How the Open Source Era is Changing the Way We Work
“Do you want a culture that works on values, or do you want a culture that works on rules?”
READ ON TO DISCOVER:
Why the “naked autocrat” is the ideal leader in our networked age
What happened to the company culture when Netflix and Ogilvy did away with their vacation and travel policies
How the gig economy is changing what work looks like for everyone
Author of Too Many Bosses, Too Few Leaders and his most recent book, Open Source Leadership, Rajeev Peshawaria is the CEO of the Iclif Leadership and Governance Centre. He has extensive global experience in leadership development with a particular focus on uncovering personal and organizational “Leadership Energy,” and developing and delivering business strategy. Author and award-winning podcaster David Burkus recently spoke with him about the ways leadership and company culture are changing in the open-source era.
This conversation has been edited and condensed.
David: I want to talk about what you call “the naked autocrat,” [which is] the phrase from your book that really sticks with me. So what is it? And why is that style of leadership so necessary moving forward?
Rajeev: Just a bit of background—my book is called Open Source Leadership, and we are living in the open source era. What do I mean by the open source era? Everything is open, everything is connected. Ordinary people today have more power than ever before in human history, because everybody today is empowered with a super computer in their pockets; with that we can either destroy or make somebody’s reputation in seconds.
So ordinary people are super empowered. Leaders, on the other hand, are completely exposed to the point of being naked. Every misspoken word, anything ever, not just in the present but in the past, is out there in the open. What is the autocrat part? I got interested in the following phenomenon—[when] you pick up any literature about leadership styles, chances are it will sing the praises of the all-inclusive democratic, “I love you all,” style of leadership. Yet you look at people in recent history who’ve rocked the history of the planet by doing the exact opposite, people like Steve Jobs, people like Jeff Bezos, people like Elon Musk, [who] are all autocrats.
We asked sixteen and a half thousand people in 28 countries what they thought. We asked the same question many times over in different ways just to make sure that we were getting the right result. All 28 countries unanimously agreed that top-down autocratic leadership was needed in today’s age of speed. Hence, the naked autocrat.
David: I think this is such an interesting point because, when you take a lot of the academic models of leadership, they point out that there are times when you have to push forward like it’s an emergency, when there’s a rapid change that has to happen. There are times where leaders have to grab the reins. We make the connection that, “Steve Jobs was a jerk and therefore we can be jerks,” [but] that’s not the lesson.
The lesson is, Steve Jobs came back when Apple had no other choice but to hire Steve Jobs. They were losing market share, they were losing money so fast they had to turn something around, and so what did he do? He came in and he was autocratic. He didn’t take a survey—he drew a grid on a whiteboard and said, “We need one product in each of these four categories in the grid and we’re cutting everything else.”
I talk about this in Under New Management. One of the chapters is called, “Fire the Managers,” and a lot of people misinterpret that as, “Do away with all leadership.” No, “manager” is a different tier than leader. You’re still not doing away with managers or with management, you’re just giving it to other people. We need the balance of openness and empowerment versus the autocratic leadership dynamic.
“We have to think about leadership as a burning desire to create a better future.”
Rajeev: I couldn’t agree with you more. Today the world is facing both exciting opportunities and daunting challenges, and you can’t just look at leadership as a title or a right to command other people to do what they have to do—that’s the old definition. Today we have to think about leadership as a burning desire to create a better future, and if you’ve seen a picture of a better future, whether it’s in society or for your business, you’re going to face resistance because other people haven’t seen that picture. So there is a core for which you have to be autocratic if you want change the world, even in a small way.
It goes a little bit beyond just situational leadership and says, “Develop a set of values that you will live by, even if it is inconvenient, and develop a values-based purpose. Now remain autocratic about those two things, and be totally humble and respectful with people.”
David: A [story] that remind me about balancing power with transparency is when the senior leaders of HLC Technologies made their performance reviews, their 360 evaluations, public. They didn’t say, “We’re going to do away with all senior leadership.” They said, “We have to keep some element of power, but we’ll show you that we are putting employees first, that we are open to feedback, by making all of our feedback transparent.”
