Empire in my parents basement it all
started with a drive to PJ’s pet center
in the family station wagon we all piled
in drove out to the pet store I got to
pick out a mouse found a nice orange one
brought it home set up the cage put
shavings in food water as a 12 year old
this was one of the most exciting
moments of my life and over the next
couple of weeks I fed this mouse and I
watched it get rounder and rounder and
rounder and one morning I woke up and
there wasn’t one Mouse anymore there
were eight and I ran downstairs all
excited told my parents I have a pet
mice this is the greatest thing ever
but they weren’t so excited about this
they had agreed to have one pet mouse in
the house but weren’t so happy about eat
but we agreed that we should let these
mice grow up a little bit but we were
going to take them back to PJ’s pet
center so after a few weeks these mice
had grown to a certain size we piled
back in the family station wagon and we
drive out to PJ’s Pet Center and we go
in and we say here we have these extra
mice and they say thank you very much
we’re gonna give you 50 cents for every
white Mouse and we’ll give you $1 for
all the brown mice so I’m 12 years old
and I’m thinking this is unbelievable I
just make $5 so I go home and
immediately I start working on my first
business plan and a couple days later I
come down to the kitchen table say mom
dad I have this business plan instead of
making $5 once I’m gonna make literally
dozens of dollars a month so to this day
I’m not sure why they agreed but they
let me go get another mouse a male mouse
and we went from having two mice in the
house to five to 10 and ultimately I was
producing 40 mice a month and selling
them to PJ’s pet center at this point my
landlords aka my parents
said 40 mice is a little bit stinky it’s
really awkward when our friends come
over so how about this we’ll give you an
allowance but you got to go and get rid
of all these mice and so ended my first
fast-forward now I graduate from
university I decide you know having gone
through co-op decide I don’t want to go
and work for someone else I’m gonna
start my own business go out and buy a
book like good – great which talks about
how you build a really strong nucleus
for your company by bringing the right
people in we grow the company a little
bit we start to you know have to figure
out products we buy books like crossing
the chasm or the lean startup that help
you you know find product market fit and
get your first customers and that allows
us to continue to grow the business
we’re now approaching 70 people and
something starts to happen this this
team worked this engagement level this
culture we had starts to waffle so we do
what we’ve always done we go to chapters
and we buy a book this time on hierarchy
and talks about the CEO needs to hire
VPS who needs to happen need to hire
directors who hire managers and this
will fix your problem so we set about
and we implement this structure and we
nearly destroyed the company and having
gone through this we sort of realized
like hierarchy is not for us this was
not for us at least was not the solution
and we start having a conversation
internally about you know what made us
so unique and so effective when we were
smaller and we come to this conclusion
that it’s this idea that individual
engagement is what drives businesses
forward so today I’m going to talk to
you guys about an alternative way to
think about organizational structure we
believe that if you focus organizational
structure on the individual experience
as opposed to hierarchy and the rigid
structure that comes with it you’ll get
higher engagement from individuals and
ultimately higher engagement from your
company I’m going to talk today
where did hierarchy come from how do we
find ourselves in the situation where
that book was even on the shelf and the
PERT in the first place I’m gonna talk
about why we believe the hierarchy is
fundamentally broken and we’re going to
talk about how we’ve gone about
implementing a different structure
that’s worked what worked well for us so
first let’s look at wereld hierarchy
come from why do so many companies
operate this if you go back to the 20th
century a lot of the large companies of
the day they made things the jobs people
did were highly mechanical material
would come in one end of the building
you stamped some metal you’d pop some
rivets and you’d ship it out the other
end and the tasks were largely
repeatable the other thing that was true
about the 20th century organization was
the communication had a very high cost
to it if I wanted to communicate out to
a thousand people who worked for me I
needed a way to cascade that
communication through various levels of
Management to get it down to the people
who actually did the work but now if we
fast forward to the 21st century through
automation through outsourcing the types
of jobs that we do in large large
organizations are largely creative not
mechanical the other thing that’s
changed is communication the cost of
communication has gone virtually to zero
we have thick tools like email like
slack like video broadcasts that allow
people in organizations to on mass
communicate with thousands of people
really efficiently so the environment in
which we all work in the 21st century
has evolved but yet we’re still stuck in
the 20th century in terms of how we
think about organizational structure so
when we talk about the individual
experience let’s unpack that a little
bit let’s figure out what we mean and
I’ll go back to the conversations we
started having internally around the
time we decided hierarchy just wasn’t
for us and one of the things that we we
started to hear as we had these
conversations was that to get people to
a point where they were most engaged
they wanted to work on a business need
it was best aligned to something they
were passionate about and something they
were good at so passion skill and need
you know in all the different
conversations we were having that was
