Matthew Kálmán Mezey looks at how the world of politics is (slowly) beginning to wake up to the potential illustrated by today’s self-managed ‘Next Stage’ organisations  from the soft Left thought-leader Matthew Taylor, Labour think-tanks Demos and IPPR, and Labour Party pressure group Compass to Policy Exchange on the moderate Right. Could the liberating potential – and outright effectiveness – of these organisations one day transform our politics?

The case for self-managed workplaces seems to grow stronger by the day – as the number of such workplaces grows too. But so far the world of politics and policy-makers has rather tiptoed around this potentially revolutionary development.

Corbynism, as yet, is too crude a project and needs to open itself up to voices including Frederic Laloux’s Reinventing Organizations
– Neal Lawson, Compass

But why should politicians pay attention?

Steve Hilton pic

Steve Hilton’s ‘More Human’ and ‘Next Stage’ organisations – just different labels?

A lot of the recent buzz around organisations without managers has followed the extraordinary decision of the prominent $1bn US online apparel retailer Zappos to remove all its managers and instead use a Holacracy structure of overlapping Circles (where everyone has multiple Roles, which continually evolve as all staff sense gaps and unfulfilled potentials).

Zappos’ founder Tony Hsieh explains that freeing up employee creativity was a key part of what drew him to try Holacracy: “Research shows that every time the size of a city doubles, innovation or productivity per resident increases by 15 percent. But when companies get bigger, innovation or productivity per employee generally goes down. So we’re trying to figure out how to structure Zappos more like a city, and less like a bureaucratic corporation. In a city, people and businesses are self-organizing. We’re trying to do the same thing by switching from a normal hierarchical structure to a system called Holacracy, which enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.”

Mark Thompson, writing in the Guardian, commented when he first heard about Buurtzorg that it “made me fall off my seat”

Hundreds of other companies now use it too. Perhaps this is unsurprising, as any organisation can use Holacracy, for free. Examples of organisations using it include Medium, the blog-publishing platform launched by Twitter co-founder Evan Williams, and the David Allen Company (with its GTD/Getting Things Done method, so beloved of personal productivity geeks).

But the astonishing effectiveness of ‘Next Stage’ self-managed structures – of which Holacracy is just one example, albeit currently the most formalised and replicable one – is perhaps clearer with an established Dutch community nursing non-profit called Buurtzorg (see EE articles about it). It was founded in 2006 with a small team and has since grown astoundingly fast, to now employ approaching 10,000 nurses – and regularly wins employer of the year awards as well as boasting the highest patient satisfaction rates in the country. Yet it does all this without any layers of management, and with a back-office administrative bureaucracy of only around 60 staff, leading to overheads of only 8% compared to the 25% norm in the sector. Audit firm Ernst & Young found that Buurtzorg’s lower costs would lead to €2 billion savings if used across the country (scaled to the US, this would be a $49 billion saving across the sector).

Little wonder that Cambridge University business academic Mark Thompson, writing in the Guardian, commented when he first heard about Buurtzorg that it “made me fall off my seat”. He made a back-of-the-envelope calculation that this self-managed approach could save £35.5bn across Britain’s public sector, freeing up thousands of staff to return to valuable frontline work.

Examples like Buurtzorg demonstrate that dramatic cost reductions can be achieved while improving services and boosting public sector staff morale at the same time
– Eddie Copeland, Policy Exchange

Of course, such ideas didn’t emerge only with the 2014 publication of Frederic Laloux’s increasingly influential book of case studies of ‘Next Stage’ organisations, Reinventing Organizations [download PDF: pay what feels right, in a month], which inspired the launch of Enlivening Edge. Gary Hamel – a world-leading business thinker – wrote in a 2011 Harvard Business Review article ‘First, Let’s Fire All the Managers’ about a self-managed organisation called Morning Star (a tomato processor). He believes this self-managed model – without a hierarchy of managers – could work in companies of any size. He recently told a must-hear BBC Radio 4 programme on ‘Companies without Managers’ that it is hard to know why these organisations remain so scarce, given their “enormous performance advantages”. His conclusion was that a “residual set of beliefs… invisibly sabotages” these developments. Given our own workplace experiences, most of us still believe that any change must be imposed, that employees are simply instruments to be managed and all the rest of that related mindset. The BBC programme profiled Buurtzorg, Morning Star and a Dorset-based aerospace company called Matt Black Systems.

