Gary Hamel is a member of the London Business School faculty and a cofounder of the Management Lab, which develops technology and tools to support breakthrough management innovation. The Wall Street Journal named him the world's most influential business thinker.
WHY WE HAVEN’T MOVED AWAY FROM BUREAUCRACY
Almost every organisation on the planet is fundamentally bureaucratic. Bureaucracy was invented more than a century ago to turn humans into semi-programmable robots, with its authoritarian power structures and rule-choked processes. It created a chasm between managers and employees that still exists today—only one in five employees believe their ideas are valued at work, and only one in ten believe they have the freedom to try out new solutions and products. Bureaucratic structures waste vast amounts of human capability, limiting personal growth, depressing wages, and stunting productivity. Bureaucracy must be eliminated for these reasons. These are described by the authors as a bureaucratic blueprint:
i. There is a formal hierarchy
ii. Power is vested in positions
iii. Authority trickles down
iv. Big leaders appoint little leaders
v. Strategies and budgets are set at the top
vi. Central staff groups make policy and ensure compliance
vii. Job roles are tightly defined
viii. Control is achieved through oversight, rules, and sanctions
ix. Managers assign tasks and assess performance
x. Everyone competes for promotion
xi. Compensation correlates with rank.
All this has created a system for which, similarly to hierarchy, we assume there’s no alternative. The book tries exactly to demolish this assumption, proposing an alternative that addresses each point of the blueprint above, which lies in a foundational question.
Suppose in a bureaucracy the core question is “How do we get human beings to better serve the organisation?”. In that case, the issue at the heart of humanocracy becomes: “What sort of organisation elicits and merits the best that human beings can give?”. Seems like a simple swap, but the implications are profound.
THERE ARE ALTERNATIVES TO THE BUREAUCRATIC STATUS QUO
Consider Haier - the world's largest appliance manufacturer. "Our goal is to help everyone become their own CEO," said CEO, Zhang Ruimin. Haier has divided its 80,000-person workforce into over 4,000 independent micro-enterprises, or MEs. Every ME is given the authority to develop its own strategy, hire team members, and distribute financial rewards. Furthermore, Haier makes it simple for employees to start new businesses by connecting them with their network of venture capital partners. Haier operates more like a startup than a bureaucracy, so, contrary to popular belief, bureaucracy is a choice, not a necessity.
TO BUST BUREAUCRACY, START WITH NEW PRINCIPLES
Seven human-centric principles lie at the heart of humanocracy and differentiate it from bureaucracy:
i. Ownership. Not everyone can work in a startup, but as we saw with Haier, team members can be given the autonomy and financial upside to feel like they own the company.
ii. Meritocracy. Influence and compensation should be correlated with competence and value added rather than rank.
iii. Markets. Big decisions should not be made by a small group of people at the top. We require organisations that can capitalise on market intelligence and flexibility.
iv. Community. Our co-workers must feel like family, not just coworkers. We do our best work when we feel safe and accepted.
v. Openness. We all want the freedom to learn, grow, and invent, which requires creating an organisation that is open to new ideas.
vi. Experimentation. This is the way an organisation stakes out the future, reinvents itself, and outperforms the average.
vii. Paradox. Companies like Haier have learned how to reconcile conflicting goals, like scale and agility, innovation and efficiency, and freedom and discipline.
ANYBODY CAN HACK MANAGEMENT
So how do one uproot something as ingrained as bureaucracy? One must conduct numerous experiments and think like a hacker. To begin developing a management hack, consider the following: What management process or system most inhibits initiative and innovation? Then consider what bureaucratic principle might assist us in changing this. What would happen if we applied this principle to the process? When you have a rough hack, consider how you can test it cheaply and quickly. This is something that almost any manager can do.
"Humanocracy" will show us how to launch an unstoppable movement to equip and empower everyone in an organisation to be their best and to do their best. The ultimate prize: an organisation that is fit for the future and fit for human beings.