Introduction
Aims, research questions and conceptual frameworks
1
Company Culture and Leadership
Did you know the average person spends 90,000 hours at work over their lifetime? (Psychology Today, 2011). A recent poll found that only 13 percent of the global workforce are 'highly engaged' (Gallup, 2013). Only 29% of Millennials in the U.S. are engaged at work, the remaining 71% either not engaged or actively disengaged (Gallup, 2016).
Organisations are well aware of these facts, and respond by focusing on driving engagement through the right corporate culture - thus improving execution, retention, and financial performance. A recent Deloitte article stated that "culture eats strategy for breakfast" (the famous words of Peter Drucker) applies to every organisation today" (Deloitte, 2015).
Another remarkable fact is that 70% of business transformation programs fail (McKinsey, 2013). Surely not?
A few organisations have become the 'go-to' companies for culture and engagement. Take Airbnb, their mission states 'to create a world where you can belong anywhere.' Airbnb have focussed on starting with their employees and "shifting them up the commitment curve, to the point now where we talk about how we treat our employees like founders" says Mark Levy. Their communication philosophy is honest, open and a two-way dialog between everyone in the company (Clune, 2016).
Organisations are well aware of these facts, and respond by focusing on driving engagement through the right corporate culture - thus improving execution, retention, and financial performance. A recent Deloitte article stated that "culture eats strategy for breakfast" (the famous words of Peter Drucker) applies to every organisation today" (Deloitte, 2015).
Another remarkable fact is that 70% of business transformation programs fail (McKinsey, 2013). Surely not?
A few organisations have become the 'go-to' companies for culture and engagement. Take Airbnb, their mission states 'to create a world where you can belong anywhere.' Airbnb have focussed on starting with their employees and "shifting them up the commitment curve, to the point now where we talk about how we treat our employees like founders" says Mark Levy. Their communication philosophy is honest, open and a two-way dialog between everyone in the company (Clune, 2016).
"What it lacked in structure, it made up for in passion. Engineers largely picked their own tasks and worked on them."
- Mike Curtis, Vice president of engineering, Airbnb (Curtis, 2014)
- Mike Curtis, Vice president of engineering, Airbnb (Curtis, 2014)
Patty McCord (former chief talent officer at Netflix) wrote a document on culture explaining how they shaped the culture and motivated performance at Netflix - it's now been viewed more than 5 million times on the web. Sheryl Sandberg (Chief Operating Officer of Facebook) has called it one of the most important documents ever to come out of Silicon Valley. (McCord, 2014). After talking to employees they shaped their approach to talent as "Hire, Reward, and Tolerate Only Fully Formed Adults", hiring only "A" players to work alongside them like professional sports team. The company's expense policy is five words long, "Act in Netflix's best interests", and when it came to taking holidays salaried employees were told to "take whatever time they felt was appropriate". (McCord, 2014)
Spotify is best known for their approach to working in Agile (Beck, 2001), using the term 'Agile Squads'. 30+ squads, covering 250+ people in three countries — each behaving like a lean startup in its own right. They apply self organising principles such as: autonomous squads over scrums, coaches not masters, community over structure, trust over control… and a recent employee satisfaction survey says '91% are happy here' (Kniberg, H. 2014).
"Ideally each squad is fully autonomous with direct contact with their stakeholders, and no blocking dependencies to other squads. Basically a mini-startup. With over 30 teams, that is a challenge! We have come a long way, but there are still plenty of improvements to be made."
- Henrik Kniberg (Kniberg, H. 2012)
Tony Hsieh (Zappos CEO) sent an all-staff email explaining how the entire company was embracing a concept known as 'Holacracy' (Holacracy, 2016) - a Teal organisational paradigm (Laloux, 2014) influenced methodology now sold as a product to organisations. Its central tenets include individual autonomy and self-governance. Holacracy is an idea invented in 2007 by Brian Robertson (Robertson, 2016), it was inspired by Arthur Koestler's 1967 book, 'The Ghost in the Machine' (Koestler, 1967).
