Photo by Rachel Nickerson

How we lead

in a self-organized company

When companies introduce self-organization some other concepts tend to get burnt at the stake. Often among them are hierarchies, power, and leadership. In this post, I will make the case that this is a crucial mistake that will cause unnecessary uncertainty and frustration. I claim that — when implemented in a way that fits the context — power and leadership are essential characteristics of self-organization.

We’ll answer common questions like: How is it that we are self-organized and need leadership simultaneously? How can we be both effective and inclusive? What is a leader’s job? Can leaders tell others what to do? Do they need to? Should they? Who gets to pick who is a leader? How do we lead effectively and in line with self-organizing principles?

The first (more theoretical) part of the post defines the concepts of hierarchies, power, and autonomy. It’s a lot to take in, but I think you’ll find it valuable as a foundation to build on for the rest of the post. Building on that, the second part describes what leadership and followership mean in a self-organized organization and how that is reflected in decision-making and titles. The third and last part translates this into concrete mandates and leadership roles.

Part 1: Concepts

Power hierarchies

The traditional power hierarchy, as it is often implemented, has (at least) five interconnected issues that don’t suit a self-organized organization.

1. It is rigid. People only ever climb up in the hierarchy — never down. People cling to positions and rarely step back or share them willingly.
2. It is an oversimplification of power dynamics. It only uses one dimension to create a power hierarchy.
3. It optimizes for individual competition. People try to keep others below themselves instead of helping them succeed.
4. It is OK with few people coercing the many to do things against their own free will. This results in compliance at best, not in commitment.
5. It exploits the people at the bottom of the hierarchy for the benefit of people on the top.

This implementation is also called a dominator hierarchy. In reaction to these issues, many organizations today claim to be a “flat organization” — getting rid of power hierarchies altogether. I think they are throwing out the baby with the bathwater. It’s an oversimplification of a complex domain. We don’t aim for a flat organization. We aim for a (1) fluid (2) multi-dimensional power hierarchy optimizing for (3) collaboration that is based on (4) consent and (5) benefits all.

1. Fluidity over rigidity: We individually lead in contexts where our competencies match the situation and follow in others.
2. Multi-dimensional over one-dimensional: We separate and distribute responsibilities like stewarding, mentoring, and taking ownership of team visions. Leadership relationships are limited to a specific context like an individual, a situation, or a topic.
3. Collaboration over competition: Status is earned through helpful behavior for the collective. We divide areas of responsibility as new people join and people specialize. Roles are non-exclusive.
4. Consent over coercion: We don’t coerce or coax people, but convince them that something is safe enough to try. We do have boundaries — like our values and vision. They may be flexible and negotiable, but they are boundaries nonetheless. Through these boundaries, we exert some form of coercion that allows us to collaborate effectively. The difference to a dominator hierarchy is that this coercion is exercised by the collective and its agreed-upon processes, not by few individuals at the top. At the extreme, the option to exclude individuals from the organization is essential to avoid the free-rider problem where people exploit the system without contributing.
5. Benefiting all over benefiting few: We establish leadership relationships that benefit all parties involved — in particular followers. These hierarchical relationships are limited to the specific area where there is a benefit for everyone involved.

Types of power sources

What is power? “Power is the ability to get what you want.” or put differently: the ability to produce intended effects. Power is relational and exercised: it exists between people and manifests when it is used. There are three sources of power.

1. Authority power (aka power over): Direct others. Reward or punish depending on results. E.g. Let go low-performing persons.
2. Exchange power (aka power by): Negotiate and trade rewards for desired results. E.g. Pay a bonus when goals are achieved.
3. Integrative power (aka power with): Attract others to your ideas. E.g. Inspire others with a worthy cause.

Authority and exchange power are scarce and subtractive. They are traditionally granted in form of exclusive positions, information, and budgets. To gain more power someone else has to give up some of theirs. This scarcity incentivizes competition among members of a group by rewarding confidentiality and hoarding. This systemic behavior makes power inaccessible.

Meanwhile, integrative power is abundant and additive. Anyone can create as much attraction as they are capable of, regardless of the integrative power of others. In fact, when goals are aligned one’s own power is amplified by the power of others. With integrative power, the limiting factor is the attention on the receiving end. This doesn’t fully eradicate competition (which isn’t the point anyway) but also incentivizes collaboration by rewarding transparency and sharing.

While authority and exchange power are traditionally about making others do what you want them to do, integrative power lends itself naturally to a more subtle way to express power: making others think the way that you think, while leaving the translation into action to them. This makes integrative power a good fit for self-organizing structures.

