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Episode Transcript
Lisa: So Chuck, I read your book “Why Employees Are Always a Bad Idea” a few years ago, but for the benefit of our listeners, maybe you could just give a sort of overview of the core message of the book and what this participation age means?
Chuck: You bet, I’d love to do that, Lisa. So the core message of that book is that the Industrial Age taught us some things about business that aren’t true. They didn’t work all that well for enduring the Industrial Age—they worked very well for the guy at the table, but they didn’t work all that well and they didn’t work well at all for anybody else, and they work even less well today.
So we’re looking at business in a way—when you and I were born, anybody born in the last hundred years thinks that the way that business is set up and organized with a top-down hierarchy is normal. And I’m here to tell you that’s not normal. That’s something that was ushered in as a result of copying the feudal systems, the military, slavery, and a few other bad things and bringing those into business in the factories. And ever since then we’ve moved forward with that same organizational structure.
So I talked a lot about the clashing of two ages: the Participation Age and the Industrial Age. We think we left the Industrial Age in the 1970s, but in reality, we left behind the technology of the Industrial Age. So we don’t have smokestacks and assembly lines and that kind of stuff—we shipped all that to China to make their pollution bad. What we do have, you know, we have digital rooms and nanotechnology and all that, so it feels like we’re not in the Industrial Age anymore.
But the factory system, the way we organize business—the top-down hierarchy, the guy at the top telling the guy underneath him to do something who tell somebody else to do something and that chain of command kind of mindset, the power and control—all that is still in place. Most businesses in America, and in the world, look like a factory in 1902 in the front office. So the back office looks very different, but the front office is a bunch of guys in ties telling everybody what to do.
It’s fascinating—I was hired by Google to come out there and help them answer the question: “How do we redesign our organizations so that we can get back our mojo and be innovative again and do all that good stuff?” And I was actually on my heels for the entire time I was there. I had no idea how antiquated that business was. Just because you have blue jeans and free lunches and ping pong tables and cool offices doesn’t mean you have a great culture. Google is one of the most top-down hierarchical factory system companies I’ve ever been around.
So the factory system is alive and well today, and we got to figure out how to get back to where we were before the factory system. This stuff isn’t new—all the things we’re going to talk about today I found very radical. The reality of it is they worked in the candlestick and the shoemaker shop in 1850, and we need to get them back.
Lisa: What then do we need to do in organisations in order to move on from the Industrial Age and embrace some of the principles of this participation age?
Chuck: It’s a great question. It always starts in our heads. Frederick Winslow Taylor had as much impact on the 20th century as Freud, Darwin, and Marx. So who is this guy? He set the mindset, he set the belief system. He wrote a paper in 1903, revised in 1911, it’s called “Scientific Management,” and it is the basic paper, and his work is the basis for all modern management theory. We’ve changed it a lot, but it still runs from that stream.
In that paper, he did a lot of good things, but he made two fatal assumptions about people that define employees. It’s why my second book was called “Why Employees Are Always a Bad Idea.” He decided that employees were two things, and these are quotes from his paper: Number one, “The average employee is so stupid they more resemble the ox than any other type.” Quote unquote. Secondly, “The average employee will only work so hard as to not get fired.” He called that “soldiering.”
So the fundamental understanding of people in the factory was they’re stupid and they’re lazy. And you start with that as a core belief system for how you treat people. Well, what’s the solution to that? There’s only one way to solve that—if most people are stupid and lazy, you find the very few motivated and smart ones and you lord them over the stupid and lazy ones, and thus management was born.
Management did not exist in a wholesale way, in the way that we express in the factory systems in business before that. It was canonized in the factory system. So it comes out of the gate as an adversarial system based on fatal assumptions that people are stupid and lazy, can’t trust them as far as you can dropkick them, and they’re dumber than an ox. People want to know where that phrase came from, “dumb as an ox”? That’s where it came from—Frederick Winslow Taylor’s papers.
So that’s what we have to work with firstly. So when people say “What do we have to do to get out of this?”, the first thing is we have to check our belief system. And I talked to so many people who say, “Oh no, no, I don’t think people are stupid and lazy.” But then I ask them about their business structure, and they have managers lording over people. And I ask them why, and they’ll give me the reverse insult: “Well, because these people are smarter and more motivated,” or “They’re more educated,” or “They’re more experienced and more skilled,” they’re more of this and more of that, and “They’re there to help those other people.”
