500%: How two pioneers transformed productivity
Magic Sieve Books | Sep 2020
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This story of how Matt Black Systems, a UK-based specialist in the design and manufacture of man-machine interfaces for land, sea and air applications, became a poster child for truly self-managing organisations should be essential reading for anyone with an interest in organisational design.
Written by the company’s two directors, Andrew Holm and Julian Wilson, in conjunction with management writer Peter Thomson (who co-wrote the seminal Future Work with Alison Maitland), the book upends many of the conventional notions about organisational efficiency and management effectiveness, not least the idea that firms can achieve economies of scale as they grow. It follows Matt Black’s journey from a conventional hierarchical organisation through failed attempts to reorganise and implement Lean and Agile principles until they finally arrived in 2009 at a radical form of self-management in which each individual is their own business unit, responsible for their own P&L and decision-making.
What also emerged from this process was the revelation that 20% of employees were responsible for 80% of the company’s performance. So over time, the under-performers left the company, leaving only 12 out of the original 30 engineers. With their functions now obsolete, all the previous managers also left, but despite this, productivity, profitability and customer satisfaction all rose. As Julian Wilson puts it, “…the success of the employees, the success of the business as a whole and the success of their customers were all linked together."
The philosophy boils down to the notion that people are the solution and management is the problem. In contrast, giving people complete autonomy “enables productivity through mastery and purpose”. This is in total contrast to conventional management in which “…responsibility is usually passed down the hierarchy in a compromised way. Responsibility for success or failure of an activity is passed down whilst the opportunity to act autonomously is not. Therefore, responsibility is just a euphemism for blame.”
Radical it may be, the results of such a fundamental shift in thinking can’t be denied. According to the company, “…since the process of rescuing our failing family firm began, the following has been achieved: productivity is up 300%, the profit margin is up 10%, customer perception has shifted from ‘poor’ to ‘outstanding’, product returns are at less than 1%, “on time and in full” delivery is greater than 96% and importantly median pay has more than doubled.”
How far this model is a fascinating one–off and how far it could be more broadly applicable is a moot point, but nobody reading this book will leave without having learnt something about the way organisations work (or don’t work) today and the direction they might take in the future.