Designing a trustful organization

Where do we start?

March 19, 2020
  • Organizational Design
  • Organizational Modeling
  • Trustful Organization

In his book Reinventing Organizations, Frederic Laloux offers an overview of the different stages of the evolution of organizations throughout history. Using different colors, he highlights how the behaviors of our predecessors have profoundly influenced the structures and models of modern political, social, economic, and religious organizations. Older organizations, painted in red, are based on strong leadership and the supremacy of violence; strict rules and conformity make up the amber section, while orange is used to emphasize organizations based on efficiency and competition.

 

The central aspect of traditional organizations, as described by Laloux, is their tendency to accept authority and power, and to structure themselves along the lines of organizational charts, which in turn define roles and responsibilities clearly. In a stable, controllable environment — like the one that became dominant from the industrial revolution through the rise of the internet — this structure can be considered the best, as it helps in standardizing methods and practices and maximizing efficiency in an otherwise chaotic framework.

 

Today, however, the view of tomorrow looks radically different. Information, the individual’s needs, the complexity of phenomena, and the social, economic, cultural, and political equilibrium are evolving at a pace that is profoundly disrupting all current organizational structures, their operational frameworks, and decision-making practices.

 

Forward-looking companies are the ones who understand that traditional solutions are not as effective as they once were, and thus start seeking alternatives. Musings that quickly begin to grow and get funneled into a new discipline altogether: organizational design, whose principles owe much to authors of old, like Douglas McGregor, as well as modern thinkers like Aaron Dignan, Jason Fried, or indeed Laloux himself. The objective of this discipline is to lay out precepts, a vision, and a codified method to imagine new organizational structures and manage the transition towards them.

Evolutionary stages of organizations according to Laloux.

More and more frequently, our interlocutors express their need for transformation and innovation, which seem to be related to the ideation of new initiatives and the adoption of more up-to-date technologies. However, these necessities stem from a deeper source, down to the organization’s very heart, the way it’s regulated and structured.

 

Our own interpretative key looks at an organization’s design to offer a solution. In our experience, there is one aspect that regulates all sorts of other internal dynamics, and that’s the way decisions are taken.

 

These necessities stem from a deeper source, down to the organization’s very heart, the way it’s regulated and structured.


Fifty shades of power

Traditional organizations tend to centralize decisional power in the hands of a few individuals, often at the top of the pyramid, for one simple reason: minimizing risk and guaranteeing a standard of quality. When fewer people have decisional power, their choices will likely be more consistent, and the risk of losing grip down the chain and veering off the chosen path wanes.

 

It’s a principle based on the core idea that it is not possible to trust a large number of people in making good decisions; let alone consistent ones.

 

This mechanism has mostly worked, consolidating over a long, stable, observable, and thus largely predictable period of time. Our age is instead one made of ambiguity and fast changes, so power bundled in the hands of the few — and based on distrust — can actually backfire. There’s a high, concrete risk that the information useful to make the most informed and rapid decision in a well-framed context does not come from the top.

 

And so the first significant change that organizations are called on to make their decision-making processes more effective is, precisely, an investment in trust. Small steps towards a more distributed, equitable, and conscious exercise of power. In a trustful organization, control over other employees granted by hierarchy (“power over”) is minimized; decisions are made on the basis of shared, transparent, predetermined rules (“power with”); everyone is equipped with the necessary tools to make the best decisions (“power to”), and clearly perceives their acting power to influence decision-making processes positively (“power within”). To make all of this possible, however, it is paramount that organizations question their power structures — and, in turn, the entire organizational life.

 

The first significant change that organizations are called on is an investment in trust. Small steps towards a more distributed, equitable, and conscious exercise of power.


Organizing decision-making processes

When we think about an organization’s design, we immediately think of the organogram. In fact, that is a tool only valuable for a specific type of organization, the formal structure. One coded by hierarchies, where everyone has a specific rank, a defined role, and a level of authority, which all come to inform our relationship with others. Then there’s an informal structure: an undefined, often hidden network where individuals exercise their power over others more softly regardless of their job title. We are talking about social ties, a person’s charisma, their personal traits.

 

Then, when these two structures merge, a third, arguably more influential entity is born: the value creation structure. The more unpredictable and ephemeral, where actual job-related responsibilities and interpersonal relationships condition what a company ultimately offers, and thus its prospective success. Unfortunately, these three layers are often unstuck to one another — and it’s in those crevices that highly closed, inaccessible power bubbles form. Areas where the right people (and so the best ideas) don’t enter, even when the company would greatly benefit from them. And so it becomes essential that those spaces get opened, to let the passage of ideas flow more freely, transparently, and in a way that fosters participation.

