Community Style Business – Leadership

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A genuine leader is not a searcher for consensus but a molder of consensus.

Martin Luther King Jr.

When looking at a CSB, it is important to grasp the concept of not only what leadership is, but why it occurs. Leadership comes in various aspects in a business. These include: product / organizational vision, practice area, cultural, team and quality. Depending on the organizational model, these leadership roles can be distributed countless ways.

Currently, organizational leadership is put on a pedestal. Leaders are those with both the information and the power, with long term success relying on a few chosen to make the right decisions. These individuals get rewarded for their efforts, which tend to be well beyond those typically performed by contributors.

The problem here, ultimately, is that people come with different talents, strengths and weaknesses. We all approach problems differently, and leverage different types of crutches to minimize our weaknesses. Given this, we create positions with fairly ridged ideas around roles and responsibilities, rather than creating a system which leverages people’s unique strengths, while not forcing them into make or break situations around their weaknesses.

The cultural change which needs to be made here is that CSB is run more like an organic ecosystem rather than a rigid structure. In essence, each skill set and partition in a CSB is responsible to self organize and adapt to their own unique environment independently. Through communication and sharing of success and failures, these independent pieces enable each other in the larger organization to improve independently, without changes being forced on the teams. This viewpoint changes what type of leadership is needed.

Leadership is a means to an end, and is not the sole objective for any one member. There is no ordained leadership position which is a given. Those who choose to lead can provide leadership across the board, or in a specific area they’re adept at. These leaders then help improve their part of the organizational ecosystem through influencing consensus, both on their team and by working with others.

An example on how this can apply is by taking a look at a hamburger restaurant, specifically the cooks team & their schedule. Staffing a restaurant cooks team includes ensuring enough members are on hand at any given point in time to fulfill the orders received in a timely manner. In this case providing leadership might be as easy as creating a draft board for hours having to be worked, and challenging working with others to make sure all the shifts are covered. Since everyone has a personal stake in the success of the business, it is everyone’s responsibility to make sure the area is staffed. It is the leaders job to help the members achieve the schedule creation.

Rewarding leadership

So what is the reward for providing leadership? Why would anyone do it? This is the question I struggled with. In the ideal world the leaders would lead because that’s what they enjoy doing. In the real world leadership can be time consuming, and offers challenges of its own. So how do we reward leaders for their efforts?

In the above example the leader might get first draft choice, where the compensation is a better schedule. Alternatively the leader could be compensated based on the schedules timely completion, and more points are rewarded for each active participant who contributes to helping create the schedule.

The best initial solution available is to reward through lead measures (or tasks which when occurred lead to effective results. This makes it possible to ensure rewards can be obtained, but still ensure that those who gain more efficiency in these tasks to be compensated accordingly, sticking with the montra, you get out only what’s perporsional to what is put in.

A new type of leadership

The team or CSB will there for tend to have more micro focused areas of leadership. Rather than having formal structures which have specific roles and responsibilities, leadership is a set of goals, which the community identifies as being valueble. The team can then either elect their leaders, or approach it via lasefair, where people can pick up what they choose. In both cases those who want to lead can pick and choose what goals best match their unique talents and skillsets. Since there’s no strict position which is gained or lost, people are allowed to find those aspects and ways they can best lead, without taking on too much, or being put in a position where loss obversion can effect decision making and direction.

With this approach determoning leadership, or baring poor leaders, has to be left up to the community members. In this way the leader is a servent of the community, only serving as such if the community approves.

This differs from hierarchical leadership where a single decision can span across various loosely related groups, and peer leadership where through organic independent adoption change is brought about.

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Corporate Scarcity – The manager’s mindset

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In previous posts I talked about the history of corporations and the contributors mindset. In this post I will discuss the mindset and challenges of being a manager in a corporate environment.

The manager, whether that is project, product, program or resource manager, is continually faced with the prospect of knowing the directions the team or teams is to go, but must turn that vision into a strategic plan as to how to get there. This is primarily done with either too few or barely enough resources to get the job done. During this execution the manager must fend off the pushes and pulls of peers and higher ups, which always want more, if it’s going to have an adverse effect on the teams immediate goals.

