Brave New Work | Aaron Dignan | Talks at Google

Summary

Aaron Dignan, in his engaging talk, challenges the traditional organizational structure and work methods by highlighting the outdated nature of the org chart and the self-sabotaging behaviors prevalent in modern workplaces. He emphasizes the need for a new operating system in organizations, one that embraces complexity and trusts employees' autonomy. Dignan shares examples of companies like Handelsbanken, Morning Star, and Haier that have successfully implemented alternative models, fostering a culture of trust, transparency, and continuous improvement. He advocates for a participatory approach to change, encouraging small-scale experiments and learning from doing, rather than relying on top-down directives. Dignan's message is a call to action for organizations to adapt, innovate, and unlock their full potential by reimagining their systems and structures.

Takeaways

• 📈 The concept of organizational debt refers to outdated rules and policies that no longer serve their purpose but haven't been updated, leading to inefficiency and dissatisfaction within the company.
• 🤝 Trust and autonomy are key in managing complex systems like organizations, as opposed to relying solely on control and compliance, which can lead to a less safe and less effective work environment.
• 🚦 The roundabout approach, as opposed to the traffic light model, is a metaphor for a system that relies on simple rules and social coordination rather than centralized control, often resulting in better outcomes.
• 🌐 Organizations are complex systems, not complicated ones, and should be managed with an understanding of their adaptive and dynamic nature, which requires a different approach than managing complicated systems.
• 💡 The way to truly change an organization is through continuous participatory change, where teams at all levels are engaged in a looping process of identifying tensions, exploring practices, and designing experiments.
• 🛠️ Aaron Dignan emphasizes the importance of learning by doing rather than arguing over theories, advocating for small-scale experiments that can lead to larger systemic changes.
• 🚫 Starting small and stopping unnecessary practices are effective strategies for change; it's about making space for new ideas and learning from the absence of certain processes.
• 🤔 Engaging with the resistance, or those who are not immediately on board with change, can provide valuable feedback and insights that can inform and improve the change process.
• 🌱 The idea of 'people positive' organizations is based on the belief that individuals are capable of growth, worthy of trust, and motivated by autonomy, mastery, and purpose.
• ♻️ The change process should be an ongoing loop of identifying tensions, exploring solutions, and implementing changes, rather than a one-time event.
• 🌟 Success stories like those of Buurtzorg, Morning Star, the USS Santa Fe, and Haier demonstrate the potential of rethinking traditional organizational structures and practices to achieve better outcomes.

Q & A

What is the significance of the 1910 organizational chart in the context of the discussion?

The 1910 organizational chart is significant because it represents one of the earliest uses of boxes and lines to visualize human labor. The discussion highlights that despite being over a century old, the basic concept of org charts has not evolved significantly, suggesting a lack of innovation in how we visualize and structure work.

What is the 'waterline' concept mentioned in the context of decision-making?

The 'waterline' is a metaphor used by WL Gore to describe the level of risk a company is willing to take in decision-making. Decisions below the waterline are considered critical and require advice or consent from others, while those above the waterline can be made with more autonomy.

How does the concept of 'organizational debt' relate to the inefficiencies in modern work practices?

Organizational debt refers to the outdated rules, policies, and structures that no longer serve an organization but have not been updated or refactored. These can lead to inefficiencies, as they may create unnecessary steps or processes that slow down work and increase costs without providing commensurate benefits.

What is the main difference between a 'complicated' system and a 'complex' system?

A 'complicated' system is one with many parts and a clear cause-and-effect relationship between components, making it predictable and knowable. A 'complex' system, on the other hand, is dispositional, with unpredictable behaviors and trends that require interaction and continuous management rather than a single solution.

Why is it challenging to implement change in organizations?

Implementing change is challenging because organizations are complex systems with deeply ingrained structures, policies, and norms. Change is often met with resistance due to the discomfort of altering established patterns and the fear of the unknown. Additionally, change efforts may fail if they do not align with the organization's underlying assumptions and operating system.

What is the 'roundabout' approach to organizational structure and why is it considered superior in certain contexts?

The 'roundabout' approach is a metaphor for an organizational structure that emphasizes autonomy, trust, and social coordination with simple rules. It is considered superior because it can lead to safer operations, higher throughput, lower costs, and better resilience in the face of change. However, it requires a higher level of engagement and responsibility from participants.

How does the concept of 'continuous participatory change' differ from traditional change management approaches?

Continuous participatory change involves ongoing, incremental adjustments made by teams within an organization, as opposed to top-down, one-time transformations. It emphasizes learning by doing, starting small, and allowing for experimentation and adaptation, making it more aligned with the complex nature of organizations.

Why is transparency in compensation considered beneficial in certain organizational cultures?

Transparency in compensation can lead to greater fairness and equity by reducing biases in pay decisions. It also promotes an understanding of the company's values and priorities, as employees can see the direct correlation between compensation and performance or contribution to the company's goals.

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How can the tension and practice cards be utilized in an organization to facilitate change?

Tension and practice cards are tools used to identify and address issues within a team or organization. Teams select the tensions most relevant to them and then explore alternative practices to address these issues. This process helps teams to experiment with new ways of working and to adopt changes that are most effective for their specific context.

What is the importance of starting small when implementing changes in an organization?

Starting small allows for the testing and refinement of new practices or policies on a smaller scale before broader implementation. This approach minimizes risk and allows for learning and adjustment. As successful practices are identified, they can be shared and adopted by other teams, leading to a ripple effect of positive change throughout the organization.

How does the concept of 'joining the resistance' help in the process of organizational change?

By engaging with individuals who are resistant to change, leaders can gain valuable insights into the reasons behind their resistance. This understanding can inform the design of changes that are more inclusive and address the concerns of all stakeholders. It also promotes a culture of open dialogue and mutual respect, which can facilitate smoother adoption of new practices.

What is the role of internal coaches in supporting the continuous participatory change process?

Internal coaches serve as guides and facilitators for teams engaged in the change process. They provide support, help teams stay true to the process of continuous improvement, and assist in the adoption of new practices. Coaches can also help to disseminate successful practices throughout the organization, acting as catalysts for broader change.

Outlines

00:00

😀 Introduction to Organizational Charts and Work Methods

Aaron Dignan starts with a pop quiz about the age of an organizational chart from 1910, highlighting the lack of evolution in how we visualize human labor. He discusses outdated work practices that resemble strategies created during WWII to sabotage enemy businesses, which are now normalized in modern work environments. Dignan emphasizes the decline in company lifespan and return on assets, suggesting that traditional hierarchies and factory models are failing in the current business landscape.

05:01

📉 Decline in Productivity and Employee Engagement

The script addresses the decline in productivity growth despite technological advancements. It points out the dissatisfaction in the workplace, with a significant number of employees considering quitting and others disengaged. Economists are puzzled by this trend, while employees attribute it to bureaucracy. The concept of organizational debt is introduced, which refers to obsolete rules and policies that hinder current effectiveness, using the example of a company that unnecessarily complicates the process of obtaining work gloves.

10:02

🤔 The Nature of Organizations and Systems

Dignan differentiates between complicated and complex systems, explaining that organizations are complex and require a different approach. He emphasizes that complex systems, such as weather or traffic, cannot be solved but must be managed through interaction. The audience is engaged in understanding that organizations are complex systems, highlighting the need for a new mindset and tools to address organizational challenges effectively.

15:04

🚦 Traffic Intersections as a Metaphor for Organizational Systems

Using the metaphor of traffic intersections, Dignan compares a traditional traffic light system to a roundabout. He points out that roundabouts, which rely on trust and autonomy, are safer, have higher throughput, are less expensive to maintain, and function better during power outages. However, they are less common because they require a different mindset and a willingness to take responsibility, contrasting with the controlled environment of traffic lights.

20:04

💪 Empowering Organizations to Overcome Bureaucracy

The script discusses how organizations like Handelsbanken, Morning Star, and Haier have successfully challenged bureaucracy. These companies have empowered their employees, distributed decision-making, and focused on customer connections. They have implemented advice processes, self-set salaries, and autonomous teams to improve performance and responsiveness. Dignan emphasizes the importance of trust, autonomy, and a connection to customers in creating a successful organizational structure.

