Ownership and the Living Organization: Part 1

If an organization is a living system, is it appropriate for anyone to own it?  Would it be more appropriate to see it as something we bring into the world and steward, like a child?  How might that work, legally and financially?

These questions came up recently as I was writing a chapter on living organizations. More practically, they also came up as my partners in a new venture and I struggled to find a legal structure that fits with the living systems views at the heart of our work. 

What followed was an exploration into emerging forms of ownership – what Marjorie Kelly calls “generative ownership models” in her new book Owning Our Future: The Emerging Ownership Revolution.  In the book, she documents the experience and remarkable success of organizations around the world that are structured in new ways.  These new models, she says, are focused on “creating the conditions for life,” in contrast to the dominant “extractive” forms of ownership.

The need for a revolution in ownership stems from four problems (as I see it): 

·         Structure: As in architecture, organizational ownership structure has a strong influence over behavior.  This is why – aside from rare exceptions - we see consistent, sub-optimal patterns of behavior in each of the major types of legal structure.

     The structural message of for-profits is: the organization is an “it;” it exists for itself. 

     The structural message of non-profits is: the organization is an "it"; it exists for others.  

     And the structural message of co-ops is: the organization is "us"; it exists for us.

As a result, for-profits are stereotypically predatory and inhuman... non-profits are assumed to be slow and chronically underfunded... and co-ops are too often sleepy and internally focused.  We can work differently in each of these structures, but it takes extraordinary effort to work against the nature of the design. The question, then, is: are there alternative structures that more naturally and consistently lead to the behavior and outcomes we want – and that integrate the positive structural messages of each of the existing models?

·         Growth: Employee-owned companies may seem like the obvious solution, inviting broad stewardship and including employees in ownership of the organization.  B-corporations are another promising model, incorporating social mission directly into their charter.  But in both of these cases, as with all equity-based models, there is still the problem of constant pressure to grow.  Increasing share value is the great promise of stock ownership, after all.  And that requires continuous growth.  The demand is multiplied in employee stock ownership models, which must not only increase share value but also endlessly generate excess cash to buy out the shares of any departing employees.  The reality is that humanity cannot continue to grow its every enterprise incessantly; as it stands, we have already exceeded the carrying capacity of the planet.  Certainly, growth is a natural urge of all living systems, including human organizations. But what new ownership structures might we imagine that would include the concept of “enough”?

·         Ethics: There is also a moral question to consider.  An organization usually consists of multiple people with immeasurable passions, ideas and contributions. It consists of patterns of relationship, context in community and unique history.  How can some few people own that?  More to the point, how can they sell it?  Isn't it in some way like selling people as slaves? 

·         Stewardship: I also wonder if, paradoxically, ownership gets in the way of the kind of wise stewardship that’s needed in organizations and society.  If I looked at my children as my property, it would fundamentally change my approach to parenting.  Instead of ownership, I have responsibility. I'm serving them and I'm also serving society - my goal is to raise good citizens. When I think of owning an organization, it’s easy to lose sight of the broader responsibility part.  It becomes even murkier when there are absentee owners whose interests are primarily financial.  What structures would more powerfully reinforce a sense of responsibility to serve individuals, the organization, society and the biosphere?

In Owning Our Future, Kelly shows that new structures are indeed emerging around the world – structures that lead naturally to high engagement among customers, employees and community; that support responsiveness and agility; that honor the life within the organization; and that encourage responsible levels of growth.  In the inspiring examples she describes, ownership is either broadly distributed among employees - and often other stakeholders, too - or it is held by a foundation or in a trust.  In every case, broad stewardship is baked into the organization’s DNA.  Notably, each is also successful according to traditional financial measures. 

The UK’s John Lewis Partnership, for example, is 100% owned by employees.  Individual shares are not owned and cannot be sold; instead, overall ownership is held in trust on behalf of all current employees.  Profits are shared as a percentage of salary.  With US$13.5 billion annual gross revenues, 81,000 permanent staff and a powerful culture of participation and engagement, the company is hailed as a testament to the power of such new models.

If we follow the trajectory – from ownership by a few, to ownership by many, to ownership held in trust – can we look ahead to imagine that a living company will come to be considered part of the Commons... something we bring into the world, like a child, for our benefit, for its own benefit and for the benefit of all life on the planet?  This is not a call for the dull impotence of communism – in the examples Kelly provides, profit-sharing and decision-making privileges remain with those involved according to formulas they design.  And the market results are at least as dynamic and powerful as traditionally capitalist approaches.  But what if the legal entity came to be something held in trust on behalf of the individuals involved and the community?  Indeed, “held in trust” seems an appropriate phrase considering the shift that’s needed, in business in particular.

Ultimately, what unites all the organizations Kelly describes – and every example of a for-profit, non-profit or co-op that breaks the structural mold – is a deep-seated intention to serve life.  It’s also the ability to hold the paradoxes this involves.  Living systems involve collaboration and community, but also predatory behavior and competition.  Individual organisms serve their own needs, even as they serve the needs of their ecosystem.  It takes wisdom to integrate all of these seemingly conflicting goals within an organization.  The revolution Kelly describes is, most of all, a search for organizational forms that support such wise perspectives and actions.

In the next post, I’ll explore what all this might mean for my own new venture.