Apparently, there are two (and only two) primary forms of status: dominance and prestige. When using authority power, leaders are rewarded with dominance status. Dominance status is taken, uses information as its key resource, requires submission from followers, and inspires fear and other “avoidance” instincts in them. Luckily, there is another type of status that leaders are rewarded with when using integrative power: prestige. This is essential because it makes the use of integrative power game-theoretically viable for leaders. If there was no reward, integrative power wouldn’t be a stable equilibrium. Prestige status is given, uses attention as its key resource, and inspires admiration and other “approach” instincts in followers.

Leading with integrative power is fueled by social capital (relationships, reputation, status) within the group. This capital determines how much someone is listened to by others, how much weight their opinions carry, and how much respect they receive. This, in turn, determines how much someone is able to mobilize and channel the participatory energy of the group. Integrative power structures reward good communicators and relationship builders.

Isn’t that manipulation? The mechanisms and effects might be the same. The difference between manipulation and integrative power is intent. Manipulation is dishonest and unfair with the intent to exploit others. Integrative power is honest and fair with the intent to make others join you in a quest you truly believe in yourself. A quest you are convinced leaves you and them better off.

Making the switch from authoritative and trading power to integrative power is a complete game-changer in terms of leadership — not only because it requires leaders to interact with the group differently, but also because it changes how they get rewarded in terms of status for their leadership.

Each source of power may be used in combination with any stage of autonomy in the next section, although the higher the stage the more favorable it becomes to use integrative power.

Stages of autonomy

People (or rather roles that people fulfill) may be led with goals of varying degrees of complexity. With each stage, the complexity of the work increases by an order of magnitude. The examples given below could be for a person working in a sales role.

1. Tasks and processes: Clarify and control what someone does and how they do it. What is your input? What is the work? E.g. Cold call these 10 customers and offer them our product.
2. Fixed goals: Clarify and control what someone delivers. What is the output of your work? E.g. Make 2M€ revenue with no more than 1M€ cost.
3. Flexible goals: Clarify and control what someone’s work effects. What is the outcome of your work? E.g. Make 1M€ more than you spend, i.e. profit.
4. Purpose: Clarify and align on what someone’s work aims for. What is the intention behind your work? E.g. Make enough profit to finance our desired growth.

Each stage both transcends and includes the earlier stages, like Russian dolls, i.e. people capable of being led at stage 3 are also capable of stage 2 and 1, but don’t need (or want) to be led that way. Each stage grants more autonomy (and with it power) than the previous one in exchange for more accountability. People prove to be capable of being led at a specific stage by actively taking responsibility and consistently delivering results at this stage. Power is earned by taking responsibility. Any leadership relationship may act on multiple autonomy stages at the same time. You may have different autonomy agreements concerning what, when, where, and with whom.

Being led at an autonomy stage below your capabilities feels frustrating because the work is too simplistic and unchallenging — you feel constrained, patronized, bored, and micromanaged. Being led at an autonomy stage above your capabilities feels equally frustrating because the work is too vague and overwhelming — you feel lost, uncertain, anxious, left alone, and unclear. Both result in demotivation. In contrast, being led at the autonomy stage that matches your capabilities feels empowering — you feel able and powerful to create, choose, and act. This concept seems to relate to reaching a flow state.

Both the leader and the follower in any given situation need to be capable of leading and being led, respectively, at the same stage for the leadership relationship to be productive.

Part 2: Leadership & self-organization

OK, now that you got through the theoretical part, and you have an understanding of what I mean, when I talk about hierarchy, power, and autonomy, let’s get to what I do with that in a more practical sense in the context of an organization. I’ll start you off with my definition of leadership that feels coherent to me in the context of a self-organized company after looking at leadership from different angles.

What is leadership in a self-organized organization

The tension we are operating in is: We want leaders to have the power to make things happen while no-one is being forced to do something against their free will. Operating within this tension means that we will sometimes make trade-offs between these positions. At times, not everybody will feel fully involved in a decision for the sake of keeping momentum. Other times, people will feel slowed down for the sake of getting greater buy-in from others.

Here is what I think constitutes effective leadership in this context squeezed in one sentence:

Leadership is taking responsibility for the achievement of a goal and attracting others to volunteer their efforts.

Let’s dissect this sentence: Leadership is…

• … taking responsibility…: Leadership is a commitment to take ownership and “choose your response to situations.” — which is the literal meaning of response-ability.
• … for the achievement of a goal…: Leadership has a direction towards a goal — something you want to achieve. Taking responsibility in the context of leadership means committing to own this goal and its achievement.
• … and attracting others…: The involvement of others is needed when the goal is bigger than one person could achieve alone. A leader attracts others to the worthy cause and creates alignment towards the goal.
• … to volunteer their efforts: The goal sets people in motion to volunteer their efforts and a leader makes sure the group achieves it together by leading the group with the level of autonomy that matches its capability.

Goals in the context of leadership are not limited to business goals. A goal here is any outcome you want to effect, for instance resolving a conflict or supporting a colleague’s growth.

