Business and School

As it happens, the authors of this book are professional educators. We work in a graduate school of education, and not business or management. We have studied learning and schooling. We think about what it takes to significantly alter the quality of learning in a classroom, a school district, or a university. In looking at these two key features of the change Next Jump made, we have only to turn our heads a little to see something familiar.

The twin pillars that hold up school are the curriculum (what is to be learned?) and the pedagogy (how will it be taught?). Slight adjustments to either element might lead to modest changes in the nature, depth, and quality of people’s learning. If you want to transform the learning enterprise (in a school or at work), you need to reconstitute both the curriculum and the pedagogy. This pretty much amounts to what Next Jump has done. In continuously moving the work down the chain, the company keeps giving people a qualitatively bigger job (not just a quantitatively bigger scope of responsibility); the work becomes more complex. The company continuously ramps up the challenge of a job’s curriculum.

By itself, though, this change is not enough. To give people a qualitatively more complex curriculum, you must qualitatively alter the nature of the teaching support you provide them so that they might master it. You begin by expecting them not to be able to do the work successfully. In a conventional work context, this may seem like an odd qualification for a job. But in a school, if you could master the year’s curriculum on the first day, you wouldn’t belong in that grade level.

So you begin by expecting that workers cannot do the work successfully, and you provide them a teaching staff that will help them gradually grow into the job. By hardwiring the coaching activity into the line leader’s job responsibility—a line leader who has himself done this very job—you alter the sourcing, credibility, and quality of the teaching. In short, Next Jump radically altered the nature of work’s curriculum and pedagogy.

Improving Retention and Productivity

We’ve described the essence of what Next Jump did. Why should we believe that these actions might have had a direct effect on retention and productivity?

Let’s start with retention. If you ask people what they like about working at Next Jump (or Decurion or Bridgewater, for that matter), the two most common answers are, “I’m doing things here I would have had to wait years to do somewhere else” and, “What I like most about working here is the same thing I could tell you I hate most about working here. Whenever I come close to mastering a job, they give me a new one, and I am in over my head again, grrrr.”

It’s an honest answer, that second one, and it deserves a pause for consideration. It reflects the tension that all of us struggle with, between our own internal longings for both the progressive and the conservative. Work settings that will let you stay in a job you’ve mastered, and that appreciate and reward the dependable, high-quality output you consistently deliver, are a good match for those who prefer to settle this tension on the side of the conservative. The conservative impulse places a high premium on maintaining equilibrium. It doesn’t make you a bad person for having this preference. But ordinary organizations typically favor the conservative (even when they talk about innovation and entrepreneurship) and may deprive their employees of the opportunity to discover their true preference.

When people in a DDO curse the very thing they’ve come to love, they’re acknowledging the pull of the conservative but reaffirming that they’ve found something they experience as more precious. It’s messy and tumultuous to undergo so much disequilibrium. Status, certainty, predictability, and control are never permanently in hand. Like anyone, of course, people sometimes prefer a little less stimulation, thank you; but in the main, being rewarded for reliably and repeatedly performing a role we have mastered comes to feel like coasting, and we fear we may be missing out on a clearly preferred alternative. Any honest person working in a DDO will tell you there are times she would like a holiday from the DDO experience, but after you’ve worked in one, an ordinary workplace becomes for many the nice place to visit and not the place where you want to live.

How strong is this preference? What if the ordinary workplace offers to pay you a much bigger salary or give you more of the perks and goodies highly sought-after high-tech employees have come to expect and demand? What if it continuously tempts you with these offers? Next Jump gets several thousand early-career applicants a year and hires about ten. The typical hire is a standout from MIT, Carnegie Mellon, or Georgia Tech. Her services are in high demand. No one who found the pressures of a DDO not to their liking would have any trouble finding a new job. Kim and Messenger tell us it is not unusual for their employees to receive a serious solicitation every week.

In 2010, just as Next Jump became a top recruiter of engineers from East Coast universities, its turnover skyrocketed. The shortage of engineering talent in the industry was (and still is) severe. Next Jump became a hub of engineering talent, and technology companies found that the fastest and best way to recruit engineers was to poach from Next Jump. Engineers exited the company, easily trading up for better compensation and often doubling and tripling their salaries.