When looking at the manager’s perspective it is important to also note that they still have most, if not all, the scarcity aspects of the contributors. On top of that they must also face the challenge of productivity management, resource allocation, aligning and prioritizing varying objectives, positioning and communicating their teams value and finally being a knowledgeable and effective leader.

Productivity Management

Productivity management is assembling, cultivating and maintaining a team to achieve a specific role in an organization. The more productive a team is, the better it, and its management, look. The limiting factor here is that the team size is limited to often being just enough to get the job done. This creates a scarcity environment where individuals are held to a standard mold of expectation of productivity. An individual’s value therefore is based primarily on how well they match the mold, with a secondary basis on their talent.

One place I worked at was a highly political environment, where perception of success was more highly regarded than actual success. In this environment those whom were adept at political maneuvers, even at the contributor level, were regarded as the most successful.  At another company, the definition of success was based on how well you worked with others. A third company I worked at based success on how much you produced as an individual. These are just examples of how varied the mold’s expectations can be.

Hiring

Having a team understaffed or improperly staffed leads to failure of projects and future assignments going elsewhere, or existing direct reports feeling overworked and leaving. As a manager you are expected to hire the right individuals for your team, which often means a specific skill set, a compatible mindset to your team and organization, the right amount of relevant experience and willing to work for the amount the company is willing to give. This makes finding the right people in a timely manner that much more important. This often limits the talent pool making the job that much harder. Add to this that the manager usually has to use an interview system which gives only a fraction of the information needed to make the “right” decision, and a vision as to the perfect fit can become a crapshoot. Many interviewing strategies have been developed, but there are still huge risk factors which can include: how well the candidate interviews, the type of stresses the candidate is under external to the interview, and what preconceived notions you and the other interviewers have. This tends to result in an interview system which results in a period of uncertainty for the company’s productivity, and the individual being hired. In the worst scenarios, the company sinks a lot of money into the individual, with very little productivity and fires the individual, resulting in financial troubles for the individual as well.

Cultivating

As a manager it is not enough to just hire and fire, you are expected to cultivate the team’s talent as well. Lack of talent growth by the team members tend to cause them to look elsewhere to gain those talents, and ultimately can cause them to leave the team. Another consequence a manager faces here is that they are only given a limited headcount, which is one of their largest scarcity aspects, which must be capable and talented enough to handle their role in the company. Growing talent is one way to fill in the skills needed without requiring more hiring. Managers challenge and grow the individuals on the team, aligning skills needed with people they already have.

The difficulty here is that the number of “challenging” projects are often seen as desirable by the entire team, but tend to be outside the team’s primary responsibilities. This creates an aspect of scarcity as you much choose how to grow individuals without creating discontentment with the rest of the team. In rare cases you may run across a scenario where the a team member feels entitled to one of these projects, but doesn’t have the skillsets required, or isn’t chosen. This results in the same discontentment even if they have other opportunities.

Another aspect of cultivation is performance reviews. Depending on the company you work for, performance reviews hold a lot of sway as to the employees’ compensation and future. The problem with reviews at most companies is that artificial limitations are placed on teams and organizations as to how many people can be evaluated as excelling or failing. These limitations once in the organization then get divvied out based off of team perception and politics. This ultimately can lead to a scenario where individuals don’t feel adequately compensated for their contributions, and if the philosophy is made public, an environment where someone’s success hurts others come review time.

One company I worked for had a review come around, and a limitation that worked out to only one individual being given an exceeds expectation grade. The past year I had saved a project, got a multi million dollar deal, and played the key point person for a large international customer, while not being paid for most of these responsibilities. Due to the project, which previously had been seen as a failure, with a customer super cautious about who it worked with, created a scenario where another’s achievement were seen as more desirable than my own. Ultimately the project I turned around became the primary project of the company, but by then it was too late for me. This scenario happens a lot, both from the reviewee and the reviewer side. As a reviewer you must make decisions as to whom you’re going to reward and who you’re not. Often times these decisions are made based off of fear of losing resources, rather than purely a review of the individual.

