How Realistic is a Leaderless Organization?

How realistic are leaderless organizations that promote autonomous careers for today’s workers?

If the reality of leaderless organizations isn’t one that you have given much thought to, then stick around and I hope that this article will give you some food for thought. 

Leaderless organizations are not completely new and have manifested in multiple ways from cooperatives, mutual organizations, or a wide dispersion of leaders rather than a single authority. 

It is not that these companies are completely without guidance. Instead “leaderless” expresses the reality that workers do not need to be babysat in order to be productive or for industries to be successful. 

Moreover, with more freedom, individuals are able to be more creative and autonomous. This independence has shown to encourage employees to be better at developing and applying unique problem-solving skills -because there is no one to pass the buck to!

Autonomy and Decentralized Networks 

One of the reasons that cryptocurrencies like Bitcoin have taken off, is that leaderless organizations work. Once Satoshi Nakamoto was able to put the peer-to-peer decentralized network into practice with blockchain technology, the game was forever changed. Since 2008, for the first time in the modern world, we have a totally peer-to-peer digital currency that works and has created a whole market of value that is primarily leaderless!

Putting aside the success of a non-fiat digital currency, the genius is in the decentralized network that cryptocurrencies run on. Decentralized networks are the way the internet was meant to work! Decentralized peer-to-peer networks allow individuals to interact freely with others, sharing information and property without borders.

But as it turns out, cryptocurrencies and Ethereum DApps are not the only ones benefiting from peer-to-peer markets and organizations. 

The changes to organizations are in many ways inevitable. Increased communications and literacy gives individuals a better opportunity to run their own lives. And as it turns out, given the right tools, people are pretty good at it.

Cryptocurrencies and decentralized networks might be the most obvious industries to embrace autonomy. But where else might we see a new autonomy in other industries as a result of the improvements offered by digital societies? And how exactly do leaderless projects work you may be wondering? 

Stick around!

Here are several reasons why leaderless organizations are working:

We Are Capable of Self-Management

Does anyone really work better with someone breathing down their neck? For the majority of us, this is not the case. In fact, more and more millennials and Gen Ys are fighting for more free time, not higher paycheques. What this demonstrates is that what the modern worker values more than anything is freedom. When we talk about freedom it does not mean that this generation wants to be cave-dwelling hippies.

Sure, it’s great to be paid well, but if it is at the expense of our personal lives and goals, then a fat paycheque is not the only thing people are after. Once basic needs are comfortably met, people value their autonomy. 

Studies have shown that people are maximally happy at an earning between $60,000 – $100,000 a year. Why is this? Because currently, the way the world works is that if you want to get paid more, you have to work much longer and harder, which means your free time and personal goals are put on the back-burner. And after earning around $100,000 overall happiness actually declines. 

This new perspective on life and work has proven to be a bit of a challenge for many traditional hierarchically organized companies. Companies have to work harder and harder to try and entice this generation to stay with them, as employee turnover is regular and a huge expense to a business. 

What this means is not that people do not want to work. It means that we are in an era where we can work and produce in ways that suit our needs and lifestyles. Most people want good meaningful work.

But what does this have to do with self-management? 

Well, with the combination of digital connectivity and the spirit of self-starting, more and more, individuals are going to work for themselves. That means that large companies are being forced to change the way they are run. And for many, that means more autonomy and less management. 

But how exactly does this look? And does a leaderless organization need to be managed at all?

The Digital Age of Communication

The short of it is, we do not need to be in the office every day to collaborate with our colleagues. Not only does easy access to digital communication make remote work a reality, but it has allowed more people to enter the workforce. That means that women with children and individuals in remote areas are no longer scraping the bottom of the barrel when it comes to gainful employment.

Technology also gives companies ane people tools to solve their own problems and to work collaboratively effectively. 

Examples of Self-Management

Cryptocurrency and decentralized networks are clear and fast-growing examples of leaderless organizations. There are many ways to reimagine the workplace, and more importantly how it is run. For crypto-specific examples, check out this article on LocalBitcoin alternatives. There you will find a collection of companies that are managing operations democratically and without a centralized authority. 

