Our Story of Reinvention
ET Group was recognized as a winner of the 2021 Tony Hsieh Award by being a leader in business and organizational design. This is our story.
CEO, Dirk Propfe speaking at Tony Hsieh Awards 2021
It’s not just one breakthrough and you’re done. It is an evolution and a commitment, and it is hard because sometimes it feels messy and uncomfortable. There is no explicit roadmap that defines, “Yes, this is the way for you” so you are trying new things every day and continuously validating what is working and what is not.
Dirk Propfe was soul searching for ways to reinvent businesses so they could be better, healthier, and more meaningful places to work. After experiencing the corporate world and scaling an SMB in a “traditional” manner, Dirk felt that workplaces were lacking a focus on their most important resource - the people.
His mindset was fundamentally shifted after a life-changing experience in the Galapagos Islands, and Dirk found his way to an intentional community of changemakers who sought to create a different story where people can live - and thrive - in harmony with nature.
Upon researching and being inspired by Frederic Laloux’s work around "Teal Organizations", and experiencing practices of pioneering organizations around the world, Dirk decided he was going to live this new story and set out to create and evolve these types of organizations.
One of the most notable examples is ET Group, a 45-year-old technology company focused on bringing hybrid experiences to life. It is a thriving business with self-managed teams, industry-leading profitability, a consistent employee net promoter score of 50+, and a shared ownership structure where 75% of the team members now own shares in the organization. Many of their practices are outlined in ET Group’s handbook, which is publicly available at handbook.etgroup.ca.
But ET Group’s story was not always like this. Before team members at ET Group were able to self-manage their work, self-set their salaries, own shares in the company, energize multiple roles to express their talents, participate in strategic decisions via generative decision-making processes, practice radical candour, or feel safe to come out as LGBTQS2+, ET Group had an ego-driven and toxic environment that almost led to bankruptcy.
Dirk felt strongly that ET Group could evolve to become a healthier and more innovative environment. Applying his learnings from Teal Organizations research, he decided to prototype a series of innovative structures, practices, and processes in ET Group.
After experiencing promising results, he proposed a fundamental power shift in the organization to adopt a self-managed structure inspired by Holacracy and decentralized decision-making processes. This was proposed to the entire company using a Generative Decision-Making Process – everyone in the organization was invited to be part of the conversation and challenge every aspect of the proposed changes - and a decision was reached to move forward.
The new, self-managed structure enabled the reinvention of processes and has resulted in 5 years of healthy growth, industry-leading profitability, top talent attraction, and top-performing innovation within the services that are delivered to ET Group’s clients.
“Over time, we switched our mindset to acknowledge that we can trust each other - because we care about each other, and we value the different gifts we each bring to the table. The opportunity was to find a better way of working together that honoured those gifts so we could be happier and successful. This was the huge initial philosophical shift. Knowing that everyone wants to do amazing work, and we do not need mechanisms for people to be incentivized and motivated, they are already intrinsically motivated. Everyone has the desire to contribute to something larger. That was the big belief we started with at the beginning, and then we asked ourselves - how do we reorganize in a way that allows us to flourish? Start by getting rid of everything that’s not serving us and figure out how to replace it.” ~ Dirk Propfe
To innovate in a highly decentralized and agile manner, ET Group invested significant resources to learn and strengthen their muscles around new ways of working. Working with leading changemakers and facilitators, we host regular labs and workshops where challenges surface and potential solutions are co-created. We continue to nourish our evolution by providing coaching, and creating teams focused on innovation and the ongoing evolution of the organization.
Many of the practices contained in the online handbook directly contribute to ET Group’s innovative culture. The decentralized decision-making process invites ongoing innovation across the organization and enables every single member of the team to innovate and make fundamental changes to the organization.
At their all-company Team Connects, ET Group uses Liberating Structures to surface and work on key challenges/opportunities. Design sprints are used to develop new products and services or reinvent the client engagement model. The prototyping mindset is supported by their values and decision-making guidelines. Key innovations are guided by the organization’s purpose (To bring the hybrid work experience to life) and decisions are evaluated based on a decision-making guideline where decisions that are “good enough for now and safe enough to try” are encouraged.
“There was a lot of inspiration around this concept – looking to find other companies that believe people can be trusted and all of us want to do meaningful work. It is about exploring and learning and that’s the ongoing journey. Before the shift, I took a year off because I was so frustrated with the way we were doing things and went to immerse myself in organizations that worked differently. I remember being invited to a UK company and as a visitor, I was authentically invited to be an integral part of their strategic co-creation process. It astounded me that they cared about what I had to say. No egos were in that room, just extended respect for each person’s life experiences and opinions. And I felt that this is how every company should be. We all care, so we should all be part of those decisions.
I asked myself, how do we totally restructure ourselves so that we can better behave in this manner, and scale? That is where holacracy made a lot of sense because it allows for this ongoing evolution on how you are structured; you can create new roles, create new circles, destroy them, combine them, it is not a fixed org chart but it is an evolving representation as what serves best now, and it always iterating.
