Integrity in the Organization

We often talk about — or hear about — companies and leaders and integrity.  Integrity is frequently defined as “acting in accord with high moral values” or the like.  I prefer a completely different definition which often has the same effect.  I prefer to speak of integrity as wholeness.

In this article, I will focus on wholeness of communities — particularly work communities, particularly businesses.  I have written elsewhere on the DecisionLab blog (decisionlab.org.uk/blog) about personal integrity, and can also recommend the work of my mentors Drs. Gay and Kathlyn Hendricks (www.hendricks.com) on the subject.
Organisational integrity is, as I said, all about wholeness.  We can borrow a definition from physics — the definition of coherence — to define wholeness in a living system.  Wholeness is the property of non-destructive interference between elements of the system and between the system and its environment.
Let’s unpack those words with examples.  Interference, in a business context, is simply interaction — talking, trading, directing.  The popular and business media are full of examples of destructive interference — from oil spills to failed mergers to management-labour disputes.  Non-destructive interference means collaboration, where teams, businesses, communities and ecosystems produce more value for each than they would be able to produce on their own.  Integrity does not come from “leaving well enough alone”; you must connect in order to be whole.
Cybernetics looks at the relations between parts of a system as feedback loops — flows of information, also known as influence, from one part of the system to another. The wholeness of a system, the non-destructive interference between all its parts and its environment, can be seen as a web of feedback loops that ensure information (value, influence) from any part of the system can easily and quickly reach any other part of the system.
In practice, these feedback loops are often blocked, distorted, incomplete.  One part of the organisation fails to talk to another.  Instructions are incomplete; feedback is ignored.  Changes in the environment (customers, regulators, suppliers, ecology) aren’t acknowledged in the Boardroom or the shop floor.  Promises made in one place aren’t kept in another.  Parts of the system are disconnected.  Or destructive interference emerges, drama escalates, and political factions go to war with one another.
To maintain the smooth flow of information, creativity and power throughout the organisation, we need to develop four key ways of organising our selves:
We must learn to give appreciative awareness to changing and challenging circumstances, in order to stay in touch with what is new.
We must learn to speak honestly and listen for others’ truth, to resonate with our environment and thus integrate our perspectives.
We must learn to invent new ways of creating what we want (rather than blaming ourselves or our environment for what hasn’t worked, and escalating the drama).
We must learn to complete what we promise, either by getting it done efficiently or by changing our agreements so they match what we want and what works.
These shared skills are essential, and they enable the core processes of organisational integrity.  To ensure the wholeness of our living community, we must also look at structure and relationships as well as process (as Fritjof Capra suggested in his definition of living systems).
Three organising principles suffice to ensure structural integrity of the organisation:
1) the organisation is made up of “circles”, teams which each organise themselves to accomplish a shared aim of delivering value to their environment in exchange for what they need;
2) each circle makes the rules (“policy”) by which it will operate through “sociocratic consent”, a particular participatory decision-making method, and then follows those rules (whatever they may be) to accomplish their work.  Each policy is a scientific experiment, with a particular theory about the expected successful outcome, and a time at which to review results and make another experiment (with new policy) as appropriate;
3) each circle is linked to the other circles of the organisation via a double-link, one a manager delegated down from above and the other a representative elected up from below; the representative is always elected by consent during a circle meeting.
The participation of both up- and down-links in the consent-based circle meetings ensures that the entire organisation is woven together in a web of feedback loops, and that people cannot ignore the influence carried by these loops.  Links to the environment are integrated in the system both through measuring connections to the environment through things like sales, and by bringing some representatives of the organisation’s environment onto the Board (the top circle).
Lastly, the pattern of relationships in an organisation is key to the maintenance of wholeness.  Living systems are “autopoietic networks”, which means that each part of the network makes another part, and thus they form (and reproduce) themselves.  Human communities throughout history have raised, trained, and initiated their members.  This process breaks down when members are not supported by their colleagues to develop in skill and wisdom, when there aren’t “mentoring tracks”, when the organisation cannot launch entrepreneurial ventures internally and instead can only buy them in.  Each circle must be able to support the development of its members, and the organisation as a whole must be able to easily launch circles with entrepreneurial aims, and support them to mature engagement with the enterprise as a whole.
When organisations have integrity, the people in them prosper, and the organisations themselves become rich in well-being, rich in material wealth, physically secure, agile in responding to opportunities and resilient in the face of harm.  Every code of morals describes what person or an organisation with integrity does in certain circumstances.  Morals are a visible product of integrity, not its source.  When we are smoothly integrated with one another and with our environment, creatively and dynamically engaged, what Buddhists call “right action” emerges without struggle as the most expedient path to our goal.

