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Why Liberating Companies Is a Bad Idea

There are excellent reasons to be suspicious about an author who sets out to blast his own work, so you should certainly take this with a grain of salt. Still, what you will find in this post is an honest attempt to critique the thoughts spelled out in the soon to be released book “Liberated Companies.” 

Let’s start with a definition: 

A Liberated Company is a learning organization that evolves its work designs in a holistic manner towards a more egalitarian distribution of power. It aims to free people of oppression to put itself on the trajectory of technology, thereby maximizing its number of options over time. #liberatedcompany

Ready to shoot holes in it? Ready. Aim. Fire!

A) The claim to “liberate companies” is pretentious. 

Companies are coercive systems. By their very nature, they need people to submit to the needs of the company. Liberating people is unrealistic; it’s Anarchy. Companies need discipline and submission.

The Defense: If the way power is wielded in today’s companies is corrosive to a companies performance, and people’s and society’s wellbeing, liberation is indeed what is needed.

Agreed, a company needs to align people’s actions to its needs. But there are better ways to achieve that alignment than the formula “money for submission.” In a more and more knowledge-driven and dynamic economy, people’s creative problem-solving potential goes to waste, if an organization does not utilize people’s intrinsic motivation. Running companies on coercion or incentives is outdated.

Yet, liberation is a weak term. It describes the release of some constraints, but it does not represent the target itself. If the current way of running companies is to be replaced with something, what is it? It is undoubtedly not Anarchy, as Anarchy is often understood as an absence of rules. 

In a liberated company there are, actually, more rules than in traditional, more hierarchical companies. These rules are there to regulate the distribution of power between people so that everyone in an organization becomes more powerful while still enabling decisive action and focus of effort.

Companies need discipline and submission. But that discipline and the submission is to rules, not towards superior managers. The paradox of liberated companies is that, as a rule of thumb, the more liberated organizations are, the more regulations (in the form of work designs) they have. The crucial point to understand is that freedom is not the absence of regulation. Instead, freedom is the balance between autonomy and loyalty – between managing and being managed. In a traditional organization, that balance is out of whack, as most people are being managed instead of being in charge of their own work. 

We need to use work designs more deliberately to correct this imbalance. Which brings us to the second critique.

 B) Work designs are secondary: All it takes is excellent leadership – everything else will follow suit. 

Great leaders know what works and whatnot. They will come up with the right organization on their own initiative. It is their decisiveness and strategic thinking that is all-important to a company.

The Defense: Are we not beyond the strong man theory of management?

The strong man theory has all but been debunked in management and organizational research. The systems of work used in a company (and its expressions, the mindsets of coworkers, and the culture of a company) are more important than any individual, and be that the CEO. Chapter two of the book “Liberated Companies” lists all the evidence.

C) The concept of work designs is too fluffy, too open for interpretation, to be actionable.

Just look at the list of work designs on the Liberated Company Map: How can work hack’s like Kanban Boards, or the Advice Process change companies for the scale? All these work designs are not even solidly defined – they mean different things to different people.

The Defense: You got to deal with the complexity of businesses. To remain blind-sighted is not a good option.

Agreed, there are no norms for work designs, and no single work design is likely to be truly important for a company. Yet, any company is made up of work designs, and progressive companies evidently use different ones than traditional companies. Plus, they use more of them and in a more deliberate manner. The evidence about this in academic studies about progressive companies is hard to ignore. 

No work design will likely ever be precisely the same in two companies. That is not what is needed, what is ultimately crucial that work designs are used in a manner and composition to create a self-supporting configuration of work-designs.  

Reality is messy. Still, this shouldn’t keep us from describing the patterns we see in companies and develop a model to get to grips with this complexity. Work Designs, the Liberated Company Map, the 11 Principles of Liberated Companies, and others are all elements of such a model.

D) Well, work designs and liberation might be a thing – but there are more important things to focus on in businesses.

Product Innovation, Business Model Design, Talent Management, Restructuring, Systems Implementation, Cost-cutting, Growth, Business Transformation is all more important. All these initiatives have direct impacts on companies’ survival. Organizational efforts might be useful, but work more indirectly and are therefore of lesser priority.

The Defense: (i) The point is not to stop these initiatives but to supplement them with organizational measures that foster their success: More liberated work designs.

Every business initiative has an organizational dimension to it. After all, what else are business initiatives than people collaborating with another? No matter what a business is up to, it should do it by using the most ingenious work designs it can come up with. So the question is not to delay any necessary initiative but to use it as a vehicle to start weaving more liberated work designs into their very fabric.   

The Defense (ii) Liberating companies is more than a supplement to business initiatives: It is a worthy target on its own. 

Many companies struggle to get to grips with the digital age. In chapter one, “The Trajectory of Technology,” I argue that companies can be made much more technophile, i.e., able to absorb technologies and put them to good use, by adopting more adequate work designs.

Did I deflect all critiques? I do not think so, and I do not believe that I ever will. The concepts laid down in liberated companies are just a model, and there will be better ones in the future. Hell, there might even be better, more accurate, and more practical models out there today. If you know one, let me know.

That’s it for this post. “Liberated Companies- How to Create Vibrant Organizations in the Digital Age.” will be in stores at the end of this month. 

Stay in touch by subscribing to this blog.

More details can be found on www.liberated.company.

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How to Liberate a Company

Suppose you have embraced the following three truths:

  1. To truly engage people, with all their capabilities you need to distribute power between people more equally 
  2. To truly utilize technology, with all the unique solutions it can provide, you need to unleash the creative problem-solving potential of people at all levels in an organization
  3. Psychological Safety, Mindfulness, System Thinking – three significant tenets of every healthy organization – can not be achieved by appeals; instead, you need to weave them into the day to day work designs of a company

Armed with these beliefs, you are ready to liberate your company or team. There are two different, complementary ways to do that. Bottom-up or top-down.

Bottom-Up Liberation: The Company Board

There are five steps to do that:

  1. List and visualize your current work designs
  2. Learn about new work designs
  3. Experiment with some promising work designs
  4. Evaluate Work Designs together
  5. Adopt those that work for your organization – discard those that don’t
  6. Repeat & Evolve

The Liberated Company Map is a great tool to list and visualize your current work designs. Besides, it is useful to learn about the plethora of possibilities, their interdependences concerning the level of power inequalities existing in your organization, and the risk you expose yourself to in the experiment.

The Liberated Company Map

While the Liberated Company Map is a map of the current all work designs of a company or team, a second tool is useful to show and track the dynamics of the experimentation process: The Company Board. The company board is a KANBAN board in which columns show the stage that a work design is in, from idea, to test, to evaluation, to adopted or discarded. The key to working with the company board is to let everyone bring up the work design she or he likes to try – everyone at their own pace. Work designs are not mandated, but they are discussed and evaluated openly before a decision is made to include them into the DNA of work designs of a company. 

The Company Board

I have worked with customers who skipped step one and jumped directly into action two without too much upfront deliberation. That worked fine, also. The crucial thing in this bottom-up process is to evaluate and decide on adopting work designs together (steps 4 and 5). While this or that work hack can enter one’s personal portfolio of work techniques, the major work designs that organizations use should be aligned. Having a “zoo” of work designs is confusing, counterproductive, and ultimately doomed to fail. There needs to be consistency in the overall work designs of an organization.

Bottom-up Liberation works like a charm because it brings order to all the Agile, New Work, Work Hack, or other management initiatives that exist in a company. It provides a holistic picture of how work is done in a company, from the simple status meeting to complex decision-making procedures, and a way to evolve it. Even better, it lets people experience that it is worthwhile to re-think the ways they work together or manage.

Most of my clients choose to do iterate and evolve their work designs in three-month cycles. That’s one 4 hour workshop every three months. Compare this tiny investment with the cost of never reflecting holistically about the way people work together at all. After twenty-five years me being in the business of organizational development, I never experienced something as effective.

Top-Down Liberation: The Themes

But all is not well. Bottom-up Liberation is excellent to get started and evolve companies or teams, but it sometimes is not intentional enough. A company is a living system, but it also a target-oriented system. The intention of a company, its purposes, should be reflected in its overall configuration of work designs.

Bottom-up experimentation with work designs will definitely make a company better but is not a surefire way to link a vision or strategy to the inner workings of a company. A certain amount of top-down design is needed to inject intentionality into the bottom-up, evolutionary process.

