April 2015 – Paul Golightly

The Strengths of Adaptive Organizations

While most of my posts can be applied to many different kinds of organizations, and even more can be applied to businesses specifically, I write all my posts with adaptive organizations in mind.

Adaptive organizations are generally loosely-structured, non-hierarchical, and depend on temporary teams to pop up and disband on their own. They’re the primary focus of Frederic Laloux’s book Reinventing Organizations, as well as the driving philosophy behind the consulting firm Undercurrent.

Adaptive organizations are designed to maximize the co-operation of human and machine. Unlike Industrial Age organizations, adaptive organizations (what Frederic Laloux calls “teal” organizations) do not rely on humans functioning as machines. Instead, they depend on the value created by healthy individuals, collected from diverse backgrounds and bonded into communities by a common vision for the future.

The contrast between the two concepts can be so pronounced that some can’t even fathom how these futuristic organizations would work. But the fact that adaptive organizations are already beginning to emerge (as with Spotify, Valve, and GitHub) shows that they aren’t just a philosophical exercise. They are real, they are successful, and they will continue to thrive.

Laloux outlines three principles of adaptive organizations: self-management, wholeness, and evolutionary purpose. While these are incredibly useful guidelines for creating a future organization, they don’t quite explain why adaptive organizations work. I’d like to propose three corollaries to Laloux’s principles.

Traditional organizations rely on planned behavior; adaptive organizations encourage emergent behavior. Traditional organizations are heavily planned: they hire people with specific skill sets to fit into specific roles and accomplish specific tasks that make up a system that’s carefully designed to play out the vision of the entity at the top. This ultimately makes traditional organizations less than the sum of their parts. Adaptive organizations operate at the opposite end of the spectrum: they expect employees to manage themselves and one another dynamically. Fixed hierarchy is counter-productive because it limits deviation from an established agenda; in a fixed hierarchy, I don’t have much room to do anything that doesn’t directly benefit my immediate supervisor, and he in turn has little room to do anything that doesn’t benefit his immediate supervisor. Designing an organization to encourage emergent behavior means opening up to unplanned innovation by anyone at any time. It can be equal parts dangerous and game-changing; the art and science of emergent behavior is to minimize the danger without discouraging the game changers.
Traditional organizations consolidate efforts in an attempt to design the best, most efficient single outcome; future organizations rely on multiple discovery to generate iterative, multi-dimensional innovation. When a traditional organization discovers two different efforts to accomplish a similar goal, it’s seen as inefficient. Duplicative efforts are shut down and/or consolidated into one another, leading to political battles and possibly resentment on the part of the employees who were trumped. These consolidation efforts frequently fail, either in process (they are never completed) or in product (the outcome is too unwieldy or unhelpful). Multiple discovery allows several efforts to reach the same point from multiple directions, or to reach different points from a similar origin. The outcomes of the individual efforts tend to be leaner and more focused, and if one option fails there are others at the ready.
Traditional organizations depend on metric productivity (output divided by hours divided by pay rate); adaptive organizations develop unique value. Metric productivity is the enemy of unique value: it suggests that all products, customers, and employees are comparable and judges each employee against some Platonic ideal of productivity. Metric productivity is what causes us to believe that putting in more hours makes us more valuable to our employer, that what we do to our bodies in our off-hours isn’t important to what happens when we’re on the clock, that our mental and spiritual and social well-being is something we do on our own time and work doesn’t factor into it. But metric productivity isn’t just bad for employees, it’s also a dead end for employers. If your concern is wholly for metric productivity, chances are high that you’re in competition with someone. Competition is a sinkhole. If you’re not digging yourself out of it and creating unique value, you’re bound to lose.

This is how adaptive organizations can thrive in spite of the concerns that keep leaders locked into traditional models. Adaptive organizations eschew the assumptions of traditional organizations–efficiency, competitive pricing, planned behaviors and outcomes–and take the lead because they engage both employees and customers in a way that makes traditional competition obsolete. They also gain efficiencies in unexpected ways–from Buurtzorg spending less time on patients by spending more time with them, to Netflix’s “the best are 10x better than average” philosophy. In the end, adaptive organizations are even better than traditional organizations at traditional metrics, because they focus on purpose and put the future of their organization in the hands of each individual. Instead of focusing on functional planning, an effective leader provides focus, narrative, and inspiration to the efforts of the collective–as Saint-Exupery puts it, she teaches them “to yearn for the vast and endless sea.”

