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THE NEXT GENERATION OF SELF-MANAGED TEAMS: The evolving paradox of organizational structure

160114_ChairCall_webDr. Ethan Bernstein from the Harvard Busines School shared his latest thinking regarding the next generation of self-managed teams.   To consider a move from self-managed teams to self-organized organizations, we will start with a story: Imagine yourself as a small team of five “Zapponians” in Los Vegas in May 2015. You’re at a firm that is famous for “delivering happiness” – a unique approach to customer service — and you’re the largest company to use holacracy (a self managing organization which offers decision making to circles rather than to managers). You’ve discovered that 14% of the company has accepted a severance package rather than become part of the holacracy. 6% is specifically leaving as a veto of the idea of a holacracy.

The findings Ethan presented will be Published in HBR June edition, so please don’t pass along what you see in this presentation to others until the article comes out.

Most work these days is teamwork because of the complexity of the tasks at hand. How do we help teams interface well with each other? We can opt toward a matrix organization or take something like holacracy, which gets rid of that structure and assumes we can find other ways to govern our circles and link to other teams. People don’t have a title of manager, but they do have roles that shift over time. The aim is to sense tensions, get those tensions out, and adapt. Currently the two options of matrix and holacracy are in a bit of a boxing match, and this boxing match is the basis of our paradox conversation.

The presentation will look at two questions:

  1. How did we get to a point where we’re arguing between matrix and holacracy?
  2. How do we understand the paradox and resolve it?

Review of History: The Matrix

Consider the traditional organization model and how it has evolved

  • functional organizations divide people by their function: sales / HR / etc.
  • divisional organizations group people into divisions with different expertise along different groups
  • process organizations try to get rid of functions and products and be about processes
  • a matrix organization is both functional and divisional and has evolved to address multiple goals

Review of History: The Holacracy

  • Eric Trist as a member of the Tavistock Institue, first observed the potential of self managed teams to increase productivity at the South Yorkshire Coal Mines of the late 1940’s and “came up a different man”
  • Coal Mining was an assembly each team performed only part of the process. Taylorism seems to see this as the most efficient process.
  • At the South Yorkshire mines, Trist observes many autonomous teams who each take responsibility for the end goal rather than simply fulfilling an assembly line task
  • Trist is impressed that the autonomous teams can make decisions by themselves with only the support of a general manager. This is the beginning of the self-managed team.
  • Self management works for more and more companies until, by the mid 1990’s, about ¾ of Fortune 500 companies have adopted self managed teams for some part of their organizational structure, even though the might have a very low percentage of employees per company who are actually participating in a self managed team.

Self Managed Teams are teams in which members collectively share:

  • Accountability for work done
  • Authority over how work is achieved
  • Discretion over how resources are used
  • Ownership over information and knowledge related to the work

The biggest challenge in moving toward self-managed teams is usually getting the managers out of the way. This challenge leads to organizations that are “post-structured,” “organic,” or “podular.” All of these attempted solutions aim to resolve tensions between self-management and the matrix. They all have a few things in common:

  • each has a set of team-like modules for getting things done
  • each system provides a framework for structuring the pods, circles, clusters, etc.
  • in each type of organization, leadership is contextual as opposed to being about the leader

There is a tension between the organizational needs and the individual needs, and we’re also faced with the challenge of being both adaptable and reliable. We need to consider whether the aim is to constantly adapt to the market context or have some consistency. Prioritizing organizational need and reliability or individual need and adaptability are both easy. The challenge comes with the other two parts of the two by two: we want to value organizational need and adaptability or individual need and reliability. That is the paradox which the self managed team has solved at the team level but which we haven’t yet solved at the organizational level. It is important to note that a resolution to this paradox will look different for each organization that is part of LILA.

Harvard Graduate School of Education