danieltenner.com

“A gentleman is a gentleman even in the gutter.”

Popular Romanian Proverb

What are your values? How do you find out? How do you test them? How do you know whether your values are really your values?

There are countless exercises designed to help a company find its values. And they are no doubt very effective at generating a consensus set of values that everyone can get behind. I am in some doubt as to whether those can uncover true values. I think only hard experience can test whether a value is truly held or merely a cosmetic convenience.

Values are oh so fragile. As my father put more eloquently than me in this article, everyone agrees with all the values, the question is, which do they put first? When trying times come around, when we have every justification to break our own values, to make an exception, to bypass the principle and to achieve a necessary, important objective, do we?

The more I observe the dynamics at play in a company like GrantTree, the more it seems to me that it is precisely in those moments that our true values are revealed. Moreover, I don’t think there is any other way to reveal them for sure.

An old principle

This is not news. No truly powerful idea is, I suppose. Jesus is reported to have once said1:

Ye have heard that it hath been said, Thou shalt love thy neighbour, and hate thine enemy. But I say unto you, Love your enemies, bless them that curse you, do good to them that hate you, and pray for them which despitefully use you, and persecute you; That ye may be the children of your Father which is in heaven: for he maketh his sun to rise on the evil and on the good, and sendeth rain on the just and on the unjust. For if ye love them which love you, what reward have ye? do not even the publicans the same? And if ye salute your brethren only, what do ye more than others? do not even the publicans so? Be ye therefore perfect, even as your Father which is in heaven is perfect.

It’s easy to love our friends. It’s easy to have values when they are untested. It’s cheap to have principles when everything is going well. But what do we do when there is real pain and loss and danger at hand? What do we do when faced with those we hate, in person or behaviour? What do we do under real pressure?

Business has a habit of throwing difficult situations at us on a regular basis. There is real work to be done, there are real stakes, things to be gained and lost right now. It maybe does not happen every day, but a business will frequently test our values.

The enemies of our values

There are certain sentences and idea fragments that I often find rising out of the ground like walls, in the way of a consistent application of our values. This is by no means a complete glossary, just a sketch of a few known shapes that the foe might take. Perhaps they can help us recognise when we are being tested.

“But these are special circumstances”

When faced with testing circumstances, it can be very tempting to carve out an exception because the situation is unique. Of course, every single situation we will ever face in our lives is unique. The world does not repeat itself.

If we give in to the temptation to carve, soon there will be nothing but holes in our principles.

Instead, we could accept the uniqueness of the circumstances, and figure out how we can successfully apply our principles to these circumstances.

“But we are running a business here”

Necessity is the mother not just of invention but also of compromise. Often, when a value is being tested, this is the shape of the challenge. Everyone has their own idea of what “running a business” means, of course, but when they bring up this bogeyman they are really saying that they are afraid that the principle or value is not compatible with the survival of the business, immediate or more distant.

If we sacrifice our principles on the altar of survival or profit, they are not really principles at all.

Instead, we could listen with compassion to the fear, accept it, embrace it, and speak to it. Many things can cause fear in the world of business, and we will find ways to be ourselves even in fearful circumstances.

“But we don’t want to set a precedent that could be abused”

This is another message of fear. In a trust-based, open culture environment, there are countless things done every day that could be abused by a “bad actor”. Open cultures rely on the Theory Y model of trusting that people will be good rather than bad. There can and will be exceptions, but my observation is that the benefits far outweigh the occasional, rare, and inevitable abuse.

It is of course very hard to trust Mr X, the future hire who we don’t know, and who therefore may well behave according to Theory X, and be selfish, potentially abusive, and who therefore needs to be controlled. It can be easy to fall into the trap of assuming that we must design the systems, the processes, the precedents, to prevent Mr X from abusing the company.

Instead, we could recognise that Mr X is a bogeyman, and replace him in our minds with people we know and understand within our teams. Would the process or decision work in their case? Would they abuse it? Hopefully the answer is “of course not”, and we can put the bogeyman to rest.

“But this person is really bad/misguided/wrong”

The last and perhaps most difficult shape is that of the evil one. When circumstances conspire to make us see the other as The Other, as the Stranger, the Evil, who cannot be reasoned with because this is just how he is, this is his nature, unchangeable. He is Evil and so there is only one thing to do: fight.

One might think that it would be easy to recognise and ignore this bias, but in my experience it is the hardest to defeat. What is violence? Disconnection, from ourselves and from others2. What is its opposite? Connection and love. When faced with someone we perceive as evil, the natural response is violence. Who wants to connect to evil, to love evil? Jesus’s admonition, his central message of love, is heavy… like a cross?

It is so very easy to slip on the battle gear and go to war.

Instead, if only we could find compassion for the other person. If only we could make room within ourselves for the possibility that they are not evil, nor even misguided, but merely see the world in a different way, or are simply angry or fearful themselves. And if we could fight that anger and fear and disconnection with love. But this is very hard work.

If we only could, though, once a connection is built, even just one way, it becomes once again possible to stick to our principles.

Are all your values there yet?

I wish I could say that I have “won” every one of these struggles. I haven’t, not by a long shot. It’s hard to stick to your principles under pressure.

I think it’s important to conclude by noting that just because we fail at our desired values once, or even over and over again, doesn’t mean we don’t care about them. We are but human. All we can ask of ourselves is to recognise the failure and try to do better next time. I imagine this is a lifelong process.

Dear Tony,

First of all, let me start by stating that I truly admire what you’ve achieved. Your book, describing your path from LinkExchange to Zappos, from culture-by-accident to the deliberate creation of an awesome company based on culture, was an inspiration for us at GrantTree. The idea of optimising a company for employee happiness, as well as the knowledge that someone else had done this on a much larger scale than my cofounder and I, were invaluable guideposts on a road less travelled, towards cultures built upon openness and respect.