 

Still, this is not an all-clear. Not everyone can be authorized to make all kinds of decisions autonomously overnight, let alone on behalf of the company. A good parameter, framed by Gore-Tex founder Bill Gore, is the so-called “waterline.” When we think that a wrong decision might cause a hole in the boat’s hull above the waterline, then we can proceed safely. On the other hand, if our decision were to dent the hull below the waterline, then we should rely on an advice process, asking colleagues whose experience and knowledge of the subject we trust, so as to make a better-informed decision.

Gore owes his success to four fundamental principles, etched onto the company culture: Freedom, Fairness, Commitment, and the Waterline.

This criterion goes well with consent-based, agile decision-making processes, capable of answering quickly and swiftly even in hazardous situations. The idea is to go ahead with one’s view as long as no one else has expressed qualms about it; without, though, the need for a quorum or indeed complete unanimity.

 

So, in short: moving towards a more distributed exercise of power demands higher trust in people, as well as a willingness to give some of it up to the benefit of the overall environment. This is the key to a successful trustful organization: a rich, multi-faceted context in which the individuals are submerged, able to provide them with all the necessary elements to make wise, informed decisions without the need for the centralization of power.

 

A rich, multi-faceted context in which the individuals are submerged, able to provide them with all the necessary elements to make wise, informed decisions without the need for the centralization of power.


The shared road toward context: aim and values

The purpose of an organization describes the reason for that organization’s very existence, and the impact it wants to have on the world; a clear mission statement that justifies the “why” behind it all. Values, on the other hand, encapsulate the driving beliefs that guide the organization’s conduct and that of everyone involved. They are, indeed, the things the organization values (knowingly or not), the ones it fosters and defends: the vision, the attitude, the ideals, the individual priorities, and everything that ultimately adds up to define the organizational culture.

 

In traditional organizations, aim and values are not clearly stated, or result from dictates mandated from above — they are usually rather generic and harmless, enough to make a good impression at the top of the balance sheet but lacking any impact on the people who actually put in the work (who might have different aims and values, perhaps at odds with the organization’s).

 

Modern, evolutionary organizational structures challenge this view, revolving around solid — yet malleable — aims and values, where individuals enter a more intimate and judicial relationship with them. They can interpret those aims and values through their own lenses and worldview, identifying personal motivations that encourage them to embrace them. This process continuously pushes the boundaries of the organization’s scope, making it both adaptive and yet firmly centered.

The rebirth of firms like Microsoft is due, in part, to a more blunt and straightforward interpretation of the reasons why people choose to work in them: from the most basic, like pay, all the way up to more ideal concepts like pride and purpose.

From this point of view, the trustful organization relies on all of its members to constantly call the scope into question, to reaffirm it, mold it, or shift it in accordance with the employees’ own growth.

 

This trait is essential in shaping an organization that is ready to react quickly and embrace change. More importantly, it provides each member with a compass — the shared aim and value — that’s needed to orient each person’s own behavior when navigating uncharted territories. A clear set of values and a well-defined aim won’t produce anything but results consistent with those principles, further feeding into a self-reinforcing loop.

 

Nevertheless, aim and values are not enough to determine an organization’s full trustfulness. Something else is equally as necessary: a detailed map that establishes a clear morphology of the internal and external territory, both within and outside the company’s boundaries. A map of experiences, best practices, cases, data, and knowledge — all drawing from a common source of information.

 

More importantly, it provides each member with a compass — the shared aim and value — that’s needed to orient each person’s own behavior when navigating uncharted territories.


Context is a shared map: information management

We come from an era in which information has mostly been jealously safeguarded by those who possessed it. Being both scarce and relatively stable, it represented both a worthy asset and a source of power.

 

Today, information is both pervasive and variable; it quickly becomes obsolete, and the window to transforming it into something valuable has narrowed considerably. That’s why everyone within the organization must be able to access as much of it as possible, leveraging a new crucial skill: distinguishing between signal and noise and processing the relevant information rapidly.

"Share information until it’s almost illegal."
Stanley McChrystal, former US Military General

But what is the best way to do it amid an overabundance of information, one that challenges our very cognitive load? We often refer to “less push, more pull” as a positive way of framing it. In complex environments, we should stop thinking that a centralized entity can decide “who needs to know what” at any given moment, and actually acknowledge that it’s the individuals themselves who are best suited to evaluate what it is they need each time.

