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California
Management
Summer 2009 | Vol.51, No.4 | REPRINT SERIES
© 2009 by The Regents of
the University of California
Review
Liberating Leadership:
How the Initiative-Freeing Radical Organizational Form
Has Been Successfully Adopted
Isaac Getz
CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU32
Liberating Leadership:
HOW THE INITIATIVE-FREEING
RADICAL ORGANIZATIONAL
FORM HAS BEEN
SUCCESSFULLY ADOPTED
Isaac Getz
Ewing Kauffman, founder of Marion Laboratories and the Kauffman
Foundation, used to tell future entrepreneurs how, while a young
sailor during World War II, he took the initiative to double-check
his navigation officer’s calculation of their location.1 In doing so,
he broke an important safety rule and put his vessel at risk of being detected by
a German submarine. However, by his action, he saved three of his fleet’s ves-
sels from running aground. Kauffman argued that this kind of risky initiative
is needed to start companies, yet as many companies grow, such freedom of
initiative becomes limited. There are, however, companies where this freedom
is complete. Consider a vignette from FAVI, a 600-person, $128 million French
copper-alloy foundry, as recounted by its former CEO Jean-François Zobrist.2
It was in 1985, at the beginning of our relationship with FIAT, that their Quality
Auditor came to visit. We agreed to pick him up at Paris’s Charles de Gaulle air-
port [a 90-minute drive from our site] if he would inform us of his arrival time,
which he never did. I waited until 7 p.m. on the evening he was due to arrive,
thinking that he perhaps had run into some difficulty, and then went home.
Imagine my surprise when he arrived at 8:30 a.m. the next morning in my office
saying, “Something very strange happened to me yesterday.”
The FIAT auditor explained that when he arrived at the airport at 8 p.m. and
found no one from FAVI waiting for him, he called the company. To his surprise,
a female voice answered and he explained that he was late, but that the company
had told him someone would pick him up. “Where are you? At Charles de Gaulle
airport?” asked the voice. After getting an affirmative answer, the lady on the
phone fixed a meeting point with the man and said that she would arrive in about
Partly based on Brian M. Carney and Isaac Getz’ book Freedom, Inc. (Crown, forthcoming October
2009). We want to thank Brian Carney, Hervé Laroche, Raymond Miles, and two reviewers for their
many helpful comments and Marie Elisabeth Holm for her assistance.
Liberating Leadership
CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU 33
one hour and a half. She came, picked him up, drove him to his hotel and wished
him goodnight.
“The funny thing,” the auditor told Zobrist, “is that she was very kind, very
polite, but she seemed not to have the slightest idea who I was or what company I
was from.” Even funnier, Zobrist could not figure out who the mystery chauffeur
of this important visitor was.
After a few calls, the CEO tracked down the mysterious lady. Her name was
Christine, the night janitor. She had been cleaning offices at the plant, just as she
did every evening, when the phone rang. Upon hearing the man’s story, Christine
simply took the keys of one of the company cars, went to the airport, brought
the visitor to the hotel—and came back to finish the cleaning she had interrupted
three hours earlier. What’s more, she told nobody about her trip. When Zobrist
went to see her to ask if she was the one who had picked up the visitor, Christine
was worried. “Did I do something wrong?” she asked.
“No,” her CEO laughed. “You did fine.”
Zobrist explained why Christine didn’t tell anybody about her initiative:
“It was normal for her. When facing a company problem, she is not a ‘janitor,’
she is ‘the company.’” Zobrist added that he didn’t thank her for her trouble:
“Why should I? When you neither punish nor reward people’s actions, those
actions become normal, everyday occurrences. She didn’t think she was doing
anything exceptional. Everyone here who faces a problem, and has a solution,
just goes and does it. No need to ask before for permission, or afterwards to give
thanks.” At the end of his visit, the FIAT Auditor raised FAVI’s quality rating
by 10%.
This is just one of dozens of illustrations we heard about FAVI’s employees
acting with complete freedom and responsibility to solve problems, maximize
opportunities, and, quite simply, do their work. Over the years, such actions
reaped several benefits for FAVI: exceptional quality (at the time of our visit the
company was at twenty million units delivered without a single quality reject),
on-time delivery (FAVI has not missed a deadline in more than two decades),
and impressive growth (the company grew its share of the highly competitive
European auto-parts market for its brass gear forks product line from near 0 to
50% and garnered a share of the Chinese market as well). FAVI experienced a
three-decade-long double-digit free cash-flow and solid margins—in a market
in which its European competitors either
are manufacturing at a loss, or have disap-
peared—all the while refusing to raise the
price of its products, even to account for
inflation.3 Despite the economic downturn
and the shrinking market in auto parts, in 2009 FAVI forecasts it will capture an
80% European market share in gearbox forks as several of its competitors col-
lapse which, at a minimum, will allow FAVI to preserve its sales volume. Fur-
thermore, FAVI—a relatively small company with little R&D—was the first firm
in the world to develop a breakthrough process to manufacture high-pressure
copper wire for electric rotors. A significant portion of the company’s gains is
Isaac Getz is a Professor at ESCP Europe
Business School and co-author of Freedom, Inc.
(Crown, October 2009). <getz@escpeurope.eu>
Liberating Leadership
UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU34
shared with employees in the form of an annual bonus, typically equivalent to
4-5 months of salary.
Though not numerous, dozens of companies like FAVI do exist. In this
article, we explore a set of organizations that have managed to retain initiative-
taking behaviors such as that recounted by Kauffman and Zobrist, and describe
the “liberating leadership” style that supports such “freedom-form” or “F-form”
organizations.
Research Approach
Since the late 1950s, the work of Argyris, Likert, McGregor,4 and oth-
ers has shown how traditional organizational forms—confining people in boxes
on an organizational chart and equating work to compliance with rules—lead,
at best, to underperformance and, at worst, to failure. Such findings spawned
efforts to develop organizational forms that promote self-control, decentraliza-
tion, and other initiative-freeing organizational features, but these efforts fell
well short of McGregor’s prediction that “Theory X” organizations would be
dead within a decade.5 In the 1990s, a new wave of research revived—under
the names of “new forms of organizing” or “advanced Human Resource Man-
agement practices”—the study of alternative, initiative-freeing organizational
forms in companies.6 Many of the studied companies, from Southwest to Toyota,
achieved world-class performance. Yet the adoption of such organizational forms
remains low.7 This raises one of the most intriguing management—and perhaps
societal—questions: Why do these obviously superior examples not become the
standard in place of the command and control form?
We decided to look for the answer to this non-adoption question by nar-
rowing down the initiative-freeing form to its radical variant, which we call
F-form: an organizational form in which employees have complete freedom and
responsibility to take actions that they, not their bosses, decide are best. We stud-
ied fifteen companies in the U.S. and Europe that succeeded in adopting and
benefiting from the F-form, and three companies that seemed to experiment
with the approach but did not implement it. (See Appendix for a brief descrip-
tion of our research.) Across the companies we explored, successful F-form
adoption yielded economic performance that solidly placed the firms at, or near,
the top of their industry. A four-year field study of their practices, as well as of
their leaders, allowed us to formulate the following answer to the non-adoption
question: In order for the F-form to be adopted, a specific type of leadership—we
call it liberating—needs to be embraced by the company’s head. Inversely, the
non-adoption of the F-form can be traced to the company head’s non-embrace
of some aspects of liberating leadership. Although about half of the compa-
nies we explored have been studied before—often for how their organizational
structures are effective at leveraging their human capital—no research, to our
knowledge, directly studied the leaders who built them in order to understand
the leadership process and traits that supported these companies’ unique orga-
nizational form. By applying this process, all the successful liberating leaders we
Liberating Leadership
CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU 35
studied have either transformed an incumbent’s command-and-control form or
fought off a start-up’s tendency toward it as it grew. Moreover, they succeeded
in building their companies’ “micro-societies” based on values often opposed to
the ones of society at large.8
Liberating Leadership
We define the F-form as an organizational form that allows employees
complete freedom and responsibility to take actions they decide are best. Just
as architects define human-built structures by their functions rather than their
structural features, so we define the F-form based on its function rather than by
a set of structural features. A bridge, for example, is defined by its function of
allowing passage over an obstacle.9 That said, there are some structural features
that are typical of bridges, and the same is true for the F-form organization.
Most F-form companies have no organizational charts. Most have no
reserved parking or corner offices for executives. Some have no assigned execu-
tive offices; everyone, including the CEO, simply selects an open desk. Some
have no fixed seating arrangement and don’t cluster desks by department.
Some remove the ceilings and install stairs to increase mobility and communi-
cation among people. Some have meeting rooms named not after presidents,
scientists, or artists, but simply after their senior employees—often secretaries.
None have time clocks. Most allow employees to set their own work times and
some even allow them to set their own salaries. Some have no managers. Some
have no titles or ranks. Many allow employees to pick their leaders, and choose
their own job descriptions, and in essence invent their own jobs. Some have no
Human Resources department. Some have no budgets or even a Finance depart-
ment. Most have no long-term planning process.
FAVI has many of these typical features, as described in the following
vignette:
CEO Zobrist doesn’t seem to manage people in the sense of trying to motivate
them. Nor does anybody else motivate them because there are no managers in
FAVI. Self-managed teams, called mini-plants, are in charge of manufacturing—
each with its own client and product. They are also in charge of all other business
processes deemed essential for getting the job done right for the client: purchas-
ing, delivery, finance, recruitment, training, and more. Each team performs these
functions in its own way. Engineers and specialists in FAVI are simply asked to
find the areas where they’d like to contribute. Naturally, this ends up being the
areas not covered by the production teams, such as R&D or initiating lean man-
agement or continuous improvement methods. What is left out by the engineers
and specialists goes to Zobrist who, besides his daily tour of the plant, greeting
and chatting with employees, essentially spends his time looking for new markets
where FAVI can leverage its core competences in copper and brass alloys. Not
having to make any operational decisions was a goal Zobrist set for himself when
he started building this F-form organization, a goal essentially achieved after three
years.