These kinds of top-down interventions into organizations are quite tricky. Managers, Researchers, and organizational design practitioners have been pondering about providing optimal work environments intensively since the days of Stafford Beer, the father of cybernetic design of organizations, in the 1960s. “Cybernetic design” is really just a fancy phrase for the quest to learn how to provide a good or productive work environment. Its basic premise is that you can design an environment in a way that it best supports the purpose of a company, by manipulating all the social and psychological strengths and vulnerabilities of people in a professional manner. 

It is certainly not for lack of trying, but even today, effective cybernetic is as rare as it is ethically dubious. So, how can top-down liberation work? After analyzing progressive organizations, I got a hunch. Each of these organizations seems to have an underlying theme to the way it had configured itself with work designs. While the theme might not have been apparent at the start of a company, I think it can be clearly discerned in their current configuration of work designs.

Some companies are about decisions (like Bridgewater, one of the world’s most successful hedge funds), others about entrepreneurship (like Haier, a world-class manufacturer of appliances), and others still about service (like Buurtzorg, a 14.000 healthcare company). 

The question is, what is your company (or team) about? I have dissected this high-level question into five major ideas:

  1. The idea of Technology: What’s the role that technology has in your company?
  2. The idea of Performance: What constitutes good performance for your company?
  3. The idea of Ruling: How is power wielded and distributed between people?
  4. The idea of Work: What exactly is work in your company i.e., what are the criteria that should play a role when selecting work designs?
  5. The idea of Life: What does it mean to lead a meaningful life while being a part of your company?
What are your and what are your organizations deeply held ideas?

Of course, there are many other ideas possible, but I think that those five ideas describe essential underlying themes around which companies can be built. Even better: Around which companies can configure their work designs too – like the four companies listed in the table below did.

A comparison of one traditional and three progressive companies

You can start at any level

As explained in this post, you can begin the journey of liberation anywhere in a company, at any level, at the top of companies, somewhere in middle management, or at the team level. Both bottom-up and top-down avenues to liberation are possible at any level. However, the lower you are on the hierarchical level, the more restricted your options to use work design are, and the more your themes need to be aligned to the overall organization.

That’s it for the post. “Liberated Companies- How to Create Vibrant Organizations in the Digital Age.” will be in stores at the end of this month.

Stay in touch by subscribing to this blog.

More details can be found on www.liberated.company.

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A Beginners Guide to Liberated Companies

“Liberated Companies” is a new approach to organize companies or teams. Its unique perspective is to make the work designs- i.e., those structures, processes, and routines used to collaborate inside an organization- explicit and evolve them. 

Every company uses work designs: Meetings, decision-making, task allocation, information and communication, performance management, project methods, and business processes. There is no way for any company or team not to use work designs. The thing is: Most companies are not aware of what often disastrous effects their incumbent work designs have on their performance as on people. Overwhelmingly, companies plow ahead and use those work-designs their managers learned by imitation from past generations’ managers.

Progressive Organizations, many Technology Companies, the Agile, New Work, and Lean Start-up Movement demonstrate that better results can be realized for everyone by using ever more refined work designs. Work designs that enhance people’s collaboration by eliminating fear in the work-place, creating the space for more mindful, holistic, and finally more ingenious solutions.

Liberated Companies provides a model and methods to utilize these advanced work designs at scale. Just imagine what good follows from activating people all those 85% more or less disengaged people in today’s companies, of people bringing their whole to work instead of turning into a mini-sized version of themselves once they entered the office!

Six challenges for todays organizations

Every work design carries in it a message. Hierarchical decision making, for example, however it is done, carries with it a clear message of discretionary, paternalizing power. It tends to disenfranchise people, making them retreat into their inner shells. More participative decision making, more open communication, more dynamic systems of distributing power between people, reduces these negative messages and systematically encourages people to speak up. 

Another example: Giving feedback. The way that managers give managers feedback but teach people to become subservient underlings. Not because all managers suck at it, but because feedback is usually delivered from a position of great power, teaching people that manipulating the perceptions of superiors is more important than truth.

Or think of meetings. Meetings are often only thinly structured discussions on agenda points that do not reflect what people actually need and that do not strive in any way to elicit people’s genuine opinions.  

Work designs are not merely structures to get things done. They all carry messages in them that are detrimental or beneficial for an organization’s mission and growth. Every time a meeting is done, a review is done, a decision is taken, information is disseminated, a project is set up, it sends a message to people. It teaches them how to behave, what to say, and it impacts their self-esteem and personal agency. 

The “Liberated Company Map”- A map of work designs.

Systems change people much more than people change systems. The unreflected systems of work designs most companies are using today are not working as good as they could. “Liberated Companies” mean to change that.

A Liberated Company is (i) a learning organization that (ii) evolves its work designs in an (iii) holistic manner, often (iii) towards a more egalitarian distribution of power. It aims to free people of oppression to put itself on the trajectory of technology, thereby maximizing its number of options over time.

“Liberated Companies” is an approach to creatively configure and evolve the work designs of any organiz ation, company or team.

An Introduction to Liberated Companies

Let’s change the system and start evolving work designs to make companies and teams into ever better versions of themselves – for the benefit of everything that a company touches.

This book shows how: Liberated Companies – How to Create Vibrant Organizations in the Digital Age.

To learn more:

Or contact us via linkedin.

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Why I don’t like Coaching. Do you?

Nor Do I think highly of personnel development, the type supplied by HR. Four reasons for this:

  1. There is too much coaching and personnel development going on in many companies. People are tired of trainers or consultants preaching 
  2. In other companies, there is too little of coaching and personnel development going on to make a significant difference to anything
  3. Even worse: There is no right amount of coaching or personnel development so long as it’s primary use is to make people fit to a rather sick system that systematically disenfranchises people
  4. There fore and worst of all, neither coaching nor personnel development are producing decisive results. They never have 

Coaching and personnel development are these days all too often just feel-good riffs of pop-culture themes: Mindfulness, Teaming and Participation, Self- Efficacy, Vulnerability, Experimentation, Failure Tolerance, Innovation, Reflection, Empathy, Agility – you name it. While each of those themes is worthwhile, they are colliding with organizational systems that let good insights wither and die – systematically. After all, systems change people way more than people can change systems. 

Of course, there is bad and good coaching or personnel development. That is not the point. The point is that any initiative that is based on transforming individuals without changing organizational systems is futile. Organizations must be changed in ways that allow people to express themselves in novel, better ways. To preach to them values and behaviors that run against the grain of the values and behaviors enticed by the organizational system itself is like sending them on an exhaustive upstream swim – often against swift currents and in cold water.

Coaching and personnel development are all too often just excuses to avoid tackling the underlying problems of companies:

  1. The systems of work we use are largely not supportive to human values
  2. As long as coercion and enticement remain the main methods to align people’s actions with companies’ targets, people will systematically choose to withdraw into their shells. They will never bring the best version of themselves to work
  3. Hierarchies are extremist ways of regulating power. If aliens would land on earth and aim to subjugate humanity to a single will, they will use the hierarchy to achieve control. Of all the many ways to distribute power between people, the hierarchy is the most centralized and extreme one

Therefore, we need new systems of human collaboration. Don’t take it from me, take it from Management professors and successful entrepreneurs like Peter Drucker, Edward Deming, Gary Hamel, Frederick Laloux, Issac Geetz, Henry Mintzberg, Zhang Ruimin, Ray Dalio, to name a few (more can be found in the Corporate Rebels Bucket List).

In my book “Liberated Companies” I argue that we need to build these systems on four criteria:

  1. Reduce power differentials: A decrease in the power differentials between people to levels that are much more in sync to human flourishing – and that hold power to account much more than common now.
  2. Invite technology in: Organizing companies in a way that invites creative problem solving into the organization and is therefore much more compatible with the needs of technological progress.
  3. Provide creative tension systematically: Increase psychological safety for people while holding people accountable for results in a more effective manner than ever before.
  4. Re-align sensemaking of economic activity with planetary needs: In our time, it will be more and more difficult for companies to turn a blind eye to the escalating ecological and human catastrophe caused to no small part by the deeds of today’s companies.

Coaching and personnel development are so often used as just another tool to make people fit to company system that is way past their prime and in urgent need of a major update itself.

Coaching and personnel development are, in their essence, conservative and reactionary in a time when all companies, people and the planet need much bolder changes.

 It’s time to make this major update.

If you like to learn more, check out the central concepts on www.liberated.company and the announcement of “Liberated Companies – How to Create Vibrant Organizations in the Digital Age” – to be published by the end of November 2019.

