A Radical Enterprise: Pioneering the Future of High Performance (US 2021)

The tomato sauce in your pantry. The raincoat in your closet. The smart TV hanging in your living room. What do all of these products have in common? There’s a good chance that they were created by organizations with no bureaucracies, no bosses, and no bullshit. Places where colleagues self-allocate into teams based on intrinsic motivation. Where individuals self-manage their commitments to each other without the coercion of managers. And where they launch new products and ventures on the market without the control of leaders. These organizations represent a new, radically collaborative breed of corporation. Recently doubling in number, and already comprising 8% of corporations around the world, scientists and researchers have discovered that radically collaborative organizations are more competitive on practically every meaningful financial and organizational measure. They enjoy higher market share, higher innovation, and higher customer satisfaction than their traditional corporate competitors --- and they also enjoy higher engagement, loyalty, and motivation from their employees. In this talk, technology thought leader and author of the upcoming book, A Radical Enterprise (coming February 2022 from IT Revolution) Matt K. Parker previews the counterintuitive principles and practices that radically collaborative organizations thrive on. By combining the latest insights from social science, sociology, and psychology, he illuminates four essential imperatives that all radically collaborative organizations must embrace in order to succeed: team autonomy, managerial devolution, deficiency gratification, and candid vulnerability. The time is ripe for change. Millions of workers around the world are struggling with feelings of disaffection and increased needs for work/life balance amidst the pandemic. Discover the radical shift to partnership and equality and the economic superiority that follows with A Radical Enterprise --- before it’s too late.

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MK

Matt K. Parker

Author, Technology Consultant, and Organizational Architect, 'A Radical Enterprise'

TRANSCRIPT

00:00:13

Hi, my name is Matt K Parker, and I'm the author of a radical enterprise pioneering. The future of high-performance. It's a new book coming out next year in February, and it's being published by the same awesome publisher. It revolution that puts this conference on every year. Uh, this talk is sort of a first peak, had the contents of the book, so let's dive in. Okay. So the first thing you should know is that there's been, um, some really great new research, looking at different organizational archetypes and how they perform against each other and have some really compelling data coming out that the fastest growing and most competitive organizations in the world are organizations that look really different from most of the companies that we know, these are organizations that don't have any bosses or managers. They don't have any bureaucracies they're kind of wild and in certain ways.

00:01:06

And so this book is really taking a peek behind the scenes of lots of these companies to figure out how they work, um, and why they work. Um, these organizations, just so you know, it's not just a handful, it's actually quite a lot. They now comprise about 80% of the world's corporations. They recently doubled the number over four year period. Um, and, uh, throughout this talk, I'm going to be referring to them as radically collaborative organizations. Now there's lots of names for these types of organizations out there in industry and in the literature, I chose the name radically collaborative because I think it really drives to the heart of what it is like to work within these companies. Um, so let me just go ahead and define what I mean by radical collaboration is a way of working together. That's very much grounded in intrinsic motivation, um, and it's formed by the commitments people freely make to each other.

00:01:58

So it's, it's a voluntary form of collaboration. That's never course. I think you'll begin to see what that means very shortly as I show you some of the pioneers of this way of working. And some of these are really massive corporations, so, um, let's check them out. Okay. So you may or may not have heard of hire if you live in Europe or Asia, you probably know all about hire because hire as a massive appliance manufacturer. And they're also a smart home appliance manufacturer. However, if you live in the states, you may not have heard of them, um, because their products aren't as prevalent here. However, you should know that hire is actually the parent company of GE appliances, which I'm sure you have heard of if you live in the states. Okay. So higher is in fact, the number one appliance manufacturer in the world, they break number one in a plant's retail sales for the last 11 years, that 80,000 people strong, they have annual revenues of 38 billion and they do all kinds of new and exciting sort of ventures in things like video gaming and cattle and healthcare.

00:03:00

And those already total about 2 billion in market cap. Um, one thing I want you to go ahead and understand about higher is that these 80,000 people are broken up into a really novel organizational structure that they call micro enterprises and that their CEO refers to as a host of dragons without a leader. And I'll get back to that in a second. But these micro enterprises, they're 10 to 15 people. Each, mostly some are bigger, some are smaller, but they average around 10 to 15 people they're really autonomous or self managing. There's no boss of the micro. They set up their own purpose. They determine their own product or service. Uh, they on their own profit and loss statement and their self linking all these thousands of micro enterprises in the organization are relating to each other, contracting with each other or going outside the organization as they please not the guidance or control of anyone.