This post serves as the frame for my next several posts, in which I’ll tackle multiple discovery and dig further into emergent behavior to provide some practical understanding of how to apply these concepts to a real organization.

What do you believe about adaptive organizations? What’s keeping you from applying these principles to your own organization? I look forward to discussing with you in the comments.

Listen to the Opinion, Speak to the Experience Part 2

“For acquired knowledge cannot be divorced from the existence in which it is acquired.” – Dietrich Bonhoeffer

It’s been pointed out to me that my previous post is a bit confusing. Granted, it’s a topic that’s probably worth writing several books, and a skill that can take years of personal development. But I want to drill down to a core that’s useful even in the short-term.

There is no such thing as objectivity among humans. (As software people are fond of saying, “It’s not a bug, it’s a feature.”) In collaboration with one another, we represent a wide array of experiences and we have each filtered out what we have found to be the salient points that we apply as broad rules of the world. This is a cognitive belief, or what we call an “opinion.”

But behind the opinion is the semi-instinctual gut feeling that is our initial filter. This is an emotional belief: a reaction, derived from our experience, that we first feel and then attempt to understand through logic and words. (I say “semi-instinctual” because highly developed, balanced individuals can actually inform and change their emotional beliefs.)

So, when we are dealing with people–whether it’s working toward consensus at a meeting, motivating a co-worker, or addressing a client’s concerns–we are dealing with a complex of emotional beliefs, masquerading as opinions.

Particularly in business, we’ve been taught to act as though the world is a rational place–or at least, that it can be made rational. And so when we encounter conflicts in opinions, we take all the facts and information from those opinions and try to reconcile them. When we can’t, we start throwing out those that don’t agree with our views until we come up with a patchwork of ideas that meshes together. Or worse, we split the difference between competing opinions and call it “compromise” just to get people on board.

The message of this process is that not every experience is valuable. If I’ve contributed my opinion and it’s been thrown out, it means that I am wrong and my perspective is useless (according to whoever is throwing it out).

But there are reasons for every opinion that are relevant to each solution. If I have a difference of opinion from everyone else in the room, it means I have an important experience to contribute–even if my opinion, the product of that experience, doesn’t bear with reality.

So much of our focus in management (and even leadership) is on getting the facts, the efforts, the opinions to fit together into a whole. And so we may often end up with solutions that are like an exquisite corpse: a too-elaborate tacking-together of mismatched parts that could never be functional.

What if, instead of trying to mesh together a patchwork of opinions, we instead undercut the opinions and worked to form an understanding of the human experience underlying the problem? What if there were no relevant experiences that didn’t matter? What if an opinion, which we often use as a way of rationalizing our emotional beliefs, is actually a lens we can look through to find the experiences that are most important to what we’re doing? Could we find a way to address the whole reality of our human experience of a problem, instead of presuming that our years of experience or our level of mastery elevate us toward perfection?

I’m not sure of the answer, but I do know that developing my own emotional maturity and my own ability to see through the eyes of others is one of the skills I value most in my business experience. This post is my own opinion: the way that I make sense of my experience. I look forward to being informed by yours.

Listen to the Opinion, Speak to the Experience

We each have at least two sets of beliefs: cognitive beliefs and emotional beliefs. Which one do you believe controls you?

You’re likely to say your cognitive beliefs–because it’s your cognitive self that is analyzing the question, and that part of yourself wants to believe it is dominant. That it has the power to bully your emotional self into agreeing with it.

But if we were all governed by our rational selves, we would look at the same facts, see the same things, and form the same opinions. There would be no public debate, and we certainly wouldn’t have the incessant raving of rabid pundits on every form of media.

My emotional beliefs determine which facts are more important than others, which virtues are more significant than others, which vices are more destructive than others. They are the substance of all my conflicts with my lover, my mother, my best friend, my boss.

But my cognitive self wants to believe it’s in control. And so it formulates cognitive beliefs–what we call “opinions.” These opinions form a shield around our emotional beliefs, which is why we hold onto opinions so dearly. To expose our emotional beliefs would leave them open to invalidation.

