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PART TWO: THE OPERATING SYSTEM
94% of problems in business are systems-driven and only 6% are people-driven.
—W. Edwards Deming
Becoming a people positive and complexity conscious organization can be overwhelming. It’s hard to know where to begin, or what matters most. But through the careful collection and tagging of hundreds of unconventional practices from around the world, I found that Evolutionary Organizations are converging on twelve domains as the proving ground for the future of work. It is in these spaces that the courageous few are taking risks. And it is in these spaces that struggling enterprises will likely find their faults. Together they form a canvas—an Operating System Canvas—through which we can see and shift our organizational identity.
THE OS CANVAS
PURPOSE
How we orient and steer
AUTHORITY
How we share power and make decisons
STRUCTURE
How we organize and team
STRATEGY
How we plan and prioritize
RESOURCES
How we invest our time and money
INNOVATION
How we learn and evolve
WORKFLOW
How we divide and do the work
MEETINGS
How we convene and coordinate
INFORMATION
How we share and use data
MEMBERSHIP
How we define and cultivate relationships
MASTERY
How we grow and mature
COMPENSATION
How we pay and provide
THE OPERATING SYSTEM
Each domain of the OS Canvas asks us to consider an aspect of our organization more deeply than we typically would. For example, what is authority? How should it be distributed? And how does that manifest (or not) in your culture? How do you make decisions? How should you? Is your approach to authority a signal-controlled intersection or a roundabout? Is it People Positive and Complexity Conscious? The canvas forces us to confront the deltas between our assumptions, our beliefs, and our reality. If we say we want to hear every voice but spend most of the day talking over others, that tells us something. If we say we value agility, but every decision requires a dozen approvals, the opportunity is clear.
In the pages ahead, we’ll explore how each of these domains is changing, the provocateurs that are shaping them, and the emerging principles and practices they’re pioneering. Each domain is broken into five parts: an overview that introduces the concept, thought starters designed to challenge your assumptions, ways to take action and try something new, insights on navigating the domain in change, and questions to consider as you reflect on and reinvent your own OS.
You may have noticed that the domains of the canvas are generic and value agnostic. That’s intentional. We want to ensure that any organization can leverage the canvas regardless of its organizational philosophy. The Morning Star Company, for example, has found huge success in the domain of structure by revolutionizing traditional job titles and roles. Every year, four hundred full-time employees at the world’s largest tomato processor write their own job descriptions. They do this by authoring a Colleague Letter of Understanding, or CLOU, that contains their commitments to and agreements with one another. CLOUs are reviewed and challenged by colleagues who offer advice, not mandates, about what should change. Since this document changes every year, there’s no need for traditional job titles or promotions. But that’s okay, because everyone adjusts their own salary as they learn and grow. The math works out. While their industry grows around 1 percent a year, Morning Star has averaged double-digit revenue and profit growth for the past twenty years. Today it generates more than $700 million in revenue. In an industry that normally treats workers as expendable, it has managed to create a way of working that rivals any unicorn for innovative and human-centric design principles.
But this approach to structure may not be right for your context and culture. Your approach may be more or less radical or aligned in spirit but different in practice. That’s fine. My only ideological prescription is that People Positive and Complexity Conscious mindsets have the power to reshape these spaces for the better. Every culture has elements of the traditional, the contemporary, and the idiosyncratic. The canvas is a tool for reflection and sensemaking, not judgment.
Further, this canvas is not intended to be mutually exclusive or comprehensively exhaustive. From a complexity perspective, reducing an organization to its independent parts is folly. The canvas simply highlights the areas that our research tells us are most in flux. Better to start in these dynamic spaces than to remain immobilized by the sheer intractable nature of it all.
At some point in this tour of the OS you’re going to start to wonder, How the hell do I lead my organization through a change as profound as these cases and stories suggest? And what if it doesn’t work? Don’t let that slow you down. The remainder of the book is dedicated to sharing all the lessons my colleagues and I have learned in the trenches with organizations trying to make it to the other side of the rainbow. The transition to a better way of working can be made. But not with the change management they teach in business school. You’ll need every ounce of your People Positive and Complexity Conscious conviction, and more than a few of the tips and tricks you’re about to discover.
