Matt K. Parker

01Intro

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. This talk is sort of a first peek at the contents of the book. So let's dive in.

02Radically Collaborative Organizations

Okay. So the first thing you should know is that there's been some really great new research looking at different organizational archetypes and how they perform against each other, and 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 in certain ways. And so this book is really taking a peek behind the scenes of lots of these companies to figure out how they work and why they work. These organizations, just so you know, it's not just a handful. It's actually quite a lot. They now comprise about 8% of the world's corporations. They recently doubled in number over a four-year period. And 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. So let me just go ahead and define what I mean by it. Radical collaboration is a way of working together that's very much grounded in intrinsic motivation. And it's formed by the commitments people freely make to each other. So it's a voluntary form of collaboration. It's never coerced. 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

03Haier

let's check them out. Okay. So you may or may not have heard of Haier. If you live in Europe or Asia, you probably know all about Haier because Haier is 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 because their products aren't as prevalent here. However, you should know that Haier is actually the parent company of GE Appliances, which I'm sure you have heard of if you live in the States. Okay. So Haier is, in fact, the number one appliance manufacturer in the world. They've ranked number one in appliance retail sales for the last 11 years. They're 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 ranching and healthcare. And those already total about $2 billion in market cap. One thing I want you to go ahead and understand about Haier 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. They're self-managing. There's no boss of the micro-enterprise. They set their own purpose. They determine their own product or service. They own their own profit and loss statement. And they're 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, without the guidance or control of anyone. And Zhang Ruimin, the CEO of Haier who's really, I think, in many ways responsible for pioneering this idea, he was very much inspired by the ancient Chinese philosophy text, "I Ching." And here's what he has to say. He says, "In Chinese culture, the dragon is the mightiest 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."

04Morning Star

All right. Let's take a look at another one of these odd corporations. So you may or may not have heard of Morning Star. Even if you haven't heard of them, I am almost positive you have used their products. What you're seeing on the screen right now is the processing of tomatoes. So taking tomatoes and turning them into diced tomatoes or tomato puree, et cetera. Morning Star is a tomato processor. 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. They have 4,000 leaders and no bosses. Everyone there starts every single year as equals without titles. And what they do is they craft these things called colleague letters of understanding, 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 to 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, et cetera. So it allows them to self-organize the day-to-day work, but these CLOUs are also how they self-organize really the whole company because it's not just processing tomatoes. It's how they go about purchasing equipment and doing payroll. All of that begins anew every year through this process. So it's a really novel, really fascinating approach, 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." It was founded by this guy named Chris Rufer and one of his 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, Rufer decided that Morning Star should have no levels of management. So just as they did in the outside world, the company's colleagues, who formerly would've been called employees, would manage themselves as they moved through negotiated commitments to their colleagues and to the enterprise as a whole. All right. Pretty radical idea, but it definitely has legs, I think, as their history shows and their results prove.

05W.L. Gore

I'm sure you've got one of these hanging in your closet. A raincoat, right? 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, W.L. Gore, is one of the largest radically collaborative companies in the world, and one of the longest-lived ones. 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 as consumers, many of which we don't because they're manufacturing products. But the important thing to understand is that W.L. Gore, the company behind things like Gore-Tex fabric for waterproof clothing or Glide dental floss or Elixir guitar strings, the company behind all of that is really radically collaborative, and they do things like self-allocation. 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. And they also decide each other's salaries. There's no bosses standing around saying, "You're going to make X this year, and you're going to get this raise," or anything like that. It's a panel of your peers deciding what your salary should be.

06Buurtzorg

Okay, one more, and then we'll proceed to look at some of the sort of trends we can see across these companies. But before we do that, I want to tell you about Buurtzorg. You may not have heard of Buurtzorg. 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. And they are united by this idea that-- Their motto is actually "humanity over bureaucracy." So this ad, "First coffee, then care," I think really sort of translates that into the day-to-day. These are home healthcare nurses going into the home of people who, for instance, may be elderly, and who need maybe daily support and care. 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. Okay. So Buurtzorg, as I mentioned, they were started in the Netherlands, where they're already the number one home healthcare provider. And they've quickly expanded to be 15,000 people across the globe. They were only started back in 2006 with a few nurses. They spread to 25 different countries, including the US, UK, Japan, and India, and they have the number one results for any of these home healthcare providers. Buurtzorg 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, so none overlapping. But these teams are entirely self-managing. 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 hires, 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 for teams to support each other, to solve problems, to get advice, but also just to propose ways to evolve the whole organization. All right, so they're a really fascinating company and one to keep an eye on.

07Performance Archetypes

One thing I'll say about all of these companies, and I mentioned earlier, is that they are out-competing their hierarchical competitors as a class by all meaningful measures. So whether it's increase in market share, customer satisfaction, systemic innovation, employee loyalty, on all of these sort of different categories, these radically collaborative organizations are winning. The three categories you see here, by the way, are three organizational archetypes that you can find in the literature. The first is known as blind obedience, so it's a really kind of ruthless sort of dominator hierarchy company, like whatever the boss says goes or else. There's another sort of class that I think most of us probably have a lot of experience in, actually called informed acquiescence. So they are 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. 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 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, in all these different things that they do? Well, there are four things that are imperative. Team autonomy, managerial devolution, 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.