To measure and count and address the opinions of people is to be a representative, not a leader. A leader isn’t concerned with opinions, she is concerned with experiences.

Consider the myriad experiences in the debates over immigration: legal immigrants with illegal-immigrant friends and family who risked their lives to cross the border; legal immigrants who struggled through a complex system; immigrants whose legal status is threatened or has slipped; union workers put out of work by immigrants; refugees from physical and economic violence; citizens who live close to violent border towns; illegal parents of legal children; kids who grew up with immigrant parents or grandparents. Every one of these people (and more) has his own experience that informs his opinions about immigration.

Phenomenology, the study of experiences, adjoins the fields of philosophy and anthropology. It’s a field that has gained some notoriety lately through books such as The Moment of Clarity, which describes case studies using anthropological techniques to inform business decisions at companies like LEGO and Intel. It also helps to turn this inquiry inward, to observe not just the experiences of customers but the experiences of the people within my own organization.

When I shout an opinion at you, what I’m saying is, “This is the best way I can see to reconcile my own experience with what I know about the world.” If you attempt to address my opinion, you are saying, “You just don’t know enough about the world.” When you attempt to address my experience, however, you are asking, “How can your experience inform what we know about the problem?” Doing so not only moves a team toward consensus, but promises a better solution.

Of course, it’s not wise to ask, “What experience do you think is driving your opinion?” Nobody wants to turn a business meeting into a therapy session. Instead, try to live like an anthropologist among those you would seek to lead. Watch how they work and observe their environment. Hear the patterns of their complaints and identify their core beliefs. Consider their incentives and responsibilities. Try to become one of them (without taking it overboard and acting like you can do what they do). Always, always ask, “Why?”

Over time, and with practice, you will start to hear the experiences. And as you do, it will become possible to address problems in a real, substantial way, rather than simply speaking to the opinions.

If you agree or disagree, please share your own experience in the comments so that we can all learn from it.

Do This, Not That: Market Versus Social Norms

Dan Ariely makes a distinction between market norms and social norms in the fourth chapter of Predictably Irrational. He touches briefly upon the way that employers mix their messages, dangerously breaking social contracts and making things about money when they are attempting to lead a socially-driven organization.

As the book documents, operating on market norms (i.e., thinking about the money I’m getting in return for the activity I’m doing) can damage productivity even when compensation is considered adequate. But worst of all, it can damage relationships when we assumed we were operating on higher terms–social norms like trust, reciprocity, and friendship. And we can’t mix the two: once we perceive that our efforts are being valued according to market norms, that’s the mindset we use for the entire interaction.

The next era of commerce will not be kind to organizations that depend on market norms, except as perhaps a back end, business-to-business protocol. For the most part, those things that are driven by competition, price, and data can be outsourced to computers and become a secondary function of people-facing businesses, businesses that use humans for those things humans are uniquely capable of accomplishing.

If you’re still using market norms to run your business, it’s best to start weeding them out now, before they relieve you of all your self-motivated people and leave you with half-hearted key-punchers.

Here are a few “do this, not that” guidelines for common business practices:

