Surely you must be wondering why NineAligned needs the four core concepts of Responsive Organisations, Holacracy, collaborative investment, and Lean Start-Up? Surely, we can just set up the group of start-ups and go.
Well, you can… go ahead. Good luck.
But leave any new business or organisation to its own devices and the likelihood of failure will be high. The founder will find himself having to make all the decisions, the organisation will very quickly become organised into functional silos leading to mistrust, if there is more than one founder they will quickly start arguing over equity and percentage of ownership, and then at the end-of-the-day there will likely be no clear sense of purpose other than maybe “make money”.
There are however, answers to all of these issues. Over the last ten years these answers have evolved as individual islands from across the globe supported by real-life success studies and entire movements on their own. They are not simply theoretical or academic white papers.
Let us start with Responsive Organisations.
Let’s take one dimension: Motivation. We have all seen how organisations have failed their employees and society in general. Around the world many people within organisations are today, rather reluctant to get fully engaged. Gallup statistics in 2012 reported that only 13% of the world’s working population was truly engaged at work.
One of the reasons for this is that the people within organisations today rarely understand the purpose of their work. As humans we are more motivated when we recognise that our work impacts positively the life of someone else, where that someone else is not just the client but also a fellow colleague.
So the movement behind “responsive organisations” is focused very much on the soft factors of our work. Frederic Laloux, the author of “Reinventing Organisations” talks about bringing one’s wholeness into the workplace rather than just the alpha-male side of our personality. In fact, it has been said that we only bring 1/16 ourselves into the workplace. The remaining 15/16 are left at the door. That is terribly sad when we think that most of our waking lives are at the workplace.
This leads us naturally onto the concepts of Holacracy.
Most organisations are typically organised into hierarchies that represents both power and function.
It is clear from these hierarchies who is responsible for what. Yet what we also find ourselves doing is rather weird, when we think about it. With these fixed functional organisational hierarchies, we organise the work around the people.
Then, after a period of time, tensions build so much, that we have to have big expensive risky change programmes.
What we really need is a way of organising people around the work which then naturally eliminates the need to run a large change program every two years. In other words, the organisation senses tensions in real-time that are processed there and then so that the organisation to constantly evolving as the nature of the work changes.
This then separates power from the hierarchy so that power is distributed across the organisation, rather than kept in the senior ranks.
But who are the owners anyway? The answer to that lies within the realm of collaborative investment, or “Slicing Pie”.
So, let us look at the challenge of a new founder or founders, that have just started their new organisation or business.
Usually ego will dictate the person with the idea retains 100% ownership. If there are two or more people, then they have a greater challenge. Do they allocate ownership 50-50 at the beginning when they start the business? Or do they allocate the equity when they become viable?
If they decide to split 50-50 at the beginning, later they will start looking at each other thinking that they are worth more than 50% and greed will set in! Worse if they decide to allocate equity at the end, when the business is viable how do they know what percentage of equity one partner holds over the other? This will always create tensions. On occasions so severe that the business suffers.
Clearly neither is optimal.
In fact, in both cases energy will be sapped trying to resolve equity ownership, rather than a customer’s problem.
Not only that people will only want to work on the idea if you pay them. So more funds are needed. That is only because it’s highly unlikely that the owners will offer their equity in return. And even if they do offer equity, it will be fixed and small e.g. 5%, or maximum 10%.
What we want is simple. We want people to be engaged and working on the idea with an atmosphere of fairness and trust. But in such a way that as people contribute time or money or both to the start-up, their equity increases.
Think about it. Would you prefer 100% of a $100’000 business or 10% of a $10’000’000 business?
With such a model, over time the percentage of ownership changes. It is dynamic: It will also change as other contributors join in and more people start to contribute even more. All of this though, has to be tracked in a transparent manner. But because it’s transparent and visible, trust and fairness is ensured.
So if somebody is contributing more, people can see it. If somebody cannot contribute we can see it. And finally when the business becomes viable we can all look each other in the eye and understand what people contributed and therefore the equity ownership is fair.
And what is even better is this: If the idea does not work it was probably because the market was not ready. Not because the owners were arguing over equity!
So, let us now look at that question of the market. This is where Lean Start-Up fulfils its role.
One of the worst ways to develop any product even if you have Slicing-Pie, even if your organisation and business and product have a great sense of purpose and even if you have distributed power, if you hide yourselves away in a garage for 18 months producing what you think is the perfect product, you will fail.
It will be a waste of time and money. When you launch the product people will not even know you exist. You will have lost touch with the real world, which will have moved on since you started your project.
There is a great expression, which is very relevant to this point: “Although your opinion is interesting, it is not important”.
Instead, we have to constantly engage potential customers and users of our product as we start to build it. We all need to learn to validate and check our assumptions and make sure we are building the things that our clients and potential customers will love.
And as we start to produce even the smallest slices of our product we can start to actually not only learn, but also generate a little bit of revenue, and thus test our pricing strategy as well.
We have to get away from launching big-bang in-our-mind perfect products and the concepts of Lean Start-Up support this.
So by combining
- Lean Start-Up which allows us to quickly produce things that customers want
- with collaborative investment (“Slicing-Pie”), which makes sure equity ownership is fair and that those that work hardest are rewarded,
- by distributing power throughout the organisation and constantly processing tensions so that we organise people around work,
- and finally that whatever we’re doing has a greater sense of purpose allowing people to bring their entire self to work
then we will have established the foundations for a higher probability of long-term success.
That is why we have those four core foundations to NineAligned.