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It is essential that autonomy is combined with responsibility.

staff typically manage the whole work process from making sales, manufacture, accounts, to dispatch

they are also responsible for managing their own capitalization; a form of virtual ownership develops. Everything they need for their work, from office furniture to high-end machinery will appear on their individual balance sheet; or it will need to be bought in from somewhere else in the company on a pay-as-you go or lease basis. All aspects of the capital deployed in their activities must be accounted for and are therefore treated with the respect one accords one’s own property.

The result is not simply a disparate set of individuals doing their own thing under the same roof. Together they benefit from an economy of scale as well as their combined resources to tackle large projects; they are an interconnected whole. They have in common a brand, which they jointly represent, and also a business management system (the Say-Do-Prove system) - consisting not only of system-wide boundaries but also proprietary business management software which helps each take care of the back-end accounting and administrative processing. The effect is a balance between freedom and constraint, individualism and social process.

embodiment of meaning

But culture is a much more personal phenomenon

Culture is like climate- it does not exist in and of itself- it cannot exist in a vacuum, it must exist within a medium.

underlying culture

Incompatibility between the presenting culture and the underlying one provide a great source of tension

The truth of course is that when tension builds to a critical level it takes just a small perturbation to burst the bubble and the hidden culture reveals itself powered by the considerable pent-up energy.

Consider again the idea that for the health of an endangered species; the conditions in their habitat must be just right. In business, the work environment can be considered analogous to this idea of habitat.

A healthy environment is one that provides a blank canvas; it should be invisible in that it allows culture to be expressed without taint

The over-arching, high-level obligations are applied to the organization via contractual and legal terms.

But it is these obligations that the traditional corporate model separates out into functions and then parcels off to distinct groups. The effect is that a clear sight of these ‘higher’ obligations by the people at the front-end is obstructed. The overall sense of responsibility is not transmitted but gets lost in the distortions, discontinuities and contradictions inherent in the corporate systems of hierarchy and functionalization.

employees are individually rewarded for their contribution to each product. They are not “compensated” for the hours spent at work. If an employee wants to calculate their hourly rate, then they are free to do so however, they are only rewarded for the outcome not the duration of their endeavors.

Another simplification is the application of virtual accounts (Profit and Loss (P&L) account and Balance Sheet) on each person within the business.

The company systems simply provide a mechanism for cheaply measuring the success of each individual’s choices. For quality the measure is customer returns, for delivery it is an on-time-and-in-full metric and profit is expressed in terms of both pounds sterling and ROI (return on investment).

The innumerable direct links back to an external reality -like the fragile ties that bound giant Gulliver, seem much more effective at aligning the presenting culture and the underlying embodied culture, and in doing so work to remove the existing tension.

With a culture that responds directly to reality, the rules in the environment can be “bounding” rather than “binding”- limiting rather than instructive; this way individual behavior need not be directed at all. The goal is to free the individual to express himself fully through his work, bounded only by the limits of the law. With clever feedback (self-referencing feedback loops) integrated into the design, the individuals can themselves grow to collectively take charge of the system boundaries, culture and even the environment itself, always minded of the inherent risks they are balancing, leaving the law of the land as the sole artificial boundary.

the conventional company, which, instead of rewarding enterprise, trains compliance by suppressing individual initiative under layer upon layer of translation tools.

apply accountability to the individual not command-and-control.

without the divisive and overbearing management cabal the natural reaction of humans is to combine their efforts

a new member of staff at Matt Black Systems

recruited by another staff member (sponsor) and they will help you learn the basics of the business management system- they will help you get to know the ropes.

jobs are passed to new staff members, a royalty payment can be established on the work passed over.

Along with that job you will be given a cash float (risk capital), P&L Account, a Balance Sheet and computer software to help plan and record your activities. Your operation is monitored by your sponsor to see if you increase the margin or volume, and so establish a sustainable operation. Training and mentoring is provided to support the steep learning curve - but without removing the responsibility of producing a return on the sponsor’s risk capital.

You will, in the meantime be looking to establish some of your own work for which you will not have to pay a commission or royalty to your sponsor and this will provide you with more profitable operations such that eventually you might pass back to the sponsor the original operation, as it has become your lowest margin activity. It will then find its way to a new employee (along with the associated Balance Sheet risk capital) where the process is repeated by the sponsor.[4]

Remuneration for staff is calibrated in a way that reflects the balance of different forces around ‘pay’

there is an obligation upon the company to pay a minimum wage even if the profitability of the operation does not support this

there are therefore two aspects of the basic pay structure: one is “absolute” and reflects the entrepreneurial skill level of the employee according to a sophisticated grading scale

A further 20% of the original profit will be paid into his risk capital account, which will be his responsibility to deploy in any way he sees fit as part of his Balance Sheet. Of the three remaining 20% slices of the original profit, one is paid out as corporation tax, another as a dividend to the shareholders and the last retained as collective risk capital on the company’s balance sheet- a war chest so to speak.

Julian Wilson and Andrew Holm sell products / services to their staff (such as office space and software) they have an identical customer/supplier relationship with the other employees.

