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Company culture: an open and shut model

May 20, 2016 by lsmit@wemanity.com in  Blog

There are nine and sixty ways of constructing tribal lays,
And every single one of them is right!

Rudyard Kipling, In the Neolithic Age

How many ways can you categorise the ways that different startups organise themselves, the different flavours and colours of organisational culture adopted by companies through their life (and death). Far more than nine and sixty, I assure you. And, yes, each of them is right. Models of the world are usually helpful in making sense of the continuous chaos of reality.

I’d like to propose a very simple and useful model for startup (and, more widely, company) cultures, that I feel is relevant at this point in history: open and closed.

hierarchical-pyramid

Closed cultures

There are a number of ways to run a closed culture, but the presence of any of the following features is usually a clear sign of an at least partially closed culture:

– Secrecy by default: Business information is closed by default, on a need-to-know basis. Typically, only the senior management team has access to all the information (e.g. salaries and bonuses, detailed financials of the organisation, etc). These multi-layered secrets often form part and parcel of the power structure: the higher you are, the more information you have access to.

– Top-down, hierarchical management: This can be implemented with varying degrees of flexibility, but the common element is the idea that you have a boss and you should do what they tell you. All closed cultures enable some elements of push-back from those savvy enough to know how to make their points from below, but the general mode of functioning is from the top to the bottom.

– The Pyramid/Career Ladder: Closed organisations are without fail mapped out as pyramid-shaped: there is one CEO at the top, with a senior executive team below, and progressively wider layers as you go down. This Pyramid also provides the Career Ladder – the ever-receding MacGuffin that motivates people to work hard so they can one day get on top of the Pyramid and finally achieve true Success.

– Focus on profit: The more advanced closed organisations tend to focus on profit above all. This is measured as a number and is the primary driver of decision-making. If an action results in more profit, it’s worth doing. If the company makes more profit, it is more successful. Profit is the essential driver of all decisions. “How will it affect the bottom line?” is the main (or perhaps even only) question being asked.

– Motivational measurements and individual incentives: Closed organisations, as they mature, learn to apply measurements as a method of ensuring performance. They will measure everything that can be measure and make up targets and projections (with varying degrees of involvement from those being measured), then hold people accountable to those estimates. Those who meet their targets are rewarded, and those who fail are punished.

– Fixed roles and masks: In closed cultures, you are hired for a specific role. You can progress towards more managerial responsibilities through promotion, but typically, doing things outside of your role is discouraged (if only because it will step on the toes of the person who currently owns that role). In closed organisations you are your role. It’s no surprise, then, that most people put on a mask to go to work: while they are at the office, they are no longer a full person with a variety of wants and activities and aspirations, but a “Web Developer” or a “Marketing Manager”. Professional behaviour is all that’s accepted, and it’s all that’s given.

– Distrust and control: A fundamental assumption of closed cultures is that people are lazy and cannot be trusted, so they need to be controlled, otherwise they will not do any work. This gives even more justification to adding more measurements and narrowly defining roles and performance criteria. When they don’t treat them like mindless cogs in a machine, closed cultures tend to treat employees like irresponsible children.

There are countless examples of closed cultures: most of the companies and organisations in the world are run on the closed model. In fact, in many countries it is illegal to run a public company in an open way .  You’ve most likely worked for a closed company at some point in your life. In fact, chances are you’re working in one right now.

Whilst closed cultures (which form the majority of business cultures today) are clearly capable of delivering great results, they have a number of deadly flaws, which I’ll cover in more detail in a later article. For now, let’s look at open cultures.

Open cultures

If there are many ways to run a closed culture, there are even more ways to run an open one. Each open company tends to have its own way of expressing its culture. However, these are some typical commonalities by which to recognise an open culture:

– Transparency by default: In open cultures, business information is publicly available to all employees. This includes salaries, but also bad news, strategic plans, problems, decisions, ideas, etc. People are trusted to be able to handle that information.

– Flat hierarchy and/or self-management: If everyone knows everything and you’ve hired smart people in the right kinds of jobs, it is very difficult to maintain an arbitrary hierarchy, since everyone can contribute to any decision. When you trust people, it is also unnecessary to set up managers whose job it is to check after them.