But then Next Jump matured into a full-fledged DDO in 2012, and now engineers rarely leave. Before the Next Jump transition, engineers weren’t finding the person above them regularly passing his job down to them, and now they do. We don’t know whether the one thing contributes to the other, but to us it seems like a compelling hypothesis.

Probably everyone wants to work where he feels he’s getting the greatest income; it’s just that there are many kinds of incomes. There are external incomes and internal incomes. There is money, and there are opportunities to experience your own unfolding. Each of the incomes may have some value for most of us. We differ in how we prioritize them.

How else can we account for the sharp reduction in turnover? The alternative offers did not suddenly stop. Next Jump didn’t soup up its salary schedule at the same time it became a DDO. It didn’t start giving people leased sports cars. It changed one big thing: it increased the intrinsic, internal incomes. And, over time, it has clearly done a better job in its hiring processes, finding people for whom this form of income shows up as highly valuable. That combination—being a DDO and doing better at finding people who will feel well paid in a DDO—seems to us the most plausible explanation for the way Next Jump solved the turnover problem.¹

It’s easier to draw a direct line between the way Next Jump altered work’s curriculum and pedagogy, on the one hand, and the increase in its productivity, on the other. Its productivity can be directly tied to the number of revenue-generating projects or initiatives it can launch and capably captain.

Being a Good School

Another way of describing Next Jump’s transition to a DDO is that it turned its business into a captain-creating machine. In a company full of engineers, the leaders’ proudest engineering feat is that they’ve created an engine that cultivates captains.

Cultivating captains means more than just giving more people opportunities to lead initiatives and projects. It also means providing them with an ongoing coaching, mentoring, and teaching wraparound that increases the chances the captain will succeed. By making the person who has done the job the coach, they increase the quality of the teaching. By deriving the coach from their existing workforce and deriving coaching time from the benefits of delegation, they increase the economic sustainability of the teaching. The arguable formula is that (a) more captains, taking on (b) more revenue-generating projects, working with (c) sustainably continuous support, leads to (d) dramatically higher productivity.

And, of course, the reduction in turnover is related to the increase in productivity. It takes time to cultivate a captain. If you’re losing too many good people, no one is staying in your school long enough to return its benefits.

We’re not suggesting that what is unusual about Next Jump is that it brought the fundamental features of schooling to the world of work. Every workplace is a kind of school and can be assessed by its curriculum and pedagogy, whether or not it is a DDO. It’s just that—to be blunt—most workplaces are not very good schools.

In most cases (particularly in mature companies) the workplace is a poor school because people take the same curriculum over and over again. Instead of feeling that they’re failing, being forced to repeat the class rather than be promoted, people find their reliability and dependability labeled a form of success that earns them rewards.

In some cases (more commonly in start-ups, or during enterprise-wide shifts in mature companies), workplaces are poor schools for the opposite reason: they present people with extremely challenging curricula but do an inadequate job of providing sufficiently talented and pervasive teaching support so that they can master the curriculum.

So, in one way or another, most organizations are poor schools. It would be understandable for leaders of such organizations to say, “Well, we don’t care how good a school we are; that’s not why we exist. We only care how good a business we are.” And that would be a fine response, if being a good “school,” in the way we’re talking about it here, were not crucial to being a good business in a volatile, uncertain, complex, ambiguous (VUCA) environment.

Just how valuable is it for a company to be a good school? We have only begun to explore that question, using Next Jump as a first point of inquiry. In becoming a DDO, Next Jump altered its work curriculum and work pedagogy by transferring authority downward and by providing systematic forms of support to help people master a more complex job. We’ve suggested that these shifts may have had direct benefits for the company. Now we want to generalize this point by saying what any employee from Decurion or Bridgewater has been thinking while reading this chapter: “Well, that’s exactly what we do, too!” Pushing the work downward and helping people successfully handle the way their work lives have changed are not just basic elements of Next Jump’s architecture. Given their robust presence across all three companies, they are likely fundamental elements of the DDO itself.

Improving Employee and Client Retention

You cannot create a culture like a DDO unless you can retain people for long periods, and we’ve mentioned that, after the first two years of trial by fire, few leave Bridgewater.

Low turnover of the right people is itself a positive business indicator, but does Jensen believe it can be attributed to Bridgewater’s culture? “Without the culture, without the kinds of relationships total honesty brings, I don’t think we would have those kinds of [retention] numbers,” he says.

