ADAPT by Design - Success for all Stakeholders
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There's a Perth based company called acQuire Technology Solutions that is really doing interesting and novel things in the technology space. They create software used by mining companies in the niche of Geoscientific Information Management. They are doing great and have grown from 5 people in 1996 to 135 in 2014. Their product performs very well as a technical solution and is the foundation to the success of the company. Equally as important as their focus on a great technical solution is their focus on company values and culture. They put a lot of focus into the people to produce these great solutions.
They publish these values on their website as a booklet (updated annually with input from everyone). It seems to create a happy and satisfying workplace. Staff turnover is very low. They aren't perfect but they always look for root causes before allowing people to go. Sometimes it's unavoidable.
Intrigued and impressed I met with Tadhg MacCarthy (Director of Development) to discuss with him in greater detail the values and principles that drive acQuire. What's coming up is not for everyone but I urge you to keep an open mind all the same.
The values are present to setup an organisation for success or more accurately Succession. It will become apparent what Succession actually means as we proceed. It forms the basis of a framework they have developed called 'ADAPT By Design'.
Stakeholders are a key component to any successful venture and the way one deals with stakeholders determines success. Whilst success is primarily measured in financial terms, success is also equally measured in the satisfaction of the stakeholders. All stakeholders are taken into account and all are equally treated fairly. This includes customers, suppliers, users, shareholders and employees. This mostly does not occur with publicly listed companies which are primarily driven by shareholder value and quarterly reporting which in turn can drive short term behaviour that is in conflict with long term goals. This typically produces the boom and bust cycles we see in our economic system today.
Culture is King at acQuire and most companies try to aspire to this but do not have a foundation or model to base this on. Rather than glib statements without substance the key is too start with a robust Vision, a Purpose, that inspires and allows those who want to come along for the ride to attach to. It's the motivating force that creates the sort of environment where great things can happen. The idea of a vision is easy to relate to, sounds like common sense, but they are a lot harder to create. Many vision statements are recycled versions from others and come across and glib. They fail to inspire even the people that put them in place. For a publicly listed company people in power are mostly motivated by 'other factors'.
Going back to the booklet and now moving to an interview style;
NZ: "What inspired the booklet?"
TM: "Interesting story, Bill our founder, saw that for a company of 25 people culture is almost unspoken. At the time he had everyone reporting to him and he felt and the time that acQuire would not grow beyond 30 people, he was out by 100 on that score. Chuckle."
NZ: "Going past 25 or so people doesn't scale for an unwritten culture?"
TM: "Yes that's right. You find you hire more people and they hire more people and before you know it culture doesn't match. To prevent this Bill found that he had to make culture explicit and state that Culture is King... you gotta make these things explicit as a starting point."
"This is where the idea of succession ties in. If you want something to live on for multiple generations, you need to think what it's going to be like for the next generation and the next generation.
acQuire has chosen the path of employee ownership thus the founders have eschewed the standard path of a trade sale or float as a means to liquidise their investment."
NZ: "So it seems there needs to be some sort of roadmap?"
TM: "Yes, and for us there are 8 Successions."
Succession 1, Culture
TM: "This is the foundation. This is how the organisation represents itself. The aboriginal people of Australia don't believe they own the land per se, rather they are part of it and simply custodians for future generations. This is a good analogy for the succession of Culture, the current leaders and employees are custodians of the organisation for the future. This feeds into how you recruit. This is fully defined. We recruit on culture basis, we recruit on skill basis and this is actually codified. We are looking for the next generation of leaders."
NZ: "Does culture trump skill"
TM: "Actually, you need both. If you have the skills but not the culture then it's not going to work. When hiring a graduate we are thinking about a future leader so we are hiring for succession, culture is a high value in this case. Long term thinking is pivotal and we hire smart people but also hire culturally aligned people who aren't likely to move on. A question asked at my interview for this job was, do you want this to be your last job? Never been asked that before, my first answer was I don't want to die in 3 years"
NZ: "An agreeing chuckle."