As we dive deep into these twelve domains, just remember: The problem isn’t your leaders. It’s not your people. It’s not your strategy or even your business model. It’s your Operating System. Get the OS right and your organization will run itself.
PURPOSE
In 1970 Milton Friedman famously said, “The social responsibility of business is to increase its profits.” To put it bluntly, the business of business is business. In the decades since, Legacy Organizations have inter- nalized this to an astounding degree. As we’ve seen, this maxim has led corporations to optimize everything in society—the market, the law, even our attention—in order to drive short-term gain. At the same time, the cost to humanity and the environment has been profound. Unchecked growth has created the conditions for a climate crisis that is unfolding in real time. This singular focus has also led to rampant inequality and a level of worker engagement that is pathetic at best. A mission statement that places shareholder value as the definition rather than the result of success is uninspiring. Jim Barksdale, former CEO of Netscape, once quipped, “Saying that the purpose of a company is to make money is like saying that your purpose in life is to breathe.”
Instead we can elevate purpose above all. Given that we spend so much of our lives at work, wouldn’t it be nice if that work were worth- while? If it delivered meaning and connection? Take Whole Foods, for instance. If you were to read its “Declaration of Interdependence,” originally authored in 1985 by sixty team member/volunteers, you’d see that the company’s purpose is to “Nourish People and the Planet.” Five words, but a lot of information. Now, what about grocery giant Kroger? Why does it exist? Its stated mission is “to be a leader in the distribution and merchandising of food, health, personal care, and related consumable products and services.” Yawn. Imagine showing up every day for forty years with that as your rallying cry.
Purpose can be socially positive or socially destructive. After all, the key difference between a charity and a terrorist organization is intent. Which is why Evolutionary Organizations aspire to eudaemonic purpose—missions that enable human flourishing. And what of profit? Profit is the critically important fuel that powers our purpose. It’s the air we breathe. Without it we can’t scale our impact or realize our vision.
Which is why the vast majority of Evolutionary Organizations are quite profitable. In fact, the socially conscious and purpose-driven companies featured by professor and author Raj Sisodia in Firms of Endearment have outperformed the S&P 500 by a staggering 14x over a period of fifteen years, ten of which were after the publication of the book.
A great purpose is aspirational, but it’s also a constraint. It focuses our energy and attention. It places a boundary around our efforts by saying, Here is where we will build our dream. Too mundane (e.g., share- holder value) and we lack meaning. Too vague (e.g., change the world) and we lack focus. Too concrete (e.g., a computer on every desk) and we can find ourselves rudderless after the moment of victory. Done well, purpose unites us, orients us, and helps us make decisions as we go.
Thought Starters
Fractal Purpose. Every organization has a purpose. But not every organization ensures that its purpose is fractal—that it shows up at every level. While we want to avoid bureaucratic alignment exercises, teams should have a coherent narrative about how their efforts serve the whole, even if they’re intentionally pursuing a divergent path. The team’s purpose serves the same function as the organizational one. Even individual roles have a purpose that, if properly articulated, eliminates the need for lengthy job descriptions. If someone who onboards employees truly delivers “members who are informed, connected, and ready to contribute,” do we really need to specify the how?
Steering Metrics. Legacy Organizations are obsessed with measurement, often using it as a form of control—to find and punish weak performance. But when we obsess over metrics, we fall victim to Goodhart’s law, which states that a measure that becomes a target ceases to be a good measure. Why? Because human beings will manipulate the situation in order to move the numbers. Instead, we should think of metrics as guides for steering toward our purpose. If we make an app that has a purpose of helping people lose weight, then average time in app is interesting, but only insofar as playing with the app translates to healthier users. It’s also worth pointing out that steering metrics should, in fact, result in steering. You’re looking for quantitative and qualitative signals that will help you sense and respond. If you aren’t making decisions and taking action based on your metrics, you’re doing it wrong. At my company we used to track how many followers we had across social media. We got worked up about it. Then one day we asked ourselves, Have we ever made a change based on these metrics? Nope. We stopped tracking them that day. Last time I looked they were still going up.
