Tag Archives: Endenburg Elektrotechniek

Misconceptions about Sociocracy

In an excellent article in the 10 September 2015 issue of the Harvard Business Review Georges Romme analyzes the misconceptions in the press about Holacracy and about sociocracy, “The Big Misconceptions Holding Holacracy Back.” Romme has been centrally involved with Gerard Endenburg and sociocracy for decades. The following is a summary and commentary on Romme’s article, which I also encourage you to read.

A key management practices is concentrating leadership in top management and suppressing or ignoring any ideas or concerns from other levels of the organization. Self management, like that in sociocracy, is believed to correct autocratic leadership but the misconceptions about how it does that have seriously affected the willingness of organizations, businesses in particular, from adopting it.

Misconceptions about Sociocracy

Romme focuses on three misconceptions:

  1. It is non-hierarchical,
  2.  Implementation specifics aren’t important, and
  3.  The board’s functioning shouldn’t be affected.

Since sociocracy approaches the whole concept of organization from an unfamiliar direction it is often misunderstood, as can be clearly seen in descriptions in the news media of the implementation of Holacracy at Zappos. While certainly not the first corporation to implement principles and practices of self management — there probably thousands of businesses, non-profit organizations, and associations using sociocracy and other self management structures—Zappos has received the most attention for doing so.

Misconception 1. Abandonment of Hierarchy

Although self management methods are fundamentally different from command-and-control structures, they still have a hierarchy that provides an overall purpose and direction for the organization. A lack of hierarchy leaves an organization without a clear sense of who is accountable for what. While some are moving to a structure more similar to a network, they still have a clear patterns of coordination and accountability between nodes.

Self management, self-organization,  and distributed policy decisions balance and complement the hierarchy of daily operations. “Power and authority can flow in virtually any direction, but with an eye to maximizing efficiency … Instead of conferring authority, the hierarchy establishes an unambiguous sequence of levels of accountability.”

Misconception 2: The goal justifies any means.

Once the blueprint of the new organizational structure has been adopted, the misconception is that any implementation strategy is acceptable. The ends justifies the means. At Zappos, the CEO sent a memo to employees — embrace holacracy or accept a buyout. Empowering employees was thus expected to be the result of exercising authority. A mixed message that could lead to mixed results.***

The implementation process must itself be empowering and include employees’ ideas and ensuring that they understand and embrace the change. The best approach is for the top executives to tend to their own responsibilities and allow the employees to self-organize with the help of a dedicated implementation team.

“The pace of change must also be deliberate and well-orchestrated. The brand-strategy consulting firm Fabrique, for example, first defined shared objectives and had a project team pilot-test whether sociocracy served to realize those objectives. Then, on the basis of the evidence collected, it had the project team, together with the executive team, make a shared “go/no-go” decision (the result was a “go”). An approach like this signals top managers’ deep understanding of distributed management and leadership and establishes them as role models.”

Misconception 3: The boardroom is unaffected.

Executives and directors often try to take themselves out of the process as if the change only affects operations and middle managers. They assume they will still have autocratic power over any decisions made. But sociocracy requires a fundamental redistribution of authority in the whole organization. There are mechanisms for measurement and correction but how a team or department accomplishes its mission is under their control as long as it doesn’t negatively affect the work of another or is in conflict with the purpose of the organization.

The distribution of management optimally extends to a financial restructuring so neither owner or shareholders can unilaterally sell or close the company. The company should “own itself” and be financially self sustaining. Endenburg Elektrotechniek and MyWheels,  in the Netherlands, and the Terra Viva Group in Brazil are examples of companies that have restructured financially to ensure their independence and continuity.

A self-sustaining company is different from an employee-owned company. Employee owned companies are just as often managed autocratically as private companies and stockholder owned corporations. A completely sociocratic company is controlled equally by all its members,  not the board.

Integral Education & Distributed Management

Another practice in sociocracy, one not mentioned by Romme, is that the move toward distributed management and self-organization is balanced with strong support for continuing education. Referred to as “Integral education” it requires a  plan for personal and team development as part of annual planning. One estimate is that organizations should devote 5% of their budget to education and research for employees, not only for top management and aside from that delegated to a research department. That is 5% distributed to each employee at all levels of the organization.

Integral education ensures quality in every detail of operations, engages the intelligence and energy of each employee, and develops the skills required to assume greater responsibilities. The expectation of self-organization develops leadership, which further ensures the sustainability of the company.