TM: "It took me 2 years to say yes it is. I can grow with the organisation, learn and move into areas I haven’t even thought of yet. "
TM: "Culture is put into practice by a 'Cultural Leader', at acQuire this a director not in your area there to mentor and support. The Cultural Leader is someone one can feel comfortable with to express issues and problems and has the authority and mandate to effect changes. Culture is not a wooden hollow term. It's expressed thoroughly in the booklet and that booklet is not fixed and is allowed to change. It's emergent and it's 'ADAPT By Design'"
Succession 2, People
Culture looks after the organisation and this point seeks to emphasize people. The company keeps a close eye on professional fit and personal fit. For example.
TM: "If you have a interest in Agile methodologies despite being a developer, how can we assist you develop in that area. This is professional fit, whereas personal fit is, for example, a mother needing to stay at home part of the time to look after children".
NZ: "On Titles, I've also felt constrained by titles. What's can you say to that?"
M: "You start with a role and over time that can expand into other roles. We still need to know who writes the code."
NZ: "I agree, for sure, furthermore but I also like the idea of cross-functionality. Traditional management encourages developers to stay in their cubicle and wait for work to appear, whereas cross-functionality implies that one should immerse themselves in the business and become aware of it's function."
TM: "That's the beauty of the ADAPT By Design model. We have strategies to deal with that."
Succession 3, Ownership
TM: "One needs to know the ownership model from the start. If an entrepreneur is not careful about the ownership structure from the start – they can potentially leave themselves open for problems in the future. We espouse the employee ownership model as a way to build an organisation with an aspiration to live for generations. Make it the place people want to be. Ownership is a motivating force and autonomy and empowerment are key, the stuff Daniel Pink writes about.
Succession 4, Leadership
TM: “The succession of Leadership is a bunch of strategies to identify, educate and mentor your leaders for the next generation. Leadership starts with yourself. Recognize your own fallibility and work on this and work together as a team and focus on your talents."
TM: "Build Leaders who explain the why, as in tell the story rather than simply issue a command. This requires embracing conscious leadership. "
NZ: "What about asking for Safety, Steven Smith recommends this?"
TM: "We don't do this. You may have something there though. I also like the ideas behind Culture Hacking from the McCarthys. Techniques like checking in. But be careful about bringing in stuff for fear of cynical reactions."
Succession 5, Financial Security
The biggest reason for company failure is cash flow. A successful company manages cash flow to provide security. This provides basic needs to people.
TM: "Stuff like dividing up profit, profit share for employees, dividends for shareholders, future fund for a rainy day are easier to manage in a private company. In a public company shareholders come first. In a private company, we would say we are going to put the profit from this year into the future fund because we know we have a tough year coming up,"
NZ: "Gotta say not all public companies are like this - some maintain large cash reserves - however I've not seen a public company retain employees in a downturn. The public model creates the boom and bust cycles whereas this appears to mitigate against this."
TM: "All of these are strategies are constantly under review. Financial security is important. Making money is a good thing however don't focus on profit, but if you do the right things it's the by-product"
NZ: "The shareholder model can produce undesirable behaviour or unintended consequences. For example, to meet quarterly sales targets we will bid low to win the work and then get them on the variation work. This in turn leads, very quickly to upset customers and probably a lost customer eventually."
TM: "Short term gains are hurting the long term goals. However, if you are in charge of your financial security you can make a decision whether to divert funds for a rainy day."
NZ: "Can you give an example of where the company is actively managing between short term and long term interests?"
TM: "Think of a telco or a bank. New customers tend to get a better deal than existing customers. That's short term and that's not we are about. Our customers are viewed as a long term relationship and they will get the best deal when viewed this way"
NZ: "So you don't bid low just to get the business and get the customer on the inevitable changes?"
TM: "No we don't. We're not the cheapest but in the long run they get the best deal and best service anyway. Don't tell lies and you won't get yourself in trouble."
NZ: "Seen this many times where companies, particularly those of low skill, go in low to win business and this sets up the adversarial relationship"
TM: "Yes so there are connections between the successions. Financial Security is at risk and the Culture (Succession 1 is not written down) which in turn exhibits these behaviours. These things are interconnected, going low has root cause in poor culture - low financial security and poor culture are linked. An academic Study called the High Performance Workplace shows there is a high correlation to happy workforce to more profit. It works for the bottom line and is scientifically proven!"
