IDEO: Innovation via Chaos

IDEO is an example to us all of how autonomy instead of empowerment, synergy instead of lone genius, and play instead of work lead to innovation instead of regurgitation.

Favorite Quotes:
"Enlightened trial and error succeeds over the planning of the lone genius."
"Being playful is of huge importance to being innovative" because needing to be right keeps us paralyzed and being wrong forces us to explore.
"Trying stuff and then asking for forgiveness is the way that people come up with new ideas."

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Democracy is not Popular

Is it possible that the same vast majority that believed political democracy could only work for the American colonies are just like the vast majority that now believe organizational democracy can only work for Groupon, WD-40, GE Aviation, Hulu, Great Harvest, Semco, and Seventh Generation and the other hundreds of democratic businesses?

Could it be that by dismissing organizational democracy, we are no less "ignorant" than we perceive the 42% of humanity that has not adopted political democracy to be? Is it possible that Thomas Jefferson's declaration that "men can be trusted to govern themselves without a master" should be universally applied to all adults in all aspects of life?

Trust is a funny thing. It is the mystery--and the genius--of what paradoxically inspires fear in the masses and excellence in the individual.

Order or Progress

Every organization must choose between order or progress since order and progress are rarely found together. Rules, manuals, regulations, codes of ethics, and bureaucracy restrict intuition and encourage conformity--not creativity.

Creativity, intuition, and excellence are developed when order is lacking. Did Mozart create his symphonies under the direction of another? Did the United States develop as a Super Power under the direction of a king or queen? Did Orville and Wilbur, Benjamin Franklin, Thomas Edison, Henry Ford, or Nikola Tesla develop their ingenuity under the watchful eye of another? Does most innovation develop in large companies or small, chaotic start-up companies?

If this is the case, why aren't businesses intentionally structured to empower and free the ingenuity of individuals?

From the Division of Labor to the Division of Management

The division of labor is the business principle that productivity goes up as tasks are divided up and simplified. The most famous contributor to the science of dividing labor is Henry Ford. By dividing up labor on an assembly line, Ford was able to "democratize the automobile." Since then, every other industry has utilized the principle of "division of labor" to make goods and services more affordable for the majority of Americans.

The benefits of dividing management are just as great as dividing labor; yet, businesses have been slow to change. The greatest advancements in the "division of management" are the franchise and Deming philosophy. By decentralizing ownership to franchise owners, corporations like McDonald's have successfully engaged employees and empowered individuals. Likewise, by doing away with unnecessary layers of management and empowering employees with a purpose beyond profits, Toyota and other Japanese companies found monumental success with W. Edwards Deming's philosophy. Toyota has developed the division of management so well that very little changes when a new CEO comes to power because ultimate authority within the company is not derived by position or rank; following the doctrine of the company, the Toyota Way, is the ultimate source of authority at Toyota.

More and more businesses are copying the successes of companies like McDonald's and Toyota, but we are still far from perfecting the "division of management." We will know that we have arrived when we replace the static org. chart with the idea of a network organization that varies over time, changing to suit the information-processing requirements of varying tasks. Doing so will inspire greater innovation, create more efficiency and productivity, and capture the $300 billion that are lost annually, in the U.S., because of employee disengagement.

Most Democratic Workplaces of 2011

New to the list this year are American Support, Bucket Brigade, Bump.com, Greenleaf Book Group, Groupon, Hulu, Integritive, Learn Quebec, Mojo Interactive, Podio, Productivity Associates, Rabbit, Total Debt Freedom, Valtech, Happy at Work, and WD-40.

Other well known companies on WorldBlu's list include Zappos, Guayaki, Great Harvest, DaVita, and 1-800-GOT-JUNK.

Democratic Business Creates Free Markets

The Free Market philosophy assumes that a person makes as much money as s/he is worth. In real life, this is not true. The average Fortune 500 CEO makes 488 times more than his/her average employee. No one's work can possibly be worth 488 times more than another's. Beyond the Fortune 500, it is common practice for entrepreneurs to make a small, initial investment, build the business on the backs of others, and then receive a disproportionate amount of the rewards.

However, we cannot blame Free Markets for our economic disparity. We can no more blame Free Markets for unfair compensations than we can blame corruption on democracy. We can only blame economic disparity on human greed and business structures that encourage greed.  Just as corruption thrives when democracy is ignored, greed thrives in businesses that are run like a dictatorship. The inevitable end of corporate dictatorship will create an environment in Free Markets where people make as much money as they are worth.

Democratic businesses compensate people for what they are worth. The average democratic business pays less than 20 times more, than its average employees, to its highest paid employee. Moreover, democratic businesses compensates employees with ownership for their investment of time and effort. In sum, democratic businesses empower employees to resolve their own disputes between labor and management, and therefore, obviate the need for most government intervention and regulation.