Holacracy as a methodology is not suited to all organisations. Tony Hsieh had offered severance packages to all employees for whom self-management was not a good fit. Most stayed but 6% left citing holacracy, with reasons of "ambiguity and lack of clarity around progression, compensation, and responsibilities" and concluding that holacracy was a "half-baked" idea. Medium, a social media company that recently dropped holacracy, found that "it was difficult to coordinate efforts at scale," said Andy Doyle, the head of operations (Holacracy, 2016).
"You don't have a boss cell telling the other cells what to do. Every cell has its own self-organising process… Really what we're trying to do is turn each employee into a mini entrepreneur who has the ability to sense ideas and do something about it," says Robertson (Noguchi, Y. 2015.)
Patagonia are best known for being a purpose-led 'Teal' shaped organisation (Laloux, 2014), most notably for their work on being economically, socially and environmentally responsible. They have spent a lot of time measuring the environmental impacts of their clothing items, establishing fair working conditions and pay for every person, examined the use of paper in catalogs, the sources of their electricity, and the amount of oil they consume driving to work. Patagonia also gives employees throughout the world a number of interesting opportunities to support environmental work. (Patagonia, 2016)
Spotify is best known for their approach to working in Agile (Beck, 2001), using the term 'Agile Squads'. 30+ squads, covering 250+ people in three countries — each behaving like a lean startup in its own right. They apply self organising principles such as: autonomous squads over scrums, coaches not masters, community over structure, trust over control… and a recent employee satisfaction survey says '91% are happy here' (Kniberg, H. 2014).
"Ideally each squad is fully autonomous with direct contact with their stakeholders, and no blocking dependencies to other squads. Basically a mini-startup. With over 30 teams, that is a challenge! We have come a long way, but there are still plenty of improvements to be made."
- Henrik Kniberg (Kniberg, H. 2012)
Tony Hsieh (Zappos CEO) sent an all-staff email explaining how the entire company was embracing a concept known as 'Holacracy' (Holacracy, 2016) - a Teal organisational paradigm (Laloux, 2014) influenced methodology now sold as a product to organisations. Its central tenets include individual autonomy and self-governance. Holacracy is an idea invented in 2007 by Brian Robertson (Robertson, 2016), it was inspired by Arthur Koestler's 1967 book, 'The Ghost in the Machine' (Koestler, 1967).
Holacracy as a methodology is not suited to all organisations. Tony Hsieh had offered severance packages to all employees for whom self-management was not a good fit. Most stayed but 6% left citing holacracy, with reasons of "ambiguity and lack of clarity around progression, compensation, and responsibilities" and concluding that holacracy was a "half-baked" idea. Medium, a social media company that recently dropped holacracy, found that "it was difficult to coordinate efforts at scale," said Andy Doyle, the head of operations (Holacracy, 2016).
"You don't have a boss cell telling the other cells what to do. Every cell has its own self-organising process… Really what we're trying to do is turn each employee into a mini entrepreneur who has the ability to sense ideas and do something about it," says Robertson (Noguchi, Y. 2015.)
Patagonia are best known for being a purpose-led 'Teal' shaped organisation (Laloux, 2014), most notably for their work on being economically, socially and environmentally responsible. They have spent a lot of time measuring the environmental impacts of their clothing items, establishing fair working conditions and pay for every person, examined the use of paper in catalogs, the sources of their electricity, and the amount of oil they consume driving to work. Patagonia also gives employees throughout the world a number of interesting opportunities to support environmental work. (Patagonia, 2016)
Teal Organisation
A new kind of organisation designed to enable "whole" individuals (not narrow professional selves) to self-organize and self-manage to achieve an organic organisational purpose (determined not through hierarchical planning but incrementally, responsively, and from the bottom up).
A new kind of organisation designed to enable "whole" individuals (not narrow professional selves) to self-organize and self-manage to achieve an organic organisational purpose (determined not through hierarchical planning but incrementally, responsively, and from the bottom up).
Holacracy
The most widely adopted system of self-management, developed in 2007 by Brian Robertson. Authority and decision making are distributed among fluid "circles" (defined below) throughout the organization, and governance is spelled out in a complex constitution.
The most widely adopted system of self-management, developed in 2007 by Brian Robertson. Authority and decision making are distributed among fluid "circles" (defined below) throughout the organization, and governance is spelled out in a complex constitution.