Liberating Leadership
UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU36
Quad Graphics, a North American leader in commercial printing with
12,000 employees and $2 billion in revenues, also has many of these typical
features. Everyone, including the CEO, is dressed in the same dark blue shirt
and slacks; people are not told but asked what they propose to do in a busi-
ness situation; job openings are used to promote people from within even if
it requires important training; and top management annually rehearses for
several weeks with a professional director for a musical they perform at Christ-
mas in front of employees and their families. Yet despite all its typical F-form
features, Quad Graphics had reserved parking spaces for top executives. When
we asked both its CEO and the head of its Quad/Tech division about it, they
looked puzzled and admitted they hadn’t thought about it and that it didn’t
make sense to have them.10 When, in a group discussion, we asked employees
about it, they laughed and said that on balance it was a small thing that doesn’t
affect the overall environment, where they are completely free and responsible
to take actions they deemed best for the company.11 Indeed, when Quad Graph-
ics’ founder and former CEO Harry Quadracci started it—after leaving his former
employer, a big printer whose top management he loathed for the way that they
handled a strike—he didn’t have in mind any particular organizational features
that he wanted to build. He just had a firm desire to build a workplace in total
opposition to the one he worked in. Specifically, he wanted a company in which
people were free to make the best decisions for the company on their own—or,
as he said to a journalist in an article famously titled “Management by Walking
Away,” he wanted a “company built by employees for employees, instead of a
company run by a management class against a counterclass.”12
All successful liberating leaders we studied clearly understood the defin-
ing function of the organizational form they were building—to allow complete
freedom and responsibility of employees’ action. However, in choosing the
form’s features, most of these leaders proceeded in a seemingly empirical man-
ner. They simply added features that increased employee freedom and responsi-
bility and rejected features that did not. Some freely admitted that they have not
fully implemented the F-form, or that it isn’t yet applied throughout the com-
pany. We found that liberating leaders employed other guiding criteria to help
them on their liberation campaign in addition to that of achieving freedom and
responsibility for employees, and we use this collective set of criteria to charac-
terize their unique type of leadership—liberating leadership.
Three Universal Needs for People’s Self-Motivation
People who are completely free and responsible to self-initiate actions are
called self-motivated. Since 1943, when Abraham Maslow proposed his (still
essentially untested)13 hierarchy-of-needs theory, many psychological theories
have been advanced to explain self-motivation. Perhaps the most ambitious
contemporary theoretical and empirical research program on self-motivation
has been carried out by Deci, Ryan, and their associates.14 Unlike Maslow, who
extended the behaviorists’ and psychologists’ view of man seeking peace of body
to that of also seeking peace of mind—and thus being motivated to eliminate the
Liberating Leadership
CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU 37
tension of unsatisfied psychological needs—Deci and Ryan view people as pro-
grammed for mastery and happiness (vitality and well-being).15
As child psychologists Jean Piaget and Lev Vygotsky have shown, people
from a very early age engage in all kinds of play in order to master different
aspects of their environment. They enjoy play to the point of ignoring hunger,
fatigue, and the risk of being hurt.16 Similarly, as adults, people seek mastery
and “fun” in many of their leisure and—when the environment allows—work
activities. The ongoing natural human activities aiming at mastery and happiness
demand what Deci and Ryan call nutriments: “relatedness,” “competence,” and
“autonomy.”17
Their numerous laboratory and field studies showed that a properly
nourishing environment that satisfies people’s three universal needs leads to
self-motivation. When people are treated with consideration, when they are
provided with support for growth and self-direction, they self-motivate and take
initiative, leading to increased performance and enhanced personal well-being.
When, on the contrary, the environment is controlling and deprives people of
their universal needs, then people’s motivation becomes externally controlled
and they do only what they are rewarded or punished for, which leads to no
increase in people’s well-being and only short-term performance benefits, if any.
Their broad empirical work led Deci and Ryan to extend an earlier pos-
tulation of McGregor’s: “The answer to the question managers often ask . . .
—How do you motivate people?—is: You don’t. Man is by nature motivated....
His behavior is influenced by relationships between his characteristics as an
organic system and the environment....We do not motivate him because he is
motivated. When he is not, he is dead.”18 McGregor redefined the “How to moti-
vate people?” problem into: “How to build an environment where people self-
motivate themselves?” Deci and Ryan extended this redefinition further still:
“What is in the controlling environment that prevents people from getting the
right nutriments and what has to be rebuilt in it so they get them?”
Deci and Ryan’s theoretical framework of a “nourishing, non-controlling
environment for self-motivation” and its three universal needs of being treated
as intrinsically equal, of growth and of self-direction19 informed our understand-
ing of the design criteria used by the liberating leaders to build the F-form in
their companies.
Liberating Leaders Create an Environment for Intrinsic Equality
Robert Townsend, an early liberating leader and author of the 1967 best-
seller Up the Organization, advised that, once you are in charge, “remove every-
thing you didn’t like [as] a subordinate and implement what you missed.”20
The work and management practices Townsend removed and the new ones he
introduced in AVIS led to one of the early F-forms.21 The same criterion guided
all liberating leaders’ initial decisions: which existing practices to remove and
alternative ones to introduce depended on how they satisfied people’s need to
be treated as intrinsically equal. Among them, the most significant removed
or introduced practices were telling and listening. Here is a vignette on how Jeff
Liberating Leadership
UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU38
Westphal, the CEO and owner of Vertex, a global sales-tax software and ser-
vices leader, 600-strong with revenues of $100 million, started his liberation
campaign:
In 1993, when Westphal became in charge of operating Vertex, its key software-
development project turned into a fiasco. While preparing to use his power to
“tell” the team that they had “to redouble [their] efforts, step back, re-organize,
and . . . go right back at it,” Westphal remembered something Stephen Covey had
written in Seven Habits of Highly Effective People. He attempted to set aside all judg-
ment, to imagine himself in others’ places, and to listen to them and suddenly had
an epiphany: “I realized in that instant that I never really understood anybody. I
understood what I wanted to understand about them, rather than really who they
were and what their needs were.... The application to business was instant: ‘I’m
walking around thinking I get it. But I don’t get it. And other people are walking
around thinking they get it, but they don’t get it.’” So, instead of “tell, tell, tell,”
Westphal decided to try something different: “I came to work the next day . . .
and I started listening.... The very first ‘program’ that we implemented was that
I changed my behavior. I started listening, I started actually involving people in
my decision making, me personally.”22
There are many advantages for the head of a company to listen to his or
her subordinates instead of telling them what to do. Getting, as Westphal puts
it, “a ton of leverage with the incremental power of 600 brains [instead of] an
itty-bitty bit of leverage out of the incremental power of my little pea brain” is
one obvious advantage. Indeed, during a meeting to assess how to move forward
with a failed software-development project, one manager observed how the tax-
software field seemed to be moving in the direction of ERP—very different from
the one that their project was pursuing. Westphal recalled:
“After this failed project I thought we should redouble our efforts . . . because I
tended to be goal-target focused. But then I started to listen. And Gerry Hurley,
who is our Marketing VP today, had noticed that circumstances were changing in
our core sales-tax software business. And I said, ‘What should we do?’ We were
a pretty small company then, 60 or 70 employees. And he said, ‘We have to shift
gears and we have to put our priority over here, because if we don’t pay attention
to that we are going to be in trouble.’ I listened, and agreed.” Westphal accepted
the idea that opened the path to the company’s growth: “It’s a darn good thing we
did, because we barely got ourselves into a position in time to seize the growth
opportunity in ERP that really put the company on the map. Had we not done it,
we probably wouldn’t be in business today.”
However, the most fundamental advantage is that when people are gen-
uinely listened to, they feel treated as intrinsically equal. They feel that their
experience, knowledge, and ideas are as valuable as those of the head of the
company.
The next (much more difficult) step for liberating leaders was to have this
practice of listening adopted by managers. In start-ups, it meant putting in place
a rigorous recruitment and promotion processes for managers—in most F-forms
called “leaders”—thus avoiding authority- and power-focused people from being
hired or promoted. In incumbent companies however, liberating leaders had to
Liberating Leadership
CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU 39
transform telling managers into listening ones. Many used informal or formal
training for that purpose. For example, early on, supervisors in Gore & Associ-
ates—today an 8,400-person, $2 billion leader in polymer products—used a
traditional “telling” style.23 When its founder and CEO Bill Gore stumbled upon
several instances of badly treated people and bureaucratic rulings, he introduced
regular dinners at which, in a Socratic manner, he coached use of a listening
style. For some liberating leaders, changing their managers’ style proved to be
more difficult than it was for Bill Gore. Though they proceeded with wisdom
in conducting a transformation and used non-threatening ways with “telling”
managers, some managers remained stuck in their command-and-control ways.
To deal with such managers, Zobrist of FAVI and Robert McDermott of USAA—
today the fourth largest American car insurer, 22,000-strong with $13 billion
in revenues—moved them to jobs where they did not have subordinates (while
letting them keep their old salaries.)
Further on, liberating leaders removed a number of work practices because
they did not satisfy people’s need for intrinsic equality including: time clocks,
locked supply closets, desks arranged by departments and other similar fixed
seating arrangements, superior offices for executives and managers, reserved
parking spaces, hierarchical organizational charts, and titles or ranks. They
also removed management practices including: Human Resources departments
and management procedures, requests and itemized reports of travel expenses,
budgeting processes, Financial (control) departments, and long-term planning
processes. Instead of these management practices, liberating leaders introduced
practices that treated people as intrinsically equal, that is, as responsible and
trustful as the liberating leaders are.24 For example, people are regularly asked
where they want to contribute most and—in a few companies—what they want
to earn. People are consulted about decisions that affect them, trusted to use
supplies and have expenses that will advance the company’s goals. In companies
that do use budgets, managers aren’t second-guessed by executives about them,
and the corporate budget is established by compounding managers’ budgets who
resolve inevitable inconsistencies among themselves. Not all of these work and
management practices have been introduced by all liberating leaders and their
introduction has been gradual. For example, from its creation, SOL—Finland’s
No. 2 cleaning service company, with 8,000 employees and 152 million euros
in revenue—produced corporate budgets by aggregating the individual manag-
ers’ unchallenged budgets. In 2008, SOL renounced budgets altogether, asking
managers only to provide sales and profits projections and leaving them with
freedom of action in how best to achieve those projections.
