The Bleak Landscape
From tech bros to bad bankers, nearly every week we’re greeted with news of a company that has fostered a culture of widespread discrimination and/or impropriety. Recently Uber, a company that has raised more money than any other tech start-up in history, announced that its CEO Travis Kalanick would take an indefinite leave of absence following a string of scandals. Kalanick was later urged to resign by Uber’s biggest investors. Uber’s foibles hardly bear repeating, but for a recap, here’s a handy dandy timeline.
Do Organizations Need a Strong Central Leader?
In the WSJ’s coverage of Kalanick’s leave announcement, they position Uber’s decision to decentralize leadership across a group of 14 senior executives as the establishment of a corporate ‘Game of Thrones.’ While this makes for an entertaining image, it highlights the sober implications of a culture that favors strong central leadership and fosters infighting. The article goes on to speculate about the efficacy of a decentralized structure, and provides examples of challenges that other organizations have faced under shared leadership models.
What Would Mother Nature Do?
To declare decentralized leadership models unviable, citing only a few examples, commits a post hoc fallacy (“y” happened after “x”, therefore “x” caused “y”). Decentralized leadership models are nothing new, in fact, they’re as old as the earth itself. Just ask the ants, the bees, or the trees. But, while nature has had 3.8 billion years to iterate, adapt, and solve some of the world’s most pressing problems, humans have only been organizing for about 6,000 years and modern organizations have only existed for about 400 years. According to Reinventing Organizations author Frederic Laloux, “every time humanity has shifted to a new stage of consciousness, it has also invented a radically more productive organizational model.” The issue which plagues an organizational transition into decentralized leadership is likely not the model itself, but a wholly insufficient approach to applying the model.
In many of the examples cited in the WSJ article, a change was forced upon stakeholders from the top down—like Tony Hsieh paying Zappos’ employees to leave if they don’t want to work in the new Holacratic system. In his book The Starfish and the Spider, Ori Brafman points out that when attacked, centralized organizations tend to become even more centralized. It makes sense, right? Change is scary. Truly gaining a new perspective requires that we disidentify from what we were previously engulfed by, so people have a tendency to gravitate toward the devil they know. But, as Albert Einstein said, “we cannot solve our problems with the same thinking we used to create them.”
Is Anyone “Crushing It” with an Alternative Model?
It can’t be denied that the transition to the knowledge economy has created a demand for more adaptive organizational structures in order to attract, engage, and retain a next-gen workforce. There are great advantages to be had including increased adaptability, innovation, and resilience. This means that there is an opportunity in the market for pioneering organizations willing to boldly forge ahead, take some arrows, and buck the system.
stok’s organizational model was not only inspired by books like Reinventing Organizations and The Starfish and the Spider, but by what Daniel Pink describes as the intrinsic motivators of the knowledge economy: autonomy, mastery, and purpose.
For stok, finding purpose was the easy part, as social and environmental impact are embedded into the very nature of our work with sustainability in the built environment.
In order to achieve authentic autonomy, the separation of governance and equity was drafted into stok’s governance documents because, as Laloux puts it, “the widespread lack of motivation we witness in many organizations is a devastating side effect of an unequal distribution of power.” stok delegated all of the traditional hierarchical power structures of an organization to self-managed “Pods“, providing transparency and decision making power for all organizational stakeholders.
Finally, mastery is achieved not through a competitive need to achieve social status, but through the structured autonomy that allows team members to freely create self-managed communities of practice centered around their shared passions.
The end result is a productive and self-motivated culture that is poised to provide our partners with a higher-quality service offering.
Our Take on “Doing it Right”
Successfully adopting a decentralized structure requires a similarly decentralized systems approach to Change Management and stakeholder engagement that authentically values human capital and taps into what uniquely motivates the workforce. Done right, it’s not a quick fix. It’s hard work, there‘s no boilerplate template, and supportive technologies and knowledge management infrastructures must continuously be developed. Furthermore, the larger system of capital markets is ripe for disruption as it creates perverse incentives in the short-term which prevent decentralized organizations from being able to thrive. In other words, changing a system this large will take time, and no doubt, a shift in consciousness. Naturally, stok is up for the challenge!
Want to shake things up with us? Get in touch.
This post was written by Burke Pemberton. Burke develops, maintains, and continuously improves upon stok’s operational, financial, and risk management functions.