The disease renders our organizations “insipid, inertial, incremental and uninspiring… To find a cure, we will have to reinvent the architecture and ideology of modern management.” Curiously, Hamel says, these are “two topics that aren’t often discussed in boardrooms or business schools.”
Hamel’s articles (here and here) are part of the series in preparation for the Drucker Forum that is taking place in Vienna, Austria on November 13-14. (The entire conference can be seen free online with live streaming.)
What is bureaucracy?
Hamel gives us a vivid description.
“Strategy gets set at the top. Power trickles down. Big leaders appoint little leaders. Individuals compete for promotion. Compensation correlates with rank. Tasks are assigned. Managers assess performance. Rules tightly circumscribe discretion.
Bureaucracy “constitutes the operating system for virtually every large-scale organization on the planet. It is the unchallenged tenets of bureaucracy that disable our organizations.”
Bureaucracy is “simple, and scalable” but “a profound liability” in today’s hyperkinetic environment. It “underweights new thinking and …perpetuates the past. It misallocates power.. It discourages dissent and breeds sycophants.” Bureaucracy is run top-down by “a small cadre of seasoned executives who fail to write off their depreciating intellectual capital.” It is akin to Soviet-style centralization and “is the enemy of resilience… If they are unwilling to adapt and learn, the entire organization stalls. “
Bureaucracy is gripped by“the ideology of controlism” and “worships at the altar of conformance.” It’s hostile to “the irregular people with irregular ideas who create the irregular business models that generate the irregular returns,” and so “cripples organizational vitality.” It “shrinks our incentive to dream, imagine and contribute.” It causes our organizations to “remain incompetent at their core.”
Most corporate change, says Hamel, hasn’t killed the disease of bureaucracy. “We’ve flattened corporate hierarchies, but haven’t eliminated them. We’ve eulogized empowerment, but haven’t distributed executive authority. We’ve encouraged employees to speak up, but haven’t allowed them to set strategy. We’ve been advocates for innovation, but haven’t systematically dismantled the barriers that keep it marginalized. We’ve talked (endlessly) about the need for change, but haven’t taught employees how to be internal activists. We’ve denounced bureaucracy, but haven’t dethroned it; and now we must.”
“What we need,” says Hamel, “is a cluster of radically new management principles and processes that will help us take advantage of scale without becoming sclerotic, that will maximize efficiency without suffocating innovation, that will boost discipline without extinguishing freedom.”
Bureaucracy is a disease that “no amount of incremental therapy can cure.” It is immune to “proactive bottom-up renewal.” Its “organizational structures and processes are inherently toxic.” It is “emotionally insipid” and “clueless when it comes to galvanizing …imagination, and passion.”
“As the winds of creative destruction continue to strengthen, these infirmities will become even more debilitating.” Most of “the currently recommended remedies—idea wikis, business incubators, online collaboration, design thinking, “authentic” leadership, et al—are …unlikely to be any more effective than the dozens of ‘fixes’ that came before them.”
“To build organizations that are fit for the future,” says Hamel, “we have to go deeper, much deeper.” We must “challenge our foundational beliefs… of organizations which are still feudal at their core.”
“There’s no other way to put it,” says Hamel, “bureaucracy must die. We must find a way to reap the blessings of bureaucracy—precision, consistency, and predictability—while at the same time killing it.”
How to invent the future
Happily, with society facing such a vast disaster, another article in the series by Nilofer Merchant, a writer and entrepreneur, and a lecturer at Stanford, tells us how to invent the future. “We need more than big ideas, or pithy words, or an ultra-clear vision to invent the future,” says Merchant. “In order to consider new ideas, you have to be willing to let go of ones that no longer serve you.”
“The challenge, though, is not how to throw away the Old to embrace the New. That would be folly… Instead, what we need is a way for ideas to become powerful enough to dent the world. And no one can do that acting alone.”