I also completely agree with where you’re trying to take Zappos. I believe that teal/open (or holacratic) cultures are a better way to operate, in many ways, with many advantages, at the very least for the people working there. I wholeheartedly agree with the objective you’re pursuing.

However, as someone who has, over the last couple of years, helped an open culture come to life, albeit on a much smaller scale at GrantTree, I find myself worried by your approach towards implementing Holacracy and the “Teal” model described by Frédéric Laloux.

I am not a culture consultant. I am not a social scientist. I am not a coach. But I am a founder of a company that, over the last couple of years, transitioned to a model that shares some features with Holacracy, and has a lot more in common with the Teal organisations described by Laloux, which I like to call open cultures. I don’t know whether you’re aware of the points below. You may very well disagree with them, and you may well be right and I wrong. I offer them up humbly hoping they might be of use to you.

My observations fall into a few key categories. First, an observation about basic respect for the individual. Then, concerning two of the key “breakthroughs” of Teal organisations according to Laloux: self-management and wholeness. Then concerning holacracy itself. Finally, concerning the agenda of open cultures itself.

As a final caveat, I should add that I don’t have any insider knowledge as to what’s going on inside Zappos itself. Perhaps the picture that emerges from reading the memo is incorrect. Perhaps things are going swimmingly and I’ve misinterpreted all the cues I’m sensing.

1. Respect for the individual

The first and perhaps most important point I observe is that the approach displayed in the memo seems, at least from the outside, to have little respect for individuals. I don’t doubt your personal commitment to creating a respectful workplace: it is a fundamental building block of happiness, and of course of trust.

And I think trust is the problem here. Open culture systems like Holacracy are fundamentally reliant on trust. It is the basic currency of an open culture company. And disrespect towards individuals does not breed trust: instead, it’s highly corrosive to trust.

In order for things like tension processing1 to function, you need trust. Without trust that they will not be needlessly punished for their opinions, people cannot be candid. Without candour, tensions are not brought to the circle’s attention and therefore cannot be resolved.

The message in the memo, “get on board with holacracy now or leave”, broadcast to the entire company and to the world at large, does not seem respectful of individual differences. Instead, it seems hostile to individuality, trying to cut everyone into the same mould without respecting or even listening to or acknowledging their differences. Starting from this premise, it can only alienate people and cause them, even if they were ready to progress to a better perspective, to regress back to a “me vs them” point of view which is toxic to Holacracy and any open culture agenda.

I respectfully urge you to consider approaching this important transformation in a more patient way, more respectful of individual differences.

2. Self-management

Holacracy is a model of self-management. It dispels the need for people managers, and distributes the responsibility for decisions to people throughout the organisations. This is great – when it works.

Self-management cannot work with people who do not want it. You can’t make people self-manage any more than you can make people love. Trying to impose self-management top-down is a bit like grabbing someone by the shoulders and screaming at them, “I want you to love me, now, spontaneously! Why don’t you love me?”

In order for people to want self-management, they need two things: to personally, viscerally believe that it is good for them; and to believe that it is possible. Both of those are things that take time. It took us two years to transition 10-20 people to self-management. We did not have the clarity of vision that you have, so you may be able to do this more quickly, but getting 1400 people to do anything will always be a challenge.

Even after 210 people have left, chances are there are many, many left who do not yet want self-management. No matter how much you try to impose it from above, they will not take responsibility for their work until they want to. And the more you try to force them to take responsibility, the less they’ll want to.

I hope that you will be willing to consider giving people more time and more examples of self-management to inspire them, rather than attempting to inspire self-management via top-down orders.

3. Wholeness

You quote Frédéric Laloux’s book quite substantially in your memo. The second “breakthrough” that he identifies as part of Teal cultures is wholeness.

What this means in the context of work culture is have the space, at work, to bring your whole self to work. This is something that has unfolded at GrantTree over the years and, for me, one of the most inspiring consequences of open cultures. When people feel free to be themselves instead of being cut down to size, they expand and swell to become superb versions of themselves. This touches every area of their life, from personal life to work life. It is truly inspiring to see people rise past their personal and emotional limits and fully grow into themselves. If I were to pick one single achievement in my life to be proud of, this is it: being instrumental in creating an environment that has enabled this to happen.

However, this breakthrough cannot happen without respect for the individual. When you push people into a “me vs them” mindset, you force them back into a fear-driven mode of operation. In that mode, they cannot be themselves: they are afraid of showing who they are for fear of being punished. Only a truly respectful, trust-based environment can achieve this breakthrough.

Once again, I request that you consider how to adjust your approach to open companies so it shows deep respect for individual differences rather than attempting to cut everyone down into the same mould.

4. Holacracy

Holacracy is a fascinating system, full of interesting ideas. I have felt its seductive pull myself, but I always resisted it. This was not because I was afraid of losing power or authority, quite the opposite. It was because I did not feel that it was well suited to GrantTree’s chaotic, freedom-loving ways. It seems too rigid, too structured. Yes, it promises that through this structure personal freedom will be achieved. Not all promises come through, though.

A first crack in Holacracy’s armour comes from noticing that it takes an all-or-nothing approach. Either you implement all of Holacracy, or none of it. This approach to open cultures belies the experience of all of the companies in Laloux’s book, all of which evolved open, teal culture systems progressively, over time. Skepticism turns to suspicion when I realise that the “all or nothing” argument enables easy evasion if Holacracy fails to deliver any improvement to company culture. It gives an easy way out of “well, you didn’t really adopt the whole thing properly, it’s hard, don’t beat yourself up for it”.

Another crack comes in practice, from noticing issues with it. GrantTree adopted some parts of Holacracy – specifically, something called a Holarchy, which is a way to organise work hierarchically without organising people hierarchically. Ironically, it was by following the language suggested by Holacracy that we fell into Holarchy’s biggest trap: importing people hierarchy via the “lead link” role.