How this translates to an improved life is that people are seen and honored. You are not just empowered, you are powerful by being alive and human. Our system just allows us to live and lean into that reality. How do you want to express yourself to add the most value to the organization's purpose? There has been a lot of appreciation for people’s talents. People believe in themselves and their teammates which has led to more joy and fulfillment for everyone. People understand that what they do has meaning, it is being valued, and it is important.
Then we introduced weightless controls – like vacation flexibility. There is no approval process, you just signal you are intending on taking time away and talk to people who would be meaningfully impacted by your decision.
Sales commissions do not exist here anymore. Our sales team are paid a whole salary that is based on the impact they are having and in turn, they are 100% focused on doing what’s best for our clients, not necessarily what’s best for their personal bank accounts. Everyone is very collaborative because there are no feelings of domain control – we realize that when we help each other out, the client is better off, and we are better off as a healthy company. Profit-sharing bonuses increase, and that is shared amongst every single person who is here.
Our compensation methods support self-setting salaries. You self-advocate, ask for feedback, and people can self-set their salary. And that is perceived as crazy to others – but when done in a generative framework the impact is immeasurable - you have agency for your own life, and we respect that.” ~ Dirk Propfe
At the age of 40, ET Group was on the cusp of burning out and going bankrupt. The traditional power hierarchy, politics, and control mindset were no longer working and robbing them of inspiration and innovation.
Prior to the shift, it was toxic. Meetings were feared because it was a vicious agenda of yelling and undermining. Talent was leaving the company at a rapid pace, only to be replaced with self-serving egos.
ET Group had a “traditional” ownership structure with three owners, multiple managers, and siloed responsibilities which resulted in power struggles, unnecessary procedural delays, and lack of accountability. Sales teams were incentivized with commissions which reiterated territorial behaviors and ended up causing rifts throughout the remainder of the organization.
The disconnect from reality and hyper-focus on the wrong metrics meant that at one point, they were about 5 days away from shutting our doors. Budgets prepared at the beginning of the year did not represent what was happening within the team itself. ET Group was not able to see past these “key indicators” to self-analyze or adjust quickly enough to changing conditions.
The biggest success at ET Group from committing and transitioning to become a self-managed organization has been around their people. They have attracted, retained, and allowed all team members to share their gifts and innovative thinking to the benefit of the overall company. The team's talent has enriched ET Group so much that they have introduced new technology to clients, won industry awards, created new revenue streams, reduced costs by streamlining processes, learned how to work more effectively together, and are recognized as an innovator by clients and peers.
To put it in numbers: ETGroup went from the brink of bankruptcy to a position of comfortably managing and growing sales consistently over the last 5 years. They even grew during theCOVID-influenced recession while maintaining a healthy gross margin.
“We shifted from three owners to one owner, and by summer 2021 we will be in a position where 75% of the active team members will be shareholders. This is a huge factor to honour everyone’s contributions and intrinsic motivation – we went from working “for someone” to working “for ourselves” as part of the ownership team. We invite contractors to participate in shareholding as well because every person who contributes to ET Group’s purpose should feel like they are adding value and being included in the team’s success.” ~ Dirk Propfe
Externally, ET Group has created a new avenue of business. They pioneered collaborative Strategic Advisory Services using human-centric design thinking and participatory leadership approaches in their industry. ET Group has applied design thinking, and transformative innovation processes to assist in workplace transformation initiatives. This has helped their clients as ET Group evolved from being a vendor to a strategic partner adding value to each project they complete. They now nurture long-term relationships with their clients. Their Advisory Services have assisted clients with global reach in designing their office space, introducing technology to their organization, and keeping human interaction at the forefront. It also resulted in groundbreaking innovations around service and support to further enable our clients’ collaboration experience.
“It’s not just one breakthrough and you’re done. This model is a commitment to an ongoing journey because we are constantly evolving our structure, our practices change, we try new things, get rid of things that no longer serve us. It is an evolution and a commitment, and it is hard because sometimes it feels messy and uncomfortable. There is no absolute clarity yet there is coherence. There is no explicit roadmap that defines, “yes, this is the way for you” so you are trying new things every day and continuously validating what is working and what is not.” ~ Dirk Propfe
The daily commitment to evolution is clear to everyone on the ET Group team. Like in any organization there has been churn, but usually for different reasons. Some team members did not resonate with the changes that Propfe proposed and self-selected to leave. Some great talents that left have now returned and are thriving. Some have moved into new roles that they felt more passionate about energizing. Some have even taken new roles at reduced pay to the previous structure because they self-set their salary and felt it was the right thing to do.
“Energizing change and influencing culture shifts is not always a smooth path. People evolve at different paces. Some who were uncomfortable with the change left right away and some stayed on the team but got stuck. With others we tried a future relationship advice process, the challenge with that is that it is an individual’s decision if they stay or go, but you must commit to listening to and accepting the feedback. Some feedback was too much to handle in the timeframe we were evolving in.
