Duc Ha Duong
Transcript (Translated)
Tonight, I will try to convince you that this movement we just discussed, the digital transition, digital transformation, call it what you will, is an important factor in another movement we see unfolding today, which is the liberation of work within corporations, and we also see many developer collectives emerging, like Mangro, Apidev, etc.
And we will try to connect the two. And to do that, I first invite you to explore this question: why do we create companies? Why do we create businesses? Why is our world, the economy made up of many small closed pyramids—we call that a business—which interact with each other, while the outside is rather multipoint, point-to-point, but with very precisely defined interfaces inside.
It was an economist who asked this question in 1945, Ronald Coase. He wrote an article on the nature of the firm, one of the most cited articles in economic science. In it, he said, but this is strange because normally, in a perfectly competitive economy, I find the best product at the best price on the market, whether it's a product or a service, and so I just need to do what I do best, and then find everything else on the market.
I think many of you are aware that we do not live in a pure and perfect world. And as a result, the system doesn’t work well because, let’s say I need to push a wheelbarrow with my bricks inside. To find a wheelbarrow pusher, I have to place an ad in the newspaper, compare prices, choose my supplier, etc. All that costs me a lot, just to push a wheelbarrow, and I don’t really need the best wheelbarrow pusher in the world. And especially in 1945, there was no Internet, so the tender process was complicated. And so, in addition to the actual work of pushing the wheelbarrow, there is a whole effort called transaction cost, which involves gathering information from the market, compiling and comparing it, and processing that information to make a decision. So, to eliminate this transaction cost, we invented salaried employment. We said, now, me, the visionary entrepreneur, I will build a house, and I will take a guy who looks sturdy. I know he’s not the best wood pusher in the world, but that’s okay, because I know that tomorrow... at 9 a.m., he will be there at the designated spot. And the day after tomorrow and the day after that too, I can start planning my actions. Because in any case, he will only be paid at the end of the month. And the day after tomorrow, I know he’s not the best mason in the world, but he will build my wall. And ultimately, the fact that he’s not the best in the world and not the best price in the world is largely offset by the fact that I have no transaction cost. This works very well. As a result, my business thrives. I hire a second, a third, a tenth employee. Then after ten, I start to realize that in fact, I still have a transaction cost, an internal transaction cost, which consists of every evening gathering information, asking each person what they did. So, I collect information. Process, compile, compare, I handle the information and send it back. By giving orders and roadmaps to each person for the next day.
But I don’t have much time, I’m an entrepreneur, a visionary, I have many dreams to fulfill. So what do I do? I hire a supervisor and tell him, here, you will manage my internal transaction cost. There! And I have gotten rid of my transaction cost at a certain cost. And then when I say supervisor, I add a supervisor of supervisors, and you know the drill, in the end, we have a magnificent pyramid.
This was ultimately very effective, since the model, the pyramidal form, was the optimal way to process and minimize this transaction cost.
But then, what is this transaction cost concretely? As I was saying earlier, collecting information—so telecommunications, communication—processing information, compiling it, so information processing, and then sending it back the other way. These are technologies that today are making staggering progress. Every year, perhaps, the performance-to-price ratio of processing and communications doubles every year. Which means that in theory, my pyramid should slim down by a factor of two every year. Which it does not. I don’t know if there are many people here who work in companies that slim down by a factor of two every year. They slim down a little, but we’re not there yet.
This is what, by the way, another American economist called the Solow paradox—he himself was named Solow—and he said, 'We can see the computer age everywhere except in productivity statistics.' It’s still strange because we have lots of computers and everything, yet productivity is increasing. Well, he said that before the Internet; we’ve made some progress since then. But the fact remains that, a priori, the more we advance and the better we master information flow, the less this paradigm, this pyramidal organizational model, will make sense.
So then, what will we do instead?
For that, we need to return to the most granular, most basic level in an organization: the human being, and see how human beings interact before we can organize them.
I will propose a model—there are surely many others—I will propose a fairly simple one.
It suggests viewing interactions between human beings as five types of exchange flows.
Material flows, which we have invented since we invented private property. One day, someone drew a boundary and said, 'This land belongs to me; everything that comes out of it belongs to me.' Since then, we can exchange goods. We can promise things in the future, etc.