Both taking responsibility and attracting others have a prerequisite that isn’t as easily observable from the outside. Before leaders can commit to a goal, they need to gain clarity about the goal (and themselves). Before they can then connect others with the goal, they need to understand the motivations of those they want to attract by listening to them with compassion.

We aim for a company full of leaders that lead with integrative power to harness the collective intelligence of the group — knowing that we need to have authority and exchange power available to us to be effective. We aim for leadership with purpose while each individual and group is led with the level of autonomy that matches their current capabilities in a specific context and towards their full potential. We aim for leadership with a commitment to understand, empathize with, and compassionately listen to others. Through this leadership, we maximize (1) the energy of each individual, (2) their contribution towards our purpose, as well as (3) the future growth of each individual and the company.

Followership and leadership

Followers and leaders create each other. Neither can exist without the other. “Followers empower leaders by committing to the mission a leader proposes.” (Fred Kofman, The Meaning Revolution) You may even go as far and claim that the first follower transforms a lone nut into a leader.

Leadership and followership don’t happen by accident. Neither do they happen by force. Leaders empower their followers through clarity and meaning while, at the same time, followers empower their leaders through commitment. This commitment cannot be demanded or forced. It can only be deserved. It comes from people caring about the cause, not from fearing consequences for themselves.

When leaders succeed in truly connecting their followers to a worthy cause they transcend leadership. “A transcendent leader has no followers; he or she must self-efface to let people connect directly to the mission and the values. The leader’s job is to ‘get out of the way.’” (Fred Kofman, The Meaning Revolution)

The best leadership is by example — acting as a role model. As humans, we are great at mimicking behavior. To a lesser degree, we also learn from reading or being told. However, when what is said contradicts what is done, we adopt the behavior we observe.

Self-leadership is a capacity of individuals to lead themselves. It consists of self-awareness (knowing one’s intentions and values), self-confidence (knowing one’s strengths and abilities), self-efficacy (believing in one’s innate ability to achieve goals), and self-improvement (seeking feedback and acting on it).

Collective leadership is a capacity of the organization, not just individuals. Depending on the situation at hand the people with the most competence lead. And, just as importantly, the same people follow in situations, when others have more competence to lead. We don’t expect the same amount of leadership from everybody. We anticipate a power-law distribution where some people show more leadership than others. This is OK as long as we don’t prevent people from showing leadership when they would like to. The goal is not equality. The goal is equal opportunity.

Beware: Power is a sink. Power attracts more power. It accumulates unless it is continuously actively distributed.

Decision-making and leadership

For a full description of our decision-making processes please refer to the post on How we make decentralized decisions. This section describes how decision-making is intimately related to leadership. Our decision-making processes are based on two principles.

• People who have to carry out a decision make the decision
• People who are impacted by a decision can give input for it

We want individuals to make as many decisions on their own as possible. These decisions are fast and create momentum. We consider reversibility and consequence before escalating to another decision making practice. For decisions that are easily reversible or have little consequence, we choose to make decisions on our own — even though they may violate the two principles above. In these cases “asking for forgiveness, instead of permission” is the more valuable option.

We heavily rely on consent both through the group consent process to agree in groups, as well as through the advice process to reach consent in groups with a single decision-maker.

For this to work effectively, it is essential to understand what a reasoned objection is. A reasoned objection is not “I’d prefer another option.” but “I think, doing this will harm us and risk achieving our goal.”

In cases where consent cannot be reached within a group, the process follows the normal escalation path of making a decision with the advice process. The leader for the related topic is the decider by default. Others may use the conflict resolution process to question this in concrete situations when they don’t see this as a suitable option.

Leadership is not about having all the answers. It’s OK to say “I don’t know.” Leadership is about creating a safe space for dissent and inviting different perspectives. “The responsibility of leadership is not to come up with all the ideas but to create an environment in which great ideas can happen. Leaders make decisions by following the standard decision-making process. They decide…

1. themselves considering reversibility and consequences,
2. themselves considering the opinions of the impacted peers,
3. within the group with the group consent process, or
4. via the advice process

Choosing between these options is a trade-off between efficiency and group buy-in. Leaders choose the appropriate method based on their current context. The rest of the group (and company) keep them accountable for doing so and give direct timely feedback in cases they see discrepancies.

Part 3: Mandates and leadership roles

Alright, where are we at? We have a shared definition of hierarchy, power, and autonomy (from part 1), which we used to describe a practical model of leadership in a self-organized organization (in part 2). This following part is about which mandates and roles this concretely translates to.

Explicit mandates

Mandates are often given implicitly by others following your lead. That’s great. Additionally, we choose to make some leadership expectations explicit to endorse leadership — to make clear “We want you to lead”. However, we want to be clear: You become a leader by showing initiative, taking ownership, and attracting others to follow you of their own free will. Explicit mandates and titles don’t make you a leader. They make it transparent that you already are. By doing so, we enable leaders to use their energy to create momentum more effectively.

