With Freedom comes Responsibility
The Operating System for Evolutionary Organizations Part 8/10
With Freedom Comes Responsibility
Why is it that a living organism consists of trillions of cells and functions effectively and on the other hand, corporations struggle already with a few thousand employees? Imagine if they had a trillion employees. The living organism does so by maintaining the autonomy of its members, its cells. And so should organizations.
As our lives get more and more fast-paced, businesses and organizations don’t just stand in one place. To keep up with this speed, organizations need to adapt, using different approaches than before and applying new principles of management. Yet, we live in a world where very few people make meaningful decisions and act freely. At work, they risk their jobs by taking steps they weren’t told to take to solve problems. But all this stress only increases employees’ sense of helplessness and lack of trust from their leader. As a result, little gets done.
Do you want to run a fast-moving organization where things get done and the best decisions are taken? Do you want a company where your staff members are fulfilled and grow above and beyond their abilities? Then, what you have to do is start trusting that your people are smart enough to make the right decision and, instead of instating greater control, empower them with the right structure and context to make those decisions.
This is the 8th article of a series of 10 where I will dive into why traditional organizations are doomed to fail and how a new breed of evolutionary organizations offers a better way forward. These innovative companies are complexity-aware, nurture self-determination, and act developmental. Thus fostering happiness and achieving lasting success. On top of that, I sprinkled in a little bit of science, distilled a framework of 3 universal principles, and defined an operating system for organizations consisting of 8 essential components, with which any CEO or founder can transform their organization into a workplace that thrives.
The 8 essential components of the operating system are:
Purpose and Direction
Virtues
Density of high-quality talent
Radical candor and transparency
Autonomy
Flexible roles
Developmental practices
Careers and compensation
In this article, we will deep dive into the 5th component “Autonomy”
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Trust your people and lead with context
In this first section, I’ll break down the key steps you need to take to create an atmosphere of trust in your organization.
We’ll discuss the importance of decentralizing power in order to help your team members make the right decisions independently and responsibly, the need to remove policies, lead by example and with context, as well as learn how you and your employees can train the decision muscle to helps increase the levels of happiness and intrinsic motivation of everyone at the company.
Decentralise authority and trust your people
So, how can your people start making the best decisions at the company? Rather than centralizing power in the hands of the few, organization leaders should aim to distribute authority as much as possible and give power to managers on various levels at the company. In a fast and innovative company, the responsibility over critical decisions should be dispersed across the workforce at different levels instead of their allocation according to a hierarchical status.
Managers aim to increase their staff members’ autonomy at all levels. For example, at Netflix leaders pride themselves on the small amount of decisions actually made by senior management.
According to Reed Hastings and Erin Meyer, authors of the book “No Rules Rules: Netflix and the Culture of Reinvention”, at a large company like Netflix, the key principle guiding the decision-making process goes as follows: “Don’t seek to please your boss. Seek what is best for the company.” However, it’s also important for employees in this case to let the boss know what is happening.
As a manager, the first step you need to make is to start trusting your employees to make the right decisions. This can be achieved by granting everyone the freedom and autonomy to serve the company in the way they see best. Aaron Dignan, in his book “Brave New Work”, sees this similarly and describes this idea this way: “The default assumption here is that you can do anything unless a specific policy or agreement prohibits it. We’re starting from a position of trust”
Moreover, Hastings and Meyer think about trust in a similar way, as they emphasize the idea of trusting your people as the key to effective decision-making. Instead of giving employees a list of what they can do, it’s easier to tell them what’s not allowed, and that’s all they need to know.
If the individual believes his or her decision will make something better and not worse, they should go ahead with it.
Responsibility and freedom are two sides of the same coin
To allow people to make good decisions, you need to ensure they clearly understand their responsibilities and what is expected of them.
Clear role definitions that are kept up to date are key, as they lay out the roles' accountabilities. This way, if a certain person fills a role, they know their specific responsibilities. However, having clear responsibilities doesn’t mean you don’t help others with tasks outside of your responsibilities and don't show initiative beyond your job role if it can help the company. In many situations, it's better to show action rather than inaction — especially if you see someone not taking over their responsibility and you need to step in to help.