We also found that the environment built to treat employees well led to
highly-motivated and productive people but not to the self-motivated—and
free and responsible to act—employees one finds in the F-form. Take SAS, a
10,000-strong, over $2 billion in revenues world leader in software.25 From the
beginning, its co-founder and CEO Jim Goodnight envisioned the company as a
world-class software champion. To accomplish this, Goodnight sought to attract
highly motivated and productive employees, so he built an environment that
provided everyone with outstanding work conditions and benefits. “If you treat
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UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU40
employees as if they make a difference to the company, they will make a differ-
ence to the company,” he was quoted in an SAS Employee-Friendly Benefits Sum-
mary.26 His initial design criterion for choosing benefits and other environment
elements was expressed in his “operating principle,” “that’s how he would like it
if he was ‘just’ an employee.”27 This led to such benefits as free food, numerous
family parties, a recommended 35-hour work week and flexible work schedule,
on-site health-care, fitness and wellness facilities, departments helping employ-
ees with their children’s education, elderly parent care, and more.
Goodnight commented that he couldn’t “imagine anyone wanting to
change the culture, because it’s proven to be so successful over the years:
the perks, and making sure that the work is challenging, those are the most
important things.”28 Indeed, these work practices, chosen to treat employees
extraordinarily well, with many perks and lavish benefits, proved successful.
The environment contributed not only to its employees’ high motivation and
productivity, but also to their very low turnover—below 3% in 2008, when
the industry average in North Carolina’s Research Triangle was in the double
digits. Notwithstanding these great results, this environment does not treat
employees as intrinsically equal.29 Though Goodnight himself is quite egalitar-
ian and he holds, for instance, monthly group meetings with willing employees,
the company implemented few management practices that satisfied employees’
need for intrinsic equality (as well as their need to self-direct.) For example, the
company’s management practices regarding its sales people involve a compensa-
tion plan that is closely tied to their sales volume, which drives those who don’t
expect to reach good levels to quit quickly. Inversely, those who do well get—in
addition to the substantial monetary reward—access to a “President’s Club” with
benefits such as a lavish leisure trip for themselves and their spouses. Goodnight
himself is critical of the latter and when he took over SAS’s U.S. sales operations
personally, he eliminated this club. Yet, the overall managerial approach of moti-
vating sales people through external rewards is not questioned.
To sum up, the first guiding criterion a liberating leader uses to design his
company is intrinsic equality (which is not the same as building a great place to
work) so that employees become self-motivated and free to act. However, hav-
ing such employees raises a new issue for liberating leaders: How to ensure that
these free-to-act employees do that for the best of the company.
Liberating Leaders Share Their World-Class Vision
of the Company so People Will “Own” It
To make good day-to-day decisions, employees must know what is in the
best interests of their company. Lacking that information, they may fall back on
personal experience, their understanding of current business conditions or sim-
ply on “saving a buck.” While a cost-saving focus certainly applies for companies
such as Southwest Airlines,30 whose strategy is low-cost market leadership, it
won’t apply as well for companies such as Gore & Associates, whose strategy
is market leadership through outstanding products and fair customer relations.
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CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU 41
Liberating leaders attach key importance to elaborating and sharing their corpo-
rate vision with everyone.
Although it is not unique to liberating leadership, we observed that liber-
ating leaders chose world-class visions that aimed to place their companies solidly
at or near the top of their industry.31 For example, Bob Davids, the founder and
president of Sea Smoke Cellars, a young Central California winery that since
its first production in 2003, has been in the World Top 100 wines for four years
in a row, gives the following explanation: “When I started any of my projects,
. . . I decided that quality is it . . . [and that] . . . I’m willing to take the time and
the money [needed] because of quality.... Position yourself at the top of the
market.... In all businesses and the markets, . . . at the top, there’s a very small
place for you.”32 Elaborating a world-class vision, however, is the easy part;
sharing it with employees so that they own it emotionally is much harder.
Liberating leaders start sharing their visions during recruitment. As he
welcomes new hires on their first day, Jeff Westphal of Vertex asserts, “Welcome
to Vertex. You are free to leave,”33 by which he means that if an employee finds
a more compelling professional vision elsewhere, she should not stick with Ver-
tex. Vertex backs this claim as it regularly helps employees who want to pursue
other goals, such as opening their own businesses. Vision-sharing efforts do not
stop at recruitment and integration, as many new hires, unaccustomed to the
freedom offered, may well remain skeptical.
Liberating leaders must follow their words with reinforcing actions. For
example, Kris Curran, Sea Smoke Cellars winemaker, tested her president’s
vision. After hearing Bob Davids’ world-class vision during her job interview,
Kris chuckled and said, “Yeah Bob, we’ve heard that a million times before.
And then the owner puts $20,000 more into landscaping and doesn’t allow me
to buy an extra $200 wine hose that I need.”34 So, when Davids asked her to
start with all the equipment she needed for world-class winery, she took him at
his word and drew up “a just outrageous list of things.” When she was ready,
Davids came in and went through the list item by item, discussing for six hours
“every last clamp, pump, and barrel,” and then asked her, “OK, so when do you
start buying all this stuff?” Curran, still skeptical, answered, “You’re not going to
knock anything off?” just to hear Davids repeat his freedom philosophy again:
“No, I believe your arguments that this is going to make better wine, and there-
fore I’m going to give you everything you need so you do not have an excuse to
come back to me and say ‘I could have done it better if only you had allowed me
to...’” Comments Curran, “I was blown away, because I had been in the industry
for eight years at the time and I had never seen anybody that I had worked for
and anybody that I knew that really stood behind what they said.”
Reinforcement also requires developing leaders throughout the organiza-
tion who pass along and reinforce the vision themselves. At Gore & Associates,
Les Lewis—an early employee and “manufacturing leader”—took over as one of
many vision bearers.35 Early on, he learned from Bill Gore the importance of on-
time delivery. Although known for his extremely quiet demeanor, Gore “actu-
ally raised his voice” when someone suggested “that it was okay to have 85%
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on-time delivery.” When Lewis discovered that on-time delivery performance
was slipping, and that some newer employees from traditional companies had
decided that 80% performance was acceptable if getting to 100% would mean
going over budget, he reminded them that on-time delivery is not an “economic
decision” but one of the company’s core principles. He ensured that Bill Gore’s
vision—it is unfair to deliver late to customers—was owned by those associates
so they would act accordingly.
Finally, to maximize emotional ownership of the vision, liberating leaders
share vision-relevant information “lavishly”—to use the word of Max De Pree,
a former CEO of the Herman Miller company.36 Rich Teerlink, a former CEO of
Harley-Davidson, for example, regularly toured its U.S. facilities where he held
town-hall meetings for each shift giving information and answering questions,
a practice still followed by the current CEO, Jim Ziemer.37
To summarize, vision-sharing efforts—from interviewing to daily rein-
forcement—help employees emotionally own the company’s vision and thus
have criteria with which to decide which of their actions are best for the com-
pany. This in turn allows them to exercise freedom of action responsibly. But
do they have capabilities for it?
Liberating Leaders Create an Environment
Satisfying People’s Need to Grow
In his 1960 book, McGregor contrasted the traditional “manufacturing”
approach to the development of people to an “agricultural” approach: “The
individual will grow into what he is capable of becoming, provided we can cre-
ate the proper conditions for that growth.”38 This notion of growth potential is
similar to Deci and Ryan’s postulated universal need to grow. Liberating leaders
expend constant effort to build environments that provide for growth of people's
capabilities. Here is an example of an environment built by Robert McDermott
in USAA.
When McDermott became CEO of USAA in 1967 it was a sleepy, under-
performing auto insurer. He was convinced that it is on “the front line [where]
all services [are] delivered” and that “top-down isn’t going to get the right
thing.”39 To implement his vision of USAA as a world-class service company,
and USAA employees the best service people in the industry, he began rebuild-
ing work and management practices to treat employees as intrinsically equal: he
removed command-and-control managers, removed oppressive and distrustful
controls, equalized salary levels of women—the majority of employees—with
those of men in the same positions, introduced a 4-day, 40-hour workweek so
that mothers could dedicate more time to their children, and more. These new
work and management practices satisfied the need for intrinsic equality, which,
in turn, made them receptive to McDermott’s vision of world-class service. Still,
the majority of the work force lacked the skills and knowledge required to do
“what is best for a customer” in the myriad of insurance and financial problems
posed and to do it in real time, over the phone. So McDermott launched train-
ing and education efforts to meet people's need to grow. A strong believer that
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everyone has a talent for something, he first encouraged people to move into
areas that interested them and then to get the training they needed to do so.
He worked with local universities to offer employees classes (at the company’s
expense) and in a variety of subjects, provided they were related in some way
to work. On a typical night, 75 USAA training classrooms were filled with
employees, involving about 30% of USAA’s work force. Service representatives
specifically got up to 16 weeks of training and simulations, including a week in
effective listening, before they started answering phones.
Treated as intrinsically equal, USAA employees were already willing “to
serve others as you’d like to be served,” following USAA’s golden-rule service
principle. The growth-facilitating environment McDermott built made employ-
ees capable of taking the best service actions. Other liberating leaders also built
environments allowing employees to move into jobs with growth opportuni-
ties40 and to acquire the skills to succeed in them. Yet, employees may be willing
to act in the best interest of the company, be capable of doing that and still not be
able to do that because they haven’t been given enough authority to act.
Liberating Leaders Create an Environment
Satisfying People’s Need to Self-Direct
If the environment employees work in deprives them of self-direction—
notwithstanding satisfaction of the other needs—they will not be self-motivated
and will not act in the best interest of the company. For example, at USAA (in
essence, a gigantic call center) the environment that satisfies the need for self-
direction includes the authority to spend whatever time service representatives
deem is required to solve a customer’s problem—both business and personal.
