We talk with Doug Kirkpatrick, one of the first employees at MorningStar Tomato company, which was one of the first companies to implement a flat hierarchy where there are no job titles or managers.
Jacob Shriar: Hello everyone, I’m Jacob Shriar, Growth Manager at Officevibe and today I’m with Doug Kirkpatrick who is an author, but more importantly one of the first employees at the Morning Star company which is a very famous company known for their kind of self- management and no-boss type of environment. Super excited to learn more about that, so Doug, thanks so much for being here with me.
Doug Kirkpatrick: Oh, thank you, Jacob. Really excited to be here and chat with you this morning.
Jacob Shriar: Awesome. Great. So, yeah, first question, if you don’t mind, maybe before we start diving deep into the questions, if you can maybe just give a bit of background on you, who you are. And just in case maybe anyone who doesn’t know a bit of background on Morning Star.
Doug Kirkpatrick: Sure. So I got out of college in the early 1980s, actually graduated from law school and was looking for an opportunity in the business world. I met a very passionate entrepreneur named Chris Rufer and he was starting a new food processing company. And so I joined his team and we started that company in 1982 and became very successful and very prosperous, but there was always something missing and it had to do with the fact that we had not put much thought into the organizational structure and the organizational design.
And so Chris went off to start another company and began that company in 1990 and that was Morning Star. And I left to join his team at that new company and that’s where Chris initiated the concept of organizational self-management. And I served as a Financial Controller for several years in the food industry. People wore several hats, so I was involved in the financial activities, HR, IT, some production, some marketing, a number of other activities, legal, risk management. And then, after several years, I left to form my own consultancy and I worked with other organizations as well trying to develop their organizations to reflect more freedom, autonomy and better performance in the work place.
Jacob Shriar: Very cool, yeah. Thanks for that. We’ll talk more about all of that. Yes, obviously a lot of research that shows autonomy produces some really cool results. But just to be the first question, at Morning Star, were you guys one of the first or the first to do this sort of self-management no traditional hierarchy type of approach?
Doug Kirkpatrick: At the scale that we implemented, I would say, one of the first. I’m not aware of any organizations, and especially manufacturing, on the kind of scale that Morning Star operates that have taken freedom, autonomy to the extreme that we took it. In some sense it’s organizationally speaking, very cutting edge and another sense it’s the oldest method of operation in the world, because everyone lives their own personal lives on a self-managed basis. So no one has a boss telling them where to live or what to do for a living, or who to date, or who to marry, but that’s how people conduct their lives already and we just wanted to take that natural method of operating and apply it to the work place. So as far as taking self-management to the extreme we did, not aware of anyone else that did it as early as we did.
Jacob Shriar: Very interesting. Yeah, that’s cool. Actually, I was reading a study I think yesterday from – it probably came out a few years ago but I only caught it yesterday – from the University of Iowa that was talking about self-management. And what they were saying, basically, was in self-managing teams you need that cohesiveness between teams, and that’s actually the only way that self-management actually works. And in fact if the team, if there is very little collaboration and they don’t really get along with each other, then self-management doesn’t work at all. First of all, what are your thoughts there? Is that true?
Doug Kirkpatrick: Perhaps somewhat true. Perhaps not totally true. Self-management is practiced at Morning Star is very grounded in philosophy. So it really comes down to two fundamental human principles of interaction. The first being, individuals are simply not allowed to use coercion, force, or command authority. And that’s the foundation of pretty much all law everywhere in the world. Second principle is that individuals are expected to honor their commitments to each other. Again the foundation of law especially civil law and contract law.
So whether people work well together or not doesn’t change the fact that they are self-managed by definition in the Morning Star Enterprise. So Morning Star has teams, certainly people that have functional similarities in the enterprise. Some perhaps work well together and some perhaps not always so well together. It doesn’t change the fact that each and every one of them is self-managed every single work day.
Jacob Shriar: Quick question for you. Are you familiar with holacracy? And if you are, I’m assuming that you didn’t really call it holacracy at Morning Star, but is that kind of what you practiced at Morning Star?