25:05

🌟 Positive People Management and Complexity Awareness

Dignan outlines two key mindsets found in successful organizations: being people positive, which involves trusting employees and providing autonomy, and being complexity conscious, which means recognizing the varying contexts within an organization and adapting the approach accordingly. He discusses the importance of continuous learning, emergence, and avoiding long-term commitments in uncertain contexts. The script also touches on the challenges of change and the need for a different model of change that involves continuous participatory change and learning from doing.

30:05

🔄 The Process of Continuous Participatory Change

The script details a process for organizations to continuously improve their way of working through identifying tensions, exploring practices, and designing experiments. It encourages teams to take ownership of their work methods and to make organizational design their second job. The process involves making small, safe-to-try changes and learning from the outcomes. Dignan also provides rules of thumb for this process, such as working through the system, learning by doing, starting small, stopping to create space for reflection, and joining the resistance by engaging with skeptics.

35:08

🗣️ Transparency and Decision-Making in Organizations

Dignan discusses the importance of transparency in pay and decision-making within organizations. He explains the concept of a 'waterline' for decisions, where anything below it requires advice or consent from multiple roles. The script addresses the challenges of change, especially when it involves perceived or real losses of power or influence. It emphasizes the need for integrative decisions in such cases and the importance of elected roles to hold certain decision-making powers. The benefits of transparent pay are also highlighted, including fairness and a better understanding of the business's economic equation.

Keywords

💡Organizational Debt

Organizational debt refers to the outdated rules, policies, and structures within an organization that no longer serve their intended purpose but have not been updated or removed. In the video, Aaron Dignan uses the example of a company that had an overly complicated process for issuing gloves to workers, which ended up costing the company significantly more than the gloves themselves. This concept is central to the video's theme of how outdated organizational practices can hinder efficiency and employee satisfaction.

💡Systems Theory

Systems theory is an interdisciplinary field that studies systems in terms of their structure, interactions, and dynamics. In the context of the video, Aaron Dignan discusses the difference between complicated and complex systems. He emphasizes that organizations are complex systems, requiring a different approach to management and change than if they were merely complicated. This concept is pivotal in understanding the need for new ways of working within organizations.

💡Complicated vs. Complex

The video makes a distinction between complicated and complex systems. Complicated systems, like a watch or an engine, have a cause-and-effect relationship between their components and are predictable. In contrast, complex systems, such as weather or an organization, are dispositional and cannot be predicted with certainty. This differentiation is crucial for the video's argument that organizations should not be managed with a one-size-fits-all approach but rather with an understanding of their inherent complexity.

💡Participatory Change

Participatory change is a process where individuals at all levels of an organization are involved in the process of change. It is characterized by continuous improvement and adaptation. In the video, Aaron Dignan advocates for this approach, suggesting that teams should be engaged in designing their own work processes. This concept is exemplified by the idea that teams should identify their own challenges and design small experiments to address them, which is a central theme in the video.

💡Waterline Decision-Making

The waterline concept is a decision-making framework used by companies like WL Gore. It suggests that decisions below the waterline, which represents critical operations, require more caution and consultation, while those above can be made with greater autonomy. This concept is used in the video to illustrate how organizations can empower their staff while still maintaining control over critical decisions.

💡Transparency

Transparency in the video refers to the openness and communication within an organization, particularly around compensation. Aaron Dignan discusses the practice of transparent pay scales in some companies, which can lead to more fairness and better decision-making. It is presented as a method to reduce bias and promote a more equitable work environment.

💡Autonomy

Autonomy in the context of the video means the freedom and independence given to individuals within an organization to make decisions and manage their work. Dignan argues that fostering autonomy can lead to more motivated and engaged employees. It is a key component of the new operating system he proposes for organizations to better manage their complex systems.

💡Roundabout Solutions

Roundabout solutions, as mentioned in the video, are alternative approaches to managing organizational processes that may be more efficient and effective than traditional, more linear methods. The term is metaphorically borrowed from traffic management, where a roundabout can handle traffic more safely and efficiently than traffic lights. In the organizational context, it represents a shift towards more dynamic and less hierarchical methods.

💡Self-Determination Theory

Self-Determination Theory (SDT) is a type of motivation theory that emphasizes the importance of autonomy, competence, and relatedness in driving human behavior. In the video, Aaron Dignan references SDT to explain why providing employees with autonomy, opportunities for mastery of their work, and a sense of purpose can lead to increased motivation and better performance.

💡Agile and Lean

Agile and Lean are methodologies often used in software development and manufacturing, respectively, that emphasize adaptability, iterative progress, and minimal waste. In the video, Dignan uses these terms to describe an organizational mindset that embraces change and continuous improvement, which is essential for managing complexity in organizations.

💡Integrative Decisions

Integrative decisions are those that require input and consent from multiple roles or stakeholders within an organization. The video discusses how certain critical decisions should be made collectively to ensure they consider the broader impact on the organization. This approach is part of a larger shift towards more democratic and inclusive organizational structures.

Highlights

Aaron Dignan begins with a quiz about the origin of an organizational chart from 1910, highlighting its lack of evolution.

Dignan points out that organizational charts are often guessed to be from a wide range of years, indicating a lack of understanding of their history.

He discusses the outdated ways of working, such as insisting on everything going through channels and not taking shortcuts, which were originally devised to sabotage enemy businesses during WWII.

Dignan highlights that modern work environments often unknowingly practice self-sabotage through bureaucracy.

He presents the concept of 'organizational debt', which refers to the accumulation of obsolete rules and policies that hinder current effectiveness.

The example of FAVI, a French auto parts company, is given to illustrate the cost of organizational debt and the benefits of eliminating unnecessary processes.

Dignan emphasizes the need to address organizational debt, which is pervasive in companies and slows down progress.

He differentiates between 'complicated' and 'complex' systems, explaining that organizations are complex and require different management approaches.

Dignan explains that complex systems, like organizations, cannot have their problems solved but only managed, and they require continuous interaction.

The importance of treating organizations as living systems that need nurturing and relationship-building is underscored.

He argues that the traditional command-and-control approach to organizations is less effective and less safe than a trust-and-autonomy model.

Dignan provides examples of companies like Handelsbanken and Morning Star that have successfully implemented trust-based models with remarkable results.

The concept of 'continuous participatory change' is introduced as a method for organizations to evolve and improve continuously.

Dignan stresses the importance of involving everyone in the process of change, rather than imposing change from the top down.

He shares practical advice for implementing change, such as starting small, learning by doing, and engaging with resistance.

The talk concludes with a call to action, encouraging leaders to take risks and make changes that will unlock the potential of their organizations.

Dignan emphasizes the need to move beyond traditional bureaucratic models to address modern challenges such as climate change and political issues.

Transcripts

[MUSIC PLAYING]

AARON DIGNAN: Thank you.

Thank you.

So I just want to start right off the gate with a pop quiz.

What year is this from?

Shout them out.

Last year?

'80?

Good.

Closer.

We're going to play game show rules.

You got to be under but not over.

AUDIENCE: '92.

AARON DIGNAN: '92?

All right.

Fair enough.

Anybody further back?

No?

All right.

Here's the answer.

It's from 1910.

It's actually one of the first org charts

to use boxes and lines.

It's from an old Southern Pacific Railroad in the US.

And yeah, this is 109 years old.

And what I find fascinating about that is when I show this,

I usually get guesses ranging from about 1850 to yesterday

or even tomorrow.

This is next month's org chart release.

And what I find fascinating about that

is if I'd shown you a picture of literally anything else--

a shoe, a house, a car, a dress, a phone--

you would have been able to carbon date it better.

But when I show you the main instrument

by which we visualize all of human labor,

you're kind of like, eh.

There's a century of range on when that thing was invented.

And so one of two things is true.