(Unlike most call-centers, which measure the number of calls handled per hour,
USAA measures performance by the number of customer problems solved
during the first call.) Service representatives can pay a claim even if the client
doesn’t have any formal proof, or cancel an insurance policy a client signed but
then realized he can’t afford. Employees debrief risky or borderline decisions
with their managers to determine whether they were ultimately the best for the
company and to correct the action next time such a situation arrives. The envi-
ronment aims to satisfy the employees’ need to self-direct; employees respond
with self-motivated actions for the benefit of the customers, and hence the com-
pany. USAA topped Business Week’s 2007 and 2008 U.S.-wide customer-service
rankings and came in second in 2009. In addition, USAA had the highest Net
Promoter Score, a customer-service indicator highly correlated with future rev-
enue growth.41
Other liberating leaders who used the need for self-direction criterion
built different environments—specific to their companies—to provide for it. Bill
Gore encouraged self-direction in his employees by asking, “Have you made any
mistakes lately?” When the answer was “No,” he replied, “You haven’t been
taking enough risks.”42 Bob Davids aims at the same purpose when he says,
“I’m gone for eight months.... If you feel that it’s critical to contact me, that I
get involved in your problem, what I want you to do is to lie down. When that
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feeling goes away, I want you to get up, solve the problem, and then send me an
e-mail with the solution.”43 Jean-Francois Zobrist is unwilling to be involved in
any operational decisions so that employees decide and act by themselves.
Failure to satisfy the need for self-direction can lead to the F-form’s fail-
ure, as in this vignette of how Lars Kolind conducted liberation in Oticon, a
Danish leader of hearing devices.44
In 1988, when Kolind was named a CEO, Oticon was losing its European market
leadership, technological edge, and money. To regain Oticon’s position, Kolind
decided to transform its “rule-based, departmentalized, hierarchical engineer-
ing culture” and convened a voluntary meeting to discuss the project. Almost
everyone showed up and 80% of those present—though not the senior manag-
ers—spontaneously voted for it. To bring the senior managers on board, Kolind
elaborated with them new company values and managerial norms. The first three
concerned employees’ needs “to be treated as independent individuals who are
willing to take responsibility,” “to develop within their jobs and gain new experi-
ence within the company,” and to have “as much freedom as possible, yet accept
the necessity of a clear and structured framework,” needs corresponding to those
of intrinsic equality, growth, and self-direction. To provide for intrinsic equality,
employees, for example, were allowed to organize their own work schedules, to
work where they wanted, and to lead a new product project if they initiated one.
To provide for growth, employees, for example, were coached by a mentor or
benefited from the help of an expert “guru.” Yet, in providing self-direction the
company’s implemented practices fell short. The company’s new—“spaghetti”—
organization centered around employee-initiated projects strongly satisfied this
self-direction need. With up to 70 projects running, the results followed: time-
to-market for new products fell in half, 50% of company’s revenue came from its
new innovations, including the world’s first all-digital in-ear hearing aid, and sales
doubled by 1994. However, to review and monitor the profusion of initiatives and
innovation, Kolind established the Products and Projects Committee (PPC), which
started to suspend projects or slow them down arbitrarily, thus, not upholding
the company’s values. Kolind, in the meantime, was busy with external projects
such as the company’s IPO, acquisitions, and international expansion. In 1995,
employees called a spontaneous meeting where they loudly denounced the con-
stant violation of Oticon’s values by the PPC. Following the confrontation, Oticon
was divided into three parts, which, as Kolind would later comment, “turned the
spaghetti organization into lasagne.” The PPC was replaced by the Competence
Center, which far from addressing the complaints, doubled down on them, taking
upon itself the authority to start new projects, to appoint project leaders, and to
constrain their earlier ability to negotiate compensation levels for project mem-
bers. Shortly before the 10th anniversary of his arrival, Kolind quit.
What happened in Oticon? Kolind—as he amply attested in his book and
in our exchanges—wanted to free his employees from stifling command-and-
control practices.45 Yet, despite his initial efforts to show these practices the door,
they succeeded in sneaking back through the window of the PPC. Naturally,
after experiencing the committee’s stifling authority, project leaders, instead of
freely self-directing to advance the projects, started to dedicate time to lobbying
for them and to measure their success not by business results but by comman-
deered resources from the committee. As one employee put it, “you end up in
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situations where you act in some sort of anarchy and steal resources that others
control.”46 Instead of “market competition,”47 the behaviors at Oticon were, in
fact, more typical of a command-and-control organization in which subordinates
compete for bosses’ favorable decisions.
To summarize, providing for the employees’ need for self-direction is a
key design criterion that successful liberating leaders used in building F-form.
On the contrary, not using this criterion constantly will cause F-form to fail,
as happened in Oticon. One reason it happened to Kolind was his inadequate
efforts to sustain the culture he was building.
Liberating Leaders Become the Culture-Keepers
The time from when a liberating leader starts building an F-form environ-
ment until the moment most employees are self-motivated and act for the best
interests of the company can be long. Our research suggests that it takes at least
a year for start-ups and from three to ten years for incumbents. Even after the
F-form culture is established, though, the liberating leader’s role continues. For
example, from the very beginning Bob Davids refused to make decisions and
created an environment in which his employees could make them. Once he saw
that the environment freed all employees to act for the best interests of the com-
pany, he switched to another role: “My job now is the keeper of the culture. I do
it by talking to everybody every day: ‘Hello, how are you, how’s it going, what
do you need?’”48 Davids is also quite graphic on how complete the liberating
leader’s effort should be in this culture keeping: “One drop of urine in the soup
is too much—and you can’t get it out.”49 David Kelley—the founder, chairman,
and liberating leader of industrial-design firm, IDEO—echoes Davids: “I view my
job as maintaining the culture. That was the most important thing.... Every-
thing else was a distraction.”50
There are several reasons why is it so important for the liberating leader
to stay alert. First, even in start-ups, employees have a tendency to view how
companies should be organized through the more familiar and dominant com-
mand-and-control prism. David Kelley recounts his response to employee
proposals to formulate company policies: “They [would] always want it. Well,
I [would] answer them, ‘Do what you think is right. Don’t look in the book.’”
Liberating leaders do not believe that a couple of years can undo a view that
employees have acquired since kindergarten: Solving problems through top-
down policies and regulations instead of through responsible individual or
small group initiatives. One liberating leader, Ricardo Semler of Brazil-based
SEMCO, has in fact created a foundation that runs several schools in which chil-
dren, beginning in kindergarten, are taught in an environment that encourages
responsibility and freedom rather than following instructions and being compla-
cent.51 However, those educated in the old system require vigilance on the part
of liberating leaders so that polices and regulations don’t sneak back in—vigi-
lance that, Lars Kolind, for example, lacked in Oticon.
When policies and regulations are not reintroduced to solve business
problems, they may also sneak in to deal with abuses. Gordon Forward, the
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former CEO of Chaparral Steel, a Texas-based mini-mill, calls this “managing
for the 3%.”52 One CEO at a small company explained to us that because he
caught one secretary dipping into her office supplies for her kids’ back-to-school
needs, he issued a regulation: No office supplies can be ordered during the sum-
mer. Thus, he figured, there would be nothing left on September first for her to
take. Unfortunately, however, such rules punish those who do nothing wrong,
even after the original wrongdoer is long gone. Moreover, the new rules risk
destroying the environment in which employees are treated as intrinsically
equal—that is, with trust and consideration—thus, putting at risk the F-form
itself. Liberating leaders refuse to “manage for the 3%.” Instead, they get rid
of the wrongdoers. In his 25 years with FAVI, Zobrist didn’t dismiss any of the
many people whose jobs became useless—because they were bureaucratic—in
his freedom-based company. He did, however, promptly fire three people for
malfeasance. This applied not only to those who abused material assets but—as
importantly—those who abused people. As Bob Davids would say, “the swift
sword cuts clean,” a mantra he employed when a person became increasingly
dictatorial and when he “realized that the rest of the people were waiting to see
how long [he] would let this exist.”53
A final reason for liberating leaders to stay alert is the tendency for
employees to switch their focus from the company’s world-class vision to imme-
diate concerns. Recall how Les Lewis, a “manufacturing leader” at Gore, was
disturbed when he discovered that on-time delivery performance was slipping
and he corrected this vision problem.54
To summarize, the employees’ and managers’ tendencies to reintroduce
the command-and-control features require a constant culture-keeping effort on
the part of the liberating leader. However, not every leader who launches a lib-
eration process will succeed in it.
Liberating Leaders’ Traits
The three traits of successful liberating leaders are: freedom and responsi-
bility values, creativity, and wisdom. The first two traits are commonly discussed
in leadership literature and shared by many types of successful leaders. The last
trait, wisdom, is rather uncommon in leadership research.55
There is much work on the role of values in successful leadership.56 For
example, Bill Gore wrote: “Freedom is the great motivating power of individual
human beings. The problem of maximizing freedom within societal restraints of
an enterprise involving groups of people is the major one facing leadership in
our industrialized communities. Freedom generates invention, innovation, and
productivity.”57 Rich Teerlink, of Harley-Davidson, left executive positions four
times at other companies because they scorned his freedom values. Many other
liberating leaders in our study became frustrated by both the chronic underper-
formance they perceived in their command-and-control employers and, more
importantly, by the values they displayed.
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There is also considerable literature on the importance of creativity to
effective leadership.58 Creativity is a multi-component phenomenon in which
creative traits, process, and environment interact in the production of work
that is novel and useful.59 In our study, we identified one particular creative
trait in liberating leaders: the ability to redefine problems. Creativity research-
ers single out this ability because very often creative insight comes not during
the search for the solution, but during redefinition of the problem itself. For
example, Robert Townsend, while an executive at American Express in the late
1950s, redefined the credit card as a “cross between a passport and a traveler’s
check,” both of which seemed familiar to his bosses, and thus paved the way for
development of a huge credit card business. Liberating leaders in our research
redefined several otherwise intractable problems. Instead of figuring out how to
motivate people, they sought to build an environment where people self-moti-
vate. Instead of searching for a way to soothe relations between managers and
subordinates to reduce stress, they focused on how to transform that hierarchi-
cal relationship into a relationship between equals in order to eliminate stress.
