Morning Star's self-organizing marketplace

Morning Star, a privately held company, was started in 1970 as a one-truck owner-operator hauling tomatoes. Today the company is the world’s largest tomato processor, with revenues of $700 million a year.

 

At Morning Star, workers manage themselves and report only to each other. The company provides a system and marketplace that allows workers to coordinate their activities. Every worker has suppliers and customers – and personal relationships – to consider as they go about their work.

 

Every employee writes a personal mission statement that describes how they will contribute to the company’s goal, and is also responsible for the training, resources and cooperation they need to achieve it. Every employee also creates a yearly Colleague Letter of Understanding (CLOU), describing their promises and expectations for the coming year, negotiated in face-to-face meetings with peers. All the agreements, taken together, describe about 3,000 peer-to-peer relationships that describe the activities of the entire organization. Each Morning Star business unit also negotiates agreements with other units in a similar way.

 

If a worker needs something, they can issue a purchase order. If someone needs help or identifies a new role that’s needed to do the job better, they can start the hiring process. The bigger the dollar amount, of course, the more important it is to lobby your peers and get their buy-in for the purchase, because the unit will sink or swim together. Over time, workers tend to move from simpler to more complex roles, hiring people to fill the roles they need to support them. There’s no competition for management jobs because there are no management jobs. To get ahead, workers must find better and more valuable ways to serve their peers.

 

The discipline at Morning Star comes from a strong sense of mutual accountability. Problems are settled through mediation. If mediation can’t settle it, a panel of peers is convened. If that doesn’t work, a dispute will go to the president for a final decision. If the problem is serious or sustained enough, the worker may be fired. But while people can be fired, nobody has a boss hovering over them. What they do have is customers.

 

Every two weeks, the company publishes detailed reports of finances and other measures, that are transparent and available to everyone.

 

Business units are ranked by performance, and those at the bottom of the list can expect a tough conversation. In yearly planning meeting, business units present their plans to the entire company and workers invest using a virtual currency which then informs the budgets for the year. Workers elect compensation committees who evaluate performance and set pay levels based on performance.

 

Morning Star is a marketplace, where every worker is a business within the business. You can read more about Morning Star on their website or in this excellent HBR article by Gary Hamel, First, Let’s Fire All the Managers.

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Taken on November 27, 2011