Thanks a lot, Giles. Pleasure to be here. Thanks a lot for the invite. Really looking forward to hopefully a lively session. I hope that you guys put questions in all sorts of different tools they're really going to be using. I prepared a few slides just to get us going on the topic. Whenever you have questions, feel free to interrupt me. I'm not personally offended if you do that, so feel free to do so.
I'll talk a little bit about our self-organizing company, what is the difference of self-management and self-organization — people confuse that — so we'll chat about that a little bit, and obviously just the learnings. Because quite frankly, it is not the magic bullet, it is not the holy grail, it will not solve all of your problems. In fact, it's probably more cumbersome in many ways. So I'll just share the things that might be completely wrong, I guess, in the beginning, and I'm probably getting wrong still. So that's the conversation I hope to have with you guys today. Really looking forward to that conversation.
Giles, you already mentioned it: we're a small team of passionate people about, in a broader sense, unleashing potential of people. I won't talk too much about that. I think the one thing that people might remember is the bottom picture there, because that's our cow. We're probably the only consultancy company in Switzerland who's owning a cow, so that's why I'm mentioning that one. In case you don't remember anything about self-organization, you'll probably remember the cow, so I'm happy that I shared that. If you want to lease a cow or rent a cow, I can tell you how that works in Switzerland. We are supporting the Swiss farmers in the Alps, because that's probably a tougher job than what we are doing here anyway. So that's our little cow.
Obviously there's also a link to what we call our lifeline. Maybe that's interesting for one or the other. It's kind of a culture book. We'll talk a little bit about it later as well, just our principles, how we see the world, what collaboration looks like for us, these kinds of things. If you're interested, that's the link there. Feel free, it's a PDF document, just like 10-12 pages. Could be interesting for some of you guys if you're on a journey, and obviously by no means is that the perfect thing — just inspiration of how to do it or how not to do it in many ways. So don't copy-paste that, doesn't make sense, and I'll talk about that later as well.
What else? Giles, you mentioned already “radically self-organized” is what we say. Especially to our corporate friends here, you might find that probably radical; some of the others might not find it that radical. Actually, we don't have an org chart in the sense of org chart boxes and these kinds of things, because we do work in a role-based setup. We don't have line managers. We don't have a hierarchy. We do have full transparency, which I'm saying is full transparency — that means, like, everything: that includes salaries, that includes our bank account, that includes everything, anything that you can think of is transparent. There's nothing secret in a company, not even the personal data. That is because we have an amendment to our working contract, so even that stuff's shared. Everything’s transparent, and that's already one of the things that some people might find a bit uncomfortable actually.
Then there's the last thing. I think I talked about that actually in London when we were last time allowed to meet in person for a Business Agility Conference, I think it was 2019 in London. I talked about self-set salary, so that's not the topic for today, but if you're interested you can probably look at that talk from two years back. We do all set our salaries ourselves, completely free range. That includes new hires, by the way. A part of the recruiting process is setting your own salary. That's maybe interesting for some of you guys.
What I want to say is, “radically self-organized” doesn't mean no structure, it doesn't mean no processes, and most importantly, it doesn't mean no leadership. So we'll talk about all of these three topics because I think it's really important, and I'm passionate about people confusing that or actually not confusing it anymore, hopefully, after the 20 minutes of my talk.
Just really quickly: we tend to call ourselves a “teal organization.” For the ones who read Reinventing Organizations by our French Frederic Laloux, you'll probably recognize these things. We don't go into detail here today, but I really recommend the book. I think it's unfortunately not on the book competition list, but I'm sure you can get it anyway. Reinventing Organizations by Frederic talks about evolutionary purpose, we talk a bit about purpose-driven organization. What does it mean for us in practice? Because purpose is always a nice theoretical concept, but how does it link back to profit? We do have a for-profit organization, so it's something that we are also obviously somehow proud of, that we incorporate purpose and profit. Wholeness as a concept: just a bit more human approach to organizations. We just understand that there's also things like lack of it, like homeschooling, like all of these things, right. They all have an impact because I'm personally not a fan of “work-life balance” as a concept because there's one life that I'm having, and it means I want to be recognized as a whole person, and that obviously is part of the setup that we're having as well.
Then there's the self-organization piece that we'll talk about more. I mean Frederic Laloux wrote a book about that, 200-something pages. Obviously I've talked about that for a minute, so I don't really expect that everyone understands it. If you want to dive deeper, put it in the questions. We'll do that during the Q&A. If you all know it, obviously, we can skip that part of the Q&A and do something else.
