Word of mouth

Imagining a new type of organization, where purpose and values are firm, yet malleable.

by Giulia Baldassari

Organizational design is not limited to a hierarchical redesign of a company’s structure, but rather triggering widespread awareness and continuous rethinking of its elements (and the boundaries between them).

From the way we share information, to the way we define the values and purpose of our organizational identity; from the practices and tools that we use to do our work to the way we enable people to grow: organizational design is the habit of rethinking and reshaping an organization to allow for its constant and distributed evolution.

In his book Reinventing Organizations, Frederic Laloux gives us an overview of the main evolution stages of organizations throughout history. And he makes clear how much the values and behaviors of our predecessors have shaped the structures of the organizations that have followed over time.

If we take a close look at traditional organizations of the past, we may notice that their main characteristic is the tendency to centralize power and decision-making responsibilities, and to structure themselves along hierarchical charts, which define precise areas of responsibility and action for each individual. 

At H-FARM we believe that, in a stable context, this structure is the best possible option. However, it’s evident that today a radically different scenario is emerging. In this scenario, everything—from information to individuals’ needs to social and economic balance—is evolving at a pace that puts decision-making processes in deep crisis. The most far-sighted companies have already realized that traditional responses, such as re-shuffling in organizational charts, are starting to lose their effectiveness, and they are looking for new models that better suit a new ever-changing unpredictable context.

Reflections on these new models are becoming a global conversation and even a new discipline, which is called Organizational Design. This finds its foundation in the studies of now classic authors, such as Douglas McGregor, but also in the community of contemporary thinkers, such as Laloux, Aaron Dignan, or Jason Fried. The goal is to outline principles, a vision and a method to imagine new forms of organizational evolution and manage the transition to these new forms for traditional companies.

Every day, the people we meet manifest a desire for transformation which at first leads to the birth of new initiatives or the adoption of new technologies. Almost every need, instead, hides a deeper root, which lies at the heart of the organization, in the way it is regulated and structured. At H-FARM, we tackle the subject starting from a mechanism that, in our view, is central to a broader set of dynamics: which is, the way decisions are made. To us, this is a crucial point, which marks a line between organizational design, an improvement program, or any other innovation path. Organizational design means rethinking what a company does and how it does what it does: foremost, it means to rethink the way people make decisions, and the way power is distributed and exercised.

As we mentioned before, traditional organizations tend to centralize decision-making to a few individuals at the top of the hierarchy for a very simple reason: that, is to minimize risks and ensure high standards. If few people have the responsibility to decide, their choices will be consistent and the risk of dangerous deviations from the standards along the chain will be very thin. This principle is also based on the key assumption that a large number of people cannot be trusted to make good decisions.

Such a mechanism has borne fruit in an age of great stability. But in our era of ambiguities and sudden changes, centralization based on “distrust” risks having the opposite effect. The risk that a few people at the top of the pyramid do not have the best information and the most useful elements to make the best decision, with reactivity, in every moment, to every specific problem, is way too high to stand.

We are convinced that the key to enabling a new and more effective decision-making model lies in making an investment in trusting people. In a trustful organization, the coercive power given by titles and hierarchies is minimized; decisions are made on the basis of transparent collective rules defined by a group; everyone has the tools to make the best decisions and clearly feels the possibility of acting and exerting a healthy influence on decision-making processes. In order to do that, we need to synchronize organizational structures. 

When we think of organizational design, we immediately think of the classic organizational chart. But charts correspond only to one of the three types of structures that exist in a company: that is, the formal structure. The formal structure assigns everyone a label, a role and a level, and defines our relationship with others. What we often ignore, instead, is the informal structure: a hidden network, in which individuals exert an influence on others regardless of their roles, made up, for example, of social ties, charisma, and soft skills. 

The success of an organization highly depends on the adherence of these two structures to the third and most important one, the value creation structure. It’s the most volatile of the three, and consists of real links between the people who are responsible for the value that the company produces and delivers to the market.

