5 Steps (and 9 Experiments) for a Successful Transition to a Self-Managing Organization

A questionable strategy we have encountered on our world travels is one often made in good faith. It goes something like this: leaders tell their workers they shall have more autonomy — thinking this will change their mindset and their actions. The bosses hope for an automatic change in working methods and general improvement.

Unfortunately, this is flawed logic. You can’t change mindsets by instructing people to do so. It’s not that people object to change; they object to coercion. You can’t force them to change their mindset. Try, and you’re likely to achieve the exact opposite: they will become more entrenched in their views.

A successful path to a self-managing organization means taking the opposite tack. People are motivated by changes in the context of their work. The goal is internal transformation. Remember: stop trying to change others. Instead, change their environment to one that encourages and embraces change.

Transform the external, and the internal will follow. A change of mindset follows a change of context — ways of working, practices and processes, and workplace ambiance. When working practices change, so will behavior; employees encouraged to act autonomously are likely to do so.

As a result, the business should perform better. Business leaders should examine the conditions and contexts of work, and discard outdated strategies. Every leader’s task is to create a sense of agency, an environment in which people can think and act for themselves — with due accountability and responsibility.

So, how exactly does one do this? Good question. There are two fundamental elements. First, understand what people are doing right now, and why they are doing it. Then get busy reviewing their working environment.

We’ve distilled five steps (and 9 experiments) inspired by the Spanish NER group’s approach, which worked so well it transformed more than 150 organizations in the Basque region. The NER approach is also what we use at our investment company, Krisos, intending to turn traditional companies into self-managing ones.

Step 1. Diagnosis

Understand the current situation. Do a proper diagnosis of your organization: the workplace itself, and what people are doing. This requires a thorough understanding of daily realities: how employees carry out their work, what they do in a typical day, how they make decisions, run meetings, lead teams, delegate and distribute tasks and responsibilities. How do they allocate resources, undertake management, handle conflicts, and solve problems?

Try to get a collective view of how work is being done — bring managers and front-line workers together. Get everyone in a room, and together study workflow. Use Post-its to cover a wall with all the activities, and do whatever it takes to get a shared concept of how work gets done, from start to finish.

This will show how and where value is created for the customer — and by whom. You’ll learn about the bottlenecks, the frustrations, and where the waste is. Be prepared: things can get messy. Some people, especially those usually distant from the “coalface”, may be in for some shocks.

Step 2. Feelings, dreams, and fears

Now you know what your employees do; the next thing to find out is why they do it. Understand the people, and you’ll understand their behaviour. How do the working context and conditions shape their days, their actions? What is considered the 'right' and 'wrong' behaviour of colleagues?

You need to understand why employees look for consensus when making a decision, why they sometimes fail to take the initiative, insist on micromanaging, or refuse to take risks. Familiarise yourself with context, find out why certain structures exist, and uncover the practices and processes that shape behaviour and mindset.

To understand people, you have to talk with them. Conduct interviews: collect feelings, feedback, dreams, fears. This will reveal tensions — and, possibly, solutions. Before you begin the interviews, do everything in your power to create a safe place for them.

It’s vital that people can give honest responses without fear of getting into trouble. One technique is to let “outsiders” conduct the interviews, and anonymise the feedback. Outsiders are also likely to present objective findings, in an open and transparent way.

Step 3. Set the direction

With those steps behind you, consider tweaking specific elements of your plan. Which direction should you take?

Develop a set of guiding principles, for a start, to clarify corporate identity: Who are we? What do we stand for? Who do want to be? How do things get done around here? What do we value most? What do we think is fair?

Guiding principles may not answer all of those questions, but they should provide direction. It’s always good to know you’re on the right path — even if you aren’t sure exactly where it leads.

Step 4. New organizational practices

With guiding principles in place, you can start changing operational methods, as long as they gel with the guiding principles collectively agreed upon. It’s time for fresh organizational practices.

Of course, avenues for improvement are multitude. One could start by changing the way meetings are run, or how tasks, roles, and responsibilities are distributed. Decision-making could be revamped, as could conflict resolution.

What’s most important is that employees are allowed enough headroom to start work on improvements. If people are fully occupied, operating at 100 percent, no improvement is possible: everyone is already too busy. Until you prioritize the improvement of work practices over simply doing work, things will never change.

In the part below are 9 elements to experiment with...

Experiment 1: Collective goals

Introduce collective goals to replace individual ones. Forget about potentially conflicting KPIs for each department or team. Take inspiration from Netherlands healthcare giant Buurtzorg, and introduce just one team performance target, shared by all. In their case, it is this: “Make sure to reach a 62 percent productivity rate.”

[Check out this course on our Academy to learn more]

Experiment 2: Keep it simple

Look back to the diagnoses you did in Steps 1 and 2. Study your findings — and see if you can reduce bureaucracy by simplifying workflow. Identify waste, sticking points, and any frustrations identified by front-line workers.

Then set about removing these flies in the ointment, one by one. Get rid of hierarchical control mechanisms and status symbols. Keep managers out of the workflow as much as possible. Streamline and distribute authority by discarding unnecessary reviews, approvals, status symbols, and privileges.

