People who are treated as followers act like followers. As followers, they temper their decision-making, initiative, and ownership. They have little incentive to give the utmost of their intellect, energy, and passion. Then we blame them for a state we've created. L. David Marquet.
To create better companies, we first need to understand the game we're playing, who the players are, and how it impacts our motivation to do our best work.
The game
Welcome to the game of business, where you have the chance to win it all! Some players have already started, but that shouldn't stop you from catching up quickly. There are some rules around somewhere, but you'll figure it out as you go. All you need to do is follow how others are playing, and understand the two players:
The Companylord: Having started playing some time ago, the Companylord can own or manage part of a company, an entire company, or multiple companies.
The Tenant: The default starting position for a newcomer, the tenant starts with very few assets or influence. The tenant must carefully navigate past the Companylords as they can severely limit their progress or even end their game early.
In this game, the incentives for Companylords are to keep the maintenance costs low (training and tools) while carefully but steadily increasing rent (productivity outputs). The motivation for the tenants is to carefully follow the rules set by the Companylords to be seen as a good tenant and keep their accommodation (job).
Over time, Companylords may notice diminishing returns from the tenants as they struggle to keep up with the output hikes. At this point, they may decide to hire outside help to keep the tenants motivated and give them the tools to keep up with the output expectations. This presents a problem for the outsider who sees that only focussing on helping the tenants produce more outputs is not a good strategy. The outsider has to then choose between helping the Companylords perpetuate a game that only a few can win or helping the tenants cope with the increasing challenge of staying in the game. Unless of course, we can create a better game for everyone...
Sidebar - The luxury of layoffs
I've been fortunate enough to step out of the game a few times, having gone through several restructures in different flavours over the years. The largest fortune I amassed from these events was 3 months without work or income, which became the best time I've had in the last decade.
Walking our dog through the Rotorua forest one morning while discussing the prospect of having to sell our home and live in a caravan, my wife and I were filled with a strange sense of peace, realising that the riches we were seeking in assets and income was nothing compared to the riches of relationships and time. Despite the grim realities we were facing, we finally appreciated what's truly important.
Quick game's a good game?
Without the desire to play the game of amassing status and power, it becomes clearer each day how broken our attitudes toward business have become. Instead of playing in the infinite game of life with its consequences for every action to the people around us and our planet, we play shorter and simpler games that are easier to win, and even easier to rig. Those who have been playing for longer understand how to bend the rules in their favour, acting as if they're beholden to some immutable force that defines how we play.
In this game, there are few winners and many losers. After playing for a while it becomes clear that the game is not just imbalanced towards those who already have status and power, but also that the game isn't very good. We forget what a powerful force for good business can be, for customers, staff, and the community around us. As a result, our world is riddled with dehumanising companies putting profit before people, served by disengaged staff that cares little for customers because they haven't been cared for, so the cycle of poor performance continues.
What would a better game look like?
If you feel like a tenant, renting your career from a series of Companylords while you slowly but steadily disengage and accept the fate it's just the way the game works, think again. There are countless examples of companies across all industries that have disrupted the status quo, putting people and purpose before short-term profit and creating environments where people can do their best work.
If you're in the position of a Companylord, managing tensions between executive expectations to reduce cost and increase profit, and staff expectations for support and development, know that they don't have to be mutually exclusive. Some of the highest-performing companies in the world have seen lower costs and higher profits as an outcome of putting people first, providing them with agency, ownership, and purpose to enable greater outcomes for everyone.
While there is no single set of rules we can copy, many companies playing by a more effective set of rules have applied the principles of ownership, meritocracy, and markets to reach new levels of performance and engagement.
Ownership
When we have a sense of ownership, we have the intrinsic motivation to go beyond the minimum to amplify the value of the thing we own, as we reap the rewards of the appreciating asset. Unlike the rental tenant who is motivated to meet the landlord's requirements to keep their accommodation, homeowners are motivated to continuously improve their home as they stand to benefit in the long run.
Although not everyone can be a business owner, we can build companies where every team member has the autonomy and financial upside that allows them to have a stake in the game. This is key to unlocking entrepreneurial energy and creating a company that is fit for the future.
Meritocracy
We need companies where excellence is rewarded, not kissing ass or playing political games to increase our influence and status. We need companies where influence and compensation are correlated with competence and value-added, untainted by power politics and personal bias.
An example is how we follow and unfollow public figures on LinkedIn. In an open market of ideas, the best and most influential rise to prominence, so long as they create meaningful value for their followers. When someone we follow is no longer contributing valuable content, we move on. Imagine, for a moment, if leadership positions fluctuated based on feedback from their followers, free from the fixed formality that keeps many ineffective leaders in their positions for far too long.
Markets
In a market economy, consumers have lots of choices, and it's clear that open markets are much more effective at aligning needs and resources than centrally planned economies. And yet, many of our organisations operating in the free market more closely resemble a centrally planned economy in our structure and operations. We centralise planning, budgeting, and internal services in the name of efficiency and good governance, with an army of resources (people) to serve the organisation's needs.
Here are some examples of how you can embed open-market principles in the way you operate your organisation:
1. Help leaders to see and understand the limits to centralised, top-down decision-making in a complex and dynamic environment. See this blog for more on the impact of over-centralised bureaucracies.
2. Test the merits of strategic initiatives with an internal opinion market. See how people compare competing projects, and how they rate the probability that a new initiative hits its objectives. See examples of internal intelligence sourcing from Intel, IBM, and Adidas.
3. Ensure internal innovators have access to multiple funding sources, and engage the crowd in making funding decisions.
4. Over time, slowly expand the jurisdiction of the crowd. Let it define company values, rank the promotability of senior leaders, suggest acquisition targets, and identify low-value bureaucratic rituals.
We need organisations that can harness the distributed intelligence of their people, and the decentralised adaptability that open markets provide.
If you're interested in learning more about companies that have applied these principles and how you can cultivate a high-performing culture of your own, get in touch at hello@culture-coach.org
If you're not yet convinced there is a better way to do business or think this is just some utopian fairytale, check out these books to ignite some inspiration.
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