– Personal development through work: When there is no career ladder, how do people achieve career progression? The obvious solution is that they take on more responsibilities without having to go “up” an arbitrary ladder. As a natural consequence of that, it is possible for people to fully express themselves in their work, by getting involved in their full range of interests, so they can achieve more personal development than they would in a narrow role with a career ladder.

– Multiple stakeholders, values, and purpose: In open organisations, the idea of valuing profit above all others becomes obviously absurd. It’s not only shareholders, but also employees, suppliers, customers, society, and the environment, which matter. The company does not exist in a vacuum. Values become a way to express what the company cares about, rather just a motivational slogan. Along with the higher purpose of the company, they become the way that decisions get made in open cultures.

– Team or company incentives: There is a progression from the closed culture approach of individual incentives, via team incentives, towards the eventual ideal, which is a system where base pay is determined by a combination of what the person is contributing, what the person needs, and what the company can afford, along with company-wide bonuses. Individual incentives are shunned.

– Self-determined pay: One of the surefire signs of an open culture is when people determine their own pay. In most companies, this is unthinkable. In open cultures, it becomes a natural consequence of all the other stuff. After all, if you trust people to make all sorts of important decisions about the company, why not trust them to make this decision too?

– Separation of role and person: The idea that a person and their role are intrinsically bound becomes visibly stupid as the culture opens up. Eventually, it is clear that people are not their roles, but are capable of engaging in several roles simultaneously, contributing more fully to the organisation’s needs. This further enables people to accomplish themselves and to be fully themselves at work instead of wearing masks. One of the ways this is accomplished is through Open Allocation.

– Trust: Perhaps most important is the fact that open cultures treat employees like adults, trusting them to do the right thing even in complex or ambiguous situations. There are of course processes to help people make better decisions, but the key point is that all these processes start from a perspective of trust and responsibility.

The benefits of running companies this way ought to be obvious, but in case they need to be spelled out:

– People in open cultures are more engaged, happier, more creative, they contribute more, etc. This makes them much more fun to work in, both as a founder and as an employee, but also much more productive – people work much more effectively when they care.

– Having a better environment makes it easier to hire great people.

– Open cultures are way more adaptable to change. Change management is an oxymoron in an open culture: change happens constantly and continually, not through expensive, long-winded, and often failure-prone change processes.

– Because they motivate people so much better, open cultures are, ironically, also better at achieving sustainable, long-term financial results.

There are some examples of open cultures out there, too, to varying degrees.GrantTreeBuffer, Valve and Github, in the startup space, are known examples of open cultures. Others include Semco, Burtzorg, Happy Startup, MorningStar, and many others in all sorts of different contexts and sizes. All companies could adopt an open culture, but most don’t. Why is that?

Reinventing Organisations, by Frederic Laloux, studies a dozen or so open cultures and comes to the conclusion that two things are absolutely prerequisite for an open culture to exist for any length of time: both the CEO/Leader and the owners must be fully supportive of this (currently) unconventional way of operating. Otherwise, eventually the company hits a hard time, and either the CEO or the owners pressure it into returning to a more traditional (i.e. closed) mode of functioning. So the obvious reason why more companies are not currently open is because most CEOs are not prepared to let go of their control mindset, and when they are, the owners (whether private owners or VCs with board seats and a traditional, closed mindset, or simply public markets) frequently won’t let them.

If you’re a founder of a startup, this poses an interesting challenge: are you up to the challenge of creating an open culture in your business? Even when that involves giving up the trappings of power? Even when that involves passing on an investment round from an investor whom you know will force the company to change its ways when it hits a rough patch?

If so, welcome to the club. Follow this blog, and I’ll do my best to share what I’ve learned in transforming GrantTree to be an open company. This is still a new field so we can all learn from each other.

By: Daniel Tenner from GrantTree

Company culture: an open and shut model

Yes … You Can … Change Your Organisation Culture!

Apr 19, 2016

Some management consultants claim that you can’t change an organisation’s culture.
This is nonsense.

Numerous other management and change consultants claim they can change an organisation’s culture.
This too is nonsense.

