Posts

Want Exponentially Better Production? Focus on People Instead

/in /by

Traditional business training focuses the leaders on production. But research shows that focusing on the people instead is more likely to help your production.

95% of companies are still organized around the outdated Industrial Age factory system model that taught a focus on production. People were an ancillary, necessary evil to be managed, but the message of MBA courses and the factory system model was clear: production equals profit, and people are just overhead.

People Are Profit, Not Overhead

It’s easy to make a correlation between the speed of the assembly line and the number of widgets produced. We like direct correlations; it’s easier for the human brain to comprehend.

But research is now consistently showing that when you focus on the people, all the production numbers that command and control businesses mistakenly focus on get better. Capitalism, it turns out, works a lot better when you build great relationships, have a great culture, and encourage community at work than when you focus on trying to get your assembly line to run faster. Focus on the people, and they will make your assembly line run faster.

Focus on People and Grow Well

James Heskett and John Kotter, Harvard Business School professors, did a decade long study of companies focused on performance-enhancing culture, and companies with more traditional focuses. Their findings, published in a book called Corporate Culture and Performance, are shown in the graph below:

Performance-Enhancing Cultures Graph

Look at the stunning differences: companies focused on culture grew six times faster, increased their value over ten times faster, and had 756% faster income growth. Data like this sadly highlights the fact that most executives don’t like facts. They want to keep doing what they’ve always done because it’s what they know, not what will help the company succeed. Any leader looking at the above graph should immediately focus every resource they have on getting their culture right. Instead, they will go right back to oiling the machinery and trying to make a better deal with a shipper. Nero fiddles while Rome burns.

Here’s another angle showing similar results. Raj Sisodia, in his book, Firms of Endearment, found twenty-eight Fortune 500 companies, what we call Participation Age companies, that valued purpose and making meaning, over production and simply making money. Here are the results:

Firms of E graph

Again, stunning. These companies focus on something bigger than making money that coalesces their people around a vision of how they can each individually make a difference inside their companies and in the world around them. This emphasis on getting people motivated to make meaning resulted in these twenty-eight companies growing four times faster than Jim Collins’ oft-referenced Good to Great companies, and ten times faster than the norm.

The Emerging Work World Executive

These are just two of a long line of studies showing that when you take care of people, they take care of the company’s numbers. It’s tempting to find this interesting and then just go make another widget. But what this means to the emerging work world is that the most valuable leaders going forward will be those who know more about how to take care of people than how to take care of production.

It also means that HR will likely no longer be a department; it is already extinct in many Participation Age companies. Instead it will be a core responsibility of executives throughout the company to care for people more than machines. Experts will focus on production, and leaders will be chosen not because of their production expertise, but because of their people expertise.

Companies like Davita, with 65,000 Stakeholders are shining examples of this focus on people. Their story of rags to riches is one small proof that if you take care of people, they will take care of production. Davita went from near bankruptcy in 1999 to 1,200% growth through 2015, by moving away from command and control hierarchy to an emphasis on great culture and distributed decision-making. Read their story and get motivated to leave the factory system behind.

The bottom line: Focus on your people even more than your production, and your production numbers will jump off the charts.

Article as seen on Inc.com

Why You Can Never Empower People, but You Absolutely Must Engage Them

/in /by

Leaders have wasted a lot of time and money on two of our favorite Business Buzzword Bingo terms for the last three years: empowerment and engagement. Here’s the real skinny.

Gallup says a whopping 70% of people are disengaged from their work. That’s critical because the very few companies with high engagement enjoy much higher net profit margins and five times the shareholder return.

Engage People By Empowering Them?

The standard answer is that if you empower them, they will become engaged. But that is an answer developed within a command and control mindset, which is not the place to find out how people are empowered. As Einstein said, “Problems cannot be solved with the same mindset that created them.”

In a recent discussion with an elderly billionaire who had made his money in the 80’s and 90’s, he was convinced that, “It is the job of the CEO to empower people.” He bristled dismissively when I suggested people might not need him to empower them. Einstein’s quote came to mind, and I realized he was trying to solve the problem from the mindset that had created it. He was well known as a top-down, command and control manager, and he was taking special delight in having the power to empower people, by sharing a little of his power with them.

Thank You, But I’m Already Fully Empowered

But empowering someone this way is a subtle way of communicating, “I’m still in power, and the only reason you have any power at all is because I granted a little of mine” – a patronizing and perhaps even belittling view of empowerment. The message is, “You don’t show up fully equipped to contribute – without me, your personal empowerment is insufficient.”