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The Trajectory of Technology

“Liberated Companies – How to Create Vibrant Organizations in the Digital Age” will be published at the end of this month. The book begins with turning a question that many company leaders ask on it’s head:

It’s not what technology can do for a company – it’s what companies can do to no longer stand in the way of technology.

I hope you like the following excerpt.


Chapter One: The Trajectory of Technology

So, you tell me that you are taking your company digital? I want to hear your idea of technology, not that you introduced this or that app… – Paraphrased from Friedrich Nietzsche, Thus Spoke Zarathustra (1891)[1]

To devise an organizational design that works well in a world increasingly dominated by technology, one has to understand two things. First, we must grasp the essence of technological progress, the direction in which it is leading us—in short, we must understand the “wants” of technology. Second, as technology and humans become ever more closely intertwined, we must ask: how do humans and technology flourish together? Let’s save the first question for later and answer the second question first. 

The three ways of understanding technology

Old truth: technology is just a tool

A hammer, a coffee machine, or a smartphone app is a tool, a technology that we are using. Humans use these tools to manipulate the world around them, to get results. Natural problem-solvers that we are, we look around for the best tool to assist our efforts. If the tool is available, we simply need the skill to use it, and our lives will be easier. The basic thinking of many people in business is similar: tools help to solve problems. All we need to do is to make a tool available to workers and train them how to use it. 

But is this really true? Of course not. For as long as technology has existed, the relationship between tools and people has never been a one-way street. Humans invented and used tools, and their use shaped human culture. No technology was ever inconsequential to human mindsets, values, social systems, even the rise and fall of empires. Anthropologists even divide cultures according to their tools: Stone Age, Bronze Age, Iron Age, Age of the Sail, and Information Age, to name a few. The impact of tools doesn’t have to be as dramatic as gunpowder or printing; even the inconspicuous coffee machine intervenes in the way we structure our day, determines where and when we gather, takes up a prominent place in our homes, changes our biological mode of operation by drugging us slightly, and sends many of us into fits of rage when dysfunctional. 

Tools have shaped us into what we are today. There is every reason to believe that with ever more technology available, the more and more we are shaped by it. As Marshall McLuhan is often attributed to have said, “We shape our tools and thereafter tools shape us.”

Even more true: technology as a maker of decisions

People in companies have already lost control over many things they used to do. In the information age, companies have delegated many tasks to complex systems, be it in production, distribution, accounting, or sales. These systems are so complex that no single person knows what the systems are really doing. Even teams of experts often struggle to make sense of the sheer complexity of modern systems—a fact that is clearly visible in the high failure rates of modern software projects. Humans have set up these systems, but are they fully in control? Are they making the decisions? Our control is limited by design because we want the machines to take over our work, to automate much of what is happening. The algorithms humans have set up mesh with other algorithms to produce the outcomes that we want, and we tend to understand less and less of their inner workings and true complexity. Still, we choose to rely on them out of necessity. 

How much will we be in control tomorrow? Certainly less, as artificial intelligence becomes more pervasive in the workplace. The more we utilize technology, the more that technology will make decisions for us: today, it simple deterministic decisions, those that can be easily automated; tomorrow, more complex decisions, those requiring judgment. Without experts to act as translators between business and technology—be they engineers or highly specialized functional experts in logistics and accounting, for instance—modern businesses could not exist today. Yet even experts are limited in their ability to control, as it takes five things to be in control of complex systems.[2]

This is a five-point recipe for making solid decisions about complex matters. The better an organization is able to apply this recipe, the more it will prosper. The trouble is that hierarchical companies find it hard to apply this recipe effectively, for the following reasons:

Major power differentials between people are systematically detrimental to making sense of complex systems, and this defect has grave consequences. As technology becomes increasingly complex and important for the survival of companies, conventional hierarchical companies will be less and less able to benefit from technology. 

New truth: technology as a co-worker

As Kevin Kelly mentions in his book, What Technology Wants, “technology is an independent force in itself. Nobody is in control now and humanity will be less in control tomorrow. The technium is already whispering to itself.”[3]

Today, most companies are already so complex that decisions are made by a mixture of humans and machines. In companies like Amazon, Google, Netflix, and Facebook, most day-to-day business decisions are made by algorithms in real-time. Have you ever tried to talk to their “customer service people”? Overwhelmingly, the product itself, in the form of some specialized algorithm, is in charge of customer interactions—and those algorithms are doing their job extremely well. Much better than the customer service peoples of cable or telecom companies usually do.

People inside technologically advanced companies tend to work more on maintaining and experimenting with algorithms. The algorithm becomes a co-worker—one that is extremely skilled in specific functions. Humans specialize in those things that they are more adept at, such as the holistic perception of contexts and setting purposeful directions. AI researchers have concluded that humans in the digital age will be an asset to any company, as they supply a certain form of specialized intelligence.[4] Supplemented by all the multiple forms of intelligence that AI has to offer, the human-algorithm team can achieve much more than either can alone. Take chess, for example. There is no human on earth today who is able to beat modern chess programs. However, in tournaments where humans are allowed to play assisted by AI, the combination of human and machine tends to beat AI that is not supported by humans. There may, of course, come a point in the future when human interference in chess AI will no longer increase but may actually impair performance, but business is much more complex than chess—its rules are much more fluid, and its streams of information are much more ambiguous. In the context of businesses, human intelligence and machine intelligence are likely to have a productive relationship for a longer period. If humans and machines are more and more equal co-workers, the companies that benefit will be those that manage to create a work environment that fosters this cooperation. 

Today, we work and live with companies that are a reaction to the challenges of the industrial age, and the work-environment design that best suited industrial technologies was bureaucracy. Bureaucracy replaced charismatic domination with legal domination, replaced haphazard arrangements with standardized processes and a clear hierarchical way of making decisions that was focused on analytics, efficiency, consistent outputs, and reduction of waste.[5] At the time of its invention, bureaucracy was considered an antidote to bad management. Max Weber, a German sociologist credited with “inventing” bureaucracy, wrote in 1922 that “organizations are shaped by the relentless march of technological and managerial reality.”[6]

Today we face the relentless march of the algorithm. There is so much benefit inherent in algorithms that we adapt our beliefs, behaviors, values, and social norms) to them, personally, socially, and in companies. According to Max Weber, technology puts us in an “iron cage”: we are defined by technology and will be redefined every time technology changes. In the industrial revolution, the “iron cage” trapped individuals in systems of efficiency, rational analysis, top-down control, and digressional power. Now, with the rise of dematerialized digital technologies and artificial intelligence, we feel the need to adapt our ways once again in order to catch up with technology.

If technology is rapidly evolving and technologies are quickly becoming obsolete, today’s challenge for humanity is not to align itself to any single new technology, but rather to find a method to keep evolving its cooperation with technology continuously and forever. Companies need a work design that is so sensitive and adaptable that technological and social innovation at the workplace occurs naturally and permanently. It is not enough to understand individual technologies: the internet of things, social media, 3D printing, virtual reality, block-chain, self-driving cars, big data, cloud systems, or AI, to name a few emergent technologies of the last decade alone. To overcome the challenge of building a design for human, social, and technological cooperation that is able to flourish in ever more technologically driven times, we need to understand what technology wants and how a company can serve these needs best.

The Trajectory of Technology

Company leaders often ask: What does our company want from technology? How can technology help our company to be more competitive? To answer these questions, companies engage in all kinds of futuristic ideation workshops, creative sessions, company visits, and pilgrimages to Silicon Valley or coastal China. They declare success if they have identified or implemented or invested in this technology or that start-up. This is naïve.

The really important question to ask is: What does technology want from companies? This is an unusual question. Can technology “want” something? There are some thinkers, like Ray Kurzweil, who predict that a “singularity” will occur around 2045[7]—a point where machines become sentient to such an extent that they will be able to self-construct. A point where the power of the kingdom of technology outstrips the power of the kingdom of biology, to which we humans belong. That point will be a point of no return for the human race—a singularity. 

The chances are high that technology will become more independent in the future. Machines are becoming sentient in unexpected ways—it may not be that machines will trump the general versatility of biological human intelligence in the coming years, but machines are already coming up with alien forms of intelligence that make them superior for many specific applications. Recommendation engines determine what we buy, filter algorithms determine how we perceive reality, navigation apps shape the way we experience geography. The sheer numbers of proliferating specialized forms of intelligences are replacing more and more areas where our generalist human intelligence once reigned. Over time, the area where we use our human intelligence will become increasingly focused. This process has already begun. 