Either it's perfect, and we can all go back to work

and just cut it short today.

Or there's something about it that's

quite intractable and quite hard to change.

And so we have to just sit with that for a second.

So that's the first pop quiz.

There are two more.

The second one is to look at these ways of working.

So these are ways of working that I've collected

from a mysterious source.

Insisting on doing everything through channels.

Not taking shortcuts to expedite decisions.

When possible, referring matters to committee for further study

and having those committees be as large as possible.

Haggling over the precise wordings of emails and missives

to customers and to our fellow employees when

we make changes, et cetera.

Referring back to matters decided

upon at the last meeting, maybe in a private one on one

or over coffee or around the water cooler

or in an email or a Slack message saying,

hey, I think we should make a decision differently

than what happened in the room.

And then my personal favorite is someone

that works with large companies multiplying the procedures

and clearances involved in issuing instructions and paying

checks and so on.

We see that three people have to approve everything

where one might be enough.

So show of hands-- who's ever seen

these behaviors in the workplace here or elsewhere in the past,

maybe has a spouse who's dealing with this?

Yeah.

Does anyone know what these are from?

It's kind of a funny story.

So most people guess that they're from clients that I've

observed and worked with.

But I didn't come up with these, actually.

These were invented-- they were invented

in the '40s at the height of World War II, when

the precursor to the CIA was trying to figure out how

to sabotage enemy businesses.

And the idea was that people that

were confederate to us that were on our side

but inside enemy businesses would

use these approaches to slow those businesses down

and grind them to a halt. So that was the idea.

And actually, there's quite a long list.

There's about 14 or 15 things.

I chose my five favorites.

But there are many, many more in there.

And so what has effectively happened

is in the space of 80 years, we've

gone from this being obviously nonsensical to sabotage being

indistinguishable from work--

that effectively, most people in the modern economy

are working in an environment where we're actively

sabotaging ourselves with the way of working,

at least in terms of how people might have thought 60, 70,

80 years prior.

And what's interesting is that in the midst of that,

the things that have maybe served us well in the past

are starting to fail us.

So we're all, of course, aware of assembly lines

and the factory model of working and having hierarchies

of managers and thinkers and doers separated and all that.

But somewhere along the lines, that has started to fail.

And it's really not something that we talk about much.

So if we look at indicators like the average lifespan

of a company, down and to the right over time.

It used to be a dynastic 60-year run

that you would have on a big index like the S&P 500

if you were a big, successful company.

Now it's closer to 10 years.

Every two and a half weeks, a company

falls off that list from either dying and pulling a Kodak

or getting dealt with an M&A.

Return on assets, which is a much better indicator

of business health than, say, its stock performance--

the stock can be manipulated a little bit.

But the ROA is just, how much profit can we

generate with what we own?

Very hard to manipulate.

And that's gone in the same time period from close to 5%

to down to nearly 1%.

And it's on its way down, which essentially

means we can't make more profit with more stuff.

When we get bigger, when we get more global, when

we get more interconnected, suddenly we become immobilized.

And we're seeing the same thing happen

with productivity growth.

So if you track productivity growth over the last century,

it has gone down and down and down to the point where we're

not getting any more gains.

We're inventing all this incredible stuff.

The people in this room and this company

are inventing things that you would think, oh my gosh,

the device in my pocket has more power

than the computers that took us to the moon.

And yet productivity-- we're not being

able to make more per hour than we were

10 years ago or 20 years ago.

It's really grinding to a halt.

And when you ask economists why this is happening,

they scratch their heads.

They're kind of like, we're really not sure.

Or they debate about it.

What's interesting is when you then

ask people what's going on, they say that they're not

super psyched about work.

So one in two people is thinking about quitting, thinking

about maybe how they're unhappy in their current job.

They're disengaged.

They're working for the weekend.

About one in five or six people is actively

sabotaging their colleagues and playing the politics game

and playing the "how do I succeed

at the expense of others" game.

And so we're not thrilled about work as a whole.

And what's staggering to me about this data--

this is Gallup data--

is that this has been the same for 20 years.

Every year, they release the data with this big fanfare.

And it's like, oh, disengagement went down by 1%

from 52% to 51%.

And we're all just OK with that.

We're OK with the fact that most people

spend one third to one half of their lives in an environment

that they're not psyched about.

And that's just the way the world is, I guess.

So that's challenging.

Now, as I mentioned, when you ask what's going on-- when you

ask the economists, when you ask people that are looking

at the system as a whole what is happening--

they scratch their heads.

But when you ask the people at the edge, they'll tell you.

Bureaucracy is what's happening.

What's happening is that the policies and structures

and boundaries and processes and rules and norms by which we

govern our behavior at work have metastasized into something

that we're no longer fully in control of

and that we no longer fully understand.

And so it's slowing us down.

It's creating friction.

It's creating tension.

It's creating dissatisfaction.

And that dissatisfaction has a cost.

It has a very real cost.

So to give you an example, I like

to talk about it in terms of organizational debt.

So think about financial debt.

You borrow money.

You owe interest.

That interest is a pain point for you until you pay it back.

For those of you that work closely

in software development, technical debt--

you rush to get the software out the door.

And later on, those choices have a cost.

You have to work to refactor and reintegrate

the code that you've created.

Organizational debt is a third concept,

and I actually think the most pernicious.

Organizational debt is all the rules and policies

and structures we've created that are no longer serving us

but that we haven't refactored, that we haven't changed,

that we haven't updated to reflect the present day.

So they're sort of like something

that maybe someone back in time understood

why we did it that way.

Or maybe it once made sense, but it doesn't make sense anymore.

Perfect example-- so there's an auto parts,

a brass foundry in France called FAVI.

And they are incredible at what they do.

They're one of the only companies

in that space that's been able to survive the outsourcing

boom.

They're one of the only profitable, successful

factories in that space in Europe.

And when their prior CEO came to take over the job,

he noticed as he walked the floor for the first time

someone standing by a cage of equipment with a slip of paper

just waiting.

And he said, hey, what are you doing?

He said, oh, I'm waiting for new gloves.

OK.

And what's the paper all about?

Well, when you need new gloves, you go to your manager.

You show the boss your gloves that are no longer working

that are worn out.

And they approve that they're no longer working.

And then they give you a permission slip.

And you leave your machine.

And you go over to this cage where all the gloves are

under lock and key.

And all the equipment is under lock and key.

And you turn in that permission slip.

And you wait while the person goes back and finds

the right size and what not.

Then they bring it back to you and stamp all your pages.

And then you can go back to work with your gloves.

And he had the CFO with him.

And he said, hey, how much do the gloves cost us?

Well, they're about 5 euro.

And how much does it cost us for this man's machine

to be down for 30 minutes?

5,000 euro.

OK.

So that's organizational debt.

And the gloves were free the next day

and from then on until the present day.

So what happened there is somebody

stole a pair of gloves.

Somebody went into the store room and took all the gloves

or took a piece of equipment.

And a leader, whose job it was in their head

to ensure perfect execution and ensure compliance and safety

and efficiency, was like, I'm going to stop that

from ever happening again.

And the way I'm going to do it is

by creating this elaborate process.

But in fact, the process cost us more than just the trust

and the judgment that would have gone

into a much simpler system.

So there's organizational debt everywhere.

I've never met a team that's like, we

don't have a stupid policy.

We don't have a thing that's in our way

or slowing us down from doing our best work.

So it's something that does need to be addressed.

Now, the reason that it exists and the reason

that it's so hard to address is that we

have a great confusion about the nature of organizations.

So an organization is a system.

There are lots of systems in the world.

And different systems have different natures.

So when most leaders and executives

that I meet around the world see these two words,

they see them as synonyms.

So they say, oh, yes.

Complicated, complex-- that means

things that are frustrating and that I don't understand

and that have lots of parts and that

are very hard to break down.

And they're all the same.

Complicated, complex-- I use those words interchangeably.

But when you talk to a systems theorist, they say, no.

There are very distinct kinds of systems in the world.

And these are two of those options.

