Transforming a Startup with Deming
Autonomy and Trust over Command and Control
The prevailing style of management must undergo a transformation. A system cannot understand itself. The transformation requires a view from the outside. The aim of this chapter is to provide an outside view—a lens—that I call a system of profound knowledge. It provides a map of theory by which to understand the organizations that we work in…
The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people.
Deming, Dr. W.E. The New Economics (3rd ed.). (p. 63)
I can tell you what gets me excited every day when I come in to work... I'm excited about what we do as a company, our purpose, but even more than that I'm super excited about creating an environment where so many people can come to work every day and go home at the end of the day with joy in work.. that joy is contagious. It's not a zero-sum game.
Sparkjoy, Keith. Discovering Deming: Cultural Evolution at Pluralsight. Deming Institute 2014 Fall Conference Session Video. (@ 47:54)
THE AIM of today’s newsletter is to share the cultural transformation story of tech training giant, Pluralsight, as told by one of its past co-founders, Keith Sparkjoy, at The Deming Institute 2014 Fall Conference.
In this talk, Keith takes us through his rollercoaster journey of the founding of Pluralsight with friends in 2004, to weathering the market crash of 2008, their first acquisition in 2012, and subsequent transformation into a Deming-led organization. Keith’s story is a reminder to all entrepreneurs, whether in a startup or established business, that there is an alternative to “growing up” and into the prevailing style of management that can be found in the teachings and philosophy of Dr. W.E. Deming.
The Usual Road to Perdition
Keith relates how Pluralsight’s growth followed a predictable path after becoming profitable in the post-2008 crash era, fuelled by their prescient investment in online training offerings and first round venture capitalist funding. Up until that point, they were having fun building their startup, and as they grew they sought to codify what made them great: A purpose of democratizing professional training around the world, guided by three core values: truth-seeking, entrepreneurial problem-solving, and eternal optimism. All of these began to come undone as they adopted more “professional” management practices that instilled fear:
Setting targets (Management by Objective)
Incentive pay (extrinsic motivation)
Holding people accountable for results (Management by Results)
And perhaps most unnerving and destructive:
Absolute loyalty (and fealty) to Team #1: Leadership
For anyone who’s worked for or with a startup, this pattern may feel familiar and unpleasant, as it did for Keith who correctly sensed that they were losing a bit of their soul day by day. He began to plan for his eventual exit…
And then something happened he didn’t expect when he was reading some unrelated books to better-understand how his software development teams worked, who were employing lean-like practices, and noticed one name coming up time and again in the bibliographies: Dr. W. Edwards Deming.
How Did Sparkjoy Transform Pluralsight?
As Deming recognized long ago, Keith began by transforming himself first by learning new theory, comparing it with what he and the senior leadership were doing, and then applying what he learned by teaching his colleagues and running experiments. In so doing, he rejected the seeming inevitability of succumbing to fear-based hierarchy management and instead learned to lead a system.
Unlike most new practitioners in the post 90s-era, Keith didn’t study The New Economics first, but was led toward Deming’s earlier material in Out of the Crisis and Clare Crawford-Mason’s Deming Video Library series that was produced in the 1980s. Through this avenue, he became exposed to Deming’s 14 Points and was strongly influenced by #8: Drive out fear. From this, an overarching theme of the transformation emerged that eschewed Command & Control for Autonomy & Trust.
What Stopped?
With the aid of expert outside help (Kelly Allan), Keith and the leadership team began to methodically eliminate any practices that could invite fear or diminish autonomy and trust, and slowly improved Pluralsight’s culture. Gone were teamwork-destroying performance appraisals, bonuses and incentive pay, sales commissions (actually the VP of Sales’ doing…), and their Paid Time Off and Travel and Expenses policies, and instead adopted Two Rules:
Be respectful, considerate, and kind, even when you disagree; this applies to everyone and in all interactions.
Always act in Pluralsight’s best interest; when in doubt, talk to your team.
What Started, Instead?
Keith then set to task filling the void left behind from removing their old command and control structures and replacing them with better practices according to the four key domains in Dr. Deming’s System of Profound Knowledge. With newfound appreciation for his organization as a system, he began to lead it accordingly for improvement of quality not just for customers, but company culture overall.
Insights granted from learning about variation and psychology enabled new approaches to old problems, such as the CFO being able to use Process Behaviour Charts to reveal the capability of their system, and replacing embarrassing public recognition awards with private words of thanks, above market-rate pay, and a new profit-sharing program. Their aim remain fixed on how to drive out fear while maximizing trust.
Bolstering this effort was the institution of experimental thinking and learning using PDSA/Shewhart cycles with the expectation that failure is part of the process. In an inspired nod to Deming, they even enshrined his maxim that no one should lose their job for trying to improve the system on the second page of their employee handbook.
Three Surprises
Along the way, Keith began to experiment more and more with trusting his teams rather than micromanaging and controlling them. He made three surprising discoveries:
Team enthusiasm went up dramatically — they became more excited about their jobs.
The teams took more ownership — it wasn’t the boss’ ideas that were being implemented, but their own. They had the ability to fix things as needed.
The teams learned faster and demonstrated increased creative problem-solving that exceeded his expectations. Lesson learned: Command and control leadership leads to solutions limited by your own imagination.
Added bonus: The successes with the teams spilled over to the CEO who now began to relax and begin his own experiments in autonomy and trust with the SLT.
Reflection Questions
How could you begin a transformation in your organization using Dr. Deming’s philosophy on leadership and management? What would you do first?
Do startups have more latitude to make the kinds of changes Keith Sparkjoy describes? What contributed most to their early success and subsequent revitalization?
What fear-based practices does your organization employ today? Are they overt or subtle? What is the effect on the people who work there? On you? Is there joy in work? How would you know or find out?
What one thing could you do to take one step away from managing by command and control and toward autonomy and trust? Could it be done just by will, or would it take more effort? Why?
Consider Keith Sparkjoy’s excerpted quote above about what excited him most about his newfound purpose in leading his company. Can you think of a time when you had this much enthusiasm and joy in your work? If so, to what do you attribute that sentiment? Do you still feel as excited today? Why?