The last liberating leaders' trait—wisdom—deals with a paradoxical aspect
of their behavior, simultaneously embracing a thing and its opposite. Here is
a vignette with a list of paradoxes we identified in SOL’s liberating leader Liisa
Joronen.60
Joronen is an owner and president of a big business, but has no company car
and rides the tram. Having stepped aside as CEO in favor of her children, she
professes to be reluctant to visit the company too often, but when she does, she
clearly loves every minute of it. She praises the free Thursday soup for employees
and visitors alike, but judges it too expensive to provide every day. In the first ten
minutes of our conversation, Joronen told us that she “lives in chaos” but, at the
same time, she insists, “I don’t go there and there and there,” waving her hand in
three directions, “I go somewhere.” She also told us that once she “decides some-
thing,” she’ll “break through walls” to get it done, yet she never “takes too big
risks.” She says that she is “the opposite of almost everything in the society,” yet
she says “I have to behave in society because . . . I still have the society, they are
my clients.”
Other liberating leaders had mottos describing their paradoxes, such as
Zobrist’s “To act without acting is a laissez faire approach that does not mean
doing nothing, but means creating conditions in which things happen by them-
selves.”61 But embracing paradoxes is key to wisdom.
Wisdom is different from intelligence, the ability to acquire and process
information. One can be smart and foolish at the same time.62 Wisdom scholars
define it as “excellence in . . . judgment, advice, and commentary in difficult
and uncertain matters of life and life conduct . . . combining personal and com-
mon good.”63 Thus, wisdom helps with uncertain, conflicting matters and with
contradictory goals. Holistic and dialectical thinking styles explain how wisdom
achieves that.64
To understand holistic thinking, or its absence, consider “the fundamental
attribution error”—the tendency to assign too much credit or blame for a given
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situation to a specific individual without taking into account the surrounding
circumstances or environment. Psychologists once thought that the fundamen-
tal attribution error was indeed “fundamental”—a universal feature of how
the mind works—but beginning in the 1980s, research revealed that it was, in
fact, culturally dependent.65 Western thinking tends to isolate actors and objects
from their environments, while East Asian thinking is more holistic, focusing
on the context and its relation to the object. Repeated studies have shown that,
as a result, East Asians are less prone to fundamental attribution error than are
Westerners.
To understand dialectical thinking, or its absence, consider how Western
upbringing and education develop the conviction that a thing and its logi-
cal opposite can’t both be true at the same time. East Asians, though, are not
beholden to this Aristotelian logic. Lao Tzu, the founder of Taoism, wrote: “The
greatest power seems weak/The purest white seems tainted/The abundant seems
empty/The stable seems shaky/The certain seems false.”66 Research has demon-
strated how difficult it is for Westerners to accept paradoxes, in contrast to East
Asians.67
In the past 30 years, developmental psychologists have shown that the
best problem solvers think “holistically” and “dialectically” about the problems
they face.68 That is to say, they consider all of the ways in which one problem
may be related to its surrounding circumstances and environment (holistic
thinking) and they are not afraid to entertain both sides of an apparent contra-
diction if it helps them move forward (dialectical thinking). Understanding these
two dimensions of wisdom helps us understand the liberating leaders’ embrace
of paradoxes and how it is useful for liberating leadership.
Liberating leaders’ wisdom also explains one more paradox—the co-exis-
tence of soft and hard leaders’ actions. For example, liberating leaders such as
Zobrist radically transformed their companies’ managerial practices, and yet did
so mostly through non-threatening, often gradualist tactics. However, Zobrist
did not hesitate to take harsh steps against certain dictatorial managers, and to
do so publicly. The inability to embrace this paradox is one reason why so few
leaders succeed in adopting liberating leadership. Indeed, liberating leadership is
transforming. As James MacGregor Burns writes, “new cultures and value sys-
tems take the place of the old.”69 Consequently, resistance to “transformation” is
to be expected and is normal, particularly from managers who have legitimate
interests they expect to be hampered. Pure intelligence may dictate using force
against or dismissing those who obstruct the transformation. However, forc-
ing managers to change leads to greater resistance, something Rich Teerlink of
Harley-Davidson summarized as: “People don’t resist change; they resist being
changed.”70 Ignoring their needs only delays the moment when the resisting
managers will strike back. Lars Kolind of Oticon, facing the resistance of senior
managers to his liberation campaign, summoned them to his office one at a time
and issued an ultimatum: “Choose whether you want to be part of the game or
quit.” The senior managers all agreed (nominally) to play their boss’s game, only
to sabotage his efforts later on. Zobrist, on the other hand, neither dismissed nor
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ignored his resisting managers. He gave them time and support (such as train-
ing) to voluntarily change, but when they refused, he moved them into posi-
tions with no authority, while preserving their salary.
To summarize, successful liberating leaders posses the traits of freedom
and responsibility values, creativity, and wisdom, that allow them to succeed in
the liberating leadership process. More specifically, they use wisdom to resolve
many contradictory matters encountered during this process. However, as
implied by wisdom’s definition, they use it not only for this but also to combine
company’s common good with employees’ personal good—happiness.
Concluding Remarks:
F-form as a Happy Workplace and a World-Class Business
The concept of happiness occupies an important place in the history
of human thought. Aristotle viewed happiness as the ultimate goal of human
actions. Many texts from Thomas Jefferson’s Declaration of Independence to James
Mackay’s questionable treatise on The Economy of Happiness71 to the work of John
Rawls and Edmund Phelps72 explore societal and economic solutions for happi-
ness. Phelps, for example, argues that if the society’s majority enjoys the Aristo-
telian “good life” or happiness, then the society and its economy can be viewed
as good or just. On the individual level, happiness is studied in the field of
“positive psychology.”73 Deci and Ryan relate individual happiness to the work
environment, and thus offer a framework to understand how a large number
of active individuals may achieve happiness in the F-form workplace (see Fig-
ure 1).
The main obstacle to happiness lies in the apparent contradiction between
the personal interests of individuals and those of the collective others. On one
hand, the pursuit of personal good has been viewed since the time of John
Adams as necessary for the market economy to function. However, it leads, at
least in the short term, to material inequality and deprivation of the good life
for others. On the other hand, primary consideration for others’ interests, while
a seemingly promising path to equality and happiness, has proven incapable of
driving economic performance. Most of Western philosophical, economic, and
political thought—including recent debate on the extent of market regulation—
assumes this paradox and seeks some compromise solution. Wisdom suggests a
different approach: to seek a solution where self-interest and consideration for
others’ interests co-exist.74 The F-form company exemplifies such a solution, both
inside and outside, as an economic actor.
First, within a company, the F-form is based on the clear acknowledg-
ment of every employee’s personal needs. As Deci and Ryan have demonstrated,
the surest way of preventing a person from becoming self-motivated is to deny
satisfaction of personal needs. Simultaneously, this person, being part of a corpo-
rate environment, has to act to satisfy others’ universal needs. For example, the
individual has to treat colleagues as intrinsically equal and to help them when
they ask. When building an F-form environment, instead of seeking compromise
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or quid pro quo, the solution to the paradox emerges as a set of “unwritten rules.”
For example, in Gore, every “associate” is expected to provide help when a col-
league needs it, which gave birth to the unwritten “credibility bucket” rule. The
“bucket” fills each time one keeps a commitment or helps others, and empties
when one doesn’t. One’s ability to work at Gore depends on one’s “credibility
bucket.” At USAA, where an employee is expected to treat colleagues as he or
she would like to be treated, the “golden rule” developed among the employees.
In the F-form companies we studied, such unwritten rules embracing the para-
dox of simultaneously satisfying one’s personal needs and others’ needs go by
different names: respect, dignity, consideration, trust, fairness, equity, courtesy,
and grace. Thus, when Bill Gore believed that his company needed something,
he’d always address an associate in the following manner: “We need to do XYZ.
Would you be interested in doing it?” Thus, within a company, F-form cultures
are micro-societies of mutually respecting, growing, and self-directing individu-
als pursuing their own and the company’s good.75
Second, within an economy, the F-form company embraces a paradox
of both pursuing its self-interests and being considerate to other companies.
FIGURE 1. F-Form's Vir tuous Circle
Emotionally owned world-class vision
Nourishing work and management practices
Satisfaction of the employees’
universal needs
World-class economic performance
and employees’ happiness
self-motivated actions
for the best of the company
“psychic incomes” including
fair gain-sharing
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The company is self-interested because, as a business with world-class vision, it
relentlessly pursues its own good often at the expense of its competitors. How-
ever, with its suppliers, customers, and partner companies the F-form company
is more considerate, because what is good for them is generally good for the
company itself. Thus, the F-form company develops—similar to the Japanese
keiretsu system—trustful long-term relationships with its suppliers and helps
them improve. The F-form company treats its customers well, which is good
both for them and for the company because well-treated customers keep coming
back. For example, Zobrist would call his customers proposing to postpone their
orders for the company’s products if he knew that their price—heavily depen-
dent on raw materials prices—would soon fall; and conversely, to order more if
the prices would rise imminently. Similarly, in response to the downturn, SOL
decided to charge less than the contractual price for many of its struggling clients
such as hotels and ferry companies—both to help them through the downturn
and to inspire even more loyalty from them in the future.76 At USAA, service
representatives stay on the line as long as necessary to help customers solve
their problems—business or personal—and to make customers come back. Some
F-form companies even help their competitors. For example, much like Robert
Mondavi’s efforts in sharing his innovations with fellow—and competing—Napa
Valley wine producers, Harry Quadracci shared Quad Graphics’ innovations in
printing equipment with its competitors because it was good for all of them.
Indeed, Quad/Tech—the division that makes and sells these innovations—sports
a rare set of testimonials in its lobby, mostly from Quad Graphics’ thankful
competitors.
Liberating leaders build an F-form environment in which self-interest and
consideration for others are integrated in employees’ actions at both the level of
the company and of the economy in the sort of virtuous cycle depicted in Figure
1. We call it a virtuous cycle because happiness is both a factor and a result of
world-class performance. As Zobrist put it, “There is no performance without
happiness.”
APPENDIX
About the Research
Based on our F-form definition, we first searched for companies reputed,
at some point in their recent history, for having responsible employees who
were free to act. Archival research of academic and media publications, as well
as professional and business networks, were used for this search. These were
then further researched through bibliography and networks to check whether
their organizational forms were potentially F-form ones.
We then approached these companies and visited the leader, current
or former, who was instrumental to building their organizational form. When
accepted, we spent 1-2 days in each of these companies interviewing the “liber-
ating leader,” employees, and managers (in one case, interviews were conducted
by phone). The questions for the semi-structured interviews were prepared after
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reading all available literature on each company. In cases where the “liberating
leaders” were retired, we interviewed them apart (in one case, through e-mail).