And they have very distinct meanings.

So I thought what we would do today is do a rapid 60-second

master's degree in systems theory by starting with

the final--

well, we might do one more quiz later-- but nearly

the final quiz.

So by show of hands in the room, who

thinks that a watch is a complicated system?

OK.

Who thinks it's a complex system?

OK.

And what about the engine?

Who thinks the engine is complicated?

A couple of people.

And complex?

A few more.

OK.

Let's turn the tables.

What about weather?

Who thinks weather is complicated?

OK.

Who thinks it's complex?

And who's a conscientious objector

who thinks I'm trying to trick you,

and you're not going to play?

[LAUGHTER]

All right.

And what about traffic?

Traffic complicated?

And traffic complex?

OK.

Cool.

So you did what almost every audience in the world does,

which is about half of you vote for one.

About half of you vote for the other.

And as we go further through the examples,

fewer percentages of people play,

but still roughly equally.

So let's get to the bottom of this.

So a watch and an engine are both what we

would call complicated systems.

And by that, I mean that they are causal systems.

There's a cause-and-effect relationship

between their components.

And while they might be rich with lots of components,

there might be lots of pieces, and it might even

require an expert to fix them, they're

not going to surprise us.

They are predictable.

They are knowable.

If you take your car into the mechanic on Friday

and it's not working, and they say it'll be ready on Monday,

it probably will be.

And it certainly won't surprise you

with-- a clown is not going to jump out of the engine

when you pick it up.

It's a known thing.

It's a knowable thing.

And so an expert can do that.

When you have a problem in a complicated system,

you can solve that problem.

You can solve the problem.

Then we have complex systems.

A complex system is like weather or traffic

or your immune system or a six-year-old, things

that we can't predict.

We call them "dispositional systems."

They have a vector.

They have a way they're trending.

It looks like it's probably going to rain today.

But we can't be sure exactly how much and exactly where.

The only way to understand a complex system

is to interact with it, to go outside,

to be in it, to poke it to see what

happens when something occurs.

And so you're always in dialogue.

You're always in engagement with a complex system.

The best way to identify one is if the thing you're looking at

has a chance of surprising you, it's probably a complex system

if it's going to just come out of nowhere with a reaction you

don't expect.

And so with a complex system, problems are not solved.

They are only managed.

Nobody ever comes in from the garden and says,

honey, I fixed the garden.

It's done.

That doesn't happen.

You have to nurture it.

You have to be in relationship with the garden.

And the same thing goes for a six-year-old, right?

You can try your damnedest to get that kid

to go to the school of your choice.

It might work.

It might not.

So complex systems require that kind of interaction.

So then the question becomes, well,

what does that mean for organizations?

So what do you think?

What conclusions might you draw from your recent master's

in systems theory?

AUDIENCE: [INAUDIBLE]

AARON DIGNAN: What's that?

AUDIENCE: The organization is a complex system.

AARON DIGNAN: The organization is a--

AUDIENCE: Complex.

AARON DIGNAN: Complex, yeah.

The organization is a complex system.

It's not a complicated one.

There are complicated tasks and problems

inside an organization.

If I ship a FedEx envelope, there's

a very high probability it's going to arrive the next day.

But the culture, the way of working,

the dynamics of the organization with 10 or 100

or 10,000 or 100,000 people working together

is, of course, very complex, and most obviously

because we human beings are complex.

So you put a bunch of us together,

that can only be more.

And so if that's true, then that means

that the way we engage with the organization

when we think about culture and way of working and change

has to be appropriate.

It has to be fit to the context.

So for example, when I talk to leaders

who are quite frustrated because they've just

gone through a culture change initiative

where they wrote down all the values on posters

and put the posters up, and people are still not behaving

differently, I laugh.

Because effectively, they're shouting at the weather.

They're just sort of like yelling at a thing that

doesn't respond to that.

You can yell at the weather.

You can yell at the garden all you like.

That's not how things change in a complex system.

The way things change in a complex system

is you introduce something new.

You put it into the wild.

And then you see what happens.

Maybe it's an attractor that creates a big reaction.

Maybe you like that reaction.

Maybe you don't.

But you're now interacting with that system.

So we have to bring the right mindset and the right tool set

to organizations if we want to change them,

if we want to shape them, if we want

to make them serve us better.

And that doesn't matter who you are in the organization.

That's true.

So I like to say it this way.

To manage complexity, we need a different operating system.

We need a new OS.

And I use the metaphor lightly.

But I like the idea of just basically saying

there's a foundational set of assumptions, of principles,

of practices, of norms in every team,

in every organization upon which everything else happens.

We assume what's true.

And then the norms and the behavior of the organization

is built on top of that.

So my favorite example of an OS, of an assumption,

is a conference room should have a table and chairs in it.

Nobody questions that.

That is just a given.

Every office, every startup I've ever

been to anywhere in the world--

you go in the conference room, sure enough, table, chairs.

Why?

Because we assume we're going to be

in this room to do something.

What are we going to do?

We're going to have a meeting.

What's that require?

Well, it's going to require sitting a lot.

Why?

Because it's going to last a long time.

OK.

And we're going to need a table for our laptops.

Why?

So we can be checking our email because we can't let that go.

There's a whole lattice work of assumptions there

that build that OS.

And then, of course, when you come into that room,

you're limited.

You've now constrained yourself.

If I want to do something physical with us in this room,

and there's a table in the middle,

if we want to use our bodies to think,

if we want to use the walls and they're not set up that way,

suddenly we're limited in our capacity.

So there's a limitation that comes with an OS.

And this is a really good example.

So to bring the idea of the OS to life,

here are two different solutions to the same problem space.

So the problem space is, two roads are crossing.

So we have a problem we have to solve for.

How do we make sure they don't hit each other?

And how do we maximize the throughput,

the number of cars that get through the intersection

per hour?

And there's an OS on the left and a different one

on the right.

The OS on the left has a set of assumptions

about people and the problem.

What do you suppose are the assumptions about people

and the problem in the lighted intersection

with the red, yellow, green light?

AUDIENCE: [INAUDIBLE]

AARON DIGNAN: What's that?

AUDIENCE: [INAUDIBLE]

AARON DIGNAN: Yeah, sure.

What else?

AUDIENCE: People will respond to a red light or a green light.

AARON DIGNAN: People will do what they're told.

Yeah.

And more importantly, people need to be told that

effectively, I don't really trust all y'all.

And so we're going to have to keep

this thing under lock and key.

We're going to keep this thing moving

based on a set of central instructions.

And so we're going to use this apparatus.

And by the way, because it's electronic

and because it requires an algorithm and controls,

it's quite a big apparatus.

So we're going to have a central control station and people

that program that.

And we're going to need an electrical grid.

And we're going to need to do a lot of things

to make this intersection safe.

And that is the knock-on effect.

And then what about this one?

What are the assumptions of the roundabout

about people and the problem?

We've got a few of these.

AUDIENCE: People are capable.

AARON DIGNAN: What's that?

AUDIENCE: People are capable.

AARON DIGNAN: Yeah.

People are capable.

Essentially, it's on you.

The responsibility is with you to each other

and for each other.

I'm going into the coliseum with you.

And I hope that we can all coordinate,

that we'll socially coordinate.

And the way they do that is with a set of constraints, just

two simple rules.

We call them "enabling constraints."

One is go with the flow of traffic.

So you got to go in the same direction

as the circle, whatever that might be.

And the second rule is that you have to give right of way

to the people in the circle.

So they have the privilege.

And you have to kind of work around them.

Those are the only two rules in a roundabout.

And if you follow those rules, you

can handle an almost infinite number of scenarios

of things that can happen.

And to know how true that is, you only

have to look at one of Europe's eight-lane roundabouts

to see just how profound those simple rules can

be when put into practice.

So these are two different operating systems,

two different sets of assumptions.

The question that we now have to ask ourselves

is, well, which one's safer?

So on the whole, which one do you think is safer?

AUDIENCE: Roundabouts.

AARON DIGNAN: Yeah.