Agile
A theory of management originating in software development. In an agile system of work, cross-functional, self-managed teams solve complex problems iteratively and adaptively—when possible, face-to-face—with rapid and flexible responses to changing customer needs.
A theory of management originating in software development. In an agile system of work, cross-functional, self-managed teams solve complex problems iteratively and adaptively—when possible, face-to-face—with rapid and flexible responses to changing customer needs.
(Bernstein, et al, 2016)
2
Challenges
Complexity
Using a self-management model across an organisation is hard and uncertain work. To better understand this, ask - what do leaders need most from organisations? Answer: Reliability and adaptability. And although managerial hierarchies can lean in either direction, they most often skew in favour of reliability—and create rigidity and red tape. (Bernstein, et al, 2016)
In traditional organisations, each employee works within a single, broadly defined role, and it's often difficult for people to sculpt or switch jobs. In self-managing systems, individuals have portfolios of several very specific roles - Zappos employees now have 7.4 roles, on average (Bernstein, et al, 2016).
The shift to self-managing model creates three kinds of complexity: doing the work, complicates compensation, and complicates hiring. Managers and subordinates must unlearn old behaviours and learn new ones. Of course, managing looks different in these structures. It's less about supervision and direction and more about designing, facilitating, and coaching (Bernstein, et al, 2016).
Using a self-management model across an organisation is hard and uncertain work. To better understand this, ask - what do leaders need most from organisations? Answer: Reliability and adaptability. And although managerial hierarchies can lean in either direction, they most often skew in favour of reliability—and create rigidity and red tape. (Bernstein, et al, 2016)
In traditional organisations, each employee works within a single, broadly defined role, and it's often difficult for people to sculpt or switch jobs. In self-managing systems, individuals have portfolios of several very specific roles - Zappos employees now have 7.4 roles, on average (Bernstein, et al, 2016).
The shift to self-managing model creates three kinds of complexity: doing the work, complicates compensation, and complicates hiring. Managers and subordinates must unlearn old behaviours and learn new ones. Of course, managing looks different in these structures. It's less about supervision and direction and more about designing, facilitating, and coaching (Bernstein, et al, 2016).
"The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn."
- Alvin Toffler (Toffler, no date)
- Alvin Toffler (Toffler, no date)
As we move out of the Industrial Age and into the Digital age, we are witnessing the transformation of 'Organisation as Machine' (McGrath R, 2014) to what we might call 'Organisation as Living Systems' (Laloux, 2016).
If traditional organisations strive to be machines governed by Newtonian physics, precisely predicting and controlling the paths of individual particles, then self-managing structures are akin to biological organisms, with their rapid proliferation and evolution (Bernstein, et al, 2016).
Similarly, leaders who want their workforces to innovate must give up the notion that they can predict or control the outcome, and instead focus on two simple goals: (1) creating conditions that encourage social interactions where new ideas are combined and recombined; and (2) building an adaptable organisation. That means encouraging the exchange of information across the company and across levels of hierarchy, and social networks that will facilitate open communication.
"The people on the factory floor: they're the ones that have the new ideas."
- Jeffrey Goldstein, Ph.D (Lewis, K. 2014)
We must learn how, when and where to apply self-management in an organisation. This relies on three questions: What needs to be reliable? What kinds of adaptation are important? And what organisational forms will produce the right balance in this case? (Bernstein, et al, 2016).
Reflection:
I understand that we are moving into a more complex world where the key to innovation and successful company cultures is collaboration, less hierarchy and trust. Reflecting on my own experiences, I believe it's extremely hard to transform a company and teach to people new behaviours. Many people are unaware of such new theories and approaches but there is a definite movement to a new consciousness or organisational paradigm.
If traditional organisations strive to be machines governed by Newtonian physics, precisely predicting and controlling the paths of individual particles, then self-managing structures are akin to biological organisms, with their rapid proliferation and evolution (Bernstein, et al, 2016).
Similarly, leaders who want their workforces to innovate must give up the notion that they can predict or control the outcome, and instead focus on two simple goals: (1) creating conditions that encourage social interactions where new ideas are combined and recombined; and (2) building an adaptable organisation. That means encouraging the exchange of information across the company and across levels of hierarchy, and social networks that will facilitate open communication.