We found that the word “lead link” was dangerous because it contains “lead”, which gives it an instant managerial sheen that is hard to rub off. This is multiplied when you combine it with a critical mistake that we made and that it seems you made too: which is to allow a “lead link” for the company as a whole, and to place the founder (formerly CEO) there. If the CEO of the company is the lead link of the anchor circle, then the lead links of other circles are naturally going to be understood as leaders of their circle. Holacracy also gives those lead links the power to invite and uninvite people from roles, which for many translates into the power to fire people. And in comes the people management hierarchy.

In our second iteration of Holarchy, we got rid of the anchor circle lead link, removed the word “lead”, and made sure the link role was understood as administrative/representative, not managerial, by voting mostly more junior people in those positions. I should add that after this Holarchy v2, I am not the link of any circle at GrantTree, and neither is my cofounder. This is a good thing if you are committed to self-management.

This is not to say that I don’t believe Holacracy is a good system. I think it is much better than many other systems for operating companies. However, I think it is important not to be blind to its flaws, and not to fall into the trap of thinking it is the only system available for open cultures, or even the best system for open cultures. Nor it is a necessary step towards open cultures. Many people may be very enthused by the concept of open cultures and yet put off by Holacracy’s rules-based approach.

Holacracy may be the best system for Zappos, or maybe it is not. I would like to humbly suggest that you consider that this may not be the right answer for Zappos, or that if it is, it may need substantial tweaks to adapt it to the Zappos people (rather than trying to adapt the people to Holacracy), and that even if it is the right system for Zappos, it is not perfect yet and you should evolve it when you see its shortcomings, rather than be beholden to a One True Way.

This take the courage to realise that in this step of the Zappos adventure, like in every other before, you are indeed alone: there is no ultimate guidance anyone can give, not even HolacracyOne. Ultimately the decisions of what to do and how to do it are yours. Or, alternatively, once you begin to respect and trust the people in Zappos, you will find, as I did, that you are not alone. There is never any certainty about any path, but when people are truly engaged with open cultures, when they truly embrace its ideas and practices, they take up more of the load than you could imagine before you see it happen.

5. The Agenda of Open Cultures

Zappos is the highest-profile open culture experiment happening right now, but it is not the only one. We are living in a time of change where many companies are adopting the principles that eventually lead to open cultures: respect rather than authority, trust rather than fear, transparency rather than secrecy, responsibility rather than obedience, and so on.

By becoming such a high-profile case, Zappos risks becoming the defining test case for open cultures. By trying to implement Holacracy in an authoritative, top-down manner, or at least by letting it appear that this is what is happening (if that’s a mis-reading), the wrong example is being given to countless companies looking for guidance on this.

This could cause the terrible harm of teaching hesitant founders and CEOs how to implement open cultures the wrong way. And even worse, should the high profile Zappos experiment fail, it may convince many to not even give it a try.

I believe that each company should be run in whatever way is suitable to it. There is no superior or inferior way. But I do believe that I much prefer to work in and with companies that have adopted open culture practices. And as I see the positive effects they have on people, how happy they feel working in environments where they feel respected and trusted and allowed to be themselves, I cannot help but wish that there were more companies operating like this in the world.

Obviously you cannot control the world press coverage of Zappos’s Holacracy story. It is obviously of interest, and many in the press will openly want you to fail so that they can write about a great disaster, which is always more juicy for page views than an untroubled success.

What I would humbly suggest in this case is that you use your time in the spotlight to shine the light on other successful open companies (like MorningStar, Buffer, Semco, Buurtzorg, Medium, etc), so the Zappos story does not become the defining story of teal/open cultures and Holacracy.

Yours Sincerely,

Daniel Tenner
Cofounder, GrantTree

The latest addition to the GrantTree books stable is Nonviolent Communication, by Marshall B. Rosenberg. It’s spreading rapidly through the company and having a very positive effect on our communications.

For the purpose of making it spread even faster, I decided to write a brief summary of the key points of the book.

I would like to start by emphasising that the book is incredibly worth reading, and this blog post is not a substitute. Go read the book!

4 Key Parts of NVC (Nonviolent Communication)

The book breaks down communication in four key elements: Observation, Feeling, Need, Request.

The key point is that when we express ourselves in this manner, people are much more likely to hear us, and to react favourably. This is not a guarantee – people may not be ready to receive this feedback. And they may disagree with our request for their own reasons. You can’t use NVC to compel or somehow manipulate people to do what you want – in fact, quite the opposite. You might change what you want when you listen using NVC.

And this is a first important point about NVC: it’s about both giving feedback, and about receiving it. It can be used both to deliver your own feedback to someone else, to disentangle what you’re observing, feeling, needing and requesting and deliver that in a way that’s not going to get the other person upset, and to disentangle other people’s requests. This is extremely powerful stuff, and means you can use NVC even if the other person has no knowledge of it, and it will still help.

But each of these steps has a catch, and can easily be misused. So here’s a quick overview of the “catch” in each step, based on my experience.

First, how to do it wrong

Here’s a great way to apply OFNR the wrong way. We’ll break down what’s wrong with this approach and fix it during this blog post.

Let’s say I’m in a meeting with John and he’s upset by something that’s being discussed. I’m not really sure what he’s upset about, because he is getting quite loud and, from my perspective, obstructing the progress of the meeting and perhaps even intimidating other people in the meeting. I find it difficult to pay attention to what someone is saying if they’re conveying it in what I perceive to be an aggressive way. I want him to speak at a normal level because he has a very loud voice and is a big guy so it’s scary to people when he shouts, and I don’t think that’s conducive for the meeting to progress. Here’s what I might say if I totally fail to apply the OFNR framework properly:

John, you’re being confrontational. It makes me feel you’re aggressing me in this meeting. I need you to behave more peacefully so I don’t feel so unsafe. I request you to stop behaving in this way, or else I will leave the meeting.