What can matter more to the success of a professional services firm than the quality of its relationships with its clients? Bridgewater is proud of having a distinctive relationship with the majority of its clients, and Jensen ties that distinction directly to its culture.

Interestingly, when asked where he thinks the company’s distinctive relationships come from, Jensen returns immediately to the culture and not to the economic return clients enjoy. “It comes from twenty years of relating to them in ways consistent with our culture, being totally honest with them, bringing them ideas that no one else had, never thinking in terms of a product to sell but thinking in terms of what is the best way to do things, working with them to do that, getting our client advisers to form these kinds of relationships—it all comes from the culture inside Bridgewater, brought outside to them.”

In considering the strictly business value of a DDO, we can’t discuss Bridgewater without returning briefly to one of its most distinctive business accomplishments. In the midst of the worst economic crisis since the Great Depression—in 2008, the worst year of the ensuing recession, when individuals, companies, and countries were reeling from downward lurching markets—Bridgewater earned 9.4 percent for its investors. It would have been an extraordinary accomplishment to have held losses to a minimum, but Bridgewater made money for its clients. Throughout the several years of the recession, 80 percent of Bridgewater’s trades were winners, and CEO Ray Dalio was on record, years before the downturn, warning of an impending crisis.

All this is testimony to some kind of special edge, to be sure; but is it reasonable to attribute this success to Bridgewater’s being a DDO? One thing you learn when you spend time with Dalio or Jensen is that they are full of passionate convictions about how wrong we can be in our passionate convictions. For all the credit Bridgewater receives for having known something and having been right about it when others didn’t know and were wrong, Dalio and Jensen naturally present themselves not as great seers, but as people who must stay continuously mindful that they frequently do not know, that they are frequently wrong, and that knowing this may be the most important thing they do know.

As someone who wrote an e-mail to the entire company with the subject, “I fail every day,” Dalio will tell you that the company’s success in the economic crisis stems from the same source as the company’s culture. The e-mail included this line.

Jensen is far less impressed than outside observers that Bridgewater predicted the economic downturn. It seems to be his view that, like a stopped clock that is right twice a day, someone will always come up with a correct prediction. It’s more important to plan for the things you anticipate as well as things you’re wrong about. From Jensen’s point of view, this is the real accomplishment, and it came about, first and last, because of Bridgewater’s culture.

This may sound like a paean to the value of steely-eyed analytic judgment and rigorous stress-testing of the logic and evidence for every cause-and-effect proposition. But that is only half of what it means to “go deep” at Bridgewater, whether the discussion is about the credit-lending pattern of a bank or a manager’s third consecutive inability to deliver his work product on the day he promised. Dalio is a well-read aficionado of brain science, and in both cases the analysis is not the work of the neocortex (the analytic part of the brain) alone; it’s also about the amygdala (the more primitive, reactive part) and the relationship between “thinking slow” and “thinking fast,” to use the words of psychologist Daniel Kahneman.³

How does our aversion to loss—threats we may feel about losses of status, control, predictability, affection, respect, and the like—incline us to cognitive distortions that cloud our judgment and lead us to poor performance as managers of people or managers of money? In both cases—in all cases, Bridgewater’s culture suggests—we are managing only one thing: ourselves. This is what the banking expert meant when he told us on our first day visiting, after we asked him how Bridgewater’s culture had anything to do with the work of an investment adviser: “The culture is not a ‘piece’ of how I do my work. It is the whole context in which I do my work. I get up every day, very clear what I am working on—myself.”

Earlier we mentioned Jensen’s observation that people need humility to survive being wrong. You can get a sense of what he means by humility if you look at something Bridgewater has not yet succeeded at. In 2009, founder Ray Dalio announced he was ready to vacate the role of CEO. How does a company whose distinctive profile is so much the expression of its founder survive his departure, carrying that distinction to the next generation? This is a living question for Bridgewater, but, in one form or another, it is a widely recognizable question many young companies face. “This will be a great test,” Jensen says, “and it’s not a test it is clear we will pass.” He continues:

It would be premature to say, in this instance, that the culture is the cause of the successful solution of this business problem, because it hasn’t yet been successfully resolved. But it is clear that Bridgewater, unlike other companies, is putting its bets on its culture here, as it has for every other business challenge it has faced.

