Sustaining Self-Management Work Systems

Jose Leal:

Welcome to rHatchery live. I am Jose Leal. I'm here with my partner Matt Perez from rHatchery part of the Radical World Organization. And today as a guest, we have Paul, Paul Tolchinsky. Paul and I have known each other for a little while. He reached out a few months ago, I guess. What about a year ago, Paul? We said, Hey, we're, we're doing EOD, pardon me, EODF. And we want to do it in Lisbon. You're Portuguese, you must know Lisbon Heights. And I had a handful of Lisbon Heights that I knew, and it worked out. We had an awesome conference. Unfortunately, you weren't able to make it, which I really missed the opportunity to, to meet you in person. But the work that you've done with EODF and telling us that you're going to get a chance to tell us what all that means and the, the conferences it's beautiful work. So, Paul, thank you very much for joining us, and tell us a little bit about who you are, what you've done, and what this organization is.

Paul Tolchinsky:

Thank you, Jose. Hello, everybody. My name is Paul, Paul Tolchinsky. I happen to live at the moment in Scottsdale, Arizona. And I've been here for about seven years. I, my background is, I have a PhD in organization Behavior and Organization Design from Purdue University. I my claim to fame is I carried a famous Britt by the name of Eric Triss bags while I was working in General Foods, helping him redesign the factories within the general food system back in the 1970s and early eighties. So I've been doing this work for 40 plus years, and along the way I moved to Europe. So the Europe, EODF stands for the European Organization Design Form. And when I moved to Europe in 2009, what I discovered was that a lot of people were concerned about how to humanize the workplace, how to create great places to work, how to bring more energy, meaning, etcetera, to the workplace. And yet they didn't talk to each other and they didn't collaborate. They weren't necessarily, they saw each other as competitors in this world where we're all, we really all have sort of a common purpose about changing the way in which organizations operate and work. And the way I learned in the eighties and the nineties was by bringing communities of people together to compare notes. We talked about what worked, we talked about what didn't. We talked about the principles underlying it and how they might be applied in different contexts. And so the European Organization design form was my way of bringing together people who had like minds, but didn't necessarily talk to each other in a way that would build momentum, build curiosity, build interest, make us all better at what we do in some way. And so, it's the forum, right? And the word forum in EODF is really important as Jose experienced that In Lisbon, it is a forum. It's a place where people come together to share ideas. We have provocateurs who provide thoughts and insights, but it's really the conversations that we have outside of the plenary sessions where people really learn and discover how to do this work and, and, and how to bring more passion and energy to it in some way. And so I'm always excited when I, you know, I hear people like Jose talk about their experience at the conference because it's, it's fun, it's energizing, but it's also a huge learning opportunity and experience for people. And the, and the, you know, and the two, the two fundamental questions are how do we create places of work that are interesting, meaningful, fun, profitable, productive, in, in, in the broadest sense of those two words, you know? And secondarily, how do we sustain it once we've created it? Sometimes it's right, sometimes it's easy to create it, it's easy to find a better answer, but to have that answer exists for more than one iteration sometimes is not so easy, and the answers are not so obvious. So those are the two questions we wrestle with, right? How do we do it? And what would it look like if it were different? And how do we build ownership and commitment and think radically, right? As we do the work? I say sort of, how do you, how do you get people to create that which they can't imagine, right? 'cause Mostly we, we don't, it is hard to believe that we could actually create places of work that are interesting, meaningful, and fun. And certainly there are more examples of the latter than there are that.

Jose Leal:

For sure. There's two things that come to mind on that one that it, the experience for me with EODF was not only that it is truly a forum, which is, I think kudos to you for the work that you've done in, in keeping it that way, and it hasn't become a mechanized event. I think that's, that's beautiful. The other was the warmth with which anyone would ooze. Whenever your name is mentioned you are loved in that organization. And I think that speaks huge volumes to not who you are, but the approach in which you do things. And I think that that should be really recognized.