Until then, I’d love to hear your thoughts, experiences and reactions.

 

[My thanks and acknowledgement to fellow Next Edgers for contributing to these thoughts in a recent Facebook discussion; in particular, Bernd Nurnberger, David Braden, David Eggleton, Jordan Greenhall, Mark Frazier, John Kellden, Seb Paquet, Troy Camplin, Jim Rutt, Irma Wilson and Dibyendu De.] 

Thank you for the fine summary and credit to co-creators. To reply, I am taking cues from successful self-employed entrepreneurs like Chuck Blakeman, author of Making Money is Killing Your Business. He begins with the Big Why, and shares practical steps how to grow business to maturity while enjoying life, too.

I like the analogy of bringing up a company like we bring up children, which proverbially takes a village. Riffing on Kahlil Gibran's famous "Your children are not your children..."

"Your companies are not your companies.
They are made by members, like sons and daughters of life's longing for itself.
They come through you, but not from you.
And though they are with you, yet they belong not to you.

You may give them your love but not your thoughts.
For they have their own thoughts.
You may house their bodies but not their souls,
For their souls dwell in the house of tomorrow,
which you cannot visit, not even in your dreams
You may strive to be like them, but seek not to make them like you.
For life goes not backward nor tarries with yesterday.

You are the bows from which your companies as living arrows are sent forth.
The Archer sees the mark upon the path of the infinite,
and He bends you with His might that His arrows may go swift and far.
Let your bending in the archer's hand be for gladness;
for even as He loves the arrow that flies, so He loves also the bow that is stable."

All rights reserved to know more tomorrow.

Hi Michelle, I really enjoy your reflection here. I look forward to part 2 :)
You may be interested in the system we use at HolacracyOne, the organization I work with. The system is called Holacracy: it entirely redefines the structure of the company and the processes at play to evolve it, in order to be in service of the organization's Purpose. The change we operated is quite deep: we have adopted the Holacracy constitution in our legal structure. This blog post says a little more about what it means: http://www.holacracy.org/blog/a-holacracy-powered-legal-structure
This other one about how Purpose is held in Holacracy might also interest you http://www.holacracy.org/blog/beyond-serving-stakeholders - I'd be curious to hear/read what you think if you're inclined to share.

As regards living organizations, I wonder if the author is aware of the Mondragon Experiment?

Thanks for visiting, Richard, and for your question.  I am aware of Mondragon, though I'm certainly not an expert.  How do you see it as an example of what's needed in the world?  

(Incidentally, looking at your website makes me think we'd have plenty to talk about!  You might be interested in what I call Humanity 4.0 : http://www.slideshare.net/mholliday/humanity-40-draft-presentation.)

 

 Thank you, Olivier - I really appreciated the link to a description of HolacracyOne's own organizational structure.  Very close, indeed, to what I was envisioning with this post.  

 

"What if the commons were a space of global-scale remixing, a living symphony, a thriving ecosystem of creativity and innovation, built on a substrate of proliferation and organic evolution?"  This is from a blog post by Harlan T Wood

Right now, seeing the company as something discrete and owned by a few invites only competition. Seeing it as part of the commons would more naturally lead to "global-scale remixing, a living symphony, a thriving ecosystem of creativity and innovation..."   

This thought has my brain racing!

 

From a fantastic blog post by Patrick Andrews called In Business We Trust?

"What we really need is new institutions. They’ll be polycentric (having multiple, inter-dependent centres) with control ebbing and flowing throughout the organisation. They’ll empower people at all levels, bringing out their innate leadership rather than dividing staff into “leaders” and “followers”. These new institutions will disperse wealth and power rapidly, rather than concentrating it and freezing it as our old institutions do. And their key assets will be held in trust for the benefit of the community as a whole, including future generations....

We don’t need institutions that say: “trust me”. We need institutions that enable us to trust each other. We don’t need institutions that treat all relationships between people, and between people and the planet, as transactions. We need institutions that help us to connect, be more human and be more alive. And ultimately we need to learn to trust ourselves, to build trusting relationships with each other, and to create institutions that support us in those relationships."

Hi Michelle,

Delighted to read your post (and I am blushing over your comment on my blog).

I agree with your four points. To me, the overriding one is the fourth - stewardship. I am inspired by the North American Indian approach to land management - you think seven generations ahead. To me, the very concept of ownership of resources or people-based organisations is anathema to this approach.

Not all ownership is wrong. It makes sense to own things which have a short life span - clothes, books, tools, household items, maybe even buildings. Ownership is linked to the sense of "my" - my clothes, my car, my wife or husband. These things are impermanent, like our bodies. There is a symmetry with the length of our lives and the life of these objects. But land, minerals, fresh air, knowledge, water - these continue beyond our death, and ought never to be owned for the benefit of one person, not unless they have some counterbalancing responsibilities to the community and to future generations. This is more like stewardship, (or trusteeship), not ownership. Of course you do find responsible owners who act as stewards. But this doesn't make the institution of ownership a morally sound one, in the same way that a kind slave-owner didn't prove that slavery was morally justifiable.

Look forward to discussing this with you further.

Patrick

Hi Michelle. This post, the comments and links have kept my attention for the past hour ... Lots to think about and build on. I look forward to the sequel and will continue to think about the stewardship idea ... Geoff

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