What Is an Autonomous Organization?
Building an autonomous company means the organization and its processes must be the center hub, rather than a person. Remember management guru Peter Drucker’s words: “The bottleneck is always at the top of the bottle.”
Keith McFarland, the author of “The Breakthrough Company,” studied the companies that made the Inc. 1000 list over a ten-year period. He looked at which ones had created a breakthrough by growing to greater than $100 million in revenue while maintaining their profitability and independent ownership. Then he looked for similarities in how these companies achieved that growth. One thing they had in common is what he calls “crowning the company.”
Crowning the company means putting the company and its processes first. You lean on and leverage the power of ordinary people to do extraordinary things by refining and optimizing the processes that drive results.
Building an Autonomous Organization
McFarland describes the four stages of moving out of the hub-and-spoke model and building an autonomous organization:
Stage 1: The One-Man Band
The one-man band describes an organization where the owners and managers are directly responsible for delivering all the technical aspects of the business, and they handle all aspects of running the business.
Stage 2: The Tribal Clan
Next, organizations move into the tribal clan phase where managers begin to delegate responsibility and coach people to perform.
Stage 3: The Village Elders
As the company grows more sophisticated in its management, delegation, and coaching, the business moves to the village elder phase.
Stage 4: The Sovereign Organization
If the company leaders can transition to a strategic and coaching role, the business transcends to the sovereign organization — what we call the autonomous company in CEO Tools language. In this model, the leaders move from an autocratic approach of commanding and controlling to an autonomous approach of coaching and encouraging.
Autocratic vs. Autonomous Organizations
In autocratic organizations, the people at the top make the decisions. The chief executive and other senior team members become the backstop for all requests, questions, resource allocations, decisions, and problem-solving. Middle managers handle routine day-to-day tasks, like scheduling and performance management, but their people make few decisions and simply follow directions to deliver output.
In autonomous organizations, by contrast, the senior team focuses on fewer—and therefore more critical—decisions. McKinsey & Co. calls these “big-bet decisions.” These are decisions that have major consequences for the company but often involve situations where right or wrong solutions are unclear. The executives set the initial levels of delegation and work interdependently to develop the processes that provide the backbone for their autonomous culture.
In the autonomous model, middle managers manage processes first and people second. If an issue arises, they look for a root cause in the process before admonishing people. The organization is now engaged in execution and decision-making within the delegated framework and the established processes. There is an ongoing focus to make incremental improvements in the process to enhance results. It’s presumed that the people doing the work often have the best ideas about how to improve the processes.