Self-Management: The XXI Century Elixir
By Matt Perez, COO & Co-founder, Nearsoft, Inc.
The real pirates of the Caribbean were self-managed teams. They wrote “constitutions” that defined how they were to work together. Very importantly, these documents spelled out how the booty was to be distributed. Everybody got one share of it; the Captain and Quartermaster got 1.5 and sometimes 2 shares. Very equitable.
As opposed to what the movies would have you believe, the Captain had absolute command during battle, only. The rest of the time, the ships were operated on a very collaborative basis. Captains could even be replaced, and often were.
Peter Leeson is an economist who also happens to be fascinated by pirates and he manages to combine the two in “The Invisible Hook” beautifully. The most surprising thing to me is how these pirates practiced what we would recognize today as advanced democracy.
Pirates’ system of constitutional democracy predated constitutional democracy in France, Spain, the United States, and arguably even England.
— Peter Leeson, “The Invisible Hook”
Why and How
Nearsoft is a service business. We help our clients grow their software development teams, with engineers in Mexico. It is a very “high touch” business. But all of the significant “touching” is done by the people who work directly with our clients.
At Nearsoft we didn’t aspire to be pirates (it might have been fun), but we did want to create a company that worked for everyone involved, not just the founders, as it’s traditionally the case. We had good intentions and the right intuition, but we were groping in the dark when it came to actually making it work.
Luckily, very early on we discovered Ricardo Semler’s book Maverick. In it, he described how they had transformed Semco, an industrial manufacturing company he inherited from his father. It was mind blowing.
PEAK or How Great Companies Get Their Mojo from Maslow, by Chip Conley was also very influential on us. Tribal Leadership, by Dave Logan et al, has been a guiding light, too.
Self-managed companies take more work than traditional companies. In a fiat hierarchy, the answer to every question is, “ask the boss.” We had to invent our own mechanisms and practices to make it all run well. We also furiously copied and adapted other company’s practices. Whatever worked.
Self-managed companies are not that different in practice. We had goals and we needed to work towards those goals. We needed something we could align around and that is our Mission. In 2012 we defined what we wanted to accomplish by 2017. In 2017 we defined a new Mission that will guide us through 2022. That’s our boss. If you want to know how to help make the company successful, just look to the Mission for guidance.
We also defined our Values in 2008,
- Long-term relationships
- Smart and get things done
And, BTW, when I say “we,” it doesn’t mean that my partner and I met in secret and then brought the tablets down from the mountain. These have all been shaped and defined by every Nearsoftian who wants to participate, using tools like Innovation Games and other techniques.
But Will It Scale?
We’ve grown quite a bit, from a handful in 2007 to over 350 today. We worried about scalability: will this craziness work beyond a handful of people. When we came up with our Values, we were about around 60 people; for the 2012–71 Mission, we were around 120; and at the end of last year, for the 2018–22 Mission, we were a bit over 250.
TL;DR: Yes, self-management scales. And in fact, it scales much easier and better (and cheaper) than at traditional, fiat hierarchical companies. No re-orgs, no surprises, no groans or eye rolling. We are constantly changing as we grow and everybody is part of making it happen.
With this infrastructure in place, every Nearsoftian can make decisions big and small 1) based on our Values, and 2) keeping in line with our Mission. No bosses needed.
Self-management is firmly founded on 1) people and 2) principles. Meaning and belonging makes it all work for people. Transparency and decentralization are the key basic principles. Together they help build trust and all the other characteristics of a highly collaborative organization.
Meaning/Belonging and Transparency/Decentralization work together as the backbone of self-managed organizations. A double-helix that provides stability and scalability.
As they say, the proof is in the pudding…
Even more to the point of what we are all about, Nearsoft has been a WorldBlu Certified Freedom Centered company since 2009.
Both of these rankings are based on annual questionnaires that are sent out to all Nearsoftians (i.e., at least 85% must respond). The high ranking is nice, but the real value is that they allow us to compare our performance from year to year. Every year, we identify our lowest ranking scores and spend the year working on ways to improve them.
Neither of these surveys deal with financial performance. They are all about people and how engaged they are. Good financial results are a nice side-effect of getting the people thing right.
But really more important, and more telling, than any of that is that all our clients are referenceable. They are all happy to talk about the wonderful work we do together. Year after year, a large percentage of our business comes from client references. Also, when people who have worked with us move to a new company, they often bring us along.
We let go of all the fear-driven rules and then made up our own, people-centered ones and it worked.
Crazy? Not So Much…
Crazy is one of the nicest things we’ve been called throughout the years. But this “crazy” way of organizing is the only one that’s sustainable over the long run. BTW, it is also financially efficient.
Nearsoft was acquired in 2017 at a very nice multiple. And everybody in the company at the time benefited from the sale.
We were lucky in that although Indecomm is a traditional company, the Indecomm folks quickly recognized the value of self-management at Nearsoft. We would have passed otherwise. In any case, I recognize that we were lucky and I am still grateful that we found each other.
— Matt Perez
And it let’s people blossom. The real crazy thing is that traditional companies work at all. Year after year Gallup tells us how bad they work: over 70% of employees are disengaged at work and 50% of them actively hate their jobs.
Self-management is the XXI Century elixir. It is the opposite of the fiat hierarchy. And it will inevitably become the “normal” way of organizing business.
Whether with a bang or a whimper, those who resist this transition will make their businesses irrelevant and unsustainable.
I can talk about this stuff until the proverbial cows come home. And not just me, Nearsoftians love to talk about how we work together. If you are interested, or just curious, you can reach me at email@example.com.
Matt has been building software products for over 30 years.
He has helped raise close to $50M in VC in investments as co-founder of three start ups.
Matt is co-founder of Nearsoft, Inc, a successful, self-managed company that helps its clients grow their software development teams, with engineers in Mexico.