00:03:48

Um, and Jane reman, the CEO hire, um, who who's really, I think in many ways responsible for pioneering this idea, he was very much inspired by the ancient Chinese philosophy, text hygiene. And here's what he has to say says in Chinese culture, the dragon is the mightiest thing animal today, each and every micro enterprise is a kind of dragon, very capable and competent, but they don't have a leader. They start their own businesses on the market without the guidance of a leader. And that is the highest level of human governance. Um, all right, let's take a look at another one of these odd corporations. So you may or may not have heard of Morningstar, even if you haven't heard of them. I am almost positive. You have used their products. Um, what you're seeing on the screen right now is the processing of tomatoes. So taking tomatoes, um, and turning them into diced tomatoes or tomato puree, et cetera, um, Morningstar is a tomato processor.

00:04:44

In fact, they are the largest tomato processor in the world. They process a full 40% of America's tomatoes alone. They were only founded 30 years ago, but they quickly rose to dominate their industry. But how did they do it? Well, they have a truly novel corporate structure there, 4,000 leaders and no bosses, everyone there starts every single year as equal without titles. And what they do is they craft these things called colleague letters of understanding, um, where they say what they're going to do that year for who, and when they're going to do it by it's really the promises they're making new each other about how they're going to take that year's tomato crops and turn it into the process results for all of their clients like Heinz ketchup and et cetera. So, um, it, it allows them to self-organize the day-to-day work, but these clues are also how they self-organized really the whole company, because it's not just processing tomatoes.

00:05:43

They've how they go about purchasing equipment and doing payroll, all of that begins a new every year through this process. Um, so it's a really, it's a really novel, really fascinating approach. Um, and certainly very counterintuitive. I think in many ways, I think many of us would look at something like that and imagine, oh, it couldn't possibly work. Um, it was founded by this guy named Chris roofer and one of his, uh, um, early colleagues, Doug Kirkpatrick, who went on to write a fabulous book called the no limits enterprise. Here's what he had to say in those early days. He said that early on roofer decided that Morningstar should have no levels of management. So just as they did in the outside world, the company's colleagues who formerly would have been called employees would manage themselves as they moved through negotiated commitments to their colleagues, into the enterprise as a whole Lorraine pretty radical idea, but it definitely has legs because their history shows and their results prove, okay, I'm sure you've got one of these hanging in your closet, um, her raincoat, right.

00:06:42

But did you ever stop to think about the company that created the fabric that makes raincoats work? Maybe not, but what you should know is that company WL gore, um, is one of the largest, radically collaborative country companies in the world. And one of the longest liveaboards. So they were founded in 1958, just a few nerds in a basement, but they have grown to 11,000 employees spread across the globe. They have $3 billion in annual revenue and they have innovated so many products. Some of which we know about has consumers, many of us, we don't because they're manufacturing products. Um, but the important thing to understand is that w L gore the company behind things like for tech fabric, for waterproof, um, clothing or glide, dental floss, or elixir guitar Springs, the company behind all that is really radically collaborative. And they do things like self allocation.

00:07:32

For instance, individuals there, when they join the company, there's no boss, they don't have a manager, no one's telling them what they have to do or which team they have to join or anything. They actually shop around and figure out what's going on in the company that they want to be a part of. And then they try to join that team. And then even once they're on that team, they may take a long time to figure out what is their role on the team? What is their responsibilities and the commitments they're making to each other. It's also a self linking company. So teams across the whole company create things called lattices for cross-functional efforts, for knowledge sharing. Um, and they also decide each other's salaries. There's no bosses standing around saying, you're gonna make X this year and you're going to get this raise or anything like that.

00:08:11

It's a panel of your peers deciding what your salary should be. Okay. One more. And then we'll proceed to look at some of the, um, sort of trends we can see across these companies. But before we do that, I want to tell you about Birdsong. You may not have heard of bird sword. Um, uh, but I think even if you haven't right, you'll soon know all about them because they are the fastest growing home healthcare company in the world. Um, and they are United by this idea that, uh, and their motto is actually humanity over pro-democracy. So in this ad first copy of in care, I think really sort of translates that into the day-to-day. These are home health care nurses going into the home of people who for instance, may be elderly, um, and who need maybe daily support and care. Um, but their goal is to help all of these people stay in their homes, stay out of nursing homes, stay out of the hospital, maintain a sense of autonomy and purpose in their lives.

