Traci Fenton on organizational democracy

Traci Fenton, founder and CEO of WorldBlu, talks about elevating the human spirit and inspiring freedom through organizational democracy and freedom-centered leadership.

Scott Laningham (scottla@us.ibm.com), developerWorks Podcast Editor, IBM developerWorks

Scott LaninghamScott Laningham, host of developerWorks podcasts, was previously editor of developerWorks newsletters. Prior to IBM, he was an award-winning reporter and director for news programming featured on Public Radio International, a freelance writer for the American Communications Foundation and CBS Radio, and a songwriter/musician.



06 February 2009

You can listen to this podcast HERE.

developerWorks: This is a developerWorks podcast. I'm Scott Laningham here with Traci Fenton, founder and CEO of WorldBlu, a leadership in business design studio, elevating the human spirit and inspiring freedom through organizational democracy and freedom centered leadership. Love that description. Welcome to the podcast, Traci.

Traci: Great being here, Scott.

developerWorks: Now, how about the high level summary right off the bat on what WorldBlu is? I gave a little description there, but obviously you're going to tell us more about it.

Traci: Absolutely. WorldBlu is about promoting the idea of democracy in the workplace -- or, what we call organizational democracy -- and this is the antithesis to the command and control default model that most businesses operate on each day.

developerWorks: Now, that sounds like something whose time has come in more ways than one. I mean, you and I were both at South by Southwest Interactive recently, and it seemed like a lot of the conversation going on around an event like that has to do with people that are looking at changing thought models about a lot of things, including what you're talking about. Wouldn't you say?

Traci: Absolutely. You know, we've really moved from that Industrial Age military model of how to do business and how to get things done into what I believe is a democratic age. And it's this age of participation and collaboration and transparency and influence that we've never seen before. This is radically changing the way people work.

developerWorks: Now, where are we in that unfolding cycle right now, do you think? I mean, what percentage....

Traci: Oh, yeah, that's a great question. Yes, that's a great question. You know, I think we're at the beginning. I think we're about five years in to a neverending hopefully upward curve in this direction. But I think we're just at the beginning.

And you know, as you start to harness people's voices and give them a platform -- so many different platforms, whether it's Facebook or Twitter, I mean, any number of outlets -- you know, amazing things are going to start to unfold. And we're going to have to radically rethink the way people work together, the way they collaborate and what our expectations are as well.

developerWorks: Now, I want to ask you to get deeper into this and what you mean by it and also about some of the companies that you're recognizing with an annual list that you all publish. But first, a little bit more for the listener on your background and what brought you to this point in life where you started WorldBlu?

Traci: Well, the real a-ha! moment for me was right out of college; I took my first job for a Fortune 500 company, a media company. And I still remember walking in that first day and I was all, you know, bright-eyed and 22 years old, ready to really make a contribution to the workplace and have a voice and have a say and learn and grow and progress. By the end of day one I remember leaving feeling completely dehumanized. I quickly saw that I was just going to be a cog in the machine. And it was sort of a kind of come-to-Jesus moment, if you will. I just thought oh, my gosh, this is what work is like? And this is how I'm going to live my life for the next 30, 40 years? And I just thought, I can't do this. I can't do this and I don't think anyone else should either. And that's what really inspired me to go and start WorldBlu back in 1997, which is when I founded it.

And it's been an amazing journey. I've since traveled all over the world, I've met with dozens and dozens of practitioners of democracy, of organizational change, and of course, CEOs who are running their company this way. And I'm currently working on my first book on the topic as well.

developerWorks: Now, what does WorldBlu stand for?

Traci: Well, people love to ask me, what is WorldBlu? And the story behind the name is actually kind of a fun one. Back in 2004, I guess it was, I went to the beach in Florida and was on vacation and was thinking about the name of the business. And we didn't have the name finalized at that point. And as I was looking at the ocean and the blue sky I thought, you know, what do we stand for? We stand for this idea of freedom. And I thought, well, where do I feel the most free? Here at the beach, you know, the waves and the sky and just the beauty all around. And all of a sudden the world blue came to me, B-L-U. And I thought blue, I'm supposed to name my company blue?

Well, we went back and did some research on it and found out that blue is universally recognized as the color of freedom. And so we stuck it together with world, WorldBlu and that's our vision, is to help build a freedom centered world through organizational democracy.

developerWorks: I love it. Now, talk about some of the things that you do when you work with corporations and businesses to get them thinking more in this direction. How do you start that conversation?

