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The Boss Stops Here

Co-workers consult on who gets to stay …  

Around the facilities, everywhere you turn, are whiteboards and chalkboards and big-screen TVs displaying names and cascading numbers—the tally of what is being done and what remains to be done by each worker. (Morning Star frames it as emancipative—your impetus to work is no longer tied to the whims of your boss but to your own motivation—and most employees seem to agree. But to an outsider, the whole thing seems a little oppressive. What if you have an off day?)

Morning Star was founded by Chris Rufer, a graduate of the UCLA business school. In interviews, Rufer, like Semler, has described the structure of his company as deeply humane, something that buoys the spirits of the workers. The relationships between members of a self-managed team, he has said, are more organic and thus more substantive than the traditional relationship between boss and subordinate, which he describes as both “forced” and “artificial.”

To that end, yearly evaluations at Morning Star are handled not by a manager (there are none), but by a group of colleagues who administers a written evaluation of your progress. Paul Green Jr., a member of Morning Star’s Self-Management Institute, a kind of internal R&D arm of the company, says the goal is to meet a series of self-defined (capital S) Steppingstones: X amount of gallons, Y number of tomatoes, and so forth.

Conflicts, meanwhile, are handled via a four-step procedure called “Direct Communication and Gaining Agreement.” The first step is to attempt to “appeal directly to the colleague,” Green told me. “See if you can sort out your differences.” Second step is to bring in a third colleague to mediate the argument. The third is to create a panel of six to ten additional colleagues. If all that fails, Rufer can be called upon to join the panel and help render a decision, which occurs about ten times a year.

It may be worth noting that the egalitarian spirit at Morning Star only goes so far: The company is privately held, and no employee, no matter how hard-performing, is entitled to a share of the profits.

One of the first things that Rich Sheridan, the co-founder and CEO of Menlo Innovations, told me, upon my arrival, was Menlo’s origin story. He tells this story a lot, at conferences and panels, and the whole spiel is practiced, and fluid, and very TED Talk–esque. It starts in the late fall of 1997, when Sheridan, at the time a V.P. at a document-translation firm called Interface Systems, invited his then-8-year-old daughter, Sarah, to join him for a day at work. Around five in the afternoon, Sheridan turned to her and asked what she had learned.

“Well, Daddy,” she replied—and here, Sheridan screws up his face and crunches his body low into his chair and, for a 55-year-old man, does an admirable impression of an 8-year-old girl—“I learned that you’re really important.”

“What makes you say that?” Sheridan asked.

“All day long,” she said, “people came in here and asked you to make a decision for them. And you made a decision, and they went on their way.”

Sheridan was mortified. “I realized that the organization couldn’t move any faster than me,” he said. “That I was the bottleneck.”

He shared his epiphany with a young consultant, James Goebel, who harbored some admittedly radical ideas about modern management. Sheridan had originally brought Goebel onboard to help teach his team some new programming techniques, but they decided instead that Goebel should help him with a redesign of Interface.

Over the next six months, cubicles were dismantled, managers were moved out of their offices and into the middle of the floor, and pair programming was introduced. No longer could any code belong to any one person—everyone would share everything. “I had one guy raise his hand,” Sheridan remembers, “and say, ‘Rich—blood, mayhem, murder. For God’s sake, don’t put us in an open room, don’t make me share my computer with another human being, and please, please don’t make me share my code.’ ”

Sheridan believed that by going from a “siloed” environment to a collectivized one, Interface would be more productive. And happier. And by all accounts it was, until 2001, when the dot-com bubble burst, and Sheridan and his entire team were shown the door. That same year, Sheridan and Goebel and two partners founded Menlo Innovations. There were the usual start-up obstacles (wary clients, financing challenges, anemic bank accounts), but over the past decade, Menlo vastly increased its revenue, outgrowing one office space after another.

When I first contacted Sheridan, by e-mail, he wrote that it was “quite bossless at Menlo! Team makes hiring decisions, team gives feedback, team decides promotions.” This is only partially true. Overseeing strategy, the long-term vision of Menlo as a whole, still falls to Goebel (now the chief architect and COO) and Sheridan. If one worker accused another of something ­illegal—sexual harassment or theft—Goebel and Sheridan would be responsible for taking the appropriate measures. They also serve as representatives for Menlo at scads of management and business conferences here and abroad. (Sheridan’s business card reads “Chief Storyteller and Tour Guide.”)