If each person of the team shows responsibility, an environment of trust in others will be created, where members of the team feel confident to seek and give advice on subjects of which they may have less or more experience.
For self-managed teams to operate effectively, there are two additional requirements. Firstly, the team must understand the values, goals and objectives of the company. Secondly, transparency of all information is necessary; teams need access to all the relevant information to allow for proper decisions, otherwise they may have to refer to another person to provide a decision (or even advice) which limits the functioning of that team.
The inspiration for our change process was Ricardo Semler who wrote ‘Maverick’ followed by ‘Seven Day Weekend’ - which is an even better read.
In 1980, Semler took over his father’s business (Semco) which supplied products to the shipbuilding business in Brazil. Semco has since grown from a revenue of $4 million to multiple hundreds of millions and from 100 to more than 3,000 employees.
In its early days, Semco was operating in a very industrialised and unionised environment – to the extent that toilet breaks for employees were monitored. As Semler observed, the workers are running their own households and are responsible for their children – and yet we tell them when they can go to the toilet. Semler has removed policy after policy to provide an environment that is run by the employees; and now, despite being the majority owner, he has no say in how the business is run.
The company has three layers of management; provides all information (including financial information) to all employees; leaves employees to choose their own salaries, decide where and how they want to work and which work they want to do; and has eliminated all controls that inhibit employees’ ability to get on with their job.
It has been run as a profit-making organisation with double-digit annual growth. Forty years on it is one of Brazil’s most successful companies and, more importantly, most desirable companies to work for. Semler’s books contain a number of observations that are worth keeping in mind when thinking about the best way to encourage self-management.
The first is around trust and the effect of peers. He removed internal controls and auditing – giving people the responsibility for their own behaviour. However, self-control is enhanced by the knowledge that you are accountable to your peers. There will always be some who abuse the system, but it is not worth creating controls on 100% of the people to avoid the 2% who cause problems. A few will find the flexibility of such a working environment difficult to embrace but employee satisfaction rises as each individual discovers what it takes to do their job.
The second is around decision-making. Decisions take longer in a self-managing environment because the process involves seeking advice from those who would be affected. However implementation is quicker because objections are overcome during this process; and if mistakes are made, they are used to learn, rather than to pass blame.
For me, Semler’s most interesting observation is that self-management is self-interest at work. People who are motivated by self-interest will find solutions that no one else can visualise. By putting the priorities of the individual first, the team and eventually the company can profit by fantastically motivated employees.
Aside from Semco, there are a number of inspirational organisations with different levels of self-management, including health-organisations (Buurtzorg in the Netherlands), schools (ESBZ in Germany) and huge multi-nationals. For other examples, it is worth reading Frederic Laloux’s book Reinventing Organisations.
So, what are the advantages of self-management?
First of all, decision-making. By avoiding the need to refer to others (maybe a lot further) up the chain, decisions are more likely to relate to the actual, not perceived, issue at hand.
I am a firm believer that the majority of the people with whom I work know more than I do about their area of expertise and so their decisions will be more informed than mine.
Often I go through the following type of conversation with new employees (in this case with a system administrator).
Him: “We need more Cloud hosting.”
Me: “Right”
Him: “I think we should get more from AWS.”
Me: “Right”
Him: “We need this amount.”
Me: “Right”
Him: “It will cost this amount.”
Me: “Right”
Him: “Can I do it?”
Me: “Are you aware what you are doing now?”
Him: “Eh?”
Me: “You are asking me to make a decision on something about which I have no idea, have no idea of competitive costs and don’t know how well it will work. You are better equipped than me to answer this question and yet you want me to take the responsibility for a decision you want to take.”
Him: “Umm, so can I do it?”
Me: “I don’t know – should you?”
At which point we generally do a repeat of the last two sentences a few times until they go off confused and are subsequently enlightened by a colleague. That enlightenment is simple: “If you know what you should do, then do it.”
By being encouraged to make their own decisions, employees are far more likely to take initiative, leading to greater productivity and improved team working.
This improvement in productivity and feeling of responsibility has a direct correlation with improved customer satisfaction. Self-managed teams see improved sales figures and customer service, but where they really excel is in reducing returned products. By taking responsibility in the first place, individuals and teams make sure that mistakes and inferior products are avoided.
This in turn leads to substantial cost savings which can be more significant than increased sales, which will falter anyway if a company gets a reputation for unreliable products.