This is the low-hanging fruit, to be sure, but good leaders make positive, symbolic steps. It will be good for morale too: It shows you’re game.

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Experiment 3: Roles and responsibilities

Increased freedom means more accountability and responsibility. Replace hierarchy-based job titles with autonomous roles responsible for certain activities, domains, or areas of expertise. Be sure to create clarity about existing roles and responsibilities, and who undertakes which roles and duties.

[Check out this course on our Academy to learn more]

Experiment 4: Open the organization

Build on the work done during the diagnosis stage when visualizing workflow. Open the organization up even more. Introduce tools like the Kanban Board app (there are digital versions, such as Trello), dashboards, and Obeya Rooms (a gathering of departmental heads to focus on big-picture issues, briefly — but Google it anyway).

These help with transparent progress and allow people to track their progress in real-time. Open up information, too: improve communication and collaboration with a tool like Basecamp (which we use at Corporate Rebels, but there are many others on the market).

Tools enable people to work with one another asynchronously. You collaborate with others — but without the need to be in the same place at the same time. It isn’t dependent on real-time harmony of operations.

Asynchronous team members can maximize their productivity without waiting for someone to become available. The system relies on documentation, transparency, trust, and autonomy. Employees in an asynchronous set-up have autonomy. They may decide to focus on a project in the morning, and then enjoy a kitesurfing session at lunchtime before getting back to work.

No matter how asynchronous work is carried out, regular in-person contact is needed to build relationships and develop respect for others’ challenges and needs. When the time is right, you may even decide to open up the books.*

Note: Ensure proper training is in place before implementing this step. Educate staff, and make sure financials are easily accessible before displaying your numbers organization-wide. A tool like Open Book Management can help.

Software can help to flatten an organization and automate workflow. It brings effortless and unambiguous transparency and allows asynchronous communication and collaboration.

But be aware: it’s no silver bullet, nor even a solution, as such. Tech can make us more efficient, but without making positive changes to our behavior and systems, not much will be achieved. Use only those tools that bring true improvements. Automate only that which is clearly defined, repeatable — and accepted by front-line workers.

[Check out our Masterclass on our Academy to learn more]

Experiment 5: Move to the rhythm

With the introduction of autonomy, it’s wise to improve collaboration rituals within and between teams. Set an operating rhythm: arrange a cadence of work and introduce regular meetings and reviews.

Your rhythm will depend on the external business environment. A fast-changing sector demands a high-frequency rhythm — which could mean daily alignment meetings. A slower environment means a lower frequency, but you’d worked that out, right...?

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Experiment 6: Decision-making protocols

Allow autonomous decision-making where possible; let people take responsibility for their actions. Any protocol you introduce must be guided by fairness. If your people value consensus, then use consensus as a criterion. If they want consent, then try something like the “no-objection” or advice processes.

[Check out this course on our Academy to learn more]

Experiment 7: Feedback and conflict resolution

Replace annual performance reviews with regular peer-to-peer feedback: no fancy tools required. Just sit down with your colleagues, on a regular basis, and informally discuss performance. What should someone “stop, start, or continue” doing? These sit-downs are simple and actionable, and include something often overlooked: the opportunity to bestow praise.

Be sure to keep the conversations positive and future-focused. Talk about what can be done better, rather than what has gone wrong. Have quality conversations, not cursory chats. Giving — and receiving — feedback takes practice. Tools can help to gather input or guide the conversation but don’t over-rely on it.

The same is true for conflict resolution. Have a mechanism in place that has clear steps to follow. Make it simple, and ensure it’s considered fair by all members of the organization.

[Check out this course and this course on our Academy to learn more]

Experiment 8: Networks of teams

With most of these fundamentals in place, get out the pruning shears: it’s time to start cutting back any vestiges of formal hierarchy. Create your own network-of-teams structure. There’s an art to it, of course. The single most important factor in the creation of a flat organization could well be its restructuring into a network of self-organizing, multi-disciplinary teams. Some important things to consider:

• Decide on the size of your teams. Aim for small, but not too small; we’re looking for Goldilocks status. Subdivide — to such a degree that a network of teams emerges naturally. These small, discrete units act as self-contained start-ups. Aim for units with minimal functions, operating almost as micro businesses. A clear goal provides momentum and purpose. Ensure that everyone has the time and resources to be innovative, and to improve their operations. See if any outside suppliers can compete with an internal team — HR, say, or social media — then check why, and how.
• Decide on performance metrics for these autonomous teams. There are several options — P&L, say, or by productivity — but there must be an agreed metric by which teams can verify their output. This helps members to assess the performance of their unit.
• Work out what flavor the network is. Do you want to create a market of buyers and sellers that organize via a market mechanism, as Haier does? Do you lean towards a network of equals engaged in voluntary commitments, as practiced at the NER Group? Perhaps a community of members that support one other via unconditional contributions, as at Buurtzorg...?

Whatever road you take, aim for a modular system to add agility, flexibility, and resilience. An added benefit is the ability to scale, fast. Don’t restructure for the sake of it. Subdivide only when you’re sure that it will support the overall mission.