Leadership roles

We look at leadership in 3 areas and on 3 levels. We see leaders growing…

• leadership ability in people and groups
• capability in knowledge areas, and
• momentum of action

They do so on…

• individual,
• team, and
• org level.

Filling in the cells of the resulting 3x3 grid, we identified 8 leadership roles that people may step into (and back from).

Growing leadership ability on an individual level

Every person has a steward. A steward is a person’s contact to the organization. A steward supports the growth of an individual through guidance within the organization and sparring of growth options. Most often this happens through regular 1-on-1 sessions. Stewards are not managers or supervisors that track someone’s workload, assign them tasks and do their performance evaluation. They are guides for a person’s development within the organization.

Every person may book sessions to work on personal development topics with a professional business coach that is at our office each Friday. This external view from an experienced coach has proven very valuable to work on personal development within the organization and beyond.

Growing leadership ability on a team level

Team coaches help teams with collaborating effectively. They support groups through the stages of forming, storming, norming into performing. Most often this happens through the facilitation of meetings and coaching.

Growing leadership ability on an org level

The org faculty steers organizational development. It envisions a target organization and identifies gaps between the current and the target organization. It brings impulses for organizational change into the organization and facilitates the co-creation of organization-wide guidelines. It calibrates guidelines across the organization and ensures they are just.

Growing capability in knowledge areas on individual level

Every person may pick one or several mentors to support them in their professional development. A mentor is a consultant or trainer for specific knowledge and skills. People pick mentors that are more knowledgeable and that inspire them to become better in areas they want to explore.

Growing capability in knowledge areas on org level

Faculty leads show ownership of a knowledge area’s strategic development. We use the title “Lead” followed by the knowledge area (e.g. a faculty) clarifying the scope (e.g. Lead Marketing). These titles and scopes are not fixed and may change over time. If a new person joins who is more competent in a specific knowledge area, she becomes the new leader of that knowledge area. In other cases, a new person may allow us to further subgroup a knowledge area (e.g. Lead Online Marketing and Lead Offline Marketing). Teams regularly decide with consent on appropriate subgroups of knowledge areas and individuals that take the lead in them. Doing this regularly ensures the fluidity of these power hierarchies.

Growing momentum of action on individual level

Within academies, individuals take on responsibility for tasks by committing to take care of their completion. This usually happens during daily standups where team members coordinate their efforts, commit to owning tasks, and hold each other accountable.

Growing momentum of action on team level

Each team has a mission that it tries to achieve by providing a product or service. The product owner role has the mandate to ensure that the development efforts of the team effectively pay into the achievement of the mission. “The Product Owner is responsible for maximizing the value of the product resulting from work” of the team.

Growing momentum of action on org level

The strategy faculty defines focus areas based on the company vision and our current context. It describes a coherent strategy that aligns our teams and products, in order for us to collectively have a greater overall impact. It does so by developing recommendations for existing teams on strategic moves (e.g. which markets to enter), and by proposing new teams to start.

Which problem are you solving?

Before starting a discussion on leadership it’s worth clarifying for yourself what problem you are trying to solve in your current context. I have experienced these two issues so far.

1. People want more leadership, but no-one performs acts of leadership. This calls for legitimizing leadership. Leadership often gets a bad reputation when self-organization is introduced. I think, there are two things to be done in this case. Firstly, make sure we agree that leadership is a valuable and essential activity for having an impact as a group. And secondly, clarify and establish mechanisms to take responsibility and perform acts of leadership (e.g. by making mandates explicit by which you grant decision-making areas)
2. People act like leaders, but no-one is following. In this case, it is necessary to help leaders be effective. Clarify mechanisms to influence others and make decisions, as well as how to effectively introduce change.

Conclusion

Making our views on hierarchies, power, and leadership explicit allows us to discuss these stigmatized topics openly. More importantly, this enables us to use their positive effects to our advantage instead of pretending they don’t exist. This is important because leadership is an essential ingredient for any successful organization. So, by all means, give everyone as much autonomy as they are capable of— while being explicit about the specific stage of autonomy and corresponding expectations about responsibility. At the same time, when people ask for guidance, don’t deny them the leadership they need to feel safe.

🙏 Many thanks to Lisa Gill (Leadermorphosis podcast), Susan Basterfield (Open to Grow), Sally-Anne Airey (Evolving Leadership Programme), and Rich Bartlett (The Hum, Loomio) for your valuable feedback that helped me gain clarity on this topic.

This — simplified — together with all other concepts on this blog is nicely bundled up with 88 visualizations, 37 videos, and 11 templates in my New Work by Design Transformation course. Helping you put New Work into practice for less than the price of a consulting day.