Doug Kirkpatrick: Very, very slightly familiar with holacracy. Have read very quickly through a model, Holacracy Constitution. Have read about Zappos certainly. We do not practice holacracy at Morning Star. What we do is not organizational democracy, or sociocracy, or holacracy, or teleocracy, or any other kind of ocracy. There is no sense of majority rule at Morning Star, there’s no sense that people can be outvoted. There is no voting whatsoever. Morning Star is all about respect for the individual. It’s about each and every individual having a voice in the work place. And the voice of every individual must be respected regardless of who is expressing that voice. So it’s very different from what I understand to be holacracy.
Jacob Shriar: Yeah, that makes sense. Actually, interesting question, because you said you worked in finance at Morning Star. Obviously, I don’t want to get into too much detail, but can you talk a little bit about how salaries worked there? I mean, who decides who gets paid what? How does that all work? And, plus, you were mentioning before because you sort of wear so many hats, how do you sort of define your job role? And say, “Okay, well, based on what you do you deserve, let’s say, X amount per year for example.” Can you talk a bit about that?
Doug Kirkpatrick: Oh, sure. So Morning Star is subject to the same economic logic of the marketplace as every other enterprise. And so it requires talent in it to perform work, and so a talent must be compensated properly at a level sufficient to attract that talent in the first place and to retain it. So when a need arises, each and every individual colleague at Morning Star has an affirmative obligation to identify the need for talent and to seek to fill that need. And so a mechanic working in a particular area may decide we need some additional mechanical talent. They will collaborate with an HR colleague and a finance colleague to make sure that we can recruit that talent and we have sufficient funds, and it makes economic sense. It has to be an economic case for a client talent.
And so when those hurdles are passed then we go out to the marketplace and we recruit talent. We tend to pay salaries that are higher than average because each and every person in the workplace is a manager and performs all the functions of management, planning, organizing, controlling, selecting, monitoring. So there’s a premium built into the salary structure at Morning Star, and the people go out, acquire the talent, people come on board, and we find that often times our job descriptions do not map particularly closely to traditional job descriptions. People end up with very unique roles inside Morning Star.
They can combine production and marketing, and finance, and all kinds of different things into a particular role. So don’t map real well, but if a person wants an increase they’d have to make a financial case for it, and document some return on investment for an increase above and beyond the cost of living that’s persuasive to his or her fellow colleagues. And if that case is made then perhaps the increase is given, and that passes through a filter of a compensation committee at each factory once a year, and that’s how pay checks are made. If a person makes no economic case for an increase above the cost of living, then they can expect generally to receive a cost of living increase.
Jacob Shriar: Yeah, you kind of hit on something interesting there. Traditionally, I’m assuming like in more traditional companies, let’s say if, I don’t know, someone wants to be hired, it’s a manager of that department, and it’s usually because they say so, they want to hire someone, that’s it. The fact that it doesn’t work like that at Morning Star, I’m wondering how much data is involved in some of this decision making? I’m guessing, do you have to kind of sort of back up what you’re saying with real data showing, “This is actually why we need to hire someone new, etc?” It’s not really because I’m the boss so I say so. What are your thoughts there?
Doug Kirkpatrick: Right. Yeah, the idea that I’m the boss, that can’t exist at Morning Star. So people do have to back up their requests with data. If you talk to the mechanics or technicians, pretty much anyone at Morning Star, they’ll tell you that we tend to measure everything that moves in the enterprise, and so there is lots of data available. And generally it’s just a matter of summarizing and collating, and presenting that data in a coherent manner that’s persuasive to one’s fellow colleagues. But data is the life blood of the enterprise and would be, I think, in any self-managed enterprise.
Jacob Shriar: Yeah, that makes sense. And now as a consultant, I’m assuming when you go into companies and you start trying to work with them and you start talking to them about self-management, things like that, some of them must look at you like you’re crazy. I mean, it must be like, “That will never work. That’s the craziest thing I’ve ever heard.” Can you talk a little bit about some of the pushback that you get? What are some of the more common things, I guess, that people say to you why this won’t work and things like that? And then also, what do you respond back to them? How do you kind of convince them that this does make a lot of sense?
Doug Kirkpatrick: That’s a great question, Jacob. The biggest pushback that I see is the fear of losing control. The reason we have traditional management structures and hierarchies, basically, originated in the 1800s, as a means of organizing railroads and steel companies. And, at that time, information moved at the speed of Morse code. And so control was a big issue and I don’t blame the people that form those management structures because that’s what they needed to do at the time given the technology.