I could claim I’ve followed OFNR there – all the parts seem present, after all. But actually, this is a total disaster, a car crash of violent communication. Let’s look at why.

Step 1: Observation

The key with the observation step is that it needs to be non-judgemental, as objective and factual as possible. By throwing the label of “confrontational” at someone, I am not observing a behaviour, I am attacking the other person’s identity as retaliation for their behaviour. In some cases, that might get them to behave the way I want, through fear, guilt, or some other negative emotion, but it does not build a healthy relationship with the other person.

In the observation step, I need to be non-judgemental, to just observe a factual behaviour without categorising it. Here’s a better way to do it:

John, I see that you’re speaking loudly and sitting back with your arms crossed.

There. Either it’s true or it’s not. Either way, it’s not a judgement of the person and unlikely to be taken as such.

Step 2: Feeling

The second part is to state how I’m feeling. The problem with the example statement is that it’s not an expression of feeling – it’s yet another accusation. “It makes me feel” is a very poor choice of words here, because it pushes the responsibility for my feelings onto the other person. “I’m not responsible for how I’m feeling – John is!”

It’s quite uncomfortable to find yourself responsible for someone else’s feelings.  Generally, if the feelings are negative, it tends to elicit a guilt response. Again, John may react in a way that I find useful, but guilt-based relationships are, well, not ideal.

The other problem with “It makes me feel you’re aggressing me” is that it’s not a statement about my feelings at all. What’s the feeling? There is no feeling stated. There is just another accusation. Perhaps I am feeling angry, or sad, or frustrated… but “you’re aggressing me” is not a feeling.

Here would be a better way to phrase this, then:

I feel sad.

There, easy, isn’t it?1

Step 3: Need

The third part is to take ownership of the feeling. We don’t feel stuff because other people make us. We feel because we have needs that are being or not being met. This can be very difficult for many people to acknowledge, particularly in cultures or societal roles that are taught that it’s bad to have needs and acknowledge them2.

Stating the need is best done with a formula that combines it with the feeling, like “I feel X because I need Y”. When I say to John “I need you to do X” I’m not actually formulating a need, but a request. When I say “I need you to do X so that I don’t feel Y” I’m compounding the earlier error of pushing responsibility for my feelings onto John. Again, John is unlikely to react positively to this.

Another way that I could get this wrong while nevertheless using the “I feel X because I need Y” formula would be to say something like:

I feel scared because I’m being attacked by you.

That again would be an accusation rather than a statement of my need. I don’t know what’s going on in John’s head. Maybe I think he’s attacking me, but he probably doesn’t see it that way. Probably, he just thinks he’s being passionate. But once I accuse him of attacking me, what will he do? Defend himself, naturally. Whatever he does, it probably won’t be to calmly listen to my request and make a measured decision about it.

Here’s a better way to phrase my feeling and need together in a way that’s more likely to solicit a good response from John:

I feel sad because I need participants in a meeting I’m in to be civil to each other so that I feel comfortable that the meeting is going well.

Is that still good enough though? Well, maybe it’s as far as we’re able to go right now, and I want to commend that it’s a much better starting point than the previous projecting version (“I need you to behave more peacefully so I don’t feel so unsafe”). But there’s still a subtle trick going on there: the need is still being projected onto others, but instead of being projected onto a specific person (which would likely seem like a directly aggressive statement) it is now being projected onto a generic category of people (which happens to include the person we’re trying to communicate with).

Can we improve it further? Maybe we can’t. Or maybe we could dig even further, towards more vulnerability, if we feel safe enough to do so. Here’s what could perhaps lie at the end of that tunnel:

I feel sad because I get scared and confrontational when people raise their voice, and I would prefer not to feel that right now.

This is exquisitely vulnerable, both because the language is verbally turning the other cheek, and because it does not make the other person wrong in any way, or imply they are responsible for our feelings, and also it is vulnerably open to the possibility that the other person might refuse to meet us in this need (and while undesirable, that has to be ok for NVC style communications to work).

I’m not going to even begin to suggest that this is easy. If identifying how you feel is hard, identifying why you feel that way, what is the need that you have that is being met or not met, is even harder. Doing that without projecting that need outwards is tough. It often takes serious digging. I find that one trap I frequently fall into is to make the need sound more objective. For example, I could have said that I need participants in a meeting to be civil to each other so that the meeting can be productive. That may be a belief that I have, but it’s not the core, personal need I’m addressing when I request John to be civil3.

This part probably takes the most practice of the four.

Step 4: Request

What could be simpler than asking someone to do something? Well, it turns out that even in this step there are ways to get it wrong. In the example, I did it in just the right way to make sure I don’t get a good outcome from the exchange. The best way to screw up the request is to make it a demand, and that’s what I did by threatening to leave if my request wasn’t met.

When we threaten people with consequences, we take away their ability to decide to help us out. If I clarify my observation of John’s behaviour, and open up by explaining how I feel about it and what needs of mine are not being met, and then request that John alter his behaviour, chances are John will agree to my request, because John is a human being and us humans tend to prefer to be helpful to each other.

And if he doesn’t, he may have good reasons to disagree. By threatening him with consequences, though, I’ve ensured that even if he would normally agree, he will not feel like it was him that agreed it was me that forced him. And because of that, this exchange will not help build up the trust between John and I.

Or, even worse, trying to force John to do something may well elicit the opposite reaction. Perhaps John will refuse to help, and continue to speak loudly, precisely because I threatened him. When we threaten people, we take responsibility away from them, and it’s not surprising that they often start behaving like children – being contrary just for the sake of it.

It is my observation through years of working in the Open Culture that is GrantTree that left to their own devices, allowed to make their own decisions, people typically prefer to be good to each other. They tend to make decisions that I would consider to be right. However, when you try and force someone, you often push them into an oppositional, confrontational mode where they do not make the best choices they can.