Listen to Jensen on how he, and his peers, are using their culture as the strategy to successfully receive the mantle Dalio is passing to them.

We asked Jensen how it was going, how he would even judge how successfully things were going. After all, six years is no small time sample.

But, to bring us back to where this chapter began, Bridgewater is not a university. Jensen again:

It may strike you as interesting, as it did us, that Jensen makes no reference, in assessing how well the transition is going, to how the company has performed during this period as the leadership has transitioned from Dalio to the next generation. Certainly Wall Street and other observers would be answering the question on the basis of return to investors, and whether such patterns suggest Bridgewater can “do it” without Dalio at the helm.

In fact, by any conventional business metric, the company has performed brilliantly over this period, a period that obviously has been challenging, given the global economic situation. In terms of the company’s profitability, return to investors, and client satisfaction, “we are better than we have ever been,” Jensen says. But, again, he does not seem to us impressed by glittery indicators that catch other people’s eyes.

From Jensen’s point of view, the culture is at once the very means, or strategy, by which the leaders hope to succeed with the transition, and it is, at the same time, the goal of the transition. For the business to survive without the culture would not feel like victory, nor, given Jensen’s belief that the culture is the cause of the success, would he expect it to be successful in the same way. Ultimately, it is as true of Jensen, Dalio, and the world’s largest hedge fund, as it is true of Forman and Ungard and Decurion, as it is true of Kim and Messenger and Next Jump, that the culture and the business are part of a single whole, that each is seen to depend on the other, that each is both means and end.

“Whenever it is looking like a choice between the culture and profitability,” Jensen says, “the culture always wins.” But even this is not because Bridgewater (or any DDO) is putting culture ahead of the strictly business motive. Jensen told us about regretfully having to fire a tremendously successful employee from a strictly business point of view. “This is a client guy who is really, really amazing, clients loved him. But he was not building the same place we were building. And you face these hard choices: Are you going to put the profitability and business metrics first, or are you going to put the culture first? I don’t know how you could do it if you didn’t always put the culture first. It can’t be half-done.” (More about this example in a moment.)

Referring to the injunction of Mustafa Kemal Atatürk, the founder of modern Turkey, that some changes must be 100 percent, all in, such as changing from driving on the right side of the road to the left side, Jensen says, “If someone is only halfway in, you are always trying to figure out, ‘So is this the time they aren’t telling me the truth?’ That’s why it is important to say the culture is the cause, not just a contributor. Once you say it is just a part of things, you’re balancing it with other considerations, then I think you are lost. And if that means that some people can’t be here, then that’s hard, and we have to figure our way through that, but otherwise the cost of giving it up and sliding away from it is too great just for the short-term benefit. It seems uncompromising, but it is necessary.”

The culture always wins, but not because it is put above profitability; profitability is the oxygen that keeps the company alive. The culture wins because it is seen as the route to profitability. The superstar client guy had to be let go, it seemed to us, not because the culture was put ahead of profitability, but because it was put ahead of short-term profitability. “That’s right,” Jensen says. “The benefit is a mirage, a short-term benefit that will end up killing you. The culture creates the success, and the success allows you to further invest in the culture. It’s a circle. It’s all one thing.” (As you will see shortly, the Decurion culture will help us to better understand this notion of a circle, the culture and long-term success being “all one thing.”)

Moreover, Bridgewater gives us another way of inquiring into this chapter’s main question: Does being a DDO coexist with the drivers of business success, or is it a contributor, even the cause, of success? We had a friend who was about to accept a senior position at Bridgewater, and we asked him what attracted him to the company. He was a senior partner at a global strategy-consulting firm, earning a seven-figure salary, highly regarded by his peers.

His answer had nothing to do with Bridgewater’s culture, which he seemed to view more as a challenge he was preparing to withstand. This is a person who had spent twenty years, for a living, being brought deeply inside the inner workings of a multitude of companies. He has become, without exactly planning to be, an expert evaluator of the way complex businesses throughout the world are run, so you might want to consider his answer carefully: “I have never seen a better-managed company.”

Countering Two Corrosive Dynamics

There is a way in which, if you look only at the DDO itself, it is not possible to fully answer how being a DDO makes a company a better company in the strictly business sense, because the answer may have as much to do with what does not happen in a DDO. You need to bring the ordinary organization alongside the DDO to make some of its features stand out.

