Self-organizing teams

Laura Donnini, Managing Director HarperCollins Italia, a few years ago shared her thoughts with us, during the round of interviews that my business partner and I conducted to have a better understanding of expectations and needs of CEOs: “The world has changed. Digital technologies create the space for new decentralized organizations that function like starfish, where each arm has the ability to feed itself, move, and regenerate. When we look at decentralized organizations, there is no clearly identified leader, there are no hierarchies, nor headquarters. In this kind of structure each unit is autonomous by definition, communicates directly with other units without filters; power and knowledge are distributed and the organization is extremely fluid, able to react promptly to internal and external stimuli without waiting for a boss’s approval. In this new structure the role of the CEO transforms into a Chief Catalyst Officer, or a ‘primus inter pares’, who is capable of embodying and supporting values and culture to ensure that autonomous entities move in a consistent way, albeit independently, toward the achievement of the common objective.”*

Decentralized structures, such as the sort Laura is describing, may operate as self-organizing, self-managing, or self-directing entities.

Although in the literature these have some important traits in common, and in some cases they are considered synonyms, for us it is important to draw some distinctions nonetheless. Especially when it comes to applying these concepts to business teams operating within the broader context of their organization.

Generally speaking:

A self-managed team is a team that holds a good level of autonomy; however, its goals are defined from above while the team can determine its own strategies to achieve them. This type of team still depends on an external authority, which also influences its decision-making processes.

A self-directed team has a stronger level of autonomy compared to self-managed teams, be it with reference to setting objectives and strategies or decision making. Self-directed teams are still operating within a hierarchical paradigm, however. Although they enjoy a high degree of freedom they continue to be impacted by the rules, policies, and corporate strategies of the larger organizational system.

A self-organizing team is a team where team members define their objectives, their strategies, and what roles they need. They have full decision-making autonomy and interact with other teams and with the broader organizational context through a peer-based system and a shared set of principles and values. Since there is no formal leadership, there is also no hierarchical pressure on them.

Examples of successful implementation of the first two models are Semco (a portfolio management company that supports corporations that want to expand their business in Brazil), Morning Star (the world largest tomato processor), Zappos (on-line shoe and clothing store owned by Amazon), Gore (the famous waterproof and windproof clothing brand), Barry-Wehmiller (global supplier of manufacturing technology), FAVI (producer of pressure die casting, for the automotive, water, electrical, aeronautic, lock, and sanitary industries) and Buurtzorg (main home-care organization in Holland), among many others.

In these examples, hardly anyone in these organizations has a title, workers are empowered to make decisions without formal approval of a boss, and teams enjoy a very high level of autonomy, although hierarchy is always present in some kind of shape or fashion.

The AEquacy model leverages many of these concepts within a hierarchy-free environment built around self-organizing teams.

Wikipedia defines self-organization as “a process where some form of overall order arises from local interactions between parts of an initially disordered system. The process is spontaneous, not needing control by any external agent. It is often amplified by positive feedback. The resulting organization is wholly decentralized, distributed over all the components of the system. As such, the organization is typically robust and able to survive or self-repair substantial perturbation.” In AEquacy, the self-organizing empowered teams are not directed and controlled from the top; rather, they are based on a network of peer relationships, where nobody has power over others and where all feel truly accountable and empowered in contributing to the team and organizational results.

The potential benefits of self-organizing teams touch many levels. The decentralization of decision-making can improve quality and speed of response to any situation and the autonomy of the teams creates a more fertile ground for innovation. These elements seem to address some key concerns of the CEOs that we have interviewed:

“One of a CEO’s main challenges is being clear on what it is that makes you successful long-term but also preparing yourself for a world that you know will continue to change. And unless you understand how to change in that environment you will not win.” Søren Hagh, CEO of Heineken Italy.

“I personally believe that in the future flexibility will represent one of the key challenges. We have to create an organization where you can move faster in different kinds of organizational combinations.” Georg Schroeckenfuchs, CEO of Novartis Italy.

The new context created by the AEquacy structure sparks true empowerment and accountability through a high level of individual and team autonomy, both of which in turn boost employee motivation. The alignment between the individual purpose and the purpose of the organization creates the conditions for a much higher level of engagement and ownership. As a consequence, people can be more productive, committed, and motivated.

In addition, the aequal system is based on the development of an environment of continuous learning, one of the key values of AEquacy, with the view to achieving individual and team mastery.

Interestingly autonomy, mastery, and purpose are the three pillars that Daniel Pink, author of the best-selling book Drive, identifies as the best enablers of intrinsic motivation, which is what drives, engages, and stimulates people to do their best at work (the difference between intrinsic and extrinsic motivation is that whereas the latter occurs when we are motivated to perform a behavior or engage in an activity to earn a reward or avoid punishment – typical traits of a hierarchical system – the former involves engaging in a behavior because it is personally gratifying).

[1] Reference to The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations by Ori Brafman and Rod A. Beckstrom.