Paul Tolchinsky:

You know, I thank you for that. I mean, and, you know, it's I'm loved because they feel valued and important when they're together, right? That's the key. You know, and I think, you know, you're, you're, you used the word mechanized, right? I love that. Right? It's not mechanized. And that's, I think, you know, this question about sustainability, right? Sustainability isn't about finding a solution and then replicating it over and over and over again. It's finding a solution today, finding a new solution tomorrow, finding another solution two days from now, finding another solution three days from now, and giving the people the opportunity to create and recreate for themselves the experience that really matters, right? That's, that's, and so no two conferences are exactly the same. There are things like the sock competition, you know, which is intended to make, which is intended to make sure at minimum, you're at least have people strutting their feathers and having some fun with it. You know, there is the open space. And so those things have become part of it. But, but how they get operationalized in the moment is created by those who are living it in the moment.

Jose Leal:

Yeah. And the other thing that came to mind, just to, to follow up on, on your intro area there, I, I think there's a third question, and that's one that Niels and I were having a conversation earlier in, in his podcast today. There's the question of not only how do we create the company that does everything you've described, how does it stay that way? Which is your second question, right? There's the third is how does it spawn others? Because if I move on from this organization and I'm back into the other type of organization or if I choose to create something new, am I back in the other type of organization? How is it that we facilitate the spawning of these new organizations? I think that's the third question that I would add to your list.

Paul Tolchinsky:

It's a really, really good question. You know, and in the eighties, I took American managers to Japan, from probably 1985 to 1992, I took any anywhere from 50 to 150 managers every year to Japan for two to four weeks to study Japanese manufacturing, right? And, and, and to learn, to learn, right? And when, and the Americans were somewhat skeptical, why would a Japanese person give away their family secrets, right? And, and, and periodically an American would actually ask the Japanese manager the question, why are you, you know, why are you telling us all this? And is, and the one manager's answer that stuck with me most was because my people know I'm giving away the house secrets today. So they got to create new secrets tomorrow if they want to sustain themselves. That's beautiful. You know? And if I, it's perfect. And what he was essentially saying is, I'm giving you my truth at the moment, but tomorrow, because I gave you my truth, at the moment, we, we won't be in the same place. And so the challenge for you is take what you learn here and apply it, but even when you apply it, it won't look like what you just saw here. It'll be somehow different, you know? And, and so how do you, how do you, how do you do that? The, the second part about it was the, the, the migration of these ideas gets too caught up in the tools and the templates and the practices. And the practices, right? And not in the principles. You know, my, I had one American manager came back and immediately implemented a morning circle, a company song and exercises in his factory. They couldn't wait to get rid of this guy you know, because it just wasn't their, it wasn't, it wasn't their culture. It wasn't their culture. Right. You know? And so, you know, and, and so it's, it's how do you, how do you get to the principle level and say, what's the principle at play? And, and how do I operationalize that principle in this moment, in this place with this group of people, right? You know, every, every design team, every design team for every EODF conference gets to create it for themselves, right? Yeah. The beauty is they have the experience in every design team. There's the experience of at least the last one or two, right? But, but that doesn't mean you have to do what they did, right? You have to look at what was the underlying principle. We changed the word speaker. I don't even remember which design came, but one group said, we don't want speakers. Speakers are people who talk at you. We want provocateurs people who talk with you, who can engage with you in a way that provokes your thinking. We don't want you to show us how smart you are. We want you to help us become smarter ourselves. Right? And so, just that shift in principle, we don't, we're not looking for speakers. We're looking for provocateurs is a massive shift, right? Yeah. You know, and, and not everybody who comes to a conference can put themselves in the position is, I'm not here to show you how smart I am. I'm here to get you to think for yourself and to provoke you in some way, right?

Jose Leal:

And from a radical perspective, the, the way that we see those principles is that they're bound to us as human beings. We, we need, as you've pointed out a number of times now meaning

Paul Tolchinsky:

Yeah.

Jose Leal:

Right? We need belonging. Yeah. We need to make an impact. These are things that are innate to us. They're, they, they're not ideas. They're not ideologies.

Paul Tolchinsky:

We, you know, the EODF, you know, I, before the EODF, I owned another company, which is sort of in the background. You see all these wine pictures you know, and I got to practice what I was preaching as a consultant, you know, and so the EODF is practicing what you preach, right? You know, and so it's in the book on whole scale change that I co-wrote 20 some years ago with my old partners, we, we, we talked about what energizes people, right? I mean, what, what is it really? The, the, the short story, Jose, as I landed in India a year after my partner Kathy, Dana Miller had been there, and the first question out of the manager's mouth was, how do you keep the fire burning That, you know, 'cause Kathy had been there, and she'd given them good ideas, and she'd provoked their thinking, and they were off and running like crazy. And then when they got done with all the good ideas that Kathy had given them, they, they were like, well, now what do we do? And so when I landed, the first question that we got asked is, how do you keep the fire burning? Right? And, and you know, that, you know, and the question is, you know, what energizes people? And you know, and this is 1996, and I thought, I don't really know the answer, right? I mean, I had thoughts about it, and I was there for a month doing a lot of training and, and working with a lot of people to understand whole system change and whole scale, large group methodologies. And, and, and we created this formula, which speaks to what you just said. What we said is energy is a function of three things. The first is meaning, fifth, meaning it's the why. Why should we do this? Right? And, and does it, does it, does it not only make a difference to the profitability of the company, but to the planet, right? And, and, you know, is it making a contribution that I could be part of what's, you know, if it has meaning and purpose, I can get energized, mobilized, right? The second was hope. Right? If I'm hopeful, I'm more energized than if I am feeling helpless. Right. You know, and, and what we said back then was hope is a function of actually seeing progress to the goal, right? And sometimes, you know, in our adult world, progress may be happening in one part of the company or one part of the planet and not happening in another, but the one doesn't know about the other. And so they become frustrated and disenfranchised to your point about how do we spread the word right? And, and inculcate each other, right? You know, and so hope is about seeing results. I have a really good low tech example of that from another old client. But the more hopeful I am, the more energized I am. Right? Right. And the more willing I am to actually put forth effort and energy to make something happen, the third will resonate with you instantaneously, which is power. If I don't have the power to influence my circumstance, if I don't have the ability to make a difference, if my voice isn't heard, I say. Who cares? Right? Right. And so we call that impact. Impact. Yes. And, and, you know, I had in, in Germany and Austria, my old partner, she didn't like the word power. She wanted the word influence. And I said, influence is too passive of a word. Power impact the ability to, the ability to influence my circumstance. Right. That's, that's impact. Right? Yeah. You know, and so, so what we said was, you know, it, it's, you know, this sort of, this energy. So when I, by the time I left India, I had these three things. I said, I, I have no idea whether or not these are right or not, but these are three things that I think are important, right? If you, and if you have those three things, then you are much more likely to have ignited a flame, created momentum in some way, right? That enables you to put another log on the fire and keep the fire burning. You know, but it begins with purpose and meaning. Right? And without that, without that, I, I'm not so sure. Right. you know, I've been working on this article, I think I mentioned to you in an email about why is it so few of these places that we're talking about and hoping for don't, don't last for long. Right? And I had the gift of working with probably the oldest sociotechnical, technically designed self-managed work system in North America, happens to be in Bromont Canada. And it's 41 years old, and it has survived 41 years of economic upturn and downturn, and has industry, it has survived five leadership changes. It has survived four or five corporate leadership changes. You know, where the corporate people are saying, we don't understand that model. I, you know, why, why, why are we letting them do that? You know? And the question that I asked retiring site leader, general manager, was, what's your hypothesis about why you've been able, why have you been able to survive for 40 years when other people can't make it past four or 10? Right. and he and I have had a really long sort of discussion about, about that, you know, and, and I shared meaning hope and power, and they really resonate with him. You know, but, but there are other, he's got more practical reasons why you know, but, but at the, at the, at the, at the macro level.

Jose Leal:

The foundation at the root.

Paul Tolchinsky:

Found the root principles are people have a voice. I mean, people, this is an 800 person facility and, and the workers run a place, There's 80 salaried people and 800 quote shop floor people. And they run the place and the 80 support them. And if somebody came in and wanted to change it, they'd throw 'em out the front door,

Jose Leal:

Exactly. And that's the power of, of having a system where people are engaged in their meaning, in their impact, in their belonging with each other. Right. And I think I would add one more your three, I would add that belonging is a big piece, piece of that. And I think belonging really is about trust, right? And yeah. And so we want to be with people that we trust and, and be safe in that environment. Yeah. if we're not safe in the environment that we're in, then we're out of balance and we have a the conflict starts there, and then we start to use power against each other, power over each other. And that's where it all falls apart. Back to the, the, the topic, today's talk, which is sustaining this, right. Because what causes it to fall apart, therefore, what causes it to be sustained? And I just want to bring our attention to the fact that Matt seems to be having a video issue and he is popping in and out But Matt, we can't see your face and we can't see if you're biting the, the to get in here in the conversation. So I want to pause to give you a chance to jump in if, if you're, if you want to do that, maybe we can't hear you either. I don't know. Matt, we aren't hearing you. If you are saying something,

Paul Tolchinsky:

I maybe just put it in the chat. Yeah, feel free to put something in the chat, either an input or a question, whatever suits your fancy. That'd be awesome.