The roundabouts are about 80%, 85% safer, about 95%

safer on fatality collisions.

Which one's higher throughput?

AUDIENCE: Roundabout.

AARON DIGNAN: Roundabout, about 80% to 88% higher throughput

per hour.

Which one's cheaper to build and maintain?

AUDIENCE: Roundabout.

AARON DIGNAN: Roundabout, yeah, 10 to 20 grand cheaper.

Which one works better when the power goes out?

[LAUGHTER]

Humorous, right?

Which one do we have 1,000 times more of?

AUDIENCE: Traffic lights.

AARON DIGNAN: Yeah.

And in fact, when I ask people--

certainly stateside, and sometimes here in Europe--

which one do you feel more comfortable in, they're like,

oh, I much prefer a light because I don't

trust all these other people.

I always feel uneasy in a roundabout.

And I like to be able to kind of relax.

And when I pull up, I can check my phone.

I can change the radio.

I'm off the hook, essentially.

The powers that be will tell me what to do.

And I can be off the hook.

This one requires quite a presence.

It requires that you're there in the moment.

It's on you.

It's on all of us in coordination.

So this is, in most sense, in most

contexts-- not every possible scenario on earth,

but in most contexts-- the superior solution.

But it asks more of us.

It asks us to show up differently.

And this one makes us feel like we're safe but is actually

less safe.

So really, it's just two operating systems

built on these ideas, control and compliance and trust

and autonomy.

So we're making a choice.

Now, again, if we're complexity aware,

if we're aware of all these different contexts,

there are going to be situations and problems and products

and moments where control and compliance approach--

the red light--

makes perfect sense.

And god bless.

That's wonderful.

But there's a lot of situations where trust and autonomy make

sense, but we haven't even considered it in a century.

We haven't even gone back to say, wait a second.

Does an annual budget make sense in a world

that changes this fast?

Does telling someone what they should work on

make sense in a world that's this varied, where

their talents and skills are developing

and moving and changing and shaping over time make sense?

And what are the things that we're not really getting

served by anymore?

What's the org debt where we're like,

is there a better way to do this?

Is there a better way to handle travel expenses than a travel

freeze, where everybody gets told

they can't travel no matter what without manager approval?

Is there a better way to solve that problem?

Is there a roundabout solution?

So a few organizations around the world

that have taken a crack at that, that have sort of

flipped the table over on bureaucracy

and played with it a bit.

Handelsbanken, which is based in Sweden and Stockholm,

is a bank that in the '70s was in trouble, coming out

of a financial crisis.

And the new CEO was asked to really change things up.

And he came in and said, hey, you know,

I think we've got this backwards.

We at HQ are telling all these branches what to do.

But they know the customers.

They're at the edge.

They're in community.

They're the ones that have all the information.

Maybe we should change that up.

And so his headline was, the branch is the bank.

And hundreds of branches were suddenly

given the authority to say, hey, make loans

to who you want to make loans to at rates

you want to make them at.

Do service for your customers the way you need to do it,

where they're not going to have a central service line where

some person reading off a script is

going to handle your customers.

You guys can figure it out.

And to keep things on the straight and narrow,

we'll just pick a couple metrics that are learning

metrics for us that matter.

And that will be the thing that we

use to know if we're on the right track.

So we'll measure profit over revenue, back to ROA.

So we'll measure, is it actually working as a system?

And we'll measure customer satisfaction.

And we'll measure that branch to branch and then

as a system as a whole.

So the branches will see transparently every month

how profit over revenue and customer satisfaction

is trending.

And then we'll see as a system as a whole

how we're doing versus the aggregate industry.

And in order to fix the incentives problem

in the financial industry, we won't

have these big individual bonuses and these incentives

to sell, sell, sell or create 15 different accounts

for a customer that doesn't need one.

Instead what we'll do is we'll just

track profit over revenue for the entire category

here in Europe.

And if we're better than the average,

then everybody gets a bonus to their pension.

And if we're not better than the average,

then we just roll right into the next year.

And everyone's paid fairly.

And that's fine.

And so we're now all winning together and losing together.

And so they went and made this play.

And for 40 years--

for 40 straight years--

they've beaten the average of all the people

in their competitive set on profit

over revenue and customer satisfaction.

And they've actually gone so far as

to blow up their annual budgeting process

and move to something that's more dynamic, that's more

local, that's more regional.

Because again, as long as you're tracking

profit over revenue and customer satisfaction,

what difference does the plan make?

What matters is, are we performing

this week, this month, this quarter, this year?

Through every financial crisis that we've had--

the big ones that have really shaken the system--

they've been able to just very resiliently skate over

that because they don't make stupid loans.

Why?

Because no one is incentivized to.

Or Morning Star tomatoes, which is an American tomato

processing company.

It's actually the world's largest.

So if you've had some ketchup lately,

you might have had something to do with them.

Their founder decided that it was already

a tough enough industry as it was.

And so to make it more vibrant and more interesting,

we would let all the employees write their own job

descriptions and set their own salaries.

When I say that, people are like, [GASP]..

But of course, they've done it for 20 years.

So this is a company where their category average

profitability is about 2%.

Their average over the last 20 years is 20%.

So they're a 10x outperformer where

people are writing their own job descriptions

and set their own salaries.

How do they do it?

They do it with an advice process.

So every year, I sit down.

I write what I think I want to do this year

and who I want to do it with and make an agreement

with my colleagues.

And then they react to that.

They give me advice.

This is overshooting.

This is undershooting.

You're really good at this.

I can't wait to work with you on that.

This is something I think you should consider.

And people edit their take because they

know they're going to be working with these peers.

They're in relationship with these peers.

So there's a social pressure instead of a top-down pressure.

And the same thing goes for comp.

So they have these elected compensation groups

in every pocket of the business.

And when people propose their salary,

they're doing it with total transparency

about the firm's profitability, the category averages,

what their colleagues get paid, and for what.

And they're saying, all right, this is what I think is fair.

Then they get advice.

And then they modify their take based on that.

And again, this is all judgment based.

It's trust based.

So if they say, I think I'm worth $20 an hour

and everybody else is worth $15, the system

is going to let them play that out.

And they're going to find out, what

are the reputational consequences of that?

What are the social consequences of that?

What are the P&L consequences of that?

That's going to be found out.

And if somebody does something so

aggressive in a system like this that it can't be tolerated,

there's a conflict process that someone can engage,

where they'll have some mediation and some discussion.

And they can use their judgment and their adult communication

to try to find a way forward.

And that's something that they very rarely need.

So that's something that's going on at Morning Star.

For those of you that have read the book

"Turn the Ship Around," I'm a big fan

of David's work on the USS Santa Fe,

where he inherited the worst-performing ship

in the Navy essentially, a nuclear sub

that was not doing well.

Was told he could not change the staff of that sub.

Had to actually keep them exactly

as they are, but needed to turn the ship around.

And he did this through a series of adjustments

that increased transparency and increased clarity

about what competency looked like, but most importantly,

increased empowerment.

So people would come to him and say, Captain,

what are my orders?

And he would say, well, what do you intend to do?

And they'd say, I have no idea.

No one's ever asked me that before.

And he's like, well, come back when

you know what you intend to do.

And over time, people realized, we have to show up ready.

We have to show up prepared for our role to the captain

because he's not going to tell us.

So they'd come and say, oh, I thought about it.

And I want to go 45 degrees north and dock

and refuel and do this training exercise

and then go back out to sea.

And he'd say, very well.

Sounds good.

Let's do it.

He reserved one choice for himself.

That was the choice to fire a nuclear weapon.

That he was going to keep for himself just out

of pure responsibility.

But everything else was distributed to the system.

Two years later, it was the highest-performing ship,

produced more officers than any other ship in naval history.

It's a great story.

I highly recommend you take a look at it.

And then last but not least, Haier.

Haier is a Chinese appliance manufacturer

that has done some really interesting things

in the past few years.

Their CEO started to recognize that they

were getting further and further removed from customer.

