Ever been spoken over at work? Or excluded from a decision-making process because of arbitrary classifications of authority in the workplace? I have. It struck me as both annoying and wasteful. So when myself and my business partner began our own social enterprise start up OpHouse in January 2020, we knew that we wanted to do a lot of things differently. This is where sociocracy comes in.

Sociocracy is a decision-making process pioneered by the Quakers. This way of doing business rejects the ‘predict-and-control’ approach to strategy that has been the mainstay of both the corporate and public sphere for a century. It can be helpful to imagine it as a collection of circles. Each circle is responsible for a certain part of the organisation, for example finance, marketing, or overall mission.

At the beginning of every meeting, whether with clients, colleagues, or external stakeholders, there is an emotional check-in. We find out how people are doing, what else is going on in their lives, and what kind of things are on their mind. Proposals for business strategy, community outreach, anything else on the agenda is proposed and passes through a series of brief rounds where everyone in the circle gives feedback similar to a SWOT (strengths, weaknesses, opportunities, and strengths) analysis. Unanimous approval is not required for an action to be taken, it only has to be good enough for now and safe enough to try.

Organisational decision making plays a vital role in the success of an enterprise. Its machinations are crucial to the well-being of staff and the effective execution of tasks. Most companies replicate an arcane business hierarchy that looks like a pyramid, with a few decision makers at the top supported from beneath by greater and greater numbers of staff with less and less authority the further down the pyramid you go. This can be ineffective for three key reasons.

1. The pyramid wastes time. Consider the following scenario: Pam from accounting has an exciting idea about how to streamline some services and potentially save Robin Hood Finances Ltd. thousands of pounds. Pam needs permission from her superior, who in turn requires permission from her superior, who also requires permission from their superior. Once this chain of requests reaches the top, it must then travel all the way back down again. This is time consuming and risks losing momentum. The further water has to travel through a pipe to reach its destination, the more likely it is to meet a fault in the pipe and leak. For this reason, the pyramid is inefficient.
2. The pyramid shaped authority structure lends itself to letting dominant people speak over quieter people. This is suboptimal because there is no evidence that extroverts have better ideas than introverts. In an environment where less confident voices are not platformed, an organisation risks missing out on advantageous insights, ideas, and perspectives. Research conducted by McKinsey has shown that businesses led by more diverse teams are more resilient to financial shocks and make more profit. There is nothing intrinsically diverse about sociocracy, however, there is likely to be a correlation between organisations that are willing to embrace a distributed authority format and a commitment to diversifying access and inclusion. Even where this is not the case, the function of the decision-making-by-consent model offered by sociocracy provides a space where issues around diversity can be brought up by any team member.
3. It is simply statistically unlikely that an arcane inherited model of doing business is the best one, just as it is improbable that you will have the best ideas of anyone in a random group. We are shown to chronically overestimate our own abilities compared to others, to the extent that 60% of drivers rate themselves as having above average skills. Think about that for a second. Human beings tend to be averse to change and tend to like what is familiar as this makes us feel safe; this applies to our meals, our routes to work, our beliefs, and our business structures. This does not make it logical.

It is ironic that so many businesses reproduce the pyramid structure given that innovation in all other areas is deemed to be so crucial for their survival. Many business models, like the economic framework that the business serve, are taught from textbooks that have changed little since the 1900s. The textbooks themselves are based on economic theory from the 1800s; there has been little innovation here.

Sociocratic business structure is innovative in the sense that not many companies do it yet, but it is old fashioned in the sense that it is essentially the model of playing fairly that our care givers likely encouraged us into when we were young. It is a structure of politely taking turns. The benefits of sociocracy can be summarised in three key points:

1. Authority over decision making is distributed which can make things happen faster. When an action is deemed ‘good enough for now and safe enough to try’ the action is taken. Although decision making by consensus sounds time consuming, some suggest that sociocratic organisations grow faster. There is also more clarity as to when a decision has actually been made as opposed to just a discussion about an issue. Action towards a goal is taken when it is clear what the smallest understandable and achievable step is, which no one has an objection to, that moves the group towards a goal.
2. Sociocracy has a major in-built benefit over traditional hierarchy; the practice of ‘checking in’ that I mentioned earlier. For readers in traditional organisations, I can imagine it might sound radical or uncomfortable or silly that every person states how they are feeling emotionally at the beginning of each meeting. This radical transparency can take a while to get used to, but it has been shown to lead to huge benefits. This format humanises business proceedings and creates an open atmosphere of high trust. Organisations with high trust have lower staff turnover, which is good for financial and operational reasons, they are also just nicer places to work where people have permission to be whole persons rather than just a job description in a flesh cage.
3. Sociocracy is a democratic distributed authority system where everybody’s voice counts. Business and psychology studies show that there is increased worker productivity and success when employees are in a positive mindset compared to a neutral or stressed mindset. Further evidence that democratic governance yields superior results can be found in behavioural economics studies which show that people quit or ‘tune-out’ of tasks that they think are pointless. The democratic process increases likelihood of buy-in from employees, which increases commitment to excellence in a task, which has obvious positive outcomes for business.

OpHouse is a very new company with lofty aims. We are working with the City of York Council, Homes England, and BlokBuild among others to bring the first tiny house development to York. We started this business because we believe in fairness; the housing market is not fair and the workplaces we have experienced also leave much to be desired. We hope that by using sociocracy, the form as well as the function of OpHouse will create more fair spaces.

We are looking for partners, funders, and friends. If you would like to be any of those things, please get in touch.

Alice Wilson is a PhD researcher at the University of York. Her thesis is examining the tiny house movement in the UK. Tweet her: @neither_both. Follow her research Instagram: @Tiny_House_Research_UK. Or email her: aew579@york.ac.uk.