Laird’s Critique of Sociocracy

Dear Laird,

I just read your blog post: http://communityandconsensus.blogspot.dk/2014/08/critique-of-sociocracy.html

First, I want to say that I feel happy when I see your name on the page — it’s great to think of you again, and I deeply respect your expertise as a facilitator. I have enjoyed working with you in the FIC and elsewhere.

Second, I have some quibbles with what you claim. I’d like to improve your understanding of Sociocracy. I’ll respond to each of your numbered points in turn.

1. While the framework of Sociocracy does not refer to emotions specifically, I find that I can effectively use the framework to include emotional content. Emotional content is a valid input, along with any other information, during every phase of the policy development & decision-making process. Most of the trainers (and all of the certified trainers) I have worked with have a background training in emotional processing of some kind and bring that into the process. I see that as essential.

I agree with you that preventing conflict and upset is both impossible and undesirable; anyone claiming to do so is not likely to be effective as a facilitator or consultant (and certainly not as a leader). I doubt that the “advocate of Sociocracy” who made this claim to you has had much training or experience.

2. When I’m working with small businesses or volunteer groups, I emphasize the difference between operations and policy-making. In many consensus-governed groups, every committee meeting is governed by consensus. From what you say in your blog, it looks to me as though you imagine the “double link” representative showing up to every meeting! I generally suggest that small organizations have infrequent “circle meetings” of the coordinating team, perhaps one per quarter. Most operational decisions can be made by one or two volunteers or employees just doing what falls within their roles.

I’d be happy to talk through the details with you, but in summary I can assure you that it does not require as much time as it seems you expect it to.

3. In my experience of sociocratic elections, they are transformative and drive the development of group cohesion and people’s ability to deliver feedback effectively. Sociocratic elections develop the group’s ability to handle the non-trivial challenges you note:

o  Creating a culture in which critical feedback relative to group function is valued and encouraged.

o  Helping people find the courage to say hard things.

o  Helping people with critical things to say to sort out (and process separately) any upset or reactivity they are carrying in association with the critique, so that they don’t unload on the person when offering feedback.

o  Helping recipients respond to critical feedback openly, not defensively.

Of course none of those things is easy to do, and of course groups using Sociocracy don’t handle those challenges perfectly. I won’t try to convince you of the things you say I cannot convince you of — and you are just arguing with a silly straw man anyway. I do claim that handling the tough issues openly and with an appreciative frame (as in the sociocratic election) is a helpful approach to a difficult set of issues.

4. Different consensus-using groups have different bars they must pass in order to make a decision — from “everyone deeply agrees” to “everyone can live with it”. Sociocratic consent uses a very specific definition for the “paramount objection” — it must be a risk which would prevent a group from accomplishing its Aim, or the specific value which that group exists to deliver. It is true that this definition is similar to the definition of “Critical Concern” in Formal Consensus, but that definition is not universal to all consensus-using groups, and in my experience even highly-trained and experienced groups (including ones you and I have both been present in) fall into the “I don’t like it” trap. I am sorry you haven’t been able to find the explicit definition of “paramount objection” in your reading or training in Sociocracy. When I am writing organizational bylaws I usually describe it as “identifying a risk the organization cannot afford to take”.

Speaking of emotions, when you say that the distinction between consent and consensus is “just playing with words”, I imagine I see anger. Is that true?

5. You are right. Rounds are not always the best format. I recommend that sociocratic facilitators master rounds as their first process tool, and always use rounds when testing for consent.

6. It is not correct that Sociocracy decision-making processes must always start with proposals. I often recommend that people start with proposals, for the reasons you mention, but the standard policy-formation process starts with asking everyone to contribute information about an issue. This information often includes emotional content. It then procedes to a group proposal-forming process, and ends in a decision-making process relating to the proposal.

In summary, I have the sense that you’ve been getting your information on Sociocracy from uninformed sources, or a quick skim of some of the materials available online. If they’ve been my materials, then I apologize for my lack of clarity! Please do let me know if there is any way I can be more clear.

Love,
Nate Whitestone (formerly Nate White)

A Community Has The Right to Self-Determination

The Market Basket supermarket chain has refused the formal authority of its owners, and given its allegiance to the leader it trusts and prefers. When I say the “supermarket chain has refused”, I am referring not to the legal entity but to the community of workers that brought that legal identity to life. That community has done the right thing; what’s needed now is a governance structure that recognizes the community’s rights.

From BoingBoing.net on July 30th 2014, a summary by BoingBoing reader MiketheBard:
“[…] Market Basket, a New England supermarket chain that Consumer Reports named the 6th best in the country, has been all over the news in the Northeast for the last couple months.

After a long family feud, the majority stockholders fired their cousin, longtime CEO Arthur T DeMoulas. He had built the business on low prices, high wages, and ZERO company debt- All employees get profit sharing and a livable wage, and many have been with the company 20, 30, even 50 years.

