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Thursday, February 21, 2013

Enterprise Without Bosses: An Interview with Paul Green, Jr.

Paul Green, Jr., is a “colleague” at the Morning Star Self-Management Institute, a Sacramento-based division of The Morning Star Company, a California-based food processor and agribusiness company. 

Of Morning Star, management guru Gary Hamel said, “They have control, and discipline, and focus, and accountability. But they do it on a peer-to-peer basis without having this kind of a bureaucratic class of overseers.” In short, they have no bosses. 
The Freeman: No bosses?
Green: That’s right; no bosses. 
The Freeman: What’s that all about?
Green: In a nutshell, self-management means that each colleague is principally responsible for each of the functions of management with respect to his mission. They plan and organize their work with respect to their mission and their fellow colleagues. It’s their responsibility—and success, or failure, rests with them. 
The Freeman: Readers may notice that in our description above, you’re referred to as a “colleague,” just as an entry-level truck driver is referred to as a “colleague.” And yet you’re an award-winning expert who probably receives executive-level compensation. How do you explain this? 
Green: At Morning Star, there are no titles; there’s no structural hierarchy. Each colleague comes into the enterprise with the same set of rights as any other colleague. Each colleague commits to a Personal Commercial Mission when they come aboard and, further, commits to what we call “Total Responsibility”—essentially, they agree that they are totally responsible for the success of the entire enterprise. 
The Freeman: That sounds pretty heavy.
Green: We’ve always felt that if people embrace this idea that they are personally responsible for the entire enterprise, they’re more likely to perform at a higher level (and, quite honestly, are most likely to find fulfillment in their career). The thing is, you can’t really expect people to truly embrace “Total Responsibility” unless they have the freedom to act—which means that everyone has the same authority in the enterprise with regards to acquiring resources (spending money), acquiring talent, and causing change. If the authority level is the same, then there’s no real meaning to titles and artificial hierarchy. 
The Freeman: Some might call self-management “intra-organizational anarchy.” Is it? And how did self-management come to be implemented at Morning Star?
Green: I guess it depends on the way you use the word “anarchy.” I guess it is anarchy in the sense that there’s no structural chain of command or hierarchy—no “government” of sorts. But it would be a mistake to assume that it’s disordered or without structure. On the contrary, it’s very ordered, and there is structure. The difference is in how we arrive at order and structure. It’s not through some sort of centralized command-and-control hierarchy; it’s a group of individuals developing order through a social network of sorts—perhaps you could call it “spontaneous order”—based on circumstances and needs. 
Chris Rufer, our founder and owner, envisioned self-management early on in his career, and when he built his first processing facility, laid out his organizational vision to the first small group of colleagues he hired. Many of the systems that we use to enable self-management at Morning Star we’ve developed as we’ve grown, but our way of doing things is, and always has been, Chris’s vision. In fact, on our website we have a vision statement that, at least in part, speaks directly to self-management as central to what we are trying to do as an enterprise.
The Freeman: Our readers will be interested to hear about the two Colleague Principles of self-management. What are they?
Green: Our Colleague Principles are heavily influenced by a principle that basically states: to the degree people do all that they agree to do, and don’t initiate force against others or their property, happiness and prosperity will emerge. 
The Freeman: Sounds familiar. 
Green: This really influences our organizational philosophy: we have a stated philosophy that says that people perform best when they’re happy, and they’re happiest when they have control over what’s important to them. We believe that most people find circumstances surrounding their job important, and that they should have control over those things. That goes for both the resources they need to achieve their mission, to the way they choose to go about achieving that mission, all the way to their personal development—their career. We believe people should control those things, and shouldn’t be subjected to some random other person—a boss—controlling those things on their behalf. 
Another example is our Colleague Letter of Understanding, our CLOU. It’s a contract of sorts that each colleague makes, where they craft their own role in the form of commitments to their fellow colleagues. It’s a subtle distinction, perhaps, but at Morning Star you make commitments, you aren’t assigned a job. 
The Freeman: For most people, self-management may seem impossible. Even for libertarians, the idea of no management hierarchy within a firm might seem insane. But it not only works, it’s allowed you to do well. How well? 
Green: We’re a private company, so we’re a little stingy with details, but we’ve grown from just an idea to become the largest processor of tomatoes in the world. We’re vertically integrated, with a large trucking company, farming company, harvesting and transplanting operations, and a pretty extensive distribution operation. Our revenues have grown to over $700 million, and our production has grown at a consistent clip, year-over-year, since we’ve been in business. And we’ve supported our growth with our own returns—our founder and owner has never sold off equity to finance our growth.