Georges RommeGeorges Romme  has a background in economics and business administration, with a MSc in economics (cum laude) from Tilburg University and a doctoral degree in business administration from Maastricht University. Previously, he was on the staff of Tilburg University and Maastricht University. His current position is professor of Entrepreneurship & Innovation at Eindhoven University of Technology (TU/e). From 2007 to 2014 he also served as dean of the Industrial Engineering & Innovation Sciences department. He is author of the forthcoming The Quest for Professionalism: The Case of Management and Entrepreneurship (Oxford University Press). 

*** An added comment on Tony Hsieh’s memo of  26 March 2015 to Zappos employees:

While Tony Hsieh did say “we are going to take a ‘rip the bandaid’ approach to accelerate progress towards becoming a Teal organization (as described in the book Reinventing Organizations),” he also went on to explain at length how further implementation of Holacracy at Zappos would take place and how. The process was very well considered and explained.

The very long memo gave many options for understanding the reasons for acceleration toward self-management, including readings. His memo was described in the press as an “ultimatum” and there would be a tendency for employees accustomed to an autocratic leadership to view it this way. In fact, it was a request that employees inform themselves and offering a buy-out to those who did not want to accept self-management.

I softened the language in this passage and in several places used “self management” instead of “distributed management.” It is more accurate to describe the organizational structure as “self management” and “distributed policy decisions.”

The full memo is online in Aimee Groth’s article published on Quartz.

Consent vs Consensus : Laird Schaub on Sociocracy

Laird Schaub
Laird Schaub

Laird Schaub helped found and has been living in Sandhill Farm, an intentional, income sharing community in Rutledge, Missouri since 1974. His community is very small, less than 10 adults, but his experience is very broad. He has been doing training and consulting in governance and consensus decision-making since 1987. He gives several workshops on decision-making, facilitation, proposal writing, delegation, etc., at the annual Cohousing Association Conferences. He is the Executive Secretary  and Development Coordinator of the Foundation for Intentional Communities (FIC) and writes frequently for Communities Magazine. He travels most of the year to work with communities and organizations all over the United States. He does intensive workshops with facilitators who meet once or twice a month over an extended period of time. In short, he’s on the road a lot, on his feet a lot, and has seen a lot. He is also very well-respected.

Laird’s blog is Community and Conensus. In his Monday 18 August 2014 post, “Critique of Sociocracy,” he presents his “reservations” which are deep and well-stated. Some are quite justified and others misunderstandings. Just like anything else, it’s easy to get the wrong information. This is the first of several posts addressing both the points I think are valid and those that are at least partly in error. I’ve divided them into separate posts where the subject changes. Laird has 6 points of contention.

Stalking Consensus

Laird’s reservations are expressed “paying particular attention to how this contrasts with consensus, which is the main horse that sociocracy is stalking.”

Well, true and not true. It is true that for many years consent vs consensus was taught as if they were totally different animals. Not just horse vs zebra, it was elephant vs fruit fly. Having worked with consensus for more than 30 years and having studied the teachings of the major consensus trainers, I never understood this. Consent is given by one person and consensus is the result of multiple instances of consent. Both consent and consensus mean agreement to proceed, not necessarily full agreement to exclusion of other possibilities.

That’s the only meaningful distinction between them that I can find: the singular and the collective plural. Consent vs consensus is more likely to be a comparison between the worst understanding of consensus with the best understanding of consent.

The Singular and the Collective Plural

The distinction between the singular and the collective plural, however, can be meaningful: The emphasis in sociocracy on gaining the consent of each person, “no objections,” rather than the consensus of the group. In sociocracy, the focus is on each individual and their ability to consent to a decision. In groups using consensus, the focus is more likely to be on the ability of each person as part of a group to develop and accept a group decision. “In the best interests of the community” is often heard in groups using consensus.

In sociocracy the standard of consent is more likely to be a question to an individual “can you work with this” or “is this within your range of tolerance.” Not particularly friendly phrases those, but I think one can see the difference.

I’m exaggerating a bit to show what can often be a subtle difference. On the other hand, the recognition of the individual is important as a measurement:

  • In a small community where everyone lives-in, the standard will be one’s ability to still want to live in the community if the change under consideration is made. “Will you still love having coffee on your balcony in the morning?”
  • In an intentional community devoted to expressing strong humanitarian or environmental living standards, the question will be “Does this activity violate your sense of the appropriateness in terms of your personal or the community values.”
  • On the factory floor, the focus will be on one’s ability to perform their job if this change is made. “Will you still be able to move comfortably to finish the final process?”

