Why Do We Work Together?

In the previous post I talked about the two pieces required to describe a company: the Goal and the Fundamental Operating Principle. In a further epiphany, I realized that these concepts could be used to describe the motivation and behavior of all businesses, and to answer the fundamental question I've been asking myself: Why do businesses exist? At first, this sounds like a silly question, but what I'm looking for is more primary: Why do we work together?

To reinvent business, we must ask this question -- especially now that technology has given us so many new choices about how a business can be organized.

The answer tells me the primary reason for the existence of a company. And if we can align the needs of the company with the needs of the individual, we can minimize management (this is a good thing, especially if you're a manager, because your life gets a lot easier and more pleasant) and create a self-evolving, self-stabilizing company.

Why do we work together? Because:

Working together is better than working alone.

That might seem like an oversimplified declaration, but I mean it to describe the Goal of all companies (actually, for all group activities), and it also creates a test: If you find yourself thinking that working alone would be better than working for your company, then the company isn't achieving its goal (and perhaps you should work alone, or for a different company). And trying to force a company to exist when everyone is better off working alone won't make sense.

It also tells you that there should be some benefit to working together. In the industrial age, you simply needed more hands and backs to make something happen, but in the information age more brains is not always better. Sometimes independent contractors producing isolated but interconnectable components is the ideal solution (more than one person has put forward a business plan based on maximized independence of employees; essentially a company that's a group of contractors). But there are benefits to working together:

• Knowledge sharing
• Learning together
• Group problem-solving
• Helping each other get unstuck

Applying last century's industrial-style management techniques to these activities has not worked out.

So the Goal of every company is to make working together better than working alone. What about the Fundamental Operating Principle? This came from a flash of insight. The fundamental operating principle for all groups, and especially companies, is:

We succeed together, and we fail together.

This concept also gives an important reason why it's better to work together than work alone. It also shows why so many companies get out of whack, even to the point where they are at war with themselves.

If I work on my own, I succeed and fail on my own. Succeeding is great -- I get all the benefits of success -- but failing can be disastrous. However, if I join a company and we succeed, we all benefit (at least in theory). If the company heads downhill, there's a buffering factor; the company presumably stores resources in good times that can be used during difficult times, so I might still get a paycheck long after I would have stopped making money working on my own. We are significantly more loss-averse than we are adventurous, so this has great appeal.

A second essential aspect of succeeding and failing together is the attitude it creates: if you're failing at your job, then I'm failing at my job, and it benefits me to do whatever it takes to help you succeed.

When a company or the people in it work against this principle, all kinds of unpleasantness ensues. The biggest of these is I succeed, you fail. One of the worst impacts of this comes from disproportionate executive pay and benefits; the bitterest example is a CEO who gets a bonus for laying people off. Since we seem to be hardwired to seek fairness, there is a strong message sent when senior management gets heaped with benefits when the company succeeds, but if things go bad their risk is minimized (they might still get rewards!) while everyone else might lose their jobs. It's very difficult to believe much of what management says when you feel that kind of disparity.

If the message is "your failure is not my problem," then there is no value in working together; I don't get helped if I'm failing and I don't help you if you're having problems. In that case, I'd be better off working for myself.

If you can see and incorporate "we succeed together, and we fail together" as the core of your fundamental operating principle -- and make it real, not a trick to try to get people to work harder without you putting any skin in the game -- then your company can be a genuinely great place to work. Try to game the principle and you are in for the usual unhappiness we see so often in the business world.