I am a huge fan of Gary Hamel. His new book is a follow-on from “What matters now”. “Humanocracy” is an indictment of how much businesses are still operating as bureaucracies and frankly are no longer fit for purpose. Command and control do not work as the pace of change has gone hypercritical. It is simply too slow and does not utilise your most important resource, which are your people.
Purpose and passion
Bureaucracy has been with us since long before the Industrial Revolution, all the way back to the “command and control” leadership of the Roman Empire. Job description, lines and boxes. But this approach is not up for our future challenges. We need to embrace instead a human-centric approach, rooted in trust. You can’t order or command trust. You have to earn it. And by embracing humanocracy, we can embrace the purpose and passion that makes profits and projects possible.
The business case against is bureaucracy is compelling
- The bureaucratic class comprised 26.9 million individuals or 18.4% of the US workforce.
- This group claimed more than $3.2 trillion in compensation or nearly a third of America’s total wage bill.
- 119 million non-managerial employees are spending an average of 16% of their time on internal bureaucratic tasks—this equates to an additional 19 million full-time equivalent bureaucrats.
- Together, unnecessary bloat and busywork saddle US organisations with $2.2 trillion a year in unnecessary wage and salary costs.
- Beyond this are the ancillary costs—travel, training, office space, equipment, and IT support—of supporting all those bureaucrats. Let’s assume these expenses are 20% of compensation costs—that’s another $430 billion.
The total cost of bureaucracy in the USA alone is 2.6 billion.
Shocks and change
We live in a world of accelerating change, where the future is less and less an extrapolation of the past. Change is unrelenting, pitiless, and occasionally shocking. The shockwaves of this explosion in computation and communication are reverberating all around us: e-commerce, the sharing economy, synthetic biology, blockchain, augmented reality, machine learning, 3- D printing, and the internet of things. As these shocks dissipate, new ones will thunder across the landscape. Existential VUCA (and includes the shocks of COVID, trust, climate and automation).
Organisations are crap at change.
Between 2010 and 2019, US public companies reported more than $ 550 billion in restructuring charges, which are typically the product of belated or inept attempts at strategic renewal. Caused by inertia, ignorance, status quo, holding on to power, incrementalism, and indeed bureaucracy. With as only aim to postpone the future.
94% of executives expressed disappointment with their organisation’s innovation performance. Despite a torrent of books promising to unlock the secrets of innovation, large organisations seem as incapable as ever of unleashing the creative energy of their people. As a result, the average age of a company on the S& P 500 Index has fallen from sixty years in the 1950s to less than twenty years.
When the world was a lot more predictable, it made sense to turn human beings into semi- programmable robots. Organisation where:
- There is a formal hierarchy
- Power is vested in positions
- Authority trickles down
- Big leaders appoint little leaders
- Strategies and budgets are set at the top
- Central staff groups make policy and ensure compliance Job roles are tightly defined
- Control is achieved through oversight, rules, and sanctions
- Managers assign tasks and assess performance
- Everyone competes for promotion
- Compensation correlates with rank
It does not sound like a type of organisation where passion, initiative, creativity, and valour can be expressed. Let alone courage, intuition, love, playfulness, and artistry. It is no wonder that 85% of staff is not engaged. There’s no secret about what drives engagement. They are purpose, autonomy, context, collegiality, and the opportunity to grow.
Our world is radically changing. That means that our organisations need to follow suit. Hamel calls it the emancipation of the human spirit. Moving from management regime that empowers the few at the expense of the many, that prizes conformance over originality, that wedges humans into narrow roles, robs them of agency, and treats them as mere resources to an organisation as a vehicle human beings use to better their lives and the lives of those they serve.
That sounds lovely. But I am always struck what Peter Hinssen in “The day after tomorrow” calls clock speed. The internal speed of decision making in an organisation vs the speed of change. It is very simple, when an organisation confronts a large number of novel problems, a top-down structure is likely to be a choke point. That type of decision making and execution is too slow to keep up with the outside world and the demands of the customers.