Consider those familiar bottlenecks and logjams besetting organizational life, obstructions that people come to take as the inevitable cost of doing business with human beings: “Same old, same old.” “Same shit, different day.” “Situation normal, all f—ed up” (which is what the acronym SNAFU stands for).

Bridgewater’s radical transparency is a vivid example of the way many derailing processes we resignedly accept as inevitable in normal organizational life rarely get enough oxygen to survive in DDOs. Bridgewater also shows how different it is, when people do screw up, to be able to count on an entire system—rather than a rare, brave individual—to engage the error in a productive way, one that is productive for both the organization and the person who is screwing up.

Let’s consider two of the most widespread, pandemic dynamics in organizational life, which damage business effectiveness every day in nearly every organization. The first of these familiar realities is something you’ve read now in nearly every chapter of this book: that everyone, in the usual organization, is doing a second job of hiding her weaknesses, uncertainties, and limitations; managing others’ favorable impressions. What is the cost of this second job to the company?

Companies have become very aware of the cost of downtime—lost days when employees are out sick, lost time when people flee into the internet for nonwork distractions. These losses are so enormous that companies now make huge investments in wellness and employee engagement.

But we have news: this kind of lost time and energy, large as it is, is puny compared with the daily, constant diversion of employees’ attention to covering up and looking good. Imagine if you could redirect that energy to the purposes of the company. What if it were possible for people to give up this second job they would rather not have in the first place? What if it were possible for them to work full-time at the job they were hired to do? What would it mean for the performance of the organization?

This is what happens in a successful DDO, where people are rewarded for demonstrating what they don’t know and can’t yet do, as much as they are for what they do know and can do. At Bridgewater there is only one kind of mistake that is not acceptable, and that is failing to acknowledge your mistakes. At the end of every day, anything you had a hand in that didn’t go as it should you enter in the issues log. It’s not a catalog of shame, a paper trail to justify your eventual firing or loss of bonus. Instead, it’s a living text (the curriculum again) from which you and your colleagues will have the chance to learn and get better.

And this idea—that more of the energy flows into the actual work, rather than to hiding out—is not just a New Age abstraction. If it were a real phenomenon—more energy going into a common enterprise per hour—you would literally feel it if you were there. If you were to spend a week, or even a couple of days, at Decurion, Bridgewater, or Next Jump, you would experience the “compression phenomenon” they all talk about—Decurion calls it “Decurion time.” At all three companies we heard, “A day here feels like a week,” in terms of how much happens (inside and outside a person).

The second dynamic is the widespread, corrosive, trust-destroying practice of speaking negatively about coworkers behind their backs. Twenty years ago two of us wrote a book (How the Way We Talk Can Change the Way We Work) asking this question: if everyone says this is unprofessional behavior and if everyone says they value being professional, then why don’t we think about creating work cultures where people try to live by their agreements—including the agreement to take their difficulties and disappointments with coworkers directly to the parties involved? Everyone said this was a lovely idea, and we could look forward to seeing this real soon, right after people stopped cheating on their income taxes and gave up all vestiges of racial prejudice.

People at Bridgewater don’t believe they’re saints, but neither do they think this means they must be hypocrites. If you agree it’s unprofessional to talk behind people’s backs, and if you agree you aspire not to be unprofessional, and if you want to experience—maybe for the first time in your professional life—what we call the “collective integrity” of an entire work community living by its principles, then why wouldn’t you welcome a practice that enables you and all your colleagues to stay aligned with these agreements? If every conversation is available for everyone to hear, then there is no back to talk behind. This space is gone. Everyone who first hears that Bridgewater tapes every conversation thinks it’s crazy. No one stops to think whether it’s crazy to believe it’s unacceptably unprofessional to talk behind people’s backs but still be party to such conversations.

The issues log and universal taping are two Bridgewater practices—features of what we call its groove—that address two widespread, corrosive dynamics that hemorrhage value every day in the usual organization. Whereas the first dynamic has to do with things people don’t say and do that they should say and do, the second dynamic has to do with things people say and do that they should not. People waste time looking good, and they waste time making others look bad.

