How to set up a profitable business in 21st century

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The subtitle to the new bible for holacrats, written by Brian Robertson, pretty much summarises the concept; “the revolutionary management system that abolishes hierarchy”. Put very simply, in a holacracy, tasks are performed by self-governing and interlinking teams, without reference to line managers and executives.

Zappos’ adoption of the approach has stimulated a lot of discussion. Is such a radical move simply faddish, off-the-planet silliness, or are we entering a new era of extreme autonomy for staff? It’s a debate, however, that misses much of the point. 

The rise of changemaker organisations

The question is not whether holacracy is too radical but whether it is radical enough. Robertson wants to empower staff to generate change without needing to get permission to do so. But this principle of empowerment is increasingly being applied across the whole gamut of organisational relationships, not just the employer-employee link. Some of the most successful organisations now work with models that treat customers, suppliers, investors or even competitors as changemakers deserving of empowerment. Giving staff autonomy is a very important part of this shift, but it is only one part.

Witness, for example, the way social media companies such as Facebook, Twitter and YouTube have grown exponentially in the last few years, by empowering their users to generate and share their own films, photos, articles, music and messages with audiences across the world.

The burgeoning online investment world, led by firms such as Crowdcube, are empowering large numbers to invest who might otherwise have just kept the money in a bank account. More exclusive firms like Fundersclub are making it easier for established investors to choose where their money goes and how it is used.

This has created a far more complex and fast-moving world of smaller players. The result, is that competitors increasingly seek to empower rather than destroy each other, recognising that it takes collaboration as much as competition to survive in such a challenging world. 

Sellers on Etsy for example, regularly work together offline to educate one another and launch joint initiatives to grow their businesses.

Even the lumbering giants of the corporate world are increasingly providing the space, support and funds to encourage the very start-ups that might one day disrupt their markets. Telefonica’s backing for technology accelerator Wayra is a case in point – as is the rapid growth of the corporate venturing trend in recent years, with big businesses now supporting small business investments totalling $26 billion in 2012.

From products to tools

The cynics who dismiss holacracy and these other instances of empowerment as a fad or oversold, ignore two important factors;

Firstly, this is hardly a new trend. There is now a wealth of academic evidence showing that the desire for self-expression, autonomy and choice, has been growing in intensity in the advanced economies since the 1960s.

That fundamental social trend has been transforming the offer to consumers for fifty years. We have moved from standardised commodities in the post-war period. To greater consumer choice in the 70s and 80s, to ‘open innovation’ in the noughties and then to today, where ‘customers’ generate their own products to suit their very specific needs or to distribute to others. In each case, the shift has been an intensification of consumer power and control.

Secondly, the technology that makes these business models possible is now reaching into new largely untouched sectors. The combination of networked machines, blockchain technologyand artificial intelligence is likely to empower customers in new fields such as manufacturing, energy generation and finance.

The overarching outcome is a progressive shift away from producer models that create products or services to sell to customers, towards changemaker models that create tools that empower customers to generate those products or services for themselves. 

The Everyone a Changemaker organisation

Sooner or later, firms that place this empowerment principle at the heart of everything they do will emerge. Rather than just empowering customers or giving staff full autonomy, they will seek to unleash the creativity of everyone they work with.

These ‘everyone-a-changemaker organisations’ will secure their investment from tens of thousands of small backers and they will provide a platform for suppliers to sell directly to customers. These customers will be buying an empowering tool that gives them much greater choice and control and staff will be free to make rapid, creative decisions to respond to a highly fluid and complex market. Oh, and these enterprises are just as likely to be collaborating with the other players in their market as competing with them.

Imagine the confectionary firm of the future. It crowdfunds $500,000 in equity to launch a website which makes it easy for artisan chocolatiers to write downloadable designs. They can then sell to customers who 3D print their own personalised collections of chocolates. The firm grows rapidly, attracting thousands of sellers, and soon has millions of customers.

But different national cultures demand very different types of chocolate – and those tastes are shifting all the time, as sweet-toothed consumers come to enjoy the freedom to print out new and interesting concoctions. So our firm has no choice but to empower its staff to make their own decisions about what will work in the wide variety of different niche markets. The chocolatiers are also soon working together in groups to pool skills and ideas to keep up with those shifting consumer demands – although there is still a clear competitive edge behind the collaboration. Before long, our everyone-a-changemaker chocolate company goes back to the crowdfunding sites for growth capital. Old firms still packing treats into cardboard boxes wonder why sales are starting to dip.

Of course, in what sectors these everyone-a-changemaker firms will really emerge in, and what they will offer to their users, is impossible to predict but they will emerge. Chances are the start-ups are already launched. Incumbents take note. Even those that are embracing elements of the changemaking model should know that something much more radical is around the corner.