Jose Leal:

So to move the conversation back to sustainability. So what, what in your experience have you seen that you've talked about all these organizations that been able to do something as you've just described in Canada? Which I, I lived for 25 years up, up in that space, and it sounds by what the company said. It's in Quebec.

Paul Tolchinsky:

It's in Quebec, it's in, it's about an hour outside of Montreal.

Jose Leal:

And I worked for a Quebec a Quebec corporation in Toronto. Okay. So I used to visit Quebec quite regularly. What, what examples do you have, because I, I'm sorry to say it this way, because it, I don't mean to be mean about this, but you're sort of the grandfather of this pace. You've been at this for longer than most people have, and you probably have more experience and more knowledge about both the failures and the success. And I'd be more interested in the failures at this point, because I think sustainability isn't so much about the success as it is understanding what causes failure.

Paul Tolchinsky:

You know, and I've had both, right? I mean, I've, I've had, I, I've, I've probably helped design and start up 10 factories, 10 businesses everything from aircraft engines and, and engine blades and landing gears to dog food in Jello and a bunch of others. And you know, and you know, I, I think you could speak to both of them. I, I think there's a couple things that sort of overlap. Maybe that's the way to, to start, right? Because I think the first most important one is the one that most people hate to hear first. And that is nothing breeds longevity better than success, right? And so if you read about, you know, the, the Volvo experiments, the Scandinavian experiments, you look at Saturn in the US and others, you know, sustainability is in part a function of being able to deliver on your results, right? So, you know, the places I've worked where people say that's, right? Then what we say is, can you outperformance? And the answer is no. Right? What we do works and delivers to the customer, to the marketplace, to the shareholders, to us as employees, right? And so, you know, what's what sustained this patent in, in, in Bromont is it's been incredibly successful and people are incredibly proud that they've been able to remain successful and outperform their sister facilities and outperform the competition. And they walk around like a big badge of, you know, on their.

Jose Leal:

That's the impact, right? That's the impact.

Paul Tolchinsky:

You know, that's the impact, right? What we do matters, and we're good at it, right? And so nothing breeds sustainability more than success, number one. Number two is continuously embracing innovation and, and technology, right? My one example of a failure is they did really, really good, but they wanted to rest on their laurels, right? They didn't really have a continuous innovation, continuous improvement mindset. If you go into this place in, in Bromont, it doesn't look anything like it did 40 years ago, right? It's all robots now. It's all automation, it's all technology, it's all new ideas that have been created by the people who work there, right? They go to the technology fairs, they go to the customer, you know, they have an internal venture capital fund that is always spawning new ideas and new ways to do. And so, so they, they've sort of surfed chaos by continuously innovating and changing. They don't rest on their laurels, right? You know, it's the never ending marathon. Periodically, you want to just stop and sort of take a deep breath, but the moment that you do that, you lose something, right?

Jose Leal:

Best practice mentality, which is this is the best practice we're not going to change

Paul Tolchinsky:

Yeah. You know, and it becomes your, you know, it's your culture becomes your worst enemy instead of best friend, right? You know, so that's number two. I i think number three is, when we talk about self-management, we really mean self-management. We don't really mean you work as you get to manage this, and we manages, we'll manage everything else, right? It is, we self-management is you manage the business like it was your business, right? And as a manager, a leader in, in, in Bromont, they don't even use the term manager, they actually have a different term for the group. You know, but, but they, they how do I say it? I sort of lost my train of thought for a second there when I did that. They, they do everything from hire their coworkers to adjust wages on an annual basis based on the wage survey that they commission. They, they fund innovation through their own stage gate venture capital fund process. They there isn't an aspect of the business that they don't run. Now, now 800 people are engaged in the running of the business, but that means 25 of them are on the plant subcommittee, which sets the goals. Another 25 or 50 cross section of them might be on the gain sharing committee. And so they're tracking the improvements and what those improvements mean to the, the pot of money that will be divided at the end of the year. There's another group that manages the profit sharing, you know they run the business. Right, right. And, you know, and so, you know, and, and I think a lot of the failures worker gets to, they get to self-manage their daily work, but they don't really get to run the business. Right. It's not, it's not self-managed. It's go

Jose Leal:

No, I was just going to say, if, if Matt's technology was working right now, he would be jumping in and saying we call that co-management, co-management, not self-management, because it's about doing it together collaboratively managing. So that's, that's one terminology change that we use. The other is co-ownership. Not just making people feel like they own things, but actually owning things.

