How (42 page)

Methodist is a fairly small company, as corporations go, and concentrated on serving a single locality. So I asked Douglas Lankler of Pfizer how he would go about pursuing his vision of “the holy grail” in a large, multinational organization. “I think it’s easy,” he immediately replied. “You ease it in. Let’s say we have a cap on the amount of money that we will let a particular regional sales force give to a group of doctors for educational speaking events, say $100,000. The law doesn’t require it, but we put that cap in place because we feared that without it there would be anarchy and people might just pour money at the doctors. That would put us in a situation where we’re essentially paying for prescriptions, and we can’t have that; we can only fund education-based speaking programs that are designed to get medical information out to doctors and patients who need that information. So you say to that region, ‘We’re going to move that cap to $200 grand, but at the same time we’re going to help you see the
right
way to use these funds, and trust you to do so in accordance with our values.’ You make them more self-governing. If they can do that, their sales are going to go up because more information is getting out to the communities, to the physicians and patients, and compliance is going to go up also because the sales reps know they are being trusted to do the right thing. Then we reward them when they do.”

Leadership is key to this process. “We have a lot of leaders who have turned around difficult markets,” Lankler said. “For example, the area president of Asia, a region that is wracked with corruption, took over a situation where, from 2000 to 2003, we were having 90-some-odd compliance issues per year, and got it down to one or two. He really drove the notion of values and integrity and his expectation that first and foremost you do it right. ‘We can sell like there’s no tomorrow and surpass our numbers,’ he told his team, ‘but if we’re doing it in an improper way that’s unethical or illegal, then we haven’t achieved what we need to achieve.’ He was able to back it with his own well-grounded and well-demonstrated integrity.”

Increasing self-governance means moving values to the center of your efforts and making it clear—in how you reward, celebrate, communicate, and pursue—that those values form the guiding spirit of the enterprise. This is not just an effort for appointed leaders and managers. Everyone has the opportunity to do something about culture, to evolve it, make it better, and make it more responsive to the needs of today. Corporate culture, after all, is not monolithic. A board can have a culture, a team can have a culture, and a unit can have a culture. The culture of GE/Durham differs dramatically from cultures of other GE units, but the fact that it embraces and sustains the core values of its parent keeps it congruent with its sister parts.

HOW leaders beget HOW leaders, like our fictional caveman Ook begat lots of collaborative little baby Ooks. Self-governing cultures grow as people begin to see, model, and then adopt the HOWs that build strong synapses. To be more self-governing is to realize that
culture is something that you do, not something that does to you
. Everyone needs to engage in the cultural dimension of what they do. Like oarsmen on a boat, we can all pull together to make culture happen. You need a critical mass of leaders to start Waves, and in a self-governing culture, leadership begins with you.

WHY SELF-GOVERNANCE IS THE FUTURE OF BUSINESS

There are many more reasons why getting more values-based self-governance into every culture makes sense.

A Horizontal World Calls for a Horizontal Governance Architecture

Values-based self-governance minimizes the layers of hierarchy within an organization. At GE/Durham, decision making eschews middle management because there is none. There are no silos and there is little separation of functions; all governance functions reside within each individual. Almost nothing happens without a chance for everyone’s input; thus almost every initiative is an expression of the group. At Sewell, each self-governed team takes responsibility for every aspect of a vehicle, which allows them to deliver a superior experience to their customers in a more efficient and responsive way.

Self-Governing Cultures Thrive on the Free Flow of Information

Unlike the hoarding or need-to-know information flow of blind obedience and informed acquiescence cultures, values-based self-governance requires that information be readily available to all when they need it. Information unleashes ability. To unleash the power and creativity of a workforce of inspired leaders, you must create an environment that unleashes the information they need to succeed. Transparency between people at all levels in all transactions actually makes these cultures stronger and more effective, and the free flow of information makes cultures more self-governing by increasing trust.

A Leading Company Needs to Be a Company of Leaders

To push the bounds of creativity and innovation, you need people to live out there every day. Rules-based cultures contain an inherent tension between outside-the-box thinking and inside-the-box compliance. Self-governing requires each individual to step up and lead, to take responsibility both for their own work and for the performance of others. They live outside the box because there is no box to contain them, only values to guide them. At GE/Durham, for example, each person works in, and is responsible for, their own team, but each also belongs to shopwide councils that address larger issues of the unit. Council membership rotates so everyone is exposed to and responsible for the complete range of functions in the factory. By making each employee both individually responsible and accountable to the group, self-governing cultures encourage a leadership orientation.

Values-Based Self-Governing Cultures Encourage Employee Development

Blind obedience and informed acquiescence cultures tend to build their workforce skills through rote learning and through training programs, respectively. While these approaches to worker knowledge can be an efficient way to disseminate black-and-white, easily quantifiable information—like maximum pollution levels or safety performance metrics—they don’t do enough to prepare people to wrestle with the infinite shades of gray they now face in the course of a working day. You cannot train someone to struggle in the Valley of C, but you can develop their ability to do so. You
train
a dog, but you
develop
leaders.