[Check out our Masterclass on our Academy to learn more]

Experiment 9: Restructuring rewards

Reward systems are often a final element that organizations choose to work on — but they’re important. Make sure that the process centers on fair pay, and fair bonuses.

Some advanced self-managing organizations introduce profit-sharing for staff. Others move towards a culture of peer- and self-assessment to determine performance and rewards.

Companies that can introduce these practices are well on the way to self-managing success. A word of caution, though: this may not be the best place to begin organizational transformation.

[Check out our Masterclass on our Academy to learn more]

Step 5. Create your own handbook

Once you’ve developed your organizational practices, it’s time to codify them. A “living” handbook must be created — one that can be updated as circumstances and practices change. It prescribes key practices to be followed and should emphasize the way in which people treat each other.

A good handbook lays out practices that will contribute to a co-ordinated system, based on unconditional contributions, voluntary commitments, or market mechanisms. It should help members to self-organize, and some fixed guidelines are indispensable: they provide necessary boundaries and keep the focus on matters of fundamental importance.

Handbooks show people how to order and co-ordinate working life with their fellows, and how to structure, maintain, and alter aspects of it. Decision-making, conflict resolution, problem-solving: the handbook must make these fundamentals clear, with no latitude or ambiguity about what is the 'right' and 'wrong' behavior.

The handbook is a point of reference to inform members about the non-acceptability of past hierarchical behaviors. See it as a tool to achieve organization-wide consensus on new behaviors to be adopted. It should thoroughly explain the minimum requirements for the health of the organization.

Top leadership usually assumes this responsibility, but open dialogue with all employees is preferable. When team members start referring to the handbook, their buy-in will be high — but there must be room for maneuver. Too much precision or rigidity hampers autonomy. The aim is for assistance, not another burden to further complicate things. Dialogue between leadership and the autonomous members must be ongoing, and practices subject to change. Psychological safety and a healthy atmosphere are of primary importance.

The handbook, over time, will establish the enduring nature of new practices, and impart information that is relevant across the organization. Everyone should be aware of changes, practices, and aims — and comfortable in the knowledge that everyone else is, too. When these criteria are satisfied, peer pressure comes into existence.

[Check out our Masterclass on our Academy to learn more]

Journey of change

With a viable version of the handbook in existence, it’s time to start an invitational movement for its wider adoption. How one goes about this depends on many factors.

In smaller organizations, it is wise to depart collectively on this journey. Larger ones can incorporate pockets of “new ways” that mesh with existing processes. Buffers should protect pioneer workers, and allow them to function in an enterprise that still works in traditional ways. They must be allowed to figure out what works, and what doesn’t.

With that address, you’re ready to create the first viable version of the handbook. Demonstrate, with evidence, how the changes introduced will bring home more bacon. Most pioneers measure productivity alongside customer and employee satisfaction. Don’t use perfection as a benchmark, because there’s no such thing. Use prior performance instead.

Patience and faith

Patience is a virtue; don’t expect immediate results. Radical change requires forbearance courage, and the willingness to accept some stumbling blocks on the road to success. Disruptions of all kinds are probable, and things are likely to be unsettled for a while. Possibly even a long while. Inter-organizational relations will become more fluid, there will be challenges to address, and ingrained habits that need to be changed.

This takes place against the background of hierarchical conditioning. You’ll be asking a lot of some team members — especially those conditioned to expect rewards for adherence to hierarchical behaviors. Counter uncertainty by reverting to your guiding principles. Remind people that freedom does not equate to a lack of constraints and controls: employees are still jointly accountable for the operation of the whole.

Everything must be accessible, so that valid opinions can be formed, and so peer control can emerge. It’s vital that limits can be challenged. Be considerate of the team players going through a period of destabilization. Be accessible, listen, and do your best to ensure a positive atmosphere. It’s an adventure, not a sentence.

Back to transforming the self

This ties back to internal transformation, those changes in the self. Increased freedom, coupled with increased accountability and responsibility, will excite some — and terrify others. Perceived perils must be addressed as people consider their view of self in a new environment. They have fresh challenges to tackle in an unfamiliar hierarchy.

The concepts of free will and freedom in the workplace may worry those accustomed to being led by supervisors and guided through the minutiae of their everyday. Most traditional relationships between rulers and ruled rely on the fiction that the organization “owns” its employees — and is thus obliged to train, motivate, and reward them. The f-word that most troubles traditional managers is “freedom”.

Why does hierarchy erode a sense of freedom at work? Well, in such circumstances, the opportunities for autonomy are few and far between. You might be a champion of fairness in all its forms, but a slave to the hierarchical system. Not everyone has the gumption or the inclination to fight the system or to reconstruct it. All too often, we close our eyes to what’s going on around us.

We hope that you, our readers, will harness humanity and overcome willful ignorance. It can certainly be done. Are we brave enough to follow our free will after recognizing that we’ve been brainwashed over the years? We are all free—office employees, bank managers, engineers, carers—all are exercising free will.

Ditch the hierarchy — and free yourself.