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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

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Brace yourself Spark the change is coming..To France!

Nov 22, 2017

 

 


Also published on Medium.

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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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Nine things I didn’t know nine years ago

May 19, 2016

 

Image from page 400 of “The Palm of Alpha Tau Omega” (1880)

It’s coming up on nine years since I first started slinging code in a professional setting. Professional here meaning with a salary, in an office, with other engineers, decent coffee and unreasonable deadlines.

Back then I was barely newly minted from school, and what I lacked in understanding I certainly carried in hubris. I remember being vaguely offended not to be on the list of Sweden’s top coders that year. No idea how they would’ve found me, but I still remember being annoyed by it.

What I’ve lost in hubris in the last nine years, I’ve gained in experience. I thought it’d be useful to punch down a few things that it would have been nice to know nine years ago — maybe it can help you, if you’re just about to take your first steps out of school.

In no particular order, here are nine things I wish I’d known when I started out:

  1. Experience counts for something. This is obvious, and maybe a bit condescending. But I remember the first time I saw a colleague in a live, heated situation pull up YourKit and hone in on the fact that we’d have two ServerInstanceFactories, not one, and that caused the entire app to go belly up. Or when I got literally smacked on the fingers for not using two-phased locking correctly. And a thousand other things. My first two years of working, what I mainly learned was that I basically didn’t know shit.
  2. People are messy. I’d love to know how many hours humanity as a total spends every day mediating between two or more angry 40-year old men. Most of the time, you’ll find reasonable people that don’t share your point of view on things, and you are not obviously right. There are tradeoffs. And sometimes people hold on to stupid ideas longer than they should, simply because they’re people. It’s a great irony that software development demands literal, logical, unambiguous reasoning while being complicated enough that you need to collaborate with ornate, arbitrary, ambiguous humans.
  3. You’re not logical, you’re biased. If there was one thing I was certain of was that I reasoned with logic and soundness and that I thought things because they were true. Things such as — we hire people only because of merit. Obviously. What I’ve learned is that any point can be argued from many angles, and who I am, where I was raised, what I studied and who my friends are all influence what I think is obviously true. I’ve also learned that I’ll likely never be Spock, and that the only reasonable defense is to invite different points of view, and accept that reasoning from different premises can lead to different conclusions, and still be logical and sound.
  4. You can use engineering for other stuff. As a flipside to above, I’ve also learned that the method of engineering that you learn in school and hone over the years is useful for a ton of other stuff than just programming. What engineering is to me is a way to define, decompose and reduce a problem space, and from that reason a solution under balanced constraints. Really, figuring out what you’re asking, and then answering that. And turns out that anything from sales, marketing, finance, design to analytics are super-susceptible to this. Don’t be afraid to dive in. It’s usually pretty simple to get stuck in.
  5. Users are not stupid. This one is a big one. When users complain about your product, it’s usually not because they’re stupid. Your dad, uncle or whatever that don’t really understand Facebook are not stupid. They just know other shit, and they haven’t learned this stuff yet. And that’s Facebook. They have literally hundreds of user researchers making Facebook simple. When your uncle doesn’t understand your app, it’s probably because it’s pretty unusable. Don’t blame users for that.
  6. Engineers have professional responsibilities. If you work with software in a company that makes money, chances are you have users. Even if you’re building Spotify, not a pacemaker, you still have a responsibility to your users. They’ve chosen your product, and if it sucks, they’re suffering and it’s your fault. This means that if you’re out chugging beer, the systems you maintain go down, and no one else can pick them up, you get a cab home and fix it. Obviously, don’t let a company take advantage of this responsibility. You should get reasonably compensated. But it’s still a responsibility. You can’t laugh off service disruption.
  7. Inverting a tree is useful, but not in the way you think it is. I’ve always been a strong believer in academic knowledge, and I loved taking the hardest courses. Particle filtering, non-linear signal processing, abstract algebra, advanced algorithms, etc. If it looked hard I wanted to know it. However, the point of Red-Black trees is not Red-Black trees. The point of graph traversal is not graph traversal. The point is, the tools you have shape how you solve problems. And the deeper the understanding of graphs you have, the easier it will be for you to see that a problem is a graph problem. Just like if you know enough economics, you can see business problems as market problems. And so on.
  8. Integrating early is always better. This is really mundane compared to all the other grand advice, but if you’re a bunch of people working on a piece of code, avoid branches and avoid submodules as much as possible. It’s really not better to work on your own branch until all is nice and then merge back. Merge early. Merge often. Otherwise you’ll spend a month merging. I promise. Like, I really, really promise … and actually, I guess there is grand life advice here as well. If you and someone you depend on disagree on something fundamental, don’t hold a grudge. Hash it out, as early as possible. Make sure you see eye to eye. The process and the product will be all the better for it.
  9. Simpler is literally always better. I saw someone write something like “Software engineers spend their first two years building complexity, and the rest of their careers managing it”. This is true. Really true. If you can avoid it, never write a dispatcher. Never write an orchestration framework. Don’t use Java if a bash script will do. Solve the problem you have now, not the problem you might have later. Nothing makes you feel as smart as a well architected, abstract framework for solving really complicated, general problems. Nothing makes you feel as stupid as not understanding how to debug it.

Anyway. This is my list. The nine things I wish I knew nine years ago. It strikes me now that current me would love to see the list Nine Things I Wish I’ll Remember In Nine Years. What stuff have I forgotten that would warp my perspective? I’d love to hear your take on either this, or what I missed on this list.

By: Marcus Frödin from Spotify

https://medium.com/@marcusf/nine-things-i-didn-t-know-nine-years-ago-fcbc757b268b#.9xksp8f8t

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