When will politicians notice these examples of cutting-edge organisations which seem to be able to creatively transform and avoid bureaucratisation? (It’s notable that these organisations never need to mention ‘empowerment’, as power is no longer bestowed from above; instead everyone is a manager!)

Who in the political world has already spotted the trend?

The three primary characteristics Laloux found to be common in ‘Next Stages’ organisations – of bringing your whole self to work, of a self-managed/non-hierarchical organisational structure, and of a focus on following the organisation’s evolutionary purpose, beyond just bottom line – would seem, intuitively, to be appealing to left-leaning progressives.

In striving to be more Teal than Red – I am grateful to Frederic for his work and humbled by the book’s insights and power
– Neal Lawson, Compass

RSA lecture Frederic Laloux with Matthew Taylor

RSA lecture: Frederic Laloux with Matthew Taylor

Sure enough, Matthew Taylor – the one-time head of Tony Blair’s Number 10 Policy Unit and now Chief Executive of civic innovation charity the RSA – publicly called for the creation of a ‘Next stage’ RSA at an RSA lecture by Frederic Laloux (view lecture). (Though he also joked – to much audience amusement – that his own, ahem…, charismatic persona, might prove to be one of the hurdles to creating a self-managed RSA – see 29:25 in).

He also named Reinventing Organizations as one of his top 3 books of 2014: “Reinventing Organizations is the book that has most influenced me as a CEO this year. As you read it, one voice in your head says ‘This is crazy’, while another says ‘Isn’t this how we should all aim to be?’”

We never got to find out what the actual hurdles really would be as the top tier of RSA management didn’t share his enthusiasm for making this major change, after reading the copies of Reinventing Organizations each was given. The RSA also awarded Buurtzorg’s Jos de Blok (view lecture) with their 2014 Albert medal for his pioneering work (I can claim some credit for initiating the conversations inside the RSA that led to this interest in Laloux and de Blok).

Further leftward, the Labour Party pressure group Compass is also keen. Its chair Neal Lawson recently wrote in a New Statesman article, for example, that “Corbynism, as yet, is too crude a project” and needs to open itself up to voices including Frederic Laloux’s Reinventing Organizations vision. Elsewhere he added that “In striving to be more Teal* than Red – I am grateful to Frederic for his work and humbled by the book’s insights and power.” [*aka ‘Next Stage’]

Labour-supporting think-tank IPPR’s July 2015 report Powerful People – Reinforcing the Power of Citizens and Communities in Health and Care also points to the findings of Frederic Laloux and the approach of Buurtzorg.

This self-managed model – without a hierarchy of managers – could work in companies of any size
Gary Hamel, leading business thinker

I also spotted that a senior social policy researcher at progressive economics think-tank the New Economics Foundation had picked Reinventing Organizations as her summer 2015 reading.

So, there is certainly the beginnings of interest – plenty of dry tinder, but no sign yet of any true firestorm and most certainly no sign yet that progressive organisations are opting to recreate themselves along non-hierarchical lines (note though that Enlivening Edge is itself learning to use the Holacracy structure). Though, of course, a Corbynista might presume there’s nothing new in this. Isn’t it all just some variant on the kind of cooperative structures long used by organisations like Mondragon in Spain or – on a smaller scale – Suma Wholefoods, Britain’s largest cooperative? Actually ‘Next Stage’ structures reach rather beyond the often-ineffective consensus-based approaches which even many on the Left have long since found to be flawed (writing biting critiques such as The Tyranny of Structurelessness and What a Way to Run a Railroad – an analysis of radical failure).

The possibility of drastic reduction in bureaucracy – for example – is something that might be of particular interest moving towards the other side of the political spectrum too. Perhaps unsurprisingly, UK Prime Minister David Cameron’s favourite think-tank, Policy Exchange, has noticed Buurtzorg (and Reinventing Organizations) and their Head of Technology Policy Eddie Copeland praised the organisation, in an article on the future of tech policy post the UK’s 2015 general election. Examples like Buurtzorg “demonstrate that dramatic cost reductions can be achieved while improving services and boosting public sector staff morale at the same time”, he writes. For similar reasons, Buurtzorg was also briefly mentioned in a report on Health in Austerity by left-leaning think-tank Demos.

There’s no particular reason why self-management should be owned by the left or the right. I couldn’t help noticing that Brian Robertson’s new book Holacracy – The Revolutionary Management System that Abolishes Hierarchy names an intriguingly broad range of influences – even including the economists Murray Rothbard and Ludwig von Mises, both somewhere off in a libertarian/anarcho-capitalist direction.

