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Self-organization – practical experience

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Self-organization – practical experience

We have explained why self-organization is good for companies and how it can work in our article “How self-organization works in companies: The 10 basics”.
Now let’s take a look at how self-organization has proven itself in practice. Who has already had experience with self-organization, how did the company approach it, what went well and what didn’t?
In Germany, there are well-known companies, from SMEs to large corporations, that have converted their management to self-organization or are at least experimenting with it in smaller organizational units: trivago, MovingImage24 GmbH, Ministry GmbH, Heiligenfeld Kliniken, care4me, soulbottles, Hema, in some cases also Zalando and even departments of Deutsche Bahn. And numerous companies around the world have also switched to self-organization, for example: Buurtzorg, Haufe Umantis, Netcentric, Spotify, Morning Star, Favi and Zappos.
We take a look at the stories of three companies as examples: Morningstar, the world’s largest tomato processing company, the US online shoe retailer Zappos and the hotel metasearch company Trivago from Germany. All three have switched to self-organization and have had very different experiences with it. We looked around to see what founders or employees who were there when self-organization was introduced had to say and can therefore report first-hand.

Morningstar

Doug Kirkpatrick, author of Beyond Empowerment: The Age of the Self-Managed Organization, Professor of Human Resources Designation tells the story of Morningstar, which he himself experienced in a TEDxchicco speech. We would like to reproduce some relevant excerpts here:
In 1990, Chris Rufer called the employees of his Californian farm together in a dusty construction trailer. He had an idea. Her name was Morning Star. And this idea was revolutionary. – Rufer revealed to his two dozen colleagues: “There will be no more boss!”
The only thing that should guide the new organization was its mission statement. Our colleagues initially found this idea radical, because nothing like it had ever been done before.
Rufer gave the company two basic principles:
  1. People should not use coercion or violence against each other.
  2. People should stick to the agreements they have made with each other.
The colleagues discussed it and at the end of the evening none of those present had any reservations; they decided to give it a try. Kirkpatrick describes this moment as the birth of self-organization.
Morning Star now has 400 employees, several factories and supplies 40 % of the US demand for industrial tomato paste and sliced tomatoes and is even the largest tomato processing company in the world. All this works perfectly even without a human boss.
And because they had had very good experience with self-organization over many years, the Morning Star Self-Management Institute was founded in 2008 to spread and support the idea of self-organization.
The basic idea is freedom. For example, no one can be dismissed. And no one can give instructions to the other. Morning Star trusts that its employees can manage themselves.
Kirkpatrick: “We have to ask ourselves two questions. Firstly, if people know how to do their job, why do they need a boss? And secondly, we know that people in their private lives are also capable of making life-changing decisions without a boss. Whether they get married, buy a house, what career they want to pursue – they decide all of this without a boss. But when they arrive at their workplace, they are suddenly too stupid to work without a boss. Why is that?”
However, Kirkpatrick also says that self-organization is not for everyone.
For example, it is difficult for people who like to give orders to operate in an environment where no one is forced to follow their instructions, he says, adding thatleadership comes from trust, not position – and this trust has to be earned first. People with a lack of initiative would also quickly get into difficulties, as self-organization requires active communication.
According to Kirkpatrick, it is not about creating a work-life balance, because after all, work is also part of life. It’s more about making work something that you can also enjoy.
At Morningstar, we turn work into play: for example, we work with so-called score cards, which – roughly speaking – indicate progress in projects. These scores are similar to those of computer games and promote the playful motivation of employees.
Kirkpatrick often encounters skeptics. The fear of losing control of the organization is particularly high. However, if the company complied with the statistics from the Gallup study (we wrote about this in our article How self-organization works in companies: The 10 basics about it ), then this would mean that 70% of employees would come to work uninspired and unmotivated. This would mean that the management already has no real control.
Kirkpatrick asks the question: “Who is more likely to discover a danger or an opportunity in the workplace: a manager who comes by three times a day or an employee on site who notices what is happening?”
At Morningstar, employees reach agreements on an equal footing, i.e. agreements on how they work together. This means they are optimally networked. It is no coincidence that Kirkpatrick compares the organization to a spider’s web: if something “breaks” or goes wrong, it is quickly repaired because the other employees quickly take over. That is more control than in other companies. In this respect, Morningstar is a self-healing organism.

