The Busting Bureaucracy Hackathon

gary-hamel's picture

Escaping the Management Tax

By Gary Hamel on March 25, 2022

The organizations that survive the future will be those that are capable of changing as fast as change itself.

The organizations that survive the future will be those that are capable of changing as fast as change itself.

Today, few organizations seem to be able to out-run change for more than a few years at a time. To build organizations that are adaptable at their core, we will need to rework every management process so it enables, rather than frustrates, breakthrough thinking and relentless experimentation. Innovation will need to become instinctual and intrinsic.  The notion of the economically-dependent, easily biddable “employee” will have to be ditched.

The goal:  a workplace where initiative, creativity and passion flourish, and where the line separating vocation and avocation disappear.

For any of this to happen, bureaucracy must die.  Why?  Because bureaucracy …

  • Adds overhead—by creating multi-tiered structures where hundreds of managers spend their time managing other managers.
  • Creates friction—by forcing new ideas to run a multi-level gauntlet of approval that creates significant lag between “sense” and “respond.”
  • Distorts decisions—by giving too much power to senior executives who often have much of their emotional equity invested in the past.
  • Misallocates power—by rewarding those who are the most politically adept rather than those who are the most capable leaders.
  • Discourages dissent—by creating asymmetric power relationships that make it difficult for subordinates to speak up.
  • Misdirects competition—by encouraging individuals to compete for promotion and political advantage.
  • Thwarts innovation—by over-weighting experience and under-weighting unconventional thinking.
  • Hobbles initiative—by throwing up barriers to risk-taking.
  • Obliterates nuance—by centralizing too many decisions and demanding compliance with uniform rules and procedures.

In all these different ways, bureaucracy imposes a “management tax.” Like arterial plaque, it is mostly invisible, but no less dangerous because of that.   To avoid the management tax, we will need to find ways of buying control, coordination and consistency “duty free.”  Thankfully, information technology can help us do exactly that.

Modern bureaucracy emerged at a time when information was mostly paper-based, and expensive to move.  The traditional hierarchy, with it’s narrow span-of-control, was a response to this problem.  Ten or so subordinates would channel information up to a manager who would then summarize the data and push it further up the chain of command.  In this model of “consolidate and escalate,” those at the top really did know more.

When challenged, they could defend their decisions on the basis of superior knowledge (whether or not their decisions were really fact-based.) In addition, those at the top typically had long tenures and could claim to be more experienced than their subordinates—another justification for top-down decision-making.  But today, thanks to IT, information can be easily stored, shared and customized, and with each new advance in communications and information technology, the rationale for bureaucracy dwindles further.

Yet when it comes to killing bureaucracy, most leaders are still fiddling at the margins.  They have flattened the formal hierarchy, but haven’t eliminated it.  They have celebrated empowerment, but haven’t surrendered their own prerogatives.  They have encouraged employees to speak up, but have balked at the idea of letting them choose their own leaders.  They have deployed collaboration tools across the enterprise, but haven’t given associates the right to hack outdated strategies or sclerotic processes.  They have set up idea wikis, but still allocate resources top-down.  They have denounced bureaucracy, but haven’t actually dethroned it.

Why?  Two reasons, I think.  First, like all of us, they are prisoners of precedent.  Most of us grew up in and around organizations that fit a common template, where …

  • Big leaders appointed little leaders
  • Power was a function of position
  • Senior executives set strategy
  • Everyone reported to a boss
  • Tasks were assigned
  • Managers doled out rewards
  • Compensation correlated with rank
  • Promotion was the measure of achievement
  • Autonomy was tightly proscribed.

This is the management model found in most schools, religious organizations, government agencies and businesses.  No wonder it’s hard to imagine a company like WL Gore, a leader in advanced materials, where associates choose their own leaders; or Morning Star, the world’s largest tomato processor, where you won’t find a single vestige of formal hierarchy; or Haier, the Chinese home appliance maker that recently divided itself into 2,000 highly autonomous profit centers; or Red Hat, the enterprise software company where everyone gets to shape strategy through an open innovation process.

We’re actively working not only to imagine alternatives to the bureaucratic management model, but to invent them as well with this Busting Bureaucracy Hackathon.

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Cui bono, Latin for "to whose benefit". This is what I should like to add as a question rather than an additional answer to your question why (bureaucracy was not dethroned)?
Contemporary management seems to live quite a comfortable life that way. It is like with your bestselling product. Why thinking about replacing it with an innovative one. There is still a lot of money to earn that way. You are absolutely right that the time for the third wave is now. Traditional management style met its limits. It is really exciting to see which companies will adopt a new management style.
Best regards - Erwin

paul-cesare_1's picture

Gary - outstandingly articulated!
I would add the following points to Gary's 9 reasons as to "why bureaucracy must die." Some of these points may be incorporated into Gary's overarching themes.
* Widens the gap - between our planned goals and execution, intention and result, theory and reality and concept and completion.
* Perpetuates toxic behavior - by allowing and rewarding identifiable, class/power, fear-based dysfunctionalities such as bullying, patronizing, apple polishing and psychological game-playing abuse.
* Rewards image over substance - by hiding failures as opposed to learning from failures due to ego-driven power players.
* Squelches greater good motivation - by hyjacking accountability and allowing the exercise of self-serving power with the intention to harm others (psychologically or otherwise) to exist; thereby diminishing human potential and creativity.
Let the reformation begin for everyone's unmined human potential and organizational preeminence.
Thank you, Gary, for sharing your brilliance and inspiring me to join you on this quest to make our workplace environments fit for the future and fit for human beings! Glad to see folks are taking action and not sitting on the sidelines - true leadership.
Best - Paul Cesare

Liked by greg kramer

Dear Gary,
I love it! I fully agree and we have been preaching it to all of our clients and practicing it in our own group - and it works beautifully!. It is so much easier to lead without bureaucracy - unfortunately most managers are frightened to even try it! Yet when they try - for example - just moving from assigning tasks to letting people choose tasks and inviting others to join them - it is so much faster. better and cheaper!

I agree that the changes we are seeing for now are piecemeal. What is needed is Distributed Leadership - that is, viewing all employees as leaders of their own work, their team, etc. and giving them autonomy to act within the context of a shared goal. Its not just organisations that need to accept this, but individuals too need to step up. Leadership development is key to equipping people with the skills and knowledge and with the behaviours that are needed to lead in this new bureaucracy-free world.

Well put, Juliet. Leadership development should be less about preparing the next manager, director, or VP. It should instead be focused on developing the skills of independent thinking, decision-making and decisiveness, personal discipline and accountability, and it must be done in such a way as to facilitate the success of each stakeholder (read "employee"). But how can we be certain that in such a post-bureaucracy/post-industrial environment people won't simply seek those things which provide them the greatest benefit and utility? How can we be certain that even with such leadership development self-centered behavior and laziness won't cause our enlightened castle to crumble? These are not rhetorical questions, nor are they meant to be difficult. Rather, such questions should be addressed in our exploration of the realities of the post-bureaucratic world.