The reality is, we can’t empower people. They show up empowered and all we can do is suffocate their innate ability and desire to contribute, innovate, make decisions and generally be self-managed adults. Empowerment is the absence of the heavy hand, just like an apple seed only grows where you don’t put down plastic. The seed shows up empowered and ready to sprout. I can’t add anything. All I can do is smother it and keep it from sprouting.

But Give Me a Reason I Should Engage With You

Engagement, however, is all on us. While people show up empowered – it’s who they are, the seed is complete – they are likely to show up not engaged in any way. The apple seed can remain just a seed for a very long time if the conditions aren’t right to grow. In the same way, people will be in neutral until you give them a reason to use their empowerment to make the company better. Engagement is the addition of leadership, principles, resources, guidance, training, community, teams and incentives – like the addition of water, sun, fertilizer, and good soil are to growing the apple seed. The seed shows up fully complete and ready to grow, but won’t until it sees the right conditions to do so.

How To Engage People

Engagement requires that we do a very few things right. We must engage everyone in building a clear vision of where we are going, and require that they play a part in creating a plan to live it out.

Engagement also requires that we build an organizational model that encourages distributed decision-making and other forms of participation formerly reserved only for hierarchical managers. And if we expect people to be fully engaged, we need to invite them to have more control over their time, and to be treated like self-managed adults. We also need to be more deliberate about recognition, rewards, relationship-building experiences, and participation in incentives programs directly related to agreed upon results.

The Bottom Line

Empowerment is the absence of the heavy hand; the absence of black plastic over the seed. Engagement is the addition of reasons to get involved – leadership, vision, tools, values, resources, guidance, training, metrics, and relationships. Get out of the way and people will show you how empowered they already are.

Don’t waste time trying to empower people. They already are. Just give them a reason to be engaged, give them the resources they need to grow, and get out of the way. And watch your company take off.

Article as seen on Inc.com

4 Steps to Fixing Your Weaknesses by Focusing on Your Strengths

/in /by
In business, one of the worst things you can do is spend a lot of energy on fixing weaknesses. You can actually fix them better by getting better at your strengths. Here’s how.

In my first five businesses I spent a lot of time trying to get everyone focused on what we were lousy at, and how to get better. It didn’t work. We just wasted a lot of time and energy, and demotivated people in the process. I’m a slow learner, but in our sixth business I finally tried something else that ignored our weaknesses, but ironically worked much better to fix them. I started focusing on our strengths.

The simple principle is that we’re good at things that we love doing. We’re highly motivated to get better at our good stuff, and completely demotivated to fix our messes. And we found out that focusing on getting a lot better at our good stuff helped us fix our bad stuff. Here’s a four-step process you can use to do the same.

Take a few hours or even a whole day (2-3 hours is usually enough) as a team and answer these simple questions. This applies to teams of any type, anywhere in a company, not just leadership teams. But certainly leaders will benefit from answering these questions:

1) What are we really good at?

List 10-15 things or so in 10-15 minutes. You shouldn’t need a lot of time to pull out the few things that make you stand out. They are things you love doing, and make you different than anybody else out there. It could be your products, customer service, relationships, teamwork, processes, passion, solid culture, etc. Once you have the list, pare it down to the top 3-4 things you are best at doing.

2) Why are we good at it?

It’s really important to ask and answer this question. It’s at the core of what motivates you as people, teams, and as a whole company. And that motivation about your good stuff will help you fix the bad stuff.

3) How can we get even better at the good stuff?

Come up with anything you think can help you get better at each one of the 3-4 things you think make you shine. Pare it down to 1-2 things that you could do to get better at each of the 3-4 good things.

At this point in the process, you might begin to see some of the negatives being addressed. If you think being a fast boat is your biggest asset, you might decide that one thing that could make you even faster is making sure the anchor isn’t in the water. Pulling up the anchor is boring and nobody wants to do it. But if you connect it directly to getting better at being fast, people can be very motivated to do it. A negative should only be addressed in light of how it will make you better at the good things. Otherwise, no one wants to tackle it. That’s how it became a bad thing in the first place – it was isolated from what makes you great.

Develop one simple, practical, measurable strategy you can employ to get better at your 3-4 good things, and make sure you put a date on when you expect to complete them.

3a) What outside forces could get in the way of getting better at our strengths?

Sometimes the challenges aren’t internal, many times they are both internal and external. Think about the external challenges that could keep you from getting even better at your good stuff, and develop a simple, measurable strategy to tackle these.

4) What resources do we need to get even better?

This is critical to help you understand that if you’re going to get better at your good stuff, you’ve got to allocate the resources to doing that. Too often we’re throwing resources at every loud weakness that comes at us, which just perpetuates the problem of focusing on weaknesses. It’s a downward spiral.