And then, at some point, it wasn’t very practical because my strawberries come in May, and your apples in October. So, we create an acknowledgment of debt, etc. And then we start inventing money. These are what we call the two market flows, which are human inventions. But fortunately, besides that, we are not robots. And we also have flows that we will call non-market, and we will see why, which are more natural, organic: exchanges of knowledge, exchanges of trust, and exchanges of feelings. And that is not a human invention. In fact, even animals are endowed with it. When the lion approaches the gazelle herd, there is a leader of the herd, so there is the trust of the whole herd, which shares knowledge, information about the lion, it creates fear, and it saves their lives. But these three flows, I call them non-market because they have characteristics that make them a bit difficult to handle. The first is that they are abundant. If I share knowledge with you, I don’t forget it.
The second is that I don’t need to take my trust away from one person to give it to another. The second is that they are not measurable. It’s very subjective, obviously. We can’t say that I have 13.37 of trust in my doctor. For fixing my moped, it will be something else. So we can try to set up scores, KPIs, but we can’t really have... Between two Nobel Prize winners in physics, which one is the strongest.
And finally, they are not permanent. They are not like a material object or money; if you put them in a safe, lock them in the dark for two days, and come back, they are still there. They haven’t moved, still the same. Whereas you, if you are in a good mood, very happy, I lock you in the dark for two days and come back. Unless you are Matthieu Ricard, normally, you are in a worse mood.
And so these non-market flows, which are obviously not very malleable, not very easy to manipulate in a company, were largely eliminated. But if we want to rebuild an organization, we must start from the basics and from the interactions we have between people.
And then, the...
These flows, precisely, came back a little to the forefront in the mid-20th century when... what we called positive psychology, social psychology, and in particular positive psychology began to develop, where basically people like Maslow realized, with his famous pyramid that you all know, that when people are happy, they work better, when they are motivated, they are more productive, etc.
And so, we thought, there’s something here to make people more productive.
And it’s nice, we do lots of experiments, labs with guinea pigs in universities, etc. Then at some point, we have to transpose this into the company to make the company more productive. And unfortunately, the guys at the bottom pushing their wheelbarrow don’t have much time.
The founder, the visionary entrepreneur up there, is a bit alone. So, what do we say? Ah!
We are going to go see the supervisors, all the intermediate bodies. And we are going to tell them, it's you who will manage it. And we will pat them on the back and tell them, bravo, now you are no longer a supervisor, you are a manager. This involves two functions: the supervisor function of routing information to manage transaction costs as before.
And a second role, which is more of a leadership role, consisting of inspiring values, explaining the company's vision, the boss's vision, being a role model for the staff, etc. And ultimately, in a manager's job, there are these two components. The component of the supervisor-manager and the component of the leader-manager.
At first, we had some small problems because we quickly realized that the best worker was not the best manager. Just because you are good at production does not mean you will be good at leadership. But we started to put methods in place to try to detect those who would be good leaders, etc.
We realized a second problem, which is that the work of leadership cannot ultimately be assigned top-down to someone like that. You cannot tell someone, 'There you go, now you are a leader,' because the definition of a leader is that you are a leader when people decide to follow you, when you have been able to convince people to follow you. Then the third problem that emerged is that leaders, as they handle these so-called non-market flows, try to inspire people, and are in reputation-based relationships,
they are much more difficult to control in their leadership work than it is easy to control their supervisory work. As a supervisor, because routing information, you can see how many emails people process, the market flows, you can see how many products leave the factory, etc. And so, no matter how many fine speeches we make asking managers to balance the two tasks, if you open your mailbox and look at the 100 emails you received today, there is still a lot, a lot of pressure that is applied, since it is feasible, on your supervisory work rather than on your leadership work.
Fortunately, though. I will show you a small example, if I can turn this thing back on, of a platform that has really understood what non-market flows are.
It's Facebook.
A huge factory that constantly processes non-market flows.
by allowing people to post knowledge. There, I write my little article.
Then, I attach a little smiley, so I convey emotions.
I post that. People will like it, send me recognition, share it again, give me even more reputation, because you say, 'Wait, read what she says, so-and-so, it's very important.' And then add their little bit of knowledge by putting comments, etc. So, is it that...
Yes, it's projected.