Proxy for Purpose. Don’t confuse your customer with your purpose. Customer obsession has become a popular theme of late, modeled to the extreme by Jeff Bezos and Amazon. And it’s needed. To ignore the customer or lose sight of their needs, as many large corporate teams have, is deadly. But simply making the customer our purpose is also dangerous. If we act on customer feedback without judgment, we run the risk of regressing to the mean, to our basest tendencies. Henry Ford’s supposed quip “If I had asked people what they wanted, they would have said a faster horse” illustrates the idea that sometimes our purpose is to take humanity to new places, places they can’t yet see for themselves. The truth is that our customers are a proxy for our purpose. They’re our partners in solving for the tension between our virtuous intent and their actual needs. Whole Foods can’t tell if they’re nourishing people writ large. But they can tell if more people chose to buy organic fruit last week, or purchased items that contained less sugar, or submitted more positive feedback about their experiences in the store. And that information might be enough for the brand to take a few more steps in the right direction.
Purpose in Action
Essential Intent. Purpose statements, even when they’re done well, are sometimes hard to translate into the here and now. In Greg McKeown’s best-selling Essentialism, he put forth the breakthrough notion of an essential intent, a goal that sits between your ultimate vision and your quarterly objectives. He says that an essential intent “is both inspirational and concrete, both meaningful and measurable. Done right, an essential intent is one decision that settles one thousand later decisions.” Think of essential intent as a stepping-stone. If we achieve it, we move further along our path to purpose. Tesla’s mission is “to accelerate the world’s transition to sustainable energy,” that doesn’t really help an engineer make a decision today. If their essential intent is to create the first affordable and desirable electric car—and ship 500,000 of them before they run out of money—that gives everyone involved a lot to go on. They’ll make trade-offs to achieve affordability, but not at the expense of desirability. And they’ll focus on production, knowing that delivery is make or break. Of course, time will tell how well they deliver on these ideas.
Ask every team in your organization to articulate their essential intent. What has to happen in the next six to twenty-four months to keep us moving toward the organization’s purpose? Share and discuss over drinks one afternoon. Resist the urge to make them all fit together perfectly. Instead, notice and discuss divergence and convergence. Offer everyone the chance to revise and refine their essential intents regularly, and keep them somewhere everyone can access them.
Six Months or Thirty Years. Here’s a slight twist on the same theme. In 2012, around the time Facebook reached a billion users, it published a little red book for employees that contained a lot of the stories, principles, values, and folklore of the business, memorialized for the next generation. Tucked inside was a page that read, “There is no point in having a 5-year plan in this industry. With each step forward, the landscape you’re walking on changes. So we have a pretty good idea of where we want to be in six months, and where we want to be in 30 years. And every six months, we take another look at where we want to be in 30 years to plan out the next six months.” While Facebook may have changed these time frames over the years, the spirit of the exercise remains. Clarify your purpose so that you can see it three decades down the line. Then tighten up your road map for the next half year.
Purpose in Change
While OS change is anything but linear, we have found that other dimensions are often dependent on a clear and compelling purpose. For example, distributing authority without clarity on what we’re trying to accomplish can lead to empowered people launching projects aimlessly. This results in emergence at best and chaos at worst. Don’t start that way. Ensure that any group in transformation—whether it be a team, a unit, a function, or the whole organization—has a strong sense of their collective purpose.
Questions on Purpose
The following questions can be applied to the organization as a whole or the teams within. Use them to provoke a conversation about what is present and what is possible.
❯ What is our reason for being?
❯ What will be different if we succeed?
❯ Whom do we serve? Who is our customer or user?
❯ What is meaningful about our work?
❯ What measures will help us steer?
❯ How does our purpose help us make decisions?
❯ What are we unwilling to compromise in pursuit of our goals?
❯ Can our purpose change? If so, how?