The interesting thing is, in all this management-oriented business, is that no one has ever done the research to find out if a manager is actually a good idea financially. When you take them away, I can show you lots of places where they’ve gone away and nothing bad happened—the people did well on their own in self-managed teams. But there is no definitive research that says when you add managers they actually add value.
And that’s the basic assumption—that people are stupid and lazy and so they need a manager, and if I put a manager over them, the manager will force enough more productivity that they will pay for the manager and extra profit. The manager will increase that whole thing. So that’s where we got to start—do we believe people are stupid and lazy, or do we believe they’re smart and motivated? If we believe they’re smart and motivated, it takes us down a whole different path.
Lisa: So it sounds like the main thrust of what you’re saying there is like a mindset shift. But it’s kind of tricky when, as you say, when you ask people or when you suggest that the assumption of management systems is that people are stupid and lazy, you know, no one would agree. But of course, as you say, when you kind of look into all those policies and processes and structures, that is what it’s saying. But how do you take—how do you help facilitate that shift for people if it’s a blind spot, you know?
Chuck: Yeah, there’s a number of things you have to do. The best place to start, and the way we fail on this most, is we don’t start with the data. People need data, and I think the data is powerful. I think the data is all on the side of self-managed teams and distributed decision-making, and we don’t show people that data.
There’s so many companies out there that have been running this way with a complete void of managers—no managers in the whole place—for six, seven decades. W.L. Gore started in 1958—ten thousand people, three billion dollar organization, not a single manager in the whole place. Nobody can hire, no one person can hire, no person can fire. The teams decide their productivity, the teams decide their quotas and all that stuff. It’s done with human beings together working in community.
And we can show that data for companies like them and Semco—it’s been doing it for 40 years now—and so many others. There’s dozens, there’s about a hundred and some companies larger than 500 that I’m aware of, which means there’s a few thousand who have been running this way for a very long time. And then there’s tens of thousands of smaller ones. So there’s no anomaly there—in every industry, every system, every vocation, every size of company, age… you can’t find a demographic that doesn’t apply to this.
So the data is overwhelming, and that’s where we start with people to answer that question: Why are you still putting lipstick on that pig of the hierarchy, what we call the “pyramid scheme” of the hierarchy? That’s the first place to start—is to show them the data.
And then to show them the history. It’s gripping and sad to show the difference between leadership and management and how they came from very different places throughout history. Leadership is something you can’t actually trace where it came from because it’s organic. So you can surmise that it came through—first we became aware as human beings, and then somebody had a good idea and somebody followed that, and then you have social order that kind of springs up. And you have democracy, which makes it even easier, and only on through to technology today.
Things like Lyft and Airbnb—those are things that were created through the opportunity for true leadership, where somebody had a good idea and somebody decided to follow that good idea. That’s leadership.
Management comes through a whole different place, and it’s very traceable. The first mention of management is Hammurabi—I think he’s like 3,000 or 5,000 BC—and it’s related to slavery. We need—we have people who are lazy because they’re not being paid. If you’re a slave, and so we need managers to lord over the slaves.
And then we see it tracing through to serfdom in the Middle Ages, when you didn’t own the person anymore but the person was owned by the land. You still needed managers to get them to do the tilling of the land because 80% of that tax went to the Lord. And then it goes into the informal military and then into the formal military, and it comes out of that into the factory systems and into HR today.
So there’s a very traceable path between them, and the two are radically different. That’s the other thing we have to help people see—is that we’re not saying people don’t need leadership, but leadership is organic. You look behind you and nobody’s following—you’re out for a walk.
Maybe one of the best ways to show the difference between management and leadership is this: Britain, the United Kingdom, managed India. Gandhi led India. Which one won? And the answer is, of course, Gandhi. Gandhi didn’t have the guns. Britain and Great Britain, England, had the guns. And that’s how we manage people—through fear and control and trepidation.
And we don’t, you know, it’s very nuanced. We would never say that. But the fact is that one human being can change my life with the stroke of a pen by dismissing me. So it’s a huge power opportunity for them, and so we respect that, and as a result, those people never know if we’re actually following them or not, because I’m going to follow you because you have a gun pointed at me. So radical differences between those two things.
Another way to look at it then—you see the writings of history. There’s a woman in the 1920s, Mary Parker Follett, who is beginning to write about… she—one of her papers is called “The Giving of Orders” and why the giving of orders is such a bad idea with human beings who are adults, who are smart and motivated. You don’t need to do that.