Paul Tolchinsky:

And therein lies my example of my biggest failure. 'cause It was an employee ESOP where they were, the mythology was that the employees were going to become the owners of the business. But the reality was leadership never gave up control. And so the workers had, quote an economic share, but they didn't really have any voice in running the business. So the bosses and the leaders and others were still making bad decisions, and people were looking around scratching their heads, saying, wait a minute, I thought, I thought I was an owner. So what exactly does that mean? And I understand that an ESOP isn't the same as what you mean. Right. You know, from a co-ownership point of view. But, but, but it, it's, it destroyed the place because the language that they were using around ownership was so inconsistent with the behavior. Right. Right. That it destroyed the place. You know, and people became disillusioned, disenfranchised. Right. That the whole issue of impact and power. Right.

Jose Leal:

Exactly. And there's a difference between ownership and having a stake. There, there're two very different things. An ESOP is the ability to have a stake in a, in a different way than just simply having, you know, shares in a public company. And shares in a public company is not real ownership for the most of the part, for the most part.

Paul Tolchinsky:

That's right. Right.

Jose Leal:

And I could be a, an outside investor with, you know, 0.001% ownership, or I could be an employee with 0.01, you know, 0 0 1 ownership, and neither of the two are really able to say, I own this organization from an impact perspective.

Paul Tolchinsky:

Yeah. Yeah. I actually, yeah, I get, I mean, where, where Bromont sort of cuts a fine line is people set people together, co-create the gain sharing goals for the year. They collaborate on what's the opportunity, what improvements, where do we need to put our emphasis? There's an overlap with the employee steering group, which is sort of looking at, you know, what do we need to do from a business perspective to satisfy all of our stakeholders for the next 12, 18 months. Right. You know, and so there's, there's the collaboration across these entities where they're working together to do that, you know and, and, and tracking the improvements in a way. But, you know, it also, the other part about it is, I think what differentiates it is people actually get to understand the financial aspects of the business and the economics of it. Whereas if you just have a share, you never get any of that. Right. You just hope that whoever's taking care of it manages it well enough that you get a return. Right. you know, so, so to, so Bromont is, you know, it isn't quite what you're describing in co-ownership, you know, it's, it's owned by a big company. Right. you know, but, but it does a really good job. Or maybe the other part of it, Jose, is it does a really good job of managing its stakeholders where one or two of my failures ha have not, you know, one, the headquarters people called it the Pleasure Palace, and they, you know, and the people in this particular place laughed at that, but never really challenged their stakeholders to understand why, why it was the way it was. Right. Why it had skylights and trees in the middle of the factory and all these other things that had it looking like no other factory you've ever been to, you know? But so they didn't manage their stakeholders very well, and so leadership and ownership wasn't as committed to them. Right. Where Bromont does a really good job of constantly managing its stakeholders, customers, suppliers, the local government, the Quebec government. Right, right. The corporate, you know, corporate,

Jose Leal:

Not an easy government to please

Paul Tolchinsky:

No, exactly. Right. You know, and, and, and in some, and at least in one instance, the government actually pushed the corporate to back off on something they were thinking about doing. Right. So sustainability was because the stakeholder was so invested, pushed back on other stakeholders, the, the group, the, the people inside didn't have to do it. Right. The stakeholders managed themselves in some way. Where in my, you know, in my true examples that I'm, that are the most painful. Right. neither one of them did a very good job of managing the ecosystem. Right. And, and, you know, they, they thought they had to insulate themselves to protect themselves. Right, right. And in doing that, they actually cut off their lifelines in some way. Right?

Jose Leal:

Yeah. As you said earlier, it's about the dynamic paraphrasing, it's a dynamic system of integration. And what we do tomorrow is different because tomorrow's a different day. It's a different dynamic. And so how do we do, do, do things in a way that is living in the moment and recognizing what needs to be done? Yeah. Yeah. That whole process of not building static models of, of structures and of organizations and of relationships. Yeah. Matt is back. Let's hope that, Hey, Matt, hear him. Can we hear you? Matt?

