A chance question during a seminar exposed a cultural norm at Menlo Innovations that confounds most corporate thinkers. Menlo has no hierarchy. They are a team in the truest sense of the word.
Menlo Innovations is a software design and development firm in downtown Ann Arbor, Michigan. The company was started in 2001 in the midst of the dot-com bubble burst at a time when everyone assumed the entire industry was heading offshore. Menlo had a different idea. Our focus would be process and culture with a mission to "end human suffering in the world as it relates to technology." Our goal was to return joy to one of the most unique endeavors mankind has ever undertaken: inventing software.
From our perspective and experience, there were three forms of common technological suffering:
1. The people who sponsor software projects often lose control of their projects and are left with only one option to control to out-of-control costs: cancel the projects.
In response, we crafted an inviting paper-based planning system that invites project sponsors into the planning process. Also, by engaing the sponsors in a weekly show & tell, they get to touch the software as it develops. By keeping the sponsors engaged and in charge of planning decisions, they keep their projects on track and under control.
2. The people who use the software created are often frustrated because the software is difficult to understand, impossible to learn and doesn't do what is actually needed.
In response, we created a High-tech Anthropology® practice to compassionately study users in their native environment, learn their habits, vocabulary and goals and design the user experience so that the softare thinks like the user rather than make the user think like the computer.
3. Finally, we wanted to end the suffering of the people that do the work of designing and building software.
In response, we eliminated hierarchy, fostered a structured process that eliminated ambiguity, put the team in charge of the space, had the leaders sit out in the room with everyone else, specifically eliminated fear as a tool of management, created a sustainable 40 hour work week, allowed new mothers to bring their babies to work all day every day for several months, forbid team members from checking email while on vacation so that they could enjoy their time away, paired our team members so that no one felt like they had to be in the office for fear that something would stop that day, switched the pairs weekly so that cross-training and mentoring would become the cultural norm, and put the team completely in charge of hiring, performance evaluation, promotions, and yes, even terminations. The leaders are there to advise and influence rather than "tell the team what to do."
Our unique workplace culture attracts tour visitors from around the world. In 2012, Menlo hosted 241 tours for 2,193 visitors. This year we are on track to host 300 tours for nearly 3,000 people.
The primary trigger was quite personal and painful for me. I started his software career during my high school years in the early 1970's. It was a heady time as there was much excitement about the future of information technology. In my 20's and 30's though, I hit a personal trough of disillusionment, as projects I was involved in just weren't succeeding in the ways I thought was possible. As I looked around the industry, I realized everyone else was having similar challenges. I knew there was a better way and was determined to find it. In 1999, as VP of R&D at a public company, I partnered with James Goebel to reinvent the way my software team was organized. In this radical change, was born the fundamental culture that would be used at Menlo Innovations. A new space, a new kind of team, a new process, and wonderful results focused on what Menlo now likes to call the "business value of joy."
Based on radical changes that Menlo founders James Goebel and I experimented with at Interface Systems between 1999-2001, we founded a company with a new kind of organziation.
2001 - James Goebel and I lose our jobs in the bursting of the dot-com bubble.
2001 - Menlo formed in the basement of my home.
2001 - Menlo secures our first open office enviroment in a 2000SF storefront on downtown Ann Arbor. The space was wide open, no cubes, walls or offices. One big open room. Programmers worked two to a computer. These programming pairs were assigned the assignments switched every five days.
2002 - As the company expanded, Extreme Interviewing was put in place to rapidly add people who fit the culture. Large groups of candidates were brought in for a mass interview, paired with other candidates and instructed to "make their partner look good." The team builds the team, no HR, no management decisions, but rather team decisions. This was critical given the nature of the paired environment. Each team member had to feel personal responsibility for their partner's success.
2003 - Menlo adds a "High-tech Anthropology®" practices whose sole focus will be the user's experience of the softare Menlo is creating. These HTAs will focus all of their attention on the users, while the programmers build the technology.