Then you see Douglas McGregor in 1960 wrote a book, “The Human Side of Enterprise,” and he postulated Theory X, Theory Y, playing off of Taylor’s stupid and lazy things. Theory X: people are stupid and lazy. Theory Y: people are smart and motivated. Whichever one you believe is a self-fulfilling prophecy.
And they follow that in industries where—in the same industry, here’s a company that thinks people are stupid and lazy, in that same industry, here’s a company that thinks people are smart and motivated, and as a result, both companies have self-fulfilling prophecies. One is full of people who are stupid and lazy, or at least appear that way—they’re not really, we’ve made them that way—and then in the other one, they’re all smart and motivated.
So there’s so many proofs for this, that the only reason people won’t do it is because they’re getting theirs and they’re not interested in somebody else getting theirs. But even that has data, because the reality of it is, when you give everybody their brain back, the guys who used to be at the top of the pyramid still make more money. There’s huge data on that.
Lisa: So when you say give everybody their brain back, how do you do that on a practical level? Because, you know, as you say, I think historically, I’m just the way that we’re conditioned, I think from a young age through parenting, through school, and then when we enter the workplace, if you’re an employee, you’re kind of trained to be passive and compliant. And if you’re a manager, you’re kind of trained to be responsible and, you know, results-driven and all of that kind of stuff. How do you sort of unlearn that?
Chuck: Yeah, well, it is a process. But it’s also a process of understanding what humanity is. It starts with what does it mean to be human beings beyond being aware, you know—we’re aware and we know that we live and we know that we die, and so there’s awareness in there. But beyond that, what is what makes us more human than other animal species? And the reality of it is, it’s creativity.
Creativity is nothing more than problem-solving. It’s a series of decisions which lead you to a final… I’ve written music, my kids do art, I’ve studied artists, and I help run an Art Institute in the summers, and art is nothing more than a series of decisions. So is getting to work, so is accounting, so is welding, and it’s all about being creative, having the ability to figure something out.
Here’s a problem: how do I get to work? How do I weld this? How do I solve these problems? How do I code this thing? And all of that is the process of creativity. And at the core of creativity is decision-making.
Michelangelo says—he said he walked around the block of granite in the courtyard in Florence for a while and decided that David was in there. And all he did was chip away everything that wasn’t David, and that’s how David came to be. That’s a series of decisions.
And we think of creativity as being something very artsy, but it’s any time you get to solve a problem, you are being creative. And that is hugely satisfying and uplifts us as human beings, more than any other thing, is to say, “I did that. I figured out how to ride a bicycle.” That’s a series of decisions. Nobody else can do that for you—you have to figure out yourself. They can help you, but you still have to get on the bike and figure that out.
So the core of this whole thing, a very fundamental, extremely simple practice—how do you give people their brains back? Distributed decision-making through distributed leadership. The core is distributed decision-making. The more we push decisions to the place where they have to be carried out, the more human your workplace will be. And as a result, the more productive, the higher the revenues are, the profits, and the biggest statistic, the overwhelmingly higher retention you will have with your staff.
But it starts with: stop making decisions and give people the training and the opportunity to make their own decisions. That leads us to a separation again of managers versus leaders. Managers tell, leaders ask. And maybe to expand on that—managers solve and decide and then tell, and leaders ask and get out of the way. Those are very radical different approaches to businesses.
You see them in business for the last hundred plus years—people who are instinctively doing the right things. Even when they’re called “manager,” they’re not managing. They’re training people, they’re asking good questions of those people to train them, and then they’re getting the heck out of the way and giving those people both the freedom and the responsibility to ask and answer questions.
Lisa: One of the challenges that a lot of companies I speak to who are experimenting with self-management is that when it comes to distributed decision-making, people often have this challenge of “Why aren’t people taking initiative?” You know, we’ve given people permission to make decisions, we want people to be responsible, but things aren’t getting done or, you know, there seems to be no accountability culture. How do you address that? Is that part of this training piece that you mentioned?
Chuck: It is, Lisa. There’s—we have to retrain people. Again, 150 years of this nonsense, people are used to going to work and turning their brains off. They’re actually very smart, very motivated at home, but the minute their foot hits the threshold at work, they become stupid and lazy because that’s what they know they’re supposed to be to survive. It’s how Scott Adams made millions of dollars on Dilbert, the cartoon. It’s based on that whole concept that we leave our brains at home and only the manager is supposed to be the smart one. And even when they’re not, our job is to make them look smart so that they’ll finally come up with the right thing, and then we pat them on the back for all that.
