Management Innovation:  Busting Bureaucracy

    Amy Muller

    Management Innovation

    As most of you know, Gary Hamel, was one of the founders of Strategos back in 1995.  In recent years, his focus has been on Management Innovation – innovating the processes and practices that are used to direct and coordinate the activities of individuals and teams.  While most of the client work that Strategos does is aimed at business model innovation, in recent years we have developed a principle-based approach to Management Innovation (see Mercy Salaz’s blog, Scope Creep) and used this approach on several internal processes and practices  such as product development.

    Gary and Michele Zanini co-founded Management Exchange as an open innovation project “aimed at re-inventing management for the 21st century”.  On this platform, innovators share and discuss the critical challenges they are facing and offer examples of practices to address these problems.  Gary and Michele’s approaches to Management Innovation are a logical complement to our work and we have teamed up to address both business model and management model issues in several clients.

    Engaging Employees

    Recently, I had the opportunity to spend some time with Michele Zanini, and to learn more about their most recent work in Management Innovation. They have taken on the audacious goal of eliminating bureaucracy.  And by eliminating bureaucracy, they hope to pave the way to a new type of workplace where individual contribution and creativity is encouraged and respected – a new type of corporation built for human beings.

    According to Gallup¹, only 31.5% of U.S. employees are “actively engaged” at work (the world-wide engagement level measured by Gallup is even lower, at 13%).  17.5% of U.S. workers are actively disengaged (we can only wonder what the consequences of active disengagement might be?), and the remainder (51.5%) are simply “not engaged.”  This statistic is shocking to me:  Can the U.S. remain competitive if more than two thirds of the workforce leaves their brains, their commitment, and their passion at home?

    Eliminating Bureaucracy

    Gary and Michele argue that one of the critical reasons for worker apathy is the pervasive presence of bureaucracy.  Bureaucracy was “invented” to address the challenges of expanding corporations a hundred years ago – challenges like making decisions, allocating resources, creating strategies, measuring performance, etc.  By applying seemingly innocuous principles like Standardization, Specialization, Hierarchy, and Conformance – the work got “organized” and bureaucracies were created.  But there were, of course, unintended consequences that eventually resulted in today’s apathetic workforce.  “Hierarchy” for example, tends to put the value on experience and status-quo thinking, crowding out new thinking and challenges to the status quo.  “Conformance” is probably one of the most dangerous principles, limiting diversity of thought and outlook.  At the corporate level, these principles and the resulting bureaucracy lead to bloated overhead, incrementalism and inertia.  In fact, in a recent paper, Gary and Michele have estimated the cost of bureaucracy to U.S. corporations to be $3 trillion dollars (17% of U.S. GDP).2

    A New Approach

    By talking with leaders and employees of bureaucracy-busting pioneering companies, Gary and Michele have identified a set of new principles – aimed at eliminating bureaucracy and re-engaging employees.   The truth is that all of the things that corporations needed to get done in the early days of bureaucracy still need to get done today.  But the key is to apply a new set of principles and to define new activities done in new ways – to get these things done.  In the Management 2.0 set of principles Communities replace Hierarchies, Openness replaces Conformance, Disaggregation replaces Standardization, and Meritocracy replaces Specialization.

    These are some of the principles, they argue, that will define the post-bureaucratic corporation and re-engage employees.  Gary and Michele have numerous examples of these principles in action – demonstrating their real-world applicability in companies like Haier, W.L. Gore, Morningstar Foods, and Whole Foods.

    Strategos continues to apply the work of Gary Hamel in client situations addressing specific management challenges.  How can we re-imagine and re-conceive our product development process to be more agile and less bureaucratic?  How can we re-invent our packaging process to be more streamlined and more responsive?   As Strategos works issues such as these with clients, we find that we are adapting many of Hamel’s bureaucracy busting principles to specific situations.

    Bureaucracy is a tough nut to crack – but given the innovative and insightful work of Michele and Gary, there is hope.  This too-brief summary of Gary and Michele’s recent work in Management Innovation has perhaps sparked some interest and desire to learn more.  The reference list below is a great place to start.

    For more examples of Management 2.0 in action see:

    • Hamel, Gary. “The Future of Management.” Harvard Business Press (2007)
    • Hamel, Gary. What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation. San Francisco, CA: Jossey-Bass, 2012. Print.
    • Management Innovation eXchange http://www.managementexchange.com/
    • Gary Hamel. http://www.garyhamel.com/

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    1Adkins, Amy. “Majority of U.S. Employees Not Engaged Despite Gains in 2014.” Gallup.com. N.p., 28 Jan. 2015. Web. 27 Apr. 2016.

    2 Hamel, Gary, and Michele Zanini.  “The $3 Trillion Prize for Busting Bureaucracy.”  Web log post. Http://www.garyhamel.com/. Gary Hamel, Mar. 2016. Web. 27 Apr. 2016.