Naturally there are some people that can’t generate a profit. The sponsor’s risk capital will eventually be consumed through pay. After a process of rescue and recovery- where their shortcomings are identified and they are given the opportunity to put them right, they either improve or leave, albeit with a sizeable increase in their skills.

there is a gradual process of accustomisation; the void of the new employee is surrounded by others dealing with their particular activities, offering both role models and operations they may wish to relinquish. One step at a time the new employee acquires the skills to become completely self-managing, to increase their margins, to make investments, to find new business, to become a creator of their own success. Ultimately, they learn to be an entrepreneur.

responsible autonomy as an alternative vision to traditional hierarchy

Matt Black Systems it is not simply commitment that they targeted in their employees, rather they aim for the specific human qualities they sum up as magic- those of curiosity, imagination, creativity, cooperation, self-discipline and realization (bringing ideas to reality).

a new form of association of individuals working together under the umbrella of a company structure: a kind of collective autonomy

The business is called Matt Black Systems, based in Poole in dorset

Turning an organisation on its head- removing all management, establishing a P&L account and Balance Sheet on everyone in the organisation and having customers payment go first into the respective persons P&L account has revolutionised this company. 

This innovative company’s approach views business success as wholly reliant upon human agency, and its wellspring at the individual level.

problem (of unnecessarily high overheads placed on production) that arguably is behind the decline in western manufacturing

over-managed business

Autonomy Enables Productivity

organizational design brings to light the unconscious socio-philosophical paradigm of the society in which it exists, organizational development points to how change occurs.

a mechanistic approach to organization

scientific management employs rationalism and determinism in pursuit of efficiency, but leaves no place for self-determination for most people within the system.

Command and Control

today, a really “modern” view of an organization is more likely to be depicted in terms that are akin to an organism.

When it comes to getting work done, the simple question is: are people the problem or the solution?

the Taylorist approach may be more real in theory than in practice: its instrumentalist view of the workforce is cursed by unintended consequences. When workers have no space for their own creative expression, when they are treated like automata not unique individuals, when they become demotivated and surly, when they treat their work as a necessary evil; this is no recipe for a functional organization.

The natural, human reaction to this is unionization, defiance and even outright rebellion; to counter this, management grows larger and more rigid in pursuit of compliance, organizations become top heavy with staff who do not contribute directly to the process of value creation but wield power over those who do.

voluntary slavery of ‘wagery’

Even when disgruntled employees strike free and start their own businesses they seem unable to resist the hegemony of the conventional command-and-control approach

Making the transition involves adherence to a whole new sociology of work with all the challenging social and psychological implications that brings.

first principal that people in the business have the ability to provide the solution

In the “theory of constraints” the goal is to align front-line staff into a neat, compact line for maximum efficiency. Surely the most considered approach is to have front-line staff self-align in pursuit of their individual goals?

The removal of hierarchy and specialization is key to a massive improvement in both profitability and productivity. In summary: there are no managers in the company, or foremen, or sales staff, or finance departments; the company is not functionally compartmentalized and there is no hierarchy of command. In fact every member of staff operates as a virtual micro-business with their own Profit & Loss account and Balance Sheet, they manage their own work and see processes through from end to end

Formal interaction between colleagues takes place via “customer and supplier” relationships.

autonomy enables productivity

if one creates a space in which staff pursue their own goals and are not paid by the hour, they will focus on their activities not the clock; if they are not told what to do, they will need to develop their own initiative; if they are free to develop their own processes, they will discover through their own creative faculties how to work more productively- in pursuit of their goals

The human qualities which are of greatest potential value to the business are: curiosity, imagination, creativity, cooperation, self-discipline and realization (bringing ideas to reality)

These qualities are the very ones most likely to be withheld by an individual when the environment is ‘wrong’.

Any elements in the business environment that undermine the autonomy and purpose of the individual will see the above qualities withheld

High on the list of undermining elements come power-hierarchy and over-specialization

the responsibility of the individual is formalized, specified and restricted. An improved system is not one where responsibility is distributed perfectly but rather one where there is simply no opportunity for responsibility to be lost (via the divisions between the chunks). Systems must be reorganized so responsibility -the most essential of qualities -is protected and wholly preserved.

Matt Black Systems believe this can only be done by containing the whole responsibility within an individual, holding them both responsible and giving them ‘response-ability’

The experience of Matt Black Systems demonstrates that radical change is possible

productivity is up 300%, the profit margin is up 10%[3], customer perception has shifted from poor to outstanding, product returns are at less than 1%, “on time and in full” delivery is greater than 96%, pay has increased 100%.

staff develop broader and deeper skills and feel greater job security; they get direct feedback from their customers which all go to fuel self-confidence and self-esteem.

the staff manage themselves

“only variety can absorb variety”.

What is particular about their story is that behind it is a very consciously crafted design that surrounds the individualism of each person with hard boundaries of the customer, the law and the business. It is these boundaries rather than the instructive persona of ‘the boss’ that gives rise to the discipline in which individuals can develop. Autonomy is not the same as freedom, at least not in the loose sense of ‘do as you please’. An autonomous person is a person who has become self-governing, who has developed a capacity for self-regulation, quite a different notion from the absence of boundaries. Indeed, it is with establishing the right boundaries that the business philosophy is most concerned. The company provides the crucible in which the individual can develop self-expression but the container itself is bounded. Wilson calls this “designing the void”. This crucible is carefully constructed from an all-encompassing, interconnecting set of boundaries that provide an ultimate limit to behaviours (where they would fall foul of the law or take risks with catastrophic potential). It is an illusion to think, as a director of a company, that you are not engaged in a process of social conditioning; the basis of the culture is both your responsibility and the result of your influence. The trick is to know what needs to be defined and what needs to be left open. The traditional authoritarian, controlling characters that often dominate business are the antithesis of this in their drive to fill this void with process, persona and instruction. Alternatively, creating an environment that fosters enterprise, individuals discover how to be enterprising.

Not democratizing the IP itself — institutions should still own and generate profits from the intellectual property they’ve created — but democratizing the ways in which we allow this IP to be discovered and licensed.

Marblar, where I’m an advisor