Is your organization—and leadership style—adaptive enough for this moment?
Over a breathtakingly fast timeline, the novel coronavirus is accelerating an evolutionary shift in how we work. Silicon Valley venture capital firm Sequoia labeled the coronavirus the Black Swan of 2020 and reminded founders and CEOs that “in some ways, business mirrors biology … those who survive ‘are not the strongest or the most intelligent, but the most adaptable to change.’”
Going remote is merely the tip of the iceberg when it comes to the deeper changes organizations are undergoing in order to survive (and even thrive) in this new environment. Physicians are seeking guidance from tech and cryptocurrency communities on how to establish effective peer-to-peer (P2P) networks so they can quickly share information. Annual budget projections everywhere are irrelevant. Predict-and-control measures that suffice in stable conditions no longer apply. Now firms must optimize for more decentralized decision making, speed, agility, and self-organization.
In a 2017 paper about the rise of self-managing organizations, Harvard professor Amy Edmondson — best known for her enterprising work drawing the connection between psychological safety and innovation — and coauthor Michael Y Lee, an assistant professor of organizational behavior at INSEAD, underscore that “longstanding research tradition suggests that managerial hierarchy functions more effectively in stable conditions, but faces serious challenges in dynamic conditions.”
Leaders everywhere are being confronted with the question: is my firm’s operating system resilient enough to respond dynamically?
Ryan Petersen, founder and CEO of freight logistics unicorn Flexport, determined early on that a top-down pyramid model would not be adaptive enough to support its global supply chain networks. “The corporation is a relic of a bygone military era,” he observed in a 2016 interview with Initialized Capital partner Kim-Mai Cutler, describing organizations as more akin to biological organisms and evolutionary in nature. “We want our company to behave like an immune system, where people see a problem and kill it rather than waiting for permission.” Today Flexport is among America’s fastest-growing companies and is delivering and donating life-saving supplies to healthcare workers on the front lines across the world.
Other adaptive, evolutionary firms are rising to the occasion. Home healthcare network Buurtzorg, which has 14,000 employees and no managers in 24 countries, is doubling down on self-management. “The corona crisis requires local customization, not commands,” CEO and founder Jos de Blok explained to Dutch healthcare and tech news site Zorgvisie. “You have to put ownership of the solutions with the nurses who are dealing with the problems locally. They do not benefit from a command structure in which one person who is far from the workplace sends commands into the organization.”
Patagonia, a longtime apparel industry leader and North Star when it comes to modeling human-centric workplace practices, committed to paying its workers through physical and online store blackouts. Software company Basecamp offered employees time off to prepare their families for the coronavirus, just one more example of the way cofounders Jason Fried and David Heinemeier Hansson consistently treat their employees like adults and deepen a culture built on trust.
While overhauling a company’s entire operating system (“OS”) in the middle of a crisis is daunting, there are incremental changes that leaders and teams can make to become increasingly self-managed and human-centric as we navigate our way through this crisis and beyond.
What it means to be self-managed
There are many misconceptions about self-management, namely that the notion implies free-for-all, structureless environments. Far from it: effective self-managed firms have clear hierarchies, values, and practices that set the necessary conditions for principled action and innovation companywide.
Some common traits of self-managed, evolutionary firms include:
- A focus on granular roles over job titles
- Information symmetry and transparency (“default to open”)
- Distributed power and decision-making rights
- Built-in feedback mechanisms and advice processes
- Leaderful by nature (vs. manager-filled)
- Dynamic, circular hierarchies
- Strong evolutionary purpose
- Clear frameworks for conflict resolution and decision making
Instead of trying to implement all of these traits at once, experiment with what you sense is called for and see what works. When Satya Nadella assumed the CEO post at Microsoft, he popularized the conflict resolution process of NVC (“nonviolent communication”) as part of a much larger cultural transformation. Frameworks like NVC establish an organizational standard and empower individuals to resolve conflicts with their peers (P2P) instead of sending them up the chain for formal resolution. Greater information symmetry and transparency—assisted by tech-driven solutions like Slack and other cloud services—helps everyone make better decisions and gives them the tools to resolve conflicts locally.