What I am getting at here is something else. We know from systems theory that complex systems develop emergent properties, which are behaviors that are revealed on an aggregate level but cannot be observed in any single component of the system. The system of biology, as an example, always moves towards greater specialization of species in a process of evolution determined by its inherent characteristics. The biochemical algorithms surrounding DNA shape the trajectory of biology, pointing toward what biology wants.

The system of technology can be visualized in the same way. Instead of biochemical realities, technology is based on the physical and mathematical realities that the world is made of. The laws of physics and mathematics are the algorithms that technology uses to progress. At first, that may sound outlandish. After all, if my computer bothers me, I can cut its power supply. But I can’t unplug the whole system of technology, everything that surrounds us and that is manmade. No one can unplug the internet. And the more the internet of things becomes a reality, the less it will be possible to disconnect physical reality from virtual reality. 

More shocking and significant is that we do not want to unplug technology because we are already a part of it. The American author Kevin Kelly, who is known as the philosopher of Silicon Valley, has devoted most of his adult life to thinking and writing about technology. Kelly uses his own definition of technology, the Technium, which he defines as “the accumulation of stuff, lore, practices, traditions, and of choices that allow an individual human to generate and participate in a greater number of ideas.”[8]

The Technium is made up of technology and humans. Our current culture still holds onto a human-centric view of the universe—a view that puts the rational human mind in control of technology. But in academia it is generally accepted today that no human, no institution, absolutely no one is in control of technology.[9] Technology is an independent force that worms its way forward as a result of technical, social, political, psychological and commercial forces. It is a system that has inert wants, just as biological evolution has. The wants of technology have been making themselves felt for decades and can only become more prominent over time, especially after artificial intelligence becomes sentient.

Today, many companies are lumbering slowly along the technological highway, only to be smashed by Amazon, smashed by Airbnb, smashed by Netflix, smashed by online pure-plays with their data and algorithms. It can be argued that these major successful companies today do not stand in the way of technology but are simply traveling on the same trajectory as technology. What if we could find a way of organizing a company where the use of technology proliferates naturally? Where the technological, social, and commercial spheres establish self-reinforcing feedback loops and evolve together? That company would be on the same trajectory as technology—and it would be a very powerful design for a company indeed.

To sketch a work design of the future, more is needed than just looking at today’s technologies; sn understanding of the inner workings of technology as a whole is required. So, what does technology want? Kevin Kelly has discerned a number of directions that technology works towards that together make up what he terms the “trajectory of technology” (Table 1). Let’s go through this list and consider its implications for the work design of a company.[10]

Technology wants efficiency

Technology loves efficiency. The more efficient a technology gets, the more it begets other technologies. Take electric cars, for example, which only became a mass-market option with more efficient batteries. Or virtual reality, which was invented in 1989 but became viable only when high-resolution smartphone screens became cheaply available in the 2010s.

Humans are in love with efficiency, too. Efficiency has been our faithful companion since the industrial revolution, and it won’t leave us now that we have passed into the digital age. Efficiency is clarity; it is rational and comforting in a world of uncertainty. Efficiency gives us a problem to solve. Dealing with the brother of efficiency—effectiveness—is much more tedious. Effectiveness, which is about choosing what to do rather than how to do it, comes with too many options and is less rationally computable for us than efficiency. It is not only humans’ laziness that lets us seek efficiency; it is technology itself that seeks efficiency. The quest for ever more efficient solutions is one we share with technology. Companies will continue to seek efficiency today and tomorrow. The change is that there will be much more potential to find efficiencies as technology has more and more to offer over time. Therefore, the way work is done in companies—their “work design,” a term we will use extensively throughout this book—needs to adapt more and more often. Organizing must become more of a process of evolution and less of an incremental exercise.

Technology wants opportunity

Over time, technologies offer more and more opportunities to do things differently. The Amazon bookstore begot the Amazon marketplace, which begot Amazon Prime, Kindle Unlimited, and Amazon Dash, which begot Amazon Web Services, and so on. The peer-to-peer file-sharing technology underpinning Napster begot the streaming mediums of Youtube, Netflix, and Spotify, which begot advanced artificial intelligence used for recommendations, which begot social collaboration on videos and music with friends. Youtube, Netflix, and Spotify in turn became possible because of cloud technologies such as those offered by Amazon Web Services, Google Cloud, and similar cloud services that offered server capacity on demand.

As options for technologies to progress increases, so too does the number of options companies have for solving problems. This is increasingly true not only for the design of products but also for the way companies do their internal work. In the 1990s, companies grew a nervous system for the processing of information, called enterprise resource planning (ERP) systems, in the form of packages like SAP or Oracle. These core systems contributed a great deal to a company’s ability to go global and outsource work. Today, web technology has joined ERP systems as the backbone of internal and external collaboration, enabling real-time business and new forms of combining humans and algorithms into new creative solutions.

As we discussed earlier, humans are problem-solvers. Companies are always desperate for better solutions, and technology provides them. An organizational design that is to stand the test of the technological tsunami must ensure that people are aware of the solutions technology has to offer. The need for more opportunity is the same for technology, for companies, and for people: they all want more opportunities. It is up to the work design of a company to transform opportunity into benefits. If people feel encouraged to be on the lookout for new opportunities, can conduct experiments without fear of failure, and have the autonomy to decide on their own to include this or that technology in their daily work, the needs of technology and companies will be aligned.

Technology wants diversity and specialization

One technology begets another, but no technology will ever go away. They stick with us as part of the Technium, forever offering an option of how to do things. Even once-obsolete technologies may be rediscovered and suddenly become attractive again if they are combined with new technologies. The Technium never forgets.

More than that, technologies come in multiple variants. For example, they change form according to their area of application. Google’s search algorithms are both similar and different for searching pictures, videos, geographies, or medical scans.[11] They are similar to and different from filter algorithms used by Facebook, Tinder, or Amazon. Every technology is adapted to the specifics of a situation and becomes ever more specialized, thereby increasing diversity.

The more diverse and specialized the technologies on offer are, the more decentralized and varied a company must become to make good use of the richness of the technological environment—more varied than can be supported by company hierarchies, which are designed to suppress variance, as we shall see in Chapter 2: The Corrosive Impact of Power Differentials.

Technology wants complexity

Technology is one of the main reasons why doing business is becoming more and more complex. Companies must organize themselves in such a way as to handle this complexity, but ever-increasing complexity cannot be controlled; it can only be worked with. Failures will be unavoidable, but research has shown that competent people who are in close proximity with technology, and who are authorized to make decisions, can prevent failures from becoming disasters.[12] Two proven methods to increase a company’s ability to handle complexity are to let the people who are closest to the problem make the decisions, and to ensure that they are competent. Give them competence and freedom, then trust them to act.

Technology wants emergence and sentience

Handling the increasing complexity caused by technology is difficult—so we use technology to stay on top of it. Intelligent agents that keep technologies in check are already at work in every smartphone, every computer center, in cloud systems, in medical systems, or in routing algorithms at call centers. Companies specialized in this field are mostly hidden from public view but are worth billions of dollars. Take ServiceNow, a company that came from nothing in 2014 and is now valued at US$50 billion in 2019. Their business model is to provide companies with the capability to stay on top of their sprawling IT operations, no matter whether the workers are humans or machines. 

Technology will increasingly be running itself in the coming years. Indeed, it has already taken on a life of its own, and determining where sentience starts is an open-ended debate. Some think it starts with intelligent, self-organizing behavior that apparently works but that we are unable to fully understand. We will be using more and more algorithms and intelligent assistants over time. Kelly and others predict that the benefits we are able to give to our organizations will crucially depend upon our ability to collaborate with machines. A work design for the digital age must provide an environment where people can get acquainted with their new technological companions and quickly adapt to the fast pace of change.

Technology wants ubiquity and freedom

Technologies, even dangerous ones, spread no matter what we do. There is no way to control the very real problem of nuclear proliferation, for instance, but there are less dramatic examples. The so-called “washing nuts”—the fruits of the Sapindus saponaria—have been used by local communities in India for thousands of years, but they recently became popular in Western households seeking more sustainable ways of cleaning fabric. Demand for them caused prices to rise so much that Indian communities were forced to switch to “modern” washing powder. Any technology, old or new, spreads. 