00:09:06

Okay. So bird story, as I mentioned, um, they were started in the Netherlands where they're already in the number one home health care provider. Um, and they've quickly expanded to be 15,000 people across the globe. They were only started back in 2006 with a few nurses, had they spread to, um, 25 different countries and the U S UK, Japan and India, and they have the number one results for any of these home health care providers for sort of patients are 30% more satisfied with their care and 33% less likely to be admitted to a hospital. Okay. So how do they do it? Well, they're structured as this kind of vast network of self managing nursing teams. These are 15,000 people, right? Divided into small teams of 10 to 12 nurses. Each, they each cover their own geographic areas, the melon overlapping. Um, but these teams are entirely self-managing.

00:09:54

They don't just decide who's doing what, when they're also finding their own clients, renting their own facilities, recruiting their own new hire, scheduling the work, managing their own budgets. They're doing all of this on their own, each of these different teams, but they're also supporting each other across the company. They have sort of a homegrown internal, digital communication platform that they use to support, uh, for teams to support each other, to get, uh, solve problems, to get advice, but also just to propose ways to evolve the whole organization. All right. So they're really fascinating company and want to keep an eye on. All right. Um, one thing I'll say about all of these companies, uh, and I mentioned earlier is that they're out competing their hierarchical competitors as a class by all meaningful measures. So whether it's increase in market share customer satisfaction, um, systemic innovation, employee loyalty, um, all of these sort of, uh, different categories, these radically collaborative organizations are winning.

00:10:53

Um, the three categories you see here by the way, are three organizational arc types that you can find in the literature. Uh, the first is known as blind obedience. So it's really kind of ruthless sort of dominator hierarchy company, like whatever the boss says goes or else. Um, there's another sort of class that I think most of us probably have a lot of experiences actually called informed acquiescence. So you're still dominator hierarchies, but they use 20th century good management practices like performance evaluations and annual goal setting exercises. And then there's these radically collaborative organizations. Okay. Um, let's move on. So, all right. A lot of what I'm doing in the book is showing you dozens of companies like this, with stories and, uh, telling you about their practices and stuff. But I'm also trying to figure out what are the trends across? What are the things all of these companies are doing that make them successful without which they couldn't be successful, what's imperative, right?

00:11:47

And all of these different things that they do well, there are four things that are imperative, um, team autonomy, managerial deficiency, gratification, and candid vulnerability. And I know that sounds a bit like a mouthful and some of these terms may be new to you, but let me break them down quickly. Enforceable we'll break them down in depth. Okay. So imperative number one team at home. All right. I think we can all recognize. And certainly the whole of 20th century psychology and developments in it have shown that human beings have a very deep and abiding need for autonomy. What we need is to control our own lives and our lived experiences, we all desire the, the, we all have this hope that we can manage ourselves without interference or domination, and to decide from moment to moment in day to day, what kind of amendments, we're both kind of commitments we're making to each other, how we'll go about honoring them.

00:12:35

Okay. Um, don't take it for me. For instance, Dr. Dan Radecki is the neuroscientist. He's coauthor of a fabulous book called psychological safety, the key to happy high-performing people in teams. He said that we know from neuroscience research, that people are more likely to succeed when they buy into an idea, when people reach their own insights and conclusions and solve their own problems, or come up with their own ideas, they are formed more likely to own and implement solutions. This is from a section of the book, all about the need for autonomy. Okay. So these radically collaborative companies, uh, exhibit the autonomy in all kinds of fascinating ways, here's a few of the things I've seen inside these companies, almost all of them have a form of autonomy of practice. Uh, and I mean, the craft of what people do day to day, how teams work practices are using, et cetera, are left to the teams to design.

00:13:26

Um, so they're controlling the how, but they're also, um, many of these companies like w w L gore, as you already saw, are doing things like autonomy of allocation and autonomy of role. So which teams are you going to be a part of in what role and responsibility we have on that team left up to you on the teams to figure out you all are responsible for that autonomy is schedule, right? How do we balance work and life? Um, when do we work? Where do we work? Are we co-located? Are we distributed in an office or on a beach synchronous or asynchronous, right? That again is an almost all these companies left up for the teams. Um, okay. Now I say all that, and it probably sounds utopian and idealistic. And I think if this was the only thing they were doing and nothing else about the company had changed, you'd be right.

