What does it really mean to be a democratic business?

NixonMcInnes, where I work, is one of the top democratic companies in the world, recognised by WorldBlu.

My understanding of this has changed, and it’s only starting to become clear what this actually means in practice.

Although we’ve always known that being democratic is the right way of doing business, it hasn’t always been easy.

For us, in the past, it has meant that everyone has had a say on everything. This brings up some frustrating memories – evenings spent debating minor details of the annual budget with 20 people is not a good use of time.

WorldBlu

Our WorldBlu award

So what does it mean?

WorldBlu has 10 principles it says every democratic organisation should live by:

  1. A clear purpose and vision

We’ve just become super clear on this at NM. Our purpose is to create meaning in business. In our case, since becoming clear on this, it’s meant that everyone in the organisation has had the clarity required to be free to do whatever they want, as long as it is serving this purpose.

Personally, my challenge has been around shifting my mindset and behaviours from putting profit first in everything I do, to prioritising making this purpose real above anything else.

In practice, this has been very difficult for me because it goes against everything I’ve traditionally been taught about business. This will only truly ever work if the leaders of the business believe and do it. And that’s what has helped me in my transition.

  1. Transparency

This is the bit I believe we’ve always done well, but perhaps we haven’t always been very good at understanding why we do it.

Open book accounting, knowing everyone’s salaries and having whole team strategy meetings, are just some ways we’ve been able to practice transparency.

In practice this means understanding why we do what we do and being fully open so that everyone is able to have a greater understanding of what the company requires and how each individual can help accordingly.

  1. Dialogue and listening

If you’re going to be open & transparent then you need to be able to give and take feedback. The idea is to create new meaning and connections so that everybody can work together to serve the purpose.

  1. Fairness and dignity

For me this goes hand in hand with point 3 – listening and dialogue has to occur through the entire organisation to be truly meaningful. Treating everybody as equals builds trust, confidence and happiness.

When I first joined NixonMcInnes as an intern I was genuinely shocked to see how interested everybody was in my opinion. But it makes total sense now – everyone has a perspective and everyone can add value.

  1. Accountability

This has been a point of tension at NM in the past.

The idea that everyone had to have a say in absolutely everything we did made it extremely difficult to be clear about who was accountable for what.

Now we’re in the process of solving this issue by being super clear about who owns an initiative. At NM we see different initiatives as ‘circles’. Each circle sits within our over-arching purpose and has an owner – the source of the idea initiative (for more info on ‘source’ read this). This means that this person owns that initiative, because they hold the vision, so it’s down to them to recruit people in to help and ultimately have complete creative authority over it.

This is still in progress at NM, but currently is working out pretty well for empowering those with ideas to serve the purpose and creating fulfilment – one of our values.

  1. Individual and collective

We are all at NM to serve its purpose so we all need to be fully bought into it. At an individual level though we all have our own purpose.

We’ve been working with Charlie Davis, Very Clear Ideas & NM Associate, to define our company purpose, which ultimately starts with the source (founder, Tom Nixon), but we’ve also been encouraged to find our own sense of purpose. It’s when these two things align that beautiful things will happen. And the overlap between these two things is the sweet spot.

  1. Choice

We are now actively encouraged to ‘follow the energy’ at work. Just the other day I sat down with my coach and MD, Max StJohn, and we came up with a list of all the things I enjoy doing at work. Then we made a list of all the things I don’t like doing. He pointed at the ‘stuff I don’t like doing’ column and said “stop doing this now”. It’s been completely removed from my job role!

When I tell other people this story, they immediately think of the negative impact it might have on the company – “what if no one wants to do the same thing that’s crucial to the company?” is the question I normally hear. But how could it be so crucial to the company if no one wants to do it? What’s the point in doing it if there’s no drive behind it? The job will be badly done and we won’t be living our values – to be fulfilled, and to have complete autonomy.

  1. Integrity

We’ve now really started to change things up with the way we hire. We only want to hire people who really believe in our purpose and our values because that’s what and how we want to deliver.

  1. Decentralisation

Again, I think this was something we hadn’t got quite right in the past. Now we have a clearer understanding of control – it sits within the source of the initiative. So, although we have decentralised control, control still exists.

This means, instead of having everything open to everyone all the time, we have four stages, or operating models – just like the different options on a Google doc (another Very Clear Idea from Charlie):

  1. Private – protecting it so that it can grow
  2. View – sharing but not asking for input
  3. Comment – inviting feedback and input
  4. Edit – designing it together

10. Reflect and evaluation

Leading and developing is crucial to success. We practice feedback to each other but also give space for the whole team to talk about what we feel is working, or flag if something needs to change.

I really buy into these 10 principles and, although I’m still figuring lots of this stuff out, it’s becoming much clearer.

Democracy isn’t just about involving everyone all the time, it’s about creating freedom by having clear lines of accountability and giving everyone an equal opportunity to input and make decisions that will affect them.

 

The Ikea Effect and Democracy

When people use their own labor to construct a particular product, they value it more than if they didn’t put any effort into its creation, even if it is done poorly.

This is known as the ‘Ikea Effect’.

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Photo of flat packed furniture from IKEA (courtesy of Kawanet)

The ‘Ikea Effect’ was an experiment published by Michael I. Norton, Daniel Mochon and Dan Ariely in 2011.

“The Ikea Effect is a cognitive bias that occurs when consumers place a disproportionally high value on products they partially created. The name derives Swedish manufacturer retailer, IKEA, which sells many funiture products that require assembly” — Wikipedia

This reminds me of what it’s like to work in a democratic company.

I’ve been working in a democratic company, NixonMcInnes (NM), for over three years now. It means I get to voice my opinion and make decisions about how the business runs.

Ultimately, as an employee at NM, I get to help construct the business and add value to the development of it.

As a result, I feel a deeper connection to the company than a traditionally run company. And in turn, I place a higher value on it – I believe in the success, I believe in the decisions made and I am extremely engaged in what I do.

The opportunity for business owners is to think about how they can leverage the Ikea Effect, to deepen the connection with the company for customers and employees.

As the experiment suggest, customers will not only pay more for your products, but they will also become more loyal. And I reckon its the same for employees to.