The cost of stress on a business is often overlooked. When employees are in control of their own destinies, they are less stressed and it also reduces the stress of a CEO. It is no longer necessary to be spinning a story to employees – they already know the truth and the number of decisions that need to be made reduces to almost zero. This leaves the CEO to concentrate on the parts of the job where they can add value. This is certainly true in my case (which is the only reason I could find time to write this book).
A side effect of all of the above is improved communication and scalability.
B)
COMMUNICATION & SCALABILITY
“We have two ears and one mouth so that we can listen twice as much as we speak.”
Epictetus – Greek Philosopher
Picture a late 19th century office. It would be full of people from the same country, with a clear pecking order, male, same working hours and all speaking the same language. Communication with the outside was in person or by letter. As a result, communication was fairly easy.
Today people could be in the office or working at home, located in different countries, speaking different languages with different cultural references. Naturally there is huge potential for being misunderstood through any of the numerous (and intended to be brief) modes to write to each to other.
One of the key components of communication, and central to the WEIRD methodology, is the giving and taking of advice. This can avoid bias and self-serving agendas. If advice is requested, the adviser is in a powerful position – empowering others to act and influencing decisions. Most importantly, both sides can learn a lot by listening.
According to a Microsoft survey in Canada, the average person has an eight second attention span (down from twelve seconds in 2000).[lxxx]
I have noticed that my listening is oriented to knowing the important facts in as short period of time as possible. Understandably, with the hectic, chaotic, complicated pace of work life today, people are even more committed to getting their own agenda accomplished.”[lxxxi]
An article in the online newsletter Fast Company set out six ways to become a better listener which are easily fo
rgotten:
1) Listen to learn, not to be polite;
2) Quiet your own agenda and listen to what someone else is trying to say;
3) Ask more questions;
4) Pay attention to your listen/talk ratio;
5) Repeat back what you heard;
6) Wait until somebody has finished talking before you respond.
Listening is a key part of the advice process; we all assume that we know how to give and take advice, but we would probably all gain from being taught how to both impart and receive advice better.
Giving advice, i.e. asking people to change, as well as taking advice and implementing it, require Emotional Intelligence, self-awareness, restraint, diplomacy and patience.[lxxxii]
We have certainly seen this during the change process in our company. Persuading people to accept the idea of change and to revise their approach to it has been the hardest step. However, various management systems, including the WEIRD methodology described in this book, can help that process.
The key is to split into small enough groups to allow for better one-to-one communication and to break down the barriers created by people focusing only on their specialism. By forming teams that are cross-departmental, each individual has a better understanding of other people’s roles A coordinator can communicate with other teams when necessary but the need for this is reduced as each team includes the skills required to run as an autonomous unit. The need for more layers to ensure communication and controls are in place has been eliminated. At this point the issue of scaling can be addressed.
The tendency for any growing organisation is to add more management, communication channels and processes. However, it is always worth asking the question: why is it necessary? At which point it may become clear that these extra layers are not required or that different steps are preferable. It is equally important to look at established ways of doing things and eradicate those that are no longer fit for purpose.
One of the advantages of organic growth is that it is easier to assimilate new employees. A very fast-growing company will find that new employees have not had enough quality time with those in the organisation who are already familiar with the company culture. As a result the culture, core values and trust between colleagues will be diluted, making it harder to overcome problems that arise. Therefore, it is essential to take time to find the right people and make sure that they learn the right mindset, in order to set the stage for speedy and effective scaling along the road.
However, effective scaling should always focus on the core business. Outsourcing other areas will increase capacity without the difficulties of managing more resources internally. Having done this, and automated as much as possible, the desire to scale should, ideally, come from lower down the organisation rather than an ambition from above.
Finally, before scaling, it is important that the business is running without day-to-day input from the CEO who should be able to leave the organisation for a month with no detrimental effect. Unless this is possible, adding more scale increases complications, which will result in a loss of customers to competitors.
C)
COMPETITION
“A merchant who approaches business with the idea of serving the public well has nothing to fear from the competition.”
James Cash Penney – Founder of JC Penney stores
Much can be said about competition and the need to know what the competition is doing and how you can beat rivals. My viewpoint is controversial and many will disagree with me.
The threat of competition is only that – a threat. Although it is worth knowing what the competition is doing, there is no value in spending time worrying about it.