 

The most effective thing an organization can do is open up the information vault to as many people as possible and let them access it without restrictions, making this operation as second nature as a Google search.

 

Not all knowledge can be condensed into a file or a folder, however; it is also necessary to manage the information that lives in our heads, the “tacit knowledge,” created by direct experience, which needs to be made explicit and served to everyone through continuous sharing.

Buffer is an example of radical transparency: the firm has a public dashboard where salaries, economic data, strategies, e-mails, and internal exchanges are all openly shared.

So. Is a rich decision context — made of common goals, shared values, and information transparency — enough to free us from structures, policies, processes, and all the deadweights that stop us from enjoying the benefits of a fuller organizational development? Complete trust in people does not mean anarchy. So if we still struggle with some aspects of said complexity, it is appropriate to equip ourselves with the proper tools and countermeasures.

 

 

Some decisions dig a groove

Many organizations are scared into thinking that having a solution to each problem and situation is imperative; especially if the affected area has already been impacted, if deviations from the standard have previously occurred.

"Policies are organizational scar tissue."
Jason Fried, Basecamp co-founder

This is exactly how mountains of micro-policies that try to regulate every aspect of corporate life arise. Rules put in place to fend off the fear that one might not know how to behave in a specific situation.

 

A trustful organization unravels this negative spiral of hyper-regulation by relying on a different core principle, the Minimum Viable Policy. The MVP exists to answer a simple question: “What is the minimum set of rules we need to make sure that none of us is capable of doing irreversible damage?”

 

The Minimum Viable Policy rules over every aspect of organizational life: how decisions are made, how they are communicated, how information is shared, how to work in a team or independently. There where the traditional rule system was highly detailed, abstruse, and impervious to change, the MVP:

  • is light: it’s not a defined, granitic standard, but rather a default, a starting point, one that every member of the organization has margin to interpret in accordance with the situation and their needs;
  • is clear: it uses fewer messages that are better delivered; it may not have an answer to each question, but it does contain an intuitive principle that is enough to guide decisions;
  • is dynamic: the members of the organization question it almost daily, they explore its fragilities and try to fill its voids, so as to shape it the way that best suits the entire organization at that moment — much like yogurt, the MVP is a rule that everyone knows will expire soon, so when it begins to smell bad it becomes necessary to get rid of it fast.

Not unlike a value we have internalized, and that thus guides us in our actions — or indeed a tool our company has adopted —, the MVP aims to simplify the complexity of the choices we need to make. It digs a groove that the organizational machine smoothly slides into, reducing entropy as well as the cognitive load that may feel overwhelming each time we need to ask ourselves, “How am I supposed to face this problem?”. Decision-making fatigue is a real problem in the digital age, but we can stem it with the right tools (even when they are experimental and change all the time, to make sure that the groove doesn’t turn into a precipice).

 

For instance, Slack has become a tangible metaphor of collaborative work for us, as it helps us manage geographically distributed teams working both synchronously and asynchronously on multiple projects at once — all without losing focus nor sight. Some others may use Trello to organize tasks and sprints; or perhaps Basecamp, if the objective is to keep track of a product’s lifecycle as well as cross-functional teams. Then there are methodologies — like Agile, Lean, or SCRUM — and then a whole lot more.

 

Being both more purposeful and experimental in the way we work and the tools we use can also lead us to significant benefits in areas where our organizational structure is still deficient. Meetings, for example, are a perfect showcase of negative organizational dynamics (inefficient decision-making mechanisms, anti-meritocratic logics of power, dysfunctional information systems) that invade the agendas of millions of people in thousands of organizations across the globe.

 

In the US, it is estimated that an average worker attends some 62 meetings a month, which amounts to $37 billion a year. To set a meeting, to be in a meeting, to use meetings to make decisions: these are all things we do without thinking too much about it, even though their actual added value to our work is little to none. And yet, different kinds of meetings for different purposes exist, as well as precise techniques designed to power through them (non to mention that meetings, at times, are altogether unnecessary).

Loomio is an app designed to save hours and hours of meetings by letting users take decisions that are both shared and informed.

Of course, each organization will have its own MVP at the given point in time, shaped by internal and external circumstances. As time passes and the MVP’s principles are absorbed, individuals begin to have more judicial discretion.

 

Much like yogurt, the MVP is a rule that everyone knows will expire soon, so when it begins to smell bad it becomes necessary to get rid of it fast.