So, figure out the good stuff and what will make you even better at the good stuff, and throw your resources at becoming that. In the process, you will have to fix some bad stuff, but your motivation for doing so will be infinitely better than just “fixing bad stuff”.

By the way, I believe this works for us as individuals as well.

Article as seen on Inc.com

A Stunning 92% of Companies Want to Reorganize This Year. Here’s Why You Need to Be One of Them.

/in /by
92% of companies recognize it is time to do something about the dusty old Factory System hierarchy we’re still clinging to. Some amazingly successful companies have already left it behind.

In a 2016 paper predicting the focus of company leaders this year, Deloitte University Press shares this eye-opening conclusion,

“After three years of struggling to drive employee engagement and retention, improve leadership, and build a meaningful culture, executives see a need to redesign the organization itself, with 92 percent of survey participants rating this as a critical priority. The “new organization,” as we call it, is built around highly empowered teams.”

The Factory System Still Reigns

The corporate organizational positions we inherited from the Factory System of the Industrial Age exist whether there is a human being attached to them or not. They are power slots in a hierarchy that are to be reached for and accumulated under you.

This model reflects a direct military heritage, communicating exactly which role has more power, command and control than the role below it–CEO (4-Star General), President (1-3 Star General), Vice President (Colonel), Director (Major), Manager (Captain), and Supervisor (Lieutenant).

Giving Everyone Their Brain Back

The Participation Age organization model is quite different. It is based on the idea that people are smart and motivated and don’t need to be managed. Therefore we can flatten the hierarchy, distribute decision-making, and get rid of unnecessary layers of command and control, such as managers:

Factory vs Participation

We know intuitively that this tired old Factory System model we dragged into the 21st century is broken. Our first attempts have been to tweak it, attempting to solve its inherent problems by nibbling around the edges and focusing on red herrings like “empowerment” and “engagement”. But while we’re treating these symptoms, the cause, a medieval military model, remains intact.

The good news is that the early adopters of the Participation Age organization smashed the military model decades ago, and the long-term data is now indisputable. In the emerging work world, those who dissolve the traditional hierarchy and give everyone their brain back will thrive, and those that don’t, will be left behind.

They’re Everywhere

Hundreds of very large companies with 5,000 to 65,000 Stakeholders and thousands of smaller ones have been operating without a military model for 60 or more years. And their numbers are growing quickly. These companies are identified by a rejection of command and control hierarchy, and by distributing decisions to the levels at which they will have to be carried out.

Leading Without Managing

Such organizations don’t have any people who manage other people. Instead, they organize around teams of people who, in the absence of a manager over them, take over all the traditional functions of management, and distribute them to members of the team.

These teams decide who they will hire and fire, how to discipline themselves, and their metrics for success. They agree with leadership on the result needed, then design their own processes to get that done, something a manager used to do. In many cases they even determine how to distribute pay amongst the team members.

Old Eyes, New Eyes

Anyone looking at this through the lens of a traditional business hierarchy sees chaos and anarchy. Yet every example of it in the real world results in faster growth, better margins, higher productivity, exponentially lower staff turnover, tighter processes, and better products. And yes, people with no business education, such as dock workers at The Morning Star Company, can manage themselves to higher levels of success than if they had a supervisor. There is no data on the side of the traditional military hierarchy in a business setting (even the military is questioning it these days).

So why do companies still do it?

First, because they don’t know what else to do. For over a hundred years, colleges have taught the Factory System model as if it was the only and best way to do business. It is neither. Rehumanizing the workplace and giving everyone their brains back works better.

Second, those who love command and control fear losing it, even though the result would be undeniably better for the companies they run (it’s not about the company, it’s about me).

Third, leaders fear a big dip in performance on the way to cleaning up the hierarchical mess. They are thinking, “It may not be optimal, but it’s working well enough as is, and we have pressure to perform this quarter.” The reality is that it doesn’t have to be disruptive at all. In most cases, if implemented correctly, a Participation Age model can result in immediate upticks in all the traditional metrics of success.

A Better, Simpler Way

The Deloitte research has revealed the obvious; we know that hanging on to the tired Factory System hierarchy isn’t working. It isn’t the only, or the best way to organize. There is decades of data that proves a flatter, more distributed model of power, decision-making and leadership works better, for both the organization and the people who work there.

There is a tidal wave of companies moving in this direction. Will you be one of them? The data is in–those who adopt the Participation Age model will thrive, and those that don’t will be left behind.

Article as seen on Inc.com

Pivotal Labs Finds Success With Self-Managed Teams

/in /by

Pivotal Labs doesn’t talk about not having managers or use the term “self-management”. They just do things this way because it works so much better.