So here’s a better way I could have made my request to John, one that doesn’t involve a threat:

Could you please speak more softly?

Obviously tone of voice is important here too. I could convey that question with a very strict tone and body language that implies threat. Or I could ask it calmly and openly, accepting that John may well decide otherwise. It’s his decision what he does, after all. Ironically, the latter is much more likely to convince John to speak more softly than the former. Sometimes exposed weakness is a strength.

Review

There are many more subtleties at work in NVC, and so I really do recommend that you read the book. But in the meantime, if you’re going to take away anything from this concept, please take the following steps and caveats:

• Clarify the behaviour that you’re observing and make sure it’s not expressed in a judgemental way.
• Express how you feel, in a way that takes ownership for your feelings and does not imply that the responsibility for your feelings lies with the other person.
• Connect this feeling with a need that you have – a personal need, not a falsely objective ideal, and a need which is about you, not about the other person. Try to use the formula: “I feel X because I need/want/like Y”.
• Finish with a request which does not include any threat component, accepting that the other person may disagree with your request.

Using these concepts, you can turn:

John, you’re being confrontational. It makes me feel you’re aggressing me in this meeting. I need you to behave more peacefully so I don’t feel so unsafe. I request you to stop behaving in this way, or else I will leave the meeting.

into:

John, I see that you’re speaking loudly and sitting back with your arms crossed.I feel sad because I get scared and confrontational when people raise their voice, and I would prefer not to feel that right now. Could you please speak more softly?

The power of this shift in language is impressive when you see it at work. I hope you do get a chance t practice it and see it for yourself soon.

As the amount of literature about open cultures grows, it’s tempting to want to go straight for what is perceived as a final prize or destination, and just “implement a full-blown open culture right from the start”.

Unfortunately I don’t think that’s actually possible, for two reasons.

The destination is change

First of all, I don’t think open cultures are a static destination. The result of an effort to open up a culture is that we create an organisation that is capable of constant change and evolution, and does constantly change and evolve. If you ever decided “this is how our open culture functions, and that’s that”, your culture would immediately begin its decline. One reason for that could be that company culture, like the stock market or job interview techniques, is an anti-inductive system. As soon as you’ve “figured it out”, it changes, adapts, moves beyond your current understanding. As Douglas Adams once said:

There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable.

There is another theory which states that this has already happened.

Culture is like that, and it needs to be like that, because at the very core of an open culture is this ability to deal with changing circumstances, changing people, changing understanding – in order to adapt to this very real and very changing world that we live in. That is perhaps the best practical feature of open cultures: their adaptability.

I often tell people who want to learn programming to avoid “Learn programming in our 10 week course” types of deals, because they feel intuitively pointless to me, as a programmer. See, programming is all about learning, about teaching yourself. It is a rare, unicorn-level event in a programmer’s life to write the same program twice. Programming itself is not anti-inductive 1, but the reality of being a programmer is that every program you write will require you to teach yourself new things, both in terms of new technologies or new bits of technologies that you want to use, and in terms of having to learn about a new and ever-changing problem space2.

Culture, it seems to me, is similar to programming, because it is constantly dealing with anti-inductive situations, and so developing the capability to adapt to circumstances, which in turn adapt to the culture and require further adaptation, is not just a nice add-on: it is the essence of becoming an open culture.

An open culture is one which is set up to adapt to and absorb change continually.

It embraces the loop of change->reaction->change and enables it to operate in the most fluid manner, instead of the very jerky manner that most closed cultures display 3. If learning to adapt to change is one of the key features of open cultures, that makes it far less practical to skip steps because “you already know where you want it to go”. By forcing the organisation to skip ahead, you’re stopping it from learning and adapting, or, more critically, from learning to learn and adapt — and this learning to learn and adapt is actually the key activity going on. The actual cultural artefacts of whether you have an advice process or a holarchy or a peer review process or values – those are objects by the side of the road.

The road is change, and it’s a continuous, endless road. An open culture is one which has learned to keep walking on that road.

Limited perspective

Beyond the arguments above, there is also another reason that “skipping ahead” can be unproductive.

Without trying to get overly enamoured with psychological models of development stages, there is a recurring pattern that is evident when working in or on an open culture, which is that different people are at different levels of understanding of the world around them. Looking at myself, without even needing to judge anyone else’s level of understanding, I can see that over the last three years, as the culture of GrantTree was born and evolved, my own perspective on the world has changed. On a personal level, it is perhaps one of the most valuable aspects of the GrantTree open culture that it has broadened my own perspective on “life, the universe and everything”. I can see very specific areas where I am operating at a better level of understanding thanks to my time at GrantTree 4.

Culture can and does eventually, I believe (though we’re not entirely there yet) grow a will of its own, take on its own direction, become the self-adapting creature that I described in the previous section. But initially it needs to be nudged in that direction, because the default model for organisations is the closed culture, so if you don’t take any explicit action to change that default, you end up with a traditional, closed culture.

Now, as cofounder of the company, I have had a fairly large amount of influence on that direction – it became an instinctive direction that I wanted to push the company towards. What I did not have was the personal experience to really understand exactly what I was pushing towards. At this point, we’re only three years into the culture of GrantTree (before that there were no employees), but already I can say that the way GrantTree operates today would not have been intelligible or indeed manageable for me three years ago.

Had you handed me the advice process, holarchy and other cultural artefacts three years ago, I would have been unable to make any use of it. Had I tried to use them at a stage where I wasn’t ready for them I would have messed them up. Hell, we have been operating what is allegedly a holarchy for the last six months, and we’re still figuring out what exactly that means. In fact, having done this for six months, we now have some fairly clear insights about the ways in which we’ve messed it up, how we’ve in some ways missed the point of holarchy and turned it into a watered down hierarchy.