Traci: Well, you know, I think when an organization decides to become democratic -- and of course we're talking about democracy here, we're not talking a political sense of democracy. But what we found is that democracy is based on 10 principles. And those principles are things like transparency, accountability, decentralization, choice.

And what we encourage businesses to do is to take this 10-point principle-based framework which you can find on our Web site and figure out how to apply those principles, how to put them into operation in a way that makes sense for the size of the organization, for its goals, its cultural factors, things like that. That's where we start from, is really that principle-based framework.

developerWorks: What is most common with you, do you find that there are maybe subsets of individuals within corporations who are interested in pursuing this and maybe they come to you and you help them begin conversations with the upper management in a company? Or does it more often come from the top down? Do you see a pattern there?

Traci: That's a great question. You know, it comes from everywhere and it can come from a division of an organization, it can come from sort of the grassroots level of an organization, it can come from the top as well. You know, one of the things that we do each year is we publish what's called the WorldBlu List of Most Democratic Workplaces. And we're about to publish, or we have published, our third list this year. And our first year of the WorldBlu list back in 2007 we actually had GE Aviation, their Durham facility made the WorldBlu list. Now, GE Aviation and GE itself are not democratic, but their Durham facility which makes the jet engines that fly most commercial aircraft does operate democratically. So here's a division within a very large company that works this way and has been very, very effective. So there's a division level.

We also see it coming from the top. Many times it's enlightened leaders who have either themselves been through pain like what I went through my first job, at my first out of college; or these are people who are really enlightened and recognize that there's a better way to treat people and a better way to get business done.

Ultimately, though, you have to have the buy-in at the top. You need to have the top leaders of an organization saying this is how we want to operate in order for it to be sustainable.

developerWorks: Well, I'd like to hear you talk about some of the characteristics or benefits that come from companies making more of an effort to shift in this more democratic direction, but maybe a good way to do that is to have you talk about some of the companies in your list this year and the characteristics of those companies, why they made your list.

Traci: Absolutely. Well, we have our biggest and best list yet that's come out this year. We have 40 companies that have made the WorldBlu list from around the world, U.S., Canada, across Europe. We've got even as far away as Malaysia and Indian companies that have made the WorldBlu list. So we're very, very proud. And basically the way the WorldBlu list works is that any company, anywhere in the world, as long as they have at least five employees and they've been in business for a year can apply for the WorldBlu list. And what happens once they apply -- and they can be non-profit, for profit, government, non-governmental organizations. Once they apply, their employees complete a survey. And that survey is based on these 10 principles of organizational democracy that I referenced before. And what we're looking for is the evidence of practice of those 10 principles at the individual leadership and systems and processes level of a company.

So it's very, very thorough. And that's how we determine or that's how essentially the employees determine what companies should make the list.

developerWorks: I'm looking at your list and there's some really interesting ones there. But are there some big ones missing or prominent ones that come to mind?

Traci: You know, I think there are. I think Whole Foods and Southwest Airlines, Gore -- W.L. Gore -- could all be fantastic companies to have on our list. We do have the first and only Fortune 500 company that has made the WorldBlu list is DaVita. And they're based out of southern California, they're in the healthcare industry, they've got 30,000 employees and almost six billion in sales and are doing remarkable work. I mean, they call their CEO a mayor. They have townhall meetings. Employees vote. They actually vote. People always say to me, does this mean they're voting on things? You know, voting is one way of making a decision.

developerWorks: Cool.

Traci: And they do. Here this Fortune 500 company, they're voting on major decisions and things like that. So it's fantastic to see that organizational democracy can work from small all the way up to Fortune 500 companies. And I'd like to see more Fortune 500 companies making the list.

developerWorks: Now, a company like DaVita, is there some story there where you can compare what they were like before and what they've been like since the change?

Traci: Yes, actually. They in 1999, they were set up to run in a command and control way as most businesses, particularly these large ones, operate. And back in '99, they were really ... 1999, they were really struggling. They were on the verge of fiscal bankruptcy. Many of their top executives had resigned. Things were really not looking good at DaVita at all. They were really struggling.

And along came their new CEO, KT, Kent Thiry is his name. And he took over and he says, you know, we need to run this organization thinking of it like a community and thinking of ourselves as citizens in a community. And that's what they did and started to go this, you know, radical transformation if you will, from a command and control type of model to a democratic model. And they did things like I mentioned before about voting and townhall meetings and things like that.

