On Open Organizations
September 17, 2015
On this episode of The Digital Life, we discuss open organization culture in theory and in practice. As the creative economy continues to grow and evolve, knowledge workers are discovering and developing new ways of working together. In contrast with the closed, hierarchical structures of 20th century industrial enterprises, in the 21st century open organization, transparency, authenticity and access are foundational elements.
But how do these open source organizational principals really work in a business context? Join us as we examine the impact of the open organization, on companies small and large.
What is the Open Organization?
Here’s Why Whole Foods Lets Employees Look Up Each Other’s Salaries
There are certain tenants or ethics or philosophies that help organize these kinds of workers, and kinds of people, together, that are slightly different from the 20th century counterparts. I entered the workforce being a part of these hierarchical organizations, are giving way to more open structures, more transparent sharing of information in these structures, and I think it’s beginning to really take hold, in terms of large organizations, adopting it, as well as smaller organizations, like our own Involution Studios, has some elements of the open organization. I thought that would be a good topic for the two of us to dig into today.
When I joined Involution, one of the tenets that we talked about here was telling the truth, being transparent, both internally and externally to our clients. I know that for me, that was a slightly different approach because I’d always been a part of hierarchical, or more hierarchical organizations, where information was kept hidden at times, especially something sensitive like salary information wouldn’t have been shared amongst people at other organizations I was a part of. Dirk, when you and Juhan were sort of assessing out the level of openness and this idea of tell the truth, what were sort of the influences and the reasons you did that? How do you feel about that level of openness within our operations here?
From my perspective, I was certainly accustomed to the more traditional, closed organization, but my personal philosophies outside of work are socialist, or even communist in nature, which is to say it’s not about power and control and top down, it’s about everybody’s in this together, creating healthy environments. For the whole history of Involution, that’s something that I have aggressively been doing in pretty unusual and progressive ways, but not to include the specific things of the radical transparency. Our sort of difference takes on it, we’re able to come together. For me, I can tell you the radical transparency initially was a little bit more uncomfortable, but the reality is different than the line.
Juhan will certainly position as pretty much radically transparent as anybody possibly could. I think while we live that in a realistic way, the reality is, radical transparency does not mean the financials are printed out and pasted on a bulletin board, and people are just meandering by and looking at them, or on a website. That information is closed. If an employee asked and said, “Hey, what are the sales like? What kind of revenues do we do here?” I’d be happy to open a report, bring them over, show it to them, and talk to them. It’s not like … There’s still some degree of editorial discretion in terms of, this is a chunk of info that we’re going to proactively make visible to everyone. This is info that if someone asks, even though we haven’t chosen to proactively make it visible, we will reveal it. We will share it and talk about it.
I think that’s really important. As someone who’s a proponent of transparency, I can tell you that there are positives to no transparency. When nobody knows what anybody makes, there aren’t the same opportunities for jealousy, for greed to come out, sort of for the weaknesses of human nature to infiltrate. You’re making what you’re making, and other people are making what they’re making. You don’t see it, and it’s an ignorance is bliss kind of thing.
Off the top of my head, I can’t think of any information that if an employee asked about it, I wouldn’t show them, but we are proactively pushing out not that much more than random other company, I don’t think. At least here, the manifestation of it isn’t … When you hear radical transparency, and certainly when I was first introduced in thinking about those things, it was scary because of the chaos and the volume of it all, but that’s not really the way it works here.
Then trying our best to get there, does engender trust with new people who enter the organization, because it is so different from the way other organizations may be structured, and just the fact that we are saying to them, “We trust you, having just entered the organization,” sort of putting out that olive branch, I think that’s reciprocated more often than not. Taking that risk, I mean it is a risk to be transparent, does beget trust because you’re exposing yourself and that information to people that may not have “earned it” just yet. I think at that level, it’s very successful, and it’s also something that requires constant work and vigilance to make sure that we’re adhering to that as best we can.
Another aspect to the open organization is authenticity. Being what you say you are in the most simple of definitions, but having a culture that is, and this goes with the transparency part, is not deceptive but is geared towards the truth of what it is that we’re doing and striving for. On the authenticity part of the open organization, I think that we do that pretty well. We’re pretty honest with ourselves about what we are and what we want to do. I think that that trend is very deeply embedded in your own personality as well, Dirk. Am I correct?
Aside from that, having the total compensation be so transparent as you guys see this bucket of money coming in, this portion of that bucket is going straight to you, and now you figure out where it should go. To me, that’s how a company should be run. That’s how a company should be structured. Especially a service company like ours, where it’s all about the time and contributions. Philosophically, things I like about it, which I’m sure some of this runs afoul of HR law and all the legal bullshit that we deal with, is if there’s somebody who is constantly getting low shares, the organization is selecting them out, you know? The other people are saying, the work you’re doing isn’t having an impact, or you’re not putting enough effort, or culturally, you are a determent to what’s going on.
Whatever the specifics in that condition are, I think that employees should move around more, around fit. If you really fit somewhere, and are happy and contributing, you should be able to place there a long time. You should really dig in, but if that’s not happening, and you’re just kind of hanging on for the pay check, people should be moving around more. Maybe I’m starting to go a little bit-
I think as a small studio, we have an advantage in that we can experiment prototype things a lot more quickly. Perhaps there are fewer consequences to us pulling something back if it doesn’t work, but I think it’s very interesting to me that the nature of work, and the creative class finding a way to work together, is undergoing change. It just startles me every time I encounter it, because as a Gen Xer, I have one foot in the industrial age structures, and one foot in the digital age structures, they’re very incongruous with each other. I’m often surprised at the level of change that’s coming with this kind of organization.
For us, the top “CEO” will make no more than four times more. Somebody could argue that even four times more is too much in theory, or a bitter capitalist could argue it’s way too little. To us, it’s a number that feels right. It feels humane, it feels appropriate, and it’s something that we feel good about, and proud about. We could say we’re having some sort of scale, some sort of level of reasonableness to the life styles that we’re affording for everyone, from the most junior person, up to the people who own the organization. Corporations are so freaking far away from that, that to me, the whole thing just feels like a farce.
I think that maybe it rubs the wrong way when there are organizations that require levels of approval for things to move forward, permissions to be given, what have you. For us, since the design process is really very much about bringing lots of different elements together and melding them together, I think access and that sort of flat hierarchy are quite advantageous for the design studio. What’s your take on the flat hierarchy?
You might be working at some brain dead, major corporation, but in your dealings with us, in your dealings with a service provider, those should be human interactions. You should feel very important, because you are important. The people who are running the show are aware of you, have talked to you, care about you, and are invested in what’s going on with you. To me, a flatness, it should be a bi-product of being a small organization. Far be it for me to use terrorism as an analogy, but it’s like the terrorist cell idea where each group, each business, to me, should be a small, nimble, largely autonomous thing where the people who are involved are just deeply involved with one another and focused narrowly on shared goals, objectives, and ways of doing business.
We, in capitalist America, as we’re wealthy and our cars, our air conditioning, getting food flown in from all over the world, to places far and wide, we’re sedate. We’re comfortable, so we don’t need to really make the changes. It’s a much slower moving, more nonessential thing. For organizations for which it’s life and death, it’s been clearly identified that the top down command and control, large bureaucratic structure is crazy. Cells that are networked are the way to go.