But today, information moves at the speed of light and we don’t need levels of hierarchy to maintain control. What we do need are people that understand exactly what it is they’re supposed to be doing, and know how to do it with skill and knowledge. And when you have that and proper communication, then the control issue really goes away. In fact, hierarchy that in itself managed a current enterprise you actually have more control than you would with a hierarchy.
I asked the question, “Who is more likely to spot an issue, a threat, or an opportunity in the work place? A manager who wanders through a work area three or four times a day, or a colleague who is working side by side with a fellow colleague all day long?” The answer is somewhat self-evident, and that’s in a manufacturing type enterprise. In a knowledge worker’s life, you know, “Who’s more likely to spot a threat or an opportunity? A manager who’s reading a progress report once a week, or a fellow colleague who is working side by side in a continuous information loop with a fellow colleague all week long?” Again, the answer is somewhat self-evident. And so we argue that there’s more control with self-management properly executed than with hierarchy.
Jacob Shriar: Yeah, for sure, that makes sense. And also you wrote a book called Beyond Empowerment. Can you talk a little bit about the book and kind of what it’s all about and why anyone should check it out?
Doug Kirkpatrick: Yeah, thanks. Yeah, Beyond Empowerment: The Age of the Self-Managed Organization came out in 2011, and what I wanted to do is tell kind of the story of Morning Star as a business novel or using a fictional company, tell some stories about self-management, how it can be implemented in an enterprise, what the pitfalls are, and what the benefits are. And so, I think, I did that in an entertaining way, really leaves out the philosophy and the foundations of self-management as well as some of the practical realities of practices of self-management. And then at the end of the book, I have some vignettes about companies that are well along the road to practicing self-management including Morning Star. And we don’t claim to be perfect at Morning Star, don’t claim nirvana. We consider ourselves to be on a journey here, progressing toward a better practice of self-management.
And there are other companies that have gone farther down the road toward greater freedom and agility in the work place as well. Companies like W.L. Gore, New Core Steel, there’s a foundation in San Francisco, Delancey Street, that is a paradigm of beautiful self-management. So there are examples out there that are very interesting.
Jacob Shriar: Cool, yeah. I’d love to learn more about all those examples for sure. My last question, you actually just hit on something really, really important. You said the pitfalls of a self-managed company. Can you talk a little bit about that? I mean, based on what I’m hearing, based on what we’ve been talking about it sounds amazing, it sounds great. I get the whole idea, autonomy, and all that stuff. Talk to me about some of the pitfalls. What are the cons, I guess, of a self-managed company?
Doug Kirkpatrick: Right, so our people that practice self-management will tell you that decision-making takes longer. It’s just a reality and a fact of self-management because of the issue I alluded to earlier which is that everyone has a voice. So every single stakeholder to a particular decision must be consulted and have a voice in that particular decision if it affects him or her. And so that definitely takes longer than a manager in the corner office looking up at the ceiling and deciding, and proclaiming the decision to the rest of the enterprise.
The other pitfall, I would say, is that sometimes people are reluctant to hold fellow colleagues accountable, and that can be a challenge because in self-management there are no supervisors, managers, or vice presidents running around to whom you can file with, whom you can file complaints, and point out problems with fellow colleagues and have it rectified. People have to deal with problems directly on their own and that’s not easy for everyone. It’s particularly challenging, I would say for introverts, and so we have a process in place that I think leverages individual’s ability to confront fellow colleagues with problems and issues, and differences of opinion in the work place.
We have an ombudsman provision so that people can seek private confidential advice about how to approach people, but ultimately it remains the task of each and every person to address problems and issues directly on their own. And an individual is not interested in doing that then they’ve chosen to live with the problem because there is no one to complain to in self-management.
Jacob Shriar: Very, very interesting and very cool, honestly. Doug, I think we’ll end it here, but seriously just want to thank you so much for taking some time out of your busy day to have a chat with me. This is very, very interesting and, like I said, Morning Star is one of the more famous case studies, I guess, of a sort of weird, non-traditional management style. So very, very cool to learn more how that all works. Yeah, I just want to thank you again, and hopefully we can do this again sometime soon.
Doug Kirkpatrick: Appreciate it. Thank you very much, Jacob. Take care.
Jacob Shriar: All right. Take care. Bye, bye.
Doug Kirkpatrick: Bye, bye.
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