Roland Dürre
Thursday May 31st, 2018

Modern Enterprises (Entrepreneur’s Diary #125)

 

This is my attempt at outlining a “modern enterprise”.

 

If you visit Antarctica, you will see the condition of our planet. We badly need change.

Because: The country needs new enterprises.

If we wish to improve our lives, perhaps even if we just want to survive, we will have to drastically change our individual behaviour and the fringe conditions of our society in politics, business, social and cultural areas.

🙁 In this article, I do not wish to write about social and cultural changes. In politics, I find the current tendencies towards demolition of the rule of law rather critical and dangerous. As far as business is concerned, I think we have now reached a perverse state of affairs that is really threatening. This is where we must start the process of change.

We managed to counter the destruction of our own bodies due to hard labour with the use of machines. Since the industrial revolution, we managed to drastically decrease the number of working hours per day.

Now the trend turns. Our growth ideology promotes an exploitation of both ourselves and others for stupid goals. The resulting burden is on our personal and social life (and on our families). By now, the process has reached a grotesque and fear-inspiring level (all-day care for small children, all-day schools for children and adolescents, several parallel jobs for grown-ups, full-time work for men and women, often in combination with hours of commuting that make the work day even longer, normal work on four or five days far away from home).

One would assume that it is the task of the state to change this situation. However, just like the unions, the state will not be able to do anything about it. Change is a task for all people who are concerned with the economy and who are responsible for enterprises – i.e. for many of us.

We must counterbalance the blind dogma of “productivity” with a new efficiency that promotes less waste (#nowaste) and more humanity. We must meet the wishes expressed by especially our young generation that say our work environments need some modification.

People are not here to serve the economy, but the economy is here to serve the people.

In this sense, our country needs new enterprises. There are quite a few communities and people who are concerned with the concept of #NewWork (#newwork) and who also try it out.

As early as in 1984, Wolf (Geldmacher) and yours truly, as the founders of InterFace Connection GmbH, aimed at establishing a really new and different enterprise. Unfortunately, we (and later I alone) only managed to do this during the first few years. Then the enterprise “grew up” and there were problems. Perhaps the time was not ripe, and/or I made too many mistakes.

Today, I at least feel competent to describe what such an enterprise would need to look like. I also know huge and small enterprises that show that modern enterprises, as described below, actually work quite well. This is true both for service providers (health, hotel, IT, mobility, care for the elderly and handicapped,… ) and the producing sector (bicycle technology, clothes, food, shoes, software, sports articles,…).

I would like to remind the reader that the following text describes many patterns that would be “ideal“ if realized. You will not find them too often in their purest form. It is already quite some progress if an enterprise leans towards the proposed direction.

I would also ask the kind reader to keep in mind that the following impulses are not supposed to be a textbook (which, with this topic, would have hundreds of pages). Instead, it is a lose document that wants to inspire a little bit and make you a little thoughtful!


 

Characteristics

Here are the outstanding characteristics of a modern enterprise

  • Common-good economy;
  • Networking idea;
  • Core competence and core business;
  • Customer and product centred;
  • Structure;
  • Processes;
  • Teams;
  • Infra-structure;
  • Requirements;
  • Culture and values;
  • Dynamics.

These are the important issues I would wish to discuss today!


 

Common-Good Economy

As demanded by the Bavarian Constitution, the priority of a modern enterprise must be to contribute towards the ” Gemeinwohl“. In other words, the products and services provided by an enterprise must, first and foremost, serve the people.

You will find something absolutely worth reading with Christian Felber, who is perhaps the most important protagonist of the common-good economy in the German-speaking world.


 

Common Good beats “Shareholder-Value“.

The common good principle limits entrepreneurial diversity and creativity.

Not everything that can be done is desired.

That is the price we have to pay for the common-good economy.