"The people on the factory floor: they're the ones that have the new ideas."
- Jeffrey Goldstein, Ph.D (Lewis, K. 2014)
We must learn how, when and where to apply self-management in an organisation. This relies on three questions: What needs to be reliable? What kinds of adaptation are important? And what organisational forms will produce the right balance in this case? (Bernstein, et al, 2016).
Reflection:
I understand that we are moving into a more complex world where the key to innovation and successful company cultures is collaboration, less hierarchy and trust. Reflecting on my own experiences, I believe it's extremely hard to transform a company and teach to people new behaviours. Many people are unaware of such new theories and approaches but there is a definite movement to a new consciousness or organisational paradigm.
Employee Engagement
"We've gone from an industrial economy - where we are hired hands, to a knowledge economy - where we are hired heads, and now to a human economy - where we at hired hearts"
- Dov Seidman (Seidman, 2016).
When we are studying individual and organisational behaviour we find that three systems support this: Governance, Culture and Leadership.
"We've gone from an industrial economy - where we are hired hands, to a knowledge economy - where we are hired heads, and now to a human economy - where we at hired hearts"
- Dov Seidman (Seidman, 2016).
When we are studying individual and organisational behaviour we find that three systems support this: Governance, Culture and Leadership.
1
Governance
Formal structures, rules and policies
2
Culture
How things really work around the organisation - norms, traditions, habits, and mindsets
3
Leadership
How power works within an organisation, how leaders behave, the source of authority, and how it is exercised
(HOW report, 2016)
Organisations can be identified into three archetypes: Blind Obedience, Informed Acquiescence, and Self-Governance. The percentage of organisations manifesting Self-Governance is going up year-on-year.
(HOW report, 2016)
The key enabler for innovation is TRUST.
High-trust organisations experience eleven times greater innovation than low-trust organisations.
(HOW report, 2016)
High-trust organisations experience eleven times greater innovation than low-trust organisations.
(HOW report, 2016)
Recent research show that inspiration over engagement improves performance of employees:
• has a differential impact on business performance beyond employee engagement.
• is identified when employees are authentically dedicated, deeply accountable and fully responsible for their organisation
• is 27% more predictive of high performance than employee engagement.
(HOW report, 2016)
Reflection:
I think for high-trust to exist we have to bring authenticity and self-belief to work with us and promote a self-leading culture without hierarchy. I always see a mix of authoritarian power hunger egos, genuinely inspired collaborative types, and everyone inbetween in our work places. Change must really be supported from the top, the CEO, completely 100%.
• has a differential impact on business performance beyond employee engagement.
• is identified when employees are authentically dedicated, deeply accountable and fully responsible for their organisation
• is 27% more predictive of high performance than employee engagement.
(HOW report, 2016)
Reflection:
I think for high-trust to exist we have to bring authenticity and self-belief to work with us and promote a self-leading culture without hierarchy. I always see a mix of authoritarian power hunger egos, genuinely inspired collaborative types, and everyone inbetween in our work places. Change must really be supported from the top, the CEO, completely 100%.
People First
Millennials (Sweeney, 2006) are the most researched generation in history. And fast approaching are Generation Z (Meet Generation Z, 2014), known as 'Digital Natives', the first generation to have the ability to be truly connected 24/7. Born between arguably after 1990 (Tulgan, 2013), they are set to become the most entrepreneurial generation we've ever seen (Schawbel D, 2014).
They have grown up in a post 9/11 world during a recession, and they understand that traditional choices don't guarantee success. Their education systems focussed on inclusive and differentiated instruction, as a result they are more collaborative and equal (Meet Generation Z, 2014).
Organisations need to engage with this generation, and to do that they will need to align with Generation Z's values, beliefs and actions (HOW report, 2016). We can do this by, as Simon Sinek states, becoming 'people first' organisations. The next generation will see our employees and our customers demand meaningful, purpose-led experiences that inspire and engage them (Sinek, 2016).
Sinek's TED talk 'How Great Leaders Inspire Action' explains the theory of how organisations need to 'start with why', this means their purpose - why do we exist? Companies need to really look at 'why' they exist in order to evolve and remain relevant (Sinek, 2009).