NZ: "This sounds like common sense"
TM: "Yes, however the key to make it work is to actually have a model - the Succession Model for instance. "
Succession 6, Organisational Architecture
TM: "How do you set up an organisation and for success? What are tasks, roles and structures?"
NZ: "An example is the Spotify model with their squads, tribes, chapters and guilds"
TM: "Yes right, and do this across the organisation. This is something that is expected to evolve over time. It's linked to recruiting. hire people smarter than me"
NZ: "Avoid doing the Peter Principle."
TM: "This is discouraged as part of the values. The design of the company is a fluid thing, it needs to evolve and change over time."
Succession 7, Product
TM: "How do you deliver your products and services? For example the sweet spot for Agile. How do you deliver your products and services and this can and will change over time."
NZ: "Many people make the incorrect assumption that Agile is plugged in, whereas it really needs to be part of a symbiotic relationship of the entire company. In effect use of Agile as local optimization and this can do more harm than good."
TM: "Yes many people plug it into development and it stops there"
NZ: "No benefit there, the obvious case is if you’re building the wrong product which has been repeated many times in the past and happens now as well."
Succession 8, Stakeholders
TM: "This means looking after everyone: Customers, Employees, Suppliers, Shareholders. This is the lean model, if you look after your suppliers they will look after you. Developing long term relationships and not purely undercutting the next guy that comes in. Government (pay your taxes) and Community (put back into the community) are stake holders as well. Have a consistent message for all of these stake holders. Furthermore all of these successions inter-relate."
ADAPT By Design
ADAPT By Design is a new venture in startup-mode in the acQuire family and will include a school which you can come and learn about the Adapt Framework via classroom or if budget is an issue (like a start-up) self directed online learning is also available.
This is backed up by technologies. For example to measure a happiness metric. At acQuire, Cultural Leaders track this by the Orbit metric with the sun at the middle. If you as an employee are tracking at the outermost layer then you are unhappy. What can we do about this to help and get to the core of the issue and retain the employee? All the strategies have data which can be captured though the technology.
The purpose of ADAPT By Design is to help change the world by helping build employee owned organisations that treat all stakeholders fairly. Its early days and we have our first client who we are co-creating with and run it as an Agile project, inspecting and adapting as well.
Designed to be adaptable and take in ideas from anywhere like Kanban. It's designed to be agnostic and to be able to plug in strategies from any source.
We see a lot of stuff going on in different areas. We are looking at the full gamut and taking a long term view. A systems view. It embraces personal learning, you never stop learning and always evolving. Mastery is also important (Dan Pink).
About Tadhg MacCarthy
Ex technical, software engineer in mostly small to medium enterprises. Moved onto management and discovered Agile and got on board with that. Found out acQuire through a colleague. At acQuire found it easy to introduce Agile whereas other places had political obstacles preventing its take up. At acQuire got paid for gaining an education and became more interested in the people side.
Firmly believes that architects still write code. Has seen many non-technical decisions made by non-technical people causing massive mistakes. Realized the importance of people by reading Peopleware by Tim Lister and Tom DeMarco - people are so very important and became very switched onto the people side.
Other Inspirations - Brian Kernighan, Fred Brooks - Mythical Man Month. Martin Fowler is good expresses complicated concepts well (succinctly). Peter Senge and the Fifth Discipline is very important. Jurgen Appelo - Management 3.0. Scott Berkun - ex Microsoft wrote Year without Pants and writes a lot on Project Management, Public Speaking, Innovation. Dan Pink - Drive.
Have heard about Holacracy which has links - don't know enough about it. Need to look at it again after looking at it a couple of years ago. Would like to know more. Kanban looked too simple to be useful when first introduced to it, but it works and difference is marked and profound. Jeffrey Liker, The Toyota Way is a heavy read but a great read.
Joined acQuire when there was 60 people in 2007. 150 is as big as we want to get. ADAPT By Design is a separate company in the acQuire family.
On Integrity - we call out Integrity very loudly. Values are not touchy feely hollow statements. We are still humans who make mistakes and recognise this, but allows the environment to promote integrity. On Performance Reviews - brought them in 2007 and removed them in 2010. They weren't working. We use Speed Reviews instead from the book “The man who cured performance reviews”.