Matt Perez:

Can you hear me?

Jose Leal:

We can. Yes. You're back. All right. Alright. Now you get a chance to, to participate. Sorry. You, you are having that issue there.

Matt Perez:

You, you already said my piece about co management,

Jose Leal:

I knew you would. I knew, I knew it would be and.

Matt Perez:

Paul has described very well, what, what we believe that it has to be ownership. You found Broman, how do you spell that?

Paul Tolchinsky:

B-R-O-M-O-N-T, B-R-B-R-O-M-O-N-T-M. It's about an, it's about, it's, it's in ski country. It's in the, it's in ski country outside of Montreal. Yeah. Actually,

Jose Leal:

And in, and in French, you, you swallow the t

Paul Tolchinsky:

You swallow the tea. Call it Bromont.

Jose Leal:

Oh, Bromont. Okay.

Matt Perez:

So, so, but you keep saying the management this and the management that, and what we're saying is what management people are doing, the management, they should know everything, sales, productivity. So they can, they can react. And some people will not do it. Well, some people will do it very well. So what, what a position would anybody have to have except the investors, obviously to, to not have management?

Paul Tolchinsky:

Well, it depends on, are you talking about a position or a role or work?

Matt Perez:

Both.

Paul Tolchinsky:

I mean, because I don't think you need the position.

Matt Perez:

I mean, both.

Paul Tolchinsky:

I mean, you know, in Bromont there are no managers. There are three groups of people who work together. The largest group is 800, and they're broken up by man, by manufacturing tasks and, and cells. Right. And they, they, they, they do everything from quality control to staffing, to right scheduling. They, they, they manage their workspace.

Matt Perez:

That's very close, very close.

Paul Tolchinsky:

Right. They, you know, they, they do it all. A second group acts as the technical support to them. Right? So the second group provides training and development, and maybe sometimes troubleshooting and problem solving around technical issues that maybe those groups of people can't solve for themselves. Right? you know, and, and, and the, and their, their salaried from a financial point of view where the 800 are, quote hourly. Right? you know, the third group is 15 people who are sort of the global functional experts whose job it is to manage the ecosystem and all the stakeholders. Right? So if we.

Matt Perez:

What does that even, what does that even mean?

Paul Tolchinsky:

Well, that means that, like, if, if I, before this call, I had the site leader on another call, and what he would tell you is he spent 30% of his time at corporate convincing people to give, bring them more business or with the, with the Quebec government, right? Talking about why what they were doing was important and useful, and looking for maybe technology capital for a spinoff, for a great idea that they were creating. He spent 30% of his time managing the external stakeholder environment, customer visits, taking people to customers, suppliers visiting suppliers, right. Taking people to visit. That's, you know, the, his job was the more long-term strategic you know, they went from no robots to hundreds of robots. Right? Now they're doing 3D printing, and soon they're going to be using artificial intelligence, right? And so this group of 15, they're the ones that are out there scouring the universe for what do we need to do to continue to be competitive? And people are basically asking them for help. You know, if you find anybody who can do X, Y, Z, right? The story he told on my phone call a little bit ago had to do with creating, creating a finish that was mirror like on the product. And it cost $10 per product to create this kind of mirrored finish. But they needed to get the price down to a buck. So between the workers brainstorming everything they could think about, and this group of 15 sort of scouring the planet, right? They discovered something in the plastics industry that they could apply to their metals industry that brought it down from 10 bucks, a buck and a quarter, right. Which enabled them to go back to my original thing about how do you remain cost competitive, right? Right. You know, and so that group has sort of a unique job. They, they're the ones that oversee the, the collateral organization of subgroups and teams that actually manage the, the work groups and the subgroups manage the week to week, month to month, maybe a little bit a year to year. The group of 15 is more two years out, three years out. Right. They, they might come back in something that may be more immediate, but that would be driven by one of the manufacturing cell teams, right? So, so, you know, and, and they don't, that group of 15, Matt doesn't really manage, they don't tell anybody what to do or how to do it, right? They're not, they're not the conduit between one functional group and another functional group that's up to the groups to figure out themselves. You know, so, you know, if, if you talk about managing as a coordinating and linking mechanism that happens group to group, okay? There's not a person who manages that boundary, right? The work groups and the cells manage those boundaries themselves. The task of managing, planning, organizing, controlling, blah, blah, blah. They, they, that's internal to every group.