Companies align themselves with technologies’ desire for ubiquity by making it easy for technologies to both enter and flow forth from the company: they pull in technology by making it easy for people or units to observe and adapt whatever technology other people, units, or companies are using, and they also let technologies travel from the inside to the outside. Why should a company share its technologies with the outside? The more technologies change, the less a single technology represents a competitive advantage for any prolonged period. Technologies become stale if they are cut off from contact with the outside world; if outside observers cannot scrutinize a technology, if insiders cannot freely discuss its merits and opportunities, its full potential benefits will fail to develop. There will still be a case for secrecy in areas where technological progress is not fast—such as preserving the recipe for a vintage drink like Coca Cola—but in most other cases, openness and the freedom for technology to spread in all directions is a better choice. More and more options become available to an organization that is open to the spread of technology. Freedom begets options begets progress. 

It takes an open organization to let technology proliferate. The primary mechanism for this is to make it easy for people at all levels to take a break from their close colleagues and explore other technologies “out there,” then come back and synthesize their findings at home.[13]

Technology wants mutualism and structure 

Technologies build (and rely) upon each other. A car’s navigation, parking, and voice control systems rely on its electrical systems, which in turn rely on the car’s mechanical systems. Technologies are mutually dependent, and the more advanced the technology, the more dependent it is. 

However, there are two traits that a successful technology—one that spreads—must show. First, it must be reliable. Those technologies prone to breakage are unlikely to spawn new technologies or combine with other technologies to form more complex solutions. Second, its structure must be easy for those interacting with it to understand. Today’s phone apps, for example, are only so ubiquitous because they are built on very stable operating systems (ioS, Android) and developers can access the published library of Application Programmable Interfaces (APIs) released by Apple or Google. Another, more low-tech example is the way that a light bulb interacts with the electrical grid. It can only do its job because it can rely on a stable grid with well-described properties and because its socket conforms to mechanical norms.

In the digital age, work designs need to be geared towards creating combinations of human and technological activity. Therefore, they must cater to experimentation, playfulness, and local variation while still providing a high level of reliability.

Technology wants evolvability and beauty

The result of all of the above is that technology will necessarily evolve. Becoming both ever more efficient and increasingly complex, it will create more opportunities, greater diversity, and more specialized uses. It will show more forms of sentient behavior, will increase freedom, and will rely on and be relied upon by other stable, structured technologies.

Kelly argues that technological evolution and biological evolution are very similar. The specialization of species, the striving of all life forms to become ubiquitous, and the ever-increasing complexity of biological systems is not unlike the process of technological evolution that we have been exploring. The biggest difference between these two types of evolution is that biological evolution is much, much slower. Biological evolution is bound by the realm of biochemistry and scarce resources. Technological evolution is not bound by any material constraints; it is only limited by the laws of physics and mathematics. Technological evolution happens in a realm of abundance; biological evolution happens in a realm of scarcity.

The implications are quite shocking. There is no way that technological evolution will not outpace biological evolution. That means that humans will need to cut loose from their biological origins and humanity will need to come to grips with artificial forms of intelligence that will become ever-more superior. Humans and technology are players on the same team, however. It’s likely that they will become closer and closer entwined.[14] In humanity’s fight to gain dominance over nature and biology, technology has always been our greatest ally. 

Of course, with the limits of our planet so clearly visible, the time has come for us to stop fighting with biology. After all, we are biological creatures, and continuing to fight against biology is likely to get us all killed. It is time to change our ways through a better understanding of holistic ecosystems.[15] Technology can be our ally if we stop using it to overpower biological systems.

Positioning companies on the trajectory of technology

How can a company align itself with a trajectory of technology that calls for continual evolution? The answer is simple: it needs to evolve, too. However, evolution is something totally different than the typical corporate transformation programs of today. A traditional change program follows a number of steps: (1) decide on a vision for the company; (2) assess the status quo; (3) determine the delta between vision and status quo; (4) create an implementation plan; and (5) execute this plan, which usually requires people to be trained, processes and systems to be established, and accountabilities restructured. Five years on, however, the company usually ends up with an outdated vision, implementation that has become bogged down, and a general sense of disillusionment. The classic change program, though rational and controllable, is a relic of the industrial age. It has four fundamental flaws that render it obsolete in the digital age:

1 Reliance on prediction. It assumes that the future can be predicted.

2 Assumption of no important unknowns. It assumes that this vision can be broken down through a rational process into an implementation plan.

3 Assumption of rational agents. It assumes that people at the top have the objective ability to sense what’s needed for both vision and implementation.

4 Assumption of relative stability. It assumes a period of stability after the change has been made so that all implementation costs can be recouped.

An evolutionary work design is quite different. It rests on the following four assumptions: [16]

Reliance on mental models: Multiple predictions are great for building mental models that prepare for the possibilities that the future holds. 

Assumption of fundamental learnings. There are very important things to learn that we are not even aware of. A high-level yet meaningful organizational mission is enough to give direction to the evolution of a company. Visions become more like forecasts, repeated along the way, and less like directions.

Assumption of collective intelligence. Individual actors are even better if they support themselves. A company’s work design must be open and transparent so everyone can sense technological, market, or customer needs.

Assumption of fluidity. The future consists both of stability and change of any magnitude. We don’t know how long stability will last, nor do we know how fundamental a change will be. But we do know that we need to be prepared. 

Biological evolution brings to life highly complex things that humans often call beautiful: zebras and giraffes on the savannah, a flock of geese in flight, meadows filled with flowers. In the same sense, technological evolution brings about beautiful things through its evolutionary drive: virtual worlds, beautiful tableware, sleek cars. The chances are that organizational evolution will bring about companies that we experience as beautiful, too. Places where people are free to invent, to heed their inner calling, to look after others, to contribute to the world with less fear of oppression.

As a very earth-bound North German, I need to add a caveat here. Evolution brings about many highly specialized things that we do not classify as beautiful: cockroaches, bed bugs, intestinal worms. There will also be ugly, exploitative organizations. However, organizational evolution will make sure that the safari will be much more colorful than ever before. 

*** That concludes this excerpt of “Liberated Companies”. If you enjoyed it, consider signing up to this blog to stay connected.


[1] (Nietzsche, 1974)

[2] Adapted from (Silver, 2012). Silver describes what a good forecast is built upon. I think that this list is applicable to the management of any complex system.

[3] (Kelly, 2011)

[4] (Kelly, 2011)

[5] (Birkinshaw, 2012)

[6] (Weber, 2019)

[7] (Kurzweil, 2006)

[8] (Kelly, 2011)

[9] (Harari, 2016)

[10] (Kelly, 2011)

[11] To get an impression, skim through the AI Services offered by Amazon Web Services today. All these world-class algorithms are available today, for everyone. https://aws.amazon.com/machine-learning/)

[12] (Spears, 2010).

[13] (Pentland, 2014)

[14] Historian Yuval Harari believes the emergence of “super humans” is likely—that is, humans augmented with technology in ways that make them significantly less human. (Harari, 2016)

[15] (Raworth, 2017)

[16] The list is inspired by (Sanford, 2017).

1 comment on “Book Announcement: Liberated Companies”

Book Announcement: Liberated Companies

Are you tired of hearing about Agile, New Work, Lean, and Design Thinking?

Did you already experience how the marvelous values inherent to those approaches have been hijacked and corrupted into just another wave of corporate gimmickry?

Do you wonder how your company or team will ever be able to solve its problems more creatively and spirited?

Companies need an update. The way we run most companies today is detrimental on so many levels. It’s neither well-performing nor allowing technology and humans to flourish. Yet there are progressive organizations that show that through distributing power more evenly, we can make the workplace much better than ever before. This book shows how.

The Need

How to enable people to prosper alongside technology is all-important for any modern organization. The more technology inundates our lives, the more humans must be at the center of organizational design. They are the only ones that can make sense of its vast and ever-increasing possibilities. In current companies, people are rarely able to flourish. There is no sidestepping the issue that arbitrary power undermines people’s initiative, performance, and personal development. In the digital age, we need to find new mechanisms for sharing power to make everyone in an organization more powerful – without distributing power so much that companies become indecisive and unfocused.

This book offers a practical method for running companies ‒ using progressive work designs ‒ that is much better attuned to the digital age as well as to human needs. #liberatedcompanies

The Content

Liberated Companies is a business book for people at all levels who are looking for better ways of working yet find it hard to determine what precisely these better ways are. Much has been said and written about digitalization, the agile company, New Work, and the need for more self-management, yet almost everyone struggles to make sense of it all. So many good ideas, so much corporate gimmickry. Most people are uncertain about what’s really important and what really works.