If you follow this principle, it is, for instance, hard to imagine how an enterprise that develops and produces weapons or mines can be common-good oriented. The service provided by private enterprises who “lease armies” or produce such things as “fighting robots“ – which is quite common today – cannot be in accordance with the common-good economy.

Less harmful examples for a clash between the common-good economy and products are the production of tobacco and e-cigarettes, or a farming concept that ruins the basis of its own existence (the soil and the country) in a predictable and sustainable way. I could make a long list of examples for existing misuse.

However, common-good economy not only takes the customers into consideration. It also considers other stakeholders, such as the employees and providers. The exploitation of employees violates the principle just as much as does the extortion of providers.

Also, in a common-good economy, the balance of “extremities” must be given. It contains and enumerates all the damage an enterprise does to its environment during the production process. The waste of water caused by a cheap production or the pollution of living space through wastewater are good examples.

However, damages caused by the products you make are also part of the extremity balance:
Example: If pre-defined threshold values for cars have been confirmed during examination but if they are then ignored and significantly higher when the cars are actually driving (exhaust scandal), then this is not simply fraud, but a huge damage in terms of the extremity balance by those enterprises that produce and are responsible for the cars.

Social damage caused by the enterprises (along with positive effects, if there are any) are also part of the extremity balance.

Examples: Damage done by enterprises if they grant credit to people although they know full well that those people cannot serve them. Manipulating people towards buying nonsense products (so-called marketing), making grown-ups addicts of gambling and children addicts of sweets, and much more of the same kind that happens every day.

Modern enterprises can follow the common-good principle!!!


 

The Idea of Networking

The networking idea means that an enterprise is willing and capable of promoting a special “added value“ to a number of cooperating enterprises, rather than wanting to develop highly complex system all by itself.

Partnership on the market beats dominating the market.

Example: The goal of a modern enterprise should not be to completely develop and produce an electronic car. Instead, it should provide an important part.

In general, you will want to say.
P (partnership) beats S (superiority)!

This is how, probably, dynamic alliances of small enterprises can make “better products“ that might well be complex and satisfy the basic needs of humans. Yet they can at the same time be sustainable and in harmony with the common good. In other words, they need not be detrimental to other people or, as is common today, to all of us.

Without – as is the practice of the huge concerns – manipulating the customers in advance and telling them what they have to need and then selling them those things.


 


Core competence and core business

There is a clear competence based on which a clearly defined service is offered or an actual product is developed or produced. In this business model, we need modern virtues such as self-restriction and the focus on your own strengths.

Example: An enterprise focuses on the development of electric motors (or perhaps even just an important sub-competence like the necessary software) or (rather than and) the efficient production of the entire motors.

Concentration and focussing beat “do-it-all-yourself“.


 

Customer centred and product centred

The customer and the product must be the centre of all entrepreneurial considerations. Consequently, all employees must work together towards one goal.

If you have a service enterprise, the person who receives the service must be the focal point of all creativity.

Examples: In an enterprise that offers home-care, the people you are assisting must get the optimal support and care. In a hospital or hotel, everything must be about the guests getting well soon or feeling absolutely comfortable. An enterprise that, for example, helps a medium-sized enterprise to cope with all the problems that can arise if you use IT, the service must give the customer time for his core business (the round-the-clock-worry-free solution).

Similarly, an enterprise that makes a product must make sure that all employees work towards making the product even more perfect on a permanent basis (functionality) and nicer (design) and easier on the eye (emotion), simpler, more efficient, less costly, etc.

Examples: You want to develop the electric motor for the low-volt sector, the best gear hub for the bicycle, the best e-velo for travelling, the best pair of shoes for making it easier to stand and walk in. Or to produce new e-cars by combining the simplest and best components available on the market.

If ALL employees in an enterprise are enthusiastic about a core competence and willing to work towards it – then true innovation will happen. The positive consequences are that the employees will identify with the enterprise in a healthy way and that being an active part of the enterprise (often simply called work) will give them courage and joy. That is what a modern enterprise needs in order to survive.