Some things, you cannot understand until you try them yourself, fail, and try again. They require a broader perspective, a broader base of experience, to be able to even perceive the concepts at all. Words like holarchy or advice process map to concepts. Parts of those concepts can be explained by writing a blog post, but other parts are too complex to understand without direct experience5.

If we “decide to implement holacracy”, but we don’t know what holacracy means, and we’re not ready to understand the concept, because we lack some of the conceptual building blocks of holacracy, then we will naturally fail. We can’t force the learning through by jumping ahead to a destination.

So what to do?

The above might seem a little bit depressing. “You can’t do anything, just relax and go along” would be a possible, if incorrect, conclusion to take away from this.

What I’m trying to convey is that we need to be patient on this path towards open cultures. There aren’t really any shortcuts. Books and coaches can help facilitate the learning, but ultimately the learning, both of behaviours and concepts, and both on an organisational and a personal level, is a key feature of open cultures, and learning to learn takes time.

So don’t rush. Keep driving in the direction which you think things should be going into, but be aware that this process will take time, and give it the time. The reward should, hopefully, be an incredibly powerful open organisation, capable of imagining and pursuing results far beyond what you could dream up in a top-down model.

Many people consider the purpose of a company to be something static and set at birth, or changing only very rarely. The truth is, the purpose of a company evolves as the founders and the company evolve1.

Here’s a story of how GrantTree’s purpose evolved through time, so far, and through the purpose of its two founders, myself and Paulina, then my girlfriend and now my wife. I hope it shows how purpose can dramatically change over relatively short periods in the life of a business.

Purpose 1: Money

We started GrantTree in 2010 when Woobius unexpectedly ran out of money 6 months early due to a bookkeeping error2. I found myself not quite out on the street, but certainly needing to find another source of income fast. Rent and food are kind of important, you know?

Paulina had been involved in R&D Tax Credits with another company. She said she could sell them if I could deliver them. I looked at what tax credits consisted of and figured it wasn’t rocket science: if I could do a physics degree, I could learn how to do this. I said I could deliver them if she could sell them. And so we decided to get started.

Let there be no doubt: in that first year, pretty much our only concern was the money – and quite naturally so! We were broke, living off credit cards3. We needed to survive. That was our objective. And to survive, we needed money. So we did whatever it took to try and get off the ground (or the shifty quicksands) financially. There was no greater purpose beyond that back then. The key question driving every decision was: will this result in some significant amount of revenue4? If so, do it. If not, skip.

Of course, whatever our values were back then still impacted our decision-making: we tried to be transparent, have integrity, help our clients, be effective, etc. But eventually decisions did come down to money and if there was enough of it at stake, it would drive our decisions. There wasn’t even any focus in what we were trying to do to make the money: at one point we tried to act as a domain broker, just because there was a potential brokerage fee in the tens of thousands for that domain. At the time, that was enough money to shift our priorities entirely5.

Miraculously (to me), we made £89k of turnover in that first year. It was more money than Woobius had made in its entire existence up to that point. Our costs were minimal, so most of it was straight-up profit. I was amazed. You can actually make money from this business stuff!

Purpose 2: More money

The next natural purpose that emerged then was, well, this money thing is quite nice: let’s make more of this stuff! It’s nice not to be broke anymore. In the second year, we did more of the same. We picked up more and more clients, and our revenues continued to go up. We could afford a 5-year old second-hand VW Passat, a Macbook air, and other non-essential-but-nice life expenses.

In the pursuit of scale and better customer service6, three quarters of the way through that second year we hired our first full time employee. Despite being basically just two people for most of that year (plus one remote subcontractor), we made £309k of turnover that year, again mostly profit.

A strange effect settles in when you finally have enough money7. This obviously doesn’t work with everyone (some people never have enough money), but for me and for Paulina, money became less and less important. A great many articles describe how money is supposed to be a “hygiene factor” rather than a primary motivator, but they seem so remote, like science fiction fantasies of cornucopia machines, until it actually does become a hygiene factor for you. When you make £300k of turnover with basically two people, neither of which are big spenders, money does become a hygiene factor.

So, like in Maslow’s needs hierarchy, you begin to shift your needs somewhere else, and your purpose along with it.

Purpose 3: Scale and Freedom (still somewhat connected to money)

The next purpose emerged from a session with Deri, who was our business coach at the time. He is also a trained NLP coach (though not doing NLP coaching anymore) and used a timeline exercise on Paulina and I to explore why we kept disagreeing on schedules to do stuff. It turned out that my natural time horizon is about a week long, which means that if I don’t see something happening each week, I don’t see anything happening at all. Paulina, on the other hand, sees a few months ahead and so is better at making more distant things happen, while my productivity tends to be ruthlessly focused on the next week. This caused a lot of clashes in our ways of scheduling “making things happen”.

Deri also suggested that I should accept that my natural space was focusing on the next week. I’m very bad at accepting limitations, so that felt like a challenge to me. So, a few weeks later, I set about planning our next three years in business.

Luckily8, at the same time, we discovered a source of leads that could help us scale the business. I set myself a goal: to grow GrantTree into an independent company within two years, so that Pow and I could “soft-exit” the business. This involved scaling, hiring more people, and creating a culture that didn’t entirely depend on me and Paulina to continue operating and growing, but the objective was still fairly material: freedom to do whatever we wanted, while being wealthy enough to be able to afford a reasonable but comfortable lifestyle. The idea of travelling around the world for a couple of years came up.

With this plan in mind, I realised that we had an opportunity right now to make things happen and that the opportunity wouldn’t be open forever. Combined with the source of leads, we started hiring and started growing our client base much faster. A sense of urgency emerged.

Over that year, we achieved a turnover just over a million pounds. An awesome achievement – 3x growth three years running.

