Story:
All Play and No Work

By Matt Shlosberg - Managing Director at Hanna Concern

June 7, 2010 at 12:31pm

Moonshots

Increase trust, reduce fear

Take the work out of work

Summary

A story of how one brave company blended work and play and achieved an unmatched level of performance.

Context

Norman Development was a US based R&D subsidiary of a Norwegian software development company. This subsidiary was just acquired (in 1996) and was a total mess. The product was popular among customers but was hard to maintain. Employees weren't motivated. Nothing was getting done. The level of customer service was poor. A turn-around executive was appointed to make it work.

Triggers

The turn-around executive (CTO) identified de-motivated people as the main source of the problem. They came to work to get a paycheck and didn't care about results. He decided to change that.

Key Innovations & Timeline

The CTO decided that he was going to blend work and play to such an extent that people couldn't see the difference. The approach was to figure out which staff can most effectively blend the two and get rid of everyone else. He did this in several steps:

1. Reduce the paycheck dependency. First, he decided to change the staff mix to only include people for whom paycheck wasn't the primary reason to work. This means he had to drop an older crowd or people with families and keep people who were young and ambitious and were hot commodities, knowing they can quickly find another job elsewhere. Of course he had to overcome US EEOC laws governing age discrimination in the workplace. To do that, he found a common denominator among people he wanted to keep (other than age) and fired other people because they weren't the right fit in the new culture.

2. Pick staff that wants to play and values teamwork. He narrowed down the staff selection to people who were extroverts, liked working in teams, liked to socialize outside of work, and felt like they were a big family. He made sure people liked each other. Because this was a software company, he picked people who were hungry for technology, were early adopters, and spent all of their free time at home messing with computers (real geeks).

3. Become highly selective. He became highly selective when it came to staff hiring and retention. His entire division (about 30 people) had a turnover of about 50% a month for the next three months. He didn't give people warnings. He didn't give people individual goals. He just told the entire team that this company consisted of the brightest people in the industry. They either had to behave like such people or leave. If things didn't work out, people were terminated immediately. As a result, everyone believed they were the chosen ones if they got to stay.

4. Bring fun to work. He then created an environment that was fun and supported the social values of the people he selected. He eliminated offices and put as many people as possible in one big room with no cubicles. He brought in NURF guns and water guns. He gave his technical staff the biggest and most expensive hardware they could ever dream of. He offered free lunches with lobsters and crabs, sometimes even offering blank checks to any restaurants they pick. He eliminated policies, bureaucracy, and work schedules. He allowed people to freely communicate on any subject at any time. He allowed each member of the team to make his own decisions about his work, never giving anyone any directions other than the overall company vision.

5. Inspire to shoot for the stars. He made everyone in the firm an entrepreneur. Everyone knew what business the company is in and everyone was allowed to directly improve the product or come up with a way to beat competition. He organized the staff to function as a team with a common purpose - beat competition at all costs.

6. Blend work and play. He took away any rules and set long term goals for the firm. He then set his people free to execute. People spent half of their time shooting NURF guns and playing video games and the other half of their time working very hard. Because of the types of people he picked to stay and the environment he created, there was no longer a concept of work vs. play. These people treated work as play. It was as fun for them to shoot guns (play) as it was to debug security software (work).

Challenges & Solutions

The firm had to go through a significant employee turnover. Once the right culture was built, it was no longer an issue. Every remaining employee knew he could find a job (the job market for IT people was hot at the time) the day he was let go. People weren't scared to make decisions though. They took risks. The payoff was great!

Benefits & Metrics

Productivity went up significantly

Product quality went up.

Customer satisfaction went up/

This firm became 100% transparent to employees.

Costs went down (no older crowd that cared about paycheck; less experience of the younger crowd means lower payroll costs).

The level of trust went up

Fear disappeared completely

Credits

The person who ran this organization was named George Willis. I was a consultant there.

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June 7, 2010 at 11:28am

Farayi Kambarami

I am getting stuck at the first part of George Willis' key innovations: getting rid of older folk because they had a pay check dependency. Two things come to my mind: was it an actual fact that the older guys were more dependent on their pay checks than the younger so called hotter guys? COuld it not have been than some of the older guys had a much better developed skill set and could also have earned their stripes to the extent that pay days were no longer a big day? My second concern is the scalability or adaptability of this idea to any other company in a different industry. How would you potentially take this idea to a soap manufacturing company, for example?
Otherwise the rest of the idea has great appeal to me. I do agree that blurring the line between work and play can really unlock a lot of potential that lies untapped in many organisations and I guess some of the things that you stated above could achieve this aim.

June 8, 2010 at 6:31am

Matt Shlosberg

Farayi,

Thanks for the comment. I don't have the research that shows the paycheck dependency across companies and industries, but this was the case in a small (20 people) group of people in this particular company. But if you think about this concept in general, it makes sense. This firm was in the software industry and this story took place in late 1990s. Back then IT people would send out 5 resumes and have 4 interviews and 3 offers the next day (first hand experience!). So people weren't scared to lose their jobs. The older crowd with families was far more experienced in personal finances and had more to lose, so paycheck was far more important to them. Although this could have been a false sense of paycheck dependency, since the older folks could probably find a job in a day as well. But it didn't matter if this sense was real. What mattered is whether or not there was fear in the workplace, and this fear was a direct result of the potentially false sense of paycheck dependency. Also, people with families tended to care more about families and worked exactly 8 hours a day, while young geeks treated work as play and stayed at work longer.

You have to see how this applies to various industries, but I suspect it can be done anywhere, including the soap industry. The idea is to find entrepreneurial people that want to make it big, give them freedom, communicate a vision, and get out of their way. P&G is a good example of this strategy at work.