But flat-structured, non-hierarchical companies that encourage self-management are not unique to cryptocurrency. Napster, the first music and movie sharing platform, and Wikipedia are examples of early adopters of the model. And as I mentioned, cryptocurrencies have been able to succeed with this model.

Human Resources Overhaul 

When there is no rigid hierarchical structure in the workplace, human resources takes a new role. Manufacturing company WL Gore, is a UK based company with an anti-hierarchical system. This system allows contributions from other employees, instead of relying on a tribunal for all decisions. The dynamic of WL Gore is to stress the ethos of a team. 

In 2008 the head of HR is quoted as saying: 

“It’s about making sure something is happening, but not taking control – you’re not managing people, you’re letting the team work out the how and then get on with it.”

The basic idea is that power and responsibility are shared amongst the entire company. It is not just the role of management to make sure that good work is valued.

Much like the idea of an old-school town hall, the idea of leaderless organizations is about keeping the discourse at a level that is focused on ground-up involvement. Management troubles follow when leaders are too abstracted from the majority voice. Instead of making productive change happen by involving the majority of people, traditional leadership styles work from the top down. 

This is the kind of leadership that WL Gore is very critical of and so they have found ways to incorporate employee autonomy into their business structure.

Incentivizing Information Sharing

Prediction markets are another example of how individuals are coordinating themselves and sharing information and profits. Prediction markets incentivize and monetize accurate information. 

By encouraging an open system of information sharing, the quality of information improves. This is because people are incentivized to provide accurate information. Not only are individuals and institutions rewarded for sharing true facts; but they are penalized for inaccurate facts. This is because if you or a company shares false facts, this will become evident by the outcome of a given event. Ultimately, participating in false information affects the value of the information they share. 

Many studies by economists demonstrate that the combination of incentivization and information sharing improves the quality of information, and therefore the accuracy of market predictions. 

To rely solely on large institutions to coordinate and dictate data and research means that information is increasingly biased. Moreover, centralized power structures tend to keep information siloed and inaccessible.  

Predictive markets work because they leverage social trading and reputation. HedgeTrade’s own platform is an excellent example of leveraging the power of predictive markets and social trading. 

Because of the improvements offered by smart-contracts and blockchain technology, your digital reputation now means something. And because of that, it is valuable and monetizable. This method of information sharing relies on decentralized networks and blockchain technology.  

Morning Star Tomatoes

In many ways, autonomous work is inevitable in the digital age. We no longer rely on expensive, top-heavy infrastructure to run the day-to-day operations of a company. 

But what might surprise you is that autonomous workers with a leaderless model have been around for a while. Chris Rufer, the founder of Morning Star, has been in business since the 70s. Morning Star is the world’s largest tomato company and has employed a leaderless model and an autonomous ethos for years. 

Rufer uses had coined what he calls CLOUs: Colleague Letters of Understanding. This is a flexible contract used to coordinate arrangements. The contract applies a peer-to-peer model to an agricultural business. The CLOUs contract helps employees to organize themselves, by allowing each employee to personally develop a contract.

CLOUs and Morning Star

A CLOU’s contract includes:

  • Personal Commercial Mission: The mission is personal to each colleague, as it makes clear how they will contribute to the enterprise. The statement serves to guide the individual in everyday operations and long-term goals. 
  • Activities: This section describes how they will accomplish their personal mission in terms of their roll in the operations of the business. 
  • Steppingstones: “Steppingstones” are a part of the unique internal lingo and ethos of Morning Star. This step includes measurable goals and directives. This is how each colleague’s accomplishments are measured. Each person’s achievements are defined with personal steppingstones
  • Time commitment: Given the flexibility of Morning Star, it is essential that each person sets and agrees to their own personal time commitment to the company. 

Paul Green believes there are good reasons for the success of their leadership model. The success of Morning Star’s model is due to the fact that it is based on a culture of peers. So rather than just seeing others as co-workers, colleagues develop a culture of peers. This means that colleagues are in charge of themselves and are therefore responsible to one another. This is a major shift in the “employee v. management” organization. It means that co-workers must coordinate with each other and build a productive team environment. 