Arthur T. was replaced with the former president of Radio Shack, with an evident goal of strip mining the wealth from the company–raising prices, cutting benefits, loading up with debt, and selling off real estate–in order to pay out higher stock dividends to the controlling shareholders.

The employees revolted. Top executives walked off the job and picketed in front of headquarters. Employees from managers to baggers are using their vacation time to protest outside stores. 68 out of 71 managers have pledged to quit unless Artie T is reinstated or allowed to purchase the remaining 51% of the family-owned company. Deliveries have stopped and twitter is full of photos of completely bare shelves. […]”

These employees are doing the right thing, and the majority stockholders are in the wrong. While I do not believe that the legal entity of a company is a person (contrary to current US law), I do believe that communities are like people and should be treated like people. To give external shareholders unilateral control over the life of a working community is wrong; it is not as bad as slavery, but it is wrong for the same reasons that slavery is wrong. Most corporate governance is geared toward injustice of this kind: giving a few the ability to control the many, to remove their means of livelihood, destroy their lives’ work, sever the relationships they have built, and squander their pensions.

A moral system of corporate governance must respect the right of a community to self-determination, aligned with a clear shared purpose. This does not mean that a community’s leaders should be powerless; on the contrary, those people a community chooses to lead it should be handed as much power as necessary to ensure business is done effectively. This power should be a delegation, however — it is held on behalf of the community. Self-determination also does not mean that shareholders, even external shareholders, are powerless. They should have a voice with exactly as much weight as any other stakeholder group (including employees) in the top-level governance of the corporate entity which provides legal structure to a working community.

When you are considering how this might apply to your own company, ask yourself this: “Do I want the power to destroy, or the power to create?” Current legal power gives majority owners the ability to destroy their companies, as we see in the Market Basket example, but the ability to create is fragile. It comes only with the enthusiastic engagement of employees (and customers, and investors, etc.). By adopting governance which constrains your power as a majority owner or chief executive, you force yourself to respect the voice of your working community. That respect buys engagement in a way that nothing else can. By giving up the unilateral power to destroy, you gain the power to create, working with the community you serve.

If you want to take practical steps to act on the ideas here, I suggest looking into Sociocracy. Although employee ownership (including worker co-operative structures) moves in the right direction, the best available model is the sociocratic one, in which multiple stakeholder groups have a voice in the governance of the company, and yet most decisions are made rapidly in the frontline teams where work is actually delivered. I see Sociocracy delivering on the promises made by employee ownership, providing effective particpatory management and governance to match the changes begun in an employee-ownership initiative.

I hope this is thought provoking in a useful way. What do you think?

When do you not want an agile team?

For the past few years I’ve been an agile enthusiast, and I still am. But when we talk of scaling agile to the organization, it is easy to forget that agile practices work well under certain conditions. Many teams in an organization will not be able to create those conditions, and standard versions of agile rituals will not work as well for them as other “project management” approaches. This is old news, going back to the 1994 classic “The Wisdom of Teams” at least, but I don’t see it shared in most descriptions of “how to scale agile”.

In “The Wisdom of Teams”, the authors describe a productivity curve — the Y axis is productivity, and the X axis is how close a team is to being “real” or “high-performing”. The most interesting thing about the curve is that there is a substantial dip in productivity just at the start. To the left of the dip, a team is not really a team — it is a working group, with a clearly defined leader coordinating the work. The dip represents a period of self-organizing (often described with the classic Forming, Storming, Norming, Performing cycle). On the other side of the dip, we have teams with progressively more of the qualities we would consider to be “agile” today, enjoying ever-greater productivity.

The key is, if your team cannot work closely together in the same physical or virtual space, with constant easy informal communication, with every member taking responsibility for the work of the whole, then your team cannot make effective use of agile practices. Formal delegation and differentiated roles are necessary if the team’s ad hoc coordination takes more than a few seconds to arrange. Literally three seconds! I think the process of making a phone/VOIP call is long enough that it requires a context switch, and that means that the work stops. When I say “the same virtual space”, I mean working with the IM chat window open or conference call running, for hours at a time.

There are hacks available — for example, arranging work sessions where everyone is online at the same time, or working from the same office (or cafe). But unless this is the only way your team works, you will still need to divide up the work, which implies more structure than is usually part of “best practice” agile.

The approach used in sociocratic organizations represents a good example of how you can scale agile with a mix of team / working group types. Each team (in Sociocracy, a “circle”) meets at least once a month to do the team learning and decision-making that makes agile or lean teams into “guaranteed learning organizations”. At that time, they have the characteristics of a “real team”, setting their methodology together and taking ownership of their outputs as a team. Between these “circle meetings”, however, some sociocratic circles use agile ritual, and others use classic approaches such as PRINCE2, with a high degree of coordination and direction from an “Operational Leader”.