“Develop a set of values that you will live by, even if it is inconvenient.”
Rajeev: The fact is you’ve got to do both, you’ve got to keep balancing that. I want to come back to the “fire the manager” piece that you talk about in Under New Management. My argument is that in the open source era, you don’t need management as much, because people are much more aware. And the days where you had to force people down to work, those days are over. People now know as an Uber driver, “If I don’t drive, I don’t get paid.” How do you overcome the criticism when your readers and your clients say, “What do you mean, ‘Get rid of the manager’?”
David: Yeah, it’s certainly not a popular idea with managers. I deliberately did not write about Zappos’ transition to Holacracy because truthfully, the jury is still out. There’s not enough information to talk about this yet, but one thing from that transition that I think is interesting is that [Zappos] did lose a significant percentage of their managers who said, “I can’t handle this change, so I’m self-selecting out.” Which proves the point, that there is some validity to doing away with the managers. But the biggest thing is that grand libertarian idea of, “Oh, it’s just an open market.” It’s still a market with rules, and then once those rules are in play, the idea is that we don’t need someone watching, because the openness is going to reinforce whatever those rules are. In the case of Uber, there’s a rating system both for the drivers but also for the passengers. Once you have those rules in play, you can make it flatter, more open, because people will self-manage, or crowds will manage each individual person.
We’ve known this for centuries, for millennia, if we look at society, not business. There are norms, there are these unspoken rules—those are society essentially monitoring and managing themselves. We still have paternalistic leadership, but what we don’t have is the level of policing and micromanaging that organizations started to do.
“If we look at society, there are norms, there are these unspoken rules—those are society essentially monitoring and managing themselves.”
Rajeev: What I particularly appreciated about your research was Paul Zack’s [study] on trust. That is really at the heart of what both you and I are talking about.
David: What I learned from Zack’s research is that trust is not something that is given, and it’s not something that’s earned—it’s reciprocated, it’s a process. In Paul Zack’s study, they played an investment game, meant to test game theory. The game works like this: let’s say you and I are the participants, we don’t know each other. The experimenter gives me $10 and they say, “You can give your other participant any amount between $1 and $10, and then when they choose to give some of it back to you, we’ll double that amount.” Economically I have no incentive to give any money to you. My incentive is to take the $10 and leave. But we find that people most often give money.
Whether it’s fairness or a societal norm around giving, people give and when they do, that act of bestowing trust actually raises the level of oxytocin [in our brains,] which is how we judge trust and love.
So what Paul Zack’s research found is that oxytocin is what is causing us to trust and to feel trusted. The really interesting thing to me is that it’s reciprocated. When I bestow trust in you, it raises [both of our] levels of oxytocin and it creates this positive feedback.
Leaders often, because of their position, say, “Trust me.” We don’t recognize that, especially in a period of total transparency where we can see all of your warts, it takes time for leaders to earn trust. But, because there’s that pure openness, the reciprocation, the feedback loop can move faster.
“Trust is not something that is given, and it’s not something that’s earned—it’s reciprocated, it’s a process.”
Rajeev: I was in Silicon Valley giving a talk, and when I said, “Set people free to do as little as they want, whenever they want, and you will actually increase productivity,” somebody in the audience responded, “You mean like lower-level workers? Will they not become shirkers?” I said, “All the research points to the fact that if you trust people, if you give them freedom, with freedom comes responsibility, and chances are they will take that responsibility and act in the best interest of everybody.”
The same thing goes with the idea of unlimited vacations, right?
David: Yes, in the same chapter we talk about Netflix and the decision to go to an unlimited vacation policy. There’s a little quote buried in their culture slidedeck where he says that, “We don’t have a dress code policy either, but no one shows up to work naked.”