But fortunately, the natural chase returns at a gallop. What happens in organizations is that, ultimately, no matter how hard you try to fit people into a Pierre Midal model with the black lines you know well,
the reality of organizations is the colored lines. The reality of organizations is that inside, there are real people who talk to each other at the coffee machine, who talk in the evening, who have worked together in the past, who want to work together again, who went to school together, etc.
And so, ultimately... So, but fortunately, the natural chase returns at a gallop. What happens in organizations is that, ultimately, no matter how hard you try to fit people into a pyramidal model with the black lines you know well, The reality of organizations is the colored lines. The reality of organizations is that inside, there are real people who talk to each other at the coffee machine, who talk in the evening, who have worked together in the past, who want to work together again, who studied together, etc.
And so, ultimately...
First observation, the pyramidal model, which was there to optimize information flows, is becoming less and less useful since information flows are optimized by technology, by liquid information.
And on the contrary, the colored flows you see here, which are non-market flows, are reinforced by digital information, which are reinforced thanks to communication technologies.
Because, precisely, this liquid information—what is information? Why do I say liquid information? Yes, it's information that circulates in tiny droplets, the little tweets of 140 characters. It's information that circulates without friction, that goes to the other side of the world at almost zero cost. And then liquid information is also, like all liquids, information that takes the shape of the container. In this case, the containers are our brains, and algorithms will be able to send us the right format—long texts, short texts, in the morning, in the evening, video, etc. Based on our own appetite and absorption capacity. And so this liquid information makes exchanges much more transparent and allows for maintaining much better, many more relationships, even in non-market flows, since information—well, you can send art, with liquid information, it's called a transfer, but as you saw earlier, I send a smiley, I send an emotion through liquid information, I send knowledge, I send relationships. So, it's simply the... The reality that must be accepted is the colored relationships. And so in our company, I created a digital services company in 2006; we are 250 employees.
We said to ourselves, if we want to be ahead in organizational methods, we simply have to accept the fact that the black lines dissolve and that the colored links are the ones that will remain.
So, how do we accelerate the disappearance of the black lines?
Simply put, since they are there to route information, we must allow information to reach the right person, at the right time, in the right place.
Three major levers that you will recognize in digital transformation factors. First, we need shorter messages. We must stop sending 15-page emails. So, we switch to chat-like modes, mobile-like modes, where you send short messages, SMS, where it doesn't take two days to add... Frilly details or to recall what happened.
Next, reintegrate non-market flows into conversations. So, use of emojis. If your boss starts sending emojis, he hasn't become senile or isn't having a midlife crisis. It's just that he is reintroducing non-market flows into the organization. Where photos, you can go as far as chat, animated GIFs. What matters is managing to bring back the language of emotions into these exchanges.
And the third highly important factor is to equip your organization, your structure, with an algorithm that will be able to take information I have produced, that I have posted,
read it, extract the keywords, see who else in the organization is talking about the same topic, who else likes everything I say, or who else I follow, and think, this will interest Gertrude, Astrid, and Eudes, and push that information to the right people. And that? That's what we call a social network. For some time now, the term 'filter bubble' has become commonplace. It's the problem of echo chambers where an algorithm gives you back information that interests you. And that's it, that's the very essence of a social network. A social network is not a forum; it's not having an account, having followers, liking, and commenting. A social network is when there is an algorithm behind it that is able to analyze... what you say and push it to the right person, at the right time, in the format that suits them best—mobile, screen, etc.—to maximize their absorption capacity and be in harmony with the rest of their organization, since then they don't miss anything, and at the same time, they are not drowned in the information overload that threatens us as we receive more and more emails.
There you go. And once this platform is in place, we can then begin to roll out on this exchange and communication platform, decidedly,
the pillars of the organization, of a free organization ultimately, because then everyone is informed, and we can make decisions with full knowledge and conscience. So here I give you the result it had for us; I show you the result it had for us, meaning we asked each individual to indicate who their
influencers are. Okay? Since, as we said earlier, you are a leader when someone decides to follow you. Right.
So, you saw on the colored lines earlier, there are some funny little comments and all that. Obviously, we didn't ask for that level of detail. We simply told everyone, well, who are the people who influence you? Either because you work with them every day on the same project and you trust them. So, when they give you feedback, you take it into account. We called these 'proximity influencers.' Or you have what we call role models, ultimately leaders, people you admire, who have skills you would like to have, who are
a bit like black belts in your subjects, whether it's customer relations, Java, or... negotiation, problem-solving.