Over time discontentment turns into turnover, which a manager is expected to limit. A failure to limit higher than normal turnover can cause the manager’s manager to question their ability to lead a team.

Maintenance

Maintaining a team can be challenging. This is probably one of the few aspects which is not scarcity related. Working with people to get better cooperation, help with personal and interpersonal issues can be very rewarding. The difficult part comes in when its time for someone to move on. While this isn’t necessarily scarcity based, it does have aspects of loss aversion. This can create scenarios where someone is under performing or out of alignment is retained longer than they should be. If not let go, the team loses morale and respect for leadership, if let go then a contributing resource is lost or possibly other consequences based off of social circle fallout as well.

Resource allocation & prioritizing objectives

One aspect of a manager is to allocate people’s time according to new projects, initiatives and maintenance. Due to the nature of business there is never enough collective time to do everything. This creates a scarcity aspect around resource skillsets and time. New projects tend to gain more visibility and political points, but increase the required maintenance in order to stay afloat. Initiatives, either peer or directed, help with longer term organizational goals. Maintenance comes with little visibility and political points, but lack of it will lead to epic failure given enough time.

Managers must then balance all of these, communicating what is necessary, and understanding when it’s more prudent to use a pocket veto (not opposing, but taking no action to fulfill). As a manager this is where a lot of time is spent, navigating the various expectations and agendas.

Positioning & communicating team value

In business, perception is reality. While in an ideal world, there’s never enough time for directors and above to fully understand all the details. Rather they rely on the manager to communicate those aspects they need to know. If a team meets objectives, but is never heard about, then evaluation, promotions, bonuses and increases in salary will be distributed eslewhere. Part of being a manager is evangelizing the problem space your team is in, the value they produce and the individuals who excel.

Being a knowledgeable, effective leader

One of the biggest misnomers which contributors expect from a manager is that the manager is an expert in all aspects the contributor is expected to work in. While this may be true in some cases its often artificially created by the manager’s hiring choices, choosing people who aren’t beyond their own comprehension in aspects they’re less knowledgeable about themselves. The other way managers manage those more skilled than them is limiting the comments and involvement in those areas. By not commenting or interacting, the reports assume they’re in agreement and therefore don’t lose respect.

Another aspect which contributes to effectiveness is the ability to lead appropriately. This means understanding how to lead different people differently. Distance of power is used to describe how people expect to be managed, on a sliding scale with extremes being low distance of power and high distance of power.

People expecting a high distance of power want to be told what to do, and in some cases how to do it. They perceive that their manager is an expert in what they do, and any suggestion they have to make is a failure of their manager’s ability to lead. Often times these people respond better to being told their suggestion is wrong, even if the outcome is not as optimal.

People expecting low distance of power perceive their manager as an equal, with a different set of responsibilities. They tend to self manage more, and expect that their suggestions are a contribution to their environment, and not a failure of their manager. If a good suggestion is ignored then the individual starts questioning their ability to lead.

Community Style Business – An introduction

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I first started asking the question two years ago.

How do I work in an environment where all my contributions are valued?

The problem I faced at the time was that I was working for a professional services software company and had just secured a multi-million dollar contract. After working with the customer and rebuilding ties I had my review, where I was given a small increase in pay, and no promotion, even though I was being billed as multiple titles above my current pay grade.

At first I thought it would be enough to step up in the corporate ladder. That’s when it was driven home to me about how much of “middle” management was corporate politics and posturing. That was definitely not what I enjoy.

I then tried both joining a couple of startups as well as creating a business of my own. It was surprising to me how different organizations varied, both in skill sets as well as personal philosophies. But there was an underlying trend of scarcity and in some cases wild financial bets where one wrong step would mean I would lose my house and my finances would be shot.

The one good thing during that whole duration was that I was continually studying. Business, people management and even psychology books became part of my daily routine. Eventually I started working out what I really was looking for in a workplace environment, and titled it Community Style Business.