And that was because of functionalization.

So you have HR over here and design over here

and marketing over here.

And everybody's trying to communicate.

But they can't because we're in silos.

And the end customer is not hearing or seeing that value.

And so what they did is they took a 60,000-person company,

and they blew it up into 2,000 autonomous teams.

Each team had a product or a service, internal or external,

that they were responsible for.

And each team had a customer.

And it was end to end.

It was P&L-level responsibility.

So it's make or break.

You decide when it sinks or swims.

If you fold up your tent on a product

that you're trying to make happen,

that doesn't mean you're fired.

You just move in the marketplace to another system.

You start a new innovation project.

Or you join another existing team that's scaling.

So there's kind of a career pathing

and a role mix ecology inside the system that's

quite powerful.

And this has been so remarkably successful

that in the past few years, they've

gone from 60,000 to almost double

that number of employees.

They've become the world's fastest-growing appliance

manufacturer.

And they actually acquired GE Appliances

in the midst of all this and implemented their model there.

And for the first time in a decade,

that business posted a profit and a revenue growth.

So there's a real power to this connection to customer

and this new structure that focuses

on functional integration and speed and connection

rather than, how do we centralize things

to make them more efficient?

It would be so much more efficient

if we put all the lawyers together and got

rid of half of them.

Well, yes.

That would be efficient for the P&L right now in this moment.

But would it be more efficient for our overall outcomes,

for our success as a system?

So it's really about pulling on those different tensions.

So at the end in the book, I looked

at about 68 different companies out of a group of over 300

that we could consider.

And there were really only two mindsets

that permeated these places.

And some of them were living them to the fullest.

Some of them were experimenting with them.

It depends on the company.

But these were the two ideas.

One was that they were generally people positive,

meaning they took the roundabout take on, how do

we feel about people and risk?

And the idea was people are worthy of trust and respect.

People are capable of using judgment.

People are capable of growing and learning themselves

if left to their own devices in the right environment.

And that we ultimately seek autonomy, mastery, and purpose.

As self-determination theory and Dan Pink would say,

those are the things that really unlock our motivation,

not some end-of-year bonus scheme that's

going to mess with our wiring.

And then complexity conscious, which you all now

have a master's in, was really just about the idea

that they recognized that the market was full

of different contexts, that the organization was

full of different contexts, and that we needed

the right approach for the job.

So if we're dealing with something that's uncertain,

that's going to surprise us, we need

to have the right constraints.

We need to allow for emergence.

We need to test and learn.

All the values of agility and lean

and those sorts of things that we

hear bouncing around the industry

are all rooted in this basic idea that if it's unknown,

then we need ways of knowing and finding out.

We need ways of doing this dynamically.

We don't want to make big commitments

to a three-year plan or a budget that's going on forever

or a set of choices that are going to come back to bite us.

We want to actually learn more and steer continuously.

And that's the big idea there.

One of the founders of sociocracy,

which is one of the early distributed authority systems

based in the Netherlands, used to talk

about a bicycle as an example.

He would say, if I told you to ride from point A

to point B on a bicycle and I locked the handlebars

and I screwed them down tight, you

would fall down in three seconds.

You cannot ride a bike when the wheel doesn't turn.

And I invite you to try it with proper padding.

But you immediately fall over.

What you actually do when you ride from point A

to point B is you keep your eye on B.

And as you overshoot left, you correct right.

And as you overshoot right, you correct left.

And you're doing this in micro adjustments

all the time when you're riding.

You're not even aware of it.

You're unconsciously micro adjusting, always heading

towards intent, always heading towards purpose.

And that should be the design of the organization.

That should be the design of any organism that's

trying to achieve its intent-- is that it's continuously

steering, that it's continuously adjusting

towards its collective and stated intent

rather than saying, all right.

Let's lock these at 17 degrees and pray.

And we'll check again in January.

So everybody says, great.

That's lovely, Aaron.

Let's change.

But here's the problem.

Change is impossible.

And change sucks.

So even though we're all excited about this,

we can't do anything about it.

That's because we view change as something that looks like this.

It is essentially the mourning process.

Change is a death to us in our culture.

And so we have this, I don't want to do it.

And then we're forced to do it.

And then we trip and fall, and it's miserable.

And then some of us have this moment of epiphany.

And then we crawl back up.

And we're 5% better off than we were when we started,

which to me seems like a horrible way to do it.

And of course, if you can afford a very fancy, exotic consulting

company, then it looks like this.

And so now you have the exact same thing

but with more bullet points.

And it's in 3D.

And again, if this is your vision of change, of course

you're going to find yourself frustrated.

Because what does a system of progressive steps,

of linear steps of change assume about the nature

of the system itself?

That it's complicated, right?

It's treating it as a watch.

We're all in the discover phase.

And then we're all in the visualize phase.

We're going to do a survey of what's broken

and then we'll tell you the most important things.

Oh, there's a lack of trust at XYZ company.

Well, that was the average take.

But if Bezos walks into a bar, the average net worth

is $100 million.

But that's not true.

That's not what's really going on in the bar.

What's really going on in the bar

is there's a rich guy and a bunch of poor people.

So we have to recognize that when

we start to talk about averages and we talk about us all being

in the same stage, that we're doing change

like the organization is a watch,

we're going to find ourselves frustrated.

And so what we do instead is we change how

we change to a different model.

And that model looks more like this.

It is teaching teams at every level, at every shape--

I don't care whether you're flat or hierarchical

or whatever you are--

to do this looping process.

And this looping process is about taking back ownership

of our way of working.

It's about saying, the way we work as teams is something

that we care about, that we think about, that we nurture.

It is our second job.

Our first job is to do what we do.

Our second job is to be org designers

and to shape the way we do it.

And that's always going on.

So it starts with identifying, well,

what are the tensions you hold?

And the question I always ask teams when I start out

with them is, what's stopping you from doing

the best work of your life?

That's the bar for me.

What's stopping you from doing the best work of your life?

Because if you're not doing it, life is short.

What are we doing here?

And so then they'll say, oh, we have meetings

to prepare for meetings, Aaron.

And it's nonsense.

Or, we have way too many emails.

Or, we have a lack of trust.

Or, we can't make decisions quickly.

Or, my boss talks nonstop and I never get a word in edgewise.

Or, we're not diverse enough.

Or, fill in the blank.

There are hundreds of things that you can hear.

They're all fine.

Whatever is true for the team is true for the team.

And instead of saying, what's the tension for the org, which

is not a real thing, we say, what

are the tensions for the teams inside the org?

What is true?

And if there are things that are present as patterns,

then that's cool to find out.

But let's find that out by talking to the system.

So I have these tension and practice cards

with tensions on them.

Routinely, I will get a leadership team

of 40 or 50 top execs in a room.

And I will have them choose the tensions that they think

are most present for the organization--

the top five, let's say, out of a list of 78.

But I'll do it in three groups.

And then I'll have them come together

and share with each of the three groups

that the very top of the house thought was going on.

And they are routinely wildly different.

And that is the moment when I can say,

yeah, there's no one true thing going on here.

You're right, and you're right.

But now what are you going to do about it?

So we find our tensions.

We pick the ones that are most present and alive for us.

Then we explore practices.

What are alternative ways of solving this problem?

What are the roundabout solutions?

Maybe we invent some.

Maybe we borrow some.

Maybe we go on a field trip and talk

to some of these other organizations

and see what they've learned.

But the idea is we got to go figure it out for ourselves.

And then finally, let's design an experiment.

So let's say we decide to try something different.

Maybe one of our problems is that we

don't do a good job of hearing everyone's voice.

And we've learned from a project that

was done in house here that equal talk

time is one of the best predictors of team success.

And so we're going to start meetings with a check-in, where

we just hear everyone's voice.

What's a question we can all answer that will

get us present in the room?

Really small experiment.

But then we have to decide, who's going to do it

and for how long?

And how will we know if it helped?

So a very tightly defined, constrained,

safe-to-try experiment that moves us

from here to what Steven Johnson calls the "adjacent possible."

