What is an organization based on people?

This article was originally published on Raul Otaolea's blog.

Innovation in organizational models has introduced new concepts and expressions in the language of business that specialized media have worked hard to make popular. However, all too often, the market and competition exercise an invisible pressure that pushes companies to hoard these new terms and wildly incorporate them into their discourse, believing that this way, they’ll project an innovative and avant-garde image of their organizations. The generalized habit of this practice ends up creating media noise, where a small minority is truly honoring innovation, and a great majority are pretending. So, how do you tell them apart?

Framework influences perception

I often fantasize about having a list of questions, or a checklist, for each innovation which would allow me, when in doubt, to separate the wheat from the chaff quickly. In this post, I set out to create one, with keys to differentiate those organizations that are truly based on people, and those which are not.

However, due to the scope of the concept company based on people, before drawing up that list, I’m going to go deeper into its meaning with a very daring exercise: exemplifying the process of adopting a concept from two opposing perspectives:

1. From the traditional company point of view. That is, a manager operating from within a mental framework based on the current company model.
2. From a new systemic point of view. That is, a person operating from within a mental framework with a wider perspective, where the company is one more element within a system in which in necessarily needs to collaborate and keep other actors in mind.

To do so, before digging into the assimilation process from the different mental frameworks, it’s necessary to understand the importance the framework itself has on how we process information. There are three fundamental truths regarding this:

1. the existence of the framework itself. The mental structures that make up the framework through which we see reality are made up by our accumulated experiences and beliefs. Being aware of its existence allows us to relativize our understanding of reality, and, if necessary, change the framework. That is, it allows us to choose, and therefore makes us freer.
2. the framework sets our way of feeling, seeing and doing. The beliefs and experiences that make up the framework influence how we perceive reality when we look through it. That is, it influences what we feel, think, and do when we’re interpreting a new situation.
3. if we don’t choose our own framework, we unconsciously adopt the one that’s culturally accepted. It’s a truth that we all see the world through a framework. If we’re aware of that, we can build one based on our values and beliefs. But if we’re not, we’ll unconsciously adopt the one that’s socially accepted by those around us. That is, without knowing it, we’ll take on the beliefs of others as our own.

Now, let’s look at the influence of the framework on each of those cases.

The traditional perspective: accumulative improvement

Third point above, the unconscious adoption of a framework, is probably the most common and most interesting to analyze. If this is the case, the question to ask would probably be: what is the socially accepted framework through which we look at companies?

To answer that, we’ll have to go back to the end of the 19th century, when in a context of exploding population and demand growth, engineers Frederick Winslow Taylor and Henry Fayol introduced an innovative administration model for the time. Until then, it was believed that the worker was the one who had the most accumulated experience on the production line, and therefore he was trusted to organize the work as he saw fit. But under the pressure to increase production, this belief was discarded to make way for a new one in which the most efficient way was to simplify and specialize the tasks in order to reduce time and errors, and to also make it possible for more workers with fewer skills to take on the tasks that had now been defined and simplified.

Among other concepts, this process brought about the rise of the hierarchical organization, the division of work into departments, specialization, bonuses for reaching goals, the definition of the best practice of administration based on planning, organization, management, and control. Despite the fact that, in their origin, the principles that motivated these practices were praiseworthy and made sense back then, with time and especially with the evolution of the socio-economic context, they have become limiting, if not outright obsolete.

Therefore, the socially accepted mental framework that we look at companies through today was created over a century ago, in a context in which factories worked as closed systems, disconnected from the outside, where activity was organized based on a purely technical and economic vision, which turned companies into machine divided into pieces that labor (or handiwork) ensured worked.

It’s important to highlight that businessmen, managers, and people who are not aware of their company-minded framework face the analysis of the new concept based on people with all that baggage that comes with these beliefs and models that have been instilled in the collective unconsciousness over the past century. In that consciousness state, the adoption of this innovation is doomed to have to fit into the current model. That is, since the interpretation of the innovation has no meaning in this century-old model, it’s molded and adapted until it’s forced to be coherent with the current model, thereby corrupting the original concept and turning up the noise.

Following this line of thought that does not reconsider the model, the interpretation of the concept based on people produces new terms and semantics that, from that perspective, make sense, but which have very little to do with their real meaning. For example, the area of Human Resources (the use of the word resources makes clear the mental framework), pushed by social progress, has acquired, in this context, ever more relevance, going from an administrative role to a more strategic one. However, despite having advanced in terms of training, the development of talent, benefits, etc., they’re all constrained by the traditional mental framework. And that’s how we end up with expressions like human capital, personnel, etc., which are nothing more than attempts to advance, but which are still synonyms born from the same technico-economic vision from the 19th century.

So, it’s clear, the improvements that can arise in this process are accumulative, and the value they add is limited by the model itself.