Matt Perez:

Okay. So, so what do you need? I mean, in the end, if this group is owned by a group of investors in the board that represents them they're making money for somebody else.

Paul Tolchinsky:

Yes. Well, yes, that's true. 100% true. And they make a lot of money for themselves, because in this facility, you get paid and you, you, your economic portfolio has four components to it. The first is your hourly wage, which is adjusted every year based on the salary surveys that they do for themselves, right? So they don't, they rarely go down. They sometimes stay the same, and sometimes they go out. The second is they have a knowledge pay for knowledge system. So the more you learn and the more you know about how to manage the day-to-day, and how to do the work of your group, the more value you become, the more incremental income you make. The third is continuous improvement. A portion of every dollar saved goes into a pot that the workers divide at the end of the year.

Matt Perez:

And who decides that portion?

Paul Tolchinsky:

They do. They do, they, they actually, I mean, technically the answer, well, maybe that's, that's a little bit facetious. They do, but it's, but it's gets signed off by the investors, by the corporate people who own 'em. Right? So, but, but they essentially set the targets and they work with the, the, the data analytics people to track and monitor the results. They report the results at a monthly meeting to the whole factory. Right. And once a month, you know, X amount of money goes into the pot. At the end of the quarter, the pot gets nailed for that quarter, that pot goes into the pot for the year, because in the second quarter, maybe you don't make your goal. Right? Okay. And so, so it, it, it, and so, and the fourth is at the end of the year, there's a profit sharing. So the investors get to declare a dividend. They take what they want, and there's a part of that dividend. There's a dividend back to the workforce, right? So they have four ways in which, so they have four ways in which they can economically benefit from what they're doing.

Matt Perez:

So they're paying back a investment that was made. I mean, do they get sales or what do they get from corporate?

Paul Tolchinsky:

What do they get from corporate? They get, in some cases they get venture capital, right? They're, they're about to bring in a whole new productions line for another customer, and it's going to require reconfiguring some of the existing facility and adding to it. And so the investors are bringing some of the money the Quebec government is putting in some of the money, right? And, and it's, and it's, it is a, it's a, it's a microcosm of the, of the site that's actually making the sales pitch and why they should get that work. Right. And what they could do with it, in some ways, they've run the numbers. They know what they need to do. So from, from the investors, they're getting, you know, capital, in some cases, they're getting access to technology and new systems, you know, the, the, the word. This facility does a really good job of integrating technology with a human system. They've, they've actually figured out, they do a real, pretty good job of managing, leveraging technology to augment human systems, not to replace human systems, right? Right. So they don't bring in a new machine and get rid of 10 people. Right. that's not the way they operate. Right. And they wouldn't bring in a machine that would eliminate 10 people. You know, but they might bring in 10 machines and ask 10 people to run them as a part of their overall cell responsibility. You know, but So, and, and if they were self-sufficient, Matt, I mean, they could spin themselves off. Yeah. I mean, they probably could, you know, I'm working with another group that's actually doing that. They're spinning themselves off, but they're getting c capital from the financial markets to be able to do that.

Matt Perez:

Yeah. That, that's a mistake, we were so I was co-founder of a company that grew to, right now it's like 900 people. Most of them in Mexico. There's like maybe 10 people in the us. And and it was, it was co-managed. It was self, it was self-managed. And now it's a patriarchy, is not, he's not what it was. But our, my biggest regret, my biggest not regret, because I don't, I don't dwell in the past, but my biggest realization after leaving the company was that we didn't do the number three, that Jose mentioned in the beginning that we didn't prepare people to spawn new companies. So people would leave. At one point, the, the salaries were going crazy, and we weren't going as crazy as salaries. And people will leave for the higher salary, even though it was what we call a fiat system, you know, moved that from there to there. Why? Because I see, so that's, that's the fiat system, and it sounds like Broman is not that way. 99% of the case, except when it comes to finance. And, but we didn't teach, we didn't, we, we didn't make it our goal to create people or to help people understand how to, how to fund another company with everything was transparent, salaries, sales, everything. Every, everything was centralized. There was no managers by title or by role, or by anything. People would take on leadership positions. There's no question you need leadership. Okay? Yeah. But you don't need leadership always to be Mapper is the leader. No, mapper is the leader when it comes to this kind of code with this kind of thing. But if he comes to t-shirts, he's not the leader. He's, he's basically a zero. Somebody else is good at t-shirt, so he becomes the leader and things like that. So it's a more fluid situation. But Bromont doesn't sound like it's too far from it.