Interestingly, Green does not see his company as being without management. Rather this model is a much richer, more productive kind of management that fosters and maintains self-management.

The developer of Morning Star Chris Rufer states:

“The best human organizations are those in which people aren’t managed by others, but in which participants coordinate among themselves, managing their own relationships and commitments to others.”

More Leaderless Examples

So where are the other leaderless companies? Marjorie Kelly, former editor and co-founder of Business Ethics magazine, lists multiple organizations that are charting their own leaderless future. 

A few more examples include:

  • Beverly Cooperative Bank in Massachusetts
  • Denmark’s Lynetten Wind Cooperative
  • Organic Valley

Much like Morning Star, Organic Valley consists of more than 1,600 farm families based in Wisconsin. The company is widespread, however, and their outreach includes many community forests of Mexico, which includes 50% to 80% of the country’s forests. Everyone who works with Organic Valley is an employee of a community-owned and operated farm.

It is interesting that both finance, and farming are the industries that typify leaderless businesses. It might seem more likely that skills such as research, writing, and marketing would be best suited for autonomous workers. 

However, cryptocurrencies and agricultural businesses such as Morning Star demonstrate that our most fundamental industries do not require the kind of hands-on leadership that we once thought was necessary. 

A Leaderless Future

Barbara Kellerman is an instructor in leadership and has written a book on the structure and future of leadership called The End of Leadership. In her book, she discusses the need for change in leadership styles and goes into detail about the reasons why this change is necessary.

A few of the highlights from her book focus on cultural and technological changes. Kellerman is interested in both the cultural and technological as feeds the other. Technology has allowed cultures to develop more horizontal power structures. And in the other direction, cultural movements demand a shift in approaches to organizing productivity.

But Kellerman is not saying that organizations no longer need leaders. Rather Kellerman’s book discusses what alternative leaders will look like. The fact remains that we still need helpful examples and productive guidance in order for leaderless progress to make gains in other areas. 

In her book, she describes what a leader looks like in the modern world. This is a world where resources are more equitably dispersed. Moreover, this takes place in society and within organizations that embrace an autonomous cultural ethos.

The question to ask, is if we need leaders to help us formulate a coherent vision for a productive economy, then how long should these new leaders remain in charge? As with Morning Star leaderless organizations still need a guiding hand and a vision. Even decentralized blockchain platforms rely on the initial planning and vision of its creator, like Satoshi Nakamoto.

Leaderless thinker Frederric Laloux, is the author of Reinventing Organisations. He states that:

“The tasks of management – setting direction and objectives, planning, directing, controlling, and evaluating – haven’t disappeared. They are simply no longer concentrated in dedicated management roles. Because they are spread widely, not narrowly, it can be argued that there is more management and leadership happening at any time in self-managing organizations despite, or rather precisely because of, the absence of full-time managers.”

So perhaps leaders are not disappearing. Rather centralized power and single powered authority are no longer seen as a productive way to manage. 

Final Thoughts

There is no question that the technological revolution has removed many middlemen and authoritative structures. Peer-to-peer networks and leaderless organizations demonstrate a few key things. 

The first is that people are willing and able to work with one another, the challenge is coming up with a collective agreement to support the productivity of one another. The second is that when with access to quality information and technology there are many creative and productive ways to build and rebuild organizations. 

And finally, people are very capable of running their own lives. We are able to coordinate terms of cooperation when presented with the opportunity. Gone are the days when there were only leaders and followers. 

Perhaps by bolstering the power of the individual, communities, and organizations have a better chance of thriving. The leaderless potential has really begun to thrive in the digital age, which is no surprise. 

However, based on the evidence these leaderless organizations have to offer, it is through developing a productive team dynamic that leaderless organizations and autonomous employees are able to thrive. 

It may come as a surprise that technology is not isolating colleagues, or encouraging antisocial behavior. Rather, it is the technology that allows them to work better together and improve communications. 

It will be exciting to see what possibilities the “leaderless” society holds.

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