Are Self Managing Organizations a Hype?

In September Heiske participated in a MBA talk with subject ‘Self Managing Organizations’. This conversation was organized by the VU University Amsterdam as Executive Education. You can read the discussed questions and answers about self managing organizations and Heiske’s add ons below.

Are Self Managing Organizations a hype?

It depends. We see organizations moving to self managing teams for several reasons:

1. We need to innovate faster and a hierarchy has a negative impact on speed of innovation.
2. Our worlds has an increased complexity and due to this it might be better not to make all decisions at the top of an organization, but empower people to make the best decision in their own fields of expertise. Empowerment is beneficial to all the knowledge workers in our current work environment as well.
3. Thanks to IT staff has access to information required to make the best decisions

So, it is not a hype. Self Managing Organizations help to adapt to changing circumstances. However, it is not beneficial to all organizations. Take for instance a team in a plane. Imagine one of the stewards asking: ‘who will fly the plane today?’ Having the whole team trained as pilot is not feasible, right? And the same applies to an ER team. They work best if they all have their own allocated task in their field of expertise when the shit hits the fan.

Do self organizing organizations share a common DNA?

• All successful self managing organizations start at the top. They have a leadership team that believes the old hierarchy is not contemporary anymore and they also trust and believe everyone just wants to do a good job. Therefor they empower staff to do what they think is best for the organization. There are examples where self managing organizations started bottom-up or where middle management initiated it in a team or business unit. Bol.com is mentioned as example. But there the initiative was not blocked by management; they saw it as some kind of pilot. You can say that there was support from the top to a certain extend. The initiative middle management took within a Business Unit required a lot of effort and due to lack of support it stopped when the key-manager left. So, you need consistent ‘believers’ in the top.
• They all have a clear vision of where they wanna go. The vision is more internalized across various levels of the organization than other organizations.
• Management has a different role. They are more coaching and facilitating instead of directive and controlling.
• Self managing organizations are not bound to cultures. We find successful organizations in China, Russia, India, Europe, South America and the US.
• They are not bound to a certain industry. It is not limited to IT or organizations with knowledge workers. Also in production environment there are successful self managing organizations.
• These organizations are not an anarchy. They are structured with clear rules and peer control.
• You can say that in these organizations artificial hierarchy is replaced by a natural hierarchy. There is always hierarchy in groups, so you will see hierarchy in these organizations as well, but then it is more an informal hierarchy that is based on expertise or personality.

What are the conditions for self management?

Art Pieter de Man did a lot of research around self managing teams. He describes 14 pre-requisites in his book:

1. Have a clear and internalized vision
2. Be clear on tasks and mandates
3. Ensure having access to relevant information. This is a challenge for many old organizations. They have to clean up their IT first to be able to transform; IT that looks like spaghetti is an issue for implementing a self managing organization
4. Have tools and knowledge to interpret the information
5. Presence of common building blocks to ensure alignment
6. No need to make critical (non-fatal) decisions
7. Assign management tasks to teams
8. Have effective team behavior
9. Organize knowledge sharing
10. Have a low dependency between teams
11. Have a high interdependency within teams
12. Level of trust to provide feedback on team level
13. Managerial trust
14. The will to implement self managing teams

Important is to call out that there is no standard that you should use. Yes, we are aware of holacracy and other models, but we are convinced that you need to figure out what works well for you.

ING for instance did a world tour to learn what other organizations were doing and created their own mix. This is also in line with what I have experienced myself when I was working for a large multi-national. We transformed the supply chain within the EMEA region and they asked me to copy-paste the same approach to the US region. That simply doesn’t work. You have to go through the journey yourself; the learning process. There is no off the shelve solution that short cuts the process for transformations like these.

What type of employees is required to make self managing organizations effective?

Well, nearly everyone can deal with the responsibility related to it. Think about how many people have their own house? That requires dealing with responsibility. The main question is: ‘do they want to work in such an organization?’

It will take 1 to 3 years to transform to a self managing organization. Typically 10-20% of staff will leave. They want to have power or the opposite: they do not want to have the responsibility. So, self managing organizations are not for everyone.

There is no indication that stress levels or the number of burnouts are lower in these organizations. Imagine colleagues firing each other, solving conflicts together, making decisions and managing budgets. This can increase the perception of stress.

What are the main reasons for organizations to turn back to a hierarchy?

1. Leadership change. Especially if the leadership hasn’t done a good job with their succession planning.
2. Crisis. Circumstances might require top down control. Staff used to autonomy will disengage or leave.
3. Growth. Especially organizations that scale up rapidly.
4. Regulations.

We don’t know yet to what extend it is sustainable. Within the Industrial Era we started working with a clear hierarchy. It took 40 years until we could do research on how performance matured. For self managing organizations we are currently in times of experimentation. It might require 20+ years till we have evidence that it can be successful.

Summarizing the above: there are successful self managing organizations and this can also be beneficial. But is requires a learning journey; a true transformation that is driven top down.

If you decided to move towards a self managing organization: good for you. You have all our respect. You dare to be different and experiment! Chapeau! And in case you need support in your journey, we are happy to take on this challenge together and guide your organization through this transformation!