00:14:08

It would fail. It would turn into chaos and fragmentation, but they embrace three other imperatives that I think the sum of all these things is really what makes it all work. Okay. So imperative number two, manage your old evolution. And evolution is probably an interesting sounding word to you, but I want to be precise here within, um, organizational science pollution as a technical term, it stands for the decentralization of power. So when managerial powers like the power to hire fire set, paid, determine priorities, allocate people, change, policy structure, et cetera. When you take those out of the hands of managers and you use some kind of process to disperse them into the organization at large, it's called managerial devolution. And if you take that to its logical extreme, and you don't have sort of dominator hierarchy anymore, you're referred to as a fully devolved organization.

00:14:56

Okay? So all these companies have practiced some form or many forums advantage. You'll be evolution on a couple of dimensions, both in terms of governance and often in terms of pay. So let's look at these two interns. So in terms of governments, here's a few examples from these companies that you can read about. In my book, some of these companies have graded basically ad hoc or self-organized leadership teams. Basically it means that anybody in the company can announce an initiative to change something about the company, and then anyone else can join them. And they have full authority to make that kind of change. So as long as they are transparent about the process, they went through, I detailed a story of a company called NeoSoft, um, in the book that used a process like this, to change the way to distribute profits in the company.

00:15:38

It was amazing. So, uh, another form of this is called the advice process. Um, this actually has its origins in, uh, in a company called AEs, which was a sort of world global power plant company. And what they did was truly radical and you wouldn't expect it at a power plant company, but they evolved, um, uh, authority and decision making powers into the organization. By saying, anyone in the organization that's allowed to make any decisions so long as they consult the people who would be affected by this decision. So long as they open up what they're thinking about doing and why they're thinking about doing it to anyone who might be affected and getting their advice. What do you think I should do now? That doesn't mean they have to take the advice. Um, but it does mean, um, that they have to be open and vulnerable.

00:16:23

Um, through that process, I'll be advise process. And many of these radically collaborative organizations have embraced it. And another one here is called holacratic governance. Um, you may or may not have heard of philoxenia and it's not too important right now to explain what it is. Just know that it's one of many different radically collaborative frameworks out there that some of these organizations in brief, the feature of Holacracy is called governance. They have a really specific and rigorous and sort of efficient process for allowing anyone in the organization to say, Hey, our organization has a tension. Maybe it's a conflict between roles. Maybe if the need for a new way of doing something, whatever it is, whatever the problem is about the way the organization is working, anyone ever anyone, and everyone has a way of raising that out. And then very quickly having that tension processed and resolved.

00:17:09

And you can read stories about that in the book as well. Okay. So as I said, there are also, many of these companies have experimented with how do we devolve compensation? How do the hands of managers at the end of the organization is large? And that's obviously a really touchy subject for a lot of people, but they're doing it and having amazing results. There's many different ways. Here's three of them that are, um, seem to be gaining a sense of predominance among all these radically collaborative organizations. The first is called practical compensation. And that's really the idea that everyone is sort of a fractal of the company as a whole. So everyone becomes an individual company of one in some sense, and they all carry around their own profit and loss statement and their own balance sheet. And their salary becomes a function of the profit and loss statement and balance sheet.

00:17:54

Um, a very different approach is the Deming paste system. You've probably all heard of w Edwards Deming. He's the forefather of lean manufacturing in, in his writings, like in the new economics and out of the crisis. And in many of his papers as well, he campaigned and sort of proposed a way of paying people that was independent of maybe anyone's individual results within the system. And that makes a lot of sense if you read giving's books, because so much of his books is talking about how the vast majority of outcomes that you see in organizations are not attributable to individuals, but attributable to the system that they are a part of within that organization. Um, the good and the bad often is much more attributable to the system according to Denby. So, uh, he came up with a way of saying, okay, everyone gets a predetermined, transparent salary.

00:18:46

And then everyone's salary is automatically implemented every year, unless the company ran out of money. Uh, and there's, you know, pre and that's all predetermined as well. And then profit sharing is something that also is distributed equally among all the members, because it's the sum total of the system that is leading the profit, not any individual member. So that was his approach. And you can read stories about companies in my book that are embracing the, uh, the last one is self-managed pain, which is kind of what it sounds like. People decide their own salary. They decide their own raises whenever they want. And they do it. The only thing is that when these companies that do this, they just do it transparently. They don't hide it, right. It's not a secret to anyone else what their salary is, or if they're changing it. Um, and some of these organizations combined self-managed pay with the advice process that we saw earlier, um, to do it.