In sociocratic organizations, a double-link connects teams up and down the functional hierarchy. It provides guidance from the general teams to the more specific and provides feedback from the specific to the general. A lead link (the “Operational Leader” just mentioned) provides a downward connection from the more-general circles to the more-concrete ones; a measuring link (a “Representative” elected by the more-concrete circle, who participates in the monthly “circle meetings” of both lower and upper circles) provides an upward connection. Thus, each circle has a well-defined structural connection to the circles above it (and below it). With the structural feedback loop built into the organization by these two roles, each circle is tightly coupled and dynamically steerable — whether they use agile processes internally, or more elaborate formal structures.

Does my description of “when you can’t use agile” match your experience of working in various teams? Are you familiar with other ways of scaling agile which don’t require every team to use the same methodology? Let me know!

Moving Together: Teaching the Principles of Sociocracy through Physical Play

I enjoyed leading an experiential session for the IMTA (International Movement Teachers’ Association) in early June — at the moment I’m calling it “Moving Forward Together — Experiencing the Principles of Sociocracy through Physical Play”. I’d like to share some brief rough notes with you on how that process worked; please feel free to experiment with this program and let me know what you discover. Note that if you are not an experienced Sociocracy practitioner, or you are not experienced in leading groups in movement exercises, you may not have the necessary background to make full use of this material. Please feel free to contact me with questions. [Also, I make some generalizations in my description — please forgive me if I am inaccurate in describing you!]

My plan was to work my way through each of the core principles of Sociocracy — Consent, Circles, Double-Linking, and Election by Consent — in an experiential way, with a minimum of explanation.

I started with explaining my intention with the experiential workshop, and checking whether people were willing to explore with me. Nobody was unwilling; this was our first consent decision, which I noted and celebrated. I then shared a very brief explanation of the concept of Consent in Sociocracy — the willingness to move forward together in an experiment, on the basis that there is no visible danger that will prevent us from accomplishing a shared Aim.

Without taking more than one or two questions, I asked people to get into groups of three. Each group chose a Goal, a Mover, and a Sensor. The Goal would make an animal noise, and slowly move around the room. (I asked each group to consent to the animal noise selected by the “Goal” — this was intended to symbolize the standard practice of consenting to a proposed Aim). The Mover would close her eyes, and move toward the Goal until she reached the Goal. The Sensor would stay with the Mover (perhaps touching) and say “safe” or “danger” as they went. Participants seemed to understand the instructions, and began play quickly.

As they moved, I informed them that once they caught the Goal, they would all switch roles.

After several rounds of this, I gathered people for Q and A in the large group. Predictably, people had made lots of useful discoveries. I did my best to answer questions, share my experience, and ask more questions.

Then I asked the groups of three to join together into groups of six. I gave each group of 6 a pillow. Now the pillow represented an Aim, a specific piece of value to deliver to the Goal. Each group of six was to choose a Goal by Consent. Then the Goals moved off into the room, and each team (circle) linked hands, closed their eyes, and followed. I had suggested to them they would need to call out ‘safe’ or ‘danger’ as they went, and this was essential to avoiding the various pillars and tables in the large space.

After several rounds of exploring in groups of six with some variation, I gathered people in the large group for more reflection. We explored what it was like delivering the pillow together, and how people felt when they all had their hands on the pillow, versus how they felt when only some of them did.

In any case, after a round of reflection, I asked them to double up their groups of six into groups of twelve. But before doubling up, I asked them to each elect a representative who would provide a link to the other group. I think this may have been the least useful element in the physical exploration, because I am not sure they really experienced the value of the double-link. In the future, I might try having the groups connected in different hand-holding patterns, to symbolize relationship patterns. This would clearly demonstrate that a two-person link is more robust and easier for coordination than a one-person link. In the exercise as we did it, I believe the double-link principle was mostly lost.

In any case, as they did multiple iterations of the game with the larger groups, I invited them to consider together between each round whether they wanted to make any changes to the game to make it more fun, a better learning experience, or just to help them feel more alive. This produced a variety of responses — some groups got more effective at delivering the Aim but found they were having less fun, which provoked the question for them of what their true Aim was. Several group noticed that if they consented to a new experiment quickly, they were able to spend more time playing and less time talking, even if the experiment wasn’t the one they most personally favored.

After several rounds of play in 12-person groups, I called everyone in for a final large circle discussion. I invited people to share what they learned, and reflected alongside them on our learning. The responses I heard from the group were strongly positive — they had enjoyed the playful exploration, and they felt enthusiastic about using such a dynamic system for steering their organization. The applause was warm — although not as warm as the applause following our next session, when we used the sociocratic method for electing new board members and making some policy decisions in their General Assembly. They enjoyed the experiential play, but they appreciated it even more when they saw that they could actually work this way.