And this is how the customers can get so fascinated by a product that they recommend it in such a way that makes marketing (which basically should be banned) and sales promotion (the very word!) obsolete.

A shared enthusiasm for what you offer will move mountains.


 

Structure

I use the word “structure” as in “organizational structure”. I no longer use the word “organization“, because a modern enterprise organizes itself intuitively. They no longer need disciplinary bosses and an organigram that describes the organization.

A modern enterprise has no hierarchy. There are no panels such as directorate or work council. The legally binding positions of the enterprise (director or chairperson) are more representatives than decision makers.

All teams have a maximum size and are self-organized. They are well connected, interact directly and learn from each other. They are also responsible for their communication with stakeholders (customers, suppliers, …).

All decisions are team decisions. The teams are responsible for guaranteeing quality and time of delivery, as well as efficiency and further development.

Depending on the size of the enterprise, there might be a (small) back office. Possibly, some value adding teams are necessary in a direct or indirect way. Persons who mostly achieve the added value indirectly, however, will not give pre-defined requirements. Instead, they will give impulses and inspiration, or, in times of crises or problems, they help with actual moderation or support.

There are no main departments such as strategy, marketing, sales, human resources, product planning. The same is true for entrepreneurial processes and pre-defined methods. Neither are there any central services that get out of control and suddenly set their own standards. Simply because everyone uses their brains and actively participates. And because the services and products have a quality that sells by itself and because the promotion by those who bought it and tell the tale creates more demand than can be met.

Local & flexible beats central & inflexible, iteration beats planning!


 

Processes

I use the word “process” as in “process organization”. As before, I no longer use the term “organization“ because modern enterprises control themselves intuitively.

In a modern enterprise, you have no processes. Something that worked in practice and well-trained behaviour will always dynamically be adapted to change. Rules and regulations are not necessary, because the idea underlying every employee’s activities is their knowledge, their experience and their mental concepts. They all want to achieve the best goal – the best service for the customer or the best product. Social interaction is determined by values, rather than rules.

Common sense and intuition will beat processes and rules!


 

Teams

They realize the achievement of an enterprise, which means they render the service or make the products the enterprise thrives on. All employees in the teams must know and be competent in the core competences of the enterprise.

Example: There was a time when google only employed people who could actually program. That included administrative and managerial jobs.

Besides the explicit added value, all employees and team members also take responsibility for others

and for all the factors that make success possible.

Example: In a software team, everybody can program. Each team member takes responsibility for important fringe issues such as quality control, configuration, delivery on time, customer interaction,… on top of his original duties. This is how all competences and talents can be used for filling different roles that will contribute towards the success of the team either after mutual agreement or without even having had to talk about it.

Depending on the size of the enterprise and the challenges, it is possible that, apart from the teams that directly cause the added value, others will be necessary for the indirect achievement of added value.

Example: There might be service and moderation teams. The moderation teams are made up of particularly experienced employees with moderation competence. They can help if a team has problems or if a team becomes too big and cannot really cope with how to divide itself. However, their support should always be restricted to moderation and perhaps help towards finding solutions.

The teams are the central elements of the enterprise!


 

Infra structure

The entire enterprise is part of one intranet (software system). Said system provides a wiki or social media system. However, I would not call it “knowledge management“ (the term has been used up). Instead, I would call it a common basis of communication.

Example: A system such as Google+ is very mature and offers all you need. If you have a bigger enterprise, you might consider customizing or even develop your own system. If you have a small firm, I would recommend you take one of the many systems available.

All members and teams contribute towards the content.

Example: A team found potential for improvement at the tag and tells other teams about it.

Ideally, the system should be available to all stakeholders (customers, providers, sympathizers and the competition), usually with reading and comment enabled. Because transparent systems are an advantage for all parties concerned.