00:19:34

So, yeah, you can read stories about companies doing that as well in my book. Okay. So deficiency, gratification, all right. This is probably a new term to you. Okay. Let me explain it this way. So I think that there's a lot of great things that happened in the 20th century, lots of discoveries of DNA and relativity, but I think the most important thing we discovered was that we human beings. We have needs that other animals don't right. We don't just need food and water and air. We need security and we need autonomy and fairness, esteem and trust. So in the field of positive psychology, these are referred to as deficiency needs or deficit needs. And that's because they work just like our needs for salt, for vitamin C, right? If we are deprived of them, um, we are going to, uh, uh, suffer, right? Our health is going to suffer, but if we are provided them, our health will improve.

00:20:24

Now, the important thing to know is that these needs can only be satisfied by other people. Here's what Maslow had to say about it, just as trees need sun, water and food from the environment. So to all people need safety, love and status from their environment. So the needs for safety, belongingness, and love relations, and respect can be satisfied only by other people, only from outside the person, from the environment. And so what you see in so many of these, um, radically collaborative organizations is that they create deficiency, gratifying environments, environments in which people get safety, autonomy, fairness, esteem, trust belongingness from the people around them, repeatedly systematically. And this emerges in certain sort of patterns you see in this company is here's just a few. Um, and there's all kinds of stories in the book about how these play out. So pure pods self-managed groups appears providing support to each other, mentoring, coaching, et cetera.

00:21:14

Check-ins, it's something you see in a lot of holacratic organizations. They start a meeting by saying, here's, what's distracting me at the moment. Here's, what's keeping me from being a hundred percent in this meeting. So that's a way to be vulnerable with other people. I'll get back to vulnerability in just a second as well, balanced scores. There's a great company called civic actions. You can read about in the book that pioneered a practice called balance scores. They start their meetings by saying, here's a score from one to 10 on how balanced I'm feeling in this moment, how, how balanced I'm feeling between work life, whole life, spiritual life, whatever that means to you, right? And people that work together over a good period of time, get to know what each other's typical balance score is. So if somebody comes and says, I'm a five today, when they normally say they're an eight, you know, something's off.

00:21:59

And you know that you can calibrate yourself differently and probably empathize with them too. All right. So you can read more about that in the book as well. All right. So candid vulnerability, I mentioned vulnerability a second ago. What is it? Well, it's really the combination of candor sharing what we think and vulnerability sharing, why we think praying what is the hidden chain of thoughts, inferences, beliefs, assumptions, and biases behind your statements. Okay. So I think the best way to understand this is to contrast this with what we normally experience. So I want you to think about how many times have you sat through a meeting where everyone is just smiling and nodding their heads and the afterward they get together and privately voiced complaints and reservations, or even outrage about something that happened in the meeting. Yet they didn't say anything during the meeting, or how many times does this happen to you?

00:22:43

Have you ever voiced a complaint to somebody in the meeting or a concern? Um, but you see the recipient of that concern sort of skillfully avoided and steer the conversation onto a new path without ever really addressing what you said. I think we've all experienced that. And I think if we're honest, we've all done these things ourselves. So that's called defensive reasoning. And that's what most people do most of the time, Chris Argyris, uh, uh, um, uh, sociologists and psychologists, um, uh, uh, wrote all about this development period, defensive reasoning. And he said, like across all kinds of cultures and, um, socioeconomic statuses, they've discovered through empirical research that there are really these four main routines that are governing the behavior of most people. It's about maintaining unilateral control and interpersonal situations and winning and not losing suppressing negative feelings in others and in yourself and behaving rationally.

00:23:34

All these things sort of add up to a lot of behavior that we see in people, but a lot of behavior that actually keeps us from progressing as a group. So what's different about radically collaborative organizations is the degree, which they don't have defensive reasoning going on the degree to which they do have candid vulnerability happening. Now, there are routines underlying candidate vulnerability as well, which you can read about in the book. It's about seeking valid and testable information, creating informed choice by being vulnerable about what you're thinking, why you're thinking it. Um, and then also monitoring vigilantly. So not just proceeding down a path and continuing to proceed down that path no matter what happens, but admitting when it's not working out. So you can go back and find another way to move stuff. All right. I just want to emphasize that each of these imperatives on their own are very necessary for radical collaboration, but on their own. They're also insufficient. You have to combine all of these four imperatives to succeed at radical collaboration. And the book is really about, um, looking at how that plays out in all of these different companies and why it works together. So I hope that's been interesting too. I hope you'll check out the book, radical enterprise.com if you want to pre-order or, um, get up, sign up for updates and news on the book. As I said, it's coming out in February of 2022. Thank you.