Tom Nixon

Democracy, Design, and the Future of Work

I was excited to find Traci Fenton from Worldblu on the speaker line-up at SXSW. Traci’s an expert on democratic organisations. NixonMcInnes applied to be on the Worldblu list of the most democratic companies in the world - to be announced next month. Here are my notes from her presentation.

Traci graduated from college 12 years ago. Got first job in a Fortune 500 company and was really excited. On day 1, she walked in and realised she was a cog in a machine. ‘Shut up and do as you’re told’ culture. Realised that wasn’t how she wanted to spend the rest of her work life.

3 years ago had idea to create a list of world’s most democratic companies. Travelled the world trying to find organisational democracy and understand how it works. Advised that people might not care or pay attention to the list. But it has been written about in Wall St Journal, BBC etc etc.

People picked up on the story because it’s an idea that’s time has come.

Companies range from small biz to Fortune 500.

Things that CEOs say about running democratic companies: Helps us to be more customer-focused; give better service; motivates and makes employees happier.

What is democracy? Run a company based on Freedom and possibility, not command and control. It’s not about voting on everything, but about everyone having a voice.

The decision-making process can be slower in democratic companies, but the execution is faster because people are bought into the decision.

Command and control has the adult/child dynamic. Democratic is less hierarchical. Flatter.

Command and control worked well in the industrial age. We’re now in the information age / democratic age.

Gallup has an annual poll – 73% of people are disengaged at work. This is a symptom of command and control. Disengaged means either doing a job, but minimum effort or even actively disengaged – deliberately sabotaging the company.

Why is organisational democracy so relevant now? Incoming generation X and Y expect it; decentralisation of communication structures in the wider world; company loyalty on the decline – free agency is rising; people don’t trust big old institutions.

Is your company designed for the democratic age? 10 principles from a decade of research. It’s about making these principles work for YOUR particular organisation.

1.    Purpose and vision. Higher level than mission. Must be defined and well understood.
2.    Transparency (over information etc)
3.    Dialogue (not monologue from management)
4.    Fairness and dignity. Not sameness. No abuse of rank.
5.    Accountability. The backbone of democracy. Often if democracy fails, it’s because accountability isn’t there.
6.    Individual and the collective. You shouldn’t have to ‘check your individuality at the door’
7.    Choice. Flexibility of work hours, how to be paid etc.
8.    Integrity.
9.    Decentralisation of leadership, power, decision-making.
10.    Reflection and evaluation.

All 10 have to be in place to create democracy – it’s not pick-n-mix.

A story from a democratic company: Semco: used to be command and control. On verge of bankruptcy in 1980. Taken over by son of founder, Ricardo Semler at age 21 and continued to run in command and control style. At 25 became ill from stress. Decided to run the company in a different way: Went from 12 layers of management with 100 employees. Today have 3,000 employees in 3 concentric circles of structure. Were ‘closed book’ with financials, now open with all financials including salaries. Employees had no voice, now listen to employees and vote on key issues. Job stagnation was replaced with job rotation – continual change. Now you choose your boss and your team. 11 different ways of being paid – salary; commission; royalties; profit share etc. Bottom line impact: Grown average 25% per year. Revenue $4M grown to $240M. Staff turnover 2% in industry of average of 18%. Check out Maverick to read the full story.

How to move to open book financials: don’t do it overnight. Start be being more transparent around management then involve employees in the process towards greater transparency. You have to be prepared for people to be upset about what others earn and deal with that.

Can governmental organisations run democratically? Not many examples, but certainly possible.

Co-working spaces can be democratic organisations.

What’s the correlation between political democracy and org democracy? Why do we live in free and democratic society but work in command and control companies? The move towards more democracy in the world should filter through to companies.

How to change a company to be more democratic: You need to have the buy-in from the top leadership. They have to believe it. But even if you don’t hold the power, you can start to live the 10 principles in the best way possible within the confines of the company and see if it and spread. Be the change you want to see. Try emailing Harvard Business Review articles about democracy to the CEO.

The change to Semco took 10 years. It’s an evolutionary process but it can be done faster than that.

Meetup.com have awards that they give to people who start their own initiatives and get results so showcase what’s possible.