A side-effect of hiring all these people, however, and trying to get them to act independently and adaptably9 was that I started to care about those people and the fascinating puzzle of how to get them to work together productively and happily (also known in some circles as “culture”).

And another element that crept in unnoticed, also with the people, was that my own purpose (scaling and then exiting the business) was not motivating enough to recruit great people. So we came up with a purpose for the company, which, loosely summarised, adds up to “enabling startups to succeed”. More on this later.

Purpose 4: Culture for its own sake, and impact

As I spent all this time trying to shape the GrantTree culture, I fell in love with it. I found something deeply fulfilling in creating an environment where finally people are treated like human beings instead of cogs in a machine. So many work (and non-work) environments are dehumanising and degrading to the people who have to spend time there. I really starting to feel very fascinated by the fact that this is not the case at GrantTree. We treat people like adults, we try and help them develop as people, not as “workers” or “employees”. We recognise that they are whole human beings, with flaws and with amazing abilities rolled into one.

Over time, it became clear that our plans to exit the company were totally at odds with this sense of love for the company. I found myself falling into that strange state where there is nothing I would rather do than work (though I do naturally do other things too). I shifted from working for some ulterior purpose (make money; free up time; whatever) to working for its own sake. This also taught me something important about myself. I noticed a pattern that I had not seen before: I really feel aligned with my own personal purpose when I help other people grow and develop, when I help them see things from a larger perspective.

At the same time, the company’s own purpose, enabling startups to succeed, has started to take a life of its own. People working at GrantTree bring their own vision of that. This common purpose loosely unites them, but much like I bring my own, uniquely tainted variant of that into the mix, with my focus on culture, other people do too. This is, I hope, a mark of a more mature company: one that leaves room for everyone there to contribute to its purpose, instead of being driven from the top like a slave beast.

An interesting conclusion

Here’s an insight coming out of this, which I alluded to in Episode 7 of On my way to work… the purpose of the company, in other words, the “why” of the company, has an enormous impact on how we actually run that company. There’s a clear mapping between how our purpose for running GrantTree has evolved over time, and the major stages of evolution that the culture has followed. Sometimes the cultural changes trailed the purpose changes, and sometimes they led them. But I can see a clear connection between the two.

When the purpose was to survive and make some money, the culture was non-existent10. The company was reactive and completely informal. When the purpose became to scale, the culture first became top-down, hierarchical11. However, because of our focus on “making the company independent”, the culture of the company started to take centre-stage, and as our culture evolved12, it dragged our personal purpose along with it. And I’m not too proud to admit that it took us (Paulina and I) some time to catch up, and I’m certain that our slowness in evolving our own purpose did in turn slow down the company culture’s evolution.

So here’s the kicker: along with other personal growth limits, the reason you run the company is going to be one of the most effective limiters on the culture of the company. If the only reason your company exists is to make a buck, you’re unlikely to ever create a great culture there. And this is not about the “stated purpose” – I’m talking about your own, personal purpose in running the business.

The good news, to soften the kicker? If you allow it to, your purpose will change during the course of the journey. This “running a company” business? It changes you, if you let it.

One of the characteristics of open cultures is transparency, which is, in my opinion, a cornerstone necessity for trust to exist. One of the ways that this transparency is expressed is salary transparency.

However, what I’ve noticed frequently happen and be masqueraded as transparency is a kind of half-way salary transparency that doesn’t quite do it. It’s better than complete secrecy, for sure, but it’s just not enough, and I’m writing this article just as much for founders and MDs who are failing their own ideals (perhaps) by thinking this is actual transparency, when it’s not, as much as for employees or prospective hires of those companies, who might buy the “we’re transparent” line when it’s not actually true.

Trust but verify

When our primary belief systems moved from religious, mythical belief mostly handled by priests, to scientific, factual belief handled by scientists1, one of the most tangible, important differences was a shift from a system of faith, where everything had to be just accepted in the form it was handed down, from an authority figure, to a system of verified facts, where everyone could, and was invited to, test the theories for themselves2.

Of course, this is a big change for people, so it’s not all that surprising that it hasn’t percolated through all of society yet, even in four centuries!…

One of the primary ways that transparency creates trust is that everyone knows that they have the whole picture. They don’t have to take it on trust, they can check it themselves. Now, unlike high-speed relativistic physics, there is nothing in your typical business that cannot be understood by the layman, with some fairly basic training and explanations3.

The ability to verify the knowledge you rely on rather than accept it as handed down by an authority figure is so powerful, so transformational, that it turned the world upside down, and is largely responsible for the way the world works today. A society where the people cannot verify information for themselves, where the government hides things from them, is one headed for totalitarianism4.

The same is true within business. Being able to verify that what you know is actually true, rather than rely on faith alone, is a fundamental feature and benefit of transparency, a huge driver of the increased trust that is typical of open cultures.

Unverifiable data is not transparent

Many companies claim to have transparent salaries, but when you scratch the surface, you find out that what they have is transparent salary bands. Now, that’s a starting point, but it is not at all the same as having transparent salaries. Any company that says “we have transparent salaries” but has only a transparent salary scheme is likely to be hiding something, for the simple reason that compensation is a really high-pressure topic where people will naturally apply a lot of tricks and tactics. Any “transparent salary bands” system will almost immediately be corrupted by people who will apply the right pressure to the right points and argue convincingly that they don’t quite fit within the regular bands and deserve some sort of premium. Soon enough, you end up with a majority of people on the transparent scheme, and a small but growing number of people with special deals. Those deals are allowed to exist because they are hidden.

If a company has a “transparent” compensation scheme, but doesn’t actively publish its accounting and payroll data internally, you can bet your bottom dollar that there are people with special deals in the system. You know for a fact there is unfairness in the system. Apart from all sorts of other impacts, it means that unless you’re a mug, you will be wanting to get your own special deal as well. I’d wager that your average “transparent salary bands” system has a sizeable minority (20-30% at least) of its staff on special deals. In other words, it does not have salary transparency at all.

