The Lively Disorder of Agile Organizations

The biggest hur­dle for com­pa­nies under­go­ing an agile trans­for­ma­tion is the per­ceived loss of con­trol. At its core, agili­ty means self-orga­ni­za­tion. The more decen­tral­ized deci­sions are made, the more flex­i­bly the orga­ni­za­tion can react to new sit­u­a­tions and the more adapt­able it is as a result. So far, so good. But the more decen­tral­ized deci­sions are made, the messier things appear for the exist­ing man­age­ment and espe­cial­ly for the man­age­ment in com­pa­nies with a high pro­por­tion of engi­neers, as is often the case in Ger­many. How­ev­er, this dis­or­der is not a flaw, but an expres­sion of cre­ativ­i­ty and live­li­ness. Only those who can accept this and rec­og­nize that this live­ly dis­or­der can be rec­on­ciled into a coher­ent whole with the right lead­er­ship can over­come this first hur­dle in their agile transformation.

Con­trol and order is an impor­tant asset in clas­si­cal hier­ar­chi­cal orga­ni­za­tions. Every­thing must be reg­u­lat­ed (and some­times over­reg­u­lat­ed) and prop­er­ly man­aged. Then the busi­ness runs smooth­ly like a well-oiled machine. And vice ver­sa, order, con­trol and man­age­ment are nat­u­ral­ly lack­ing when things don’t run so smooth­ly. Then heroes and alpha males are need­ed to restore order and bring every­thing under control. 

It seems as if we in Ger­many are par­tic­u­lar­ly fond of order. We are proud of the gap size and love our lawn edges. Lenin is there­fore ascribed this state­ment that can­not be com­plete­ly dis­missed: “Rev­o­lu­tion in Ger­many? That will nev­er hap­pen, if these Ger­mans want to storm a sta­tion, they’ll buy a plat­form tick­et first! 

In a for­est, there is no mas­ter tree that plans and dic­tates change when rain fails to fall or when the spring comes ear­ly. The whole ecosys­tem reacts cre­ative­ly, in the moment.

Fred­er­ic Laloux

Buurt­zorg in the Nether­lands proves that order is not every­thing and that com­pa­nies also work dif­fer­ent­ly and even bet­ter. After more than ten years in oth­er nurs­ing orga­ni­za­tions, Jos de Blok was fed up in 2006 with peo­ple’s care degen­er­at­ing into an indus­tri­al­ized prod­uct, which degrad­ed him to a cog in a cen­tral­ly con­trolled nurs­ing machine and pre­vent­ed him from devot­ing him­self ade­quate­ly to his patients. That’s why he found­ed Buurt­zorg and start­ed a revolution.

Buurt­zorg is rig­or­ous­ly focused on the well-being of its patients. Jos de Blok con­sis­tent­ly relies on the prin­ci­ple of decen­tral­iza­tion. A team at Buurt­zorg con­sists of 10 – 12 nurs­es who care for 40 – 50 patients in a clear­ly defined neigh­bour­hood. The nurs­ing staff at Buurt­zorg are all gen­er­al­ists with regard to the dif­fer­ent clin­i­cal pic­tures as well as with regard to the way they orga­nize their work. 

The teams plan and orga­nize the care them­selves, con­duct job inter­views, rent offices, plan train­ing cours­es and much more, where the typ­i­cal con­troller would imme­di­ate­ly sense wast­ed syn­er­gies. At Buurt­zorg in the Nether­lands, more than 10,000 employ­ees now work in 850 teams. They are sup­port­ed by a very lean back office with 45 employ­ees plus 15 coach­es and zero man­agers (cf. Buurt­zorg). Instead of hier­ar­chy and con­trol, Jos de Blok relies on the live­ly net­work­ing of the teams (among oth­er things in Buurt­zorg’s flour­ish­ing Social Intranet). 

Does Jos de Blok have his busi­ness under con­trol? In the clas­sic sense that he knows every­thing or decides every­thing him­self cer­tain­ly not. Is every­thing con­sis­tent­ly reg­u­lat­ed and ordered there? Cer­tain­ly not. Is that a prob­lem? By no means! Pre­cise­ly because of this live­ly dis­or­der and because of the result­ing cre­ativ­i­ty and adapt­abil­i­ty, Buurt­zorg is far supe­ri­or to oth­er and in the clas­si­cal sense “order­ly” care organizations.

The num­bers tell their own tale. In just 10 years Buurt­zorg has grown to over 10,000 employ­ees in the Nether­lands alone and is now oper­at­ing in 24 coun­tries. Cus­tomer sat­is­fac­tion is sig­nif­i­cant­ly high­er than with oth­er care orga­ni­za­tions, as is employ­ee sat­is­fac­tion. And all this at sig­nif­i­cant­ly low­er costs: A study by KPMG in 2012, for exam­ple, stat­ed: “Indeed, by chang­ing the mod­el of care, Buurt­zorg has accom­plished a 50 per­cent reduc­tion in hours of care, improved qual­i­ty of care and raised work sat­is­fac­tion for their employ­ees (cf. Buurt­zorg).