A Practical vs a Higher Purpose

The focus in all three contexts—a friendly live-in community, a political or values-based community, and a workplace—is whether effectiveness will be impaired.  But “effectiveness” in each case is based on a different desired outcome. Consent emphasizes the understanding that a group is a group of individuals who all have to be able to fully commit to a purpose before it can be accomplished optimally. People who use consensus not infrequently have in their hearts and minds a more spiritual union. A commitment to a “higher purpose,” one larger than the individual. Higher even than the group.

A sociocratic organization could adopt a higher purpose statement as a policy decision. Such perceptions are not banned in sociocracy. It is used in a variety of religious organizations. But that belief is not inherent in sociocracy as it is sometimes felt to be in the traditional practice of consensus.

The practice of consensus itself is often regarded as indicating that this group of people is more advanced or of higher morals. This makes tradiitonal consensus unworkable in a workplace. In this sense, consent vs consensus is a meaningful understanding, if not a real difference.

Workplace vs. Social Action Groups

Gerard Endenburg developed the Sociocratic Circle-Organization Method to reproduce the traditional consensus model he had lived with at Kees and Betty Boeke’s residential school, the Children’s Community Workshop. Instead of everyone caring for each other, Endenburg needed a definition that worked in the high pressure, fast moving production of electrical  engineering systems. People are hired in businesses and other organizations to fulfill roles with specific responsibilities, not to care for the other engineers, whom they probably don’t even know.

In engineering and manufacturing decisions are based on the responsibilities of the person to fulfill their roles and responsibilities, not a perceived higher purpose. But overtime the empathy required to understand the role requirements of each person and appreciation for their insights and support, do create a tighter bond between people.

Because the Sociocratic Circle-Organization Method is taught as it developed in Endenburg Electric, and in many other businesses all over the world since the 1970s,  the engineering and business vocabularies often overtake the fundamental purpose of using consensus in the first place: collaboration and respect instead of competition and disdain.

Comparing an Elephant to a Fruit Fly

The major distinction is that sociocratic decision-making operates within a governance structure designed to support consensus decision-making. Groups that use traditional consensus typically make many decisions as a full group or are completely flat with all decisions made by the full group. Some have a governance structure loosely and sometimes directly based on conventional social and governance structures designed for majority decision-making. Because of this, they are limited in size.

While comparing consent to traditional consensus isn’t a very meaningful, comparing sociocracy with traditional consensus really is like comparing elephants to fruit flies. One is a governance method and the other a decision-making method and they work synergistically.

Policy vs Operational Decisions

Another difference is that consensus is specifically used only for policy decisions. The operations leader makes  day-to-day operations decisions within the policies set by the workgroup. This takes advantage the power of efficient decision-making in the moment and collectively made policy decisions by all members of the work group.

Groups using traditional consensus tend to make almost all decisions as a group and delegation is feared as a re-introduction of autocratic, hierarchical control.

Groups using traditional consensus are also unlikely to apply cybernetic principles or use scientific methods for evaluating the effectiveness of their decisions, but that is a subject for another day. Many of the practices and processes used by sociocracy are also best practices used generally in businesses and organizations.

No Magic in Decision-Making

Neither have  magical qualities. Decision-making can be hard no matter what you call it or how you structure it. If it were easy, it wouldn’t need to be taught and wouldn’t need a governance structure at all.

These are both the reasons why sociocracy has been perceived as “stalking consensus” and the reasons why it is not. Sociocracy is an elephant that is dependent on the fruit fly.

(Part 2 is still unwritten and given the amount of time taken to write this, it may be a few days.)

Gerard Endenburg: The Sociocratic Circle-Organization Method

A Sociocracy for Business

Photograph of Gerard Endenburg in 2010.
Gerard Endenburg at Sociocracy Day in The Netherlands in 2010.

It was a graduate of the Boekes’ school, Dutch electrical engineer Gerard Endenburg, who developed a method for implementing sociocracy in a competitive, results-oriented corporation. After completing his military service, he worked at Philips where he invented the small speakers still used in mobile devices. In 1968, he became the managing director of this family’s electrical engineering company, Endenburg Electric.

As an engineer, Gerard Endenburg found it frustrating that he could design remarkably successful electrical and mechanical systems but in managing people, it seemed impossible to produce satisfactory results for everyone—managers, workers, and investors. He knew from his experience at The Children’s Community Workshop that everyone’s needs have to be considered to  create a highly productive organization. Anything else was self-defeating.

Cybernetics

While teaching radar technology in the Army, Endenburg had become interested in cybernetics, the study of communications and control. Cybernetics focuses on the ways that systems self-regulate. Primarily they do this  by communicating in a chain of cause-and-effect that creates feedback loops. This allows the systems to manage themselves successfully by self-correcting in response to their environment.

