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Let’s fire all the managers and start to innovate

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Could a company, especially a large company survive without managers? Can it still innovate? No.

Yes. Yes, indeed. There is proof. Many. Here are just 3 of them — proofs of holacracy.

Morning Star/ California

Here is one: Morning Star (California) is the world’s largest tomato processor, handling about one-quarter of the tomatoes processed in the U.S. each year. This company has no managerial structure, whatsoever. Well, it has a president (Chris Rufer) and many “colleagues” (i.e. “not employees” as there are neither “managers”). Holacracy.

Each colleague sets the pace, is a boss, is an internal independent contractor (establishing collegial partnerships with the others), is a purchaser, is a human resources guy (doing hiring), is rewarded by the other colleagues and sets compensation for the others. (Harvey Schachter — “Managing without managers“ in The Globe and Mail. )

Well, you can not get it, are you?

More: this is a company where there is no hierarchy. All the managerial functions are performed by each “colleague” in partnership with the others. Try to grasp it! It is like any regular family. Each colleague makes a personal statement, a “colleague letter of understanding” — CLOU (see Paul Green Jr. explaining it). This happens in the beginning of each year and he or she states what he or she will bring for the benefit of all the others and the company. Like in a regular family! (but more explicitly).

All the details are given by Paul Green, Jr., co-founder of “The Self-Management Institute” in “The Colleague Letter of Understanding: Replacing Jobs with Commitments”, Management Innovation eXchange

About the company:

– world’s leading tomato processor;

– $400 mln. Turnover;

– organizational structure :”Self-Management” (“an organization of self-managing professionals who initiate communication and coordination of their activities with fellow colleagues, customers, suppliers and fellow industry participants, absent directives from others”), see definition here.;

– “Our company is operated by colleagues without titles or an appointed hierarchy of authority. Authority relative to other colleagues’ activities is lateral” (on the About page of the company);

– founded in 1970, by Chris Rufer;

– “Our founder, Chris Rufer, developed, early on in his entrepreneurial career, a general business philosophy around the fundamental cornerstone that simply states that Self-Management is the most effective and efficient method of organizing people. It’s the way families are organized; it’s the way community relationships come to be; it’s the way that the most prosperous economies are organized. Is it possible to capture that effectiveness and efficiency in commercial relationships?” (on the About page The Self-Management Institute);

– Here is an audio interview with Gary Hamel, on the “self-management” philosophy ;

– white paper on self-management

Chris Rufer/ Morning Star:”People are actually taking initiative because they feel unbounded by having to go through various folks to get something done”.

Semco (Brasil)

Here is two: Semco SA/ Brasil is a successful global conglomerate in the services and industry fields.

The founder, Ricardo Semler says that industries are based on “formats that are basically legacies of military hierarchies which neglect or deny the power of human intuition and democratic participation.”

At Semco, there are no five-year business plans (which he views as wishful thinking); holacracy. A project takes off only if a critical mass of employees decides to get involved. Also “the staff” determines when they need a leader, and then choose their own bosses; the corporate personnel turnover rate is 2% over 25 years. Semler says: “We’ll send our sons anywhere in the world to die for democracy but don’t seem to apply the concept to the workplace”.

About the company:

– a company with a 900% TO increase in 10 years;

– main actor: Ricardo Semler, CEO: at 20, he was one of the few MBBA recipients of Harvard Business School; at 21 he took over the company from his father and founder , Antonio Semler. Ricardo is internationally renowned as the creator of the world’s most unusual workplace. He was named one of the “Global Leaders of Tomorrow” by the World Economic Forum in Switzerland;

– in his first day as CEO, at 21, Ricardo Semler fired two-thirds of management and eliminated all secretarial positions. Dismantled managerial structure to eliminate “corporate oppression” and encourage core business values of employee participation, profit sharing and a free flow of information;

– Ricardo (over 50 years old now) is the author of “The Seven-Day Weekend” (2003) and “Maverick” (1993). And here is his first Harvard Business Review article which provoked intense discussion among senior managers worldwide and is one of the most reprinted articles in the journal’s history (77,000);

– he says that “The purpose of work is not to make money. The purpose of work is to make the workers, whether working stiffs or top executives, feel good about life.”. See him here at TED;

– his idol: Bill Gore from Goretex

Ricardo Semler: “Every one of us can send emails on Sunday night, but how many of us know how to go to the movies on Monday afternoon?”

Gore-Tex / U.S.A

Here is three: At GORE (creators of Gore-Tex), everyone is an “associate” in the business. And there is no orga chart. Holacracy.

Was it possible to build a company with no hierarchy — where everyone was free to talk with everyone else? How about a company where there were no bosses, no supervisors, no managers and no vice presidents?

How can you have a $3bln. business with 9,000 employees located in 30 countries worldwide and having no formal hierarchy? Bill Gore (the founder) kept his commitment to keep company’s operations small and informal. It generally doesn’t allow a facility to grow to more than 200 people. That reflects another of Bill’s beliefs: that once a unit reaches a certain size, “we decided” becomes “they decided.” And it mobilizes its plants into clusters, like the 10 factories located in Flagstaff.

Here is Gary Hamel on the subject in Management Innovation eXchange (“Innovation Democracy: W.L. Gore’s Original Management Model”)

About the company:

– Still a private company, Gore has grown revenues to nearly $3 billion and consistently turned a profit since its founding in 1958;

– the company has approximately 9,000 employees at 30 locations worldwide;

– Bill Gore (the founder) conceived of the company as a “lattice” connecting every individual in the organization to every other (this informal network exists anyway in any company, underlying the formal hierarchy);

– the company culture is based on the “belief in the individual to do what’s right for the company” and on freedom for associates to achieve their own goals best by directing their efforts to the success of the corporation, to take action, to come up with ideas, to make mistakes as part of the creative process”;

– the structure is flat, with self-managed teams as the basic building blocks, and no management layers. It doesn’t have an organization chart, and resists titles. Everyone is an “associate”.

William Lee “Bill” Gore/ Gore-Tex: “We can’t run the business. We learned over twenty-five years ago to let the business run itself. Commitment, not authority, promotes results”

Round Up.

Try to imagine yourself now: go to a work-place that looks like home. Have friends working with you, feedbacking you, helping you “become” better. You decide who is your boss. What is his salary. What is your salary. No worry for tomorrow. Working hard each day. Enjoying it. Having fun. Making a buck (even a fortune). Being inspired each day. Inspiring each day. Creating your future each day. Being happy. Each day.

Would you innovate more in such an environment?

For more than 3 years I’ve been investigating what creativity and business innovation is. I have followed many threads and each of them led me towards holacracy, self-management leadership, solid and renowned “crazy” companies like Semco, Morning Star, AES, HolacracyOne and alike.

This is an open discussion, on this matter: innovation in a “holacratic” place. Please comment here. In the meantime, you can listen to my latest interview with Brian Robertson of HolacracyOne, author of “Holacracy: The New Management System for a Rapidly Changing World”

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