Mapping Your Organization’s Ecology

Mapping an organizational ecology is an essential step to functioning as a Genius Organization.  Whom do you serve? Where do you do business? This includes the work of understanding market and value stream but it goes considerable further.

Mapping the Market & Value Stream

Who buys your products? Most companies have a clear answer to this, with a break-down by demographics and psychographics. We won’t review the well known basics of market research. The one suggestion we will make here is that you use personas — prototypical (perhaps fictional) examples of your users / customers that everyone in your company can develop a personal (imagined) relationship with — to capture the demographic and psychographic figures. Many people find it difficult to remember statistics, but find it easy to remember details about a person. This is especially useful if most of your customers fit one type, but a substantial minority have several significant differences.  It is also useful if your customers are very different from your employees. You can use short fiction to help your employees understand who your customers are in the moment they deal with your company. That understanding will improve not only marketing but customer service and product design.

Mapping the value stream is less widely understood. Detailed and rigorous instructions are available from various Lean sources; the Lean Toolbox by Bicheno & Holweg is a good place to start. We offer a very simple version here on the theory that it is better to do a simple version than nothing.

In order to map your value stream, you must make a simple flowchart of every step that must take place in order to deliver value to your customer. If often helps to start with the customer and work backwards. By the time you are finished, you will have a web of materials and services that starts with recycling and resource extraction and finishes with the customer acknowledging receipt of delivery. We recommend that you begin this process at a high level of abstraction (the rough-and-simple version), and refine it over time.

Once you have mapped the web of firms, processes, and materials that delivers value to you customers, it is time to look at the web that surrounds the use and disposal of your company’s products. Again, we recommend a simple initial overview before putting a lot of work into detail. What processes, people, and materials are required by your customers’ use of your products? (We specifically include services, experiences, and guided transformations in the word “products” throughout this article). What processes, people, and materials are involved in the disposal or recycling of your products? Draw the flow of materials and processes, until you reach its end (or until it loops back to your manufacturing or delivery process).

Since the mid-1980s (when Interface Carpets began pioneering the practice on an industrial scale), we have been moving into what is now called “the circular economy”. This refers to the “cradle to cradle” approach of tracking our products after they are sold, through the end of their use cycle, and taking responsibility for their disposal or recycling. This shift is absolutely required in order to function effectively as a Genius Organization. How will you know how your customers’ lives are changing if you do not at least track the long-term impact of your products? Fortunately, it is not only necessary, it is also the source of significant savings and additional revenue for those firms that truly make the shift. The shift from selling software as an object (disk plus documentation) to software as a service (cloud-based and membership-based) is driving a great deal of commerce. That is the same shift that Interface pioneered when they began selling carpets as a service rather than a good, and it is also driving the “sharing economy” where people own fewer things but rent “thing plus service” more frequently.

Once you have mapped market and value streams, you are ready to define the communities you serve.

Defining Your Community

Defining a community requires you to ask yourself not only “who are my customers” but also “who are my people?” Your organization probably serves several communities:

  • the people who are upstream from you, from materials extraction to component manufacture to professional services, the physical towns or cities where they live, and the virtual associations where they work or socialize;
  • the physical communities where your facilities are based;
  • the physical or virtual communities to whom you sell your products;
  • the people who are downstream of you, who receive the results of your work and develop it further, recycle it, or clean up after it, and the physical towns or cities where they live, and the virtual associations where they work or socialize.

The list of communities you serve may be quite long, but again it is enough to start with a high-level overview — if you have a very large company, you will need to do a much deeper exercise later, but with a small company you may find that you only serve two to four communities.  The key here is to decide who deeply involved your company is with any given community along the value stream (and if you should be more involved than you are). For example, an oil company operating in the coastal delta of Nigeria should probably include the people living in that coastal delta in its list of communities, even if they currently do not devote much energy to serving those people. On the other hand, an accounting firm in Manhattan may regard its communities as being the schools where its accountants trained, the physical neighborhoods where its employees live and where the company is located, and the industry groups to which most of its customers belong.

Mapping the Ecology

Once you understand your market, your value stream, and your communities, you understand most of your organization’s ecology.  The last thing to do is to make a brief best-estimate assessment of the ecosystems or other elements which drive the well-being of your communities.  You can do this very simply: make two columns, one with a list of elements in a community’s environment which drive that community’s wellbeing, the other with a list of elements that impede its wellbeing. These lists should include key allies or trading partners, key enemies or competitors, and key ecosystems on which they depend. This obviously includes biotic ecosystems such as farming systems or watersheds, but for virtual communities it may include “a free and open internet”, for example.