the common
theme that was coming up and the more we
researched it this wasn’t necessarily an
idea that was unique to us there’s a guy
named Dan pink who gives a great talk
about autonomy mastery and purpose which
we believe are just different words for
passion skill and need and there’s a
real science around getting people to
that sweet spot where they can work on
the things that link to their passion
skill in need and their engagement level
so that was great you know that told us
a little bit about the individual but in
order to think about organizational
structure we had to look at leadership
so let’s take this the business need of
leadership well we start having these
same conversations what do you guys
expect from your leaders you know hey
leaders what do you think your jobs are
and the three things that come up in
these conversations is this idea that we
expect our leaders to turn vision into
strategy we expect our leaders to
execute a plan and we expect our leaders
to coach and mentor and have empathy so
that’s great we now we can say okay well
the business need of leadership are
those three things but now let’s apply
this idea of the individual and their
skills and their passions and what we
found was and I’ll take myself as an
example what we found was that on these
three dimensions that we expect all
leaders to do everyone who’s a leader
has one of these that they were just
born with so in my case turning vision
to strategy I love doing it I’m super
passionate about it it’s been my you
know life purpose since I was 12 years
old trying to build a mouse empire
leaders generally have learned a second
one you know they got into leadership
they’re passionate about being leaders
they want to get better at it so in my
case coaching mentoring empathy I’ve
learned to say good morning to people
learn to say thank you but I have to
think about that and it’s a skill I’ve
developed over time on the third one
usually leaders have one of these
dimensions that they have a blind spot
for that they are not passionate about
that they’ve never been good at for me
its execution you don’t trust me
you to plan so I want to just kind of
stop and really drive this point home
because these two concepts drive the
rest of my talk right so we have this
individual model passion skill need
that’s what drives people to be the most
engaged and the most productive then we
have this leader model where we expect
leaders to drive strategy execute plans
and have empathy for the people that
they work with so let’s watch what
happens when we put these two concepts
into a hierarchy so there’s me driving
vision saying thank you being horrible
and execution so what do I do well I do
something logical I hire people around
me who are good at execution but the
problem is by the very nature of this
model they’re good at execution but
they’re not good at something else maybe
maybe they’re not good at saying thank
you maybe they’re not good at
communicating strategy and as you build
out this or this hierarchy what happens
is this dilution of those three things
by time you get to the bottom of the
pyramid no one knows what the strategy
is
there’s execution going in all different
directions and no one feels valued and
these are the leaders of the
organization so now the people that work
for those leaders are confused they
don’t feel valued and they ultimately
are disengaged they don’t want to work
there and this was what we had
experienced so we went through this
exercise we sort of unpacked
you know engine being engineers we did a
root cause analysis and we figured out
that this was what was going on an
organization so the insight that we took
away from this was this idea of
functionalizing a leader so we don’t
have managers anymore we have three
functions that do the things that a
manager used to be responsible for doing
we still have this individual but now
each individual has these three
functions of leadership that they
interact with it’s supposed to push and
pull and help them get to that sweet
spot where they can be most engaged and
most productive so let’s look at what
that does to the hierarchy so these are
now individuals right we said before
we’re going to focus on the individual
experience as opposed to the tyranny of
structure so these are the individuals
we invert
the pyramid so now we have these leaders
and their job is to support the
individual not to be their boss each of
the individuals in a team has a
relationship which with each of those
three types of leaders that give them
each of the three things and those
leaders go and work on the type of
leadership that they want to work on
based on their passions and their skills
you get a way more engaged leadership
sphere and as a result you get a way
more engaged individual and team now one
of the the the problems with this model
is it looks a bit chaotic there’s lines
going everywhere how does an individual
actually experience this in their in
their average day one of the things that
we’ve done is we’ve organized people we
kind of stole up a a play a page from
agile we organized people around
business needs as opposed to function so
instead of having a marketing team and a
sales team we have a sales team or a
sorry a territory team focused on all
the things that you need to do inside a
territory customer support sales
marketing and that’s what we interface
with the leaders the other critique of
this model is that what happens if
there’s a tie
what happens if someone’s career path
and the strategy are in conflict or what
happens if someone’s strategy and and
the need to execute in the short term
are in conflict so what we’ve done is at
any given time one of those three
functions of leadership is in charge and
they can break the tie but it’s not
always the same group if we’re trying to
make culture better one year we might
make it the coaching and empathy side of
the side the leadership team if we’re
trying to drive strategy for you might
make the strategy team in charge and we
