Liquefying an organization means disrupting the industrial-age driven assumptions on which rigid structures are designed and move on to make it adaptive, dynamic and anti-fragile. Based on lean management and open collaboration principles, the liquid organization model is flat, meritocratic and value-driven, enabling stigmergic behaviour and "organic" effectiveness.
Rigidly structured organizations cannot cope with the current pace of innovation and its complexity, let alone exploit it.
On one hand hierarchies are a sound bottleneck both for decision making and for competences evolution. Too many info to process in order to succeed. It's crazy today to think that whatever kind of manager, as an individual, can collect, process and use all the info that is produced in a single day (and that is now fairly easily reachable) in her domain of management! Of course non-peer evaluation, silos and recruiting inefficiency are additional heavy side-defects of an organizational design philosophy based on the two illusions of control and predictability, and therefore actualized with structural divisions between thinking and doing.
Moreover, on the other hand, the distance between where and how in the organization strategies are created, and where and how they have to be executed too often creates waste, lack of effectiveness or even complete failure. As a consequence, people’s disengagement and misalignment with the company's goals and principles add up as heavy side-defects of this way of thinking the organizations.
There is much more that can be done today, if only we let go of control, predictability and rigidity. We definitely need to step into a revolution that moves structures, processes and the organization itself away from the center, where it is assumed that people have to adapt to them, instead shifting the focus on people and truly empowering them to dynamically find their maximum value creation spot within the organization, expressing leadership effectively and without fear, naturally growing and being rewarded for this.
We are doing it.
A liquid organization can be created embracing some basic principles and putting them in action with the right enabling platform of tools and processes.
It is very important here to understand the term "platform" in its wider meaning. As said, it is a platform of tools and processes. A software platform is needed, and in Cocoon Projects we have our own and we're continously developing it. It is necessary indeed, but not sufficent.
What we'll be describing can be initially implemented using different digital tools, even very basic ones like Google docs empowered with some Google scripting. But the model itself is first of all a platform to rethink, reconnect and develop the whole organisation processes, even becoming a hub for new ones within a brand new liquid structure.
That said, the platform for the open-governance of a liquid organization is composed of 4 pillars, as follows.
1. Collaborative working board.
The entire organisation shares a common working board. It is a kanban board, so the work in progress is limited (at multiple levels if needed), there is no assignment of activities but a "pull" mechanism by people that decide to start what has been collectively approved as "to be started" and then collectively prioritized.
Anybody can propose a new activity to be lazy-majority voted for acceptance. Lazy-majority voting implies that a decision is taken counting the votes given within a pre-defined timebox. So, when a new activity is proposed by anybody, along with a short rationale of why that activity would be useful and what would the expected outcome be, all the organisation members can vote that item to be accepted in the backlog of things to be started, or reject it. The lazy-majority voting timebox is in this case short, usually 2 days.
The backlog of to be started activities is often reordered by priority. This prioritization is necessary when a new activity item is accepted within a lane, thus requiring to have an "entrance priority" among the existing items of that lane. And it is also usually cast when there is room in the work in progress limit of a lane because some in-progress item has been completed. In this case, in fact, it is important to have the first few items of the lane in an up-to-date priority order, so that anybody who picks an activity item among the upper ones to start it, thinking that they have highest priority, would make the right pick.
Collaborative prioritization is performed by a "comparing pairs" decision making tool, that compares couples of items asking members to decide which of the two has highest priority. And, again, it happens by lazy majority voting within a very short timebox: a few hours in this case for the whole prioritzation process. When the time is over, the new backlog order is given, even if nothing has been changed.
When there is room in the work-in-progress limit of a board lane, a new activity can be started in that lane. She who starts an activity is its owner, meaning she is the "facilitator" and "coordinator" for that activity. Anybody can join the activity at any time, freely. When completed, an activity is collectively approved by lazy-majority voting.
What we see in Cocoon Projects as a result is a "living" board, on which we hold a 30 to 45 minutes coordination meeting every Monday open to be attended by anybody in the organization, live or even remotely. And most of the changes are noted and pointed out in that meeting. Of course asynchronous communication over the board items goes on for the whole week, and eventually some outstanding issues or ideas or deadlines, shout the call out for a dedicated discussion.
2. Credits accounting system
Each governance activity has a value in credits, estimated by all the participants to that activity and averaged by the system. These estimates can be changed in any moment, real-time following actual work, until the activity is completed.
After the activity's been completed and accepted, its weight in credits is distributed to all the participants to that activity. This happens by a retrospective shares evaluation executed by each participant of how much value (and not time or effort) each person has brought into the final result. The system averages the shares evaluation for each participant and distributes the activity credits in that proportion to the participants. The credits earned with this mechanism are directly converted into money compensation. The system then returns to the whole organizations two transparent values: the final averaged shares percentage of that activity for that participant, and the distance between this value and the percentage that participant has given for herself as self-evaluation.
In this way it is always visible how much a person over-estimates or under-estimates herself. An oscillatory situation of over-estimation and under-estimation is physiologic, while a constant over or under-estimation is a pathological situation that becomes immediately visible for treatment.
Presenting our model around the world, we've been questioned many times about how to control or at least discourage people from cheating and trying to get more than they deserve within this credits accounting system. Surprisingly in these years we've observed and amazing sense of "justice" triggered by this system and by the principles that it implements, and to give a measure we've witnessed an average distance between self-evaluations and team average evaluation definitely lower than 10%. People know very well how much they contributed in the creation of value. The rest of the job is done by the transparency and reputation dynamics and, not least, by the common culture that such a system fosters.