Liberated Companies is a book about management in the age of digitalization. It provides orientation to master the ever-increasing complexity of the business world by showing that human collaboration is more actively malleable than we are accustomed to think or believe. By using and evolving work design configurations, ways of collaborating with one another, we can work ourselves and our organizations into new behaviors and mindsets. The book can be a travel companion on that journey. It provides a map and a compass for those seeking to navigate their company or their team to better human and economic outcomes for everyone in business and society.

The USP

This book helps readers to:

  • Design their organizations, companies, and teams much more actively than ever before.
  • Know what makes really matters for them and their organizations and what can be safely ignored.
  • Map and navigate their organizations’ journey through the digital age.
  • Lead their organizations with purpose, efficiency, and humanity
  • Appreciate, realize, and support everyone’s human potential much better. 
  • Manage in a way much more attuned to the needs of technology and of people. 

Because the book:

  • Makes the fallacies of hierarchical, empowered and self-managed models of working clear
  • Maps the complex territory of organizations in a unique representation of management practice, the “Liberated Company Map.”
  • Distinguishes, based on the situation of a company, those work designs that are most applicable for it out of a library of about 200 work designs
  • Provides a compass to the organizational journey, the “11 Principles of Liberated Companies.”
  • Delivers great examples by describing the configurations of work designs of one traditional and three leading progressive companies. 

The Author

Frank Thun has helped organizations around the globe to digitalize their operations as a Project manager, CIO, COO, and Coach. He studied Economics at the Universities of Kiel, Germany, and Glasgow, Scotland, and holds a Masters Degree in Economics. He worked for start-ups and companies like Daimler, Volkswagen, Capgemini Ernst & Young, General Electrics, Nokia Networks, Bayer, Philips, Schneider Electric and Invensys.  

___

I spend my lifetime looking for better ways to run teams and organizations. This is my attempt for a comprehensive answer. I hope you will find it useful.

Liberated Companies- How to Create Vibrant Organizations in the Digital Age“, 380 pages, will be available in hardcover and e-book worldwide in the second half of November.

Sign-up to www.liberated.company to stay in touch AND spread the word – every tweet and post helps.

0 comments on “Extremely Powerful Organizations”

Extremely Powerful Organizations

New Work and Agile always seem to imply that you need to mellow. It pitches the evil organizational hierarchy against the inventive, social human individual. Like it’s a matter of picking a position on a scale between despotic hierarchy and an egalitarian self-managed organization.

Given the abundance of oppresive hierarchies and bad bosses – attested by the fact that only about 12-15% of people declare themselves truely engaged at work the give people more say in organisations is very understandable. But it is wrong in a critical aspect.

Agile and New Work seems to imply to transfer power from managers to the people, through more participation, empowerment, more transparency and devolution of decision making to individuals and groups. Like power is a zero-sum game: Either managers have it or coworkers have it.

Here comes the snag:

Power is not a zero-sum game. Just transferring it from managers to people might make coworkers more powerful, to ease the weight of oppression from their shoulders, but might not change anything about the power of the organization. #liberatedcompany

More self-management is certainly better for the creativity, engagement, learning, experimentation and growth of people but it has its own defects: Indecisiveness, political behaviors, lack of strategic behavior of the overall organization, diffusion of organizational focus.

A simple transfer of power from the hierarchy to the people doesn’t help much. It just trades one set of limitations for another. Granted, these are other limitations, which might be helpful for some organizations, seeking, for example more creativity and willing to sacrifice focus. However, organizations can do better, much better.

What if it is possible to increase the power of an organization while simultaneously increasing the power of the people? Welcome to the Liberated Company. #liberatedcompany

Let me explain. The power of an organization is the higher, the more it is able to focus all its resources, behaviors, processes, systems on its targets and re-focus them with lightning speed to market or strategic needs. This is a bit like having a Steven Jobs at the helm, who used Apples resources by laser focus and strategic foresight. However, a powerful organization is more than about having a powerful leader, it’s about having extremely powerful bureaucratic processes at work, in all or most parts of the organization: Logistics, HR, Sales, Purchasing, Manufacturing, Finance etc.

The other, largely independent dimension is the power of the people. It is the higher, the more people are able to express themselves, are able and willing to speak up freely, are able to experiment and pick their work according to their intrinsic drives.

Where most people go wrong is to think that powerful organizations invariably suppress people. While there are despotic organizations, where fear is the dominant feeling inundating the organization, there are other organizations that have extremely able, powerful organizations and at the same time are a place where people can freely flourish, in all the many ways they chose to.

Healthy companies only exist in a narrow corridor, that allow for both, a powerful organization and powerful co-workers at any level.

Extremely powerful organizations are always struggling to keep in the narrow corridor. If they increase the power of the organization too much, for example by tolerating despotic managers or overbearing bureaucracies, people will retreat into their inner self’s and go into survival mode. Any increase in organizational power needs to be flanked by an increase in power by the people. Two examples might help to understand this concept.

Take the introduction of new work processes. It is no secret that work processes, however brilliantly designed, are likely to fail if people at work level do not feel the need for them. To push processes on people will just lead to people circumventing them. People don’t like change – they dislike being changed.

Or think about a company deciding to pivot to a new strategic direction. Many companies arrange “change programs to roll-out a new strategy to get buy in of people”. Like a recruiting officer skimming the streets of London to enroll new army recruits in the Victorian Age. Companies engaging with people after all important decisions have been made, will likely end up with outward compliance and inward apathy or resignation.

The fact is: Organizations can only be truly powerful, if they have both: Powerful, bureaucratic institutions delivering great services to customers and employees efficiently AND powerful coworkers, who have a real say in the company, are highly motivated to speak up and communicate their true attentions. #liberatedcompany

On the other hands, if organizations increase the power of people too much, neglecting the focusing capabilities of the organizational bureaucracy, they end up with a social collective of people that engage in all kinds of political behaviors, which are not necessarily helpful for a company’s mission.

It is a matter of balance. The corridor in the middle is where what I call Liberated Companies exist. Hugely successful companies like Haier, world’s leading manufacturer of household appliances, Bridgewater, world’s most succcessful hedgefund or Buurtzorg, a trailblazing care company – just to name a few.

Liberated Companies manage to turn on the power of their central institutions while simultaneously enable coworkers to flourish. #liberatedcompany

Don’t mellow. Turn up the power!


There is more to Liberated Companies, they:

  • strive to put themselves on the trajectory of technology
  • use more self-managed and networked structures
  • are build around a central theme
  • evolve their work designs to create ever better versions of itself
  • manage to turn on the power of their central business functions while enabling people to flourish

A liberated company is conscious of its own work designs, the implications that these have on human behavior, human growth, and economic results. #liberatedcompany

Interested? If you like to learn more, sign-up for “Liberated Company”. You will receive regular updates my upcoming book about configuring progressive organizations.

And: Spread the word, if you like the concepts here or on www.liberated.company.

P.S. My book “Liberated Companies Flourishing Organizations in the Digital Age” will launch by end of November.

Sources

  • The Gallup Studies of Global Employee Engagement
  • Daron Acemoglu and James A. Robinson (2019) The Narrow Corridor
  • Amy Edmondson (2018) The Fearless Organization

1 comment on “Why are Agile, Lean and New Work Getting Stale?”

Why are Agile, Lean and New Work Getting Stale?

Because they ignore power. Take the Agile Manifesto:

  • Individuals and interactions > processes and tools
  • Working software > comprehensive documentation
  • Customer collaboration > contract negotiation
  • Responding to change > following a plan

There is nothing in there about power.

Or take the main underlying of one of the main expressions of Agile, Scrum. It’s main six underlying principles are iteration, self-management, empirics, collaboration, value, and time boxing. Only one of these, self-management, is about power but merely on team level. It ignores the power dynamics that teams are subjected to in organizations. Yes, there are approaches to scale Agile to multiteam level, namely LeSS, SaFEE and Nexus, but these approaches are nothing more than prescriptions for multi-project management.

It speaks volumes that Scrum, which for many is the epitome of Agile, strangely ignores the first line of the Agile Manifesto.

How on earth can one put individuals and interactions over processes and tools and at the same time slavishly obey SCRUM processes?

A silly, obvious contradiction. But that is the state of Agile. It becomes more and more captured by the powers in charge as just another set of management processes which are to be adhered to. Most companies “upgrade” their project management processes from waterfall to agile by replacing one set of processes and measurements with another. Still, the operating system that these processes are running on remains the same, the organizational hierarchy. 