Worse than just a waste of time, these corrosive dynamics disarm a company’s ability to effectively address and improve any and all of the suboptimal practices from which the organization suffers. Here’s a quick example. We are currently trying to help a company that is not a DDO but wants to become one. The company has a great mission, and its people are dedicated; it has outperformed its competitors, is growing rapidly, and is very profitable. Still, the company is running far below its own targets, leaving on the table hundreds of millions of dollars each year because it is not managing itself as the leaders know it should. The reason? People will not call each other out, across ranks and divisions, when someone is screwing up (although they can clearly see it and are happy to complain about it to others); and people will not call themselves out when they know they’re falling short. In the non-DDO organizations we work with, we regularly ask, “On a one-to-ten scale, how frank are you with each other on matters of importance to how the business is run? ‘One’ equals ‘not at all,’ and ‘ten’ equals ‘completely.’” We gather the scores anonymously (because otherwise they wouldn’t be frank about this either).

The averages are usually around 6—a pathetic score. Imagine your doctor, your attorney, or your spouse telling you just 60 percent of what she feels you need to know. If we had to turn this whole chapter into a Tweet and were required to address the strictly business value of being a DDO in 140 characters, this might be our best shot: “Q: Why should a business become a DDO? A: To move its Frankness Score from 6 to 9 or 10! A business w/ a 6 runs at 60 percent efficiency.”

It’s easy to see how these two pervasive dynamics collude with each other. We make a sort of bargain: “I won’t take you on directly, if you’ll give me the same pass. I won’t interfere with the work you’re doing to look good, if you won’t interfere with mine.” Each of us is free to keep hiding our weaknesses and letting off steam about others’ shortcomings behind their backs.

Bridgewater is an object lesson in the error the rest of us make when we settle for less in defining human nature. People will tell you it’s only human nature for coworkers to talk behind each other’s backs. It’s only human nature to hide your weaknesses and show only your strengths. Asked to explain why she wouldn’t want to work at Bridgewater, a Harvard student said, “I want people at work to think I’m better than I really am. I don’t want them to know how I really am! That’s just human nature, isn’t it?” What if what she regards as “only human nature” is exhausting in both senses of the word: it is personally exhausting, and all that wasted energy is exhausting resources that could be brought to the work at hand?

If it’s only human nature to hide in plain sight (covering your weaknesses) and regularly violate your own sense of what is right (talking behind people’s backs), then the folks who work at Bridgewater, or any of the other DDOs, have some serious explaining to do. If they are not human, where did they come from? How many freaks of nature would it take before we’d begin to change our view of nature?

Learning from the Hawaii Project

If we hold this concept of oneness, as we ask you to do here, it invites a clear-eyed approach to gathering evidence about the business impact of Decurion’s focus on development. Put simply, we should be able to observe repeated, specific instances of the way that focusing on people development is essential to creating value within the company.

Let’s look carefully at the results of several strategic bets Decurion has made in its portfolio of activities, from the real estate business, to senior living, to the theaters. As we do so, consider the ways that the business advantages you see depend on unlocking the potential of Decurion’s people.

Long after ArcLight’s model had transformed the theater business, Decurion’s real estate unit operated quite differently from the theaters. Although ArcLight was led by a leadership work group that held collective responsibility for the health of the unit, such a structure seemed improbable in the real estate business. Progress had been made, but the relationship between all real estate functions was one of silos at best, and it was especially bad between property managers and accountants. The real estate managers saw the people in accounting as rigid paper-pushers, slowing them down with demands to attend to boring details and inflexible deadlines. The accountants saw the real estate managers as careless, unprofessional, and unreliable.

Professional stereotypes by role also beset every company, and again, most would try to work around their difficulties and costs. Instead, Decurion set about unlocking potential for business growth in real estate by making accounting and property management even more dependent on one another for success.

Decurion was in the midst of a massive real estate development in Hawaii, an ambitious project encompassing three residential towers, a shopping center, and a hotel. The company needed to develop a new model of entitling, developing, leasing, operating, and reporting on a project that was larger than anything it had built previously.

The project’s complexity called for a new level of collaboration across all functions of the real estate business—development, leasing, finance and accounting, legal, and property management. Jeff Koblentz, who leads the real estate business, saw the necessity of a new way of operating, one that represented the wholeness of people development and business growth. He saw the Hawaii project as a good business opportunity in traditional terms, one that also had the potential to transform the business if members of the real estate community could overcome their internal barriers. The demands of the project offered an opportunity to create pulls for the entire real estate team. But Decurion couldn’t develop more projects like the one in Hawaii until its people learned how to develop the first one.