June 11, 2010 at 7:43am

Matt Shlosberg

Jennifer,

Thank you for your questions. I hope the following will answer:

1. I don't think it's a matter of paycheck dependency. I think it's a matter of perception of paycheck dependency or perhaps fear of losing a job. You are right that it may not be 100% age dependent and if this organization had 1,000 employees, targeting age would probably be the wrong this to do. But this was a small organization and it was easily seen that the young crowd didn't have that fear of losing the job because they (1) still lived with parents, (2) had no student loans yet, (3) didn't have mortgages, and (4) were maybe too young to be financially experienced to know better. The idea wasn't to reduce dependency as much as it was to build a culture of people who weren't too worried about getting fired.

2. The source of fear in the organization is the fact that people can be fired or unable to find another job if quit voluntarily. If they didn't have this fear, other things wouldn't scare them either. In fact, if an unwanted event happened to them, they could easily quit. So, if your alternative (quiting) is easily reachable, why would you be afraid of other things? In this particular case fear was eliminated because the source of fear disappeared. By focusing on people who weren't scared of losing jobs, this firm eliminated the source.

3.I think it depends on the industry, the types of people, and the job market. For example, Harvard professors are probably not much scared because they are hot; if they quit Harvard, they will be instantly snatched by another university. So this model would work in Harvard University regardless of employees' age and family status. US based doctors and nurses would probably be in the same shoes. But this wouldn't work in companies, industries, or geographies where unemployment rates were high or finding a job is tough. Also, although I don't have empirical evidence to prove my theory, I would guess that on average older people with families are more sensitive to job losses than young singles. It may be a false sense and it may just exist in their heads, but it exists.

Hope this helps.

June 11, 2010 at 12:17pm

Jennifer J Giasone

Of course the concept is great, but this case leaves a lot of unanswered questions...

For instance:
1. How was it REALLY determined who had the paycheck dependency? It reads very strongly that the decision was based on age and/or whether or not someone had a family to support. But what young professional is not dependent on a paycheck (student loands, rent, credit cards, etc)? If the job market was so great, what separated paycheck dependency of the young, inexperienced professional from the older, experienced professional? Wouldn't either of them be less dependent on a paycheck because the job market was so strong?
2. How exactly was fear eliminated? Wouldn't fear be exacerbated by the simple fact that people were fired so easily?
3. Is this model applicable to a company who employs people older than 40 who support a family?

Am I reading this too literally?

June 27, 2010 at 3:48am

Pedro Gonzalez Lopez

I realy like the concept of: ¨Increase trust, reduce fear¨. I will only change the approach to reduce fear, focusing more on the fear source at the organization and less on the fear source at the employees side.

July 3, 2010 at 12:44pm

Satya Vegi

Hi Matt

I liked the concept of Paycheck Dependency and it got me with great clarity on the issue i am facing with senior people where they risk taking capacity or thinking big is really a concern due to family ,fear of failure ,social pressure especially indian culture...where as young people are ready to take up challenges and ambitious and are always hot in a job market with their flexibility ...

thanks
Vegi

August 7, 2010 at 12:26pm

Jaxi West

Never heard of the new 'C' postion/title - like it!

Strong creative genius ideas!

Good balance of everything in the work/funplace!

I would say he is an exceptional CTO! Should be a keynote speaker at some event one day!

Jaxi :)

August 12, 2010 at 3:43am

Marwa Farouq

I really like this story, it's so impressive and innovative in the way implemented.
I'll actually try some of those ideas in my practice and see how it works.

Thanks for sharing :)

August 12, 2010 at 3:43am

Marwa Farouq

I really like this story, it's so impressive and innovative in the way implemented.
I'll actually try some of those ideas in my practice and see how it works.

Thanks for sharing :)

August 18, 2010 at 5:12am

Ahmad el Nashar

I believe this is an impressive story about creating the right work culture. When I look at all the various things done it boils down to this create the right work culture and get onboard people aligned to this culture and you get an amazing organization. I actually think a lot more values/mindsets were introduced in the change mentioned here that also need to be emphasized such as team work, freedom, and entrepreneurship.

Having said that, it is important to be able to sustain this culture. Therefore to me a lot of the things you mention could create a hype that would positively influence people for a while however there needs to be mechanisms in place beyond recruitment, and pay and introducing some of the fun concepts to maintain this culture. This would be especially true if the organization seeks to grow and maintain this culture.

So here comes questions on leadership development process/mechanism, the onboarding process, decision making mechanisms and other culture sharing/value definition process mechanisms.

September 4, 2010 at 1:08am

Ellen Weber

Mat, I really like the ideas detailed here and especially t valued the determination to make a workplace work – where it had been one that failed in so many areas. To that point I concur with all your points, with one exception. Perhaps I should say I have questions about the first step he took – since I am unsure how he did it exactly.
1. … decided to change the staff mix to only include … Is it dangerous to change the mix to make staff less inclusive. Did he try at any time to motivate all staff toward this innovative approach?
2. … he had to drop an older crowd … Did he use research to show the dangers of getting rid of all one age in his staff mix? Recent studies, for instance, show the amazing advantages that older workers bring to the mix.
3. … he had to drop people with families… How would the trust you spoke of in the post – be established by axing people who did not fit an innovative change, when family became a criteria for firing. What is that saying to a larger business community about values of people as capital?
4. … keep people who were young and ambitious …Wall Street was filled with folks who were young and ambitious and that soon led to greed and dog-eat-dog. How would this culture ensure they understood clients who had families, were old, or needed the pay?
5. … he found a common denominator among people he wanted to keep… What was that common denominator?
These were questions that I left the story wondering about, and thanks for the terrific arena to raise these, Matt. I am inspired by your desire for innovation.