For Pivotal Labs, the only reason to have a process is to get a result. Productivity is the mantra, and it’s all based on three simple, core values: “Do what works,” “Do the right thing,” and “Be kind.” But wait, where are the managers? Oh, that’s right, there are none.

Addition, Not Subtraction

Pivotal Labs never tried to reduce or get rid of managers or create “self-managed teams.” Instead, CEO Rob Mee, who co-founded Pivotal in 1989, based his culture on extreme programming, and designed the most efficient project team structure for getting things done fast and well. It’s focused on “balanced teams,” and managers were never part of the mix. And it worked.

Today, Pivotal has over 2,000 staff members in nearly 20 locations around the globe. Clients like Twitter, Mercedes, GE, Philips, Humana, and Southwest Airlines lead a Who’s-Who list of companies that have benefited from Pivotal’s commitment to results over process. And their technologies and tools touch billions of users every day.

Pairs, Teams, and Generalists

Pivotal Labs structures their workplace very simply, with teams of people working on projects together. Pairs of programmers switch out almost daily to work with other people and on other projects. Cross-functional pairs can also be comprised of user experience (UX) and user interface (UI) designers, product managers, and engineers. Rejecting the specialized assembly line method, there is an emphasis on everyone learning how to do everything. Mee says, “At Pivotal, every developer works on every level of the system, from HTML and JavaScript to Ruby and down to the database. The argument that specialists will be better at a particular layer of the system if they’re allowed to focus on it doesn’t really hold water.”

Shaping Cultures, Not Just Building Apps

The company’s success speaks loudly to that belief, and others have taken notice. Pivotal has been credited for shaping the cultures of some of Silicon Valley’s most influential and valuable companies. This is a result of their own belief that building better software is as much about creating a better culture as it is about creating new products. So companies regularly reach out to Pivotal not just to build an app but also to get help with rebuilding their own software development cultures.

Productivity Drives the Absence of Managers

Pivotal Vice President Drew McManus says, “Few software companies truly operate as self-managed workplaces. Putting agile development principles into practice is harder than it looks. It’s not about Ping-Pong tables in the break room, but about productivity. Rather than providing Ping-Pong or other games as a ‘perk,’ they are used as strategic breaks from staring at computers by employing other motor skills. People are happiest when they are being productive, and productivity drives everything we do here.” Which is why they don’t have managers.

The idea isn’t new. In the late 1950s, Bill Gore created his company, W. L. Gore and Associates, to produce Gore-Tex fabrics and other great products. Today, Gore’s revenue is north of $3 billion annually, and it has over 10,000 staff members. Gore called it the “Lattice Organization”-if you need something from someone, go get it. Pivotal Labs didn’t study Gore, or any of the thousands of other companies running without managers. They focused on getting the best result as fast as possible, and simply arrived at the same conclusion: most corporate layers slow things down without adding value.

Empathy-Based Teamwork

But Pivotal isn’t a rugged individualist culture, either. They don’t hire programming “unicorns,” working in the middle of the night propped up by caffeine, headphones, and Doritos. If you can’t program in pairs and work as part of a team, Pivotal won’t hire you. Again, Rob Mee addresses this myth. He says the most important thing they hire for is “empathy.” “Collaboration is the most important thing we do, and it doesn’t matter how smart you are if you can’t relate to how other people think.”

Janice Fraser, director of innovation practice, says a group of people built the concept of balanced teams together in 2010. “For the best outcome, ownership should be with the team, not with one person,” she notes. As a result of the work environment they’ve built, McManus says, “Pivotal’s best sales tool is the tour, because they see people working without managers. Large corporations say, ‘I want this. Come show us how to do this.'” They’re not just writing software, they’re helping change organizational structures from traditional top-down hierarchy to teams without managers.

Conversations, Not Communications

Every company struggles with communications, but Pivotal approaches it differently. Fraser says, “Our organization is built to create conversations, not just communications. Word of mouth is the best way to communicate. So we give people lots of landing spaces and encourage interaction.” To put feet to creating conversations, Pivotal provides free breakfast every morning and everyone takes lunch at exactly the same time. They also work from “stories,” not architecture, which also facilitates conversations. “Our office sounds like an bustling caf,” says McManus. “Face to face conversations are encouraged. Pivotal Tracker also triggers conversation. Live interaction saves us a lot of time. It happens ad hoc, so we have very few meetings.”

Part of building a culture of conversation is ongoing “AMA” (ask me anything) sessions with leadership. And sideways communication is facilitated by software they developed called Feedback, short tweet-like shout-outs with timely responses. All of it is designed to eliminate latency between identifying an action item and completing it.