What's right next door that we can actually get to?

Because if I come in on day one and I'm like,

let's blow up the budgeting process, everybody's like, no.

That's not going to work.

This place will be pandemonium.

But we could get there if we take some steps that

start to move the momentum and start to trigger

bigger questions in our heads.

So I started with one leader at an educational company,

where the first question in their head was,

how do we make decisions better and faster?

Super exciting, but also easy to get at.

It wasn't until month 12 that they

started asking, what should we do about resource allocation?

Because it seems awful slow that we're making these decisions

once a year.

And we were sort of like, oh, interesting question.

Once the question's there, there's a space for the answer.

Once you have that negative space in your head

or the leader has that negative space in their head,

they're going to go on the hunt to find the answer.

So designing the experiment, then we do it.

And then eight weeks later, we get together.

And we hold a little retrospective.

Did that help?

Did it hurt?

Is it the same?

Is it different?

What's going on?

When we teach teams to do this concurrently

and we have experiments alive in the system about the way

we work, the things that start to work spread.

So a team figures something out that really serves them.

They tell other teams about it.

And if we created a system of trust and autonomy

where things can spread, where we're

allowed to choose our way of working, then suddenly

we find that more and more teams are doing it that way.

And there may even be moments where

the leadership or the people at the edge or whoever

start to make bigger pronouncements.

We're going to do things this way.

Or we're going to take what those teams have figured out

and try to scale it.

So this is the model of continuous participatory change

that we're finding has the most legs in these systems.

A few quick rules of thumb or heuristics or principles

that we've figured out along the way that help while you're

doing this process.

The first is through them, not to them.

So again, this has to be happening

in the system in relationship with participation.

This is not a PowerPoint document

that's written over the weekend and foisted upon 10,000 people.

That is not change.

It's not changing how we change.

The second is learn by doing.

So I am so sick of having debates with people

about what's the right way to make decisions or the right way

to have a meeting or the right way

to talk to somebody or the right way to get feedback.

Just try something new and then decide.

Did it help?

Did it hurt?

Just do it.

This is my son riding a balance bike.

Riding a training wheels bike is not learning to ride a bike.

That is learning to be in a spin class.

Learning how to ride a bike is balance.

It is being in relationship to the bike.

So learn by doing rather than by arguing.

We're not going to argue our way to an answer about what

our operating system should be.

Start small.

Big systems are so addicted to scale.

Because to have a idea that moves

a billion-dollar system 1%, it has to be a $10 million idea.

But instead, we know that systems

change through the progressive pattern of small things

that spark revolution.

So we actually want to-- instead of trying to move this boulder,

we want to figure out, how do we do this with one team,

with two teams, with 10 teams, with one location?

I did one factory last year.

Just figure it out here.

And then let the echo effect start to unfold.

Start by stopping.

So this is a really good one in the age of Marie Kondo

and tidying up.

We all are really good at accumulating.

This is a real client calendar--

45 hours a week of meetings on average for this exec team.

45 hours a week.

No time for lunch.

So instead of trying to fix that by adding more stuff to it--

let's add another smart meeting.

Let's add an agile practice.

Let's add, add, add--

we said, let's stop.

Let's stop meeting for two weeks and see what hurts.

What do you miss when we stop?

When we do that, we learn things that we couldn't ever

have the space to learn.

So we want to actually take the time and make the space.

Take 90 minutes at the end of the week to reflect on the way

we work.

Stop a policy that doesn't make sense.

You don't have to have the solution.

Someone's like, well, if we get rid of our travel policy,

what will we do without a travel policy?

I don't know.

Let's see what happens.

What if we just didn't have one?

Would it be worse?

Would it be better?

Would we learn something?

Would someone else propose something

that we wouldn't have thought of as the leader?

Sometimes it's OK to just let the negative space create

a pull on our system.

And then finally, join the resistance.

So it's very easy in change work to argue

that the person that's not playing

is a resistor, that they're a laggard, that they

don't get it, that they need to get on or off the bus.

And instead, if you engage those people in curiosity--

not to convince them, but just to ask,

why isn't this working for you?

Why aren't you engaged in this?

Why wouldn't you try this new thing?

What about this is not appealing to you--

they'll tell you stuff you need to hear.

The incentive system is not set up for them.

And they have two kids in private school.

They don't have time on their calendar

to show up to this thing because they

have three bosses that they dotted line to.

And they are back to back packed.

There's a reason.

People are rational for the most part.

And they will tell you what's going on.

And then you can say, all right, well,

let's design our way out of that.

So is there something that we could

co-create that would make this more accessible for you?

Or you can just take that and thank them

for the gift of the feedback, of the clarity about what's

really going on.

So I'll leave you with this.

The high jump was done this way in the early '60s

and late '60s.

And for those men in the room, you

can see how precarious this is.

And this was the norm because the other side of the bar

was, for a long time, just dirt.

So you had to land on your feet.

And this was the way to do it.

But then towards the latter half of the '60s,

that dirt became foam.

It became padded.

Other options became possible.

Dick Fosbury came along and obviously went

over backwards and head first, which

is now quite a famous story, and not one

that I intend to bore you with.

But what's fascinating about Dick's story is that after he

won the gold medal in the '68 Olympics,

the reaction from the fellow competitors was,

works for Dick, but won't work for us.

It's great for him.

He's a freak.

But we have these reasons that we can't do that,

that it won't work for us.

And over time, those reasons got whittled away.

And now, of course, only one person

has held the world record jumping

any way different than this for the last 50 years.

So what we know is that people are

going to have that reaction.

Oh, works for Buurtzorg, won't work for us.

Works for Morning Star, won't work for us.

Works for Google, won't work for us.

That's not really a great excuse.

The way to find out what will work for you is to jump.

It's uncomfortable.

It's a little nerve wracking.

It feels weird.

But the reality is, it's pretty safe to try.

And if you constrain where you do it, how you do it,

and you make sure that the people that are doing it

are using their judgment, that they're in the roundabout,

then a lot of things are possible that we're not

seeing today.

And we just might be able to unlock our potential

and solve some of the quite intractable problems

that we face.

We have climate issues.

We have political issues.

We have issues in for-profit and nonprofit businesses

that are going to require a different level of performance.

And we're not going to be able to get that

with what got us here.

So it's really incumbent that we take the leap.

And that's why I'm so excited that you all came

to hear this message today.

So thank you so much.

[APPLAUSE]

SPEAKER: We have about 10 minutes for questions.

Does anyone have a question they'd like to ask?

AUDIENCE: I just wonder, what's been

your experience of working with the executives

and getting them all excited about an idea?

What then happens after that?

Do you continue to hold their hands?

Or do they go in and implement?

Or do they go in, and it sort of falls

by the wayside a little bit?

AARON DIGNAN: Yeah, yeah.

So what we have found is most helpful

is to have at least some coaching support,

both internally and externally.

So when we get started, we'll start

by having a red-pill, blue-pill moment to see,

do we want to go deeper into the rabbit hole?

And if we have that alignment and we have the right mindset,

then we might provide a couple of coaches

into the system to be present and help the teams that

are looping stay honest to the loop

and stay honest to themselves.

And then we'll also find people internally

who are very excited about this stuff

and maybe have been trying to agitate this themselves.

And we'll start to bring them into the fold as coaches

as well so that as practices bubble up

and we realize, oh, this is a way of meeting

that really works here.

This is a way of sharing that really works here.

This is a tool that we're getting excited about,

they can become knighted in those things.

And that way, when we're not needed,

which is hopefully soon, then there's

still a support structure in place.

One of the things that's not often talked about

is most of the cases in the book have a set of internal people

who are coaches with no authority, who exist purely

to serve teams at the edge.

So in Buurtzorg, I think there are 14,000 nurses now out

in their distributed system.

And there are 50 people in corporate.

And of those, like 15 are coaches.

So if a team throws up a distress signal,

like our numbers aren't looking good,

or our engagement isn't good, or we're not feeling right,

or something's off, they can request a coach come in.