With freedom also comes responsibility. If you give your people a lot of autonomy and trust them to make the right decisions, they also have to live up to their responsibilities defined in the roles they fill. When everyone can trust everyone else to live up to their responsibilities and give their best, it is only then that freedom works and produces the best results. Everyone has to make sure to really deliver on their responsibilities.
For this exact reason, you also need high talent density at the organization to be able to give your people that autonomy.
Remove your policies
Maximizing freedom also means minimizing policy. In the book “Rework”, Jason Fried and David Heinemeier Hansson of Basecamp software company warn that isolated incidents can too easily lead to bureaucracy: “Policies are organizational scar tissue. They are codified overreactions to situations that are unlikely to happen again. They are collective punishment for the misdeeds of an individual.” This is governing for the exception rather than the rule.
Don’t create a policy because one person did something wrong once. Policies are only meant for situations that come up over and over again.
Also, it’s best that you drop your policies on vacations and expense or travel approvals. Don’t you trust your employees to make the right decisions? If you want them to act like adults – treat them like adults. They can take over the responsibility for their actions and decide for themselves.
The same thing should apply to remote work and working hours. If you trust your people, you should let them choose how they work best, and when. Nevertheless, you need to define some guiding principles that act as context.
Lead by example and with context
When you give your people that much autonomy, as a leader you also need to lead with context instead of control to help them make the best decisions.
Reed Hastings, CEO of Netflix is a strong supporter of leading with context and they have mastered it at his company. He explains it the following way: “You provide all of the information you can so that your team members make great decisions and accomplish their work without oversight or process controlling their actions. The benefit is that the person builds the decision-making muscle to make better independent decisions in the future.”
He provides a strong visual image, saying the organization’s structure should resemble a tree rather than a pyramid. The boss is at the roots, holding up the trunk of senior managers who support the outer branches where decisions are made.
In the picture, you can see how the context cascades through the organization from the CEO Reed Hastings who sets the strategy to "grow global" to Aram Yacoubian’s decision to purchase the “Mighty Little Bheem” animated series. Let’s take a closer look at how the context is set by the leaders to empower people at Netflix to make outstanding decisions.
So, with 80% of its growth coming from outside the US, Reed makes it a priority to focus on international growth. To create content around the world, CCO Ted Sarandos knows that they have to stay laser-focused on learning and also be willing to take big risks in high-growth-potential countries like India. For instance, If something is a risky bet but offers a high learning potential, it’s worth pursuing.
Then, to grow global in the kids section, VP Melissa Cobb thought that it would be important for a ten-year-old Kulap, who lives in a Bangkok high-rise and watches Netflix, to see not just characters from Thailand (those are already on her local television channels) or from the US (those are on the Disney cable station), but to also watch shows filmed in ice-covered cabins in Sweden or set in rural Kenya. It would be a big bet to try out whether kids really wanted that content, but it sure had a huge growth potential.
Further, director Dominique Bazay felt like animation was the best answer to provide these shows globally because with animation you can provide consistent quality and let the characters speak any language, compared to the reduction in quality when it comes to dubbing.
Finally, Aram Yacoubian, who is responsible for buying shows, knew that "Mighty Little Bheem" would be a hit in India based on his experience, but the animation quality was not good enough to be shown across the world. It would cost a lot to improve. To be worth it, the show would need to be watched by a lot of children. Additionally, there was the belief that Indian series did not travel well. As a result, he considered the context that he had been given from investing globally, such as taking risks in order to learn, bringing local shows to the world, and investing in animations. Based on all the context shown by his leaders, he took the decision and purchased "Mighty Little Bheem”.
Netflix was also one of the first companies that pioneered flexible vacation policies where people can take as many vacation days as they want. The company also set a context that helps everyone decide when or how to take vacations, but the choice is still for everyone to make independently. Netflix has 3 rules that act as guiding principles:
1) Always act in the best interests of the company
2) Never do anything that makes it harder for others to achieve their goals
3) Do whatever you can to achieve your own goals.
As long as the team members keep these principles in mind and act in accordance with them, when it comes to setting holiday time, staff can do whatever they want. Since Netflix pioneered this approach, many companies like LinkedIn or Hubspot, have followed their foot steps and are applying unlimited vacation policies.