Trust Is Everything

Fraser sums up Pivotal’s unique culture, “Think about who else will be affected and get them involved. We all strive to act like grownups. Balanced teams works on the principle that the right decision is made by the right person who has the right information at the right time. It’s all about trust.”

That’s real leadership. And all without managers.

Article as seen on Inc.com

Barry-Wehmiller – Another Great Participation Age Company

/in /by

They’re Everywhere.

Participation Age companies make higher profits, are more stable, have more cross-trained people, exponentially higher Stakeholder satisfaction and retention, and great longevity. Are you looking to join one, or become one? Here’s another great example:

Most companies are still mired in the front-office business practices of the Industrial Age. But the Participation Age is a tidal wave breaking over the workplace. Those that embrace it will thrive. Those that don’t will be left behind.

Hallmarks of most Participation Age Companies:
1) Leaders, not managers. Stakeholders, not employees.
2) PARTICIPATION in building a great company. SHARING in the rewards.
3) Decisions made by those who will carry them out.
4) Results-based (not the traditional time-based workplace)
5) Profit-sharing (includes time-sharing – extra time off for good results)

Barry-Wehmiller – Embracing The Participation Age and Thriving
Company Name: Barry-Wehmiller
Industry: Diversified manufacturing technology and consulting
Revenue: $1.7 billion a year
Headquarters: St. Louis, MO
Founded: 1885
Growth: 20% compound growth every year since 1987
Ownership: Privately Held

Key Culture Belief
Leaders shouldn’t manage people; they should steward them. Who in your life do you “manage”? Your spouse? Your children? No, you care for them. You acknowledge the deep responsibility you have for them. They wanted to be sure Truly Human Leadership becomes permanently embedded in their culture. So they taught leaders to become good stewards of the lives entrusted to them.

Key Leadership Practice
THL – Truly Human Leadership

Key Moment
1997 – Bob Chapman, CEO, had “an epiphany” while visiting a company B-W had acquired. He was hanging out in the kitchen before work watching people have fun talking, but noticing the closer it got to the start of the workday, you could see the “joy went out of their bodies.” He asked himself, “Why should people have to leave work to have fun?” And that was the beginning of a new way of doing business at B-W.

Key Mindset
Bob Chapman decided and the company’s Guiding Principles of Leadership cultural vision statement needed to be lived out, not in employee handbooks or on posters – “we’re going to put this in people’s heads and hearts, not just on the walls.”

Key Participation Age Practices
(an extension of their Key Beliefs (no managing):
1) No managers, just leaders who seek how to make others successful
2) No timecards, even in their manufacturing area
3) Free phones for line workers to call out any time
4) Take breaks when needed, not at prescribed times
5) A multitude of other things based on the principle of de-emphasizing hierarchy and elevating equal voices in building a great company
6) Results-based rewards: “Measurables allow individuals and teams to relate their contribution to the realization of the vision”
7) A deep commitment to their Stakeholders personal growth

Key Results
1) Exponential revenue growth (20% compounded annually since 1987) and overall company expansion
2) 88% of employees of Industrial Age companies feel they work for an organization that doesn’t care for them. At Barry-Wehmiller, 79% surveyed by an outside organization said they believe BW cares about them – 180 degrees from “normal”.

One Fun Thing They Do
Guiding Principles of Leadership SSR Award Program. Team members nominate their peers as great examples of leadership in our culture, celebrating the everyday greatness in those that they work with day in and day out.

The entire organization gathers for elaborately planned celebrations designed to make the winner feel honored for his or her contributions to our culture. Winners are awarded the keys to a unique sports car, which they can drive for a week. Unlike a plaque for your desk, winners get the chance to drive their “trophy” for a week, inviting questions from family, friends and neighbors about why they have this unusual car.

They’re Everywhere
Companies of every size, in every industry, are embracing the Participation Age to be more successful. If you are a Stakeholder and want to Make Meaning, not just money, leave your Industrial Age company and go find one (see other examples on this blog). If you’re looking to build one, read Why Employees Are Always a Bad Idea

Story confirmed with Barry-Wehmiller. Click here for more information on Barry-Wehmiller’s Participation Age culture

Giving Responsibility vs. Giving Tasks

/in /by

How to get people on board

I just finished a whirlwind trip to Ireland, California, Ohio and Virginia. In each of those places I had discussions with business owners around how to get people to take initiative. One thing that came out was that a lot of us think we’re giving people responsibility when we’re really just giving tasks. The results are very different from one to the other.

The Main Difference
When we give people responsibility, they will take ownership.
When we give them a task, they will feel used.

Responsibility Leads to Ownership
The difference matters because giving people ownership creates Stakeholders, while making them feel used creates employees. Too often we give tasks when we think we’re giving responsibility and are inadvertently making people into employees when what we really want are Stakeholders.