2004 - HTAs begin working in pairs as well. Quality advocates now join the Menlo team, as well as professional project managers.
2004 - Menlo begins their now famous "leveraged-play" model where they trade away up to 50% of their cash revenue for stock and royalty. A startup called Accuri Cytometers takes them up on this contract option.
2006 - Menlo triples their space to a 6000SF facility in the Kerrytown neighborhood of Ann Arbor. Growth continues.
2011 - Accuri Cytometers sells to their largest competitor for $205M. A big win for Menlo's leveraged play model.
2012 - Menlo triples their space again to 17,000SF right near the campus of the University of Michigan. Portfolio at Penguin Random House engages me to write a book about Menlo's culture. The book will be called Joy, Inc. - How We Built A Workplace People Love.
Throughout our history Menlo has taught it's culture to the world through formal classes and tours. During a weeklong Menlo class with Nationwide Financial in 2007, one of Nationwide's managers asked me a chance question: Who do people report to? After all these years, I didn't know how to answer the question. As the class was being taught in right in the middle of the Menlo Software Factory, I asked several Menlonians to join the discussion. They came over to the class not knowing what to expect. I asked the Nationwide Manager to repeat the question to the visiting Menlonians. They didn't know how to answer, but eventually pointed to each other. This simple, innocent question revealed an important truth about the culture we had built: we had a team. A team that trusted one another. A team that cared for one another. A team that didn't need hierarchy. The manager refused to accept this answer, and told them they didn't understand what he was asking, so he probed deeper: How makes hiring decsions? We do, the Menlonians answered. OK, who makes promotion decisions: Again, we do. How about firing: we do. The manager was confounded.
Dr. Jeff Liker (author of The Toyota Way) was quoted in an article that compared Menlo to Toyota saying:
"Any piece you see in Menlo you'll see somewhere else. What you won't find [elsewhere] is all the pieces working together…."
What you often find at Menlo are things put into practice that some people read about, write about, talk about, but most never actually DO them. We do.
What are some of our key innovations?
The space: one big open room, no walls, offices, cubes. (Although we do have 3 glass-walled conference rooms for quieter conversations with our clients). Pulldowns from the celings, lightweight aluminum tables. What is this important? Space affects how we think about work, if our space is flexible, our minds are flexible. Our team is flexible. Most spaces, even award winning spaces, stifle team creativity. Our space energizes.
The noise: Our team works in pairs, and chooses to put the tables in close proximity to one another. The team is in constant conversation. We don't allow earbuds or headphones. Why is this important? We are counting on the serendipity that results from people overhearing the ideas of others. Trust is also stronger when we work together all day long.
The team structure: We work in pairs and we switch the pairs every five working days. Why is this important? We strive to avoid Towers of Knowledge. By working in pairs and switching the pairs, no one person can horde knowldge. It gives us a very flexible team. It allows people to take vacation without slowing down a project. It allows team members to easily move into other projects and never feel trapped in a "tower" that one day feels like a "prison".
40 hour work weeks: Because we work in pairs and switch themweekly, it gives us the flexibility to add more people to a project when a project is behind or a customer wants to accelerate a project. (Watch this video for a deeper explanation). Why is this important? Most teams can't scale this way, if they need more done, they must work overtime. They burn out quickly and tired programmers put more bugs in than features. Schedules slip, qualkity and morale plummet, projects get cancelled. Our inudstry has coined the term "death march" in a business comtext, we celebrate tired programmers brining sleeping bags to work. In our view, this is very sad and counterproductive. It leads to massive software failures that threaten the very existence of some companies. Think about the debacle that occurred at Knight Capital Group.
Story cards: No project work can occur at Menlo unless and until the work is described on a 5 1/2" x 8 1/2" handwritten index card. Why is this important? Project teams are often confounded by "hallway project management" where new priorities are set verablly during casual hallway conversations. This isn't possible at Menlo. This creates such a clear environment for planning. Using paper based artifacts that are handwritten appeals to the tactile nature of human beings. This system is very democratic as there are no learning barriers to using it!
