HBR Case Study on Morning Star: Running a industry leading organization without managers

Company Profile

Introduction

• California based agribusiness and food processing company which is a global leader in the tomato processing market

• Established in the year in 1970 by Chris Rufer, as tomato trucking operations, who continues to be the CEO till date

• Processes 25% of the California processing tomato production, and supplies approximately 40% of the U.S. industrial tomato paste and diced tomato markets

Company DimensionsSize• 400 full time employees

• 23 business units

Company Vision

Units• 3 large plants for processing• Canned tomatoes for super markets• Trucking company• Business for handling harvesting

To create a company in which all team members “will be self-managing, initiating communications and the coordination of their activities with fellow colleagues, customers, suppliers, and fellow industry participants, absent directives from others

Revenue• $700 million a year in

revenue• They receive double digit

growth rate compared to the 1% of their competitors

Organization Design

Organization Structure

• Specialized tasks• Strict Hierarchy, many rules• Vertical communication &

reporting systems• Few teams, task forces or

integrators• Centralized decision making

• No boss , no hierarchy, no promotions• Employees Negotiate responsibilities with peers• through (CLOU: Colleague letter of understanding)• Everyone can spend company’s money• Individual’s responsibility to acquire tools needed• Compensation decisions are peer based

Organization Culture – It is all about self management• There are no corner offices in our Chicago headquarters. In fact, there are no offices at all

• At Morningstar, the open environment reflects belief that anyone at any level can voice their ideas and take part in making them happen

• For all bigger decisions , a jury of experienced professional is set to make final decisions and resolve differences arising from conflicts

• Across Morningstar’s groups and global offices, we rely on every individual to contribute their ideas and perspectives to help us continually improve how we serve investors

• No one has the right to kill ideas and staff seldom take big decisions all by themselves

Key points of learnings and implications

• Moving up is about competency and reputation, not the office you hold.

• Freedom and expression in work leads employee to think about the business holistically and innovation. information silos do not help.

• People will be loyal to the company under self management.