Koblentz created a real estate work group modeled on the community that governed the theater unit, and he carefully worked to strengthen the interdependencies of its members. Koblentz held hierarchical accountability for decisions in real estate, but the work group shared responsibility for running the business. The members needed to learn to work together to understand the entirety of the business and to think, decide, and act in unison. In Decurion’s language, “This is what the business required.” As Koblentz put it, he made clear to the group that “there were new business demands, and as a result, there were new demands that the working relationship among all disciplines develop to a more sophisticated and integrated level.”

Decurion made it a business requirement that people in the work group grow into a learning community whose members saw things first as businesspeople rather than through their limited expert roles. Over time, they also worked to recognize that the present state of their capabilities was not sufficient for the challenge of the Hawaii project and the promise of what lay beyond it. But if the group members came together to both push and support one another to take collective responsibility for the health of the real estate business, individuals could grow in the very ways the business required, and people could use the business challenge as a practice ground for their own self-improvement.

As the group’s members continued to focus on overcoming their individual and collective limitations, something started to happen, something that Decurion leaders had seen earlier in the theater business: the members of the real estate work group began gaining skill as a group in evaluating new real estate deals, identifying and assessing opportunities faster, with more coordination, with clearer discussion of trade-offs, and with better-quality recommendations. The technical experts—architects, in-house counsel, and the heads of property management and accounting—started to act more consistently as a trust on behalf of the company. This didn’t mean that their meetings were easy, tidy, and nice, or without tension and occasional rancor. But supported by Decurion’s assumption that people and the business grow together and that growth requires commitment, patience, and daily effort, members of the work group began to feel responsible for the whole of the real estate business rather than only their respective bases of expertise.

Considered on its own, the developmental value of a move like Koblentz’s in creating and nurturing the real estate work group may seem obvious by this point. Clearly it helped individuals develop complex, less-role-bound thinking about real estate. Koblentz explains:

On one level, having accountants and property managers who understand more about the business improves the quality of work within their existing groups. But the even more hard-nosed value to the business’s success was just as essential to Koblentz and other senior Decurion executives. He explains this in terms of cost structure, something everyone in business can relate to.

What lessons about the value of the DDO approach can we take, then, from the Hawaii project? First, Decurion leaders take a sophisticated business play as an audacious goal the business must meet, one that exceeds the current limits of the business and its people. Both the business and the people must be in a little bit over their heads.

Second, the leaders spend time building a shared understanding that the project can be accomplished only if people overcome their limiting assumptions, individually and collectively, to get to the needed level of capability.

Third, the company creates community governance, forcing individual technical experts or subject-matter stars to think relentlessly about the whole of the company—to see all of its elements coherently and understand how value is and could be created, not only by their unit but by the interplay of all the units. Finally, and under these conditions, the pursuit of profitability provides the way for an individual’s desire for growth to be one with, and not competing with, the needs of the company.

In this way, focusing on development creates business value across many activities and strategic bets.

Learning from the Senior Living Business

Let’s take another example. Decurion got into the senior living business with a long view: to learn how to translate its corporate strengths and values to a new type of business, and also, very clearly, to make a profit, as an expression of its purpose as a company that creates places for people to flourish.

From the beginning, the company’s leaders struggled to break free from many aspects of the standard practice in such facilities. Over time, they identified a number of practices that would integrate individual development and business success. For most of these practices, they realized that something that “at first seemed innocuous,” in one person’s words, “was actually a key to addressing the big-picture issue: exceptional, affordable care.”

For example, in their facility operations one practice they found hiding in plain sight was scheduling. In a typical facility, senior executives take care of scheduling, and schedules remain fairly static. But Decurion leaders realized that rotating more people at lower levels through the responsibility of scheduling work shifts would require people to learn more about the entirety of the business. To schedule the right people with the right skills at the right time in a facility requires an understanding of how the whole business operates. People with this knowledge make better decisions, are more effective, and progress faster in their careers. Decurion also requires the function to be fluid, and, as the organization learns how to operate more efficiently, changes are made immediately.

