By Dennis Wittrock and originally published as a single article at Medium.com/encode-org
This is Part Two of a two-part article Read Part One here.
The For-Purpose Enterprise to the rescue…
In their quest of solving these problems, Raëma and Robert encountered the work of encode.org and its model of the “For-Purpose Enterprise”. Not unlike Holacracy, a For-Purpose Enterprise (FPE), puts purpose front and center. Yet its scope is broader than merely self-organizing the context of work, which is the great strength of Holacracy practice.
An FPE therefore happily incorporates the Holacracy Constitution (or any comparable self-organization ruleset) as the agreement for its work context. Since this is still an incomplete picture, an FPE extends its key principles of purpose, structure, awareness, agency, and transparency to the people context and the legal context as well and provides companies with concrete templates of how to do so.
For the people context, it provides the template for an agreement that regulates what members can expect from each other as members, how interpersonal disputes are settled, what values should be expressed, how mentorship and personal development are organized, and anything else that helps a group of individual people, attracted by individual resonance to a shared purpose, associate with each other effectively.
The legal context comprises the ownership and investment container of a For-Purpose Enterprise and connects to the local legal code of a given jurisdiction. The operating agreement of an FPE modifies the legal container (e.g., an American LLC, a Dutch cooperative, a German GmbH & Co KG, etc. …) making it literally “for-purpose”. It integrates and encodes new Holacracy-style governance mechanisms at the Board or Anchor Circle as it’s known in Holacracy.
Recording of a webinar on the For-Purpose Enterprise
The Anchor Circle encompasses all three contexts, the work, the people, and the ownership, and aligns them with the overall purpose. What is unique is that in the Anchor Circle of an FPE the people show up in their various roles as workers, as investors, and as …well, people, and integrate and harmonize all of these crucial perspectives at the top level by using integrative decision-making processes (as in Holacracy practice).
This is especially relevant for determining a fair compensation model while incorporating all relevant perspectives of investors, the people, and the organization, without one being able to simply overrule or outvote the others.
As Robert remembers, “The light bulb lit up, realizing that putting purpose central and finding the reason for the existence of the company was the driver for success. With the FPE structure, we saw that the People also had their place in an organization again. To complete the picture, it would become much easier for people to also connect in other contexts, such as an investor context, building an even stronger connection between people and company purpose.”
Taking a leap of faith and becoming fit for purpose
A collaborative supply-chain model in the oil & gas industry
On the business side of things, NRG Flow as the operating entity of NRG Circles, — developed a Collaborative Relationship Framework (CRF) to supply its valves to its customers. That means that NRG Flow representatives focus on the relationship over the transaction. This relationship is built on trust and the desire for both parties to be better off than before they met each other. “The lowest price is never the lowest total cost” explains Robert.
Since the customer doesn’t know the specialized products as well as NRG Flow does, they closely collaborate on projects and offer advice on the highly specialized kinds of valves the customer needs in order to reduce energy and operational expenditures. This often helps the customer to considerably lower the total cost of ownership. The full implementation of a CRF relationship also means that both sides decide on the earnings together. So far, the first steps of this process have been really successful with customers testifying “It’s a joy to deal with you.”
But the endgame is — as the purpose of NRG Circles indicates — to transform the oil and gas industry. Fossil fuels have been instrumental in catapulting humanity to unprecedented levels of complexity and wealth — so there is a lot to be grateful for. But as an industry, its peak is behind it. Since fossil fuels are no longer a viable path forward for humanity, it is clear that we will need to wean off of them soon.
The sun is slowly setting on the oil and gas industry — photo by Zukiman Mohamad via Pexels
So, in that sense, Robert is certain that NRG Flow will move into the consultancy business direction in the future. Without the need to demonize a whole industry and having established a trust-based relationship, NRG Flow will be instrumental in helping customers reduce their inefficiencies and assist the industry in finding its new purpose moving away from the use of fossil fuels.
By aligning people, investment, and the work with an evolving purpose, For-Purpose Enterprises like NRG Circles will inspire and guide the way for others to follow.
“If we can transform this industry, we can transform any industry”, says Robert.
May the first domino fall.
Republished with permission.
Featured Image and some paragraph spacing added by Enlivening Edge Magazine.
Photo by Arifur Rahman on Unsplash