She gives the example of Eric Liu, founder of Citizen University, which runs programs designed to help build the skills of effective citizenship. The key is “a common shared purpose, with many possibly different, most likely opposing strategies to achieve that purpose.”
This, says Merchant, “is the ‘new how’, a collaborative way that shapes ideas to be better, to be stronger, and ultimately become real. To invent the future, we don’t need more ideas, or better words, or directional visions to invent the future. Instead, we need challenge common beliefs and ingrained interests. We need to stop pulling each other down by the tail and instead build up our ideas together.”
The path to transformation
If bureaucracy must die, what is to replace it? What could this collaborative invention of the future look like? Some clues are offered by another article in the series by Vineet Nayar, the former CEO of HCL Technologies.
Today, technology is creating human challenges. “One, digital technologies have shortened and simplified execution cycles, and compressed advantages built on physical reach. Two, with the emergence of specialized organizations that can handle manufacturing and logistics, customer support and after-sales services, and IT, entry barriers in many industries have fallen. And three, the new technologies have made possible more consumer analytics, greater visibility, and scale, forcing a move away from standardization and towards personalized offerings and unique experiences.
Today, says Nayar, “the winning formula has become: Innovative Ideas + Delivering Unique Experiences + Enabling Leadership. “ To implement this formula, an organization needs transformation, which in turn involves breaking free of three traps:
“The Logic Trap. Companies often have to consider doing what others believe is impossible… Their leaders have to move away from incremental steps, such as cost cutting, and think of giant leaps that will put them on the path of transformation.
“The Continuity Trap… the best talent is usually motivated by challenges and how to tackle them.
The Leadership Trap ..Customer experience is supreme, so leaders must inspire employees to create and deliver unique experiences by tapping into their insights.”
Unlocking employee innovation through platforms
Another clue to achieving transformation and meeting Hamel’s challenge of unlocking those human capabilities that are being crushed by bureaucracy, writes Professor Bill Fischer from IMD in Switzerland, in another article in the series, comprises innovation platforms.
“Creating a platform for innovation means allowing for, even depending upon autonomy – and yet not sacrificing the benefits of having a sound strategy.” Platforms “promise a degree of freedom and entrepreneurship in delivery, while maintaining many of the advantages of scale and scope.”
“If you need a better sense of what I mean by platform,” writes Fischer, “think about Apple’s iPad, a mass-produced consumer electronics product which also offers a base on which other parties can create and capture value with their independently-produced apps. Apple has maintained a relatively high degree of control over how something is developed, and over how value can be captured from it, but the use and utility of its platform far exceeds anything that anyone at Apple could ever have imagined. In a sense, Apple has become the mass producer of a commodity item that liberates the imaginations of a developer community, and a good part of its customer base as well.”
Fischer gives details of how platforms have been introduced at the Dutch life sciences and materials science giant DSM, and the Chinese home-appliance global leader Haier.
And don’t forget economics
Don’t forget economics, writes Pankaj Ghemawat, Professor of Global Strategy at IESE Business School in Barcelona in another article in the series. There are things that “economists know that managers don’t (and vice versa).”
Economists argue that “disasters only happen because the rules of the game in which the businesses operate must be flawed. Economists disagree about the actual incidence of these market failures and the cost-effectiveness of governmental efforts to tackle them, but they broadly agree that the only factors that prejudice performance are external to businesses.”
“Businesses and management experts, in contrast, tend take the opposite position. They argue that ““poor performance is (mostly) caused by management failures — specifically, miscalculations of various sorts — rather than inherent flaws in the workings of the marketplace. And specific prescriptions for practitioners are served up that are supposed to improve both private profits and public welfare.”
“Neither school of thought, though, has it quite right. In their efforts to characterize important failures as being (for one group) always market failures and (for the other group) management failures, the two groups end up missing out on each other’s insights.”
Perhaps, Ghemawat is suggesting, economists and managers should pursue Merchant’s radical idea: talk to each other and collaborate?
Culled from: http://www.forbes.com
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