The same logic is used for travel policy at Netflix. Here, the guiding principle is, once again, to “act in Netflix’s best interest”. To be clear, this means the leaders need to set the right context upfront and keep an eye on spending out back.
In Hastings words: “Before you spend any money, imagine that you will be asked to stand up in front of me and your own boss and explain why you chose to purchase that specific flight, hotel, or telephone. If you can explain comfortably why that purchase is in the company’s best interest, then no need to ask.”
When you give people freedom, even if you explain the rules and consequences, a few might try to game the system. When that happens, don't freak out and make more rules. Just handle the situation as it comes and keep moving forward. So even if employees spend a bit more of the company’s money when given more freedom, these costs are still significantly smaller than for a company that doesn’t allow their people to fly. If you restrict their options by forcing them to tick boxes and seek approval, you're not only going to annoy them, but you'll also miss out on the speed and flexibility of a low-rule workplace.
Next to leading with context, it's also important for leaders to be a role model to their team members. When they lead by example, the team mirrors their behavior, so the behavior trickles down.
To illustrate this process, let’s consider the situation with vacation policies. If leaders don’t take vacations, their team will neither. But if they take many vacations and openly talk about it, they make it clear that it is desirable for their team to take vacations. This way, the team will follow the example and start taking vacations.
So, when your team is moving in the right direction and making their decisions independently, using knowledge and information provided by you, this is when you know you are leading with context.
Autonomy and intrinsic motivation
One other very important reason for trusting your people and giving them as much autonomy as possible is explained well in “Drive” by Daniel Pink, where he lays out the science behind motivation that suggests that providing people with autonomy is one of the main drivers of intrinsically motivating them. Secondly, by practicing their decision muscle they will grow and learn, which, according to Pink, is the second driver for motivation and happiness: mastery.
If you give your people the freedom to make decisions, they will inevitably make wrong decisions too. But it’s fine because it’s the best way for them to learn and grow. Making mistakes on the way is still better than having to ask for approval for every step, which reduces the speed of moving forward. And who says the leader will have made a better decision? It’s important that your people are allowed to fail and, even more so, that they can fail several times. Only then the people at the organization can start feeling secure enough to decide and take risks.
In line with Netflix’s philosophy, as we’ve discussed above, whenever a new team member joins the company, they are told that they have a handful of metaphorical chips that they can make bets with and that some gambles will succeed, while others won’t. This way, the performance of the individual is judged on the total outcome of the bets they have made.
The right environment to give freedom and trust
For autonomy and freedom to work, there are a few conditions that you need.
You need a team of high-performing employees, so you can trust the smartness of your people. They also need to have a certain maturity and humility. This way, you can trust them to make the best decisions when given the right context.
You will also need to be a company with the goal of innovating in the market. Additionally, in order for it to work your company needs to operate in a loosely coupled manner and highly aligned.
And, last but not least, you need to make sure to provide great transparency across the whole company from responsibilities and performance to why certain decisions were taken.
A mature, humble and high-performing team
Hastings says: “The denser the talent, the greater the freedom you can offer. This only works so with a high talent density.”
Let’s consider a simple example. Imagine you have a teenage son. The way you are going to treat him depends on the way he behaves. The choice you make will most likely depend on your son. If he’s shown poor judgment in the past and you don’t trust him, you might choose to use control rather than context. But if you know him to be sensible and dependable, you can set the context and count on him to make his own decisions and be safe. In doing so, you can prepare him to make not just good decisions on his nights out with friends, but also be responsible in the myriad of seductive or peer-influenced situations he will face in the coming years.
If you have a responsible child, the second option may seem like an obvious answer. Who wants to be an overbearing parent and why would you not want a teenager to assume responsibility for his own safety? But, in many situations, the choice is not so clear-cut.
The first question you need to answer is: “What is the level of talent density of my staff?” If your people are struggling, you’ll need to monitor their work to ensure they are making the right decisions.