You can change your organisation’s culture … from the inside.
Indeed, a leader’s responsibility includes Shaping their Organisation’s Culture.
I am going to share two successful stories of leaders driving change in their companies. On both occasions, I was engaged as an external consultant with the brief to co-design and facilitate the process and selected interventions.

 

Engineering Inc.

From a loss-making conflict-ridden environment where indifference and lack of trust reigned, to a profitable integrated company with engaged employees. The company is now a unit in a global corporation and a Centre of Competence for its product line.

The Situation: A new CEO had recently been appointed to a company which had changed owners 3 times and been making losses for 8 years. The environment was poisonous: chaotic production processes, cynical, continuous conflict with customers due to delivery and quality issues, abuse of the system by middle managers who themselves were not trusted by the production engineers and technicians. Closure was a possibility with 300 jobs at risk.

Changes and Process: Three new engineers were brought in to fill critical positions: Chief Engineer, Senior Project Manager, Site Manager. We conducted individual interviews with all managers, held focus groups at all levels, engaged the works council. Product demand fortunately was not an issue. Customer relations unfortunately were a serious problem. The CEO appealed for support. He laid out a clear strategy with a message of the environment and changes needed to continue operating. Changing the focus from inward (protectionist silos) to outward (the whole business with customer needs as focus) we used strength-based approaches to realign around real business Questions, whereby employees were invited to contribute. The production and logistics process was changed completely; skills deficits were alleviated; product design now involved production; the management team began to work as an integrated unit; employees wanted to contribute to improvements. Three middle managers who resisted the changes were forced to leave. Additional jobs were created in production as demand rose. Within two years, the site was making a profit.

Key Change Success Factors: The need: without change, the company was in serious danger of closing. Leadership: A driven leader who everybody trusted – he was visible, approachable and walked the talk. His messages were clear and he listened. Involvement: People learned not only that their contributions were desired, they experienced that the invitations they received were genuine.

 

Finance Inc.

From a small sleepy company in which employees had a lackadaisical approach to their work and customers, to a dynamic market leader whose customers praised service quality.

The Situation: A small specialist data processing company was acquired by a global corporation. A new CEO was installed together with two experts from the parent company. The environment was friendly and relaxed. There was little engagement, people worked with an eye on the clock, problems were referred to management, error rates were high, clients were irritated.

Changes and Process: The new CEO laid out clear guidelines, expectations and his vision of potential opportunities. All employees were invited to play an active role in working groups that defined and implemented new more efficient practices and new customer interface processes. Customer orientation was prioritised. The two new specialists were appointed to lead functional units, otherwise, the only hierarchy was towards the CEO. Processes were defined, personal and team responsibility was expected, engagement levels improved significantly, the environment was noticeably more dynamic, problems were solved at the level at which they occurred, customer satisfaction indices increased dramatically. Within two years, the number of employees increased three-fold as new clients came on board.

Key Change Success Factors: Leadership, Trust and Recognition: Clear consistent Leadership; clear guidelines; employees felt valued and freer. Involvement: employees were able to see the impact of their contributions.

 

Culture is the continuously evolving dynamic interaction of the mindsets and gutsets of all the actors in the system. It is the Soul of the Organisation that drives the behaviours we observe.

In many if not the majority of organisations, observed behaviours reflect not the values of the people within the organisation, but those hidden values of the organisation as a system, frequently driven by inappropriate leadership. By inviting and encouraging the people to engage with the system, leaders can lead a change from a negative to generative culture. Indeed, this is their responsibility.

And in the fast changing world of the early 21st century, shaping an adaptable organisational culture is becoming a survival essential.

Yes … You Can … Change Your Organisation’s Culture!

By: Eric Lynn from CultureQs

Yes … You Can … Change Your Organisation Culture!

Rejecting roles

Mar 29, 2016

Rejecting roles: That’s marketing’s job. You need to talk to IT.

Having roles is considered essential by most organisations. We’ve read dozens of business blogs, HR advice articles and even management training courses that insist clearly defined roles lead to better results, greater productivity and higher motivation. Without clear definition of roles, they warn that tasks get missed, no-one takes responsibility, the office is chaotic and individual motivation drops.

We disagree.