In cases where the “liberating leaders” had passed away (Bill Gore and Harry
Quadracci), we interviewed several executives who had worked closely with
them to learn about these leaders’ attitudes and behaviors. Also, in two cases,
the potential F-form we wanted to study had no longer existed within the com-
pany for more than a decade. Thus, we have interviewed the leaders who built
them but not the current employees and managers. To assess the work and man-
agement practices that had existed before, we relied on the employees’ oral and
written testimonials.
Altogether, we studied eighteen companies for their potential F-form,
three revealing themselves as either not having it to begin with or having
attempted to build it but failing in the end (see Table 1 with short descriptions
of eighteen studied companies; the three companies which had not adopted the
F-form are in italics).
All interviews were recorded and later transcribed for analysis. We also
collected corporate documents that were relevant to our topic. Where further
clarification was needed, we exchanged via telephone and email with the inter-
viewees. The specific findings in this paper were extracted by using the collected
observations- and documents-based inductive reasoning typical to field studies
methodology. Overall, our research is subject to the concerns traditionally asso-
ciated with this methodology (e.g., Klein and Myers77).
TABLE 1. Short Descriptions of Studied Companies78 (continued on next page)
W. L. Gore & Associates—Founded in 1958 by Bill Gore with no product, the company grew to upwards of $300
million in sales of the Teflon-based products by the mid-1980s, boasting 29 plants and 4,200 employees worldwide.
Now, the 8,400-strong company takes in over $2.1 billion a year in revenue and is still growing at 15%. It has been in
the “100 Best Companies to Work for in America” since the ranking’s inception.
USAA—When Robert McDermott took over as CEO in 1968, USAA had $200 million in assets in its 3,000-
employee insurance company. During his 25 years as CEO, USAA had a 400-fold increase in assets with only a 7-fold
increase in headcount. In 2008, it had $14.4 billion in sales and 22,000 employees. Ranked #1 for Customer Service by
Business Week in 2007-2008. Was in the “100 Best Companies to Work for in America.”
Sun Hydraulics—In 1970, Bill Koski started this hydraulic valves maker in Sarasota, Florida. The company was
profitable every year since 1972 and is today 633-strong, $167 million in sales all over the world. It went public in
1997. It is on the Fortune 100 fastest-growing small public companies list (three years in a row) and on the Forbes 200
best small companies list (three years in a row).
Quad Graphics—In 1971, Harry Quadracci started a print shop with 11 employees. From $154 million in 1986, the
company’s sales grew to $703 million in 1993. Today, this $2 billion, 12,000-strong firm is North America’s 3rd largest
printing company. Was on the “100 Best Companies to Work for in America” list.
GSI—In 1971, Jacques Raiman created this French payroll computer services provider as a subsidiar y of a large
industrial corporation. The company, later turned independent, grew both organically and through acquisitions to
become the top European firm in this industry with $590 million in revenues and 3,800 employees in 1995. That year
it was acquired by ADP, a world leader in payroll and other computer services.
Bretagne Atelier—In 1975, Jean-Michel Quéguiner became CEO of a then small company dedicated to the
employment of handicapped people. Since then, he transformed it into a world-class auto-parts supplier with close to
$30 million in revenues, with 80% of employees being handicapped (though never mentioning this in biddings).
Richards Group—In 1976, Stan Richards transformed his creatives-for-hire business star ted in his apartment into
a full-service adver tising agency. From 1985, his company landed big name clients including Motel 6 and was already
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Notes
1. Video documents on the Kauffman Foundation’s website <http://video.kauffman.org/ser-
vices/player/bcpid1811456713?bclid=1811598530&bctid=1811454387>, accessed March 20,
2007.
2. Personal interviews on April 8, 2005 and January 25, 2006. We will try, as much as pos-
sible, to present our illustrations in a narrative form. Though unusual for most scientific
texts, narrative form is common for fieldwork-based disciplines, such as ethnography or
anthropology, where, beyond getting close to the empirical fact, research must be factual,
billing over $100 million. Today Richards Group is the largest independent agency in the U.S. with nearly 900 people
and over $1 billion in billings.
IDEO—In 1978, David Kelley co-founded a small industrial design company. It designed the first Apple mouse, Palm V
PDA, stand-up toothpaste tube, and with a thousand more products is considered one of the world’s most influential
design companies. The company has close to 600 employees and since 1996 is a subsidiary of Steelcase, Inc.
Chaparral Steel—With the company since 1973, Gordon Forward became its CEO star ting in 1982 when its sales
amounted to $297 million. The sales grew to $376 million in 1988, when the IPO was made, to $462 million in 1994,
when it became world’s lowest cost steel manufacturer. Today, it accounts for 10% of its parent company’s Gerdau
Ameristeel production (sales $5.8 billion). Was on the “100 Best Companies to Work for in America” list.
SAS Institute—Since being co-founded by James Goodnight in 1976, this software maker experienced double-digit
revenue growth annually reaching $2.26 billion in 2008, becoming the world largest privately held company in this
industry. Its workforce of over 10,000 enjoyed an under 3% turnover in 2008—extremely low for the industry. Is on
the “100 Best Companies to Work for in America” list.
Intertech Plastics—Noel Ginsburg, CEO, started this Denver-based company in 1980 at the age of 21. Today, this
regional leader, with close to 100 employee and $14 million in revenues, has grown into a world-class manufacturer of
injection and molded plastic products.
FAVI—When Jean-François Zobrist took over this French copper alloy foundry in 1983, it was producing sanitary
equipment and water meters and was initiating gear forks. Today the company has 50% of the European market plus
a share of the Chinese one in gear forks with $128 million in sales. FAVI delivered twenty million units without a single
quality reject and never missed a deadline.
Harley-Davidson—The company was on the brink of collapse with $295 million in sales when Rich Teerlink took
over as a CEO in 1986. He soon star ted its transformation bringing the sales to $940 million in 1990. When Teerlink
retired in 1999, Harley had a 50% U.S. market share, $2.5 billion in sales, and 17% profits. Today Harley-Davidson is
the world’s largest motorcycle manufacturer, with $5.7 billion in sales and $1 billion in profits. Was on the “100 Best
Companies to Work for in America” list.
Oticon—When Lars Kolind took over this Danish hearing device manufacturer in 1988, the company was losing
product leadership and money on sales of $52 million. He soon started its transformation and the company’s sales,
which had already doubled between 1990 and 1994, had doubled again by 1999—a 400% increase in revenue in one
decade, accompanied by double-digit profit margins.
SOL—The Finnish company became profitable within its first year, 1991, and remained so with average annual profit
of 8-9%. Its sales grew from $130 million in 2004 to $203 million in 2007. SOL holds the #2 spot among cleaning
companies in Finland.
Ve r te x —In the early 1990s, Jeff Westphal became an executive of a mere 30-person, $10 million in sales tax-
consulting firm inherited from his father. In 2000, its sales reached $70 million and it had 450 employees. By 2006,
Vertex was 600-strong with $100 million in sales. Regularly listed among the “Best Places to Work in Pennsylvania,” its
home state, company turnover is a low 6% compared to 16% for the industry in the region.
Zappos—The Internet shoe seller was founded in 1999, partly with the venture capital of Tony Hsieh who became
gradually involved in the company’s management and a few years later became its CEO. From $1.6 million in 2000, the
sales surpassed $1 billion in 2008. Employs over 1,600 people. Ranked #7 for Customer Service by Business Week in
2009. Offers $2,000 for employees willing to leave during the first 90 days; extremely low turnover thereafter. Is on the
“100 Best Companies to Work for in America” list.
Sea Smoke Cellars—The winery first produced 795 cases of wine in 2001 and grew dramatically over the next
years to 4,000, 12,000 and then to 15,000 cases sold in 2005. Named the Best New Winery in the U.S. by Food &
Wine, it ranked among the 100 Best Wines in the Wor ld in Wine Spectator in its first year and for four years straight.
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descriptive, and rely on quotations in reporting. See John Lofland, Analyzing Social Settings:
A Guide to Qualitative Observation and Analysis (Belmont, CA: Wadsworth, 1971). Regarding
the narrative form in organizational research, see Haridimos Tsoukas and Mary Jo Hatch,
“Complex Thinking, Complex Practice: The Case for a Narrative Approach to Organizational
Complexity,” Human Relations, 54 (2001): 979-1013.
3. Adjustments are only made to world prices in raw materials.
4. Chris Argyris, Personality and Organization (New York, NY: Harper Collins, 1957); Integrating
the Individual and the Organization (New York, NY: Wiley, 1964); Rensis Likert, New Patterns
of Management (New York, NY: McGraw-Hill, 1961); Douglas McGregor, The Human Side
of Enterprise [annotated edition, originally published in 1960] (New York, NY: McGraw-
Hill, 2006); The Human Side of Enterprise, conference at MIT on April 9, 1957, reprinted in
McGregor, op. cit., pp. 341-356.
5. Warren Bennis, “Foreword to the Twenty-Fifth Anniversary Printing,” in McGregor, op. cit.,
p. xx.
6. On “new forms of organizing”/“new organizational forms,” see Nicolai J. Foss, “Introduc-
tion: New Organizational Forms—Critical Perspectives,” International Journal of the Econom-
ics of Business, 9/1 (February 2002): 1-8; Anne Y. Ilinitch, Richard A. D’Aveni, and Arie
Y. Lewin, “New Organizational Forms and Strategies for Managing in Hypercompetitive
Environments,” Organization Science, 7/3 (May/June 1996): 211-220; Andrew M. Pettigrew
and Evelyn M. Fenton, eds., The Innovating Organization (Thousand Oaks, CA: Sage, 2000);
Andrew M. Pettigrew, Leif Melin, Richard Whittington, Tsuyoshi Numagami, Winfried
Ruigrok, eds., Innovative Forms of Organizing: International Perspectives (Thousand Oaks, CA:
Sage, 2003). On “advanced HRM practices,” see Mark A. Huselid, “The Impact of Human
Resource Management Practices on Turnover, Productivity, and Corporate Financial Per-
formance,” Academy of Management Journal, 38/3 (June 1995): 635-672; Casey Ichniowski,
Kathryn Shaw, and Giovanna Prennushi, “The Effects of Human Resource Management
Practices on Productivity: A Study of Steel Finishing Lines,” American Economic Review, 87/3
(June 1997): 291-313; John Paul MacDuffie, “Human Resource Bundles and Manufactur-
ing Performance: Organizational Logic and Flexible Production Systems in the World Auto
Industry,” Industrial & Labor Relations Review, 48/2 (January 1995): 197-221. On the “cellular
form,” see Raymond E. Miles, Charles S. Snow, John A. Mathews, Grant Miles, and Henry J.