If you have a group of high performers, they’ll most likely crave freedom and thrive if you lead with trust and context. This also requires a certain maturity to dare to make their own decisions, as no one tells them anymore what they have to do. They have to decide for themselves and then be able to stand up for their decisions. They also need to be humble to accept that sometimes they should not decide for themselves alone and know when to ask for feedback.
Goal of innovation
As you consider whether or not you should trust your people and start leading with context rather than control, one thing you should really consider is whether your organization’s goal is about innovation or, instead, error prevention. For instance, in situations where your goal is to reduce the number of mistakes to a minimum, control may still be the best approach.
To illustrate, control is necessary when you’re running an operation that depends on technical accuracy, such as online security systems. When you need to ensure people’s safety with your services and implement high-functioning and efficient mechanisms to do so, control may be the answer. Similarly, if you’re building cars, you need to ensure that every vehicle is identically safe so that no one gets hurt when using it. It’s a lot about quality control and safety procedures.
However, if your goal is not to reduce the number of mistakes but to innovate, leading with context becomes more useful. In this case, making an error is not the biggest risk you face. Instead, when your teams are afraid to make mistakes, they stop coming up with ideas that could innovate your organization and take it to the next level. For example, take the example of Amazon which is the largest online marketplace in the world. It continues growing every year and selling more and more, because its key goal is innovation, such as implementing AI-driven mechanisms and development of new platforms for customers.
Loosely coupled systems
In addition to high talent density and a goal of innovation instead of error prevention, you also need to work in a system that is “loosely coupled.”
A loosely coupled system essentially means that all of the elements in the organization are not too dependent on each other entirely. Thus, the whole system doesn’t break if one part malfunctions.
For example, when you have teams whose responsibilities are independent of each other (i.e. one works on a finance product and the other one works on a marketing strategy), they can act independently and decide autonomously on goals and make progress, as their actions will only minimally affect the other team.
Highly aligned systems
With loose coupling, however, the risk of misalignment is high. For instance, if the head of the department has a great vision for the new strategy, but each team member decides for himself what projects to take on, everyone can head off in their own direction.
According to Hastings and Meyer, loose coupling can work effectively when big decisions are made at the individual level. However, then the leader and the employees agree on their final destination, where they are all aiming to arrive as a result of these decisions. Loose coupling works only if there is a clear context shared by the leader and the team.
This includes a clear purpose, as well as shared virtues and goals. Such a system gives your employees the context and a sense of direction the company wants to go in — and the rest is up to them. Your employees will make their own decisions and take responsibility for them. This way, the alignment of context drives employees to make decisions that support the mission and strategy of the organization as a whole.
In order to align, Netflix leaders use Quarterly Business Review (QBR) meetings. According to Hastings and Meyer, the key goal of these meetings is to make sure the leaders are aligned with the company’s “North Star”, the general direction it is running in.
Transparency
Last but not least, you need to make sure to provide great transparency across the whole company from responsibilities to performance, to why certain decisions were taken.
If managers are not deciding anymore they need to see how good the decisions are from their team members to judge the quality of their employees.
Decision process and implications
Now that you trust your people: you give them freedom and they show responsibility. You also made sure this happens in the right environment. It’s time for your people to build the decision-making muscle. This also means understanding when to ask for feedback and consent before going ahead with the decision. People also need to learn to ask for feedback in a smart way, how to ensure a productive consent process, and what it means if you don’t own up to one's responsibility.
Build your decision-making muscle
Just because you have the authority to decide within your responsibilities, doesn’t mean you should not seek feedback. As we’ve discussed in previous sections, feedback is more important than ever in evolutionary organizations. It allows people to collaborate, communicate, and search for solutions together, and so they are encouraged to do exactly that. Employees also need to learn when to ask for guidance, especially being in junior roles where they still need to be guided.
First and foremost, you need to really think about when and how to ask someone for feedback, who it should be, and how you can ask them.
Be humble. You don’t know everything. Reflect on when to ask for advice. It is the person's own responsibility to assess their capacity to make a good decision. So, in case of doubt — get feedback.
However, sometimes simply getting feedback is not enough and you need to get consent.