And these people, who are role models for you, may have a little less time because they are a bit more senior. They are, in fact, your leader influencers, which we called, in this case, 'spiritual.' And once everyone has filled in this information, we obtain in our PR a follower-follower system, which is a bit like Twitter, where each person indicates who is the person, which are the people who influence them the most. This gives a social graph... Let's try to zoom in a bit.
Which is ultimately somewhat equivalent to an org chart in our organization.
Over there, it's a bit of a mess.
It's an algorithm that arranges the points. It's not every day. And we see patterns emerging in the organization. Here, you can see in the purple zone a team that is highly pyramidal. It has remained pyramidal. Because in this team, it turns out there are many young people doing data entry. Jobs they will do for two years more or less as a means to an end before moving on. They chose to do them, but they won't stay for 107 years. They are very young. And there is a senior who has been with the company for 10 years, who manages customer relations, who has international experience. And as a result, de facto, he radiates so strongly that everyone falls under his orders. Whereas if you look rather on the side of our developers,
it's a joyful mess because on the dev side, you have guys who...
You have guys who are more or less senior in different subjects. Some are more influenced by the tech lead, others by the senior QA, others by... the business analysts, etc. And so, we see that there is more... Mixing, since there are more seniority options, people allow themselves to choose more freely.
There you go, and based on this infrastructure of relationships, which are no longer—excuse me for insisting—relationships that were first imposed top-down, and on the other hand, which are not authority relationships, but influence relationships, meaning I have chosen, I admit, I express the fact that this person influences me.
We have a platform on which we can operate the main principles of organizations we call LIM, or Liberated Company, or Teal Organization, TIL.
As always, movements are born, there are many names and much vocabulary. But whose main lines are having a purpose, a why, a 'start with why,' a meaning, etc. And what is important, Because since there is no boss to tell me what to do, it's up to me to take my own initiatives. And for that, I need to know in which direction we are going. And everyone needs to go in the same direction. So for that, there is an important job, which is to make this famous North Star shine, representing the purpose, the why. We defined it. My job now is to talk about it all the time to everyone to ensure that everyone is looking in the same direction.
So, digital technologies are very useful for me because, as a result, it... I can do it continuously and repeatedly through social networks, like Facebook, etc. But also, they are very important because they create a... Because that is just a broadcast use of social media, what I just described, which already existed before. But also, they enable the transparency that is allowed by the fluidity of information, which means that when someone starts to drift a little to the side, their neighbor can tell them, 'No, no, wait, we're going over there, don't forget.' " What we call 'everybody is a sensor.' Everyone is a detector, since everyone sees everyone else in theory, but in practice, obviously, we see the people who are closest to us.
The second important factor in these organizations is what we call wholeness, meaning not wearing a mask between who we are in life at home and who we are at work. Now, I'm not talking about the intimate and the extimate; one must preserve their private life as much as possible, at all costs. But on the other hand, the fact that, for example,
not behaving the same way, telling yourself, 'No, but here I can play a dirty trick on them, stab them in the back, it's not a big deal, it's strictly professional.' That's not possible in a company where everyone expects others to follow more friendly, societal codes of personal relationships.
And once again, this behavior is enabled by transparency. Which means that ultimately, everyone sees you, and in this case, not just within the organization but also outside because you will start expressing yourself on social networks that are sometimes very public, like Twitter, etc.
Or on LinkedIn, and everyone will have a need for alignment between
managing their personal brand, their personal branding, and having complete alignment in their behavior.
And finally, the big piece we often talk about in liberated organizations is what we call self-management, meaning no one gives orders to anyone else. So, that means if I want to make a decision,
it's up to me to decide. If I want to change something, it's up to me to decide based on what we call a tension, meaning a gap between what I see and what I would like to see. And that comes from my gut. I feel this tension, and as a result, I make my decision.
And the golden rule to be able to... Go ahead and make my decision is to talk about it with two types of people. The people who will be impacted by my decision, which makes sense. And, just as logical, the people who are experts on the subject, since they are the ones who can give good advice.