“Evolutionary organizations with adaptive operating systems are fundamentally designed to function — and even thrive — in situations where traditional bureaucracies fail,” notes The Ready’s Sam Spurlin. “An OS that doesn’t optimize for transparency, autonomy, or people positivity is not an OS that can handle shocks like the one we’re currently experiencing.”
Petersen echoes a similar sentiment in his prescient Columbia Business School thesis, “Out of control by design,” highlighting the way Brazilian manufacturer Semco successfully weathered various cycles of inflation and hyperinflation, economic boom and bust: “[CEO Ricardo] Semler’s remarkable achievement is his willingness to abandon his need for control. By setting his people free to collaborate with whomever they feel is useful to their specific task, whether inside or outside the firm, he has tapped into a wealth of human intuition and creativity unavailable to traditional firms.”
Leading a self-managed firm
Among the misconceptions around self-management is that these firms are essentially leaderless. To the contrary, strong leadership is in ways even more important in evolutionary firms than in traditional organizations.
Former McKinsey consultant Frederic Laloux made this observation while researching his 2014 international bestselling book, Reinventing Organizations, which has inspired an entire organizational design movement and informed the effectiveness of humanitarian efforts like Extinction Rebellion. He discovered a number of companies around the world that are operating in a way that supports a more human-centric version of capitalism. Some of these companies have become well known for their innovative self-managed structures: nursing network Buurtzorg, tomato processor Morning Star, French brass foundry FAVI and Semco, among others.
The CEOs of these evolutionary companies eschew traditional pyramid hierarchies and support their teams more in the way of a “chief ecosystem officer”: they are still the primary visionary, but the execution and expansion of the vision is largely up to a network of sovereign individuals. Success is enabled by allowing transformation to occur without exerting autocratic control. If you’ve determined that this involves a lot of humility, that’s true — many evolutionary leaders work hard to tame their egos. And while they don’t have the formal control they once did, CEOs of self-managed firms still hold a great deal of positional power; it is counterproductive to pretend this doesn’t exist.
Buurtzorg’s de Blok walks that fine line, providing clear direction and influence while allowing members to rise to the occasion: “The self-managing teams are used to solving matters themselves,” he added, reflecting on the company’s coronavirus response. “We mobilize the collective wisdom of all nurses. You have to give them space for that.”
Whereas most traditional organizations celebrate an awkward parent/child dynamic, effective self-managed organizations are designed to give everyone a greater sense of ownership and agency, which creates more incentive alignment, accountability, and a bias toward action. The organization eventually becomes more leaderful: full of self-directed leaders.
Trust: a necessary condition for self-organization
Among the biggest differences between top-down, command-and-control organizations and self-managed ecosystems is the high degree of trust required for the entire system to run smoothly.
By design traditional/legacy organizations convey a lack of trust to members (e.g., requiring employees to ask permission before taking any action outside one’s job description). These organizations also embrace a narrow and outdated definition of trust: that it’s built solely through predictable and exacting reciprocal behavior, a byproduct of Taylorism.
Bonnitta Roy, a philosopher known for her framework for open participatory organizations, developed a more expansive definition through her source code analysis of trust. “When we get into times of transition, navigating complex unpredictable situations, then we have to let go of coupling the notion of predictable with trust almost entirely,” she observed. “Reciprocity isn’t highly generative.” In other words, a deeper trust sets in motion the conditions for greater potentialities and nonlinear innovation—like we’re seeing at generative companies like Flexport.
There are many historical examples of wildly successful companies built upon that kind of radical trust during trying times. PayPal famously made its way through the dot com bust thanks in large part to the way the founding team deepened their trust in one another through adversity. Trust scales.
20th century organizations were largely designed to defer sense-making up a chain of command and over-rely on guidance from a central authority. What if the more natural, human and adaptive way of working involves trusting oneself and others more?
The Ready is an organization design and transformation partner that helps you discover a better way of working. We work with some of the world’s largest, oldest, and most inspiring organizations to help them remove bureaucracy and fundamentally change their approach to better suit the complex world in which we all live. Learn more by subscribing to our newsletter, Brave New Work Weekly, checking out our book, or reaching out to have a conversation about how we can help your organization evolve an organizational operating system better suited to our current reality.