Pay healthy salaries, don’t track hours. Some businesses require hour tracking, but to the extent that it’s possible your people shouldn’t identify the time they put in with dollar amounts. Doing so puts them in a market mindset: Am I getting enough money to be worth what I’m doing? Paying healthy salaries instead removes market questions from their minds, and has the potential to make the rare transformation of money into a social contract: the business is a community that takes care of your needs, rather than an employer compensating you for your activity. This is the genius behind Netflix’s policy to pay employees as much as they would pay to keep them: there’s no need for employees to ever negotiate salary or think about how much their work is worth, so they operate on a basis of trust and social contract rather than constantly competing with the employer for a fair wage. Even better if employees have direct deposit, where the money simply appears in their accounts as if by magic.
Appeal to social contract, don’t talk about money. It should go without saying that you should never bring up the fact that you’re paying an employee, or use money as a bargaining chip for a change in behavior. They’re already aware that a threat to their position in the community is a threat to their livelihood. Focus on the social contract rather than the monetary transaction. Are they letting down their co-workers? Are they hurting their ability to make a difference in the organization? Talk about those things. If you have to mention money, it’s already a lost cause. (If they’re the ones bringing money into it, you might as well address their concerns–they’re already thinking in market terms. Take it as a form of feedback on your ability to keep market norms out of your business, and consider whether the issues raised might affect other people as well.)
Make your people financially secure, don’t cut costs at their expense. If your employees have to be worried about paying the rent, covering bills, and eating, then they are already thinking about their jobs in terms of market norms. If you’re going to employ someone, make sure you’re ready to pay enough that they don’t have to be concerned about the basics of life. That includes health care, child care, and retirement. Ariely and James Heyman report that people who perceived themselves as paid inadequately lost as much as a third of their productivity at a very simple mechanical task (forget creative problem solving), and that’s without factoring in any worries about feeding their children. And if Costco is any indication, paying a living wage is a clear path to sustainable business.
Share successes, don’t pay bonuses. This is a tricky one: Traditionally, bonuses are the way you share successes. But paying bonuses can create a clear line between the actions of an employee and the money, turning the action into market-regulated action rather than social-regulated action. There are different ways of accomplishing essentially the same thing. One is to reframe the concept of compensation entirely, as with my post on taxation. If employees interpret the amount they earn not as a payment from you but as something they are accomplishing with you, it may be possible to avoid activating market norms. Another way is to award the bonus as an in-kind gift–but this is fraught with pitfalls. Having the employee choose the gift causes the employee to think about the monetary value; choosing the gift for the employee puts one in danger of choosing something the employee doesn’t want or need; and having co-workers choose may invite comparison and market-norm thinking among the co-workers.
Show loyalty, don’t dig moats. There are already a lot of financial obstacles to leaving a job. Creating new ones causes your people to think about the job in terms of their financial need instead of thinking about the social contract. Instead, you should make it as easy as possible for them to leave–and challenge yourself to convince them they shouldn’t. To the extent your people feel that they are with you by choice and not by necessity, they will be more likely to act on social norms instead of market norms.

It can be difficult to manage the financial needs of the business while operating on social norms, but undermining the social norms can quickly undo all the effort you’ve placed into creating them. If you start by thinking of your organization as a community, a family, or a nation, you will be on more solid ground. And when in doubt, leave the money out of it.

Who Is the Mother of Invention?

You’ve heard that “necessity is the mother of invention.” It’s a proverb that’s likely over 500 years old. But what does it mean?

The saying might recall Captain Kirk calling down to Scotty in engineering, and Scotty iconically replying, “She canna take much more, Cap’n!” Fans of the show 24 similarly joke about Jack Bauer telling Chloe to “just do it!” as the push she needs to make the impossible happen. And let’s not forget the ingenious agent Macgyver. Our culture is rife with the myth of the skilled but uncertain innovator solving an impossible problem in an unrealistic time frame simply because it was necessary. This kind of resourcefulness is a cornerstone of Americans’ beliefs about economics and the world.

But the question is: How true is it? Not the one-in-a-million stories we pluck from the biographies of rags-to-riches businessmen, but the kind of everyday invention and innovation that drives our economy forward. Does desperation drive invention? Or is it something else?

The answer, as with many things, is dependent on the specific definition and context. Desperation as a sense of urgency to meet a particular deadline may spur certain kinds of innovation. But desperation as a state of being–that is, the lack of security around one’s position, as with financial poverty or the ongoing threat of being fired–tends to lock us into survival mode. Desperate people grasp at proven solutions that promise to get them what they need, rather than inventing solutions that may not be sufficient.

That’s not to say these solutions are without risk. But consider someone who agrees to transport bulk drugs: The activity is risky, but the payoff is assured. Innovation requires room to be uncertain about the outcome: Will there even be a payoff? Will it be big enough? You can see this play out at companies that are in danger of bankruptcy: Rather than innovating out of the problem, for the most part they cut down to the basics and try to replicate past success. For every individual that becomes more innovative under that kind of pressure, thousands lose the ability to innovate at all.

If not desperation, then, what drives innovation?

The first parent may surprise you: Laziness. We innovate because the way things are being done is just too much work. This is part of the reason for a disconnect between hours worked and productivity: An innovator can work half as much as someone who doesn’t innovate, and still accomplish more. Laziness gets a bad rap simply because there are so many who misuse it. One of my own innovations early in my working life was a matter of saving myself the tedium of several weeks of repetitive tasks. That innovation was ultimately spread to offices around the country and saved hundreds of hours.