Mapping the ecology of your organization will give you a significant resource for developing your organization’s ability to deliver remarkable value, and for cultivating the ability of the communities you serve to do the same

Game Design is Necessary

Games are about, among other things, freedom. To design a game is to create a system in which people are free — free to play, free to explore, free to excel. The boundaries — rules, game board, etc. — define the space of freedom.

Those who are familiar with governance best practice (for example the Carver system of corporate governance, also known as “governance by policy”, or the sociocratic system of governance) will recognize the idea of a bounded space in which players are free to act to accomplish their shared goals.  

The value of freedom in an organization cannot be overstated. People require clear boundaries, but when the boundaries are completely prescriptive — when there is no room for experimentation or improvisation or learning in one’s work — people begin to suffocate and die.  

The past twenty years of research into the phenomenon of Flow illustrates this point well.  As pioneering researcher Mihaly Csikszentmihalyi has shown, people thrive in environments where they experience the right balance between challenges and their skills. 

This chart illustrates that balance. Where people must bring their best-developed skills to bear on significant challenges, they enjoy peak experiences in the ‘flow state’, where the sense of time falls away and deep fulfillment occurs. When challenges begin to outstrip a player’s skills, that person moves first into arousal, then into anxiety. When skill outstrips the challenge, a player moves into control, then relaxation.  If neither challenge nor skill is high, the player experiences worry, apathy, and boredom.  This is true in games, and in the workplace.

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(Thanks to Wikipedia contributer Oliver Beaton for this chart).

In order to confront meaningful challenges, a player must be free to experiment and apply skill to meaningful choices.  The art of game design is, in part, the art of defining meaningful choices and challenges in a way that matches players’ skills.  For that reason, we know that game design is essential to the Genius Organization: the task of drawing out the genius of employees and customers requires us to consider the games that will leave them most creatively alive, and to set up the rules so they are free to face those challenges at the appropriate time.

Beyond the Learning Organization

We face a dramatic challenge. We are changing our climate and driving species to extinction on a scale similar to the asteroid and/or volcanic eruption that destroyed the dinosaurs. We struggle with social inequality (from slavery to the prison industry to our failure to invest in poor youth), theft of our cultural commons (theft both legal and illegal), and the tyranny of mass surveillance and robotic war. Our global governance systems pit one nation against another, one social class against another, and all against the very ecology on which we depend for life and livelihood. Learning organizations are necessary, but getting better at capitalism — improving our ability to extract value for shareholders — is not enough. Humanity and the biosphere — what we think of as ‘the world’ — needs more than ‘learning organizations’ at this point in history. We need radical change. We need Genius Organizations.

We are indebted to Peter Senge and his collaborators for the concept of the learning organization.  That concept, and the various practices shared through books such as The Fifth Discipline Fieldbook, have been constant guides through our  professional lives.  For those reasons, people who hear the phrase “Genius Organization” may think we simply mean “learning organization, re-branded”.  It is true that every Genius Organization must be a learning organization, but it must be a very specific kind of learning organization — perhaps what every learning organization should be.

Defining the Genius Organization
A “Genius Organization” is an organization which serves a community both by cultivating the community’s genius and by delivering a particular set of products the community values.

We understand the “genius” of a community to be a combination of special resources (tools, location, history, etc.), useful complexity (knowledge, social organization, social diversity, biodiversity, etc.) and integrity (mutually beneficial connectedness within the community and with its environment).  A community’s genius allows it to produce value in a way that no other community can.

A Genius Organization must be able to maintain a long-term commitment to delivering human development that also benefits the ecologies on which people depend, and must deliver on that commitment with ever more skill over time. A Genius Organization is what Arie de Geus would call a “living company”.

When we use the word “community”, we include the physically co-located communities of neighborhood, village, and watershed, the virtual communities of social networks, the temporary communities of festivals and gatherings, and the broader extensions of these meanings to cities, regions, industry sectors, social classes, psychographic and demographic units.  The important thing is that a community must in some way be self-organizing — “teenagers” are not a community, but “teenagers that go to Beatles concerts” were a community, in the way we use the term.  “Baby boomers that went to Beatles concerts and still love the Beatles today” are a community in the way we mean it, because that group of people accesses the same media and shares an “imagined territory”.  Most of the communities served by Genius Organizations today are imagined communities, in the sense Benedict Anderson used when coining the phrase.  In other words, the people do not all know each other, but they relate to the same media and the same stories about a shared “imaginary territory” — an imaginary territory which may also be physically real, like the physical territory controlled by the United States of America, or which may be virtual or temporary, like the performances of a pop music act or the playspace of an online game.

