I went to the World Appreciative Inquiry Congress in Orlando, USA last year where this book was positively recommended by various luminaries such as David Cooperrider. After I heard about it for the third time, I thought I would investigate.

Firms of Endearment: How World-Class Companies PROFIT from Passion and Purpose, by Raj Sisodia, David Wolfe, Jag Sheth

Brief account of the book

The book is based on two rounds of research undertaken by the authors in collaboration with their MBA students. They identified the organisations initially by asking the question “Tell us about some companies you love. Not just like but love.”

They evaluated the suggested organisations against some criteria and produced an initial batch of 18 companies that qualified, expanded to 62 in the current edition. The headline criteria are that, to qualify as a firm of endearment, the company or organisation must be passionate about doing good while doing well, and must be equally committed to doing well by all its shareholders, e.g. partners, investors, customers, society and employees. In addition there must be evidence that they live these values.

The headline news is that when they then compared the performance of these Firms of Endearment against the Good to Great companies and the Standard and Poor Top 500, they outperformed them against the market by four to six times. In other words, while Good to Great and Top 500 companies outperformed the market, the Firms of Endearment, particularly the American ones, outperformed the market even more, in a 6 to 1 ratio (p. 20). So of course the question is: chicken or egg? Interestingly, much later in the book, a model is presented that suggests that initially a company has to “establish a strong market position and a predictable stream of profits” before it can advance up a hierarchy equivalent to Maslow’s Hierarchy of Needs. At stage two of this Kyosei hierarchy “managers and workers cooperate”; at stage three the organisation “extends cooperation to customers, suppliers, communities and even competitors”; and finally, at stages four and five, gets to address global imbalances and help governments solve global problems (p.157).

In attempting to explain the rise of the Firm of Endearment as a successful business model, they suggest it is part of a wider 21st century zeitgeist, prompted in part by an ageing population experiencing the psychological process of “generativity”: “the disposition of older people to help incoming generations prepare for their time of stewardship of the common good” (p xiii-xiv). Many of these ageing baby boomers are also, of course, in senior and influential positions in business life. They also believe that the world is experiencing a strong search for meaning, which is driving people to look beyond the relationship of an organisation to their purse, to a relationship that speaks to their hearts, their passions and their values. This is described as “A transition from material want to meaning want.” (p. xxvii). The authors describe this as the emergence of the “Age of Transcendence”, suggesting that in this new age, organisations will need to connect with six specific senses – design, story, symphony, empathy, play and meaning – to engage and influence their stakeholders. All of which are asserted to have deep roots in the brain’s right hemisphere and all of which of course resonate with AI. There is a suggestion that we are moving from a “having” society to a “being” society. One can’t help noticing this resonates rather with our straitened and benighted times where there is less “having” to be had.

The book draws on its more than 60 exemplar organisations to illuminate the various features of a Firm of Endearment and how they are expressed differently with the various stakeholders. For example, it recounts how Costco implements practices that reduce staff turnover, increase per-person productivity and support good efficiencies that create a virtuous circle that allows the organisation to both pay better wages and generate more income per person than rivals in the same industry (p.35). Wegman is quoted to illustrate that high quality, highly motivated staff can result in a doubling of margin per square foot against the industry average, a gain which more than offsets their proportionally greater wage bill (p. 61).

In summary

There is no doubt the authors have identified an interesting group of organisations. A key question is whether, as argued, they are harbingers of a new age, or whether they are outlier organisations of a type that have always existed. The book itself starts well, but for this reader became progressively less interesting.

My take on this book

I can see why David and others got excited about this book. It is centred on answering a great AI question “How are we going to make this company an instrument of service to society even as we fulfil our obligation to build shareholder wealth?” (p. 3) and gives good, quantified answers to that question. The evidence that organisations can be good and do well is very convincing and valuable. The authors have clearly contributed immensely to the business case for Appreciative Inquiry.

The text is clearly located in idea that “Business is by far the greatest value creator in the world” (p. xv) and argues that we need to “Understand the power of capitalism to transform our world for the better” (xvi). This belief underpins the “Business as an Agent of World Benefit” AI project.

However, the book proceeds as if a concern for the common welfare is a new phenomena, with no reference to the Quaker-run businesses, for instance, of the 19th and 20th centuries. I could also take issue with the unintended sexism of calling older women ‘postmenopausal’ while older men are referred to, somewhat more graciously, as ‘grandfathers’ (p. xxviii). Similarly the first time the female personal pronoun pops up, is in relation to a hypothetical customer (p. 7); none of the experts or CEOs quoted to this point (or at all, according to memory but not rigorously checked) are female.

