Why Are Rebels So Rare?
There are many examples of self-management on the Corporate Rebels Bucket List, all of which have very few layers of management, if any, and they are mostly highly successful. So this raises the question “If this is such a good way of organising work, why isn’t everyone doing it?”.
This is a question I put to Andrew Holm and Julian Wilson of Matt Black Systems. They have successfully transformed a small manufacturing company, increasing productivity by 500% whilst improving the quality and delivery of their aerospace components. What have they done that other organisations need to copy in order to produce similar results?
Personal values of leaders
The answer is buried deep in the personal values of the leaders of the organisation. It’s what drives them on to run a radically different structure compared with the traditional 20th Century hierarchical organisation. The successful leader in the past has been one who is powerful and decisive, who impresses the shareholders with a personal vision and surrounds himself (it’s usually a man) with people who think similarly. They like having power, enjoy being in a position of authority and in many cases are ruthless in the way they treat people. They know best, which is why they are paid hundreds of multiples of the average salary in the rest of the organisation. They come in, make the ‘difficult decisions’ stripping assets, cutting the workforce and implementing top-down financial controls. They promote people who think the same way and get rid of the ‘rebels’ that dare to think otherwise.
This explains why it’s so difficult for existing organisations to change. There is no incentive for the existing leaders to reduce their own position of power and it’s not in their psychological make-up to want to do so. They have always lived in a world where power, information and authority come from the top and they cannot conceive of running an enterprise any other way. They will shuffle people around on the organisation chart, reorganise divisions and tinker with the operations of the business, but are stuck with the hierarchical, siloed model that is the only one they know.
This explains why it’s so difficult for existing organisations to change. There is no incentive for the existing leaders to reduce their own position of power and it’s not in their psychological make-up to want to do so.
Empowerment of employees
If you look down the Corporate Rebels list of leaders you find people like Jos De Blok of Buurtzorg, Zhang Ruimin of Haier and Ricardo Semler of Semco. They are all people who are not aiming for personal glory and power. They are modest individuals who are motivated by seeing their organisations flourish without their interference. They genuinely ‘empower’ employees instead of just talking about it and follow the philosophy that ‘everyone can be a CEO’.
This is also the position of Andrew and Julian at Matt Black Systems. They believe that leadership has to come from the bottom, not from the top. The overall business direction results from the decisions of the individual, self-leading, virtual companies that make up the whole enterprise. They describe their organisation as self-leading rather than self-managing; as not only do they give their employees the choice of how to do something, they also give them the choice of what to do. If you go to the company’s premises you won’t find Andrew and Julian there. They moved out years ago so the employees could truly run their individual virtual companies.
The driving force behind the evolution at Matt Black Systems was the survival of the business and its ability to compete on a global stage. The cost of their traditional hierarchical and functional organisation couldn’t be supported if they wanted their business to survive. Patching their existing organisational model with Lean and Agile tools failed to deliver any sustainable results and transformation was going to have to be something that looked very different.
They believe that leadership has to come from the bottom, not from the top. The overall business direction results from the decisions of the individual, self-leading, virtual companies that make up the whole enterprise.
Perfect example of a fractal organisation
In his blog in August Joost highlighted the Atlas project and Visa as examples of ‘membership cooperatives’ without traditional hierarchies and bureaucracies. He then explained the ‘fractal’ nature of their structures where the same pattern is repeated at different levels. Matt Black Systems is the perfect example of a fractal organisation. The responsibilities of running the whole company are replicated at the individual level. Every employee has a profit and loss account and balance sheet, they have their own customers, suppliers and internal investors and run their own administration. There is no finance department, central stores or marketing manager. Individuals choose to collaborate when they wish, if there is some advantage in working together. Each is responsible for meeting the legal and regulatory requirements for their own virtual company. This ensures that the whole business meets the external obligations placed on it, in true fractal fashion.
The key to this change is the transformation from an internal ‘currency’ of time to one of value. Andrew and Julian describe this as “a shift from clock to contract”. Essential to the network of virtual companies at Matt Black Systems, are the explicit agreements between the virtual companies. These are like any other contract: they describe a product or service to be supplied in exchange for money. It is the money that values the product and not the time it takes.
The result is a highly effective operation. There is no need for management coordination between specialist departments. Every employee is a generalist running their own virtual company making their own decisions. They have to be multi-skilled and know when they need to pay for specialist advice or bring in help with their workload. It needs an entrepreneurial mindset that is not easy to find amongst the average manufacturing workforce. As a result, only one of the original 30 employees of Matt Black Systems has survived the evolution from a traditional time-based structure to a new value-based one.
A fundamental new approach
Two decades ago when the company was failing, Andrew and Julian realised they had to take a fundamental new approach to the organisational redesign. They describe this as the difference between the pilot and the designer of an aeroplane. CEO’s and leaders in conventional organisations are ‘flying the plane’ like a pilot. They have skills in operating the machine and finding the best way to make it work. But they are not aircraft designers, who have a different skillset.
The heroes on the Corporate Rebels Bucket List are people who have realised that they have to redesign the plane and not just pilot it. They get their satisfaction from seeing it fly well, not from being at the controls and telling the rest of the crew what to do. It takes real talent to be able to redesign the plane whilst you are still in the pilot seat, which is why the bucket list is quite short. Companies like Buurtzorg started from scratch with a new model in mind but Matt Black Systems had to go through a painful process of evolution from the old to the new. Most leaders would have given up the fight and let the company fail, but Andrew and Julian were determined to be ‘rebels’ and find a way to make the company ‘fly’. Now they are happy to share their experiences with others brave enough to follow.
Peter Thomson is Director of the Future Work Forum and runs Wisework Ltd. He has teamed up with Andrew and Julian to write a new book ‘500%, How Two Pioneers Transformed Productivity' about the journey taken by Matt Black Systems. Find more at Fractalwork: a free resource for people interested in self-leading organisations.
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