3. Decision making support
Operational decisions for single activities on the collaborative board are taken by the company members using lazy-majority voting. As said, this means that the decision is taken counting the votes of the members that have voted within a pre-defined timebox, which is usually between 2 and 5 days.
For all the other decisions the platform features a toolbox of decision making processes, ranging from a very simple dot-voting tool, to a multi-phase investigation, envisioning and selection process lasting up to some weeks per single decision.
Deciding quickly (and iterating over that decision) is considered a guiding principle for decision making, thus the decision is launched with the quickest tool in the toolbox that is considered suitable for that specific decision. If the result is not considered good enough (usually after actually testing it on the field) a deeper and slower decision making tool is adopted.
Lazy majority is used in all kind of decisions, reputation dynamics hold people to take part in decisions for which they would be considered strongly inadequate, and the pragmatic culture of co-creation and short feedback loop testing, moves the whole organisation as a single thinking brain.
Moreover, when some of the "dimensions" of the decision grow and the decision is considered "important", voting is executed not democratically but meritocratically. This means that the weight of each participant's vote is different and defined by the value she has created within the organization open-governance up to that moment, measured in credits earned by governance activities. In this way strategy is co-created involving (and engaging) all the useful and willing people, and defined by a purely meritocratic system. Note that there is actually no need for up front "strategic" or "tactical" classification of decisions any more, because there is no "company level" or function to address them to accordingly.
4. Reputation tracing
An open-governance specific reputation tracing system is key to leverage contribution, transparency and value generation dynamics in a stigmergic system. It shows the trace of healthy behaviours, and let best practices and high level skills emerge. Of course it also gives visibility to "pathologies", allowing the organization to face them as early as possible.
This part of the platform enables any existing or entering person to see and understand the whole existing population. Each person can expose her skills and former collaborators can validate them. The participation in the open governance activities and the value created is visible from more than one point of view and by different metrics. Relationships between people within the organization are also visible, such as having taken part to the same projects and/or to the same governance activities.
It is therefore easy to start understanding "who" is anybody within the organization, in any given moment in time. And, as a consequence, it is also easy to engage the "right" people letting them know about opportunities or threats at any scale and asking for their support in different ways.
This part of the platform looks much like an enterprise social network indeed. But do not be mislead: that is just its basic "layer". Actually the job of this pillar is done by the transparency it implements in exposing the other pillars related behaviours and results, thus giving each member in any moment a "position" within the dynamic relationships of the organisation from the specific perspective of value created and recognised by peers.
- Transparency triggers reputation guided behaviours, helps defining a culture of fairness, enables visual control, allows stigmergic behaviour to take place on the basis of silent best practices continuous evolution.
- High level results, after being approved by peers, must be visible and able to emerge easily, giving people higher earnings and more decisional power proportionally to the value they are creating within the organization.
- Waste elimination can be radically embraced, removing everything that is not contributing to the creation of value towards the company's goals, that of course includes the company's health itself. Job interviews, for example, are not a meaningful way of using time. The most efficent (and effective) way to verify anybody's fit within an organization, is letting them immediately in and let them work just like all the "regular members" but in a "safe zone", and see if they fit-in. We call this zone Contributorship.
- Job titles and pre-defined organizational functions are not needed for the creation of value, what is needed are well aligned people with high level competences, motivated in what they do by a sense of belonging and directed by a common work culture.
- Concentrated decisional power is just one specific "tool" for decision making, not the only one nor the best one for any situation. The organization must have a toolbox of decision-making processes, including more than one technique adopting distributed decisional power.
- Agile iterative experimentation and execution are crucial to complexity management: the speed of learning is a very important measure of the organisation's ability to evolve quickly and healthy.
- Co-creation is a fundamental means of information, creativity, intelligence and criticism utilization towards the common goals of the organization.
- People want to be engaged in the creation of value if fear is removed and the results are fairly rewarded: we humans want to contribute by our own nature.
- A system that makes potential problems or any negative tension very early visible is a system that will be able to manage them with the least waste of energy, when not even to exploit them for evolution, before they become a severe problem.
A liquid organization is simply a game-changer.
Iterative experimentation is a built-in principle, and decision making is both lightning fast and powerfully backed by the knowledge and the point of views of an entire organism. This means complete real-time adaptability of strategy and operations.
Creativity, leadership and operational skills are more than free to be expressed, they are empowered. And their expression doesn't have to adhere to a standard pre-defined by anybody: since we're human beings we go through phases, and such a system allows us to express the best of us in any moment, even when this means a need to step back and breathe.
Due to its structure it attracts the best people, because they are the ones taking the greatest advantage of a truly meritocratic system. Even further than this, it breaks down the entire concept of competition, becoming a framework in which different players can co-create value on the market leveraging the openness and inclusiveness of its dynamics.
The very concept of "employee" is overtaken, moving work to a new era in which people can use an organization as a means to fully express both their individual value creation power, and their exponential power of doing so within a single liquid, almost organic body with the others.
In order to succeed, it is vital to have both a top down and a bottom up buy-in. At least one real sponsor of the transition must be in a very high decisional power position within the existing hierarchy. And at the same time, part of the operational layer must be sensitive to a pro-active and lean working attitude.
Thanks Jacopo Romei for precious editing support, and the whole Cocoon Projects team for the ongoing adventure we're sharing.