The other is often thought to be exactly the opposite: Enthusiasm. We also innovate because we want something new and better for the future. Our ability to anticipate the future is one of the things that distinguishes human evolution from natural evolution: we can evolve not just for the present circumstances but for the circumstances we anticipate.

Together, laziness and enthusiasm are the push and the pull of an engine. Laziness, better described, is a dissatisfaction with or disinterest in things as they are; enthusiasm is a deep interest in the possibility of things to come. Spitting out what is and sucking in what’s coming is the process that drives innovation forward. Without enthusiasm, laziness becomes pessimistic and defeatist. Without laziness, enthusiasm becomes toothless; if the present isn’t so bad, it’s better to just let that future come on its own.

Necessity may be a parent of invention in at least one sense: We invent things that are useful to us. If we didn’t need it, why would we invent it? This reveals a critical problem with the way innovation is handled in many organizations. Some businesses try to institute an “innovation department.” But isolating the innovators from the problems is self-defeating. An innovation department has to go the extra mile just to understand what problems need to be solved, and may often end up solving problems that don’t exist or aren’t high-priority. The power for innovation is always best placed in the hands of those who experience the need on a daily basis.

Better Business Through Storytelling

When you tell a story, you’re not always writing it in a narrative format. With a business plan, financial statement, or presentation, you’re often presenting facts that don’t look like a narrative.

But people understand facts by placing them in the context of a narrative. So even if you’re not deliberately structuring a narrative, your audience is always constructing a narrative around the facts that you present.

This leaves you with a problem: Are they constructing the narrative you want?

It’s easy to confuse the facts with our interpretation of the facts, or to assume our story is the only one that can be derived from the facts. It can be helpful to present the facts without trying to load a story into them, if you are presenting to a safe audience that can give you a different perspective on the story.

But when you assume that the story you’re telling yourself is the one your audience will see, you may:

leave out key facts
fail to contextualize the facts
fail to adequately explain causes and effects
over-emphasize less-important points
fail to present a coherent picture

Another part of the problem is control, or presenting the facts in such a way that they tell the story you intend. If you’ve ever been confused by what was supposed to be a straight-forward movie, then you’ve experienced a storyteller who lacked control. It’s a skill that can take years to master.

But you can improve your skills with everyday storytelling, and as a result improve your impact both in your organization and in your everyday life. Here are some questions I tend to ask, intuitively as a storyteller, when I’m presenting to an audience.

Do these facts present a beginning, middle, and end? For example, do they represent what we expected, the facts and methodology that changed our expectations, and the new direction we find ourselves taking?
How do these facts draw us out of the ordinary day-to-day of life, i.e., the assumptions and routines that form the way we operate in our eight hours a day?
Who is the hero of this story? In other words, whose action is most important to the outcome? Am I asking someone to help me, or am I trying to help someone else? (Whoever is being helped to achieve something is usually the hero–but be careful, you may be asking someone to help you help them.)
If I am the hero of this story, what role is my audience playing? What intrinsic motivations and extrinsic rewards can I reference to encourage their involvement?
If my audience is the hero of this story, why am I involved? What do I have to contribute to the hero’s quest, and why do I care so much about it?
If a third party is the hero of this story, why is the story so important? What is our motivation to collaborate and elevate the third party? And why isn’t that third party involved in the telling you’re doing now?
What are the obstacles ahead? What enemies must be defeated, what challenges must be overcome, what dangers have to be endured? How can we prepare the hero to surpass these obstacles?
What is the future if the hero manages to overcome the obstacles? Is it worth the risk and the investment, not just for the hero, but for everyone in the story? (Remember not to appeal to extrinsic rewards except where intrinsic motivations aren’t enough to spur action.)
Why? A story illuminates the reasons (or lack of reason) behind everything. So for every fact and every statement, ask the question, “Why?”

The more you practice looking for the story and contextualizing your facts, the more intuitive these ideas will become, and the better you will become at controlling the story others are seeing.

Once again, it’s not always a good idea to control the story. With a safe audience, it can be better to present straight facts to check whether the story they see is the same as the story you have in your head. We don’t always have the best or most accurate story. However, it’s also dangerous to present facts to an unsafe audience without knowing what story you’re telling and whether you’re telling it well.