The Genius Organization provides a kind of servant leadership to its community by enabling that community to develop and transform, in addition to providing whatever other products it may offer.  In fact, those “other products” are usually the means by which the genius organization delivers the transformation.  CSR (“corporate social responsibility”) is usually a separate functional silo within large companies; it makes grants to deserving charities.  While making grants to charity is a desirable thing, a Genius Organization requires CSR (like all functions) to be integrated in the product-based divisions of the organization. Corporate social responsibility is a practice throughout a Genius Organization, and results in strategic benefits that disconnect charitable grants cannot.

Required Ingredients
Every Genius Organization must have certain qualities or practices in order to reliably deliver the servant leadership that makes it a Genius Organization.

In order to understand its community and serve it effectively, the Genius Organization must be a Lean Enterprise (or at least a Lean organization) — it must understand what its customers value, and take responsibility for the whole value chain involved in delivering value to its customers.

A Genius Organization must understand its product in terms of the customer’s experience, and it must bring the different elements of customer experience together into a guided transformation.  This requires an understanding of personal, organizational, and community development and transformation.  At a minimum, this means that the Genius Organization implements the five disciplines of the learning organization. Most Genius Organizations will benefit from practice of user-centered design, lean or agile product development, and personal transformation of the kind documented in ‘Presencing’ by Senge et al. or taught by the Hendricks Institute.

Finally, the Genius Organization must have the structures, processes, and skills necessary for it to govern and manage itself in a deeply participatory manner. If the governance structure is not strongly participatory, there will be a tendency over time for an influential group in the company (such as management) to enrich itself at the expense of the other stakeholders (e.g. shareholders, other workers, and the human and biotic communities where the company does business).  Cautionary tales abound — such as the example of WireMold, once an exemplary Lean company, which was sold and placed under management that was not committed to Lean, resulting in the evaporation of a decade’s devotion to learning and excellence. Either the Genius Organization uses a management and governance structure such as Sociocracy, or it will endure great risks with each new owner and each new generation of management.

Progress on the Journey
When a company is functioning as a Genius Organization, that is the beginning of a journey which may continue for centuries.  I suggest that, as a leader, you track your ongoing success on at least these measures: the productivity of your colleagues, the wellbeing of colleagues, trading partners, and ecosystems where you operate, customer satisfaction, and the resilience of your communities.

To truly transform our world for the better, we must go beyond the learning organization.  Genius organisations learn constantly, but they intentionally serve their communities in very particular ways and they are structured to ensure that they continue to serve into the indefinite future.

What is Genius?

This is the first of a series of posts on genius, and genius organizations. Enjoy!

At Genius Engine we define genius as “the ability to create remarkable value”.

We say that genius is an ability to create value, because we are not interested in an abstract definition that ignores the context of a person’s or group’s genius.  Value is always valuable to someone in particular.  We use the word “remarkable” because we want to express that genius is something exceptional or beyond the norm — but again, we know that it is beyond the norm because people perceive it as specially valuable, not because it meets an abstract test about which few people care. Genius matters — if it does not matter, it is not genius.

Historically, people have understood genius to be a fortunate spirit (giving good luck to a place, a family, or a person); more recently genius has been seen as a personal quality — a particular sort of talent, even a measurable level of general intelligence that is produced by some combination of genes and environment. There has been a shift from looking at genius as something external, collective, and mysterious, to something internal, individual, and measurable.  By talking about the ability to produce remarkable value, we keep the measurable aspect of modern ways of talking about genius, but we allow ourselves to focus on both individual and collective, internal and external, qualities of genius.

Some scholars still think of genius as a collective trait. Keith Sawyer makes a clear argument (which is consistent with the pioneering work of historians and sociologists of science such as Thomas Kuhn and Bruno Latour) that every invention is the result of a wide network of previous work, of critics and collaborators, of patrons and customers.  The airplane could not be invented without certain materials, certain engine innovations, certain scientific disciplines, and the Wright brothers are known as the inventors of powered flight not only because of their insights but also because of their embodied skills as bicycle mechanics, hackers who were very familiar with reworking vehicle technology by hand, and because of their ability to popularize their work — which allowed them to develop positive relationships with a curious world.

Certain qualities allow individuals and groups to create remarkable value. We look at genius as having three primary drivers: special resources, useful complexity, and integrity. Special resources includes internal resources such as genetics, external resource such as access to the right tools, and personal history which is both internal and external. Useful complexity includes individual types of complexity — mental and emotional — as well as collective types such as social complexity and genetic diversity. We define integrity as the mutually beneficial connectedness within a living system (person, organization, or community), and between that system (the person, organization, or community) and its environment.