Only one publicly traded company on the Worldblu list. Wholefoods and Southwest airlines could potentially be on the list.

Traci believes that people naturally want freedom – it’s an instinct.

It’s not for every employee. Requires emotional intelligence and compassion which not everyone has.

Is the logical extension of organisational democracy to not need a company at all and just work together as independent people, like the co-working model? Quite possibly, yes.

Lessons Learned from a Self-Organized Company

Here are my notes from an awesome session at SXSW. Two directors sharing their experience of developing meetup.com

Started 7 years ago by 5 founders (60 people today)

The bad times: As they grew, they created heavyweight processes and decision-making. Productivity and quality fell through the floor. Morale was also low. People worked on side products because they were disengaged. War between managers and employees. Hit a low point around end of 2007.

Management team spent two weeks talking about solutions but felt they needed more time.

Got rid of a load of people who weren’t compatible with a better Decided to have a 6 week ‘hackathon’ to shake things up. Rules were:

1. Pick a project that will benefit the meetup.com community and company.
2. Convince 3 other people to work with you to make a team of 4: front end, back end, cust support, product.
3. Your job is to impress your peers

Management announced the game then left the room to allow people to self-organise. And they did.

One team created a multilingual version of the site.

Teams set the office up to suit themselves and their projects.

Created a feeling of energy. People didn’t believe management were serious as it was such a big change from the norm.

The job of management is to nurture and not squash the natural entrepreneurial spirit of the people.

Some people either needed more structure or more authority and didn’t like the new culture.

As the hackathon period finished, they consulted the team to create a big list of problems and issues that might happen with their new way of working. Instead of trying to mitigate all of  the risks they just prepared themselves to fix problems as they arose, and as it turned out, most things worked out OK.

Created an in-house usability studio so engineers can continually see what customers think of the product. The lesson here is close proximity to the customer is key to solving their problems.

Announced to the team that they would maintain self-organisation. Teams continually come together and break up. At first there were too many teams – people were on several teams at once and there was too much chaos.

The key to success in self-organisation is laying down some guiding principles or game rules (rather than business processes in the traditional sense)

Teams set own success metrics, goals etc. Goal of management is to hold people to their own goals.

Only way they restrict people is limiting people to a set number of projects so they’re not spread too thinly.

Very important to remember that everyone’s an adult. It’s not like management are the adults and the rest are the kids. Management do have a lot of skills and experience that can help people to do their job well, but have to recognise that they won’t always be right.

Don’t have many managers, just people to lead particular efforts. Lots of mentoring and coaching. Leads often work on the most interesting projects, but organically.

Very difficult to avoid user interface inconsistency. You can look at having  a cross-team specialist to roll out best practices between teams.

Yay, first mention of Ricardo Semler! :) 
Recommending Maverick and 7 Day Weekend

Meetup have open books – full transparency of financials with the team.

No product roadmap because the team self-organise.

Question: What are the decision-making processes in the company?

A: Consensus most of the team, but decentralised and up to the teams. Teams can pick methodologies like SCRUM for development

Lots of management by walking around – checking in with teams and asking how things are going. Asking a lot of questions and challenging.

Question from me about how you hire people who will fit:

Written test that should take 2 hours given 40 minutes.
Interviewed by 4-6 people. Problem solving at a whiteboard. Interview to decide team fit. “If it’s a maybe then it’s a no”

How does the employee review process work? Have tried 360 reviews, peer reviews, but don’t really have a formal review process. They don’t feel a great need to put this in place.

How does the structure affect support functions in the business e.g. finance and admin? Less so.

South by South West

I've been a bit quiet on this blog recently, but I've been blogging like a trooper over on the NixonMcInnes blog. You can check out my notes from the sessions I've been to at SXSW here.

I'm friendly and like beer, food and good conversation so give me a shout if you're in Austin and want to meet up at any point. Twitter is the best way to connect.

After SXSW I'm going to be in New York until the 24th. I'm up for meet-ups, networking, drinkies so drop me a line if you're going to be in town.

Finally, keep an eye on Tweets tagged with digitalmission to follow the British contingent here at SXSW.