When, at GrantTree, we say that we have transparent salaries, we mean that all the payroll information, and all the accounting information of the business, including dividends paid to shareholders, is entirely transparent and verifiable. Every member of the team has full access to all the company’s accounting data. There is nowhere for a special deal to hide.

This is the only viable way to do salary transparency. You have to open up the financial data.

Advice to founders and CEOs

If you want to get the benefits of transparency, you must make the critically important compensation system transparent. If you don’t, then unfairness will creep into the system via this critical channel and build up over time. You can keep fighting it, but it will sap your energy and eventually you’ll give in.

The best time to implement salary and financial information transparency is on day one, when there is no unfairness in the system yet. If you wait until a lot of this unfairness has built up, shining a light on it may well be politically unfeasible. You may find you have to choose between transparency and losing some of your best people (who are the most likely to have successfully argued for special deals) while demolishing company morale for a while.

Advice to prospective employees

If you apply to a company that claims to have salary transparency, be sure to ask, in the interview, whether everyone has access to the financials. If they don’t, they’re not necessarily lying – they may simply not understand what salary transparency is5.

This may not discourage you from joining that company (perhaps there are other factors that are more important to you), but you should at least be aware of what you’re walking into: a system where everyone gets a special deal if they are good enough at arguing for it.

It may also influence your initial interactions. There is little point in trying to negotiate a higher (or indeed lower) salary with a transparent company6. On the other hand, if the company claims to be transparent as a negotiation tactic, then you should probably feel free to push for a higher salary – you probably will get it if they want you enough, though they’ll probably ask you not to tell anyone what your actual salary is.

A final thought on transparency and access

The same flaws that affect verifiability in science can affect verifiability in financial information. Namely, things can become too complex for anyone but a small cabal of compensation experts to understand. Or maybe the company has twenty thousand people and a supposedly transparent, but hard-to-access payroll information system7.

If the information is not easily accessible, it is also not transparent. And as information becomes more complex, it inevitably becomes harder to access. So, even if you do have completely transparent and easily accessible financial data, it will take some consistent effort to keep things that way as the company grows. Bear that in mind and don’t let inaccessibility creep in through complexity or other access issues.

TL;DR

• Transparency is not real without verifiability
• Transparent salary bands are not at all equivalent to transparent salaries
• If you can’t verify the payroll for yourself, there are certainly going to be some unfair deals in the system
• If you’re a CEO or founder, you need to push for total transparency to reap the benefits of a transparent culture (e.g. increased trust)
• If you’re a prospective employee, be aware that a company without verifiably transparent payroll is not actually transparent, no matter what they may claim
• Making the information available is not enough if it’s hidden away somewhere inaccessible.

Here‘s an interesting article by Jeff Lonsdale about what he calls the “fungible worker”. Jeff examines some of the old arguments about whether technology spells the end of the human worker, whether it will drive everyone out of work, etc. He dismisses the classic Luddite argument and instead lands on an interesting point:

Amazon can quickly train employees as well as track them to make sure they are not underperforming. There is a smaller difference between one employee and their potential replacement. If an employee decides to leave their replacement is guided by technology that makes the new worker’s productivity very close to that of a good worker.

Before these technological advancements, workers enjoyed mini-monopolies. The warehouse worker couldn’t be easily replaced because their replacement might be way less efficient as they learned the layout of their workplace. As technology more directly guides low and mid skill workers in their jobs the workers are losing their mini-monopolies. Workers don’t need job specific experience to be hired so the supply of workers available to every technology guided job has increased. A higher supply leads to a lower price (the price of a worker is their wage). After full employment is reached the general wage level may increase for low skilled workers, but for now the impact of the Great Factor Price Equalization and the More Fungible Worker are suppressing the wages of middle and lower class developed world workers.

It’s actually quite hard to disagree with this point, and in fact I won’t – because I believe it’s true. Certain kinds of applications of technology turn human beings into replaceable, indistinguishable cogs and levers and wheels and bolts in the name of efficiency above all things.

Now, I’m a big fan of efficiency. Huge fan. I love being able to buy stuff on Amazon for cheap and getting it delivered the next day. Yay for efficiency.

However, I think there’s all sorts of ways to measure efficiency. Which efficiency are we talking about anyway? The efficiency of providing the service is the obvious one. How about the efficiency of use of natural resources? Debatable, off topic for this article, perhaps. Efficiency of fulfilling the right orders, those that add the most value to humanity, instead of just fulfilling every online shopping spree no matter how useless, selling whatever the hell is in demand right now no matter whether it’s actually useful or even downright dangerous? We’re starting to get somewhere.

How about the efficiency of the human capital being put at work – is it really delivering its highest potential value to the rest of humanity? Er, no. A human turned into a robot that follows instructions and turned into a fully replaceable piece of a large and complex logistical machinery is definitely not delivering on his or her potential.

Ultimately, I think that situations like Amazon are temporary. Eventually, all low-skilled jobs will be replaced with automated machinery1. In the meantime, however, while I see that “fungible workers” are inevitable for the time being, I’d like to propose, to entrepreneurs, managers, and other people in charge of creating or managing such jobs, a different philosophy of efficiency:

Aim to improve the efficiency of how the potential of humans is being deployed at work.

If you do that, you’ll probably build a different business. You’ll certainly do so – a business whose fundamental principles include enabling every person within it to develop to their full potential will not end up looking like Amazon. In this business, the very concept of fungible workers will be bizarre and alien. But such a business will  be far more efficient (in the sense of reduced waste and overheads, as well as in the human potential efficiency) than Amazon can ever dream of being, and the tradeoffs of shop-floor efficiency vs. human potential efficiency may well turn out to be surprisingly tilted to the latter side.