The writers of this advice have grasped the outcomes they want – people taking pride in their work, everyone focusing on delivering value, individuals coordinating and collaborating – but they’ve applied the wrong solution.

They’ve confused roles with responsibilities.

That may not sound like a big deal, but we think it is. Rigid role definition has some major downsides. We believe it hurts companies and individuals, costing them in creativity and happiness.

Most organisations intend their role definitions to be a way of signalling particular specialisations, expertise and responsibilities… but instead, the definitions swiftly harden into barriers, marking out territory which is defended against ‘interference’ from others. Have you ever been told to back off by the marketing manager for commenting on the new advert? Been refused access to the code base by the developers, ‘in case you break something’? Been told to leave presentations to ‘the sales guys’ or forecasts ‘the finance guys’? At the extreme, you may have your opinion rejected with a straight-forward ‘well it’s not your job to worry about x, it’s mine!’.

Individuals may also use their role definition as a way of avoiding unpleasant or boring tasks. This ‘that’s not in my job description’ approach ends up making the company less efficient as well as eroding team motivation. I remember organising a last-minute marketing stunt when I worked at Unilever. I was booking a double-decker bus to turn up and I wanted to check it would actually fit into the office forecourt. The marketing assistant nipped down to Reception to check. An hour later, she returned. The security guard had refused to measure the gateway and if it was beneath the dignity of a security guard, then she reckoned it was beneath the dignity of a marketing assistant as well. So I borrowed the security man’s tape-measure and checked the gateway (you could – quite literally – have fitted a bus through there). Anything wrong with doing my own measuring? Absolutely not. Anything wrong with wasting an hour of time arguing about whose job it was? Plenty.

Roles are comfortable – but bad for us

It’s very human to defend our own work and our own opinion. When we can dress this up with the authority of experience, expertise and organisational separation – all the better. Except it isn’t. Rigid role definition acts as a barrier and can stifle innovation. It can also make things slower and less efficient.

If a customer rings up with a problem, they want a solution, not to be told that only part of their problem can be dealt with by this department, and they must be passed on to billing or whoever to deal with the rest of it.

It’s not great for individuals either. Sticking to just one thing may mean our knowledge gets deeper, but also narrower.  We can get bored or worse, so convinced of our own expertise that we can’t take on other points of view.

Being Radical: Sticking to the start up way

In many start ups, a lack of defined roles is the default position. There is not enough money to hire specialists – instead developers must learn to present to investors, marketing managers must be able to create and manage their own customer data, and everyone must have a grip on the financial assumptions as well as a grasp of the their product (this often means some grasp of the technology).

When entrepreneurs look back on the early stage of their companies, they often comment on wistfully on the diversity of work and of how close to the customer it meant they were.

Jeff Bezos, CEO of Amazon, recalled being the ‘mailroom grunt’ in the company’s early days, driving books to shipping and courier companies in his 1987 Blazer. But this doesn’t scale, right? Jeff Bezos is not still doing deliveries. Actually, he is. He spends a week every year in the warehouse. It’s not a PR gimmick, because he refuses to set up interviews when doing it. It’s an opportunity to stay connected to his responsibility – leading Amazon – and not the role of CEO. That includes really understanding conditions for employees – something for which Amazon has received a lot of criticism – and staying close to core services like order fulfilment.

Another trick used at Amazon is to have individual employees who have no role at all. Bezos has ‘shadows’, people who simply follow him around. It means there’s always someone free to chase a wild idea or set up an experiment – and it recognises that a responsibility like ‘envision Amazon’s future’ requires several people, not just a single role.

So what should we do?

1. Responsibilities not roles

Some radical companies go for a very broad responsibility ‘provide value to the company’ and say that how this is fulfilled is up to the individual. Others go for more precise responsibilities: ‘help the customer’ or ‘make sure we comply with financial regulations’.

The point is that how you fulfil these needs can require doing tasks which, in other companies, would be seen as belonging to differing roles.

2. Trust people

A lack of roles makes people more responsible, not less. Tasks rarely get missed because everyone knows they have total responsibility for the work – no tester will come pick up the programmer’s bugs; no finance controller will correct over-optimistic projections.

