Self-managed organizations are increasingly heralded as the future of work, promising greater innovation, flexibility, and employee engagement. But before a company can successfully transition to self-management, it must first establish a clear sense of purpose and a set of shared values. Without these foundational elements, self-management initiatives are likely to flounder. Here’s why:

Purpose as the North Star

Purpose provides direction. In a traditional hierarchy, leadership often dictates decisions and strategies. In a self-managed organization, decision-making is decentralized, and employees are empowered to take initiative. This level of autonomy requires a shared understanding of the company’s ultimate mission. Purpose acts as the North Star, aligning actions and decisions across teams and individuals. It ensures that even without rigid oversight, everyone’s efforts contribute to a common goal.

For example, consider Patagonia’s purpose: “We’re in business to save our home planet.” This guiding principle informs every decision, from product design to supply chain management. Employees across all levels know their work serves a larger mission, enabling them to make decisions confidently and consistently without micromanagement.

Values as Guardrails

While purpose defines the “why” of a company, values define the “how.” They provide a behavioral framework that guides interactions, decision-making, and conflict resolution. In a self-managed organization, where roles and responsibilities are fluid, values act as the glue that holds the culture together.

Shared values reduce ambiguity and prevent misalignment. For example, a company that values transparency will encourage open communication and data sharing across teams. Without clearly defined values, employees may interpret autonomy differently, leading to inconsistent practices and potential conflict.

Self-Management Without Purpose and Values Leads to Chaos

Without purpose and values, self-management can devolve into disorganization. Employees may struggle to prioritize tasks, resolve disagreements, or collaborate effectively. The absence of a unifying framework creates an environment where personal preferences overshadow collective goals.

Zappos’ transition to a self-managed holacracy provides a case study in the importance of purpose and values. The company’s commitment to “delivering WOW through service” and fostering a “fun and weird” culture ensured that employees understood not just what to do but how to do it in alignment with organizational principles.

Purpose and Values Foster Accountability

In self-managed organizations, accountability shifts from hierarchical oversight to peer-driven responsibility. This transition is only successful when employees share a commitment to the company’s purpose and values. When everyone is aligned, they hold each other accountable in constructive ways, ensuring that individual actions support the collective mission.

For instance, Netflix’s culture of “freedom and responsibility” empowers employees to make decisions, but it also holds them accountable to the company’s values, such as “judgment” and “courage.” This balance of autonomy and accountability is essential for successful self-management.

How to Define Your Purpose and Values

If your company is considering a shift to self-management, start by:

Engaging Stakeholders: Involve employees, leadership, and other key stakeholders in defining the company’s purpose and values. This collaborative approach ensures buy-in and reflects diverse perspectives.

Articulating Purpose: Answer foundational questions such as, “Why do we exist?” and “What impact do we want to have on the world?” The answers should inspire and guide your team.

Clarifying Values: Identify behaviors that reflect your desired culture. Translate abstract concepts into actionable principles. For example, instead of simply stating “integrity” as a value, describe it as “being honest, transparent, and ethical in all interactions.”

Embedding Purpose and Values: Ensure that purpose and values are integrated into all aspects of the organization, from hiring and onboarding to performance reviews and decision-making processes.

Conclusion

Transitioning to self-management is an ambitious and transformative journey, but it cannot succeed without a strong foundation of purpose and values. These elements provide the direction, alignment, and accountability needed to navigate the complexities of decentralized decision-making. By investing in defining and embedding your company’s purpose and values, you set the stage for a self-managed organization that thrives on trust, collaboration, and shared commitment.