So what I’ve learned in doing this—because we work with companies to help them make the transition from the factory systems to the participation age distributed decision-making model, what we call a mission-centered model—and we work with those companies. And when I first started doing this—I’ve done this all my life instinctively with my own businesses, good or bad—I never looked at what other people did, I always just did what I thought made sense.
I’m left-handed and right-brained and ADHD and a little bit dyslexic, so I just did what I knew to do, and I built businesses based on everybody having a brain. When I started helping people—I got encouraged to help people do this 10 or 12 or 15 years ago—I told them the same thing that you started your question with: “Hey, you just need to give people the freedom, release them to make decisions, and they’ll be fine.”
Doesn’t work. Because there’s 150 years of mistrust there, there’s 150 years of habit. And the reality of it is, management creates codependence. In fact, management is, in its essence, nothing more, nothing less than pure unadulterated codependence. If we called it what it was, we wouldn’t… you know, we don’t call it that because we don’t like the idea, but I haven’t found a single person anywhere who can refute that management is nothing more than codependence.
“I need to tell someone what to do.” Well, that’s convenient, because I need someone to tell me what to do. That is pure unadulterated codependency. I will sit around and wait for you to run my life, and that’s great because I love running other people’s lives. We both get fed from that. That’s codependent.
So we’ve got to break the cycle of codependency. We have to identify it as something that you need to do with a three-year-old but you don’t do with a 30-year-old. That’s the beginning of the cycle. And then you switch your language to “allow and require.” The art of leadership—we say this all the time, and something I ask business leaders to memorize—the art of leadership is to know how few decisions the leader needs to make.
You see this in all great distributed decision-making environments—fewer and fewer and fewer decisions. We’re constantly distributing the decision-making by training other people to make those decisions, so I don’t have to anymore. That said, there are a few decisions I will make, and I will make more early on in this switch than I would later on.
So one of the ironies of this is—I found over the years that it takes strong leadership to make a switch from the factory system to the participation age. We think it takes abdication—let’s just get out of the way and people will rise to the occasion. No, they won’t. Well, that’s not true—half will and half won’t. Half are sitting there waiting for you to get out of the way, and the other half are afraid that you’re getting out of the way because they don’t want the responsibility.
So we have to allow and require. That becomes one of the decisions we make up front. Okay, we’re making this switch. We used to have this codependent parent-child relationship—it’s not healthy, we’re not going to do that anymore. I’m now one of many adults. You are all going to be adults, we’re all going to be adults, we’re all going to serve the mission. And in that context, we are all allowed and required to make decisions—not by ourselves, in collaboration, but we’re all going to be doing it. It is not an option.
Anyone who doesn’t want to get to the point where they make decisions, they will end up in somebody else’s company. The rest of us will be here. And what we find when we do that—again, 20, 30, 40 percent of the people are chomping at the bit to make decisions. “Finally I get to be an adult at work.” And then there’s 10 or 20 percent who never will—they’re going to be children at home and children at work the rest of their lives, and they’re going to have to go somewhere else.
But the other 50 to 60 percent will reluctantly do this because they don’t want to lose their jobs, in the same way that they reluctantly gave up their brains because they didn’t want to lose their job. So they don’t like change, it’s easier to not have the responsibility, but they will do it. And then once they do it, they feel better about themselves because they went in that direction.
So that’s sort of at the core of this—is to require that everyone do it, to make decisions, and then to train them how to do it. Be patient—this is a switch, 150, 200 years of this nonsense, plus 10 or 15 or 20 years of their own experience. It’s going to take six months to 18 months for them to actually get to where they can understand how to make a decision.
And we have a very simple little process that can take a few months for that to happen called two-step decision-making. So I don’t know if you want to get into there or not, but that’s sort of the mechanics of distributed decision-making.
Lisa: Yeah, please tell us about two-step decision-making.
Chuck: Yeah, well, it’s not something I invented. I just gave it a name so that it could be clear and simple, because all of this stuff has to be utterly simple. You generally in life, you solve the complex with simplicity versus the other way around.