Tangible Examples
I also thought: let's talk about something tangible, because these nice theories and concepts and purpose-driven stuff — that's all nice stuff, but how does it look like in practice? What you see on the left is our, I think it's on the second page of the lifeline, actually, it's kind of an overview. There are things just like buzzwords that are important to us, and we'll describe all of these things as you go through what I'm going to call our “culture book.” We do talk about efficiency, we do talk about profit, about growth, about financial outcome. We do talk about all of these things that are somehow kind of the bad things if you talk about a purpose-driven organization, and I'm really passionate about if you have a purpose where you want to create impact — and I think almost all purpose statements, obviously, are about creating impact in some kind of way, so ours is too, about impact, and unleashing potential of people means we want to have impact. And the economic world especially is just a system that works like it works today. We can like it, we cannot like it, but I believe you need to leverage the system to really have impact. That's why we are saying, look, we talk about these things. We talk about efficiency, we talk about profit, we talk about financial. No matter how purpose-driven we are, we need to get that right, otherwise we will not have impact. I think that's exactly the part that I mentioned before: purpose and profit integration is really important. That doesn't mean obviously that we turn down certain things because we think it's outside our purpose, clearly, but it also means that we need to make sure that we somehow hit that mark.
What you see here in the middle is what we call “sales and company KPIs.” It might be a bit small to read, and I'll just talk you through it. The top line here is cash flow. Every week in our team meeting — so we have a weekly team meeting — every week in the team meeting, we look at cash flow. That screen today is pretty green. I tell you, it's not always that green. It's just by chance the one that I took from last week, and it looks good. But it was fairly red and orange some days back, right. So it's not always green. It's really important that people learn how to handle that, and we'll come back to the learning later. You'll see cash flow turning red, and I'm working for a company where the cash flow's red. It's really uncomfortable. That's where transparency is not easy to handle, for example. Again, I think it's important for any company, if you want to steer a company, a self-organized one means distributed leadership. Everyone needs to be able to take decisions that are business-relevant. You need to be aware of these things.
The other thing that we are looking into is these two KPIs: it's utilization rate, so the past months or the past few months, and then the capacity planning looking forward. You can't run a professional services company without capacity planning, right. You might say, “Well, that's fairly traditional and nothing to do with agility,” or even worse, “It's nothing to do with teal.” I would disagree there. You need to know these figures to run and steer your company.
So now what is the difference to a traditionally run company, and that's maybe important to remember: KPIs and numbers and metrics are only asking questions. They help us ask questions; they never provide an answer. That's the difference to a traditionally run company: they look at KPIs and say, “That's the answer to whatever question we might have had,” and that's why we then take action in some kind of way. I believe a cash flow number, a capacity utilization number, whatever it is, will never give an answer. It will just help you ask the right questions, and that's how we look at KPIs. That's why it is probably a bit different compared to traditional organizations.
By the way, that's nothing I invented or reinvented. That's by our German friends of Buurtzorg. Some of you might know the senior Buurtzorg founder there. So that's nothing new, that's been there for 40 years. He talked about that 40 years ago, and Buurtzorg, by the way, is a fairly traditional company in Germany, an engineering company, okay. So not invented by us. Just listen to the right people who have some great wisdom, and then copy-paste, right.
Then the other thing I talked about is a role-based working setup. What you see on the right is actually not the current one, I must admit. We changed it just last week, and I forgot to take an up-to-date screenshot. That's our role-based working setup. What you see there is about roles and accountabilities. It's not based on jobs. It's a switch from a one-to-one relation — one person, one job, Tim the CEO or Tim the business unit head or whatever — to a one-to-n relationship. So I do have in that current setup that you see here, I think I had seven different roles. It's moving into a role-based setup, and that's important if you want to break silos, not create little kingdoms, making sure that we have a kind of a fluid exchange of resources and these kinds of things, and also the capability to adapt quickly. You know, this outside world changes, and reacting to these. So role-based working setup, I believe, is key to that. That's why we obviously do it.