Zappos

Self-organization only works if the employees want to organize themselves; if they actually support this form of organization.
If this is not the case, the new order will fail and the company may even have to backtrack.
This is what happened at the online shoe retailer Zappos:
Founder Tony Hsieh was enthusiastic about the idea of self-organization using Holacracy and introduced the latter – from the top down. He announced that there would be no more managers from now on. However, he was unable to spark any euphoria among his employees. Many had helped to build Zappos and had grown into management positions – and now they were suddenly no longer needed?
The introduction of Holacracy not only made managers feel insecure.
Jennifer Reingold, Senior Editor of Fortune Magazine, reports on the insecure job situation in the Holacracy phase. For example, employees had to collect points from other employees. If they failed to do this for a few weeks, they were fired.
A former employee, consultant Bud Caddell, described the Holacracy period as follows: “I found it extremely dogmatic, rigid and overly complex. And it shifted the focus away from our customers.”
Despite resistance from employees, Hsieh prevailed. And that was not the end of it: one year later, he ordered the Teal Organization. (This is an organizational form from Frédéric Laloux’s “Reinventing Organizations”: Teal, or petrol, refers to the integral evolutionary stage of Laloux’s model and describes an organizational form that is a living organism based on the principles of wholeness, purpose and self-management).
This completely overwhelmed many employees: first Holacracy and now Teal? People wondered whether the unwelcome changes would ever end.
CEO Hsieh was aware that he would lose some good people, but he assumed that employees who did not want to participate would slow down the desired progress. He gave the order: Employees who did not want to accept Teal were asked to leave the company. On average, 10 % to a maximum of 20 % of employees leave a company during such changes. The figure for Zappos was significantly higher: 29% left, 18% received buyouts.
This had consequences: Zappos had previously been among the top 100 employers on the Fortune list for 8 years in a row, but after almost 30% of the company’s employees left, this was no longer the case. On the contrary: it became difficult for Zappos to find employees at all.
This is one of the reasons why Zappos has now returned to the classic management style.

Trivago

Working at Trivago sounds like a club vacation: In addition to the colorful offices with playful furnishings and a jogging track on the roof that are now common in many places, Trivago offers its employees free snacks and – get this – free beer. There are no fixed working hours. The company outing is – how could it be otherwise – a joint cruise. And to top it all off: If that’s not enough vacation feeling – employees can take as much vacation as they want!
That shows: A lot of trust is placed in employees and they are given responsibility. One of the founders, Rolf Schrömgens, has a clear stance on this: “Time is not a measure of productivity.” After all, it’s about what an employee does for the company and not how much time they spend doing it.
Trivago is an attractive employer. How can this be achieved? What are the challenges?
The German hotel metasearch Trivago was founded in 2005 and has since expanded worldwide. It now has over 1000 employees, was listed on the US technology exchange Nasdaq and is worth over 5.1 billion dollars.Trivago is owned by Expedia and the three founders.
In July 2017, founder Schrömgens spoke to Wirtschaftswoche about his company’s experience with self-organization and named the

4 cornerstones of his leadership

1. abolish hierarchies

Schrömgens assumes that within classic hierarchies, sooner or later only power is secured and that many decisions are therefore largely based on the personal benefits they bring to the decision-maker. In this respect, hierarchies tend to harm the company.
That’s why Trivago does away with rigid positions, hierarchies and job titles. Responsibility is constantly redistributed on a project basis.
As in all agile, self-organized companies, leadership is not understood as a controlling authority with the power to give orders. Instead, managers support and motivate employees to do their work well.

2. separate management and expertise

Trivago identifies the skills and potential of its employees: Who is on top professionally and who has the ability to motivate their employees?
“Specialists solve tasks, management experts steer power in the right direction,” says Schrömgens in Wirtschaftswoche. His aim is to work on an equal footing, as everyone contributes their different skills and we need each other.