What is CSB (Community Style Business)

The simplest definition of CSB is:

A group of individuals working together as peers to create value, with the rewards of that value distributed to the community members based on the extent of the individual’s contributions.

This style of business borrows heavily from the organizational structure of agile, in which the members executing define how work gets done, and the inception members (product owners and researchers) work to identify what customers value and how much.

I personally come from a software background, and so the following will be heavily focused on the definition as it pertains to software, but that doesn’t mean a variation can’t be applied to other domains.

Distribution of rewards

Members of this system are rewarded based off of efficiency and completion of work. These pieces of work are given point values based off of risk, complexity and effort in relation to what it would take a competent individual skilled in the craft. This value is then voted on by the community of individuals on the team, much like agile’s planning poker.

Once a unit of work is finished, it is reviewed by the team and at least one member of the inception team. If the work is approved then the points associated with the work are rewarded to the individuals who worked on it.

It is generally considered a good practice to define lead measures as part of a unit of work. Lead measures are measurable behaviors which when done tend to ensure high quality results.

As the product is purchased, and value is transformed, all non-contributor based expenses are paid first. Items such as rented servers, or the power bill and Internet, at face value. After that any community agreed finances are taken care of, such as putting together a rainy day fund. Finally the remaining is distributed based on the percentage of points an individual has as part of the whole.

Leadership

This is one of the main differences from this style of organization to others. The way leadership works in this style is through evangelizing ideas, and gaining community buy in, although depending on the size this could be as simple as convincing a team to consolidate around the idea.

Often times this will come from the inception team, but any member of the community has the ability to become part of inception, even stepping outside of their current role to do so, although it’s important to note that they shouldn’t do it in a way which will cause their current team to fail on the current iteration.

A fundamental principle here is that an idea or vision by itself is worthless, and shouldn’t be directly rewarded. The true value of the idea comes through the researching, flushing out and implementation of the idea. Usually this means many people are involved, from the high level vision all the way down to the details. To that extent those who want to lead with vision become part of an inception team, and are given the opportunity to gain support from others.

People management

Since value is created by each person which should be directly relational to that created, there isn’t a need for the typical oversight of individuals. A member who doesn’t want to work that much will be rewarded with little, and the more workers creating value leads to more value created. If there is limited value which can be obtained, more value created leads to a faster realization of that value, allowing the team to move more rapidly towards more valuable goals.

Those who do not feel they receive enough value for their lifestyle will tend to leave a group on their own. These individuals are often referred to as dead weight in other organizations. In this regard reviews, performance management and classic hiring/firing practices do not apply to the CSB. If a member is not performing enough value, others can be added without detracting from the community.

Pay scale and peer to peer pay comparisons also becomes a moot point in the CSB. Since the system rewards based purely on value contributed, individuals can achieve any pay amount they’re capable of, either through efficiency, talent or brute effort.

Individual responsibilities

In the community model the individual is given a lot of leeway as to how they want to work. The only requirement of this model is that individuals are required to self educate and take part in community obligations. It is up to the community to decide what these obligations are. Examples of items which should be discussed are: insurance, time off, office space, etc.

Individual Community Obligations

A good rule of thumb should be that obligations directly benefit all members of the community equally, if that’s not the case then it’s a good idea to ask if that’s an individual’s responsibility.

An example might be offices of different sizes. If one individual prefers a larger office to himself but others double up on office space then the office space doesn’t directly benefit whole community. In this case, it might be a good idea to allow individuals determine how much of their own distributions they’re willing to give for their working environment. This would allow those that need larger offices the ability to get them, but does not create a pecking order as there is no downside for those who it doesn’t directly benefit.

Self education

In this style of business it is up to the individual to stay informed in order to create the most value possible. This can be done through self education, team discussions, and a suggested high level cross training which gives the individual a concept of other areas of responsibilities and research which is ongoing.

This high level training of research and concepts will allow the community to better understand how to help each other out. Due to this nature there should be an increase in the volume of applicable value across the community.