In addition to the system, you organize meetings (face2face) at regular intervals and with a reasonable format, for instance barcamps. Basically, the internet only makes sense if you also see each other once in a while.

For the infra structure, the following is true: It always has to be a means to an end, rather than its own end. It must be capable of adapting to changed needs quickly and be absolutely simple. So here is what we need:

No more than the amount we really need and as much as necessary!


 

Requirements

From the business point of view:
The only element we know from classic enterprises and that has to remain intact in a “modern enterprise“ is the strict adherence to business control principles. All teams must have positive balance sheets. If a team has problems, it has to either solve them or ask other teams for help. Budget deficits are only tolerated for short time intervals. If they do not disappear quickly, the team will be suspended.

Any surplus will be used for financing the (low) infra-structure costs. A considerable part of the profit

remains with the team, the team members decide the quota and extent to which profit is distributed among the team members. Dependent on the individual situation, a suitable part remains with the enterprise or/and with the shareholders.

Example: If a team has a problem, for instance with coming up with a decision or with dividing itself into smaller parts, they will contact the moderator. That is also true if a team notices that it has technological problems or quality deficits. The team will choose its own moderator.


 

Structure:

The size of a team will be mutually agreed upon. Depending on the task or challenge, I would say a team should be between seven and fifteen employees.

As the situation requires, a moderator should be able to work for between ten and twelve teams. If you have a small enterprise, for instance only one team, then members of the teams will also play the moderator role.

Example: The enterprise Buurtzorg (The Netherlands, Home Care) has 1,000 teams with ten employees in each team (i.e. 10,000 employees), for which fifty moderators are totally adequate. They have many teams that never need a moderator and some teams that often need a moderator.

If you have founders (which, naturally, is only relevant for a young enterprise, since after a few decades the problem solves itself biologically), then they can, of course, be moderators, impulse givers and inspiratory, as well as achievers.

Example: At InterFace Connection GmbH (which was the predecessor of InterFace AG), I did consultant work for other companies and at the same time contributed towards building up CLOU/HIT (”product owner“).


 

Knowledge:

All experience is shared. This should at least happen online and, if we are talking important experience, also in person (peer2peer or in a barcamp).

Example: Best Practice concepts discovered by one team will be published for all teams on a shared website.

Merkantile clarity, the willingness to support each other and the absolute readiness to share all knowledge are indespensable requirements!


 

Values and Culture

Similar to the entrepreneurial culture, values are also best described by stories. It makes sense to remember the culture onion  (Kulturzwiebel).

Example: There are enterprises where the employees share the belief that all they do and all their decisions should be agile, slim, transparent, pragmatic, professional, uncomplicated and similar things. They also believe that listening is just as important as – or maybe even more important than – talking. The values they live are eye-level and respect. Self-organization, self-responsibility, participation and error tolerance are normal behaviour. They all share the basic assumption that all form of indoctrination can be avoided if you use your common sense and emotional intelligence. And, last not least, they all believe that the “heroes” that every social system will inevitably create will turn exceptional employees into models.

In summary, one could say that a modern enterprise is a social system with a respectable goal that masters the art of not producing system agents. Because diversity beats simple-mindedness. Together, the employees know and understand more than the “boss“ alone can ever know or understand.

Thus, “corporate identity” will not be decreed from above, but instead develops mutually, just like the future is also shaped by mutual agreement. This is possible in a modern enterprise. Bureaucratic detours like holacracy, („Holokratie“ – in my opinion, the concept is crazy) must be avoided. Because the cooperation in teams and in an enterprise must not be dominated by bureaucrazy.

In a modern enterprise, it must be clear that there is no control through set goals and that nobody tries to motivate anybody by explicitly holding out a prospect of rewards by granting material favours (extrinsic motivation). Both measures will not work and in the end they will be more detrimental than beneficial.