3. not every good employee is also good for the company

Self-organization must be supported by the employees; after all, they must organize themselves and be willing and able to do so. In this respect, employees who do not agree with self-organization and who want fixed rules, structures and hierarchies are out of place. According to Schrömgens, Trivago mainly hires young people in order to find employees who do not yet have any or so many established patterns and ideas. According to Schrömgens, people who have worked in fixed corporate structures for more than two years already have these patterns in their heads.
This is debatable, because attributing characteristics to people based on their age – whether positive or negative – falls into the realm of prejudice – the unconscious bias.

4. avoid false compromises

Here, Schrömgens reports on a classic sales department within his company that was not self-organized, but quite the opposite: tightly managed and competition-oriented. When several attempts to change this culture failed, the decision was made to outsource the department to a separate company. This allowed Trivago and the sales staff to maintain their cultures and no one had to make compromises that might not have worked.

 

Here are a few more points on how self-organization works at Trivago:

Liquid structures

The structures at Trivago are very changeable: the company works on a project-oriented basis, there are job rotations and evaluations by employees. For employees at all levels, this means that nothing is safe in the long term. This liquid structure is described very well by the Trivago credo: “All rules that are considered good and right today can be overturned tomorrow if necessary.”
According to Wirtschaftswoche, Schrömgen’s goal is: “…to create and maintain liquid learning structures.”

Reviews

Salaries are also flexible, as Schrömgens explains: “We don’t negotiate salaries as a matter of principle; this leads to a misallocation of resources, because in the end, the best paid are those who can negotiate best, not those who work best. The basic salary at Trivago is below the industry average. What is paid for this is currently being determined: Humans and algorithms constantly measure the extent to which employees are aligned with the company’s values, including through evaluation by colleagues. If the reviews are positive, the salary is well above the industry average.

The challenges

This liquidity has many advantages, but also some disadvantages that former employees complain about: communication is not controlled enough, so that information sometimes only reaches the recipient in fragments or even in the form of contradictory statements. In addition, it is often not clear what falls under whose responsibility. And due to the flat hierarchies, there would naturally be few career options.
Nonetheless, Trivago receives good ratings in employer reviews.

 

Our video: What are Welutions actually?

Our conclusion

The introduction of agile structures, such as self-organization, requires a great deal of sensitivity. Please note:

The agile mindset:

It is not enough to simply introduce the methods; the mindset of the management and the employees must match. At berliner team, we work on both the structures and the mindset during change processes.

Individual world solutions (we solutions):

Every company and even every department is different. It is important that the way in which the new form of self-organization with its structures or tools is put into practice must suit the company. When we at berliner team accompany such a process, we make sure that we work together with the management and employees to find the organizational form that best suits the department’s tasks, the environment and the employees.
This can even mean that within the same company, some departments are self-organizing and others are not. We at berliner team are of the opinion that self-organization is not a dogma. There is no “one best way” of organizing, as Frederic Leloux sometimes suggests, but depending on the environment, the task and the value systems of the players involved, self-organization may or may not be the best method.

Change management:

It is important to involve employees in the change process. Yes, life is not a bus stop where you can stand still and wait to be picked up. At the same time, however, the bus driver does have the task of thinking about what it takes to give his passengers a lift. A new organization chart and a rule booklet, both sent by email, are not enough to introduce a functioning new form of organization. As in so many change processes, many companies do not think change management through to the end.

Would you like to introduce agile structures or self-organization in your company?

Would you like to find out more about self-organization in practice?

We have put together some links to articles and videos for you. Have fun with it!

The authors

Oliver_Grätsch_550x550px
Oliver Grätsch
Michelle 550
Michelle Templin
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Christian Grätsch
Matthias-Beikert-550-550
Matthias Beikert
Susanne_Grätsch_1_550x550px
Susanne Grätsch
Monika Bt 550x550
Monika Steininger
Kai_Hübner_550x550px
Kai Hübner
Philipp Andresen 500x550
Philipp Andresen
berliner_team_Isabell_1
Anna Isabell Arendt
Claudia_Schmidt_550x550px
Dr. Claudia Schmidt
Inga_Kühn_550x550px
Inga Kühn
BT_Web_Team_Knebel_550x550
Kassandra Knebel
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Claudia Lehmann
Komplettes Team

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