“It’s just pragmatic,” Koblentz explains. “We use scheduling and other similar tasks differently than others in the industry. When a quarter of our workforce can hold the whole of the business, we get better results on the floor. For the employees involved in the process, the business knowledge they are gaining and using is going to progress their careers, either with us or at other operators in the industry.”

As in the real estate business, the need for a lower cost structure called for people to develop in ways not typical of the industry. The company structured a way for people to overcome their limited perspectives and see the complexity of the business as a whole. As a result, it gets more capacity out of fewer people earlier in their careers.

Rethinking Roles

As you’ve seen earlier in their theater business, creating a big stretch goal for the company is explicitly about both growing the people and growing the business. But let’s focus for a moment less on the developmental outcomes for individual crew members, managers, and senior leaders. What about the success of the business? At ArcLight, top-line growth goals for revenue are tied to strategic bets that assume people’s growth and the business results of the theater circuit are interdependent. One of these goals is especially worth spotlighting: a different kind of respect for the entry-level employee, part-time workers, and retail work.

Nora Dashwood knows from her decades of experience that our default assumption about the growth possible for people in retail jobs stifles the people in those jobs. “It’s an entry-level job, whether it’s popping corn behind the concessions stand or tearing tickets,” she says. “It’s something somebody does until they can go do something else. But what is possible in that role versus what most companies think is possible in those roles are two very different things.”

The success of the theater business depends on the quality of the guest experience, and the way each crew member shows up in the business each day is directly related to guest engagement. To measure this aspect of the work, ArcLight is data-driven. It carefully tracks financial metrics that are standard in the industry, but it also monitors in every operational meeting two families of metrics that are closely tied: guest engagement and crew development. Decurion leaders draw a straight line between the theaters’ profitability and crew members’ experience of the meaningfulness of their work. That line goes through the quality of the guest experience, something that depends on every crew member upholding standards of excellence.

Practices and principles you’ve seen earlier form a workplace culture organized to connect people to personal meaning. Via check-ins, the company welcomes people’s humanity in the workplace; you’re a person with dreams and dignity, and not the human equivalent of a widget. During pulse-check huddles, the crew members come together, giving and getting feedback constantly during a busy evening of screenings, and, in doing so, the crew is at the center of running the business. Crew members repeatedly describe discovering they were capable of more than they knew, because they were treated, and invested in, like budding businesspeople. And this discovery often extends outside work to family life, relationships, college study, and new life ambitions. At ArcLight, hourly employees can learn to read the profit-and-loss statement then make decisions about show scheduling the very next week, opportunities other companies in their industry do not provide. Crew members’ identities are not pegged to the duties they might perform in a given shift, but constantly are oriented toward workers’ seeing themselves running the business as a whole.

Dashwood sums up the impact of all this on the business: “We see a big difference in our revenues and the experience of our guests because we focus on people’s development and their critical thinking. What’s right for the business actually creates meaning and confidence for the crew members. We have had breakthrough results in every category. This is not just fun and games.”

Exploiting the Power of Pulls

Integrity, oneness, and pursuing profitability and employee growth as one thing, indivisible—these features of working life in the theaters are emblematic of the way Decurion supports a kind of agency for individuals. It does this by creating conditions where the requirements of a growing business constantly pull people toward higher expectations for what they can do and who they can become.

Those developmental pulls, like the ones you’ve seen in the real estate, senior living, and theater businesses in this chapter, use the demands of business growth to inspire individuals to overcome their limiting assumptions. From the walk through Decurion you’ve just taken, we hope you might even now see its metaphor of the developmental pull with fresh eyes, more aware of both the business side and the personal side of the pull. The metaphor, after all, requires something that pulls and something being pulled; we can’t understand the physical concept without holding on to both parts simultaneously. A pull creates tension over a distance that must be closed. In the developmental sense, when we work to close the distance between where we are and where the company needs us to be, we overcome our current limits. We are developing, and the business shares the benefits fully.

Even if you still worry that the focus on people development in a DDO is a lavish expense of time and energy, we hope you’ll at least take away the notion that there’s nothing charitable about it. At Decurion, the drive to develop greater capability requires greater challenge supported by strong communities. Greater capability in turn enables things like lower cost structures and more talent ready for leadership positions.

People at Decurion might even turn the questions around and ask skeptics, “How much potential growth in your own business are you leaving off the table by not assuming that your employees’ growth and your business’s growth are really one thing?”