Unfortunately, too often these three layers are not connected. In their stretch marks, closed power spaces arise, preventing people—and therefore ideas—from entering and better decisions to be taken. We have to loosen the constraints of a formal structure, making it lighter and closer to one of value creation. This way we open up more visible and participatory decision-making spaces that unlock incredible potential.

This does not mean, however, that suddenly everyone becomes empowered to make any kind of decision on their own. A good criterion, formulated by Bill Gore is that of the “waterline.” If we realize that the decision we are making risk compromising the hull underwater, leading the ship to sink, we should have the maturity to rely on colleagues whose experience and knowledge we recognize as able to better guide the choice.

This criterion goes well with “consent-based” decision-making processes, more agile and streamlined, capable of giving rapid answers to pressing issues. The principle is to proceed with a decision unless someone shows serious reservations, without having to reach unanimity at any cost or some kind of qualified majority. Moving towards distributed forms of decision-making power requires trust in people’s maturity, and requires being willing to give up some control in favor of a strong “context.” 

This is a key ingredient for a trustful organization: a rich, dense, self-evident context, that gives individuals all necessary elements to make good decisions without the need for centralized control. How do we ensure a rich context? From our point of view, a rich context is characterised by a purpose and a set of values that are as shared as possible and which are fundamental for guiding the decisions, relations, and conduct of all members of the organization.

The purpose is the “why” an organization exists and what impact it wants to make on the world; it’s a clear statement of intent, a vision that David Packard (co-founder of Hewlett-Packard) defined as the “guiding star on the horizon, forever pursued but never reached.”

Values, however, encapsulate the deepest beliefs of the company that guide all members. They are the things we give importance to (consciously or not), and which we try to nourish and defend through our actions: visions, attitudes, ideals, and priorities that add up to form a strong organizational culture. In traditional organizations, purpose and values are often not clearly stated, or are the result of operations from above. They are generic and harmless enough to look good in the introductory pages of a balance sheet, having no real impact on its members—who have their own personal purposes and values, sometimes in conflict with those of the company.

The new organization that we imagine challenges this assumption. To us, purpose and values should be firm and at the same time malleable. Individuals have the ability to enter into an intimate (and critical) relationship with them, reinterpreting them according to their way of being and reading the world, finding the motivation to embrace them. The members in a trustful organization constantly question its own purpose, with the result of reaffirming or shaping it along with people’s growth.

This process constantly changes the boundaries of the organization, making it strongly adaptive, while keeping its center of gravity stable. It trains the organization’s ability to react quickly to change and, more importantly, it equips each member with a compass to guide their behavior in situations of uncertainty, where there is a need to make delicate choices.

However, having a clear and shared compass is not enough. We also need a well detailed map of the organization made of experiences, practices, cases, data and knowledge, whose source is always one: information. We came from an age in which information was once jealously guarded by those who held it. As scarce and relatively stable, it represented in itself a valuable asset and a source of power. Today information is pervasive and constantly changing, it becomes obsolete very quickly and the window of opportunity to transform information into value has narrowed considerably. 

This is why today it is necessary to make information available to everyone, leveraging a new fundamental ability: to distinguish between noise and signal and to process relevant information quickly.

As Stanley McChrystal said: Share information as much as possible, unless it’s illegal.

The key here is to understand how to avoid strong information overload. The answer is “less push, more pull.” In complex contexts, we should stop thinking that a centralized subject can establish “who should know what” at all times. The most effective intervention to be quick is therefore to put people in a position to access it freely, without restrictions, and extract what they need when they need it in the same way as they do when Googling.

However, not all knowledge is in a file or folder: there is also knowledge in our heads that is “tacit” knowledge, the one we create through direct experience, which must be made “explicit” by being available to everyone through continuous sharing practices.

It may seem that full trust in people means anarchy. Not true. If we are still struggling to tame certain aspects of complexity, it is legitimate to think about equipping ourselves with appropriate tools and measures.  But pay attention to the “how.” Many organizations are seized with the momentum of having to establish a rule for every occasion, especially if an error has already occurred in the past. In this way, mountains of policies and micro-behavioral rules arise to regulate every aspect of company life, to respond to the fear that it may not be clear which conduct is most appropriate.