And the coach lobs in with all that systemic knowledge

and just tries to help.

But again, they have no authority

to tell that team what to do.

So there's an ecology like that in most of these systems

that we see in some way, shape, or form.

SPEAKER: Are there one or two examples which come

up again and again?

I know, for example, at Google, we have--

with our corporate credit cards, anything under $20

you don't need a receipt for.

And that's a really good example where we are trusted.

And that just eases through the system.

Do you find examples similar or other

where it comes up again and again in large corporations?

AARON DIGNAN: Yeah.

Well, I think to your point, the thing

that comes up again and again is the concept

of what WL Gore calls a waterline.

So the waterline is when you're sailing a boat.

If you get a hole below the waterline, everybody dies.

But if you get a hole above the waterline,

you can patch it when you get back to shore.

And so what they taught their people very early on is,

when you're making a decision, any decision, we trust you.

And think long and hard about, is this decision

above or below the waterline?

If it's above the waterline, knock yourself out.

And so for different companies, that's at different levels.

My company can only risk so much.

A bigger company might be able to risk more.

But we know where our waterline is.

And then if it's below the waterline, seek advice.

So go to people that have done it before.

Go to people that will be affected by it.

And seek advice before you make that decision.

And then for those very few decisions

that are really critical, maybe it's an integrative decision.

So it means that multiple roles have to consent

to that before they act on it.

So for example, we can't change the maternity and paternity

policy at my company without multiple roles consenting.

But someone can spend $10,000 with advice.

And someone can spend $1,000 whenever they want.

So there are different levels of clarity.

And then when you see decisions being

made that don't align with maybe what you would do,

there's a question to ask.

A, is it safe to try?

So is the learning that will occur worth the squeeze?

Because again, if we just protect everybody

from learning, then we end up immobilized.

We end up with these very incapable teams.

It's sort of like raising a kid where you

don't let them skin their knee.

They'll never be good runners.

You have to let people learn and bump up against reality.

But you want to do that in a safe-to-try way.

So you want to find like, where's that dynamic?

Where's that edge?

So that kind of decision stack, as I call it,

is present in almost every case.

And there are different languages for it.

But it's always about, what's the waterline?

What's the advice process?

What are those decisions that we reserve for certain roles

or for integrative groups to make together?

And how do we push as much as possible above the waterline?

Because obviously, the more we have there,

the more adaptive and the more resilient we are.

AUDIENCE: To extend the metaphor about above the line

and below the line, it sounds like there's

a presupposed assumption that everyone

agrees where that line is.

AARON DIGNAN: Correct, yeah.

AUDIENCE: And it also assumes that everything

is net positive.

And there is nobody that will lose as a result of the change.

So how do you navigate situations

where there's perceived headcount losses or perceived

political influence losses that one person will lose if you

make the change to the system?

AARON DIGNAN: Yeah.

Great question.

So a couple of things.

One, it's very true that the waterline

is in different places for different people.

So based on their own comfort, their own experience,

the roles that they hold--

I mean, certainly as the founder of my company,

I feel like my waterline is higher than other people

just because I'm like, I don't know.

I just feel a sense of ownership that I can do more

than maybe someone else does.

That doesn't mean that I wouldn't allow

them to do the same thing.

But they may not allow themselves.

So their waterline is where it is.

So I think that's absolutely true.

Part of developing a system with this kind of maturity

is having that dialogue.

So the value of the advice process

is, if you're even not sure, just engage some advice

because you'll become a richer decision maker.

And we'll all benefit from understanding your situation.

So there's a little bit of extra work

that goes into it early on while we build that competency

and that mastery.

And then over time, we get better and better

at refining where that line is and also as the situation

changes.

So at the beginning of this year,

my company changed the nature of our incorporation.

And to do that, we had to kind of dump cash

and then re-add it.

There was a month where we didn't have

a lot of money in the bank.

And it was like, hey, everybody, flag.

The waterline just moved.

So now we all need to be aware of that.

And then once it recovers, we can go back

to our normal attenuation.

So that's the first answer.

The second question was about, when someone loses,

what does that look like?

And there are two kinds of losing.

So there's legitimate losses of power or influence or control.

And then there are perceived ones.

And I think one of the big shifts that

happens in these types of organizations

is changing one kind of control for another, one

kind of identity for another.

So as a leader, yeah, maybe I don't have the same number

of headcount underneath me.

Does that actually make me lesser?

Is the debate worth having?

And the identity of who I am in the system and how I add value

and what I'm worth may or may not change based on that.

So there's a little bit of growing up

that has to happen about what's really being lost here.

But the other thing is, when there are real losses--

when someone's going to lose their job or a bunch of people

are or we're going to change something that materially

affects what we're doing--

that's probably an integrative decision.

So we're going to get consent from multiple roles

that we've entrusted to hold that type of decision.

And even though not everyone will agree with that decision,

we've agreed with who will make it.

So it's possible that we could make a decision tomorrow

at the ready that eliminates an entire section of our business.

The people that are in that section of the business

have consented to the body that would

make that decision making it.

So it's something that we're more explicit about.

Where do decision rights live?

And who do we trust?

And a lot of the roles that hold that kind of power

in systems like this are elected.

So in hire, at the ready, in other companies,

often the people that hold those levels of influence

are elected.

So that they can be trusted to do what's best for the system

or the collective as a whole.

And for sure, sometimes what's best for the collective

is not best for the individual.

And there's some real tension and stress there.

AUDIENCE: I've got a question about transparency

of remuneration.

You mentioned in one or two of the companies

that everybody knew what everybody else was

getting paid.

Is that an obstacle too far?

It feels like a really strange thing.

I know in Sweden they publish their salaries

and everybody knows what everyone's getting paid.

But how divisive is it not to know

what everybody's getting paid?

AARON DIGNAN: So there's a few things about it

that are interesting.

One is that in most cultures, the opacity of pay

leads to bias and unfairness in comp.

So just on the whole, it means that people

that are less vocal or less negotiative

or have a different background or situation

might end up not being paid as well as their counterparts.

And there's just a lot of data to suggest that.

So one of the things it does is create more fairness

or more equity over time.

But I think the more interesting thing

is that when we don't know what people are being paid,

we're missing out on a huge part of the economic equation

of the business.

So if we're meant to be leaders and managers and people that

are shaping the decisions we make and we don't know what

those decisions cost, we're missing

a huge piece of the puzzle.

And so in terms of developing that entrepreneurial spirit

and that awareness, it's a big gap.

And so I think there are a lot of cultures where

it's quite a sensitive topic, where

it's quite an emotional topic.

But what we've learned through practice--

and we did first transparent pay at the ready and then self-set

pay in two progressive years.

And what we've learned is that it's

the transition that's painful.

Once you're on the other side and you're really

embedded there, then there's a different kind of discussion.

But it's actually the transfer from one thing to another

that's the most dangerous.

So I invite people to be cautious about that

rather than where they're going.

The how you do it almost matters more than the doing it itself.

But yeah, on the whole, I think I definitely

come down on the side of the benefits outweigh the costs.

But there are stresses and tensions and costs

and outbursts and people who realize

unbelievable inequity has been occurring

and other people who don't understand

why there's a difference.

But again, I think that's building the capacity.

So if someone comes to me and is like,

Aaron, I'm paid half what this other person is paid

and I think that's totally unfair,

now we have a chance to understand something.

Either they're right, or we're right.

So if they're right, we'll find out through dialogue

that maybe it is a little bit unfair

and we can make an adjustment or they

can if it's a self-set pay environment.

And if we're right, they're going to learn something

about what the company values.

So maybe they haven't sold anything.

And this other person has sold $2 million of services.

That's why they get paid twice as much.

And now they realize, oh, this place values sales.

But they didn't know that before.

It was just sort of in the soup of how the important people

judge the other people.

So I think just the transparency creates those conversations.

SPEAKER: With that, please join me

in a mass round of applause for Aaron Dignan.

[APPLAUSE]

AARON DIGNAN: Thank you.