The Freeman: If you’re doing so well and others begin to adopt self-management and become successful, we may start to see a chain reaction of sorts. Do you think this could have not only a transformational effect on business, but on society? (And if so, what would that transformation look like?) 
Green: There’s no question in my mind that self-management would have a transformational effect on society. Our organization, at its core, is about individual freedom and personal responsibility. People recognize immediately that success will come only as a result of what you do: You are generally unimpeded by bureaucracy or stifling regulation that might keep you from whatever measure of success that you want to achieve, but neither is there a “paint-by-numbers” map that shows you the way to success. It all flows out of your drive, commitment, hard work, and ingenuity.
And—surprise—we’ve found that that kind of success, the kind that is unquestionably the result of your blood, sweat, and tears, is incredibly invigorating. Our colleagues fall in love with it, and embrace it almost universally. And, anecdotally, I see that it affects the way they live their daily lives outside of work—their relationships with others in the community, friends, families, and other businesses. But it also affects the way they vote. Think about it: Once you’ve had a taste of the thrill that comes with building something yourself, it’s hard to get excited about someone who tells you they are going to “grant you prosperity” by giving you something; those promises don’t excite you very much. Our folks tend to become incredibly responsible as individuals, they covet their freedoms and have proven, over and over again, that once they have a taste of the benefits of our way of doing things, they are stubbornly unwilling to trade freedom for any sort of safety net or benefit that purports to make their lives better.
The Freeman: People might be confused about the idea that at your company there are no bosses, but there are “authorities.” Can you unpack this distinction?
Green: There are authorities in every facet of our lives—and that’s a good thing. When I need my appendix removed, I want the world’s foremost authority doing it, if possible. The question is, how does one gain authority? It can either come from a title—that is, handed down as some sort of structural set of rights—or it can come from one’s peers as a result of performance. We believe that true authority is the accumulated esteem of your individual colleagues. We believe that we’re stronger if the only way to gain authority within the organization is by providing excellent service to your colleagues, and for them to individually acknowledge you as an authority.
It’s definitely more efficient to issue a decree (in the form of a job title) that anoints me an authority, but can you imagine how frustrating it would be if that were the way the world worked outside of our jobs? Imagine if your choice of doctors when it came time to have your appendix removed was made based upon some sort of formal “hierarchy” of appendix doctors that was appointed by the government?  
So there is authority—but it’s what we call informal and dynamic. It’s given to a person by his colleagues as a matter of individual choice. And those colleagues can take that authority away as quickly as they gave it if the authority fails to live up to the expectations of their colleagues—just as you have a choice, in a free market, to seek out an alternative supplier if your current supplier fails you. 
The Freeman: If self-management involves tying an employee’s personal commercial missions to the performance of themselves and the profit centers within the firm, what can nonprofits do by analogy? 
Green: Interestingly enough, while we are a for-profit enterprise, and while we measure profitability as a key high-level measure of the degree to which we achieve our mission, we don’t obsess about profitability. We do have these micro business units that we’re working to build robust profit-and-loss statements (P&Ls) for, but even those P&Ls are simply one of a handful of indicators of performance.
I think the critical thing for any enterprise—for-profit or not-for-profit—is to develop a robust mission for the enterprise, and personal commercial missions for each colleague within the enterprise. Those personal commercial missions—essentially mission statements specific to individual colleagues—should, collectively, roll up to the overall mission of the enterprise. From there, you can develop what we call Steppingstones—measures of process performance. Most of our Steppingstones are not profit-related; they are measures of the individual processes that each colleague has committed to. 
Any organization, with a little work, can be defined in terms of missions and processes measurable in terms of Steppingstones—irrespective of the legal structure of the enterprise. In fact, our thought has always been that profit, as a measurement of performance, is not really actionable, and as a guide for action, isn’t really the most critical measurement. Profit will result from excellence in performance if we perfect our processes as measured by Steppingstones—but you can’t directly affect that profit.
The Freeman: Paul, It’s been a pleasure.
Green: Thank you.


  • The Freeman is the flagship publication of the Foundation for Economic Education and one of the oldest and most respected journals of liberty in America. For more than 50 years it has uncompromisingly defended the ideals of the free society.