Coleman Jr., “Organizing in the Knowledge Age: Anticipating the Cellular Form,” Academy
of Management Executive, 11/ 4 (November 1997): 7-20. On the “post-bureaucratic type,” see
Charles Heckscher, “Defining the Post-Bureaucratic Type,” in Charles Heckscher and Anne
Donnellon, eds., The Post-Bureaucratic Organization: New Perspectives on Organizational Change
(Newbury Park, CA: Sage, 1994), pp.14-62. On “people-based” forms, see Jeffrey Pfeffer, The
Human Equation: Building Profits by Putting People First (Boston, MA: Harvard Business School
Press, 1998). On the “individualized corporation,” see Christopher A. Bartlett and Sumantra
Ghoshal, “Beyond the M-form: Toward a Managerial Theory of the Firm,” Strategic Man-
agement Journal, 14 (Winter 1993): 23-46; Sumantra Ghoshal and Christopher A. Bartlett,
The Individualized Corporation: A Fundamentally New Approach to Management (New York, NY:
Harper, 1997).
7. Tuomo Alasoini, “In Search of Generative Results: A New Generation of Programmes to
Develop Work Organization,” Economic and Industrial Democracy, 27/1 (February 2006): 9-37.
8. For more on this, see Raymond E. Miles et al., "The I-Form Organization," California Manage-
ment Review, 51/4 (Summer 2009): 59-74.
9. In reality, built structures are multifunctional: beyond the usage function, they also have
historical, aesthetic, social, and other functions. See Donald Preziosi, Architecture, Language
and Meaning: The Origins of the Built World and Its Semiotic Organization (The Hague, The Neth-
erlands: Mouton, 1979.)
10. Personal interviews with Joel Quadracci and Karl Fritchen, September 26-27, 2007.
11. Personal interviews with Quad/Tech employees, September 26, 2007.
12. Ellen Wojahn, “Management by Walking Away,” Inc. (October 1983), pp.66-76, p. 76.
13. See Gerald R. Salancik and Jeffrey Pfeffer, “A Social Information Processing Approach to Job
Attitudes and Task Design,” Administrative Science Quarterly, 23/2 (1979): 224-253; Charles
O’Reilly, “Corporations, Culture, and Commitment: Motivation and Social Control in Orga-
nizations,” California Management Review, 31/4 (Summer 1989): 9-25.
14. For the recent accounts see Edward L. Deci and Richard M. Ryan, “The ‘What’ and ‘Why’ of
Goal Pursuits: Human Needs and the Self-Determination of Behavior,” Psychological Inquiry,
11 (2000): 227-268; Marylène Gagné and Edward L. Deci, “Self-Determination Theory and
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CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4 SUMMER 2009 CMR.BERKELEY.EDU 55
Work Motivation,” Journal of Organizational Behavior, 26/4 (June 2005): 331-362. Deci, Ryan,
and associates’ work began in the 1980s, but despite its empirical breadth and theoretical
relevance, most management and leadership research still relies on the earlier motivational
theories, including that of Maslow. For example, see James MacGregor Burns, Transforming
Leadership (New York, NY: Grove Press, 2003); Stephen P. Robins, Management Today! (Upper
Saddle River, NJ: Prentice Hall, 2000).
15. It can be argued that the highest need in Maslow’s hierarchy—self-actualization—is never
fully satisfied and so continually motivates people to new action to satisfy it. Though this
may be true for a small portion of human beings, even for them Maslow’s view of an unsat-
isfied need is that of a tension that one strives to reduce, which is very different from Deci
and Ryan’s view of needs as nutriments.
16. We are not ignoring the importance of physical and security needs. A chronically hun-
gry or hurt child obviously won’t enjoy playing. At the workplace, whether the major-
ity of employees in the developed countries have their essential physical and security
needs satisfied or not is a subject of debate. See, for example, Angus Maddison, Dynamic
Forces in Capitalist Development (Oxford: Oxford University Press, 1991). More specifically,
F-form companies, though not based on Maslow’s hierarchy of needs, obviously don’t
ignore the fact that all employees sign a contract stipulating the material benefits for their
work. Regarding the latter, most F-form companies pay salaries within the third quartile,
a compromise between their unwillingness that employees stay “just for money” and their
awareness that “if we don’t pay a competitive wage, our competitors will.” Though none
offer stock options, they all provide a gain-sharing plan, from stock ownership, to ESOP,
to annual performance-dependent bonuses. Such plans’ technicalities can be notoriously
complex and indeed they differed among the companies we studied in everything but one
common feature: they all tried to make it fair and reflect both individual and collective con-
tribution to the results. The fairness mattered in particular because material benefits were
not considered as separate but rather a part of all the benefits employees gain through the
satisfaction of their universal needs (see Figure 1.) Many liberating leaders referred to it as
“psychic income” and were convinced that the F-form companies’ extremely low turn-over
rate and even “boomerang” rate (proportion of employees who leave and come back) are
due to the totality of this income, not only to its material part.
17. Deci and Ryan define relatedness as “desire to love and care, and to be loved and cared for”;
competence as a “propensity to have an effect on the environment as well as to attain val-
ued outcomes within it”; and autonomy as a “desire to self-organize experience and behav-
ior and to have activity be concordant with one’s integrated sense of self.” Deci and Ryan,
op. cit., p. 231.
18. Douglas McGregor, The Professional Manager (New York, NY: McGraw-Hill, 1967), pp. 10-11
[the emphasis is McGregor’s].
19. We prefer these terms to denote people’s universal needs rather than Deci and Ryan’s “relat-
edness,” “competence,” and “autonomy” for two reasons. First, terms such as competence
and autonomy have acquired specific meanings in management. Thus, “competence” is
often used as an HR term, as in rather command-and-control “competency management”
and autonomy is often discussed in “balance” with control within a company. Second, we
want to stay close to McGregor, who talked about treating people as if they are good and
about self-direction and self-control.
20. In Tom Peters and Robert Townsend, Winning Management Strategies for the Real World, Audio
Cassette (Chicago, IL: Nightingale Conant Corp, 1986).
21. Gore’s F-form being another early case, but in comparison to Avis, Bill Gore had little to
remove since he was building an F-form from scratch.
22. Based on a personal interview, March 3, 2006.
23. Personal interview with Les Lewis, one of the early supervisors, March 1, 2006.
24. One reason invoked for the removal of the HR management procedures in companies like
FAVI or GSI was that treating people as “resources”—instead of as human beings—intro-
duces a fundamental intrinsic inequality between them and those who “manage human
resources.”
25. We observed both the company’s U.S. and European facilities.
26. Ellen Bankert, Mary Dean Lee, and Candice Lange, “SAS Institute,” International Journal of
Leadership Education, 1/1 (2005): 93-114, p. 99; the emphasis is in the original.
27. Bankert et al., op. cit., p. 94.
28. Personal interview, May 23, 2008.
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29. SAS performance of more than 30 years of profits and growth is indeed spectacular: only
less than one tenth percent of comparable companies achieved such sustained competitive
advantage (Robert R. Wiggins and Timothy W. Ruefli, “Sustained Competitive Advantage:
Temporal Dynamics and the Incidence and Persistence of Superior Economic Performance,”
Organization Science, 13/1 (2002): 82–105). This also means that highly performing over a
long span companies are rare—whether of SAS-type, F-form-type or other.
30. Based on many studies of Southwest, we considered including it in our panel of likely
F-form companies. It didn’t happen, in the end, since we were unable to study it firsthand
and interview its co-founder Herb Kelleher.
31. There are several reasons for a leader to elaborate a world-class vision. One, given both by
the liberating leaders and many leadership scholars is that a vision, in order to rally people,
has to be inspirational. Another, offered by workplace design and transformation scholars
is that the organizational design has to align itself with a corporate strategy. See Jeffrey
K. Chan, Sara L. Beckman, and Peter G. Lawrence, “Workplace Design: A New Manage-
rial Imperative,” California Management Review, 49/2 (Winter 2007): 6-22; Arnold C. Levin,
“Changing the Role of Workplace Design within the Business Organization: A Model for
Linking Workplace Design Solutions to Business Strategies,” Journal of Facilities Management,
3/4 (June 2005): 299-311.
32. Personal interview, September 24, 2007.
33. Personal interview, March 3, 2006.
34. Personal interview, September 24, 2007.
35. Personal interview, March 1, 2006; other paragraph’s details are based on the same inter-
view.
36. Herman Miller is a candidate for an F-form company not studied in this research. For De
Pree’s leadership philosophy, see Max De Pree. Leadership Is an Art (New York, NY: Double-
day, 1987); Max De Pree, “The Leadership Quest: Three Things Necessary,” Business Strategy
Review, 4/1 (Spring 1993): 69-74.
37. Personal interview with Rich Teerlink, August 15, 2005; personal interview with Jim
Ziemer, August 17, 2005.
38. McGregor, op. cit., p. 265. In that passage, McGregor was primarily concerned with the
development of managers, but the overall argumentation is resonant with his similar views
on human growth in other parts of the book.
39. Our interview took place on March 6, 2006. General Robert McDermott died at the age of
86 of complications from a stroke on August 28th of that year.
40. Changing jobs in these companies may simply require an employee to inform her current
leader of her wish and to agree on the plan to phase out her engagement with her current
team or project. This approach is very different from the so-called “job mobility” one run
centrally by most HR departments.
41. Frederick F. Reichheld, The Ultimate Question: Driving Good Profits and True Growth (Boston,
MA: Harvard Business Press, 2006), p. 20. NPS is calculated as the percentage of people
who on the 11-point scale give 10 (extremely likely) or 9 to the question “How likely is it
that you would recommend Company X to a friend or colleague?” minus the percentage of
people who gave between 6 and 0 (not at all likely.)
