In businesses, power comes from capital. By contrast, in Radical companies come from contributions. It is not a simple issue and in this post we look at it from four different views.

In businesses, power includes financial, operations, and people. By contrast, in Radical companies Operations is lead by co-owners and nobody has coercive power over anybody else. Co-owners do get more or less Dividends based on what other co-owners recognize as their contributions.

Financial Power

Shares in a business for 30% ownership. let’s assume that the 30% ownership gets you a seat on the Board.

Your financial power, to dividends, is determined by owning 30% of the shares. Since business shares are static, this means that the 30% is yours forever.

Operational Power

In theory, the owners, via the Board of Directors, don’t have any operational power. On the other hand, the Board can fire the CEO and hire a new one. This results in the fact, that the CEO has to follow the Board’s operational wishes. If they say, You should use AI, then the CEO had better include AI or have some story about AI—a good enough story for the Board and the Annual Report.

Power over People

In theory, again, the owners don’t have any power over people. The CEO and his Fiat hierarchy has that power and the Board has power over the CEO. The CEO can not blame people for all ills because eventually someone will ask, But… didn’t you hire him?. On the other hand, the CEO can “report” that he fired an entire team for being irresponsible. At best, Directors will ask, How do you make sure that won’t happen again?, but that’s it.

Centralized

ownership are centralized, based on capital. In plain language, that means that 1) seat on the Board are based on capital, and 2) the Board of Directors hold all power. financial power, Operational power, and power over people.

Radical companies are very different.

Radical

Financial Power

You are a co-owner of the company and as such,

• You contribute to the work you and the other co-owners are doing together.
• Other co-owners see some of your work as a contribution.
• They give you RADs in recognition of those contributions.
• Other co-owners may recognize other contributions and give you RADs.

RADs determine the percentage of dividends that you get. That’s it.

Operational Power

Operations are determined by people. For example, somebody proposes a particular project and either he is the lead, or he proposes somebody else as lead.

The Explicit Alignment guides the overall direction of these operational project. It a proposed project does not more the needle in the direction of the Explicit Alignment, then in the worst case, nobody joins it and the project goes by the wayside. Most likely, after some discussion, the project is modified so as to lean in the direction of the Explicit Alignment and people do join.

By the way, there is nothing magical about the Explicit Alignment, except that every co-owner has agreed to it and it provides a starting point of discussion.

Power over People

There is no power over people. People are guided by what is meaningful to them and the Explicit Alignment.

Decentralized

Radical company ownership is decentralized, based on contributions.

• You contribute to the work you and the other co-owners are doing together.
• Other co-owners see some of your work as a contribution.
• They give you RADs in recognition.
• Your percentage of RADs determines your percentage of ownership, this month (i.e., it is dynamic).