3. Trust people some more

A lack of roles doesn’t mean that everyone will try to do everything. People naturally gravitate towards what they’re interested in and what they’re good at. If someone is convinced she’s a brilliant illustrator and everyone else insists the stick men cartoons are rubbish, she will soon stop.

4. Value dissent not consensus

No roles doesn’t mean you have to design by committee. Heated arguments are common, and that’s fine.  Even if people don’t agree at the end of the debate, the important thing tends to be to air the problem. Opinions can be rejected; a decision can still be made, risks can still be taken…

By: Helen Walton from Gamevy

In the family way

Apr 29, 2016

It’s funny how things work out, what we see when we open our eyes and raise our curiosity.

In particular, two events this week that in one moment filled me with dread, then filled me with hope and possibility.

Firstly, on Wednesday a colleague sent me an article from The Economist about the quality of managers in the UK. The article reflected on the following:

The low productivity of British workers has several possible culprits. Inefficient family-run companies are sometimes blamed, as are poor workforce skills. But whereas these problems are well documented, another factor is glossed over: the mediocre performance of British bosses. John van Reenen, director of the Centre for Economic Performance at the London School of Economics, argues that the standard of British management is “significantly below” that in leading countries. His team carried out 14,000 interviews with employees around the world and found that British workers rated their supervisors lower than those in countries such as America, Germany and Japan. “We are not in the premier league,” he says.

Management as a skill has rarely been taken seriously in Britain, where the cult of the gifted amateur prevails. Ann Francke, the head of the Chartered Management Institute (CMI), says that four out of five bosses are “accidental managers”: they are good at their jobs but are then promoted into managing a team or a department, without further training. Unsurprisingly, “they flounder”, she says. Mr van Reenen reckons that about half the productivity gap between Britain and America could be attributed to poor management.

http://www.economist.com/news/britain/21679215-business- gets-serious-about-running-business- end-accidental-boss?fsrc=scn/li/te/pe/ed/endoftheaccidentalboss

Inefficient family run companies? Funny that, because on the very next day I found myself in need of the services of a family run company. My wife’s lovely Michael Kors watch had used up all of it’s battery charge and a replacement power cell was needed. The most obvious place to get this done is my local Timpsons.

You may know of Timpsons. You may even be a customer of theirs – everything from key cutting, engraving, shoe repair to wrist watch maintenance. But do you know John Timpson’s approach to management?

In a recent article in The Independent, Mr Timpson explained his philosophy.

His way of avoiding top-heavy management is to do away with their jobs. “When I introduced my ‘upside school of management,’ which is putting the customer at the top of the matrix and management at the bottom – and giving staff the freedom to run their own shops – our middle managers didn’t like it at all. Many left.”

As he admitted, Timpson is a funny business. It does all the odd jobs that no one else wants to do, whether its key-cutting or, now, watch and mobile phone repairs. “This wouldn’t have worked if we hadn’t understood the importance of picking the right people and giving them the freedom to look after customers and to decide how to run their shops and to set their own rules. That is the core of our success.”

http://www.independent.co.uk/news/business/analysis-and-features/john-timpson- all-the- great-retailers- know-their- customers-does-ms-a6697471.html

So what was my experience? As someone who is often frustrated by lack of customer service, I find the whole Timpson experience leaves me with a smile on my face.

I took the opportunity today to ask the 2 guys serving, what is life really like as an employee?

Their answer was simple “Great!”

Why, I asked. “Because we are left alone to get on with it. This is our store. We get guidance, sure, but we make the decisions because we are with the customers every day”.

And how does that make you feel? “Trusted!” was the immediate response.

But does this upside down school of management work commercially?

Well, Timpson recently reported sales up 12 per cent to £189m and profits 38 per cent higher at £18.7m. Furthermore, over the past three years the company has grown rapidly – from 800 stores to 1,400.

Yet again, more evidence that shows having engaged staff not only results in a better, happier work place, it also brings commercial value.

By: Mark Manley from Gaia Leadership

If you would like to learn more about how to build engagement within your organisation, please contact me

mark.manley@gaialeadership.com

I write these articles as part of my own learning. Thank you for reading it.

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