The Ultimate Corporation

April 29, 2008

The Ultimate Corporation is one that reinforces my excitement and happiness. I want to wake up in the morning turned on. No snooze button or other foot-dragging. What are the characteristics of a corporation that is not simply good, but great to work at?

Characteristic 1 (Foster community, avoid faction and alienation):

This is achieved through limited population. Many companies confuse growth with development. This results in bloat that eventually murders a company. I’ve thought over different optimal maximums for limiting growth which I’ve written about here and here. I think the number is somewhere below 150. And my current attitude is to let employees decide where that number lies under that maximum. Growth beyond this number necessitates a new business division to be physically isolated and separately run from the original seed company.

Characteristic 2 (Structure for creativity):

Have 20/80 splits of time on the hourly, weekly, and yearly scales. This means 20% of a person’s time every day is allotted to their own initiative. One day of their work week is exclusively for their own projects. Two months out of the year, they leave and are payed double their salary. Half of that goes to them, and the other is invested in a company idea of their choice. Those two months aren’t enough time to start a company, but they are enough to get the ball rolling, and to see if the project fails or succeeds. If it fails, they return. If it succeeds, we either spin them off into a new company or if it makes sense, absorb the project into the main body.

Characteristic 3 (Create trust through transparency):

Everyone’s wages are transparent to everyone else in the company. If someone isn’t pulling their weight and getting payed a lot, then it becomes obvious they should decrease their pay, or be fired. If the CEO is getting payed one thousand times what the janitor earns, then it is obvious that something is wrong (Or maybe the CEO is generating a billion dollars in revenue single-handedly, and is justified, however unlikely, in such pay).

Characteristic 4 (Acknowledge dynamic rhythms)

Let people get to work when they want and leave when they want, as constrained by the necessity of synchronous times for socialization and laboring. Employees decide this for themselves. Moderated by an appreciation for safety, this incentivizes speedy work, thus reducing costs.

Characteristic 5 (Profit is health, so make sure everyone knows it)

Employees get 33% of the profit the company makes. It’s harder to hire someone useless if you can see them eating your bonus.

Characteristic 6 (People work best under leaders they choose)

Employees elect their own bosses. Either from peers, or from outside the company. If the boss isn’t doing a good job, the employees oust him.

This article was inspired by many companies, including Gore Associates, Semco, Google, and HP.

On a tangential note, I recently read the HP Way, and though the book’s forward has the occasional vacuous corporate speak, the rest of the book is quite good. I did not know that HP essentially started off boot-strapping, rather they started off with a general idea of how they wanted the corporation to be. What their values were. Of course they knew they would be heading in the electronics direction since they had both been students of radio technology, but it’s not like they had a specific product in mind. That approach, more than anything, is what inspired this post. After all, as a self-interested party, it is about what a company does for me, and a product is only part of that.

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5 Responses to “The Ultimate Corporation”

  1. kareem Says:

    have you seen the wrodlblu list? 2008’s list consists of 25 democratic companies — ultimate corporations who are making money :)

    http://www.worldblu.com/scorecard/list2008.php

  2. primevector Says:

    I hadn’t seen this. This Worldblu list is great. Some of these I had heard of, and some of them I hadn’t. This will be cool to research. It’s easy to talk about companies in the abstract, but to see people applying these innovative techniques to their business structure is so cool.

  3. ggruschow Says:

    I think you’re not going far enough.

    Why only 33% of profits to employees? Also, why not dedicate a significant fraction to charities of the employees choices? Just think about it – which is better – a firm that dedicates 1% of its profits to charity, or a firm that dedicates 0%? If the 1% is better (it is), how can it be the ultimate corporation without giving (heavily) to charity? You can deduct donations to public charities up to 50% of income in the USA.

    Why work 80% of the time on something you don’t want to? Why doesn’t the “ultimate corporation” take good initiative from everyone in stride? If nobody else thinks it’s worth spending some time on, either you’re not working with people that are smart enough, or you might need an ego check.

    Why work with 150 people? It’s nearly impossible to get 150 people to consensus, and that many people almost always requires management (even if you call it “coordination”). I’d rather work with 5 to 15 people. I think it’s feasible to get a really tight knit group of that size.

  4. primevector Says:

    To ggruschow:

    Some of the profit a company makes has to return to new projects. A company needs to maintain itself to continue to be of service.

    Company receive tax benefits for a certain amount of charity, I think. And it makes sense to give back to the environment (social and physical) that supports you. The amount is something to be debated.

    Like I said in the article, the size of 150 is just a maximum. Actually attained sizes would be decided by the group.

  5. ggruschow Says:

    Only some companies need more capital to expand, and it doesn’t have to be 67%. For instance, Microsoft had more than enough, so they’ve been paying it out to shareholders (dividends).

    Yes, companies do receive tax benefits from charity. It’s a deduction, so effectively the benefit means that they can give untaxed income to charity.

    I was too negative before, sorry. You’ve got good ideas on your mind. Nice post.


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