P2P Foundation

Our starting point was to change the ownership structure, a sacred cow of Western business. We questioned the traditional ownership model not because we wanted to start a revolution, but because we felt there are better ways of inspiring people than to ask them to serve shareholders and shareholder value.

There are plenty of positive behaviour habits associated with ownership – responsibility, caring, taking a long-term approach. But they’re not generally associated with shareholder ownership, and certainly not on a large-scale, where remote speculators exchange shares like playthings.

We prefer to ask staff to serve their neighbours, meaning in our context other staff, customers, suppliers, the local community, investors and the environment. To speak on behalf of these stakeholders, we have created six custodian bodies, separate legal entities who are the sole members of Riversimple LLP. They jointly appoint the board. The board is directed to serve them all and balance their interests.

Another significant innovation is the introduction of a “compound board”. We felt that having diluted the power of shareholders, we also needed to dilute the absolute power of the board. Thus our board is split into two – an “operating board”, in function very like a conventional board, appointing and monitoring the CEO, and a “stewards board”, acting as a critical friend of the operating board and responsible for auditing and dispute resolution. The latter is not, I emphasise, a supervisory board – the two parts of the board sit next to each other in the structure, both being appointed directly by the custodians. They are mutually accountable.

Below the board, we aim to develop a self-organising and fluid system designed to foster personal initiative, a network rather than a hierarchy. Inspired by W. Gore, Ricardo Semler and others, we will do without chains of command or predetermined channels of communication.

Accountability is something we have thought hard about in devising our structure, aiming to balance it with power. In most businesses, we believe, shareholders have too much power and too little accountability, whilst managers and staff have too little power and too much accountability.

It is still early days and there will no doubt be plenty of trial and error as we work with this novel structure. A particular challenge is to persuade potential investors to accept this approach. We are fortunate in our current investors, a family with a successful habit of taking a long-term perspective. They share our view that by ceding control, they set free the potential of the people within the business and thus have a greater chance of creating long-term value than in a conventional structure. Time will tell.