In the following cases, you need especially pay attention and think of the best way to approach a decision if your actions:
have the potential to seriously damage the company. Some call this the “waterline rule”: where the ship (the company) would potentially sink if a hole (a certain step/decision being taken) is being punched under the waterline;
are not in line with your company's virtues;
are not in line with the company's purpose, vision, and goals;
are part of some predefined agreements in which the company stated that additional advice, feedback, or consent is required (I.e. some decisions are critical: they need to be checked with someone else but this should be kept to a minimum);
can negatively affect people or the company within a reasonable frame.
So, how can you handle these decisions? People can still make decisions but need either:
a) ask for advice/feedback; or
b) get consent from the relevant stakeholders.
The integrative decision-making process (IDM) is a productive consent process that takes into account all affected stakeholders and helps reach a decision. See more below.
But once these steps are made, then it's within their authority to make the decision. Each company has to clearly define when asking for advice is enough or when consent should be obtained. Especially in the cases mentioned above.
How to get feedback smartly
Hastings and Meyer discuss a concept they name the “Netflix Innovation Cycle”. It provides instructions to everyone who has an idea they are passionate about, and can be used in any professional setting.
The Netflix Innovation Cycle is a framework to use if you have an idea that you are passionate about:
“Farm for dissent,” or tell people about the idea and get feedback.
If the idea is big, test it out.
As the informed captain, make your bet.
If you succeed, celebrate. If you fail, be open about it.
A productive consent process (IDM)
Detailed below is the integrative decision-making process (IDM), which is a productive consent process. It’s also a good way to improve one's decisions and make this conversation productive. It involves the following components:
Define propose: what do you want to do?
Clarify: are there any open questions that need to be asked for others to understand the proposal?
React: is there any feedback? (e.g. ideas on how to improve the proposal)
Adjust: how can the proposal be improved based on questions and reactions?
Consent: allow others to raise an objection and identify a reason why this would be unsafe to try or cause irreversible damage to the team and/or organization
Integrate: The objector works with the proposer to edit the proposal to address the objection and find a solution
Make sure to make the logic behind all decisions transparent and share it with everyone involved.
Owning up to one’s responsibility
This, however, doesn’t mean the employees can do whatever they want. Every action has its consequences, both good and bad, and the person who makes a decision assumes the responsibility for them.
When one of your employees makes a mistake, don’t rush to blame them, but ask yourself — “what context have I failed to set?” Were you clear enough on your goals and strategy? Have you communicated the risks? Did you make sure your vision aligned with that of the team?
As we’ve mentioned before, the performance of the employee can only be judged based on the collective outcome of the bets (decisions) they made in their position. Some of them can be bad bets, but if the majority or all of them are bad, then it becomes a problem.
However, it’s not just about decisions but also about making sure that you live up to your responsibilities as a team member. This includes things like making sure you commit to all your tasks and make sure to deliver the best results according to your goals. Another simple example is when you work remotely to make sure you have a good connection and can be available within reasonable times during your working hours.
And in case after repeated feedback that a person is not living up to his/her responsibility the person should be fired.
Conclusion
To summarise what we’ve learned in this article: in order to run an organization where things get done, the right decisions are being taken and where your staff members are fulfilled and grow beyond themselves, you need to trust your people and lead with context. Therefore you have to decentralize authority to your people who do the work and trust them to make the right decisions. Again we can learn from nature. A living organism consists of trillions of cells and functions effectively. It does so by maintaining the autonomy of its cells. On the other hand, corporations struggle already with a few thousand employees. Imagine if they had a trillion employees.
You have to educate them that with freedom comes responsibility. Remove all policies and lead by example & context. This only works though in an environment that is loosely coupled, highly aligned, and where there is a lot of transparency. You also need to have a mature and humble team of high-performing members. Train their decision-making muscle. They need to learn when it's wise to ask for feedback and when to act. And when people overstep their boundaries you need to be ready to act.
In the next article, I will dive into the next 2 essential components of the operating system of evolutionary organizations: “Flexible roles” and “Developmental practices”. If you are interested, please subscribe. I will then notify you when I release the 9th article (in around 2 weeks) and send you the full white paper about the operating system for evolutionary organizations when it’s done. You can also read the previous articles on substack or find them here directly: 1, 2, 3, 4, 5, 6, 7
Picture from Michael Olsen on Unsplash