In a conventional organizational hierarchy Agile is an impossibility at any level above the team:

  • Processes > Interactions: 
  • Control > Results
  • Adherence to your manager > Collaboration
  • Execution of a plan > Sensing & Evolving

A hierarchy expects adherence and submission. It is basically built on control. Individuals and interactions are secondary concerns.

There is just no way you can scale Agile in purely hierarchical organizations. Instead we need an update not of this or that process, but on the underlying operating system that agile runs on, the hierarchy. 

No, that does NOT mean that all companies need to become self-managed. Neither does it mean that middle management needs to be eliminated.

To liberate companies we need to (i) update the mechanisms to distribute power between people in (ii) a manner that is much more complex than just exchanging hierarchy for self-management.

 As Nobel prize winner Elinor Ostrom and many others have shown, there are many more alternative models of governing. These are not even new, we just got to rediscover them. We are better equipped in bringing to live these new, progressive organizations than ever before in history: Digital Technologies and the transparency they offer, enable forms of human collaboration, that are much closer to the needs of organizations, people and technological progress itself. 

We are more than ever before in human history able, ready and in need of new ways of collaborating with one another. 

If you like to learn more, sign-up for “Liberated Companies”. You will receive regular updates my upcoming book about configuring progressive organizations.

And: Spread the word, if you like the concepts you find on www.liberated.company.

P.S. I expect the book “Liberated Companies” to launch by end of November!

Sources

  • Agile Manifesto https://agilemanifesto.org/principles.html
  • Keith Sutherland (2015) Scrum: The Art of Doing twice the work in half the time
  • Elinor Ostrom (1990) Governing the Commons: The Evolution of Institutions for Collective Action
0 comments on “How is the worlds most successful Hedgefund organized?”

How is the worlds most successful Hedgefund organized?

Which companies are at the forefront of organisational design AND economic results? The case can be made that this list will include these three companies: Bridgewater, Buurtzorg and Haier.

  • Bridgewater, argueably the worlds most successful hedgefund over the last decades with 125 Billion Dollars of Assets under management
  • Buurtzorg, a Dutch Health Care Company which grew from zero to 14500 co-oworkes within twelve years
  • Haier, the worlds dominant manufacturer of white goods (e.g. washing machines), which gained prominence by buying GE Appliances in 2017 – and by its CEO smashing sub-standard washing machines with a sledge hammer

These three companies are all leaders within their markets. They are quite different from one another, but all of them share one common focus: Work Designs. They use a configuration of work designs that contributes to their mission. Not only that, they experimented with work designs over years to come up with ever better versions of themselves. By zooming in on these progressive organisations it becomes blindingly obvious, that their success is rooted in their obsession over work designs.

Bridgewater, Buurtzorg, Haier – companies that know that their success is rooted in their obsession to design ever better ways for people to work together.

The concept of work designs and configuring companies has been introduced preciously in my blog, especially in the last post. Starting with this post, I like to analyse the configuration of these three leading companies, one company at a time. Let’s start in this post with Bridgewater.

The configuration of Bridgewater

Bridgewater is all about learning. For a global hedge fund, it is all-important to get the big decisions right, the ones involving billions of dollars. Consequently, Ray Dalio, the founder and guiding spirit of the company, has configured it with work designs that strive to get one thing right: making big decisions. Learning is the sustainable advantage that Bridgewater seeks in order to make ever better decisions.

Bridgewater can be characterized as a hierarchical organization that relies not on orders but on mission command. Through its management practices Bridgewater strives to develop people from a socialized mindset (“team players”) to a self-authoring mindset. It wants people to become more autonomous, independent problem solvers. A framework of adult development, proposed by Harvard researcher Robert Kegan, whom we met before, underlies Bridgewater’s choice of work designs. In his 2018 book, Ray Dalio describes his organization as “a machine to produce good decisions through the optimal use of the collective power of self-authoring minds”.[1]Let us look at how Bridgewater achieves this, category by category.

The structure of the above map is explained in in the last post.

Some of these work designs might be unknown to you. Feel free to investigate them in the compendium of management practices.

Organization

Bridgewater has not abandoned the traditional hierarchical structure. It focuses much more on learning and reflective practices, while expecting managers to empower employees so that people take charge of their own development. Managers are to refrain from ordering and requesting obedience. They should use mission command instead. Personal development at Bridgewater is decentralized: everyone is a coach and a mentor, as well as  being coached and mentored.

Decisions

This is the area where Bridgewater is very special and very focused. Most decisions are still made by individuals and hierarchical superiors, but the most important decisions are made using a unique process called “believability-weighted decision making”. In a very structured meeting format, decisions are made by voting on alternatives. The number of votes that everyone gets depends on their track record of making good decisions. More experienced, more competent, more knowledgeable people with better track records get more votes than novices without much experience in the subject that is to be decided upon. Hierarchical rank does not matter – but competence in the subject to be discussed does.

The thinking behind believability-weighted decision making is that voting is good, as it allows an organization to use collective intelligence, but it is better still if the voting is done by competent people ‒ an idea that is as reasonable as it is fraught with difficulty and danger. Who determines the competence levels, the individual believability of people? At Bridgewater that competence level can be set by a superior, it can be voted upon by a group, it can be established by data analysis (for example on the basis of CVs or psychometric testing), or a combination of these three methods.

Believability-weighted decision making is an attempt to make high-stakes decision making in companies more effective. In democracies, anyone proposing this kind of decision making would be rightly accused of Orwellian elitism. Every national assembly, even the founding fathers of American democracy, has struggled with this issue: “Surely, we can’t give equal voting rights to the plebs, the uneducated masses! We aristocrats/bishops/merchants/educated people need to lead.” In a company setting, the jury is still out on the believability-weighted decision-making idea. Ray Dalio is sure that this kind of decision making is a huge part of the reason why Bridgewater is – by some measures ‒ the most successful hedge fund in the world.

More conventional, participative decision making, delegation of decisions, the advice processand other decision practices are also used. Routine decisions, those that can be safely trusted to a number-crunching machine, are routinely engineered into algorithms. Especially in the financial sector, machines are making many decisions on their own or are an integral part of a combined machine‒human decision process. While other companies approach decision making by machines haphazardly, as mere minor features of this or that process, Bridgewater has elevated algorithmic decision making into a work design.

Meetings

Bridgewater is strong on meeting structures. It recognizes that everyone must be heard. It employs a time limit of a maximum of two minutes of uninterrupted talk in small meetings. And it expects people to make themselves heard, too: staying silent is not an option. Even in large-scale meetings, people are obliged to give feedback about their feelings and the performance of other meeting participants, using an online app that displays the feedback in real time on screens, while the meeting is still in progress. People are supposed to be open-minded and assertive. Meeting structures drive these two behaviors to the fore.

Control

Bridgewater employs most of the usual practices of a hierarchical organization: target setting, budgets, dashboards, standard operating procedures, job descriptions and reports. The most significant practice to align and control the work of people at Bridgewater is mission command, although Ray Dalio doesn’t call it that. The nature of mission command fits the overarching target of creating and utilizing self-authoring minds perfectly, as it is squarely based on the independent problem solver. On top of mission command, people are also expected to pick challenges themselves. The self-authoring mind writes their own destiny in service of the mission that a superior or the company has defined.

Bridgewater uses toolscaping intensively to supply its people with integrated tools to manage the business. Far beyond the usual communication and business process supporting systems, it goes so far as to provide apps for interpersonal conflict moderation and interpersonal transparency, and cloud systems to stream videos of meetings. It appears that founder and CEO Ray Dalio takes a personal interest in an ever-expanding, ever more integrated tool set.

People 

Bridgewater emphasizes three kind of people practices: testing, coaching and feedback. Testing is pervasive. New hires remain in a special “onboarding” status for as long as reviews are not good enough for them to be allowed to move into the line organization. Dalio writes that a 30 percent attrition rate is acceptable, and onboarding may take up to 18 months. Even people inside the organization are re-evaluated regularly by co-workers at all levels and through the use of psychometric testing. Dalio speaks of “oiling the machine”, a questionable and telling metaphor for his utilitarian outlook on people.

Performance management is centered on coaching. Being a manager at Bridgewater means being a coach; without outstanding listening skills and questioning techniques no one at Bridgewater should be able to climb the ranks, or indeed, retain their job for long.

