage III, self-organized companies.  But there are a lot of successful stage IV, self-governed enterprises too. In fact, a lot of self-organization seems to be the sweet spot that today’s companies aim for, without crossing the chasm and abandoning the hierarchy. 


Source: What kind of Organization do modern Companies aspire to be?

So why crossing the chasm to self-governed organizations?

  1. For some owners, this is a crusade for humanitarian values.
  2. For others, its a way of relinquishing control and earn a smart passive income.
  3. Others do not trust the stability of a self-managed company, as the hierarchy is still around and may reassert itself at any moment, especially in the event of an exchange of senior management. There are numerous examples for that, one of prominent one the rise and fall of the Bell Labs. At these labs, lots of the inventions for the digital age (Computing, Networking, Internet, Mobile Phone) have been made in self-organized environments. Before the hierarchy took over and stalled innovation. It is today a subsidiary of Nokia.

IV. Self-Governed

There are three hard criteria that indicate that a company is no longer self-organized but is now self-governed:

  1. There is no management hierarchy
  2. Hiring and Firing are done by teams
  3. Salaries are negotiated by teams

Sounds like anarchist chaos? Let’s address the main questions on self-governance in an FAQ:

A. How can the organization ever act in unison, quickly and decisively?

The Coordination misperception: Someone needs to see the big picture and act. Given all what is known about human biases, don’t you think that this someone should rather be a group and not an individual?

Coordination is Self- Governed Organizations is achieved through a hierarchy of teams – instead of a hierarchy of individuals. The top-level team directs the organization, not unlike a board of directors does. In other words:

The Hierarchy of Individuals is replaced by a Hierarchy of Teams

Holacracy, Sociocracy and many of the forms of Liberated Companies are following this pattern. Obviously, hierarchy is important. There needs to be a single voice giving a clear direction. It just doesn’t need to be an individual.

B. How gets anything controversial ever being decided in this workers paradise?

Oh yes, the consensus misperception. Just because teams are in charge, doesn’t mean that everything has to be debated without end in order to achieve the often elusive consensus.

There are other decisions mechanisms available: Take a vote. Determine an individual decision maker for a specific action. Have discussions in such a scripted way as to hear everyone out, not waste too much time on talking and come up with better, more reflected decisions than ever before. Curious? Read the last post: Delegation on Steroids.

C. Will people not just slack off, enjoy their pay cheques and do what they want?

Ah, the Slave Driver misperception: In order to make people work, show them a carrot while holding a stick in the other hand. While it is true that carrot and stick works in lower levels of the Maslow pyramid, Knowledge workers are very likely to have their basic material needs satisfied.  Carrots and sticks have a limited use, here.


But it’s not that carrot and sticks are no longer in use in self-governed organizations. It is only that this power is no longer wielded by individual managers. Teams set salary, hire and fire and give directions to lower level teams.

Still, work is not assigned to employees. Employees volunteer for work, they “pull the work into their area of responsibility. That process of “pulling in the work” is facilitated by social cohesion, a commonly shared mission and last not least social pressure multiplied by transparency over everything that gets done and not done.

Imagine someone slacking off in a vastly transparent work environment, thereby burdening the team with his presence. Chances are the Slacker won’t be a Slacker for long – at last not in the Self-Governed organization.

It much harder to hide a lack of engagement to co-workers than it is to hide it from managers.


All indications are that we need more self-management in this VUCA world, where innovation is the key to delight customers.

I think we can get there by addressing the hard questions in our efforts to empower an organization. We do not all of a sudden need to become Missionaries, Communists or Anarchists to benefit more from self-management. As a manager, you just need to do your work thoroughly, as you really should and work on the hard questions of empowering: Flatten the management hierarchy.

To compete with world leaders such as Netflix, Airbnb and the creative parts of Amazon, a company needs to move to the sweet spot of innovation. It needs to move to Maturity Level 3 and become Self-Organized.

Maturity Level 4 is not for the faint-hearted and its results are by no means certain. But it is a viable alternative and is likely to be much more stable than Maturity Level 3, where the Hierarchy always looms in the shadow and threatens this sensible “Sociotope” that Self-Management has created and that lets innovation blossom.

This is what I think. What do you think?


  • Drucker, Peter “The Effective Executive,” 2006
  • Drucker, Peter “Management Challenges for the 21st Century”, 2001
  • Oesterreich, Bernd “Das Kollegiale geführte Unternehmen,” 2017
  • Denning, Steven “Radical Management,” 2011
  • Ries, Eric “The Lean Start-up,” 2011
  • Pontrefact, Dan “Flat Army,” 2013
  • Featured image by Stefan Wagner “Project Sociotope,” 2011, andsychrony.net

Last not least, here is a different layout of the Capability Maturity Model of Self Management.


0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *