Making Self-Organization Work

 Discipline without freedom is tyranny; freedom without discipline is chaos (Cullen Hightower).

Morning Star is the largest tomato processor in the United States with 400 employees and over $700 million in annual revenues. Morning Star’s CEO, Chris Rufer, built a successful company on the principle of self-management where everyone is responsible for coordinating with colleagues, customer, and suppliers absent directives from others (this story comes from management guru Gary Hamel’s recent book, What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation).

What struck me about this story, essentially about moving from a hierarchical to a networked management structure, from command-control to self-management, were the success, the benefits, and the difficulty. Self-management, or self-organization, doesn’t come easy. It’s so much more than saying, “Ok, now everyone is empowered.” It takes three distinct things to make self-organization work: Values, Accountability, and Systems. All three of these things are embedded in the Morning Star culture, and they make their success difficult to duplicate.

First, the values of self-management run deeply in Morning Star. Every employee receives training in this from the beginning and new hires that have experience in more traditional companies often have significant problems making the change. For example, there is no centralized purchasing group—if an employee, any employee, needs something, they buy it!

Networks are built on peer-to-peer agreements, not top-down plans. Each Morning Star employee and business unit develops individual mission statements that establish the context for their work. Then, each individual and business unit develops a set of “Colleague Letters of Understanding (CLOUs)” that outline how each will work with others. (I proposed something similar in Agile Project Management called an Inter-team Commitment Story that helps in managing large projects). These CLOUs include activities and relevant performance metrics. As Chris Rufer says, “The question is not whether you have structure, but how you develop it—top down or bottom up.” The important point here is that these are peer-to-peer, not employee-to-boss commitments.

Agreements, of any kind, aren’t effective without accountability. In Morning Star accountability is built using a number of systems, but eventually it boils down to individual commitment and culture. Anyone in Morning Star has the authority to spend money and hire new employees. However, they must justify those acts to their peers. This means that the bigger the decision, the more colleagues the decision gets discussed with before taking action to insure you aren’t stuck out on a lonely limb. Freedom is there, but so is discipline. Employees feel accountable to each other for results—and they hold each other’s collective feet to the fire.

While accountability is driven by culture and individual responsibility, it can’t be operationalized without data, without transparency. In Morning Star everyone sees the data, twice a month, from everyone else and from the company as a whole. Transparency assists employees to make decisions that are in the best interest of the company as a whole, not just their individual business units. Accountability is also woven deeply into the culture by using detailed feedback from a peer review process at both the individual and business unit level.

There are other similar examples in Hamel’s book, but the same conditions for success seem to be woven through each case. While the details are often different, the broad categorizations of success factors are the same: A dedication to the values of self-management/self-organization, deeply engrained accountability at the individual and organizational unit level, and comprehensive management support systems. To paraphrase the thoughts of Chris Rufer above—you have to have structure, but whether it comes top down or bottom up makes a big difference. Self-organization isn’t easy, in fact, based on the evidence; it may be harder to carry off than traditional management. But the rewards, in terms of performance and organizational health can be substantial. (for more on this topic, see “No More Self-organizing Teams”).