Community iterations

When I was a manager one of my direct reports told me something to the effect of, “In agile you should be okay if we fail”. While this can sound bad, what he was trying to imply was that in an environment where the group is expected to self improve, harsh accountability regardless of the circumstance will drive away the willingness to try new things.

In the community model, mistakes are expected to happen, people aren’t perfect. The community should pick durations by which it can review and change the way it functions, even trying out new ideas to see if they will work. This iterative process allows for course correction as the community evolves and the business evolves or individuals in the community’s priorities change.

A brief history of Corporations

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A very brief history of the modern corporation

The modern corporation is founded on a rich history, and evolving philosophies, dating back to Rome.  Originally the term corporation comes from corpus meaning body, or body of people.  These were legal entities the Roman Empire used to manage everything from business to religion.  Even the government itself was considered a corporation, although none of these exactly match what we currently know as corporations.

Europe went through a dramatic change after the fall of the Roman Empire, falling into feudal society, where the governing of people and the oversight and management of the generation of value and goods were combined.  Those in charge were responsible for both the generation of goods in addition to the well being of those they ruled. The educated, connected and noteworthy would rise to the top taking prominent positions, the rest would do what they could to put food on the table. Those positions would ultimately be based off of birthright, political prowess, and ability to lead and produce profits. But as the world’s philosophies on government changed, so to did the notions behind how goods were managed and ultimately the profits were distributed.

The simplest transition for those who were in positions of power in this new world, while still maintaining their status quo, was for those with money to invest in groups, and provide general direction.  In return the profits from these organizations would then be distributed based off of the shares these investors had, along with those shares retained by the individuals who created it in the first place.  This transition allowed the previous feudal elite to maintain their positions to some degree, while allowing the government to change around them.

The corporation, unlike the feudal government, was only partially responsible for the employee’s well being and generally led to the corporation taking advantage of those who worked for them.  Ultimately the government had to step in on the side of the employees.  The positive aspect of the corporation is that the individuals who work for them tend to have a stable source of income, independent of the profit fluctuations the company goes through.  Over time, shares in companies became publicly traded as commodities themselves.

The structure of a corporation

A corporation can be broken down into five classes of individuals: Shareholders, the board of directors, executives, middle management and finally the workers.  These entities work together, performing different roles, in order to predict and produce an overall increase in value in comparison to previous quarters and years.

Shareholders

Shareholders have a financial stake in the company, having paid for the privilege of holding stock.  The goal of the shareholder is for the stock to increase in value and/or to get paid dividends from the profits gained.  The shareholders as a whole own the company.  Their ability to influence though is limited to being able to elect those who will be on the board of directors.

Board of Directors

The board of directors provides more direct influence over the executives, providing oversight of those running the company, as well as making final decisions on large decisions including dividends, compensation policies, executive salaries and hiring and firing of executives.

Executives

The executive class provides oversight, direction and strategy for the corporation.  These responsibilities require a deep understanding of how businesses work. The result is a holistic understanding of how to direct different disciplines to work together to produce value which results in profits.  This manifests in the form of corporate vision and direction, or the why and where the company is going.

Middle management

Middle management takes on the tactical aspects of business.  These individuals have to balance the why and where, with the how and what is currently being made.  The ultimate value these individuals provide is the ability to work with contributors to allow the adjustments in order to align with the executive’s vision, but in a way which doesn’t sacrifice what is currently paying everyone’s paychecks.

The other role of these individuals is to keep things running smoothly, providing oversight, handling personnel issues and a source of day to day decision making when properly empowered.

Contributors

Contributors are those who create the value.  They work in different disciplines, but are the ones who actually perform those functions which contribute directly towards revenue.  In most corporations these individuals are highly specialized and silo-ed, having little interaction with members from the other disciplines.

The value of corporations

The Corporation has become a staple of society today.  Most businesses you’ve heard about is some type of corporation.  They tend to provide reliable employment, and structures which allow individuals to contribute in meaningful ways with a limited understanding of business.  No business entity has had more success, or grown as large, as the modern day corporation.  Many corporations also provide benefits to their employees which may include health, transportation, life insurance and various others.  These benefits provide a higher quality of life for those working for the corporation.