Culture and engagement are now business issues. Organisations in the human age need to create a culture defined by meaningful work, deep employee engagement, job and organisational fit, and strong leadership (Sinek, 2016).
Millennials (Sweeney, 2006) are the most researched generation in history. And fast approaching are Generation Z (Meet Generation Z, 2014), known as 'Digital Natives', the first generation to have the ability to be truly connected 24/7. Born between arguably after 1990 (Tulgan, 2013), they are set to become the most entrepreneurial generation we've ever seen (Schawbel D, 2014).
They have grown up in a post 9/11 world during a recession, and they understand that traditional choices don't guarantee success. Their education systems focussed on inclusive and differentiated instruction, as a result they are more collaborative and equal (Meet Generation Z, 2014).
Organisations need to engage with this generation, and to do that they will need to align with Generation Z's values, beliefs and actions (HOW report, 2016). We can do this by, as Simon Sinek states, becoming 'people first' organisations. The next generation will see our employees and our customers demand meaningful, purpose-led experiences that inspire and engage them (Sinek, 2016).
Sinek's TED talk 'How Great Leaders Inspire Action' explains the theory of how organisations need to 'start with why', this means their purpose - why do we exist? Companies need to really look at 'why' they exist in order to evolve and remain relevant (Sinek, 2009).
Culture and engagement are now business issues. Organisations in the human age need to create a culture defined by meaningful work, deep employee engagement, job and organisational fit, and strong leadership (Sinek, 2016).
3
Research Questions
Research question 1
How can we create a culture of strong character and high-trust?
In changing times as organisations attempt to transform to more self-organising models, how do existing employees and leaders 'unlearn and relearn' new skills? How do younger employees get to learn and develop their emotional intelligence (EQ) and IQ skills? Are EQ skills actually very difficult to learn? The hypothesis proposes 'EQ skills' are essential human skills that need to be explored and practised throughout our education and career to support a culture of strong character and high-trust:
In the last decades 'human skills' or EQ has had much debate, with organisations like Hyper Island teaching psychological and sociological approaches to management, there is a large amount of research indicating 'EQ' is a key indicator of a top performer (Bobinski, 2009). As Daniel Goleman writes:
"this competence in perceiving emotions both in oneself and in others. This competence also helps us regulate emotions and cope effectively with emotive situations. Therefore important as people fail to manage emotions successfully." Goleman claims "in order to enjoy a successful life 'EQ' is more important than IQ." (Goleman, 1995a, 1998)
Alfred Binet, french psychologist, inventor of the first IQ test 1909, was aware that general intelligence might not be the only factor important for social functioning (Landy 2005).
"this competence in perceiving emotions both in oneself and in others. This competence also helps us regulate emotions and cope effectively with emotive situations. Therefore important as people fail to manage emotions successfully." Goleman claims "in order to enjoy a successful life 'EQ' is more important than IQ." (Goleman, 1995a, 1998)
Alfred Binet, french psychologist, inventor of the first IQ test 1909, was aware that general intelligence might not be the only factor important for social functioning (Landy 2005).
"As we move into a human economy 'Empathy' has become the quintessential skill for the 21st century workplace."
Roman Krznaric (Krznaric, 2015)
Roman Krznaric (Krznaric, 2015)
Will CEOs invest in developing these skills and qualities for employees? How and what will they measure? How are these skills affected by different social, ethical and diverse cultures? How should EQ be taught in education? Should these be the most important qualifications in 'the Human Age' (Ackerman, 2014)?
Research question 2
How can we redefine the role of leadership?
Are our younger generation being 'misled' under outdated leadership? Is top down hierarchical management is out of date? How difficult is it for existing leaders or managers to 'unlearn and relearn' new skills for a self-organising model? The hypothesis below suggests that in fully formed self-governing organisations, ALL members should have a leadership mindset:
Human development happens in stages and in the last two centuries we have seen rapid change, nothing would have been possible without organisations as vehicles for human collaboration. As the evolution of human consciousness accelerates faster, the new organisation model we are shifting towards is called the 'Teal model'. This leadership style is distributed and purpose driven, self-management replaces top-down hierarchy, and the organisation acts as a living entity with creative potential and evolutionary purpose (Laloux, 2016).