Making changes as a defensive measure against a potential threat will lead to failure. A football team can’t win a game by focusing all its efforts on defending the goal. At some point somebody in the team has to score a goal. That said, the commercial world has become so globalised that it is fair to assume that somebody, somewhere, will be two steps ahead of you. This isn’t necessarily a problem, as the flip side of a globalised world is a bigger market – so you can still succeed.
The best way to succeed in the face of competition is to do the best you can. Daniel Priestley in his book Oversubscribed encourages entrepreneurs to concentrate on a niche area and become the predominant supplier and leader within that niche. He focuses on changing mindsets to persuade customers that they should be lining up to buy your products. As with most things it is easier said than done, but really comes down to one thing – differentiating yourself from your competition and doing what you do really well, allowing you to build a reputation that will make it almost impossible for others to compete.
There are, however, some useful things that can be learnt from the competition – or lack of competition. If you are starting a new company and cannot find any competition, you may want to re-consider whether there is a market at all.
Assuming that there is competition, this can provide valuable insight as to not only where the market is going, but also the products currently available. Knowing the USPs of each competitor also makes it easier to explain to a potential customer why your product’s USPs are better. Most of the effort of competitor analysis should be focused on nimble companies – these are the ones who are more likely to neutralise your advantages.
Finally, it is also necessary to look at those who may not be direct competitors but could provide the same product as yourself. A good example is Amazon which, by adding a new product line, could decimate a smaller company which cannot pivot quickly.
It is not possible to look at the business challenges we face in the next fifteen years without taking into consideration how Artificial Intelligence and disruptive technologies are also going to affect the wider society. This is covered in the next chapter.
4. SOCIAL CHANGE
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”
Richard Buckminster Fuller – American architect
A)
THE PURPOSE OF WORK AND LIFE
“Achievement of your happiness is the only moral purpose of your life, and that happiness, not pain or mindless self-indulgence, is the proof of your moral integrity, since it is the proof and the result of your loyalty to the achievement of your values.”
Ayn Rand – Author
Our satisfaction in life is intrinsically tied up with our health and wider social factors. Despite the constant barrage of negative news given to us by the media, we actually live in a far better world than in any period of human history. In his book Factfulness: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think, Hans Rosling proves how outdated and negative our perception of worldwide health and social factors is. He starts his book with a quiz to give us a sense of our understanding of the state of the world. My answers were better than the chimpanzees he uses as a base line to compare our level of knowledge – but not by much. Mind you I still did better than most politicians.
We tend to rely on historic rather than current facts. As Rosling pointed out, children are taught by teachers who still rely on facts that are often thirty years out of date. We remember big events, but don’t notice the small changes happening each day which change the world. Our perception is that each industrial revolution improved our quality of life. In reality, although industrial revolutions have changed industry, they have not necessarily improved working lives (changing from manual work in the field to manual work in the factory did not improve working conditions). However, industrial and technological changes, combined with social changes implemented over the last two hundred years, have revolutionised the way we live – with health and social care that our ancestors could not even envisage. The number of people in the world living in poverty has been falling steadily for generations.
However, it is only today at the start of the fourth industrial revolution that technology is allowin
g us to change our attitude towards office work, insomuch as roles and place of work have become less important and flexibility of working becomes easier.
Until approximately thirty years ago, for the majority of people, work was not to be enjoyed but endured (and for many people holding down multiple jobs in order to survive, I accept that the situation is still the same).
However, for those of us lucky enough to have choice about the work we do, there is an interesting question as to whether work is just a means of survival or a purpose in itself. According to theoretical physicist and author Stephen Hawking, “Work gives you meaning and purpose and life is empty without it.” With a French influence in my family, I have found that there are significant differences in attitudes to work between the Anglo-Saxon mentality and the continental European mentality. Brought up in an Anglo-Saxon culture, from my perspective, work needs to be as fulfilling as possible. Part of the French side of my family sees work as a means to enjoy holidays and leisure time. That is not to say that they don’t want fulfilling work – but it isn’t their first priority.
Aside from cultural differences, there are also generational differences. I was born into Generation X and we feel that we should be working hard, but also enjoying our family. Often, we end up doing neither well.
A study by EY in 2016 looked at the attitudes of different generations towards work in the US.[lxxxiii] The most interesting result was the difference in attitudes in older millennials compared to younger millennials and Generation Z.
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