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Traditional Corporation
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Natural Enterprise
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Normal formation mechanism
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Incorporation then eventually public offering
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Self-organization as partnership
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Source of initial capital
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Large capital infusion from established corporations, capitalists and lenders, in return for substantial control of the business
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Organic, from customers
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Organizational structure
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Hierarchical, centralized, top-down managed
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Flat, networked, self-managed
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Decision-making process
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Executive decree
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Unanimous consensus of members
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Importance of innovation
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Moderate; it is often easier to buy out, or buy off innovative competitors
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Critical
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Key strengths
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Political and economic power; brand presence
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Agility; customer proximity
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Sales process
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Develop product in lab, mass produce, advertise
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Identify unmet customer need, develop customized solution, deliver to pre-qualified customers, market virally
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Stakeholder priority
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(1) Absentee shareholder-investors; (2) executives; (3) creditors
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(1) Members; (2) customers; (3) community
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Social & environmental responsibility
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Subordinate to shareholder profit
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Paramount; implicit and explicit
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Optimal size
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The bigger the better
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Small: 30-150 members each with unique skills or knowledge
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Primary objective
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Profitable growth
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Members' well-being |
Peter Block wouldn't like the title of this blog. In his newest book The Answer to How is Yes, he asserts that how
is the wrong question, one that keeps us back from doing what we really
want to do, what we were meant to do, waiting for someone to show us how. "The boss doesn't have what you want", he tells us.
The new book is based on one chapter of a classic 1993 Peter Block book Stewardship,
which I've just finished reading. Way back then, Block had already
learned what I was a decade from realizing, that entrepreneurship is
natural to all of us, and that hierarchy, money, growth and
self-interest are not necessary ingredients of true entrepreneurship
but rather obstacles to its effectiveness.
Stewardship attempts what might just be an impossible task: The converting of large, established companies into what I call Natural Enterprises.
Chapter by chapter explains how to dismantle the obstacles to true
entrepreneurship, slowly convincing the people in the enterprise that
you are absolutely committed to radical change, that you mean it
(lots of big companies talk a good empowerment story, but have
absolutely no intention of acting on it). One of the hardest parts, he
says, is convincing managers to give up managing (in favour of
stewardship) and at the same time, ironically, convincing line
employees to give up comfortable dependency, where they're not really
responsible for anything. It's a difficult trade-off, and I am sure it
would take enormous patience to pull this off, but Block is the master, and he's covered all the angles.
The
question of course is why bother to convert established totalitarian
enterprises to democratic Natural Enterprises -- why not just start
fresh and build a new Natural
Enterprise from scratch? Then you don't have to undo all the things
that are wrong with the old model, and you can start with the people
you want to make a living with, instead of trying to remake a pool of
employees into what they are not (and can't be too unhappy not being,
since they've stuck around in the old enterprise).
Even if I
were the owner of a very successful traditional enterprise, I'd be more
inclined to quietly start up a completely separate 'side business'
using the Natural Enterprise model, cherry-picking the people who I
think would be most inclined to accept the responsibility and
egalitarian principles of such an enterprise, instead of trying to
convert everyone. Block devotes much of Stewardship
to methods of dealing with, and turning around, "cynics, victims and
bystanders" -- people who don't believe Natural Enterprise can work and
poison it with their negativity, people who say they can't do anything
or won't take responsibility unless they're given more power, and
people who withhold commitment until the Natural Enterprise concept has
been proven to work by others. These people will kill you. Better, I think, to start fresh and not let these people into your organization in the first place.
Block
puts a wonderful perspective on all this. The traditional corporate
governance system is fundamentally wrong for us, and for our society,
he says, for three reasons:
- "If day in and day out we go to
a workplace that breeds helplessness and compliance, this becomes our
generalized pattern of response to the larger questions of our society
and our lives", and democracy will flounder.
- "Autocratic governance withers the spirit". It disengages us and makes us less effective.
- Centralized
control interferes with and precludes innovation, quality, and deep
understanding of and response to what customers really need and want.
The
cult of leadership drives us to think that hierarchy works, that those
at the top of the hierarchy can really wield substantive change, and
that the organization is best served when the rest of us just do what
we're told. These are all untrue, of course. Instead, Block points out:
- Our
'leaders' have more impact in the news than in their organizations.
They are symbolic, but deluded to believe they are much more.
- They
reinforce the idea that most accomplishment comes from extraordinary
personal action, when most accomplishment actually comes from team and
community collaboration.
- They convince us that until/unless we climb to the top of the organization, our impact on the organization can only be marginal.
- They
begin to believe their own press, take undue credit for successes (and
get unfairly fired when the organization fails), take home a wildly
disproportionate share of the organization's profits, and take
unilateral and ill-considered actions that hurt the organization, in
the belief they can do no wrong.
Even well-intentioned leaders
quickly get sucked into the mythologies of the old model: They start
telling subordinates how to behave, view management as essential to all
organizational change, use education as indoctrination, and use
performance appraisals to ensure compliance.
Block's stewardship
model, like my Natural Enterprise one, is one of equal partnership of
all co-workers. Block outlines five principles for such partnership:
- The
need for agreement on shared purpose among all partners. The
organization reflects everyone's vision, not just "management's".
- The need for unanimity in major decisions. "Every partner has the right to say no".
- The acceptance of joint accountability and responsibility. No blame games.
- The need for absolute honesty. "Not telling the truth to each other is an act of betrayal".
- The prohibition of abdication. No sitting on the sidelines. Full engagement.
He
then moves on to operating principles for organizations that are
governed by such partnerships. I've 'radicalized' these principles a
bit, because I think Block tends to get a bit mired in traditional
operating methods, and compromises the statement of these principles to
the point they lose some of their power:
- Empower everyone: Day-to-day decision-making is entrusted to those closest to the
customer, those on the front line. Learning from experimentation means
learning by making mistakes.
- No managers, no hierarchy, no titles: Everyone manages themselves, and collectively manages the organization.
- Only long-term, qualitative measures: Collective, meaningful results, not behaviours and actions to get there.
- Local
solutions, not standard solutions: Except where health and safety is at
stake, standard answers are suboptimal. Diversity and innovation need
to be encouraged, not crushed.
- Promise of commitment to service: Partners
are in the business to serve others, not to maximize their
self-interest. The freedom of equal partnership bring with it
responsibility for service and full engagement.
- No secrecy:
Complete information and the complete truth, all the time. That
includes training everyone to understand the whole business ("business
literacy") so they can make meaning of this information.
- Equal
compensation: No individual ratings or rankings means that everyone
shares equally in the success of the organization. Block is a bit
equivocal about this, for good reason -- it's the hardest tenet of
traditional hierarchical enterprise to give up, especially when
competitors still operating under the traditional pay-for-rank model
may seduce some people to bolt. I say let 'em go. I go even further,
and say compensation should be based on what the partners need,
not on their impossible-to-determine 'individual' performance. That
needs to be spelled out in the partnership agreement. You have kids and
a mortgage, you need more compensation than the 60-year-old with no
debts; the traditional compensation model gets it exactly backwards.
It's
great to read this kind of principled idealism from someone who has
worked with real organizations for decades. He is at once pragmatic and
uncompromising. No wonder Dave Smith is such a fan of his. |
MADE IN CANADA
trust your
instincts 
