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Creating a Company of Owners

This content from: Duct Tape Marketing

I believe that one of the greatest opportunities we have as business owners is to create wealth.

By that I don’t necessarily me get wealthy. I mean create an asset, a business, which is worth more today than it was yesterday. All too often this view gets buried in the push to create a paycheck.

In my view there are much easier ways to draw a salary than owning a business.

The real magic in the wealth creation opportunity comes when you also see it as a way to create wealth for all of the people the work to increase the market value of the business.

Image Doug Brown 37 via Flickr CC

The key to this notion is shared ownership.

Sharing ownership with employees has become much more popular in the world of Internet startups and IPOs. The idea is that if people have stock they’ll be more productive.

The problem with this mentality however is that if employees don’t have psychic ownership first and foremost, real ownership probably won’t benefit anyone.

Psychic ownership suggests a culture where employees feel like owners, act like owners and think like owners, even though they may not actually have any formal equity in the company.

The fact is many companies try to explore this idea of ownership but approach it in name only.

If employees don’t feel like they have a stake it what happens, don’t have access to the financial data or can’t make decisions that impact the value of their ownership, then all the stock options in the world won’t help. In fact, organizations that simply adopt an ownership or equity type of environment based on paper only find that it can be a disincentive and create entitlement without accountability.

Until you can create a culture that fosters psychic ownership first – a place where people feel empowered as owners, even if they’re not – you’ll never realize the benefits of providing real ownership.

The combination of a psychic ownership environment and real ownership structure, however, is perhaps the most potent tool for the creation of commitment that can be employed.

Creating a culture of shared ownership

When Sky Factory founder Bill Witherspoon determined, approaching sixty, that he would start yet another company he sat back and analyzed his past failures and successes and concluded that he had never been very good at managing people or the organization once it had grown to a certain level.

So, he decided to throw everything he had ever done or learned about traditional management out and start with a totally new view of how to build, in his words, a “beautiful corporation,” also something of an oxymoron in his view.

Having a background in bioscience he determined that every organization’s DNA lies in the company culture and he knew he had to direct that element over all else. The company’s core beliefs sprung from that thinking, but became much more than words on sign.

Transparency – Now, there’s a word that’s been abused in business writing over the last few years, but taken at face value, and in this context, it simply means sharing everything with everyone in the company.

Every Friday afternoon the entire staff gathers to go over the metrics one by one – even things like how much cash is in the bank is reported. (The only metric that is not public is individual salaries.) Every department talks about goals and challenges and the entire team of 40 can discuss any element that’s shared.

When issues arise that need to be shared quickly, they call impromptu “stand up” meetings and shut down so that everyone can be involved.

Autonomy –There are no vice presidents, no managers, and no shop supervisors at The Sky Factory. If they had an organization chart it would be very flat.

The company is organized into functional teams based on related work and each team uses a rotating facilitation model to keep things moving in place of the traditional manager.

Every week two members of a team take on the role of management (one from last week and one new one.) Everyone on the team takes a turn and Witherspoon feels that this concept allow people to learn, grow and earn greater respect from other members of the staff.

This no hierarchy approach removes politics and frees people to stretch far beyond the confines of the normal job description. The Sky Factory has numerous job descriptions that are tied to functional work that must be done, but the goal is to create a workplace where everyone can essentially do everything.

There certainly are instance where this isn’t practical or possible, but no one gets tethered to one kind of work, no one gets bored and everyone is asked to grow and given the opportunity to do work that continually stretches them.

The Sky Factory also finds that experience built in continuous improvement by letting new people provide a fresh approach in processes and systems.

Consensus – Every important decision made at The Sky Factory is made through a system of consensus. Some decisions are departmental, others are company wide, but if there’s even one no, the decision must be evaluated.

Decenters are asked to explain and own their no votes and more often than not the no simply leads to more research or looking at a decision in a new light, but everyone has a real voice in the process.

Sky Factory also uses consensus to impact operations – The Company was experiencing a high percentage of late deliveries on promised projects. They had tried a number of process improvements to no avail. During one of their weekly meeting an employee suggested that they should tie profit sharing bonuses to delivery. The group agreed and the rule became that if even one delivery missed its promised date during a month, no one in the organization would receive that month’s profit sharing bonus.

Since installing this rule several years ago they virtually eliminated the problem. Everyone in the organization is now concerned about late deliveries and everyone is focused on pitching in and solving any potential snags in any part of the production process. And you can bet that if someone is having an issue with an order they ask for help.

Of course consensus won’t work if there’s no transparency and truly no hierarchy. Consensus as a stand-alone tool is a recipe for disaster, but teamed with complete sharing of information and rotational management, it is the tool that turns everyone into an owner.

Now, Sky Factory also has an incredibly innovative profit sharing and real ownership structure, but the key to making it work in their incredible shared ownership culture.

When an entrepreneur starts a business and it’s just them, they have all the information, have no hierarchy and get consensus on every decision – shared ownership thinking simply takes this to another level.

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