The Difference Between a Task and a Responsibility?
Responsibility always includes the ability to make decisions at multiple levels:
1) Am I free to come up with a better way to do it?
2) Can I question the validity of the task altogether (ask why)?
3) Am I responsible to get it done without someone checking up on me?, and others.

Tasks usually involve one decision:
“Am I going to do what they told me, or not?” Someone else has figured out all the other “hard” questions” (especially why). I just need to decide whether I will obey. Pretty much what we expect of a five-year old.

Children are given tasks. Adults are given responsibility. Stakeholders are Adults. Employees are children. Which do you want?

BLOCK is a Participation Age Company

/in /by

Founder Jon Pickering gets it.

Read this great blog post from the co-founder of London-based Block, Jon Pickering.

Block was just named a Cisco Gold Partner on October 3. They have experienced phenomenal growth since they were founded in 2006, for good reason. Jon Pickering and his co-founder, Marc Chang are building a Participation Age company that pushes past the still common business practices of the Factory System and the Industrial Age. They are building a Participation Age company that attracts the best of the best.

Jon’s post is about people who want to be employees (not a good idea) and people who want to be Stakeholders (great idea), and how to build a company like his that is welcoming Stakeholders.

I met with Jon in London a couple weeks ago. He was introduced to me by Kate Warren, founder of Brightlife, another great Participation Age company we’ll highlight in the coming weeks. Jon has a great vision for where his company is going. More importantly, Jon is moving forward on his vision – not sitting on it.

Dreamers talk; visionaries walk – Jon is walking it out. Read how he and Block are doing it here.

The Participation Age Company – Is Yours?

/in /by

Day 13 of 21 days with Chuck’s new book, Why Employees Are ALWAYS a Bad Idea

The Participation Age isn’t futuristic. Companies in all industries have escaped the core business diseases of the Industrial Age to Make Meaning, not just money. And they make a lot more of both. Can you?

A Big That Figured It Out Decades Ago
Some people are pioneers. Bill Gore was just that. In 1958, at the height of the Industrial Age Factory System, he created a company that foretold the Participation Age. It is a magnificent example of a big manufacturing company ($3billion 10,000 employees) that gets it and ignored the Industrial Age altogether. They are named one of the best places to work every year. Following are reasons for their success.

What Is Gore’s Secret Sauce?
Leaders as Servants; No Managers – “Eschewing hierarchy and bosses, W. L. Gore encourages a team-based environment— and there are no executive perks. “At Gore, we don’t manage people,” wrote founder Bill Gore. “We expect people to manage themselves.”

In 1967, Bill Gore described their culture in a paper as a “Lattice Structure”. This wasn’t a paper he wrote; it was a life he lived out through his company. Here are some quotes from that paper that show how W. L. Gore lives as a Participation Age company:

“A lattice organization involves self-commitment and natural leadership, and lacks assigned or assumed authority… It is through these lattice organizations that things get done, and most of us delight in going around the formal procedures and doing things the straight forward and easy way.” Bill Gore

Attributes of the Lattice
• No fixed or assigned authority
• Sponsors (mentors) not bosses
• Natural leadership defined by followership [Not titles]
• Objectives set by those who must make things happen
• Tasks and functions organized through commitments – Each person in the Lattice interacts directly with every other person with no intermediary. [Not through managers]

Leader Different leaders guide associates in different activities. The title “leader” is earned only by gaining followers. No managers.

Sponsors [mentor newer associates]
• Engage in a one-on-one relationship
• Focus on the development and growth of the associate

Work Teams and Leadership
Leadership evolves based on knowledge, skill, experience or capability in the particular activity in which a team is involved. Leaders are associates who have developed followers. Teams or groups formulate their own plans of action rather than having them dictated to them. Each associate self-commits to projects or responsibilities.

Communications – Direct, Not Through Managers
There is no hierarchy of communication, no need to go through one associate to reach another. Associates are free to go directly to whomever they believe has an answer.

Salaries Set By Peers
Associates rank each other twice a year on contribution to the success of the enterprise, and functional teams assign pay according to the rankings.

A Traditional Manufacturer Escapes the Industrial Age
Semco has 3,000 employees and makes things like washing machines, meat slicers, and heavy industrial machinery. They practice everything W. L. Gore practices, and more. The message here is if the most traditional of manufacturing companies can escape the Industrial Age, it leaves the rest of us without an excuse.

At Semco, the two ruling assumptions are the opposite of Fredrick Taylor’s two “stupid and lazy” assumptions:

– “trust in adult behavior” — assume that the basic human drive is to be productive, to build something lasting, and to contribute to something bigger than themselves, and

– as adults, every person’s rhythm is different when it comes to when, where, and how they do their best work.

