Can a Company Be Run as a Democracy?

Ternary Software Inc. is a small company with a very interesting approach to management. Ternary runs itself as a democracy, and requires that all decisions are made unanimously by employees who have voiced their opinion to the issue at hand. CEO Brian Robertson says that ever since switching to a democratic management style, Ternary has enjoyed a quicker decision process, added employee buy-in, and increased innovation. As for his role as the chief executive officer and facilitator for employee consensus, Robertson says, “It takes getting beyond your ego.”

Several other companies use similar management strategies systems, but none to the extent of a unanimous agreement policy. Google Inc. prides itself on an egalitarian culture that encourages executives to field questions from employees on a weekly basis. Honest Tea Inc. shares its financials with employees in hopes that they will contribute to annual planning and strategy meetings. Each of these companies value the diverse perspectives and ideas that reside in there very own organization, and are determined to tap into this potential.

Ryan Quinn, a management professor at the University of Virginia’s Darden Graduate School of Business, believes that these unorthodox practices can succeed at both small and large organizations if the company is willing to sacrifice some profits in the short-term, and pursue innovation and other goals that might pay off later.  To the contrary, Harry Katz, dean of Cornell University’s School of Industrial and Labor Relations, feels that Ternary’s management strategy can only exist in smaller companies because of conflicts of interest between management and employees. Either way, Ternary’s democratic management style is worth the debate as it bespeaks to the continual shift away from the traditional top-down management practices to a style that better embodies the “diversity of the crowds.” In this case, the diversity of the crowds is coming from within the organization.

Please read the Wall St. Journal article, “Can a Company Be Run as a Democracy?” [1] [2]

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