In 1970 Gerard Endenburg reduced the size of his company from 160 to 100 employees to create a laboratory for developing a sociocratic business model. His goal was to produce the same environment of harmony and self-directed achievement that he had experienced at school. He found intolerably counter productive the negative spirit of competition he found in the university, the army, and now in his business,

Sociocratic Circle-Organization Method

Over the next few years, step by step, Gerard Endenburg developed the Sociocratic Circle-Organization Method (SCM). He based it on the now famous three principles:

  1. Consent decision-making for policy decisions, including electing people to roles and responsibilities.
  2. Circle meetings in which working groups meet as equals to make policy decisions
  3. Double linking of circles to form a circular hierarchy that functioned as a feedback structure.

He spent ten years planning, testing, measuring, making corrections, and starting over again. Finally,  Endenburg had developed a revolutionary method of organizing and managing organizations, Including his own producing electrical systems for the Dutch shipping industry. It expanded the ideas of Comte and Ward, and was more broadly applicable than the Boekes’.

In the Children’s Community Workshop, Kees Boeke and Betty Cadbury had created a  harmonious society of self-organizing equals. But their methods only worked in a homogeneous population and was dependent on the valuing of  love and concern for each other. In a demanding, fast-paced business waiting until everyone loved each other was no more an option than majority voting.

Gerard Endenburg Applies His Method

By the early 1980s, Endenburg had developed a method that produced a harmonious, self-regulating, and highly successful business. Remarkably, it could be used to govern any kind of organization effectively. He founded the Sociocratisch Centrum in Amsterdam and began consulting in other businesses and organizations.

When Endenburg stepped down as managing director of Endenburg Electric in 1995, the company, still kept at 110 employees, had an annual income of fl 14 million (~US $5.6 million).

Sociocracy at Endenburg Elektrotechniek

Statement from the Endenburg Elektrotechniek Website about their sociocratic governance:

A Circle Meeting at Endenburg Elektrotechniek
A Circle Meeting at Endenburg Elektrotechniek

The word “sociocracy” is derived from the Latin word socius,  neighbor or fellow, and the Greek word kratein, to rule. As a form of governance, sociocracy is based the equivalence of individuals, but not in the sense that “the majority rules,” as in democracy. In sociocracy a decision may only be made if one has a well-founded counter-argument. (This is called the consent principle). Sociocracy offers the individual thus more participation in decisions. So much for the theory.

At Endenburg we have known the sociocratic tradition since the 1970s. Our employees have a voice in policy, and that happens through service (department) circles, business (management) circles, and the top circle. In the service circles, all employees meet with their departments. The business circle formed by MT members and elected representatives from the service circles. In addition, we have a so-called Top Circle which includes the management, delegates from the business circle, and external experts.

Our sociocratic foundation leads in practice to greater involvement and job satisfaction among employees. This is demonstrated by the quality of service. And thus the contributions of sociocracy also contributes to better work for our clients.

The Original in Dutch:

De term sociocratie is afgeleid van het Latijnse woord ‘socius‘ (= medemens) en het Griekse woord ‘kratein‘ (=regeren). Als bestuursvorm gaat sociocratie uit van de gelijkwaardigheid van individuen, maar niet in de betekenis dat ‘de meeste stemmen gelden‘, zoals bij democratie. Bij sociocratie kan een besluit alleen genomen worden als niemand een gefundeerd tegenargument heeft. (Dit noemt men het consentbeginsel). Sociocratie biedt het individu dus meer beslissingsinspraak. Tot zover de theorie.

Bij Endenburg kennen we sinds de jaren 1970 een sociocratische traditie. Onze medewerkers hebben zeggenschap in het beleid, en dat gebeurt via de dienstkringen, bedrijfskring en topkring. In de dienstkringen hebben alle medewerkers zitting van de betreffende afdeling, de bedrijfskring wordt gevormd door MT leden en gekozen afgevaardigden vanuit de dienstkringen. Daarnaast kennen we een zogenaamde TopKring waarin o.a. de directie, afgevaardigden vanuit de bedrijfskring en externe deskundigen zitting hebben.

Onze sociocratische grondslag leidt in de praktijk tot grotere betrokkenheid en meer werkplezier bij de medewerkers. Dit werkt aantoonbaar door in de kwaliteit van de dienstverlening. En daarmee draagt sociocratie ook voor onze opdrachtgevers bij aan ‘het betere werk.‘

http://www.endenburg.nl/endenburg-profiel.php?item=7 Last accessed  2 September 2012.