Some of the practical out workings of these two ruling assumption:

1) No HR department – the leaders at Semco do not abdicate their responsibility to the Stakeholders so they could focus on operations and making more money in the short term. They see operations and people in an integrated way, and not a function to be segmented out to HR professionals.

2) No policy documents – none anywhere in the company. Adults will figure out together what matters.

3) No headquarters – There are various facilities in many locations. None of them reports to a flagpole at some “most important” location.

4) Six or more leaders take on the function of “CEO” – and pass it around every six months

5) No job titles – everyone is just an associate – no senior, junior or part-time labels.

6) Stakeholders all decide their own working hours, including all manufacturing associates, and find teams of people to work with that share those life rhythms. Ricardo Semler says, “We want people to work on a structure of their own,” says Semler. “The day that we measured people by time clocked is long gone. We don’t want to know when or how you’re working, but only if you’re fulfilling your commitment.”

7) All 3,000+ regularly receive the company’s financial statements – There are classes to help them understand how to make senses of them.

8) Each small team is fully self-governing and has to figure out how to best contribute to the larger picture at Semco. You can be voted out of Semco every six months by the people who work with you. In my opinion, this is one of the key reasons Semco’s model works – no one can brown-nose or BS their way to safety. W. L. Gore uses this same model.

9) All meetings are voluntary and the first two people there become “board members” with a bigger say during the meeting.

10) The responsibility for reviewing and setting targets falls squarely on every employee for themselves – No one else sets their targets or reviews them.
As you can see, there is a remarkable level of independence, inter-dependence and responsibility placed on each person. People can even start their own businesses using company resources, and many have.

Others Are Already Doing It
We have mentioned many times that size, age of company or type of industry has no bearing on whether a company can escape the Industrial Age and become a Participation Age company. The above are only two examples. We have found dozens of companies in almost any industry and all sizes that are building Participation Age companies in which the hallmark of the company is “sharing”, including TD Industries, Whole Foods, Wegmans, Zappos, 37Signals, Trader Joes, Container Store, Stonyfield Yogurt and hundreds of others.

Making It Work For You
Building a post-Industrial front office isn’t easy, but it isn’t complex either. If you love the idea of building a company that will last for generations and leave a fabulous legacy, this process will be a joy for you, even if you still find it hard. This is not a size-based model, it’s the model that companies of any size who want escape the gravitational pull of the Industrial Age will have to employ in order to be successful in the 21st century.

As the Industrial Age fades and the Participation Age grows, there are more Stakeholders than ever out there looking for you, just as much as you are looking for them. For the next decade you will do a lot of weeding out of “employees”. But more and more you will find people coming in prepared to be Stakeholders who will hit the ground running with you to build a lasting business with a great legacy.

This is a summary of a chapter from Chuck’s new book, “Why Employees Are ALWAYS a Bad Idea (And Other Business Diseases of the Industrial Age)”. Click here to pre-order this new ground breaking book at a discount on IndieGoGo.com until July 28.

Stakeholders – A New Model for the Participation Age

/in /by

Day 10 of 21 days with Chuck’s new book, Why Employees Are ALWAYS a Bad Idea

The Industrial Age created the modern employee on such bad assumptions (you’re stupid and lazy) that the whole concept is simply broken. Both the word and the concept of “employee” are not redeemable. The Participation Age requires Stakeholders.

“Pick yourself. Don’t wait for someone to pick you. The shift is that it doesn’t matter if you own a company. You can make an impact if you want to.” Seth Godin, Linchpin

Employees Are Replaced by Stakeholders
Our company doesn’t hire employees; we have replaced them with Stakeholders, and we are working with hundreds of early-adopter companies who have decided to do the same thing. It’s not woo-woo crap. It is hard core Capitalist intention to be the best company in the long-term, making great profits, and adding tremendous value to the world around us.

Stakeholders are Self-Managed
Stakeholders are first and foremost self-motivated and SELF–MANAGED adults who can think, take initiative and make decisions, carry responsibility, take ownership, be creative and solve problems. Stakeholders can be left home alone. Employees (children) can’t.

Stakeholders are Adults
Our Stakeholders are all adults. “Employee” is a four-letter word for us. Adults don’t need someone to keep them from running into the streets or ruining the carpets. Adults ask questions, most importantly, “Why?” Unlike the Silent Generation, they don’t live passively but are self-motivated, self-managed, creative, and problem solvers. They don’t shut up; they make waves. They don’t sit down; they are highly visible. And they don’t expect the company or other adults to take care of them.