Systemic perspective: a radical change

The main virtue of the systemic perspective is being aware of the existence of the mental framework and its influence. It also understands that the company is in a symbiotic relationship with all the other systems, with which it must necessarily relate and cooperate; among these are other organizations, society, the planet, etc.

1. Of the awareness of the interdependence arise two new ideas:when going from an individual focus to a collective one which implies keeping in mind the interests of all the systems, the only possibility for understanding an organization is focusing on people, because in the end, everything is being done for their development and well-being.
2. if the organization is not based on people, it turns into a parasitic system, because its objectives are no longer pursuing the sustainability of the whole. This instability will, sooner or later, bring the system collapse.

Bearing the above in mind, it’s not odd that, from a systemic mental framework, questions start being asked that give new meaning to organizations. Why are we creating this organization? What are the principles and values that will guide our activity? How are we going to be environmentally sustainable? How are we going to have a positive impact on society? What are the structures and practices that are best for maximizing people’s potential?

Unlike the traditional focus, where innovation is limited to adapting the concept to the established framework, in this case, all that is put up for close inspection:

• what should the relationship between property and workers be like in order to encourage the development of the whole organization?
• how do you divide the power in an organization to encourage the maximizing of people’s potential?
• what organizational structure is ideal to get people to develop, collaborate, and communicate?
• what should work spaces be like in order to favor authentic relationships between people?
• what culture and practices help improve the commitment and creativity of people?

Each organization needs to find its own answers that are adapted to the singularity of the people who make it up and the goal being sought. However, thanks to the advances in neuroscience and psychology, what is ever clearer is that the structure of the current company, unaltered for over a century, is incompatible with the development of people and social, economic, and environmental sustainability. Furthermore, it doesn’t adequately meet market needs.

Although there is no magic recipe that works for all organizations, there have been advances regarding principles, values, and alternative practices that are aligned with the concept of an organization based on people. Some of the most important are:

• systemic vision: Moving away from an EGO-system, which only seeks to benefit self-interest, towards an ECO-system, where all the related people and systems are born in mind to pursue the sustainability of the whole.
• integral vision. In addition to the traditional economic and technical dimensions, we must also add the human one, which becomes the center of organizations. This implies bearing in mind the values, principles, and emotions of people and, because of this, placing great emphasis on the relationships between them.
• autonomy. Power is democratized and therefore the hierarchies that structure them are eliminated. People manage themselves and are responsible for the commitments they take on with other people.
• transcendence. People only try to make big changes that can be achieved only with the synergies obtained from combining the abilities of many people. They look for a meaning that transcends their abilities as an individual.
• development. People need to feel that they are developing in every sense, and the organization becomes a space where this is not only possible, but encouraged. The more people develop, the better organizations, ecosystems, society, and the planet are.

Based on the above points, the following supporting practices can be derived:

• transparency. Autonomy is not possible if there isn’t complete transparency of all the information an organization has with the people that make it up.
• organizational decisions. When decisions are being made, all affected people need to take part in that decision-making process, since it is they who have the authority to do so. If strategic decisions need to be made, the whole organization will take part.
• measurement. You can’t tell if you’re improving without measuring. Once the indicators that will measure the organization’s progress toward its goal are agreed on, they will be continuously measured and shared with everyone. This way, both the organization and its people will know where they’ve been, where they are, and where they’re going.

In addition to these practices, there are many others that allow all the effort of the people to align with the principles and values stated earlier. Unlike the traditional focus discussed in the first section, here the praxis is focused on creating and maintaining the best relationships possible between all the people in the organization.

Conclusions

As usually happens with every disruptive innovation, the term based on people requires a certain mental framework to be completely understood. Otherwise, the concept is reinterpreted to be coherent to the established model, and it loses its power to transform. In this case, the key to getting the right mental framework is consciousness.

Consciousness is the sum of the knowledge that something exists and the attention we pay it. Specifically, it’s about being conscious of the collective, which forces us to modify our relationships with ourselves, with others, with society, and finally, with the planet. All these relationships have a two-way influence, which we must now pay adequate attention to.

Nevertheless, the process will be slow. Only when the most innovative organizations adopt this innovation and can show their notable improvement will other, more conservative organizations, take the same step. And so on and so forth until the innovation is completely adopted, at which time it will cease to be new and will become the established model. With the growth of a collective consciousness, organizations’ modus operandi will transform into the symbiotic coexistence with change, operated by and for people, which will end up being an unprecedented social advance.

The impact of this innovation is even greater, because it means innovating people themselves, as, in the end, we’re the only ones who can create innovation. What’s more, it arises from the growing demand of society, even more so in the younger generations, such as the millennials, who are already adapted to the current social context and are demanding a different way to live. This means that this innovation does not arise from a market demand, but from a social demand, with must greater implications that companies will progressively have to face.

Checklist for organizations based on people

Finally, below, I propose what I promised at the beginning of the post: a checklist to see if a company is really based on people. It’s easy to use. Ask for the concepts in the middle (gray column) and depending on the answers you will distinguish them.