So, if we take a very concrete example, my salary,
I want to change my salary or I want to give myself a bonus. Who do I talk to about it? The people who will be impacted, meaning the people on my team who are around me, because if I am paid double for the same work, it will be a problem for them, so they will also want to revise their salary. And also,
they have a direct view of the quality of my work since we work together daily, so they can give me interesting feedback. And who will be the experts? The experts will be people who are senior enough to have a broad view, to compare my salary with those in the market or with the salaries of many other people in the company, so people who are a bit more, I would say, black belts in the organization, people who will have a lot of... decidedly, people who will have a lot of followers, so the big nodes in the network that you see appearing here. And who are actually what I called earlier my spiritual influencers, so my leaders. So I gather these people, and once again, this is where the graph is useful for a given person, they will... They will gather their influencers and discuss it with them.
ask for their opinion, see what they think is socially acceptable, get feedback from them, until the person is then
confident enough to tell everyone. Everyone in the company, we have an internal social network, it's Google+, but it could be something else, to say in front of everyone, 'Okay, now, I was part-time and I'm increasing to full-time.' With enough confidence that if someone challenges me, my influencers
will jump to my rescue, and it's them who will defend me, not me, to resist... To justify rather than resist, but to justify the decision I made. Obviously, if they don't defend me, it goes badly for me. So it's important to manage, to have this awareness, this consciousness
of the people around me and the people who matter to me.
There you go. So, I...
So, I've given you the example that everyone always asks me about, which is salary increases. But ultimately, the same principle also applies, for example, if you want to make a purchase request, where you will say, 'Well, I have a tension, I think that...' My phone is broken, I would like to have another one. You will discuss it with the people around you, and you will discuss it with the expert, the go-to tech guy who knows all the phone models and prices. And since everyone will ask him, it will create homogeneity in the inventory, necessarily, because he will give the same advice to everyone. But at the same time, there is tolerance for exceptions because if I manage to convince him that 'No, no, but I need the 7+, thingamajig, because of this, that, I need it...' "
for client testing needs. Once he tells everyone, 'No, but yes, he has a 7+, that's normal.' You're safe, you know.
And once again, everything is ultimately done through this game of influence. We can even say it's what we call social pressure. So it's not Big Brother, in the sense that there isn't one person at the top of a tower watching everyone, but transparency creates many local influence dynamics. Where ultimately, everyone is a sensor, everyone picks up a little of what's happening in the organization and can
use their weight, their influence—obviously, the more followers you have, the more influence you have—to steer directions and the group's awareness in the chosen direction. With an interesting, well, interesting corollary, which is that as I described to you, a salary increase, you discuss it with 4-5 people around you whom you know well in a climate of goodwill since you chose them. And so it's not as complicated as it seems.
But on the other hand, a decision like 'Let's move everyone from one office to another because we're tired of closed offices and want an open space,'
that becomes much more complicated because you can't just go convince a boss who will say top-down, 'After all, we're going there,' and then the others keep quiet. And so, you have to use your social engineering skills. And concretely, we wanted to move 150 people.
We had a building with 150 people; there were 4-5 people who wanted to move. They ended up organizing drinks, doing propaganda on social networks, sending photos of other offices, saying, 'Ah, it would still be better if it were like that,' and regularly they did small surveys. To see what people think. And whether people vote or not, if it matters to them. And there is a threshold. When they had 80% of votes in favor of moving,
the activists, I would say, who wanted to move, felt confident enough to take action. That's 80% of 50% of voters, so actually 40% of the voters. But it turns out that with their individual seniority, they were already confident enough to go further.
There you go.
The movement, there you go, I hope you now see a little better the correlations and the stakes we can see between being able to start, to transform an organization into a liberated organization. And for me, that's what I will call, in my opinion, a digital transformation.
Transforming your organizational order as long as you haven't freed speech, it hasn't become horizontal, etc.
And that, if you don't have digital tools, the only...
You can't be too radical, but basically, the way to do it 20 years ago, when there was no Internet, was to have people with such incredible charisma that they would finally walk through the halls once a month, tap you on the shoulder, and there you go, you've seen the Christ, and then you toe the line because you feel his goodwill.
But today, with digital techniques, we can quite simply... Well, you still have to work to maintain a climate of goodwill, but we can, without having a great guru who inspires everyone daily, lead an organization toward horizontal management, horizontal modes of organization.
There you go. Have I been clear enough?