Our world view is changing, as Frederick Laloux writes in his book 'Reinventing Organisations' (2015):
"In these confusing times, some people double down on their existing perspectives and beliefs, trying to apply outdated solutions ever more frantically. Others, in increasing numbers, make the leap to a new perspective that allows them to seek solutions that were previously unavailable."
(Laloux, 2016)
With the Teal model we shift from external to internal yardsticks in our decision making. We are now concerned with the question of inner rightness: Does this decision seem right? Am I being true to myself? Is this in line with who I sense I'm called to become? Am I being of service to the world? (Laloux, 2016).
As people start to profoundly shift perspectives, organisations start to speculate how they can structure and operate differently. Already operating on Teal models are companies like Patagonia, FAVI, and Buurtzorg - each with amazing success stories.
How will people adapt to a new differentiated version of leadership? How will middle/senior management react to losing their positions? Will self-management only work with a truly flat distributed system? How will we compensate employees for experience and responsibility? How important will EQ be when machines take over many of the tasks we do now? How do we nurture empathic leadership?
Our world view is changing, as Frederick Laloux writes in his book 'Reinventing Organisations' (2015):
"In these confusing times, some people double down on their existing perspectives and beliefs, trying to apply outdated solutions ever more frantically. Others, in increasing numbers, make the leap to a new perspective that allows them to seek solutions that were previously unavailable."
(Laloux, 2016)
With the Teal model we shift from external to internal yardsticks in our decision making. We are now concerned with the question of inner rightness: Does this decision seem right? Am I being true to myself? Is this in line with who I sense I'm called to become? Am I being of service to the world? (Laloux, 2016).
As people start to profoundly shift perspectives, organisations start to speculate how they can structure and operate differently. Already operating on Teal models are companies like Patagonia, FAVI, and Buurtzorg - each with amazing success stories.
How will people adapt to a new differentiated version of leadership? How will middle/senior management react to losing their positions? Will self-management only work with a truly flat distributed system? How will we compensate employees for experience and responsibility? How important will EQ be when machines take over many of the tasks we do now? How do we nurture empathic leadership?
4
Objectives
Working in design industry for the last 15 years, with many organisations big and small, I could clearly see the problems with top-down management, politics, power, egos and inequality. These issues stifle creativity and make people miserable and unmotivated. Little are people aware that we were going through an evolutionary transformation into a new digital age, where EQ is going to be the greatest value for humans, along side the rise of artificial intelligence. I want to focus this report and future studies on this subject.
I believe over the next 15 years we will see rapid change in organisational structure in almost every industry imaginable. I want to help shape and design those organisations to be places of evolutionary purpose, high-trust and meaning. Ultimately if I can help improve the experiences of work and education for future generations then I have achieved my goal.
I want to gain a deeper, broader knowledge of culture, leadership and governance within organisational design and apply it to my future projects. How organisations are moving away from the idea of 'organisation as machine' and closing to that idea of 'living entities'.
I would like to explore how EQ can play a much greater role in our organisations than we give it credit for, and how we need to embrace practices in work and education to develop and support these skills. To understand the new role of self-leadership, I would like to define the supporting qualities that we all need to learn to have a 'self-leadership mindset'.
By applying the learnings from Hyper Island, I would like to further explore set of practical ideas that I could be developed for use in future organisational re-design.
I believe over the next 15 years we will see rapid change in organisational structure in almost every industry imaginable. I want to help shape and design those organisations to be places of evolutionary purpose, high-trust and meaning. Ultimately if I can help improve the experiences of work and education for future generations then I have achieved my goal.
I want to gain a deeper, broader knowledge of culture, leadership and governance within organisational design and apply it to my future projects. How organisations are moving away from the idea of 'organisation as machine' and closing to that idea of 'living entities'.
I would like to explore how EQ can play a much greater role in our organisations than we give it credit for, and how we need to embrace practices in work and education to develop and support these skills. To understand the new role of self-leadership, I would like to define the supporting qualities that we all need to learn to have a 'self-leadership mindset'.
By applying the learnings from Hyper Island, I would like to further explore set of practical ideas that I could be developed for use in future organisational re-design.
