Organizational behavior

This is how bureaucracy dies

April 16, 2014: 1:28 PM ET

Eventually, every firm will discover that it's quite possible to manage without managers.

By Gary Hamel

Hanging files in filing cabinet

(TheMIX) -- If you've spent a lifetime accumulating and wielding bureaucratic power, and if you've calibrated your career progress by the steps you've taken up the corporate ladder, or by the number of people who work for you, or the perks you've been awarded, or the scope of your authority, then envisioning a world in which leaders report to the led may be a bit daunting.

People with power are often reluctant to give it up. Take the debate over the "consumerization" of IT as a case in point. Granted, vexing security and support issues arise when employees bring their personal devices and apps to work. Nevertheless, it's troubling that many CIOs seem to regard the idea of Bring Your Own Device (BYOD) as an annoying technical problem rather than as an opportunity to amplify employee empowerment. Yes, the notions of security and openness are often at odds, but it's precisely this kind of assumed trade-off that needs to be reconsidered. Rather than regarding themselves as enforcers, IT execs and managers need to view themselves as enablers.

The web has delivered a dramatic shift in bargaining power from producers to consumers. What's coming next is an equally dramatic and irreversible shift in power from institutions to individuals. BYOD is just the beginning. If your organization is going to attract and engage the most creative individuals in the world, then you have to think about how you might help facilitate SYOG—Set Your Own Goals, DYOJ—Design Your Own Job, PYOC—Pick Your Own Colleagues, AYOE—Approve Your Own Expenses, or CYOB—Chose Your Own Boss.

More generally, you should ask yourself, "What sort of value could I create for my organization if I were as committed to reinventing my firm's management model as I am to further optimizing the operating model or the business model? What would happen if my team fully exploited the revolutionary potential of big data, cloud services, mobile technology, and the social web to dismantle formal hierarchy and empower every associate and team member? And where would I start?"

Inevitably, more and more of the work of managing and leading -- the work of setting priorities, devising strategy, reviewing performance, divvying up work and allocating rewards -- is going to be distributed to the edges of the organization. Every firm will discover, as some already have, that it's quite possible to manage without managers.

If this seems like a fantasy to you, look at the social revolution that's been gathering pace on the web. The Internet has proven to be an almost ideal medium for social experimentation. The list of web-spawned social technologies is already impressive (crowdsourcing, social graphs, microblogging, tagging, opinion markets, mash-ups, peer ratings, peer production, crowdfunding, social curation), and new, socially enabled technologies are emerging almost daily.

At the same time, most CIOs and CEOs still look at these technologies either as a means for connecting more intimately with customers (by, for example, mining sentiment data from social media) or as a way to increase the efficiency of internal communication (by deploying social platforms like Chatter and Jive). In both cases, social technologies are seen as "bolt-ons" -- either to existing marketing practices or communication channels. Rarely are they seen for what they are -- the building blocks of a comprehensive and radical alternative to centralized management structures and rigid management processes.

It's easy to get lost in the social web, but when you step back, there are some clear patterns: Users are calling the shots. Choice and freedom are expanding. Communities are proliferating. Individuals are following their passions. Boundaries are disappearing. Hidden talents are being discovered.

And yet, most CEOs and CIOs are stuck inside the old paradigm; they're tweaking when they should be overhauling and tweeting when they should be transforming. It's disheartening to go inside one of America's youngest and fastest growing IT companies and discover that it already has 600 vice presidents. As with virtually every other startup that preceded it, the tentacles of bureaucracy have slowly encircled this young company. The ratio of managers to first-line associates is going up. Decision cycles are growing longer. Staff groups are growing and accumulating more power. Rules are proliferating. And legal has to sign off on everything.

We know how this movie ends. It ends with a company that is still competent but just not very relevant. Opportunities have been squandered, margins have shrunk, the best brains have left, and those who are left are mostly going through the motions.

Big companies have a well-deserved reputation for being blinkered and ponderous. The problem, though, is not size but rather the bureaucratic structures and processes that come with it.

The web, on the other hand, has demonstrated that an organization doesn't have to be centralized to be robust, that it can be large but not bureaucratic, efficient but not inflexible, disciplined but not disempowering.

The web has unleashed human capacity in ways that few of us could have imagined a decade ago. It's a multiplier of human capability. Bureaucracy isn't. It allows us to do some extraordinary things -- like manufacturing 20-nanometer computer chips -- but it squanders human talent.

In a bureaucracy, obedience, diligence and expertise are valued. Initiative, innovation and passion? Not so much. It's precisely these latter capabilities that are most essential to success in today's creative economy. No wonder, Richard Florida, in his book, The Rise of the Creative Class, observed that "the biggest issue at stake in this emerging age is the tension between creativity and organization."

Human beings are resilient, inventive, and passionate, but our organizations mostly aren't. Our bureaucracy-infused management models have left us with organizations that are less capable than the people who work within them. Therein lies the imperative and the opportunity: creating organizations that are fit for the future, by creating organizations that are fit for human beings.

If you believe in the transformational power of IT, you have to face the fact that tomorrow's winning management practices and processes will be as different from their bureaucratic predecessors as Skype is from "plain old telephone service," as Amazon is from a strip mall, as Twitter is from a postcard. And once you've accepted this truth, you'll have to bring all of your imagination and all of your heart to the challenge of building a "post-bureaucratic organization."

That's what we've been doing with a community of progressive thinkers, practitioners, and technologists in the "Busting Bureaucracy Hackathon." Join us.

Gary Hamel is the co-founder of the MIX (Management Innovation eXchange) and author of "The Future of Management" and "What Matters Now." He's a visiting professor at London Business School.

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