That's how it looks. As I said, we are roughly 15 people permanent and then a few more obviously in a freelance basis. What you see here is, I think, 13 or 14 different roles. That's how much you need because people are always afraid: “Role-based working setup, breaking jobs into roles, that’s such an overhead of documentation.” It's not. If you have 10 people and you have 80 roles, then you've probably done something completely wrong. So just try to reduce it to a reasonable level. One of the learnings we had — and hello to my dear consultancy colleagues, I'm doing consultancy for more than this time here with the 5 years with the self-org company — the question we asked ourselves in the beginning when we set it up was, “What could be the right setup for the next two years to be successful?” That was the question: “What do we need to be successful from a roles and responsibilities perspective?” Completely the wrong question. It took us half a year to figure that out, by the way. Wrong question. The right question is, “What kind of roles do we need today to be able to be successful today and tomorrow? It's not the next two years, it's not whatever, it's just today. Just document what you have today.” Again, it took us six months to figure that out and change everything upside down basically, and I'll talk a bit about the learnings: how do you build that self-actualizing, self-updating system? But again, if you get that right, then the right question is, “What kind of roles and responsibilities do we have today and what do we need today, nothing more.”
The bottom picture just shows our capacity planning. So I just wanted to show you a self-organized teal company is not any more fancy than you are. That's just a Google Sheet, right, for capacity planning, because we're small, that's good enough. Doesn't look any different; there's not always fancy stuff. It's just the normal things that you've known for decades already.
Good, so much for the tangible things. There's also a way of how we run our weekly meetings. We can dive into that; I'll skip that just for time reasons because I wanted to share some of the learnings with you guys: some of the patterns we saw so far. As I said, we are a self-organized company for five years now, so we've done that for a bit.
One thing I already mentioned: top left, “Autonomy and empowerment are uncomfortable.” It is not fun, okay, because that means you have a ton of exposure, you have more accountability, it's all transparent. Decision making: if I take the wrong decision, investing 100,000 Swiss francs, that means everyone knows, everyone sees that I've taken the wrong decision. They obviously know the direct link to their bottom line salary because we do have a profit-sharing mechanism, which means they'll tell me, “Tim, what the *bleep* did you do there?” That just cost me a lot of money. That's the part where it's really not always comfortable. And obviously autonomy also means — and that sounds easy, but it's actually not — you have to be self-reliant for so many things. What is the work that I really want to focus on, and I need to focus on how to prioritize my work because you could probably work 24/7 for our company as well. It's never-ending work. So there's that part where autonomy and empowerment are really uncomfortable. That leads to the one that I have bottom left: you need to invest into capability building, help the people to build that capability, the skill set that is actually necessary to be successful in such a setup. For example, all of us do have a personal coach, so all of us do work with at least one coach, some even have two or three, just to make sure that this whole development journey that you'll probably be going through is supported somehow by someone who's professionally doing that. So we all have our coaches, and that's, by the way, something you see across most of the self-organized companies that we are in touch with. You see that in almost all of them.
The other thing is people ask me, “Is a self-organized organization more efficient, because obviously you cut all the management overhead, bureaucracy stuff, right?” The answer is: no, it's not. You talk about different topics, you have different conversations. Compared to my former management job at the other company, I was signing off 1,200 expense sheets — no kidding, 2015, I signed off 1,200 expense sheets. That is, one, a waste of time for the company, two, a waste of time for me, and three, it's incredibly boring and it's completely no value. Obviously you could say, “Okay, you gain that efficiency,” and hence, no, you don't. Because again, there's capability building. We invest a lot of time so that people understand correlation of cash flow to invoices that we send to our customers, to my salary, to all of these financial things. We have a ton of discussion about strategic direction. The difference is it's not a strategic direction discussion at whatever, five percent, ten percent at the top. It's something that we have across the company. Obviously that's stuff you need for decentralized decision making, right. So you invest your time and resource into other conversations. I don't think it's really more efficient. The good thing is if you have a peak time where you have a lot of customer demand, you can reduce the internal conversations and be a lot more customer-focused in short time, and that means we're more adaptable to our demand cycles. If you run a professional services company, you know that there's these waves throughout the 12-month period, a year usually. Especially Q1 is usually a bit more quiet because of Christmas break and all that stuff and in Switzerland you go skiing and so on. So that's the time to have the strategic conversations, and we do have time for that usually, and if it's picking up, we just reduce it, we can fully focus on the customer. So we are a lot more flexible compared to this bureaucratic overhead that you actually can't really do in waves because it's always there. That's maybe one of the advantages, but again it's no more efficient.
I already touched on it: we all have coaches, “outer work requires inner work” or “self-organization requires inner work,” depends how you want to phrase it. It is a personal development journey. It's a personal development journey for me. If you listened to my talk in London from two years ago, I said I'm actually a control-freak type of person or leadership type of person, and getting rid of that control-freak attitude to be able to really thrive in a self-org setup, that was good fun... not. Then there's all these other development topics where you really need to work on your self-awareness, your consciousness, all these kinds of things. If you're doing that yourself, you know that inner work is incredibly exhausting in many ways. You need a lot of energy, but it will also give you a lot of energy back. You just need to plan for it. You need to have that inner work component as well, otherwise all of the structure will not help you to get there.