Stakeholders Are Owners
Stakeholders are owners. It is a requirement of being a Stakeholder. Adults own stuff, and they own their work as a natural part of being an adult. Most importantly, they own their result, something employees/children rarely think about. The most powerful motivator in business is ownership, and when you find someone who views life as an owner/Stakeholder, they will rock your business.

Stakeholders Bring the Whole Person To Work
Stakeholders bring the whole messy person to work, not just the extension of the machine. That sounds counter-productive except the messy parts are what help us think, ask why, create, solve problems, innovate, and inspire others to do the same. If you want people who will regularly bring great ideas, creativity, problem-solving and innovation to work, you have to not just ALLOW the whole person to show up, you have to REQUIRE it.

A Stakeholder would never think about dividing themselves into “Work Bob” and “Play Bob”. It’s unnatural and keeps us from contributing like we are required in the Participation Age.

Stakeholders Require Leadership, not Adult Supervision
If you hire Stakeholders (adults) instead of employees (children), it changes the way you direct people.

Stakeholders don’t need management; they need leadership, which as we showed in an earlier chapter, is a radically different thing. Simply put, Stakeholders need a leader who will give them vision, give them the tools they need, train them and point them in the right direction, and the Stakeholder will take it from there. Employees need to be hovered over during the whole process to make sure they get it done.

Stakeholders Don’t Report to the Day Care Center
There is nothing wrong with an office. We have one for our clients (not our Stakeholders). Our Stakeholders work where they can be most productive. If it served them to have an office desk, we would get them one. But employees are different. They need to be herded daily into an office day care center. They can’t be trusted to work as adults on their own without direct and close supervision. We don’t have any managers. We don’t need them – we have Stakeholders.

Stakeholders Focus on Work, not Promotion to the Next Title
In our company, upward mobility is not even available. Every adult who works with us has a title that includes the word Chief; Chief Results Officer, Chief Connecting Officer, Chief Transformation Officer, Chief of MIH (Making it Happen), etc.

None of us will ever need to be promoted; we all came in at the top. The only place to grow is laterally. As our influence and impact grows, that will be recognized and somebody might change our title (there is no centralized title giver). Owners don’t get promoted; they just make more money because they expanded their value to the world around them.

Stakeholders Participate in Profit-Creation and Profit-Sharing
Stakeholders are owners, who own their jobs, processes, systems and their results. They function as if they have actual equity ownership in the business, which means they need to be rewarded like one. Every full-time Stakeholder with us takes part in profit-sharing starting in their second full year. Why wouldn’t they? They’re all adults who own their work, so they should own some of the profits from their work as well. No equity owner would work harder just to see the profits given to someone else. Stakeholders will find another place to work if you do that to them.

Stakeholders Never Get Bonuses, Only Rewards
Stakeholders do not receive year-end bonuses for having occupied a chair for another twelve months (time-based). They get rewarded when they do things well (results-based). People get gifts, money, gift cards weekends away, pay raises and other rewards for having performed well. It’s ad hoc and requires that we pay attention to people. And that’s a good thing, because then we see their great value.

Nothing irks a Stakeholders like the 2.5% across the board bonus that goes to both disengaged employees and Stakeholders, regardless of their contribution. Any equity owner would reject a system that paid every business owner in their industry the same amount regardless of how well they had grown their businesses. Stakeholders are no different.

Stakeholders Make You and Themselves More Money
Do Stakeholders make a difference? We believe they do. Only thirteen companies have made the Fortune 500 “Best Places To Work” list every year it has come out. All of them are more profitable than the average for their industry; most of them wildly more profitable. We’ve grown over 560% in the last five years with Stakeholders.

We Didn’t Invent Stakeholders
Stakeholders isn’t a new concept. There is a fast growing tidal wave of businesses in every industry, of every size and age, that have already cashed out of the Industrial Age, and are fully embracing the Participation Age. To do so, they proactively create company cultures that are conducive to celebrating Stakeholders, while 21st century Industrialists create cultures that mirror the Factory System of the mid 1900s.

Do You Have Stakeholders? Are you one?
If you are treated like an employee and don’t like it, start looking for a Participation Age company that will invite the whole person to come to work. If you are a company that has ongoing employee issues, it’s not the employees that are the problem. It’s your belief that they need to be managed, or your unwillingness to move the children along and replace them with adults. We know companies with 10,000 Stakeholders and no employees. You can find them, too.

This is a summary of a chapter from Chuck’s new book, “Why Employees Are ALWAYS a Bad Idea (And Other Business Diseases of the Industrial Age)”. Click here to pre-order this new ground breaking book at a discount on IndieGoGo.com until July 28.