Profound Lessons about Work and Life

This quote comes in the last chapter of the book Maverick by Ricardo Semler

"To survive in modern times, a company must have an organizational structure that accepts change as its basic premise, lets tribal customs thrive, and fosters a power that is derived from respect, not rules. In other words, the successful companies will be the ones that put quality of life first. Do this and the rest - quality of product, productivity of workers, profits for all - will follow. At Semco we did away with structures that dictate the "hows" and created fertile soil for differences. We gave people an opportunity to test, question, and disagree. We let them determine their own futures. We let them come and go as they wanted, work at home if they wished, set their own salaries, choose their own bosses. We let them change their minds and ours, prove us wrong when we are wrong, make us humbler. Such a system relishes change, which is the only antidote to the corporate brainwashing that has consigned giant businesses with brilliant pasts to uncertain futures."

4,000 Years of Democracy

http://www.mapsofwar.com/

Euphoric Purpose is the Aim of Democratic Business

Euphoric purpose is the motivation, beyond profits, that drives people to excellence. The transparency, decentralization, consensus, and participatory ownership that embody democratic business exists to create passionate and engaged workers. According to Steven R. Covey, passionate, engaged people spend 60-80 percent of their time working on non-urgent, important activities (e.g., skill building, planning, relationship building, and thinking). People driven by fear spend most of their time on everything else (e.g., deadlines, interruptions, and distractions). According to Covey, not only do passionate, engaged people spend more time on non-urgent, important activities, but they are consequently more productive, successful, and happy.

If Covey's research is right, then we should ask ourselves, 'How many business owners are willing to free up 80 percent or even 60 percent of their workers' time to focus on the important, but not urgent, activities of the business?' For most people, the thought of doing so inspires visions of chaos, diminished productivity, and lost profits. And yet, A study done by Kenexa Research Institute found that of 4,000 worldwide companies, the top 25 engaged workplaces outperformed the 25 lowest engaged businesses 7-to-1 (based on shareholder return, on a five-year basis). Furthermore, a Gallup study of three million employees, published in 2005, calculated that disengagement costs U.S. businesses $350 billion in annual profits. Gallup found that 71 percent of American employees are either “not engaged” or “actively disengaged” from their work. If you think this is only indicative of lazy workers, read on. The Corporate Executive Board reported in 2010 that high-potential employees are increasingly disengaged and seeking new career opportunities. Some 25 percent plan to leave their current employers in the next year compared to 10 percent in 2006. About one in five (21 percent) identify themselves as 'highly disengaged'--a three-fold increase since 2007. With numbers like these, it is no wonder that shows like "the Office" are so popular.

As demonstrated, passionate and engaging workplaces retain better talent and increase profits. Transparency, decentralization, consensus, and participatory ownership are proven ways to inspire and engage workers. We can fix our economy by implementing these principles into American business. The first step is to realize that numbers do not drive people, but people and relationships drive numbers.
 
(Information taken from http://www.kenexa.com/getattachment/8c36e336-3935-4406-8b7b-777f1afaa57d/The-Impact-of-Employee-Engagement.aspx, http://corporatecranium.com/wp-content/uploads/2010/05/ActionCoachNovember20101.pdf, http://www.hrmguide.net/usa/commitment/actively_disengaged.htm, and http://www.worldblu.com/live/2005/presentations/Traci%20Fenton.pdf)

(See also, http://www.workplacementalhealth.org/Publications-Surveys/Research-Works/Employee-Engagement-Best-Practices-for-Employers.aspx?FT=.pdf)

Alexis De Tocqueville Attributed America's Prosperity to Local, Participatory Democracy

 Alexis De Tocqueville in Democracy in America attributed America's prosperity and wealth to the experience American's derive from local, participatory democracy:

"Local assemblies of citizens constitute the strength of free nations. Town-meetings are to liberty what primary schools are to science...A nation may establish a system of free government, but without the spirit of municipal institutions it cannot have the spirit of liberty."

"I have no doubt that the democratic institutions of the United States, joined to the physical constitution of the country, are the cause of the prodigious commercial activity of the inhabitants. It is not engendered by the laws, but the people learns how to promote it by the experience derived from legislation."

"In America I met with men who secretly aspired to destroy the democratic institutions of the Union...but I know of no one who does not...place the advantages of local institutions in the foremost rank...The only nations which deny the utility of provincial liberties are those who have fewest of them."

Although our townmeetings are poorly attended and our neighbors are often strangers, there is reason to believe that the Local Spirit has not fled America. The internet has, in many ways, revived our Local Spirit. The 2010 Elections saw the greatest turnover in American congressmen since the Great Depression. Political debate and idealism have returned to our conversation on Facebook and Twitter.

Another example of Local Spirit on the internet is in Egypt, Tunisia, and Iran. Democratic revolutions have been coordinated as a result of Local Spirit through the internet. Moreover, I believe that this is only the beginning. Entrepreneurship, liberty, and solidarity will accelerate in the 21st Century as the Local Spirit of liberty sweeps across the world.