Weekly estimation: Before a story card can be selected for work, it must first be estimated. Our team gathers wekely in an estimation session to estimate how many hours a card will take if assigned. Why is this important? We should never start working on things unless we have a good guess how much time it will take to do. Most softare projects spin out of control and miss deadlines because estimation is not part of the standard practice.
Planning game: Our unique paper-based planning system using photocopied story cards that are folded relative to the size of the estimatesa nd placed on planning sheets that are sized to allow no more than 40 hours to be planned for each pair of resources assigned to the project provides unambiguous scope control. What is this important? Scope creep is ledendary in our industry. Much of this stems from ambiguous planning sessions where scope is selected based on priority, but with no consideration given to relative cost. Thus, no real economic tradeoffs are made, and fantasy schedules are followed until they blow up. Death marches follow.
Weekly Show & Tell: Once a week, we meet with our customer and have them show us the work we did the previous week while our team watches. This connects the team doing the work with the people who are paying for the work. Why is this important? Staus reports never adequately communicate challenges and problems. Putting everyone on the team together once a week eliminates misunderstandings.
The key challenges for eliminating hierarchy are the ones you'd expect. How do people on the team give productive feedback to one another? We had a to build a team that knew how to be open and honest but do so with dignity and respect. We practiced this often in our pairs, and reached out to VitalSmarts (authors of Crucial Conversations and Crucial Conversations) to give us some formalisms in interpersonal communication. We buy a lot of books on organizational design. Pretty much everyone at Menlo has read Five Dysfunctions of a Team by Patrick Lencioni.
Our physical environment also helps. With no offices, cubes or walls, our proximity with each other helps build the trsut needed to have a team without hierarchy. Founders James and I share the same space with the team and have the same size tables as everyone else. There are no trappings for the founders.
We hold many lunch & learns to further explore teamwork and help build trust.
By pairing, we get a chance to practice interpersonal communication every minute of every day. By switching the pairs each week, we avoid cliques forming, and everyone has to learn the different communication styles of all other team members. They have to learn to care about each other.
We also had to teach our clients why all of this was so important to the success of their projects. We began hosting tours right from the start so that potential clients could explore our strange culture firsthand. Those who took interest became great clients. They believe in our culture, our approach and the positive results it generates.
Conflicts arise often during the paired work. Most conflicts are resolved within the pair. If not, another pair is asked to help. Sometimes they "volunteer" without being asked if they sense an escalating conflict that doesn't seem to be headed to resolution. If a larger conversation is needed, someone may call an all team meeitng by calling out "Hey Wilmut" (on the Wilmut team -- a project code name). The team will stop working and say "Hey Ted" (if Ted was the one who called the meeting. No one has to leave their chair. The meeitng commences, the discussion is had, the conflict is explored, consensus is reached, the pair respects the decision of the team and everyone moves on.
The leaders on theteam (and there are many) are seen as teachers and influencers. James and I are more often now the tecahers of teachers. The way you move up to "senior staff" level is to be recognized by your peers as a good teacher.
When someone joins, we must give them some time to adjust to our culture. We must give them feedback as to how they are doing and where they need to improve. If they never adjust, they must move on. We must do this with dignity and respect. We must in this instance both honor our culture and the person. It is never easy to let someone go, and it shouldn't be. It should be a thoughtful and respectful decision.
Menlo is intense. We are working the entire day. We get a small break at our daily standup meeting at 10am, a break for lunch at Noon, and 3pm walkies breaks the long afternoon into two pieces. By 6pm our room is typically dark and locked. The team is tired at the end of a day. But it's the good kind of tired.
The key benefit of this approach is that it supports our defintion of Joy: we want the work that we do to get out into the world, be widely adopted and delightfully used by the people for who it was intended. This is a very high bar for an industry that regularly fails to produce any results at all!