When you expect adult-like behavior from employees, most often you get adult-like behavior in return. Yes, you do get that one person out of a hundred who’s a shirker, who takes advantage of the system, but you don’t change the rules. You don’t change what’s working for 99 people because one person took advantage of the rule. I think that’s where we went wrong with this overly-autocratic style of management—it’s essentially policy creep. Every time somebody misbehaved, we made a new policy to make sure that they couldn’t do that and now almost everybody is breaking the rules at work because they don’t even know what all the rules are.
But if you just start from, “I trust you, and that one person out of a hundred who’s misbehaving, we’ll deal with them on a case-by-case basis,” you get 99 grown-ups working like grown-ups.
“When you expect adult-like behavior from employees, most often you get adult-like behavior in return.”
Rajeev: With the open source era, there is a self-ordered mechanism. Because everybody’s watching, you can’t do things that are not acceptable because people won’t let you. You can’t be a dictator or a ruthless person.
David: Let me ask you this: do you find there are still industries or companies that aren’t that open and hence shouldn’t make this transition yet?
Rajeev: As more and more of the workforce moves to the gig economy, to free agency, it’s going to be very obvious to large companies that they cannot treat full-time employees the way they used to. This idea that the more freedom you give, the more trust you’re going to create and the more responsibility people are going to take, is an idea that is going to take hold as we go along.
I was talking to folks at Ogilvy, the big advertising firm. Like Netflix, they did away with their travel policy. By acting in the interest of the company, they found that travel expenses actually went down by 30%. A significant number of people were acting more responsibly because there was no policy.
Ask the question, “Do you want a culture that works on values, or do you want a culture that works on rules?” When United Airlines dragged Dr. Dao off of that plane, the first response that came from management was, “Our employees were acting according to company procedure.” Well, what if they had acted according to the company values rather than company procedure? I think it’s an idea that is going to take root, but it does make a lot of people uncomfortable.
“Do you want a culture that works on values, or do you want a culture that works on rules?”
David: One of two things will happen in those industries where you insist, “It would never work here.” The first is that eventually that level of openness and transparency starts to happen in that industry. If it doesn’t, that job will probably end up being done by robots in the next 10 years anyway. So in one way or another, this is going to be relevant. I once heard Barry Schwartz talk about it as, “Rules versus wisdom.” What we’re doing when we enforce too many rules is we’re not enforcing wisdom.
Rajeev: Exactly. In my very small company, we’ve been following this idea of freedom within the framework, which is, “Let’s build a culture based on values, not a culture based on rules.” Whether it was in this small company or when I was working in large corporations, I’ve always followed that principle within my team, and I’ve yet to be disappointed that somebody did less than what they needed to do. Everybody does more when they have freedom.
“Everybody does more when they have freedom.”
David: We’ve gone [through] the macro, and as we wrap up, I want to ask you [about] the micro. My book deals with a lot of policies and practices that stem from this leadership model of yours. So it makes me wonder, of all of the work you’ve done, what’s the rule that most companies have that you wish people would just kill?
Rajeev: “What time did you come to work? What time are you leaving?” We expect people to be responsive to clients all around the world, which often requires them to stay up in the middle of the night, often requires that they sacrifice parts of their weekend. When they do, we don’t say anything, but when they come to work half an hour later than the stipulated time, there’s all kinds of queries on it. So if there’s one rule that I would say in the open source era that completely needs to go away, it is this whole idea of time.
David: The other thing that’s always fascinated me is that because of laziness, in my opinion, we are attached to this idea that a workweek is 40 hours, that a salary pay is for 40 hours of someone’s presence, not necessarily their productivity.
Rajeev: That’s the point. The other day I was engaging a freelancer, and they quoted a price based on a certain number of hours it’ll take to finish the job, and my colleague pointed out, “What if they just charge us for the hours and then don’t produce the [work]?” I said, “Look, I’m using them from a site, there are reviews out there. If they do that to a lot of their clients, they’re not going to get good reviews.” They can’t afford to do that. That’s the self-check mechanism of the open source era. We have to open up our thinking because we’re living in new times.