Room to grow

The growth of the individual’s independence matches the so-called “power within,” the most positive and genuine form of power. It’s a form of power that grows from within, spontaneously, as a natural consequence of our own maturation both as a person and a worker. It’s a power that allows us to open up new “spaces”: new responsibilities, added authoritativeness inside of our teams, but most of all room for learning and growing professionally (and personally, of course).

 

What kind of organization does this self-empowerment unlock?

 

As people treasure the more purposeful, healthier sharing of power, the trustful organization gives people the space they need to put their added independence into practice. It often happens that employees at traditional companies are forced (or force themselves) to the confines of a “comfort zone”; an operative space with predetermined boundaries, where they feel safe and know how to move. This comfort, however, is dangerous, as it is a harbinger of stagnation. Outside those boundaries lies a limbo: a “fear zone” filled with the new, the unknown, the unexplored, where stumbling and falling feels like an expected, unwanted outcome.

 

In our idea of a new organization, this space not only can, but indeed needs to be explored. Falling is welcome, so long as it is followed by the willingness to stand back up and try again. Employees don’t need to be shown the way out: they will have the tools to find it themselves, in their own unique way. A culture of failure and experimentation will ultimately encourage members, and allow them to develop their “power within”. In this corporate culture, reprimands give way to feedback — destructured but frequent, informal but authentic.

Spotify’s Learning & Development team (aptly named “Greenhouse”) perfectly encapsulates the principles of experimentation, autonomy, and the failure-embracing culture necessary to learn constantly in ambiguous, complex environments.

Once out of the fear zone, workers enter a learning and growth zone. They are now ready to draw their own path, without the need for a predetermined road to follow or even external approval. They become capable and flexible enough to self-determine their level of maturation — which is the only way to continuously push the entire organization’s boundaries beyond the limits, tracing a perfect symmetry between the individual’s personal growth and the company’s organizational innovation.

 

The more individuals mature and find space for their own growth, the more they acquire the sophisticated tools and lenses needed to interpret the overall context. This, in turn, leads to the slow but inevitable elimination of policies, as in such a scenario they would not be necessary. The context itself will be enough to guide people, who will naturally respond to situations and make decisions in perfect accordance with the company’s aims and values.

 

 

So, where do we start?

Everything we said so far about the trustful organization makes it rather evident that it is a “living” organism. All of its fibers are intertwined in a thick weft; they are symbiotic and can trigger endogenous reactions, in a self-reinforcing cycle of cause and effect. The initial injection of trust is mandatory, but it can only work if the underlying context is sufficiently healthy. An actual redistribution of power needs to be possible in the first place, as well as that of decisions and responsibilities. Then, naturally, come new ways to communicate, collaborate, work, explore, and grow. If this context isn’t there to begin with — if people aren’t mature or sensitive enough — then time and resources must first be devoted to changing that.

 

Today, H-FARM is an organization where we give ourselves few but sound principles, and then let the individuals take responsibility for applying those in their everyday work life.

 

There is no bridgehead, no one common entrance point that is valid for every organization. Each one will have to follow its own rhythm, kickstart experiments, and throw some of the proverbial things at the wall to see what sticks. This requires a lot of listening and a lot of focusing on the overall organizational context, and we help companies better understand what the most sensible first steps are.

 

The good news is that the trustful organization does exist, and it is absolutely possible to make it a reality — even coming from a totally different culture, history, and organizational structure. There are many, diverse examples. From digital native firms like Spotify, Valve, Basecamp, or Enspiral to companies that are more present in the territory like Buurtzorg, Morning Star, or Patagonia. From traditional businesses that have decided to change their ruleset — like Gore, Favi, Harley Davidson — to the ones we never thought would even consider moving in this direction, like the crew of the US Navy Santa Fe.

 

We have decided to test these principles and to put ourselves out there. Today, H-FARM is an organization where the hierarchies are almost non-existent, there are no “bosses” of functional areas (nor any “functional area” to manage), resource allocation is entirely decentralized, and access to any kind of information is granted to partners and interns in equal measure. An organization where we give ourselves few but sound principles, and then let the individuals take responsibility for applying those in their everyday work life, because we trust the people we choose to work with profoundly, every day.

 

How did we get here? If we told you it was a sudden process, we would lie. We rolled up our sleeves and began to experiment. Small, intentional, highly specific experiments led by people who believed in these ideas and dared to actually put them to the test — fail, stand back up, and try again, until those practices became part of the shared culture.

 

We believe in this structure deeply, and we are willing to help anyone who might want to take up the challenge, with the same spirit that drives our every undertaking: big shoes and (a) beautiful mind.


To learn more about our innovation projects:

innovation@h-farm.com