I am currently working on my third book project, in this case about innovation practices of self-organized companies. Self-organized means that the organization is not relying on traditional hierarchy with positions, functions and ever growing influence and power the higher up the pyramid one gets. Self-managed organizations rely on other means of leadership and making decisions. My key assumption for the book is, that an organization that does not rely on traditional power structures and systems, also will approach innovation differently. After all most innovation processes rely on ordained power and decision making committees to determine the course of action.
For my book I am interviewing and interacting with a number of organizations from all over the world that are governed by a system of self-management. The company VSE which I’d like to introduce in this case study uses Holacracy as a way to structure its organization (like creaffective does).

About VSE

VSE_logo-sentient4VSE is a provider and creator of community platforms based in the USA. The organization exists for over 30 years now and currently has a little over 100 people working for the organization. In 2014 the company adopted Holacracy as a system of self-organization. For this case study I spoke to Scott Kushner, the Chief Innovation Officer of VSE.

For more information on VSE check out their website: http://vseinc.com/

Separate and voluntary innovation program

Similarly to the self-organized company W.L. Gore, from whom VSE took some inspiration, VSE is also concurrently running a specific “separate” innovation program.
Every person working at VSE is allowed to dedicate up to 20% of her work time each week to this completely voluntary program. This time has to be provided by the organization, however people don’t have to participate in the program. Currently about 60% of the workforce at VSE is participating.

In contrast to some other organizations using Holacracy, the VSE innovation efforts do not only happen within existing roles in Holacracy but happen in a separate format. That means people can work on ideas that don’t fall into the accountabilities of the roles they are filling but are able to work on ideas for which currently no roles exist to drive them, or for ideas for which role fillers have decided not prioritize at the moment.

Innovation for the program is defined as “anything new related to our product, process or service. anything that could bring value to the company”.

No ordained authority

Contrarily to popular belief, Holacracy as a system of organization knows authority and ordains authority to many roles. The VSE innovation program however intentionally excludes ordained authority.
Participants are free to decide which ideas they want to follow up upon. Anybody can take an idea up and lead. People are also not restricted to their area of business or expertise.
For example there was a marketing manager who took up the idea of a notification app. He decided that this was a good idea to follow up upon.
There are regular pitch sessions for people to pitch ideas in order to get support from others. If people buy in, they are free to join an idea team and dedicate their 20% time to that idea and the team. The program therefore follows a concept of natural leadership instead of ordained leadership. Idea team leaders can actively go out into the organization to recruit further team members to join the team, a case that also happened with the notification App.

Providing additional resources

At the time of the interview VSE had over 50 promising ideas and 10 idea teams running as well as a number of individual contributors pursuing ideas.
To determine these promising ideas VSE facilitated and ran ideation games and workshops to generate ideas, and then followed up “elaboration” workshops to better clarify them. Participants then voted on the most promising ones. However, the vote was only to provide “crowd” feedback to the proposers as to how others in the company thought of their idea. Regardless of vote, anyone can still pitch and work on any idea.

In order for the program to be successful additional support has to be provided. These resources can range from monetary to non-monetary aspects.
In order to provide people with the skills and support needed, VSE runs different event formats such as full-day Fed Ex days and multi-day hackathons. These events also contain training elements such as creativity fun competitions to get people into the mode for creative thinking.

In order to make ideas work, financial resources are often needed. Therefore every employee receives 250 USD per person per quarter to invest into their ideas to purchase what they deem necessary to drive along their idea. Teams can also pool their money.

Additionally there are science grants worth 20.000 USD in case more resources are needed. The way teams receive these grants for sure is unusual: All it takes is to fill out a hypothesis form. Once this form is filled out, the money is automatically granted. The form is not evaluated. The money will automatically be granted. Why then fill out a form in the first place? The intention behind the form is to require people to think through their idea and to be able to answer a set of helpful questions. The intention is not to control people or decide on the quality of an idea.

If even more resources are necessary there is the possibility of incubation funding. This works like a crowd funding approach: The money necessary can be granted by different lead links who have further budgets an can contribute to funding. The idea teams can pitch to different lead links to pool their funding. An example of this is the Online Therapy team, a potential new line of business. The Team went to the product circle (a Holacracy Term) for $75K in marketing, and to Technology circle for $50K to build basic MVP site and landing pages.

Depending on the outcome of the idea development efforts the idea can lead to a new line of business or can be included into the existing operations. Both have happened.

The program is designed in a way that it does not disrupt lines of authority for the domains of operational circles. It is a separate program but with 20% of work time to be dedicated to it. If ideas touch operations, people need to get permission to get into the operational business. They can get this permission by pitching the ideas to the respective people.

A program like the one described above does not run purely by itself. It needs to be taken care of. Therefore VSE has created the role of the innovation stimulator that is filled by a small group of people. Their task is to support and coach people participating in the program and organize regular events to keep the momentum. Although the program is driven by the intrinsic motivation of the people participating, there needs to be some framework in place to drive the overall program.

Achieving a cultural shift

The program is part of VSE’s efforts to change the culture from “tell me what to do” to “I tell myself what to do”. Especially the innovation program is based on individual inspiration and desire.
Therefore the company tried to limit anything that implies hierarchy such as committees that rate the quality of ideas and decide if a team is allowed to move on further. How would a committee really now anyway?
Instead teams use an empirical way to evaluate by gathering evidence that their idea is likely to work or not. Teams also decide when to stop their projects. Some teams therefore stopped their idea, some are pivoting and now go into a different direction as originally intended.

In line with this cultural shift is the fact that the innovation program values both boldness as well as tangible value. This is reflected by a number of non-monetary awards (see list of awards at the bottom) for information and pride. There is no prize money given on purpose as the company does not want to create competition but use the awards as a form of recognition instead. Almost everybody can come in 1st or 2nd in some category. One might argue that this is not the purpose of awards in the first place. In VSE’s case however, these awards serve a different purpose.

Initially skeptical managers are now open to throw ideas into the innovation program and have them worked on. For them the program may also serve as a way to get stuff done.

Self-organization is not a requirement

It is noteworthy that the VSE program can also be implemented in any traditional hierarchical company, as it is a separate program. Using a system of self-management like Holacracy is not a prerequisite unlike the innovation practices of other organizations using Holacracy.
Scott Kushner argues that this innovation program might even do a better job to change peoples’ mindset towards self-management than Holacracy does.
Holacracy limits how much a former manager can tell people. It does not automatically create an attitude of self-management. People can still hide if they choose to do so. The innovation program really trains people to be self-managed! There are no accountabilities to tell somebody what is expected of him, only a person himself can make that decision.

How to start?

The innovation program has evolved over the last two years. Looking back Scott recommends to following things to be aware of:

  • Start with events (Workshops, Hackathons)! Events are very important. Having individual innovation time does not by itself take off.
  • Have events company wide (all conference rooms are booked on event days). Very few other things should be going on during the day of the event. This make people feel like they have permission.
  • Have regular activities.
  • Have lots and lots of fun. At events, we play upbeat music, provide food and drinks, and have goofy creative and team building games.
  • Give lots of encouragement. Innovation involves failure. At the end of every event, members present on their progress, and we clap for everyone, regardless of outcome.

List of Awards

  1. Most Impactful to Business
  2. Most Long Term Upside Opportunity
  3. Most Benefit for Cost (Bang for buck)
  4. Most Innovative
  5. Most Grit (Persistence & Efforts)
  6. Fastest to Finish
  7. Furthest journey from start (most iterations/pivots)
  8. Most Learning (towards further business value)