The other one I put here is letting go of leadership. Again, I'm the control-freak type of leader. If you look 10 years back, people would describe me that way, I'm pretty sure. There's one thing: leaders need to let go. That's something you hear in all of your agility journeys, I'm sure. And that's the other side of the coin though, which is once dropping the ball or creating that room where he or she let go, that means somebody else needs to pick up the ball, they need to fill that room. Otherwise, you create a vacuum and that's most likely not helpful for your business, right. So also think about the other side: how do you empower your people to actually take up the balls that you're dropping because you're not in control of all the things anymore, right. That's also something where it might be a development journey, or you might need to talk about capability building, because many people have not been exposed to these kinds of conversations before, just because they're coming from a more traditional setup.
Then last but not least, I'm a big fan of “structure is a great enabler for behaviors you want to create.” Obviously, if you create the wrong structure, it will create the opposite. Which means also, for our self-organized company, as I said before, we do have processes, we do have structure. As soon as you create something that's counterintuitive or actually not consistent with what you want purpose-wise, mindset-wise, culture-wise, you will create behaviors that are going against your culture. Not because of the people not embracing whatever you wanted to create culture-wise, but just because you got the wrong processes, the wrong structure to enable and develop exactly these behaviors. We had a ton of discussions about different processes, for example, how do we lay off people in a self-organized company? Not exactly an easy question, right, because you can’t go to your boss. We just don't have one. So we're really careful what that process looks like because you can easily get something that's standing in the way of a culture that you really want to create. Same as for KPIs and all of these kinds of things. That's the pattern that we saw, the learning that we had.
Before going into Q&A, there's also this slide here. I will not go through all of these. Please tell me in the Q&A which are the most interesting ones, right, because there are some questions and answers or key topics on the journey that we found. I just want to touch on the first one, and then you tell me if you want to touch on some of the others or not. The first one is how can you create a structure to create a learning organization, right, that the organization learns, that always adjusts? Because I was talking about the wrong question for a role-based setup in the beginning, right, where we asked ourselves, “What do we need in two years’ time?” Wrong question. “What do we need now?” That’s the correct question. So what's the mechanism for that system update process? If you run Holacracy, Sociocracy, or any of these ideas, it's always what they call tensions. By the way, in the Reinventing Organization's teal world of Laloux as well, called tensions. The most important thing is that tension, physically speaking, is a gap in potential. Tension is negatively connotated in many languages, but physically speaking, it's just a gap in potential. That’s basically how thunderstorms work. It's just a gap in potential, full stop. There's nothing else. If you look at tension as a gap in potential, you see we could have a different potential here that is actually fairly positively connotated. So what we do is we do have tensions. There are two types of tensions. The first one is tensions within the system, which basically means Giles is fed up with me and really frustrated because I didn't reply to his email for five days, and he asked me three times already. That's the within-the-system tension. That's usually personal conflict, and it's really important. You need to get rid of these conflicts personally, and usually it's fairly straightforward. I mean, I just go to Giles and say, “Yeah, you're actually right, I should have replied much earlier. Sorry for that,” and then try to improve in the future. But then there's also tensions which are tensions for working on the system. So we are changing the system with tensions where we say, “For example, there's a tension that we don't have a role for getting in touch with clients directly, or there's no role for marketing, there's no role for whatever, right.” It's just a tension, a gap in potential, and then we would create that role based on that tension, which also means if nobody has that tension, nobody sees a potential with a marketing role, that means we don't create one. With that, you reduce the overhead, the bureaucracy. Most of the time, if nobody sees potential for marketing, we don't do it. That’s pretty easy. If at some point somebody has a tension saying, “Hey, we really should do something about our LinkedIn profile or website,” well then we have tension, we create a marketing role, we make sure that somebody is taking care of it and energizing the role, obviously. So that's the system update process, and I can tell you one thing: it doesn't matter if you have org charts and boxes and pyramids or if you have circles and roles. If you don't have that process, you will not be any more agile or adaptable or whatever. This is the key process. Think about how you have that key process implemented. Again, I could talk about the other things, but looking at time, I think I've just got 20 minutes for the talk. Let's stop here, look at the questions and answers. I might pull up one or the other slide in a minute again, but let's move into the Q&A part.