The trustful organization unravels this spiral of over-regulation, relying on a new basic principle which we call the Minimum Viable Policy (MVP). It’s about answering a very simple question: “What is the minimum set of rules we need to avoid people to cause devastating damages?”

The Minimum Viable Policy is a concept that applies to every aspect of organizational life, from how decisions are made to how we communicate, from how we share information to how we work individually and in teams. 

In a trustful organization, the MVP is light: it’s not a standard, rather a “default,” a common starting point, which everyone makes their own and declines from time to time.

MVP is also clear: because it conveys few messages in a clear way. It does not answer every specific question, but provides an intuitive criterion to guide our behavior.

Finally, it’s dynamic: in their daily exercise, the members of the organization put the MVP into discussion, reshaping it when needed so that it fits everyone better. 

What an MVP does is to simplify the complexity of the decisions we make, reducing entropy and the cognitive effort of having to ask ourselves every time “how do I deal with this problem?” We can contain decision fatigue which is a real problem of the digital age, with appropriate tools and working methods.

For us, for example, Slack has become the tangible metaphor of working in mixed teams, geographically distributed, working synchronously and asynchronously on a series of projects at the same time, without ever losing concentration and organization. For others, the tool can become Trello, or Basecamp, but also methodologies such as Agile, Lean, and SCRUM, and much more.

No matter the solution, the matter here is being more intentional and experimental in the way we work and in the tools we give ourselves. The meeting, for example, is the perfect theatre of a series of negative unintentional dynamics. Meetings invade the agendas of millions of people, in thousands of companies, all over the world. In the United States, it has been estimated that an average worker attends 62 meetings per month, for wages costing $37 billion per year. 

Being in meetings, setting up meetings, making decisions within a meeting, we repeat these practices constantly, with little or no benefit. Yet there are different types of meetings for different purposes, and precise techniques to deal with them (not to mention the fact that, most of the time, perhaps a meeting is not even necessary).

Clearly, each company will have its own MVP level in every specific and historical moments. But, over time, the more autonomy, the more the MVP will lighten, leaving room for individual discretion.

This “growth of autonomy” in individuals is the most positive form of power that can exist: it’s a power that arises spontaneously, as a natural consequence of our maturation. A power that allows us to open new “spaces” for ourselves: of responsibility and authority, but above all, space to learn and evolve professionally.

So the trustful organization literally gives “space” to people to exercise the autonomy that realizes them. Often employees at traditional and hierarchical companies are forced (or self-constrained) into a well-known and codified space, the “comfort zone:” an operative space in which they feel at ease and to which, however, in the long run they risk getting used, losing motivation. Just outside this space, there is a zone of “fear” for the unknown, for the new, for the unexplored. 

The new organization we have in mind allows people to venture into this area, falling over and over again: without mortifying them, without dissuading them from getting up and trying again, but at the same time without even showing them the way out immediately. This culture of experimentation, of failure, this continuous encouragement to search within the organizational context for one’s own way, constitutes the healthiest environment for growth. 

In this type of organization the culture of “reproach” is replaced by the culture of feedback—unstructured but frequent, informal but authentic.

Because once out of the zone of fear, you enter into the area of learning and growth that is shaped by the ability and flexibility to self-determine your own maturation—the only way is to constantly push the boundaries of a company beyond the known horizon, in a total symmetry between individual learning and organizational innovation.

Our methodology which allows everyone to grow through suggesting and developing new projects, is a clear example of this learning space. In many organizations, this space is shaped by R&D, a specific team who decides what needs to be learned to keep the organization innovative. In our case, we decided that all people can contribute, in a spontaneous way, to look for new areas of intervention. Last year, we ran a one-year project to theorize a method to help our clients do what we have done through the years and to help them make radical changes. Today, H-FARM is an organization that is open to spontaneous change, in which there are no “heads” of functional areas (nor functional areas to be managed); an organization in which projects and resource allocation are completely decentralized and in which access to information, of all kinds, sees no distinction, from partner to intern; an organization in which we give ourselves few, firm principles and let individuals take responsibility for implementing them in their daily lives, because we have deep trust in the people whom we choose to work with, every day.

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