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At Menlo Innovations, founders James Goebel and Richard Sheridan used to hire, coach and promote the old-fashioned way. The two had started their custom software design company in Sheridan’s Ann Arbor, Michigan basement after they lost their corporate tech jobs in the 2001 Internet bust. For the first seven years, they approached management at their own company with a conventional mindset.
But a decade ago, they started to re-examine the way they were handling their 20 employees. “The boss would make the decision about who got promoted and who got a raise,” says Goebel, 53. “But in fact, it’s your peers who know your work best.” That realization led the partners to a dramatic shift. “We said, ‘let’s have our teams radically collaborate, to match the way we work on projects,’” he notes.
At Menlo, named for the New Jersey lab where Thomas Edison invented the incandescent light bulb, programmers and designers work in pairs on a single machine and no teams are permanent. The office has an open plan, with no private spaces or cubicles aside from conference rooms for visitors.
Letting go of top-down hiring, promotions and firing was an emotional decision, says Goebel. “It felt like we were giving up control.” But he and Sheridan, 61, forged ahead.
Before the shift, a staffer with a gripe about a coworker would complain to Goebel or Sheridan. “We’d try some shuttle diplomacy and some coaching, but it only patched up the problem,” says Goebel. Under the new system, an employee who has a conflict with a colleague engages immediately and directly with the colleague, sometimes with the help of a supervisor.
Goebel himself was the subject of critical feedback after a junior designer was assigned to co-lead a tour of the office for visitors. Goebel dominated the tour. The designer hardly spoke and left thinking she’d screwed up. The next day she talked to factory floor manager Carol Sheridan (spouse of founder Richard) and expressed her concern. The two women went directly to Goebel. “I had to realize that I was so excited about the tour, I didn’t give [the designer] enough space,” he says. Such conversations prevent worse clashes down the road, he says.
Menlo arrives at promotion decisions in a similar fashion. When design researcher Andrew Muyanja, 31, thought he deserved to move up, he first approached Carol Sheridan, who gave him supportive feedback. He then talked to a half-dozen colleagues he had worked with extensively and they agreed he should be promoted. Those staffers, in turn, talked to Sheridan and she put the promotion in motion.
Likewise, says Muyanja, if he believes a colleague should move up, he can talk to fellow staffers and start the process. “You don’t just advocate for yourself here,” he says. “And you always know where you stand and where you need improvement.”
Menlo is expecting profits of $700,000 on revenue of $6 million this year, says Goebel, partly driven by the paid tours it offers to visitors curious about the firm’s unusual team approach and radically flat organizational structure. Tours account for between 5% and 10% of revenue. The company’s headcount has grown to 50.
CEO Sheridan, who also carries the title Chief Storyteller, is publishing his second book, on Dec. 4, about Menlo’s distinctive inner workings: Chief Joy Officer: How Great Leaders Elevate Human Energy and Eliminate Fear.
“One of my darkest nightmares is that Menlo would somehow go away, and I would have to take a normal job,” says Goebel. “This can be hard, and you have to have difficult conversations, but I’d much rather deal with real issues instead of doing business theater.”
For a Q&A with James Goebel, read this.
December 31, 2018 at 08:08PM
Forbes – Entrepreneurs