The employees are motivated because they experience an environment where they can work with courage, joy and confidence in a self-organized and self-responsible way. This is how an intrinsic motivation will grow. And because they know that they can and will be successful together and that, at the end of the day, the success will be shared fairly and in a self-organized way wherever possible.

In former times, I often invoked the term “fear-free zone” as something an enterprise must realize. Today, I have progressed and now I demand a “zone that leaves room for unfolding“.

If you want to have it, you will, first and foremost, need absolute mutual appreciation of everybody’s value. It must be lived and shown by the models. Most likely, something else must be added to this element, for instance maybe that the expectations are not ”too trivial“.

Culture and values are the “operating system” of a modern enterprise.


 

Dynamics

Since the world changes at an enormous pace and is also perceived as more complex than in former times, there must be a high willingness to change in a modern enterprise. The wisdom of an enterprise should ideally consist of the wisdom of the masses. The right questions are asked before you start working on the solutions.

Nothing is as constant as change!


 

Utopia?

Some readers will probably not understand this article and judge it as utopian. Freedom makes them insecure because they know another world and feel comfortable with this other world. They prefer clear statements by third parties, instead of accepting responsibility.

That has also been my experience with some of the people who started out with me. They considered my ideas utopian. Regardless, my experience with self-organisation and self-responsibility were always excellent.

There is another argument that, sadly, I have to accept:
Huge success, exceptional growth and the thus achieved enormous dimensions will corrupt an enterprise and its culture.
It is perhaps some kind of entrepreneurial natural law.

Well, all I can do is provide a nice counter-argument and a solution:

I notice all the time that huge enterprises that had medium-sized beginnings work better than the concerns I know.

And perhaps there is a counter-measure: You could decree that companies that grow too fast have to divide into smaller ones according to their core competences and determined by the teams that were built inside the company?

Today, I know a number of firms that show that it really works and that you can be very, if not fear-inspiringly, successful with utopian ideas. You can really earn a lot of money with this kind of company for your employees and for your enterprise.

Thank you very much for living and having discussions with me.

RMD

P.S.
I often and gladly give presentations on this topic. I always defend my theories. Strangely enough, though, I seldom have to do a lot of defence work to do. Instead, I usually get a lot of consent and support.
🙂 To my surprise (or not), this support often comes from very conservative leadership personalities.

P.S.1
For more articles of my entrepreneurial diary, see: Drehscheibe!

RMD
(Translated by EG)

2 Kommentare zu “Modern Enterprises (Entrepreneur’s Diary #125)”

  1. Thomas Kleiner (Friday June 1st, 2018)

    Lieber Roland, beim Lesen Deiner Ausführungen kam mir der Gedanke, dass sich viele Deiner Gedanken nahtlos auf ein bekanntes Kleinstunternehmen in Deutschland, nämlich die Familie übertragen lässt. Daher bin ich auch sehr froh, dass ich in meiner Familie immer das Prinzip Selbstorganisation fordere und fördere. So ist für mich absolut klar, dass ich ganz entspannt reagieren werde, wenn meine Tochter (aktuell 8 Jahre) mit 35 Jahren ihren ersten Freund mit nach Hause bringen wird.
    Im Ernst: ich habe eine Befürchtung, dass die Zahl derer (und mich komplett persönlich davon ausnehmen, kann ich mich nicht – siehe männliche Freunde meiner Tochter), im Unternehmen größer ist, als am Stammtisch. Gleichzeitig bin ich der festen Überzeugung, dass meine Tochter sich nicht an die Regeln ihres Alten halten wird, sondern einen Weg gehen wird, der sich eng an den von Dir genannten Charakteristika orientieren wird. Herzliche Grüße Thomas

  2. Thomas Kleiner (Friday June 1st, 2018)

    Kommentar zu meinem eigenen Kommentar:
    Mit der “Zahl derer” meinte ich die Zahl derer, die Du beschrieben hast, welche signifikante Schwierigkeiten mit den Prinzipien von Selbstorganisation und Freiheit haben

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