So how do we do this? How do we distribute the decision-making in a safe way? Because otherwise it sounds like chaos and anarchy—“Every man for himself! I’m an adult, don’t tell me what to do, I get to make decisions on my own.” That is not what we’re talking about. We’re talking about community at work, where we collaborate together to make decisions. We never make decisions that impact other people without their input and, in some cases, their vote on that decision.
So 2-step decision-making gives us that parameter to actually make much safer, much better decisions than in any factory system hierarchy. I didn’t invent this, but I fine-tuned it. Bill Gore, who started the company Gore-Tex, or W.L. Gore—I mentioned them earlier, three billion dollar company with 10,000 people, no managers—he would use the concept. He didn’t have a vehicle for this, where he could have built it a little better, but he had a concept. It’s a very great, very good concept.
He called it “above the waterline” and “below the waterline” decision-making. Anybody who’s going to make a decision above the waterline, which means you might shoot a hole in this, and if you do it wrong, you’ll shoot a hole in the boat above the waterline—well, we’re going to let you make that decision because it’s not going to sink the boat. We’re going to make you patch the hole, you’re going to learn, you’re going to be more of an adult, more of a decision-maker, less dependent on us. That’s a good thing. We celebrate that.
And then if there’s any decision that might shoot a hole below the waterline, we’re going to get a lot of people involved in that because that’s dangerous.
2-step decision-making puts feet to that. So two-step decision-making has two simple principles or parameters around it. Principle number one: decisions should be made by whoever has to carry them out on a regular, ongoing, daily basis. So if I’m the person who’s going to use the software, or there’s ten of us who are going to use the software, we should make the final decision on which software we buy.
If that was the only parameter, that’s chaos and anarchy. Step number two is where it all gets safe. Step number two is the second principle. Principle number one: decisions should be made locally, wherever they have to be carried out. Step number two: whoever is impacted or affected by that decision should have input in that decision.
If you follow step number two, you never make an isolated decision. Who else is affected by that piece of software being bought? Well, whoever is the customer of that software, the results of that software, whoever funds that software—accounting or the owner. Or there’s, you know, technology—does it fit in with the rest of our technology? There’s multiple entities that will be affected by that decision, and they need thorough input into that decision. And in some cases, they will join the decision-making because they are affected ongoing by it.
So that’s the simple process. If someone—just put a real practical spin on this—let’s say I make copies. I’m one of the three people in the office that makes lots and lots of copies. And I walk up to the copier one day and I say to myself, “This copier is on its last legs.”
In a distributed decision-making model, I am now the leader. I’m the first one to see this issue, and I’m saying to myself, “This needs a solution.” I’m now solving and deciding. The first thing I ask myself is, “Well, who else will have to carry out this decision on a regular basis?” And the answer is the other two people who make copies.
So I go to them and I say, “Well, do you guys think the copier is on its last legs?” And they look at it and say, “Well, we actually hadn’t thought about it, but you’re right, it is on its last legs. Let’s get a new copier.” That’s step one.
Step two is then the three of them ask themselves, “Who else will be affected by us buying a copier?” And now you’ve got accounting, the budgeting, you’ve got technology—does this fit in with the rest of our technology? You’ve got the recipients of the copies, the customers of the copier. You need to poll them and say, “What kind of copies do you need?” There might be one or two others who are involved in this thing.
And so you can see that they can get all the input they want from all those people, and some of those other people might want to join them in the decision-making. But that’s the simple two-step process. And you can see that a copier can get bought locally by those who are going to own it, and it’ll work out better.
And I’ll give you the reason why this should happen, because it’s a real live example. Six or seven years ago, I violated this. We got together, and we’re a small company of eight or ten people at the time, and one of the people who made a lot of copies said, “Hey, your copier’s on its last legs, we need a new copier.” And I had a friend who sells copiers. He sold me a copier—an $8,000 copier for $4,000. I brought it in, and I could see as the two people came in who make copies, they looked at that thing and said, “What in God’s name is that doing here?”
And then it broke. And guess what they did? “Hey Chuck, your copier broke.” And now I’m in the copier management business—not the highest, best use of my time. That went on for about six months, and then I asked them, “Well, what would you have bought?” They showed me a fifteen hundred dollar copier that would work great, and they said, “That’s what we had in mind.”
I sold my copier, lost two thousand dollars, we bought their fifteen hundred dollar one, and I haven’t heard about copiers or copies in the last six or seven years. It’s just not mine—they owned the decision, they own the copier.
So here’s the principle: input equals ownership.