How do we meaure joy? Much of it is anecdotal. We hear about how the products we've created are delightfully easy to use. This video is a good example of that.
Our phone does not ring with problems. While many software team reports hundreds of emergency calls per day, we haven't had 10 in the history of our compnay. The last time the Menlo team recalls a true softwasre emergency is 2004. This produces a upward spiral of morale as our team knows they have a sustainable process that produces great results.
In 12 years of business, we have worked 40 hours of work per week, never weekends, and have never had to deny or delay a vacation request. All this while satisfying the needs of our customers. We have the benefit of a humanly sustainable pace for our team that allows them to regularly and systematically produce the quality results we seek.
What we have achieved is a shared belief system, a powerful culture that everyone reinforces. Our systems rights itself when tipped, because everyone on the team wants to see Menlo live to see another day.
Lesson #1: An intentional culture defeats the typical default culture every time.
Lesson #2: In order to create an intentional culture, you must custom fit everything you do to that culture, including:
- Understanding why you exist. For us, we believe we can bring joy to the world with beautifully designed software that actually works.
- Custom fitting an interview process to your culture. For example: We pair our team, so we pair our interview candidates during the interview.
- Custom fitting your physical space to your culture. We beleve in transparency, so our tam all sits in the same room. All financials, project plans, etc. are posted on the walls for everyone to see.
- Custom fit your team structure to the cultural intention. Fo example, we want to delight the end users of the software, so we crafted our High-tech Anthropology® practice to understand the end users by studying them in their native environment.
Lesson #3 - Learn to be storytellers. Use storytelling to reinforce your culture within the company and with the world. Open your culture to the world, invite them in and tell them your story.
Lesson #4 - Craft your culture along the lines of an HVAC system: Pump fear out of the room, filter out ambiguity, pump safety back in. If the team feels safe, they will begin to trust one another. If they trust one another, they will collaborate. If they collaborate, you will get teamwork. With teamwork, you can get innovation, creativity, imagination and energy.
Lesson #5 - Use simple tools that work well for humans. Many of our project management systesm are paper based.
Lesson #6 - Establish the cultural norm that says "Make Mistakes Faster." Embrace change by encourgaing the attitude of "let's run the experiment."
Lesson #7 - Kill meetings. They are mind-numbing, spirit-draining, energy sucking tools of management. The only meeting we have every day is called by a dartboard alarm clock at 10am, controlled by a Viking helmet token, and typically lasts 13 minutes of less.
Lesson #8 - Eliminate chaos and destroy bureaucracy. Replace both with simple, well understood structure.
Lesson #9 - Teach your culture to others. You will learn more about your own culture by teaching it to others.
Lesson #10 - Seek teachers. For us, they are authors. They are also the professors at the Positive Organziational Scholarship team at the University of Michigan Business School. They are also the founders of other great organziations like Zingerman's and IDEO.
We would like to thank the following people and companies for inspiring us:
Kent Beck, author of Extreme Programming Explained
IDEO, and the fine folks at Nightline who introduced us to IDEO via their famous Deep Dive episode recorded in 1999.
The founders of Zingerman's, Ari Weinzweig and Paul Saginaw.
Eastern Michigan University Professor Diana Wong, founder of Sensei Change.
The Positive Organziational Scholarship team at the Ross School of Business, University of Michigan. Founder Robert Quinn, and Executive Director Chris White.
Patrick Lencioni, Peter Senge, Peter Drucker, Tom Peters, John Naisbitt, Simon Sinek, US Navy Captain Michael Abrashof, Leigh Buchanan, Shawn Achor, Traci Fenton
Check out Menlo's YouTube channel:
June 2013 Inc. magazine cover story of 25 small companies that believe they can change the world: (check the culture column and click the link)
July 2013 New York magazine cover story on "the bossless office", their word not ours!
Huffington Post TV picked up on this a couple of days later:
As did Tom Ashbrook of NPR's OnPoint:
And then finally, the grandaddy of them all, we were featured on All Things Considered!