To live! Like a tree alone and free. Like a forest in brotherhood. THIS YEARNING IS OURS. – Nazım Hikmet
Maybe you are already believing in next-stage, teal organizations and their concepts. You imagine or feel and know the deeper sense. Being self-managed, purpose driven, value generating, satisfactory, team-oriented and thriving for wholeness. Pretty sure the majority of people have a positive attitude reading and thinking about next-stage, teal organizational concepts. The benefits are so appealing.
Leaving the theory level there are concepts and frameworks in place for realization. Frameworks like Holacracy to overcome the need for classic people hierarchies, management concepts of servant leaders supporting psychological safe environment, self-organized teams empowered by agile manifesto.
But how about ownership? Who is in for profits and losses of such an organization? How deeply are members also within a teal organization really involved? Does ownership matter to a teal organization?
Organizations held by owners or shareholders bare the risk of the classic imbalance. Owners often can’t free themselves from “taking leadership”. It is their “baby” (and investment) and when they get the feeling they could decide better, they easily fall back to overruling self-managing concepts by managing people into their believed direction. External shareholders might prove an even higher risk to argue against teal organizational concepts. They might be too distant from operational business to value realistic success or failure, having maybe too high expectations on outcome or profit. During happy times when teal concepts succeed in delivering high level of resilience and sustainable efficiency, there might be lower risk. But also a great organization can’t always perform on expectation.
On the other side the employees. They are encouraged and supported to live up upon self-organizing principles. But if they don’t have a direct and relevant share in profit and loss of the organization, they are in a different position than an owner. If the organization fails, they can just walk away and get employed at next doors company. They aren’t “all in”. Without direct participation in risk and success self-managing behavior lacks in consequence.
One option is shared ownership and responsibility. Simplest created by e.g. a set of freelancer joining to a team. This way everyone is self-responsible and equally involved. In such team it might only miss in binding character, identification and concept of a collaborating organization. It might be too loosely coupled. Also a recognizable face towards customers and community is missing. Very likely in the future new forms of virtual companies take a major stake here. As of today those virtual organizations are mostly missing the formal legal basis.
For sure there can also be a common limited liability company or similar form of legal entity be chosen, where multiple owners take equal shares. But such model has difficulties in scaling. As soon as more members are joining the company shares have to be reevaluated to equally spread them again. Also it involves notary actions every time shareholders change. Shareholders cannot easily on-board or off-board.
And there is the cooperative. In case you feel attached to teal principles but not being known to the principles of a cooperative, you might be surprised reading about it. First cooperatives were already setup 200 years ago, but are an ideal foundation for a teal for-profit organization (non-profit version of cooperative is an association).
Have a brief look at the Rochdale Principles which were set out 1844, the underlying ideals for operation of a cooperative.
- Open, voluntary membership
- Democratic governance
- Limited return on equity
- Surplus belongs to members
- Education of members and public in cooperative principles
- Cooperation between cooperatives
Core elements of a cooperative can be defined as:
- Underlying constitution – By formal law each cooperative has to have an underlying constitution declaring purpose, share and profit handling and additional formalities. Check for example the Noordwind constitution where the agile manifesto is defined as a formal foundation.
- Jointly owned – The cooperative is owned only by its members. Members can sign for one or multiple shares of fixed price (as defined in cooperative constitution). There can also be companies becoming members and with this shareholder. This can be decided by members.
- Democratic decision making – Ownership is only the one thing, but more important the decision power is distributed to all members. No matter how many shares a member holds, everyone has 1 equally voice in decision making process. This doesn’t mean all single decisions have to be made by democratic vote. Also a cooperative has a board of directors and supervisory board, but those board members are again elected by members. There has to be a yearly general meeting of all members, where decisions and elections are made by majority votes.
- Official legal entity – Cooperatives are official legal companies comparable with limited liability ones. Also a cooperative limits liability to organization assets, not to member’s private assets.
Cooperatives for mentioned aspects fit very well the teal idea. But they haven’t been a major player the last decades. Reasons might be numerous, first there is the fact, that the concept was heavily damaged by communistic regimes. In former socialistic states the majority of big organizations were run as cooperatives. Similar like other socialistic concepts those were perceived as dictatorship of the masses. Second the major motivation for most people starting a company is individual wealth and success. Many people dream of their own “business” which pays them extraordinary well and is their personal belonging. They can do things as they think, without making any compromises. For sure also in a cooperative you can make very good money, but you share profits with many shareholders.
Right now you see more and more cooperatives being setup, especially in areas not classic for coops, e.g. IT organizations. Future will tell if the concept of shared ownership will spread more widely and “real responsibility” will be spread to all members of organizations.