08Imperative 1: Team Autonomy

Okay, so imperative number one, team autonomy. 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 have this hope that we can manage ourselves without interference or domination, and to decide from moment to moment and day to day what kind of commitments we're making to each other, how we'll go about honoring them. Okay. Don't take it from me. For instance, Dr. Dan Radecki, he's a neuroscientist. He's a co-author 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 far more likely to own and implement solutions. This is from a section of that book all about the need for autonomy. Okay, so these radically collaborative companies exhibit 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. And I mean the craft of what people do day to day, how teams work, what practices they're using, et cetera, are left to the teams to decide. So they're controlling the how. But they're also, many of these companies, like 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, and what role and responsibility will you have on that team? Well, that's up to you and the teams to figure out. You all are responsible for that. Autonomy of schedule. How do we balance work and life? 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? That, again, is in almost all these companies, left up to the teams. Okay. Now, I say all that, 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. 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.

09Imperative 2: Managerial Devolution

Okay, so imperative number two, managerial devolution. Now, devolution is probably an interesting sounding word to you, but I want to be precise here. Within organizational science, devolution is a technical term. It stands for the decentralization of power. So when managerial powers like the power to hire, fire, set pay, 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 any sort of dominator hierarchy anymore, it's referred to as a fully devolved organization. Okay, so all these companies have practiced some form or many forms of managerial devolution on a couple of dimensions, both in terms of governance and often in terms of pay. So let's look at these two in turn. So in terms of governance, there's a few examples from these companies that you can read about in my book. Some of these companies have created 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 long as they are transparent about the process they went through. I detail a story of a company called Nearsoft in the book that used a process like this to change the way they distribute profits in the company. It was amazing. So, another form of this is called the advice process. This actually has its origins 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 devolved authority and decision-making powers into the organization by saying anyone in the organization is allowed to make any decisions so long as they consult the people who would be affected by that 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, it doesn't mean they have to take the advice, but it does mean that they have to be open and vulnerable through that process. It's called the advice process, and many of these radically collaborative organizations have embraced it. Another one here is called holacratic governance. You may or may not have heard of holacracy, 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 embrace. A 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 it's a need for a new way of doing something, whatever it is. Whatever the problem is about the way the organization is working, anyone and everyone has a way of raising that up, and then very quickly having that tension processed and resolved. 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 out of the hands of managers and into the organization as 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 seem to be gaining a sense of predominance among all these radically collaborative organizations. The first is called fractal 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. A very different approach is the Deming pay system. You've probably all heard of W. Edwards Deming. He's the forefather of lean manufacturing. 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 Deming'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. The good and the bad often is much more attributable to the system, according to Deming. So, he came up with a way of saying, okay, everyone gets a predetermined transparent salary, and then everyone's salary is automatically implemented every year, unless the company ran out of money. 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 to profit, not any individual member. So that was his approach, and you can read stories about companies in my book that are embracing that. The last one is self-managed pay, which is kind of what it sounds like. People decide their own salary. They decide their own raises whenever they want, and 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. And some of these organizations combine self-managed pay with the advice process that we saw earlier to do it. So yeah, you can read stories about companies doing that as well in my book.

10Imperative 3: Deficiency Gratification

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 or vitamin C, right? If we are deprived of them, we are going to suffer, right? Our health is going to suffer. But if we are provided them, our health will improve. Now, the important thing to know is that these needs can only be satisfied by other people, and here's what Maslow had to say about it. "Just as trees need sun, water, and food from the environment, so do 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 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. And so here's just a few, and there's all kinds of stories in the book about how these play out. So peer pods, self-managed groups of peers providing support to each other, mentoring, coaching, et cetera. 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 100% in this meeting." So it's a way to be vulnerable with other people. I'll get back to vulnerability in just a second as well. Balance 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 the score from one to 10 on how balanced I'm feeling in this moment, how balanced I'm feeling between work life, home 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. 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.

11Imperative 4: Candid Vulnerability

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 it, right? What is the hidden chain of thoughts, inferences, beliefs, assumptions, and biases behind our 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 yet afterward, they get together and privately voice 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 has this happened to you? Have you ever voiced a complaint to somebody in a meeting or a concern, but you see the recipient of that concern sort of skillfully avoid it 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, a sociologist and psychologist, wrote all about this and developed this theory of defensive reasoning, and he said across all kinds of cultures and 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 in interpersonal situations, winning and not losing, suppressing negative feelings in others and in yourself, and behaving rationally. 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 to which they don't have defensive reasoning going on, the degree to which they do have candid vulnerability happening. Now, there are routines underlying candid 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 and why you're thinking it, 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 of doing something. 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 looking at how that plays out in all these different companies and why it works together. So I hope that's been interesting to you.

12Close

I hope you'll check out the book. Go to radicalenterprise.com if you want to pre-order or sign up for updates and news on the book. As I said, it's coming out in February of 2022. Thank you.