This book offers support to the Appreciative Inquiry project. It will also give you case study stories for your presentations. In addition there are some great statistics in here, but you have to dig through a lot to find them. I confess I didn’t finish the book.

This book claims to offer an alternative way of organising that breaks away from the command-and-control model or as the author of the book calls it, “the predict and control” model. This seemed sufficiently in line with our aspirations as Appreciative Inquiry (AI) practitioners to warrant further investigation.

Holacracy: The Revolutionary Management System that Abolishes Hierarchy, Brian Robertson Portfolio Penguin, June 2015

Brief account of the book

The book has noble, honourable and inspiring intentions: it offers holacracy as a “new operating system” for organisations that will create a “peer-topeer distributed authority system”. This operating system creates empowered people who are clear about the boundaries of their authority, about what they can expect from others, and are able to be highly effective in their roles. In this model the organising process itself becomes the ultimate power, more than any individual, and every individual can have a voice in designing and altering the process. It is a flat system of roles and links that delivers high autonomy. It is predicated on a system of roles (essentially disembodied job descriptions), decision-making circles (meetings by another name) and a process of links. It bravely attempts both to relieve leaders of the pressure of the demand of omnipotence, and to make it possible for weak signals of dysfunction, lack of alignment, gaps in accountability, missed opportunities etc. to be attended to promptly and effectively by empowered individuals. It offers a clear process for distinguishing working in the business from working on the business. It presents a view of strategy as “dynamic steering” by simple rules or principles towards a general purpose. In this way it attempts to simulate evolutionary development processes and indeed sees itself as an evolutionary model.

Reading this book was an interesting experience. The book is a “how-to” book and it sets out the process model in great detail, describing the purpose of key facilitator roles and the process of key tactical and governance meetings (“circles” in the terminology of the model). It is not hard to tell that the author and originator of this model has a software development background. My initial impression reading it was reminiscent of getting to grips with the complex board games of allies and axis that my sons and husband loved to play some years ago: a complex set of rules about the properties and powers of various pieces and cards subject to the rules of the dice. In the early stages as much time was spent consulting the rule-book as playing the game.

If this, then that

As I read on I realised there was a strong binary flavour underpinning much of the process, an “if this, then that” logic driven by an implicit flow chart of binary decision-making. The author’s argument is that these tight constraints work to create an empowered freedom within them. However, it is noticeable that much of the instruction reads “no discussion allowed” as the process is strictly followed. In essence he is trying to programme out the negative aspects of the human element in this organising process and to create an organisational process that functions effectively despite the emotionally and relationally wayward behaviour of people. This takes a lot of discipline on the part of all the players; which is to say it takes organisational energy.

The author is honest enough to point out that this new process does not always “take” in organisations despite various people’s interest, energy and support. He identifies that the key challenge, which is also at the heart of the model’s power, is the need for those with current power in the system to give it up. The author is of the opinion that after an initial period of painful discipline, the benefits will become clearer to all and the process will become more self-maintaining. It is clear that not all organisations make it over the hump. Similarly, while initially he took a whole-system “all or nothing” approach to implementation, he has since softened his views and in this book he offers a chapter on “holacracy-lite” possibilities that offers guidance on how to implement parts of the process.

In summary

The book is well written, offering a clear and detailed explanation of theholacracy organising process with a worked case study and anecdotes from experience used to illuminate how the various meetings and roles work. My take on the model presented This model is likely to appeal to those who have great faith in rationality and like highly structured, detailed and disciplined processes. In this sense it reads as very bureaucratic. It put me in mind of Lean, another process that, in theory, makes perfect sense; however in practice often takes a lot of energy to maintain. Both demand great human discipline. Robertson is clear that the role of facilitator “requires that you override your instinct to be polite or ‘nice’ and that you cut people off if they speak out of turn”, amongst other skills and abilities. In this way it is trying to programme out the emotional, irrational human decision-making influences such as ego, fear and group think, to create a less contaminated system of governance.

In many ways this model seems aligned with Appreciative Inquiry and co-creative ways of thinking. For example, it is more wedded to biological than mechanical metaphors, it prioritises adaptability over predictability, and it is focused on releasing collective intelligence within a leader-ful organisation. However, it seems to work against human nature, or human psychology, rather than with it. It is this constant fight against core features of human systems that, in my opinion, is at the heart of the gap between the promise of these kinds of models and the frequent experience of the lived reality.

However, I do think it offers a real, well-thought-out, and to some extent tried and tested alternative to our current creaking-under-the-strain-in-the-modern-era command-and-control organisational model. It will be interesting to see to what extent it is adapted across the organisational domain and I would love to hear from anyone who has either direct experience of working in an organisation based on this model, or who has attended training on it.

Sarah Lewis