Paul Tolchinsky:

You know, and, and I mean, you know, Bromont has a way of entrepreneurship, right? Where they can, you know, because of their internal venture capital funding, they're, they're creating spin ins,

Matt Perez:

Which comes from cap from corporate, right?

Paul Tolchinsky:

Yeah. Okay. Yeah, yeah. You know, and, but, but, you know, but even within the larger, I mean, to to, to Jose's point earlier, within the larger ecosystem of this company, this facility, 41 years of success is still an anomaly and an exception and not a rule. Right? I was at general, I was at General Foods in 1975 when the Harvard Business Review article came out about the Topeka Experiment, which was another general foods pilot, which was the quote, first experiment in self-managed workplaces, right? In the US and I worked at another General Foods facility. And if you mentioned the word Topeka, it would be like calling somebody a bad name, right? Because, you know, the, the sort of the, the, the corporate body wanted to repulse this organism that didn't fit Right. The reality, you know, and, you know, and, and I think, you know, the, how do you, how do you enable a place like a Bromont or a Topeka to spawn future generations like it, even though they don't have to be exactly the same, you know, it's a real challenge. You know, I mean, in it's true, in, in, in this company, Broman is still the exception. It's not the rule. Right. you know, even though everybody acknowledged its success, right. You know, and everything like that, that, you know, sort of the, the notion of somehow changing and letting go of the old and embracing something new is not an easy transition, right. As we all know.

Jose Leal:

Yeah. me, Miranda is reminding us that we're at 53 minutes and it's

Paul Tolchinsky:

I'm sorry, I ramble. I ramble. I'm sorry. A great

Matt Perez:

No, no. It's not your fault. You said it's very interesting. Yeah,

Jose Leal:

No, it's been a great conversation.

Matt Perez:

For next week, we have Kylie Steadman Gomez with Nest. So I suspect that she comes from a Portuguese family. She's strategic advisor to Cordal World Foundation. I don't know what any of that means. I don't know who Jose knows, but we're going to find out next week when she join us, and looking forward to it. So far, the conversation with Paul has been really interesting in spite of all the problems that I had. And, and the talk about Broman is, is it's amazing that it gets so close, even though it's still part of a corporate body. It really is amazing that way. But yeah, the, the, to me, the, the basic thing is ownership. When people say, oh, we want people to feel like owners, well, they don't feel like owners because they're not, you're the owner and they're making money for you, making money if still were making money for themselves. I think, and right now it's just an, I think it would be a different, a different story. And that's where the radical things become. And by the way, as radical as to the roots, not to Yeah. Not kill the people or.

Paul Tolchinsky:

I think, I mean, I, I agree. I mean, I think your point is really well taken because ownership, to create psychological ownership requires creating real ownership. Yeah. You can't have one without the other. Right. You can't have, you can talk about ownership and you can, people can actually, I mean, in Bromont, people feel a sense of ownership. The first generation is retiring, and they feel a sense of responsibility to ensure that the next generation understands why they did what they did and, and how they got to where they are so that they can at least carry the torch forward. Right. However, they're going to co-create it.

Jose Leal:

And I, I think that when we talk about impact as an example and meaning that these two things are, are not binary. It's not, yes. There's meaning no. There's no meaning. Yes, there's impact. No, there's no impact. It's what you've described, I think Paul beautifully, and thank you for that is a situation where there is a lot of meaning and there is a lot of impact. Yes. That I sense now, would I sense more impact if I were also the owner? And, and that was fully realized for me. Yep. I, we argue that. Yes.

Paul Tolchinsky:

The boss lady, the boss lady just walked. The boss lady just walked into the office.

Jose Leal:

Perfect timing. Perfect timing.

Paul Tolchinsky:

All right. Thank you very, very much. Thank you. Lovely to see you.

Matt Perez:

Yeah, thank you. Thank you too.

Paul Tolchinsky:

Talk to you soon. Very, Matt's a pleasure. Thank you. Thank you both.

Jose Leal:

Bye-Bye.