The type of work done by a home care orga­ni­za­tion is of course par­tic­u­lar­ly suit­able for this rig­or­ous decen­tral­iza­tion, but this pat­tern can also be found where one would expect it less, for exam­ple at the French die cast­ing man­u­fac­tur­er FAVI. There, too, the approx­i­mate­ly 500 employ­ees worked in autonomous and self-con­tained mini fac­to­ries with 15 to 35 employ­ees, each of which was assigned to a spe­cif­ic prod­uct or customer.

I was aware that in order to become a respon­sive orga­ni­za­tion, deci­sions need­ed to be made by the work­ers them­selves, direct­ly on the pro­duc­tion floor. I believe that a good employ­ee is an employ­ee that takes initiatives.

Jean François Zobrist

When Jean-François Zobrist became CEO in 1983, FAV­I’s then 80 employ­ees, as in most man­u­fac­tur­ing com­pa­nies, were orga­nized strict­ly hier­ar­chi­cal­ly and func­tion­al­ly: The work­ers report­ed to a chef d’e­quipe, who report­ed to a chef d’ate­lier, who in turn report­ed to a chef de ser­vice and who final­ly report­ed to a chef de pro­duc­tion, who in turn report­ed to the CEO. In addi­tion to this pro­duc­tion area, there were, as usu­al, the sup­port­ing areas HR, Sales, Engi­neer­ing, Plan­ning, Main­te­nance and Finance. 

With­in two years, Zobrist com­plete­ly rebuilt FAVI by dis­solv­ing all cen­tral­ized sup­port areas and mov­ing these tasks into the mini fac­to­ries, so that they them­selves were respon­si­ble for sales, plan­ning, engi­neer­ing, HR, etc. (sim­i­lar to Buurt­zorg). The suc­cess of this trans­for­ma­tion was remark­able: FAVI was able to grow from 80 to over 500 employ­ees and con­tin­ue to pro­duce prof­itably with above-aver­age wages in Europe, where oth­er sup­pli­ers had long since relo­cat­ed pro­duc­tion to the Far East. (cf. Fred­er­ic Laloux, Rein­vent­ing Orga­ni­za­tions. Ama­zon Affil­i­ate Link).

Did Jean François Zobrist have his busi­ness under con­trol? In the clas­sic sense of a busi­ness leader, he cer­tain­ly has as lit­tle con­trol as Reed Hast­ing over Net­flix, who is proud to make as few deci­sions as pos­si­ble and instead puts con­text over con­trol. As well as Cap­tain David Mar­quet had no con­trol over his nuclear sub­ma­rine USS San­ta Fe, on which he no longer gave orders. Did it work any­way? Yes, and it worked even bet­ter because of it, that is, because of this live­ly disorder!

Every­body gets all the infor­ma­tion. So what we’re try­ing to do is build a sense of respon­si­bil­i­ty in peo­ple and the abil­i­ty to do things. I find out about big deci­sions now that are made all the time, I’ve nev­er even heard about it, which is great. And most­ly, they go well.

Reed Hast­ings

The exam­ple of FAVI also shows, how­ev­er, how quick­ly orga­ni­za­tions fall back into their old and seem­ing­ly over­come pat­terns. After Zobrist had hand­ed over FAVI to his suc­ces­sor, the share­hold­er struc­ture changed and the new major­i­ty own­er want­ed to bring more order into the “chaos”. So lib­er­ties were grad­u­al­ly reduced and more con­trol and order were introduced.

Jean François Zobrist him­self describes the result of this restored “order” in this way: „As a result the 20% net cash flow first dropped till 15%, then to 10%. And today only 5% is left. Sure­ly, next year the net cash flow will be dropped till 0%. The more the net cash flow went down, the more the share­hold­ers increased the con­trol. Sub­se­quent­ly, the increased con­trol led to unhap­py work­ers lead­ing to poor results. It’s a vicious cir­cle. To me this is the proof that there is a direct rela­tion between the hap­pi­ness of pro­duc­tive peo­ple and the net cash flow.“ (cf. Cor­po­rate Rebels, Teil 2)

Hap­py work­ers make hap­py cus­tomers who make hap­py shareholders.

Jean François Zobrist

Both exam­ples show the pat­tern of uncom­pro­mis­ing cus­tomer ori­en­ta­tion through decen­tral­iza­tion: autonomous units work close to the cus­tomer instead of close to the head office. This nec­es­sar­i­ly goes hand in hand with a per­ceived loss of con­trol and a cer­tain live­ly dis­or­der. Both – and these exam­ples also show this – can be com­pen­sat­ed by lead­er­ship, such that these self-suf­fi­cient units align them­selves to a com­mon whole.