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The Beyond Bureaucracy Challenge: Creating Inspired, Open, and Free Organizations

by Gary Hamel on October 11, 2011


gary-hamel's picture

The Beyond Bureaucracy Challenge: Creating Inspired, Open, and Free Organizations

Co-authored by Colin Price.

In their new book, Beyond Performance: How great organizations build ultimate competitive advantage, Scott Keller and Colin Price identify nine factors that are critical to organizational health:

Direction Accountability Motivation
Leadership Coordination & Control External Orientation
Culture & Climate Capabilities Innovation & Learning

Organizations that thrive over the long run, in good times and bad, pay explicit attention to all these issues. Three of them, though, seem particularly crucial as we think about new challenges confronting us today.

Motivation: As products, services and even knowledge itself get commoditized ever more rapidly, we need organizations that are capable of producing a steady stream of highly differentiated products and services. This requires imagination, which is, in turn, the product of passion. In business as in other aspects of life, passion is the difference between "insipid" and "inspired." Innovation doesn't come from dispirited employees.

Amazing contributions don't come from employees who feel like conscripts.  Therein lies the problem. By one recent estimate, only 14% of employees around the world are highly engaged in their work. This has to change. We must be as rigorous and inventive about inspiring passion and unleashing contribution as we are about every other aspect of business.

External orientation: In our hair-trigger economy, customer preferences change at light speed. Unexpected new challenges can pop up at any moment, and new opportunities come and go in the blink of an eye.  The environment for business is more dynamic, more complex, and more global than ever. Given that, we need organizations that can draw meaningful insights out of the maelstrom of fragmentary and incoherent data that daily surrounds them. We need companies where every individual is equipped to sense emerging trends, where the implications for action are rapidly recognized, and the necessary resources are quickly brought to bear.  

The decision lags typical of large, bureaucratic organizations are becoming untenable. Individuals on the front lines must have the discretionary power to respond instantly to shifting circumstances.  Rather than moving information up to those with authority, authority must be pushed down to those with real-time information.

Coordination & Control: With global supply chains, distributed production networks, and virtual teams, the challenges of coordination are more pressing than ever. In most organizations, managers are the rivets that hold everything together. They connect activities, teams, programs, and business units. The implicit assumption: coordination requires a hierarchy of coordinators. Problem is, hierarchy adds costs and reduces responsiveness. What's needed now are ways of integrating complex activities with little or no management overhead.

And then there's control: Managers are often the enforcers. It's their job to ensure that procedures are followed, budgets are met, and slackers are punished.  But again, a supervisory superstructure is expensive and profoundly disempowering. We need organizations where control comes less from rules and sanctions, and more from norms and peers. We need to radically reduce the management costs associated with both coordination and control.

Hence The Beyond Bureaucracy Challenge, the second leg of the HBR/McKinsey M-Prize for Management Innovation. Help us build organizations that are fundamentally fit for human beings, characterized by:

Total Passion: We know a lot about what it takes to drive deep engagement:  purpose, self-direction, a sense of community, and opportunities to grow are a few of the most important. What we're looking for are examples where engagement has been taken to new heights--where management assumptions, processes, and behaviors have been radically overhauled in ways that create a sense of adventure, that inspire leaps of imagination, that foment excitement, and take the work out of work.  If you don't have a real-world case to share, invent a hack--a bold, new idea for turning contented team members into zealous ones.

Outside-In: How can we turn an entire organization into a sensory organ, ever alert to the changing dynamics of the marketplace? How can we dramatically improve the signal-to-noise ratio in environment scanning? How can we ensure that weak signals don't get filtered out when the implications are politically uncomfortable? How can we eliminate the lags between "sense" and "respond?"  How do we mobilize teams and resources faster than ever? And how can we inject the voice of the customer into every decision? More generally, how can we create organizations where a lot fewer people are inward-focused and a lot more are outward-focused--and where contributions at the edges are every bit as important as those emanating from the center? Once again, we're looking for game-changing practices and mind-flipping hacks.

Managing without Managers: Managing is largely about controlling and coordinating--the question is, can the work of managing be pushed out to the periphery of our organizations? Can it be automated? Can it be dispensed with entirely? Is it possible for an organization to be highly decentralized and precisely synchronized? Can you get discipline without disciplinarians?  Are there ways of combining the freedom and flexibility advantages of markets with the control and coordination advantages of traditional hierarchies? Can we reduce the performance drag of our top-heavy management structures without giving anything up in terms of focus and efficiency? To what extent can "self-management" or "peer-management" substitute for "manager-management?" If you've got some hard evidence, or just a wild idea, share it with the world.

Help us turn healthy organizations into world-class athletes that are able to vault over tomorrow's challenges.

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ikway's picture

Dr. Gary Hamel,

Thanks for a good & insightful read.

I heard some time ago that a company by name Polyhydra in Karnataka, India is practicing a flat org structure with very transparent systems. PLease check.

What is the difference between influence & manipulation. Where does the thin line exist / disappear.

Isn't it because of the fact we naturally detest hierarchial systems, we are eager to look at and believe the new age corporations are alternate to heaven.

Why not a Inidan / Chinese Or any Government backed corporation is not being taken as example? What else could be more democratic than a company managed by a government elected by people in a democratic election?

On a side note : What is you thought & opinion about Toyota Production System or for that matter the people part of Japanese way of organisations/ production systems.

peggy-mcallister's picture
Thanks for your article here Gary and for your video on the new drivers for managers (leaders?) that are demanding a new form of leadership.  Your video really drives home the need to re-evaluate how we lead our organizations and communities.
I would also suggest that we are now being faced with more and more evidence that many of the fundamental and unexamined principles upon which we have built our economic systems and ideas of leadership are flawed.  Some of these around business include "bigger is better";  and "win-lose" (our job as a company is to beat the competition) vs. Excellence, or even Service (our role is to offer a product or service that serves the greater good); and for leadership, that leadership is about a person... instead of leadership as a movement that has many arms and legs.  
The movement toward collective leadership as demonstrated by Gangplank, the Arab Spring and social entrepreneurs among many others seems to be on the frontiers of new wave of "leadership".  
And to be successful, such leadership requires a more evolved and self aware mindset than that which has created our devolving industrial era system.  A new "operating system" of the mind so to speak.  I have been very impressed wth the work of Bob Anderson of The Leadership Circle and his 360 profile that helps leaders map their own operating system and discover the unexamined assumptions they have been making.  It fits nicely with the work of Daniel Pink, the Heath Brothers, Wilbur and others.
Thanks MIX for this community.
frederic-jleconte's picture
Very clever positionng of the debate and questioning method.
You do not choose the easy path and this is right.
Simplification is good for communication but does rarely solve complexity (exception of old times genius). It does poorly control entropy, despite good efforts from 5S and other tools in the box.
A good thing for ideas flow sustainabilty by the way.
There is a clear need to give additional fields of understanding, then real life experiences to the 9 + factors listed.
None is new, so the need for revision and new depth.
The 3 characteristics proposed as leads sounds nice solid signals to my ears and brain (me being a soundwave and music freak).
I'll be happy to jump in and add to the voicing of the choir.