One of the other practices that they do is their CEO and their COO, I think it's at least once a year, what they do is they share their mistakes with everybody. They say, this is how we screwed up this past year and they share that kind of stuff. I mean, who does that, you know?

developerWorks: Wow.

Traci: But they do that kind of stuff to say, we, we're learning too and we're all in this together. And let's learn from each other's mistakes and let's create an environment here in which people feel that they can, you know, give it their best shot and learn. We're all learning.

So they do things, like I said, townhall meetings. They have 1,300 clinics across the U.S., and decentralization is the key principle of organizational democracy. And they allow those 1,300 clinics to essentially run like their own boss. So, massive democratic transition that they went through.

What was the bottom line impact? Well, their revenue was just at 1.4 billion in 1999 when KT took over. Like I said, it's now estimated to be at six billion by the end of the year. Their stock price has performed 279 percent versus 52 percent against the S&P Index, and they're now the industry leader. So there's been a tremendous bottom line benefit to running democratically there at DaVita.

developerWorks: I'm assuming that similar data is available there in that story regarding turnaround within the workforce and people feeling vested in the company in more ways than one as well, right?

Traci: Well, absolutely. You know, the Gallup organization releases numbers each year that talk about something that they call the Employee Engagement Index Survey. And they've been measuring over the years, you know, how engaged are employees in the workplace? And engagement, I mean, really affects the bottom line. If people are not showing up at work because they're just sort of butts in the seats and just doing the baseline work that needs to be done, this can affect productivity. And in a time when people need to be innovative like we're in right now, this is really important.

Recent Gallup Index Employee Engagement Index Survey says that 73 percent of the U.S. workforce is disengaged at work. Disengaged, 73 percent. And this is costing the U.S. economy roughly $300 billion a year. So we have to rethink this command and control model. We need to understand that it's not working anymore. You're going to lose top talent. Gen X and Gen Y, Facebook generation, whatever you want to call them, want to work in a workplace where there's a sense of meaning, there's a sense of voice and that they can have a say in the decisions that affect them each day.

developerWorks: Wow, and 73 percent disengaged -- that means basically they're just trying to get through the day then, right?

Traci: Absolutely, they're doing the absolute lowest level baseline of what they have to do to keep their job and nothing more. So it's a pretty staggering number.

developerWorks: And I guess in these conversations and investigations that you go through, it must be clear or I'm assuming it must come out, that people obviously are more complex than we think and they don't simply want another bonus or more money, it's about a lot more than that then, isn't it?

Traci: It absolutely is. In fact, Patricia Aburdene, in her book, Megatrends 2010, says that the number one megatrend of our time is the search for meaning. And that's what people want more and more, again, particularly Gen X and Gen Y, although it's not limited to those generations. People want their work to be an expression of meaning for them. People want to feel like they can change the world or at least affect it for good through the workplace. And so it's not just about money, it is about meaning.

developerWorks: Are there areas of concern or sensitivity when you're working with a group, an organization, a company, trying to make some of these moves, are there things that they can trip up on and do this wrong and end up in a worse place? Is that a concern ever?

Traci: Yes, that's really an important thing to recognize. You know, I ... whenever an organization has not been successful at the practice of democracy in the workplace, what I find is typically they're not implementing all of the 10 principles that are required. And sort of like, you know, building a car with just three wheels and not four, it seems so basic. But that's what we spent over a decade researching, is what are these principles? What are all these parts that you have to have in place in order to make this work?

And so you really do have to, an organization really does have to implement all 10 of those principles. And understand, you know, when an organization decides to become democratic or even go through that transition, I think there are sort of three stages. The first stage is commitment. You have to absolutely 100 percent commit, this is what we're going to do. No sort of toe in the water, go for it 100 percent.

The second stage is often confusion, you know, how do we do this? What is democracy? You know, what are the boundaries to all of this? How sort of high do we want to turn up the volume of democracy in the organization as you work into it?

And then, last stage is clarity. And you do get to that and we see that sort of, that cycle happen within all organizations. But that clarity, where things are really humming and really clicking and working does come.

developerWorks: What do you say to an executive, maybe you're in a meeting with some leaders in an organization who are wanting to pursue some of these evolutionary changes and you've got someone who goes, well, that's not going to work. We've got to have a strong person in charge making the decisions. They don't have the information down below me. We won't make money, we'll lose market share? I mean, what do you say to.... First of all, do you hear that; and how do you respond?