42. Personal interview with Les Lewis, March 1, 2006.
43. Personal interview, September 24, 2007. Bob Davids credits this approach to Robert
Townsend, from whom he borrowed it and who was Davids’ mentor and friend.
44. The description is based on the following sources: Lars Kolind, The Second Cycle: Winning the
War against Bureaucracy (Philadelphia, PA: Wharton School Publishing, 2006); Nicolai J. Foss,
“Selective Intervention and Internal Hybrids: Interpreting and Learning from the Rise and
Decline of the Oticon Spaghetti Organization,” Organization Science, 14/3 (May/June 2003):
331-349; Nicolai J. Foss, “Internal Disaggregation in Oticon: Interpreting and Learning from
the Rise and Decline of the Spaghetti Organization,” LINK, Department of Industrial Eco-
nomics and Strategy, Copenhagen Business School, 2000; Pernille Eskerod, “Organizing by
Projects: Experiences From Oticon’s Product Development Function,” in Mette Morsing and
Kristian Eiberg, eds., Managing the Unmanageable For a Decade (Hellerup: Oticon, 1998),
pp. 78-90; Tom Peters, Liberation Management (New York, NY: Ballantine Books, 1992),
pp. 201-4; e-mail interviews with Lars Kolind, January-May 2007. The unspecified quotes
are from Kolind’s book.
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45. Kolind himself suggests that though it was a setback, overall his project in Oticon of de-
bureaucratizing its environment succeeded. Indeed even today, Oticon is not a typical com-
mand-and-control company.
46. Eskerod, op. cit., p. 87.
47. Foss [op. cit.] suggested that Oticon is an example of the impossibility of “hybrid” structures:
a mix of market mechanisms—in Oticon, internal competition among projects—and of a
hierarchical mechanism—in Oticon, the supervising PPC. It’s true that Kolind sometimes
refers to competition among the projects suggesting, for example, that with more people
joining them, the more attractive projects will win over less attractive ones, which should
be outsourced or simply eliminated. In that way, a sort of “collective wisdom,” rather than
senior management, orients product strategy. In reality, though, the Products and Projects
Committee never let the “market forces” unfold, if that is in principle possible within a
company. See Geoffrey M. Hodgson, “Knowledge at Work: Some Neoliberal Anachronisms,”
Review of Social Economy, 63/4 (December 2005): 547-565; Todd R. Zenger, “Crafting Internal
Hybrids: Complementarities, Common Change Initiatives, and the Team-Based Organiza-
tion,” International Journal of the Economics of Business, 9/1 (February 2002): 79-95.
48. Personal interview, May 18, 2008.
49. Personal interview, May 17, 2008.
50. Personal interview, September 15, 2008. All other quotes by Kelley, unless specified, come
from this interview.
51. See Lawrence M. Fisher, “Ricardo Semler Won’t Take Control,” Strategy+Business, 41 (Winter
2005): 1-11; <www.lumiar.org.br/english/index.html>. Semco is a candidate for the F-form
we haven’t studied in this research.
52. Personal interview, September 25, 2007.
53. Personal interview, May 18, 2008.
54. Interestingly, Kolind of Oticon understood the importance of maintaining the vision too:
“The more freedom . . . we as a company want to give to staff, the more clarity we must
create about mission, vision, strategy, and values.” The problem in Oticon, as we have seen,
was that this clarity has been blurred by a top-down committee that didn’t share it, and
Kolind wasn’t able to catch that on time.
55. For rare examples, see Jeffrey Pfeffer and Robert I. Sutton. The Knowing-Doing Gap: How
Smart Companies Turn Knowledge into Action (Boston, MA: Harvard Business Press, 2000), the
book adopting the Socratic, “epistemic humility” conception of wisdom; Karl E. Weick and
Ted Putnam, “Organizing for Mindfulness: Eastern Wisdom and Western Knowledge,” Jour-
nal of Management Inquiry, 15/3 (2006): 275-287.
56. Burns, op. cit.; Joanne B. Ciulla, ed., Ethics, the Heart of Leadership (Westport, CT: Praeger,
2004); De Pree (1987), op. cit.; Robert Greenleaf, Servant Leadership (New York, NY: Paulist
Press, 2002); James O’Toole, Leading Change: The Argument for Values-Based Leadership (New
York, NY: Ballantine Books, 1995).
57. “The Future Workplace,” Management Review (July 1986), pp. 22-25, at p. 23.
58. See for example Robert J. Sternberg, James C. Kaufman, and Jean E. Pretz, “A Propulsion
Model of Creative Leadership,” Leadership Quarterly, 14/4-5 (August-October 2003): 455-
473; Bass emphasizes leaders’ “originality in problem solving,” Bernard M. Bass, Bass &
Stogdill’s Handbook of Leadership: Theory, Research, and Managerial Applications, 3rd edition (New
York, NY: Free Press, 1990), p. 87.
59. Teresa M. Amabile, “A Model of Creativity and Innovation in Organizations,” Research in
Organizational Behavior, 10 (1988): 123-167; Robert J. Sternberg and Todd I. Lubart, Defying
the Crowd: Cultivating Creativity in a Culture of Conformity (New York, NY: Free Press, 1995).
60. Based on personal interview, September 8, 2008.
61. The motto opens the book by Jean-François Zobrist, La Belle Histoire de FAVI: L’entreprise qui
Croit que l’Homme est Bon (Tome 1: Nos Belles Histoires) [The nice story of FAVI: The company
which believes that man is good (Vol. 1: Our nice stories)] (Paris: Humanisme & Organisa-
tions, 2007).
62. Robert J. Sternberg, “What Is Wisdom and How Can We Develop It?” Annals,AAPSS, 591
(January 2004): 164-174.
63. Paul B. Baltes and Ute Kunzmann, “The Two Faces of Wisdom: Wisdom as a General
Theory of Knowledge and Judgment about Excellence in Mind and Virtue vs. Wisdom as
Everyday Realization in People and Products,” Human Development, 47 (2004): 290-299, at
pp. 295-296.
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64. Richard E. Nisbett, Kaiping Peng, Incheol Choi, and Ara Norenzayan, “Culture and Systems
of Thought: Holistic versus Analytic Cognition,” Psychological Review, 108 (2001): 291-310.
65. Michael W. Morris and Kaiping Peng, “Culture and Cause: American and Chinese Attribu-
tions for Social and Physical Events,” Journal of Personality and Social Psychology, 67 (1994):
949-971; Nisbett et al., op. cit.
66. Lao Tzu, Tao Te Ching, the definitive edition, J. Star, translator (New York, NY: Tarcher/Put-
nam, 2001), p. 54.
67. Nisbett et al., op. cit.
68. Patricia K. Arlin, “Cognitive Development in Adulthood: A Fifth Stage?” Developmental Psy-
chology, 11 (1975): 602-606; Patricia K. Arlin, “The Wise Teacher: A Developmental Model of
Teaching,” Theory into Practice, 38/1 (1999): 12-17; Michael Lamport Commons and Francis
A. Richards, “Four Postformal Stages,” in Jack Demick and Carrie Andreoletti, eds., Hand-
book of Adult Development (New York, NY: Kluwer Academic/Plenum, 2003), pp. 199-219.
69. Burns, op. cit., p. 25. Burns, who coined the transforming leadership term, believes it simi-
lar and yet different from the transformational leadership later proposed by Bernard Bass.
Personal exchange with Burns, August 20, 2005.
70. Personal interview, August 15, 2005.
71. James Mackay, The Economy of Happiness (Boston, MA: Little, Brown, and Co., 1906,
reprinted by Kessinger Publishing, 2007).
72. John Rawls, A Theory of Justice (Cambridge, MA: Harvard University Press, 1971); Edmund S.
Phelps, “The Good Life and the Good Economy: The Humanist Perspective of Aristotle, the
Pragmatists and Vitalists; and the Economic Justice of John Rawls,” Lecture in the Annual
Series “Aristotle and the Moderns,” Low Library, Columbia University, New York, NY, Octo-
ber 3, 2007.
73. Martin E.P. Seligman, Authentic Happiness: Using the New Positive Psychology to Realize Your
Potential for Lasting Fulfillment (New York, NY: Free Press, 2002).
74. Interestingly, this specific wisdom and its resulting happiness also constitute a major sus-
tainability advantage for an organization. As O’Reilly discusses in this issue [California
Management Review, 51/4 (Summer 2009)], organizational cultures composed of “helpers”
outperform and outlive cultures where purely individualistic behavior prevails.
75. The F-form may be thought of as simply an alternative—disguised—means of employee
control since instead of directly controlling their behavior through orders, policies, and
motivational schemes, the F-form culture replaces these with a number of “unwritten rules”
that every employee must respect or face “soft excommunication” (one expression we often
heard is: “We don’t fire people; they fire themselves.” For discussion of social control, see
Charles A. O’Reilly and Jennifer A. Chatman, “Culture as Social Control: Corporations,
Cults, and Commitment,” Research in Organizational Behavior, 18 (1996): 157-200; see also
O’Reilly, op. cit.) However, there are some fundamental differences between both sets of
rules. First, in the command-and-control culture, the rules are formal and plethoric, while
in the F-form culture they are “unwritten” and few. Second, in the command-and-control
culture they are thought up and enforced from on high, while in the F-form they grow up
organically from people’s own interactions with each other and are enforced by no one of
authority but by all members.
76. Personal exchange with Liisa Joronen, May 10, 2009. Despite the reduction in its revenues,
SOL remains profitable thanks to its employees’ increased initiative and productivity.
77. Heinz K. Klein and Michael D. Myers, “A Set of Principles for Conducting and Evaluating
Interpretive Field Studies in Information Systems,” MIS Quarterly, 23/1 (March 1999): 67-94.
78. Companies are ordered by the year when the adoption of the F-form or similar organiza-
tional form began. Only part of the listed companies are referred to in this article others
being described in Brian M. Carney and Isaac Getz, Freedom, Inc.: The Remarkable, No-Cost Way
to Lead Your Business to Higher Productivity, Profits, and Growth (New York, NY: Crown, 2009).