One of the benefits in looking at genius in this way is that we can see potential strategies for increasing the genius of a person or a group.  One might look at a person’s ability to create value, and think “this person is very detail oriented, and enjoys logical puzzles — if only this person could use better tools, they might be able to produce some amazing electronics”.  That would be an approach to enhancing genius using special resources.  One might also look at that person and think, “I wonder if they have learned about cybernetics?” By adding the cognitive complexity of cybernetics to the person’s repertoire, that person might be able to create more valuable electronic craft-pieces.  Lastly, we might address the person’s integrity — “how is this person relating to himself and his colleagues? Could he take a stand more often? Could he love himself as he is? How could we support him in developing his integrity?”  Any one of these approaches might yield a significant increase in this person’s ability to produce value.

When we ask these questions over and over, for ourselves, our colleagues, our organizations and our communities, we begin organizing ourselves for genius.  This is the path to the Genius Organization.

I Love Games – especially games that are great businesses, too

Cross posted from the DecisionLab.org.uk blog.

I love games.  Jane McGonigal gave a TED talk on her inspired plan to get us all playing socially transformative games — brilliant — but as she so clearly describes, the idea is not new (watch her talk for the stunning and archaeologically supported premise that the Roman Empire was founded by gamers).  But her ideas are also not new for those on the cutting edge of 21st-century business.  Jack Stack wrote Great Game of Business about a 1980s employee-buyout of an American manufacturing firm that has since prospered due to what Stack describes as ongoing game play.  Michael Gerber’s E-myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It is a classic, in which he describes exactly how small business success depends on giving employees and customers a “game worth playing”.  And one of my favorites, Pine and Gilmore’s The Experience Economy: Work Is Theatre & Every Business a Stage is a clear and comprehensive description of how to craft the game worlds in which we play.

Businesses that don’t work suffer from bad game design.  From this perspective, cash flow is a symptom, a sign that people are engaged in transformative play, creating value together, passionately recruiting new players — or that they are struggling to get by in a zero-sum game where the winners don’t share.

I was delighted when I realized that the best system I’ve found for organizational design, governance and management (whoa! that’s a lot already!) is actually a gaming system.  In this post, I’ll address one portion of that system in particular — the requirement that each individual and each team (as well as the organization as a whole) have a vision, a mission, a set of aims, a domain and policies.  I’ll explain here how each of these elements is like the elements of other game systems with which you may be familiar.

The vision is a description of the winning conditions.  In chess, it is when you have placed your opponent’s king in check-mate.  In more immersive games (online or offline role-playing games, for example) the winning conditions may be more flexible — completing the chronicles of a particular set of characters, saving the world from a particular villain, or solving the full set of puzzles faced by the players.  In business, a good vision statement gives players an ultimate goal that can remain viable throughout the life of the community — something that can never be fully achieved, but is always worth striving for.

The mission describes broadly what will happen during the game — what the players will be doing.  In chess, your mission might be to “take pieces and control territory.”  In role-playing games, the players’ mission is often “take on the role of a heroic character, solve problems, and have fun.”  As I mentioned previously, a sociocratic business is structured with missions for the org as a whole, each team, and each role (and a person may play several roles).  The individual role mission might look a lot like that in a role-playing game…

Aims are not just specific goals — they describe an exchange that takes place.  The aims are how you score!  In chess you offer your opponents an attractive but disadvantageous series of trades in pieces and board location.  Each piece you capture is considered to be worth a certain number of points.  In role-playing games, players score by telling good stories, role-playing well and achieving in-game objectives (which depend on the game, but might include completing quests or killing monsters).  In most role-playing games, the storyteller and other players reward each other with points for doing those things.  In business, an aim may be as simple as “farm fresh eggs, $2.99″.  It is an offer in exchange for money (the “points” we play for), ideally phrased to emphasize what makes the offer unique, and put in language the customer will understand.  As a player, I will be rewarded according to how many eggs I sell, how many chess pieces I capture, or how fun the story is that I create with my fellow players.

Domain, in chess, is the board and pieces.  In a role-playing game, the domain is the imagined world the players share, and the tools — books, dice, paper & pencils — that are used to play.  In a business team, it is the area of the team’s responsibility and authority — a web site, for example, or a work place, and possibly a budget and set of clients as well.  In the language of Jesse Schell’s The Art of Game Design, (another book I strongly recommend) it is the “game space”.

Policies are the rules.  This is probably the easiest element to understand.  Policies tell us how we work toward our Vision by doing our Mission by accomplishing Aims in our Domain.  The rules in board games are often written, and brief enough for everyone to remember them all.  Not a bad idea!  In computer games, rules can be much more complex because the computer remembers them for us (and following them is easy).  This is key — keep your policies as simple as possible!  Remembering the rules can take energy you would otherwise use to accomplish your Aim.

So you see that sociocratic business design is in fact a game design system!  If you want to use the remarkable store of work on game design and business design, I suggest you do it through a sociocratic context.  I will publish more posts on this subject in the future.