There is also a perceived lack of structure that does not appeal to everyone – not everyone is comfortable in fluid environments, and that is ok because that is who they are. A person who is used to a privileged role can be challenged because you influence decisions here rather than use authoritative decision-making. We always have a natural hierarchy that fluxes depending on the context, and we give and take while respecting every person’s ability.
We focus a lot on asking what makes you happy? What challenges you and helps us live our purpose more fully? We open new opportunities to everyone who is driven to fill them and candidly ask for team members who want to add value in any area. It is amazing how that has shifted how our people behave, and how involved everyone is. We are a team, where everyone is collectively focused on mutual success and inclusion.
We vowed never again to hold those false “key indicators” so tightly that it makes us blind to what is really going on. Now we hold our budget lightly. Yes, we track where we are in the overall scheme of things via our regular tactical meetings, but we have shifted to looking at the holistic health of our team and sharing it transparently. That holistic tracking gives us leading indicators that allow us to sense and respond to what is actually happening and being experienced. We have also observed that when our people are happy and intrinsically motivated to do well, the funnel progresses, and innovation happens at a healthy pace without anyone having to manage it.” ~ Dirk Propfe
Perspective can shift at a moment's glance. A visual scene, words strung together in a resounding order, or a feeling invoked by all senses that have the power to forever change how we perceive things.
But what happens after the shift? Is it a fleeting moment, remembered fondly when your mind casts back to that place in time? Or does it become a catalyst for change, within yourself and how you interact with the world around you?
“I went on a trip; I invited my dad to the Galapagos Islands. At this point in my life, I thought I was successful because I could buy myself a luxury car and spend lavishly on myself. I was in my 20s and making well over six figures, but at the end of the day I felt like garbage; the way I was living felt wrong somehow. I constantly wrestled with those feelings – is this what life is about? Is this all I have to offer? Why don’t I feel joyful even if I am experiencing financial success and recognition? This is how success is publicized, but I felt there must be more to it.
We get to the Galapagos Islands, and I love being hyper-focused reading books for hours. I am reading about sustainability and the circular economy which are igniting different thought processes for me. Then I put down the books and observed what was around me in the different islands around Galapagos – the interconnectedness of life hits you in the face. Everything is thriving and it's flora on top of fauna and you realize that life is so fully interconnected and the magnitude of feeling alive was immense. You immediately juxtapose that to the experience we have, how we live and show up as humans in our current ways of living – it feels like we are really screwing up our home with systems and cities that are so hurtful to our ecosystem.
As we were returning home, it was a perfectly clear day and all I could see from my plane window were these mega, massive cities that felt like tumors attached to the earth’s surface. I spent 4 hours watching that from my window, staring down at our beautiful planet, crying. I knew that I could no longer be part of this way of living and being. That revelation was met with anger about the way I was living my life previously. The self-actualization in seat A3 was immediate, knowing that I could not continue to behave as I was, and believing we are all here for a reason – to figure out how we can add to life and what we should really be investing our time in.
That trip led to a journey, where I wanted to further pursue sustainability and sustainable business. I did a master's in environment and business; it felt a bit like a greenwashing exercise. And I was questioning, is this the why of business sustainability? Is it a business case or is it because that is aligned to who we are as human beings, and we have just forgotten that we are all part of the larger web of life?
I sought out experiences that would help me grow as a person; I went to Sweden to a program with holistic ties to social sustainability, environmental sustainability, and their interconnectedness. It became clear to me that if we do not take care of our own wounds as human beings, we cannot fulfill the need to be interconnected beings who are stewards for each other and the land we live on.
Every day, we put conscious effort into challenging ourselves to make systematic, consistent change. That requires effort every day. Every day requires navigation towards what you feel is the right thing to do, versus our cultural autopilot. It requires steeping yourself in the practice of evolution.
What we are trying to create at ET Group is this space for people to experience a totally different way of being who you are. It is okay to not feel great that day and say it. You do not have to wear a professional mask all the time, because we are showing up as who we are and not pretending to be someone else.
Although this started with a significant shift in my perception of who we are and the life we are meant to live, it is not a one-time breakthrough that holds forever. This is a constant journey; it is a constant mental mindset of evolution. It is never-ending, with no real before or after but always learning and evolving.
When we look back at ourselves year after year, it always feels a bit different. Maybe we are structured differently, we learnt different things, but it is never static. We are always flowing; we are always changing. There is no state of perfection, but we are continually dedicated to the quest of being authentic. Our interactions with each other are genuine – and since we’re learning and evolving it can be uncomfortable – but we’re always growing.”
“This story we’ve been telling ourselves on what it means to be human wants to be retold; life is not about how I can succeed or be better than others. It is about seeing and appreciating each other as wonderful beings with different gifts, talents, and dreams. It is about being in service of each other, and life itself to create beautiful things together. As a collective, it is imperative we shift the narrative and realize what makes us truly happy and fulfilled is to be in service of each other and the planet as a whole.” ~ Dirk Propfe
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