Transparency

Transparency is extremely highly valued:

  • Videotaping.Every meeting is videotaped and accessible for everyone.  
  • Issue filter. Everything people feel about the company and job is supposed to be captured in a system for all to see.
  • Baseball cards. Every person is described with a small number of key personal attributes determined by psychometric testing and co-worker feedback. 
  • Open reports. Every report is available to everyone. Classified reports do exist but are a rare exception. 
  • Daily updates. Every day, everyone in the organization posts their answers to three questions: What did I do yesterday? What is to be done today? What are my reflections, the thing or feeling that is most in my mind? These posts can be seen by everyone in the organization. 

Bridgewater is definitely operating on a “all there is to know” basis ‒ and not on a conventional “need to know” basis. Its overarching target is to supply all the information that “self-authoring” minds at all levels can process, learn and use to provide feedback or come up with better decisions. This degree of openness is radical and can easily appear dystopian. Is a place of work where the light of transparency is everywhere and there are few dark corners to hide and rest still a place for humans? Is this degree of transparency making people show compliant behavior on the outside while keeping their true views to themselves? Many people are quite skeptical about Bridgewater’s configuration of work designs, while others, like philanthropist Bill Gates, appear to be supportive of Dalio’s practices. [2]

Projects

Little can be obtained from the sources about any special work designs for projects. However, it seems fair to speculate that Dalio’s outlook on projects is bound to be determined by the three cornerstones on which he built Bridgewater: elaborate decision making; learning; and feedback and radical transparency. This means Bridgewater would be expected to use more mature work designs for its projects, like agile methods, but I found nothing to substantiate this claim.

Learning

Dalio’s core idea for his company is learning. He wants Bridgewater to be a meritocracy of ideas,  a place where the best ideas are produced and where people that consistently produce these great ideas rise to the top. He even provides a formula for this: “Idea Meritocracy = Radical Truth + Radical Transparency + Believability-weighted decision making”. The target is to create a culture of learning, where failure is allowed, and the resulting pain is distilled by (brutally honest) reflection into learning. Everyone is expected to teach everyone all the time in a work environment saturated with learning opportunities. 

Reflection

Reflection in an environment of “radical truthfulness” means ignoring social impulses to dampen one’s critique to the point of being perceived as unkind and rude. Dalio calls this way of giving feedback “tough love”. As well as reflective microstructurespeer feedbackskip-level feedback and talking partners, two more radical practices stand out from the host of opportunities for self-reflection at Bridgewater: the dot collector and the pain button (see Chapter 8).

Bridgewater clearly puts the collective interest of the company ahead of the individual interest of comfort and self-preservation. Bridgewater is a very challenging workplace where you need to display an uncompromising willingness to learn. There is nowhere to hide from personal injury of the ego in a place of radical openness and radical transparency. Unlike other elitist organizations, no one is able to rest on their laurels. Its central ideas are:

  • An idea of technology that sees technology and people as co-workers.
  • An idea of performance centered on making ever better decisions.
  • An idea of ruling based on a hierarchy which nurtures people to become self-authoring.
  • An idea of work based on never-ending, relentless growth in a machine of learning.
  • An idea of life based on mental awareness.

You might feel fascination or abhorrence at these radical practices. But one thing is for certain: they are a great experiment.

Conclusion

Bridgewater uses a staggering number of work designs: Seventy five. A typical, run-of the mill company uses just about a third of these, usually about 25 to 30. This proliferation of work designs is typical for progressive companies. It seems counter-intuitive, but Bridgewater is regulating the work between people heavily in order to make it easy for them to speak their mind freely.

The paradox of progressive organisations: In order to liberate people you need to regulate a psychologically safe work space into being.

It is a complex story, but basically if you want people within a hierarchy (which Bridgewater is) to speak up, you got to restrict the arbitrary power that managers have over people. The way to do that is by using mandatory work designs.

In the next post, I will contrast Bridgewater configuration of work designs with the one of a more traditional organisation, before proceeding with analysing Buurtzorg and Haier. I like to end with a teaser: Here is a chart comparing the average liberation level of Bridgewaters work designs to the ones of a traditional, purely hierarchical company.

Hope you enjoyed the post. Sign up the the emailing list of the upcoming book “Liberated Companies” if you like what you see.


[1]Ray Dalio,(2018) Principles (Simon & Schuster)

[2]A critique can be found at https://www.nytimes.com/2017/09/08/business/dealbook/bridgewaters-ray-dalio-spreads-his-gospel-of-radical-transparency.html, retrieved 5thof  June 2019

I have posted about Bridgewater before if you like to learn more just search for Bridgewater” on the Blog side.

0 comments on “200 Work Designs on a Map”

200 Work Designs on a Map

It is strange. On the one hand most companies seem to be all alike and not so much different from one another at all: Hierarchical beasts that employ the classical work designs of Feedback, Delegation, Status Meetings, Protocols, Policies, Orders, Rewards, Appraisals etc. to get things done.

On the other hand there are more progressive companies like Google, Buurtzorg, Amazon, Haier, Netflix or Bridgewater that utilize some “leading edge” work design such as OKR’s, Self-Managed Teams, 6 Page memos, Culture Books, Promises Beyond Ableness, Mission Command, Consent Decision Making etc. They often appear to be using quirky ways to get things done differently.

Many people are fascinated by this or that “Work-hack”. Some even try it on their own Organization. Well, I guess by now most people have been subjected to daily stand-up meetings, KANBAN Boards and more engaging workshop formats with lots of breakout groups working in parallel – just to name a few of the better known practises.

What if we could explain companies by the way people are working with another? Introducing the Liberated Company Map.

During the last couple of years I have assembled a library of Work Designs of both traditional and more progressive organizations. All these Agile Work-hacks, New Work or Self-Managed Practices were too intolerably disordered for my limited teutonic mind. So here is my roster for ordering them. It consists of three criteria.

First, all work designs have a primary function, a target that they are used for. I have clustered these targets into nine functions of management in a 3*3 matrix. That order is inspired largely by Henry Fayols classic six functions of management.

The nine types of management practices

Please note that “Management Practices” are a subset of work designs – more on that in later posts, I do not want to get bogged down in theoretical discussions here.

Second, work designs are ordered by the size of the power differential that exists between people. By doing this, I am assuming that the amount of discretionary power that bosses have over employees has a critical influence on a persons behavior. People in more hierarchical, authoritarian companies will weigh every word and deed to not upset superiors, wherelse people in more self-managed organizations will find it easier to disagree and speak up. There is much more psychological safety in more self-managed organizations, and that causes work designs that foster on intrinsic motivation and social team dynamics to work much better than they would work in an enviromment of conformity and fear. I clustered the size of the power differential in four levels.

Companies can be distinguished by the size of the power differential between people

With increasing liberation level, the power shifts away from a manager towards employees and groups. This way of ordering companies is based on a scale proposed by Renis Likert, an American business professor, and is similar to other popular ordering systems, like Laloux’s Teal Model.

Developmental stages of organizational systems: 4 models

Last, I use the severity of a work design as an ordering criteria. The “severity” is the risk of a major backlash occuring if things go wrong with the use of a work design. For example, there is usually no harm in using pratices like “Daily Standups” or “Kanban Boards” but immense harm is done by using “Elected Superiors” or “Self-Service Remuneration” out of place, i.e. without a suitable company environment and other supporting work designs being in place.

Putting it all together, here is the map. It uses the 3*3 Layout of the nine management practice categories, subdivides each of the nine quadrant’s into four sub-quadrants by liberation level, and orders the list of practices in these sub-quadrants by severity. I call this the Liberated Company Map.

The Liberated Company Map

It’s a big map: You need to zoom in to see the details; you won’t know some practices and you might disagree with some of the mapping. I can offer you some help right now: If you want to dig into the practices, here is a complete list. Howeever, there is more to it, more to the art of configuring companies with work designs. But I leave that for the next posts.

I like to close with a preview. Any company can be mapped on the Liberated Company Map: Amazon, Google, Haier, Netflix, Buurtzorg or Siemens and Ford – any company. So here is a mapping of Bridgewater, a company of about 3500 employees and the worlds successful Hedgefund, known for its radically progressive organizational design.

All the management pratices not used by Bridgewater are left out in this graphic.

In the next posts, I will go through configurations of progressive companies and explain how they work. Companies on the very edge of organizational design, such as Buurtzorg, Haier and Bridgewater – but also more traditional companies.

I have just finished a manuscript for a book called “Liberated Companies: A Map and a Compass to Better Organisations in the Digital Age” that explains the topic in about 300 pages and 45 graphics and tables. If you are interested in learning more, sign up to my blog.

And spread the word, if you like what you see.

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Featured Picture by aitoff, https://pixabay.com/users/aitoff-388338/