# Morning Star Case Study
## First, Let's fire all the managers
[Article](https://hbr.org/2011/12/first-lets-fire-all-the-managers)
> The inefficiency stems from a top-heavy management model that is both cumbersome and costly.
> direct management costs would account for 33% of the payroll. Any way you cut it, management is expensive.
> Give someone monarchlike authority, and sooner or later there will be a royal screwup
> hierarchical structure that systematically disempowers lower-level employees. For example, as a consumer you have the freedom to spend $20,000 or more on a new car, but as an employee you probably don’t have the authority to requisition a $500 office chair. Narrow an individual’s scope of authority, and you shrink the incentive to dream, imagine, and contribute.
> economists like Ronald Coase and Oliver Williamson have noted, markets work well when the needs of each party are simple, stable, and easy to specify, but they’re less effective when interactions are complex.
> Managers do what markets cannot; they amalgamate thousands of disparate contributions into a single product or service.
> It might seem so, since most us have never come across a company that’s both highly decentralized and precisely synchronized.
> Morning Star is a “positive deviant”;
> Make the mission the boss.
>
> Every employee at Morning Star is responsible for drawing up a personal mission statement that outlines how he or she will contribute to the company’s goal of “producing tomato products and services which consistently achieve the quality and service expectations of our customers.”
> Let employees forge agreements.
>
> Every year, each Morning Star employee negotiates a [[Colleague Letter of Understanding]] with the associates who are most affected by his or her work
> An employee may talk to 10 or more colleagues during the negotiations, with each discussion lasting 20 to 60 minutes. A CLOU can cover as many as 30 activity areas and spells out all the relevant performance metrics. All together, CLOUs delineate roughly 3,000 formal relationships among Morning Star’s full-time employees.
> Over time experienced colleagues take on more-complex assignments and off-load basic tasks to recently hired colleagues
> Morning Star’s 23 business units also negotiate customer-supplier agreements with one another annually, in a CLOU-like process.
> Agreements reached by independent entities are better at aligning incentives and reflecting realities than centrally mandated arrangements are.
> Colleagues are responsible for initiating the hiring process when they find themselves overloaded or spot a new role that needs filling.
> In an organization built on the principles of self-management, individuals aren’t given power by the higher-ups; they simply have it.
> employees get the opportunity to take on bigger responsibilities as they develop their skills and gain experience.
==This happens but less organically than we’d like. Think Steve.
> Everyone has the right to suggest improvements in any area.
> With no hierarchy and no titles, there’s no career ladder to climb at Morning Star. That doesn’t mean everyone is equal.
> While there’s internal competition, the rivalry is focused on who can contribute the most rather than who gets a plum job.
> Encourage competition for impact, not for promotions.
> Don’t force people into boxes.
> Empower everyone—truly
> “What strengthens my résumé is more responsibility—not a bigger title.”
> Moving up is about competency and reputation, not the office you hold.”
> Freedom to Succeed
> Colleagues are encouraged to hold one another accountable for results, so an unexpected uptick in expenses is bound to get noticed.
> That’s why there are no information silos and why no one questions anyone else’s need to know.
## Calculation and consultation.
> Morning Star colleagues have a lot of authority but seldom make unilateral decision
> If the two of us couldn’t resolve the matter, we would pick an internal mediator whom we both trust and present our views
> president would bring the parties together, hear the arguments, and make a binding decision
> No one gets the option of handing off a tough call.
> At the end of the year, every employee in the company receives feedback from his or her CLOU colleagues, and in January every business unit is required to defend its performance over the previous 12 months.
> Business units are ranked by performance, and those near the bottom can expect an interrogation.
> There is a social risk in doing something your colleagues think is stupid.”
> Colleagues then have the opportunity to invest in the most promising strategies using a virtual currency.
> Elected compensation committee
> The Advantages of Self-Management
> Define roles broadly, give individuals the authority to act, and make sure they get lots of recognition when they help others.
> Our organization is driven by reputational capital. When you have some advice to add to another part of the company, that increases your reputational capital.”
> There’s a lot of pride. Besides, there’s no boss to take the fall if things go wrong.”
> More flexibility
> structures need to appear and disappear based on the forces that are acting on the organization. When people are free to act, they’re able to sense those forces and act in ways that fit best with reality.”
> There’s less backstabbing, because we’re not competing for that scarce commodity called a promotion. All your energy goes into doing the best you can do and into helping your colleagues.”
> Since the doers and the thinkers are the same, decisions are wiser and more timely.
> Some of the savings go to Morning Star’s full-time employees, who earn 10% to 15% more than their counterparts at other companies do. By avoiding the management tax, the company can also invest more in growth.
> First, not everyone is suited to Morning Star’s model.
> it takes a new associate a year or more to become fully functional in the self-management environment.
> Today every potential hire gets a two-hour introduction to self-management and is interviewed by 10 to 12 Morning Star colleagues
> as many as 50% of seasoned hires leave within two years because they have a hard time adapting to a system where they can’t play god.
> That risk is explicitly addressed in Morning Star’s training programs, which stress the fact that peer regulation won’t work without courageous colleagues.
> everyone is responsible for safeguarding quality, efficiency, and teamwork by calling out colleagues who violate policies or norms.
> With no hierarchy, Morning Star colleagues can find it difficult to evaluate their progress relative to industry peers. That can be a handicap for someone who wants to switch companies but can’t claim to have attained a particular rank.
> Everyone’s a manager here,” he said. “We are manager rich. The job of managing includes planning, organizing, directing, staffing, and controlling, and everyone at Morning Star is expected to do all these things.
> Morning Star is neither a loose confederation of individual contractors nor a stultifying bureaucracy; it’s a subtle blend of both market and hierarchy.
> you can think of Morning Star as a socially dense marketplace.
> This encourages associates to think in terms of relationships rather than transactions.
> Without this social glue—shared goals, long-term relationships, and industry knowledge—Morning Star’s system would be much less efficient.
> Maddeningly, key jobs often go to the most politically astute rather than the most competent. Further, because power is vested in positions, it doesn’t automatically flow from those who are less capable to those who are more so.
> Can it cope with a serious threat, such as a low-cost offshore competitor?
## Links
- [Video on Morning Star](https://www.managementexchange.com/video/paul-green-mashup-talk)
- Useful notes are that
- 1) start with a strong purpose or mission
- 2) staff do things for each other
- 3) total responsibility and freedom
- 4) Growth should not be about a [[Zero-sum game]]
- [[Oticon]]
- [[GORE-TEX (WL Gore)]]
- [[Holacracy]]
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