The curse of bureaucracy
- Grants excessive credence to the views of precedent- bound leaders
- Discourages rebellious thinking
- Creates long lags between sense and respond
- Calcifies organisational structures
- Blinds silo- dwelling leaders to new opportunities
- Suboptimizes trade-offs
- Frustrates the rapid redeployment of resources
- Discourages risk-taking
- Politicises decision making
- Creates long and tortuous approval pathways
- Misaligns power and leadership capability
In a world filled with unexpected threats and opportunities, formal structures are suboptimal, parochial, byzantine, and inflexible. While specialisation yields economies, it curtails initiative and innovation. Formal structures are also rigid and hard to change. Organisations need to experiment with dozens, if not hundreds, of strategic options. One all-knowing leader or management team is a fallacy. Collective wisdom always wins.
New organisational models
What’s needed are radically new organisational models that downplay formal structure. In a world of relentless change, trade-offs need to be made as close to the front lines as possible. Boundaries must be malleable. Resources, rather than being hoarded, must flow unhindered toward promising opportunities. Interunit coordination must be the product of nimble, self-organising communities and market- like transactions rather than blanket policies or cumbersome board.
Here are some question from his book to consider
- How many layers are there in your organisation (from frontline employees up to the CEO, president, or managing director)?
- What percentage of your time do you spend on “bureaucratic chores” (e.g., preparing reports, securing sign-offs, complying with staff requests, and participating in review meetings)?
- How much does bureaucracy slow decision making and action in your organisation?
- To what extent are your interactions with your manager and other leaders focused on internal issues (e.g., resolving disputes, securing resources, getting approvals)?
- How much autonomy do frontline teams have to design their work, solve problems, and test new ideas?
- How often are frontline team members involved in the design and development of change initiatives?
- How do people in your organisation react to unconventional ideas?
- In general, how easy is it for an employee to launch a new project that requires a small team and a bit of seed funding?
- How prevalent are political behaviours in your organisation?
- How often do political skills, as opposed to demonstrated competence, influence who gets ahead in your organisation?
Emergent and fluid
We need organisations that, like the biosphere, the internet, or a vibrant city, that are more emergent and fluid than engineered. We need gymnastic organisations. We agree on a lot of the characteristics:
- Legacy driven
- Focusing on developing business acumen, teaching frontline staff to think like businesspeople
- Structure the organisation into small, multifunctional teams
- Gives these teams accountability for a local P& L
- Grants staff the time and resources to run local experiments
- Internal contracting (support function competing with external providers)
- Full transparency
- Continues experimentation
- Competence and mastery
The gymnastic enterprise
The gymnastic enterprise is an ambidextrous rubrics cube that is super structured, super disciplined, combined with superfluidity, super creative, super nimble, super-resilient, super skilled and super innovative. Hyper agile and adaptable. Where change is a muscle. I use “super” because enterprises of the future need to be very good at what they are doing in all of those facets to survive. A constant 10X is going to be the new benchmark. Loose and fixed at the same time. Able to move in every direction. An organisational shapeshifter.
- Where functional departments will disappear as the knowledge gets codified and systemised through automation, machine learning and AI. The structure is hardwired through IT and project management. Outcome-based multidisciplinary project teams will deliver the value to the customers. As close to customers as possible. Without the need for middle management.
- Where discipline, accountability and common purpose and a shared vision are fixed. Where technology, business acumen and constant training deliver the infrastructure and platform to operate. Where everything is digitised, and all routine is automated. Where everything is a project.
- Where command and control no longer exists. Where leadership is a collective responsibility. Asset light, with an on-demand workforce, operating on a low code, no-code platform.
There is no form without structure. The pillars of the gymnastic organisation are an IT infrastructure, a project management office, an agreed common purpose and vision and governance. Combined with a culture of transparency, accountability and enablement. With deep investment in training and access to the latest technology to do their job.
Enabled by citizen development where staff get the technology, the tools and the training to develop and deploy improvements, ideas and experiment. And I think citizen development is the key that will unlock humanocracy and the ability to gymnastic as it merges structure, technology and enablement.