Steve Hilton’s More Human and ‘Next Stage’ organisations – just different labels?

His calls for a ‘revolution’ and for a shift to ‘a post-bureaucratic age’ made me think that David Cameron’s former advisor – the sandal-wearing ‘blue sky’ thinker Steve Hilton – might well have noticed Morning Star, Buurtzorg and other non-hierarchical, non-bureaucratic companies in his recent much-discussed book More Human – Designing a World Where People Come First. Surprisingly, the admirably post-tribal Hilton – who is rumoured to have voted Green and Labour in the past – never mentions the distributed authority of self-managed ‘post-bureaucratic’ workplaces. Though he rails against inhumane conditions at Amazon’s workplaces, he doesn’t explicitly highlight those pioneering workplaces which encourage staff to bring their whole selves to work (one of the three ‘breakthroughs’ Laloux discovered was typical of ‘Next Stage’ organisations). However, Hilton does clearly admire those organisations which take the “more human road” of using business as a force for good.

The Office of the Chief Information Officer, Washington State, USA, has partnered with Harvard Business School to test the hypothesis that ‘Holacracy produces better employee outcomes than hierarchy’

Interestingly, Hilton believes that new Labour Party leader Jeremy Corbyn is asking many of the right questions – which mainstream politicians avoid – even if he’s unlikely to devise answers that build the ‘more human’ world Hilton desires.

Perhaps the liberating wave of non-hierarchical organisations could be a missing piece of the puzzle for them both? It could even rescue Corbyn from the charge that he’s a 70’s political throw-back – if Hilton and co. don’t get there first.

What will it take to break the inertia?

It will clearly take a lot to overcome the residual beliefs most of us have that invisibly sabotage the idea of self-management, as Gary Hamel concludes.

But if the prominent experiment with Holacracy at Zappos proves to be a clear success, this could change the picture rapidly. The CEO of Amazon – which now owns Zappos – is said to be keeping a close eye on it!

Perhaps it will take the successful spread of self-management within the public sector for politicians to really take notice – perhaps the Holacracy implementation at the Office of the Chief Information Officer in Washington State, USA, for example (Lesson: do not use the word ‘Holacracy’, at first; Challenge: “Holacracy has ruined me: I no longer want to work in an organisation that practices hierarchy”; Only barrier: lack of courage to try it. They have partnered with Harvard Business School to test the hypothesis that ‘Holacracy produces better employee outcomes than hierarchy’). Even the UK’s surveillance agency GCHQ has been taking an interest.

Clearly the developments with Buurtzorg – as they ripple out of the Netherlands to the USA, Japan, Sweden and the UK – have the possibility of attracting growing attention. Backing from the UK’s respected Royal College of Nursing is just the kind of public support that is needed. In August 2015 its updated policy briefing on Buurtzorg concluded: “The RCN welcomes the remarkable success of the Buurtzorg model. Its demonstration of nursing capability and self-management in delivering even better patient care is a great boost to the profession’s morale, both in the UK and internationally.”

It would no doubt help to win over the doubters if advocates of reinvented workplaces in the world of politics reinvented their own workplaces. It always helps to know what you’re talking about from direct experience.

On second thoughts…?

On the other hand, perhaps my desire that the world of the policy wonks and politicians makes more of these inspiring developments is looking in the wrong place for transformative change with integrity? Isn’t politics so often a laughable pantomime of simplistic black-and-white thinking, grabbing credit for others’ successes, zealously following your leader perched atop a command-and-control hierarchy? Well, yes…

Yet I suspect Steve Hilton is right when he says “if we really want to change the world – if we want to make it more human – then we must start with the people who call the shots. That means government.” Hilton previously even wrote a book – Good Business – about how business could be used to change the world for the better. But now – in the light of his government and business experience – he believes he was wrong in this faith in this role for business: “Business does not run the world. In the end government sets the rules by which business – and everyone else – operates.…”

In the end, it seems to me that either Left or Right can – and should – embrace the enlivening transformation offered by ‘Next Stage’ organisations – and whoever does so will be aligning themselves with a liberating current that is now validated by numerous cutting-edge organisations. And the ‘Next Stage’ mindset – and its accompanying novel capabilities – would likely help them make far greater headway against today’s ‘wicked’ problems, into the bargain.

Follow me on Twitter: @MatthewMezey

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