found that this allows us to move
quickly not get stuck in in little
Quagmire’s while still maintaining this
idea that leaders can support
individuals using what they’re good at
and what they’re passionate about now as
I was putting this talk together I was
imagining being in the audience and I
know what you guys are all thinking
here’s this guy up here talking like a
professor showing lots of diagrams about
organizational structure
so the next part of this talk I actually
want to give you guys some practical
experiences that we’ve had in terms of
how you apply this so that you don’t
think this is all just theory and that
you know that it can actually be
effective so the first lesson is you
have to hire the right types of people
not everyone can thrive in this type of
environment
people have to have to want to what we
call flow have to want to go find that
intersection of their passions skill and
you need if they’re complacent it
doesn’t work so we spend a lot of time
trying to find the right types of people
we’ve gone as far as codifying using
what we call core values what those
right types of people are and what we
find is if you if you fill the
organization up with the right kinds of
people you can build all of your
business processes around this idea of
trusting your employees which I know
sounds obvious but is not how most
organizations run we design for the 99%
the people we can trust given that we’ve
hired the right people as opposed to
designing business processes around the
1% that you can’t trust which is how
most hierarchical organizations run so
what happens if I bring someone in who’s
got a passion for a business need they
have the skills to do it over time let’s
say they finished the project or the
business grows something changes that
business need I brought them in for is
no longer needed because they finished
their project so the second concept and
this is I think the most important part
of this whole thing is this idea of the
bench and by bench what we mean is that
if you don’t provide people with a safe
place to go when they’ve when they’ve
finished the business need using the
thing that their passion doing the thing
they’re passionate about using they’re
skilled then they they crave security
they don’t want to move off of that role
right and then they get stuck in this
area where now they’re not passionate
anymore or their skill isn’t being
useful isn’t being used where they’re
working on a business need that doesn’t
matter anymore
so if you have someone let’s say for
example who’s great at building teams
but doesn’t love operating the team at
some point the team is built and that
person needs to be able to move to the
side without
feeling like they’ve failed so for us
the bench is something we actually
celebrate if someone finishes executing
on a business need and they move to the
bench that’s that’s awesome because now
they can go and they can take some time
and they can find the next thing where
they can find that intersection of their
passion skill need one of the types of
transitions that we see people make is
they go from being contributors to being
leaders and that brings me to our third
lesson in hierarchical organization you
know I imagine that a higher leader
leader comes in they get down on one
knee
some guy takes a sword anoints them you
are now a leader you’re the boss
right you have this power now you can go
and do boss things in our environment we
don’t do that ever
leaders emerge in our organization and I
always say leaders are people who lead
you know if someone comes up to me and
says hey I want I want to I want to be a
leader great lead go do it and we find
that that that approach makes it so that
when you do bring in a leader because
sometimes we do hire people we have a
need business need for a leader we have
someone who’s passionate about leading
we have someone with the skills to lead
we bring them in but we don’t give them
the title we don’t give them the reports
we just say welcome to the team and what
happens every time is those people will
rally the people who crave leadership
they want to learn you want to know
where to go they’ll rally around that
person but if they don’t well then that
person wasn’t a good leader in the first
place and you’re better off to not have
put them into that environment and said
hey this is your boss because then I’ll
lose credibility so to conclude on this
there’s a new way to build organizations
or an organizational structure it’s
centered around the individual
experience at the core of that idea is
two truths one you have to build your
organization in a way that allows people
to find the intersection of their
passion their skill and a business need
and two if you want to be true be
faithful to that idea for contributors
you have to functionalize leadership you
have
to break leadership into three pieces to
allow the individuals who are leaders to
apply their passions and skills in each
of those three areas execution strategy
and empathy and if you do that you will
have way more engagement inside your
inside your company your company will
perform better your turnover will go
down and you’ll win in your markets and
I’ll leave you with one final thought
there is a revolution happening in the
way that organizational design is done
we hear it in terms of terms like hala
cracy and agile and nodal organizations
these are all words that we’re trying to
use as a society to find our voice our
common voice on this new type of
organizational structure and I would say
to you all as you go out into the work
fete workforce as you build startup
companies as you want to build your own
Mouse empires don’t accept that
hierarchy is the way that this has
always been done because it
fundamentally will make your
organization’s slower and it will result
in disengaged people who work for you
embrace some of these new ideas find
your voice on it and we will all build
great organizations together thank you
very much [Applause]