Thomas R. McCormick, director, global ethics and compliance for the Dow Chemical Company and one of the true thought leaders on the relationship between values and business performance, told me a story about how Dow is investing in the education of its team. “We are asking every supervisor in the company—there are about 2,000 of them—to have a face-to-face education session with their employees to take them through three or four scenarios (such as conflicts of interest), really tough, gray-area issues that would be relevant to that work group, whether it is a business or a function or a geographic location or whatever,” he said. “The goal is to really have people talk through some of these areas where there aren’t any good black-and-white answers, and collectively explore how they would handle the situation. It’s educational, but it also sets a tone. They see their leader talking through it with them, and that reinforces what leadership expectations are. All of that is designed to help people manage the gray, which you can only do by making values-based decisions.”
²⁶

The conditions of the networked world make pushing vast amounts of information to workers’ fingertips cheap and easy, but it must come with a concomitant dedication to education. At GE/Durham, it means multiskilling. At Sewell, it means the rich stories, told again and again, and modeled in everyday behavior.

Self-Governance Builds Universal Vigilance

There are times when individuals can join an organization but not embrace its goals. In groups governed by informed acquiescence, these people can skate by or game the system to some degree, fly under the radar so to speak, and create drag on the system. They might even be part of the 2 percent that compliance efforts are currently focused on containing. In values-based self-governed groups, however, they can’t fool the culture; the vigilance of the group identifies them and makes them feel uncomfortable. In a self-governing group, the person who does not truly align with the values of the group will not feel at home, and be ejected. The overcharging technician at Sewell learned that lesson the hard way. Thus, the 98 percent take care of the 2 percent, ejecting the non-aligned before they can create the kinds of compliance failures that can bring a company down.

Greater than simply preventing compliance failures, though, the universal vigilance of a self-governing group maintains alignment over time. If someone is not performing, it becomes incumbent on everyone else to raise the issue and then solve it as a group, with a focus on fixing the problem, not assigning blame. With everyone accountable to the team’s success, slacking is not tolerated.

Global fast-food giant McDonald’s organizes itself more like an ecosystem than an organization with strong central control. CEO Jim Skinner likens the culture to a three-legged stool supported by the franchises, the suppliers, and the vast employee pool. But it is a strong commitment to values that keeps all these various and dispersed stakeholders aligned with a common purpose, and the culture it breeds exerts a similar self-regulating influence on all levels of the organization. “People talk about ‘tissue rejection,’ ” Skinner told me. “It occurs when people join us at too high a level from outside the organization without paying their dues, if you will, in order to understand our culture. It’s not really a rejection by the business itself, but by our culture. People in a sense say, ‘I don’t care how bright you are or what capabilities you have; you have to be able to understand all of what we stand for.’ ”
²⁷

Cultures like these are self-enforcing, and this reduces the need for external management controls. Honest feedback becomes the name of the game, and this form of self-governance takes advantage of the collective intelligence of the group to regulate the culture as a whole.

Self-Governance Shifts Decision Making from the Pragmatic to the Principled

Reputation, consistency, promise keeping—all the factors we’ve discussed necessary to achieve personal and corporate continuity in a transparent world—stem from the ability to make decisions based on principle, rather than what is immediately pragmatic. Values-based self-governing cultures are inspired by mission and steered by values. They enshrine long-term principles in place of short-term thinking, and challenge each decision maker to fulfill those principles in every act they perform. Decisions made on the basis of sound principles provide a steady rudder in stormy seas.

Self-Governance Is a Higher Concept

Like the trust, belief, and values it relies on, values-based self-governance speaks to the higher self. It governs in the name of principles and values, not rules, and only principles and values have the ability to inspire. Isn’t it more inspiring to think that you are your own legislature? More inspiring to self-govern rather than acquiesce to someone in authority?

There is a touch of inspiration in all these concepts. Values-based self-governance relies on structures and rhetoric that
speaks
to people. It speaks the language of
should
rather than
can
. Inspiration comes from holding a set of beliefs, and we all want to believe in what we do. This is why values-based self-governance provides such an outstanding model for the future. It calls us forth to marry our highest goals and aspirations to how we do what we do each day.

THE CASE FOR SELF-GOVERNING CULTURES

If values become the engine of culture, self-governance provides the scaffolding that allows everyone throughout the hierarchy to embrace and put into operation those values daily in everything that they do. Different subunits, like the various specialties at Methodist Hospital System, can internalize those values in ways that are specific to their form and function; global businesses can extend horizontally across borders, open back-room operations to embrace and collaborate with new partners, and diversify in myriad ways while maintaining the integrity of their missions; and the myriad combinations of freelancers, consultants, full-timers, telecommuters, and other thinly bound people who make up the workforce of today can align more tightly around common values. Since values provide a stronger, more adaptable navigation system than do rules and procedures, values-based self-governance provides a system that allows an organization to grow, adapt, mutate, and evolve in the marketplace without losing sight of its core mission or straying too far from its chosen path.

Cultures stay healthy only if they pursue and stay true to their missions, a purpose beyond themselves, a noble mission. Culture means journey. Because cultures are alive—growing and changing as they adapt to challenge and celebrate success—they are in a constant state of
becoming
. To embrace the notion of doing culture, then, means to accept that you are on a journey, every day, to build stronger connections with those around you. Embracing the importance of self-governance—that how your group interrelates begins with you and HOW you do WHAT you do—is the first step on that journey.