Traci: Well, it's sort of an interesting thing that we all, you know, value living in a democratic country, arguably a democratic country, and yet there's a disconnect at how well democracy really can work in businesses; in fact, I think even better than it does on a political level.

But to me there's nothing more sort of revealing about how messed up the command and control system is than the Wall Street economic crisis that we're in. And clearly, top leaders, you know, are not perfect and we really do need to distribute leadership throughout an organization. It creates a stronger, more sustainable, more robust organization.

And you know, I don't think if these organizations on Wall Street operated democratically that we would be in the mess that we're in, you know. If there had been accountability, if there had been transparency, if there had been a sense of integrity -- all core principles of organizational democracy -- I don't think we would be in this mess.

developerWorks: You know, again, I mention that being at South by Southwest Interactive a few weeks ago and you spoke there, and one of the thoughts that I loved coming out of the conference was this renewed interest in relationships and that markets and economies that ignore one-to-one relationships and the core aspect of relationships in an effective economy are missing the boat and are really hopefully being swept away and leaving room for some new thinking. How did that ... did you get that same kind of feeling from it? And in a way, it seems to just dovetail beautifully with what you're talking about -- that, you know, you have to have the trust, you have to have those relationships and trust in those relationships to be a more democratic company, right?

Traci: Absolutely. I think that is a very keen observation. Organizational democracy to me is the language of relationships. And it is very relational and we lose sight of that.

You know, people always talk about, well, I do B2B business. You don't do B2B business, you do business with people, with individuals. And we have to remember that relationship component and figure out how to bring it in.

You know, people say, we have to have trust in the workplace. Well, you don't just suddenly trust people one day. I think democracy, organizational democracy, is what allows for trust to happen in an organization. When you have transparency of information, when people are allowed to have a voice and you have more of, instead of this sort of paternalistic, you know, management at the top; child employee and you have more of a peer-to-peer type of dynamic, that's what creates trust. And that's what you need to be able to, you know, weather the storms, but also be creative and be innovative.

developerWorks: So Traci, where can listeners go and read this list of companies that you've honored or that you've recognized this year and find out more about what you're talking about?

Traci: Absolutely they can go to WorldBlu.com ... it's WorldBlu, B-L-U, no E, WorldBlu.com, to our Web site and we've got all 40 companies from around the world that are on this year's WorldBlu List of Most Democratic Workplaces. And we just added a new feature to our site. We actually have profile pages on each of the companies so that you can read about some of their best practices and organizational democracy, why they do it, other news and information about them, and hopefully get inspired to go out and build your own democratic company.

developerWorks: Now, are these all young hippie companies or are there old ones, too, in the list? [LAUGHTER]

Traci: Yes, some of them are new and some of them have been around for a long, long time. And they range in size from small to, like I said, Fortune 500, and from a diversity of industries. We're not just talking sort of Silicon Valley startups here; we've got companies that are in aerospace, healthcare, telecommunications, retail, manufacturing, and of course, IT. So you really see that democracy is impartial in where it can be practiced.

developerWorks: That's fantastic. What are your hopes and expectations in this work that you're doing over, say, the next 5 to 10 years? What are your goals that you're setting?

Traci: Yes, our vision is to help inspire and support the creation of 20,000 democratic workplaces around the world by 2020. That's what we're really focused on. We believe, and there's research out of the University of Michigan's business school that indicates, that when a company operates democratically -- operates democratically -- not only does it benefit the bottom line and the people who work in the company. But there's a ripple effect of good on the community in which the company operates. And so things like when a company operates democratically it affects the community in fighting corruption, in increasing civil society, involvement in increasing economic prosperity, and also increasing peace. So we really think that organizational democracy is not only smart business, it's a wonderful way to help move the world forward.

developerWorks: It sounds wonderful. I hope that we can at least talk once a year, if not more often, and at the very least revisit this list with you each year and see how things are progressing.

Traci: I'd love to come back, Scott. Thanks for having me.

developerWorks: Our guest again has been Traci Fenton, Founder and CEO of WorldBlu, a leadership and business design studio elevating the human spirit and inspiring freedom through organizational democracy and freedom centered leadership. Visit them at WorldBlu.com, that's worldblu.com. And visit us at ibm.com/developerWorks, IBM's premier technical resource for software developers with tool, code and education on IBM products and open standards technology. I'm Scott Laningham, talk to you next time.

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