In today’s rapidly evolving business landscape, traditional management practices are being challenged like never before. Gary Hamel, a leading authority on modern management, offers a fresh perspective in his latest book, “Humanocracy.” We had the fortune to have a chat with him. In the interview, Hamel discusses the pitfalls of bureaucracy and the need for a new management paradigm that empowers employees and fosters innovation. He explores how organizations can strike a balance between autonomy and accountability, sharing inspiring examples from forward-thinking companies. Dive into this insightful conversation to discover how your organization can thrive in the modern world.
Join our Leading Complexity Program to learn more from Gary and how to thrive in the age of upheaval. Sign up here.
Transcription of the interview
Tomas: Today with us, we have Gary Hamel, well-known for many books, including the latest, “Humanocracy,” which I highly recommend. It’s very much about new management. Gary, in your work, you argue against bureaucracy. For instance, you have pointed out the paradox where individuals are trusted to make major personal investments, like purchasing a home, but in the office, they need a manager’s approval to buy something cheap. I could argue that bureaucracy stems from the fear of losing control, particularly over financial resources. How can we design a system that provides high levels of autonomy while ensuring that resources are not misused?
Gary Hamel: That’s a great question, Tomas. First of all, you have to realize that bureaucracy was created about 150 years ago when most employees were illiterate, and information was difficult to move. The best way of moving information was to have a hierarchy where ten people would report up to a manager who would consolidate that information and report it up the chain of command. It was also a world in which change was relatively well-behaved. That world doesn’t exist anymore. If you want to build an organization that is resilient and innovative, you have to give people more authority and power.
There’s a risk there; people are nervous when you say you have to dramatically expand the decision rights of those on the front lines. There is a certain degree of nervousness – what happens if they screw up – what happens if we can’t trust. The answer is not that difficult. If you want to empower people you have to:
- Training them to think like business people so you can trust them with significant decisions.
- You want to give them a financial upside to incentivize smart decisions and they benefit when those decisions work out
- Provide context so they understand the business environment, competitors, and customers.
Nobody really wants to be managed, but we have ranks of managers because we haven’t given people business literacy, proper upside, and the context and information they need to make smart decisions. These are all things we can change. When we do, we find an extraordinary amount of initiative and ingenuity that has long gone unexploited. People will rise to the challenge. We’ve seen this in organization after organization. Leaders must recognize that in a complex world, we can’t be in control, so we have to trust and equip others to make real-time decisions close to customers.
Tomas: Thank you very much. You have advocated for a new approach to management for nearly three decades. Are we now seeing the emergence of this new management paradigm?
Gary Hamel: There are certainly more companies and organizations now that I would say are post-bureaucratic, part of that vanguard, than perhaps 20 or 30 years ago. Bureaucracy as a social system is deeply embedded. Most organizations around the world are more alike than they are different: power trickles down, big leaders appoint little leaders, strategy is set at the top, and ranks of managers assign tasks and assess performance. But that is beginning to change. Over the last 20 or 30 years, we’ve seen an explosion of new business models, and now we’re starting to see new management models. Companies like Vinci, the huge French infrastructure company, and in healthcare, organizations like Buurtzorg, which runs a network of 16,000 nurses with only a couple of managers, and Roche, a global pharmaceutical company that has pretty much flattened the hierarchy. There are a lot more inspiring examples now than a couple of decades ago.
However, we’re still a long way from a fundamental paradigm shift. Most leaders grew up in and around organizations that fit the old bureaucratic template. They’re comfortable there and have learned to win in that environment, so it’s going to take more time. But I’m optimistic that we’re on the right path. Part of what makes me optimistic is that when I talk to leaders and CEOs, increasingly they admit that the real challenge for their organization is not the operating model or the business model, but the management model. We have too many layers, we’re too conservative, too slow, and too inwardly focused. Not all of them have the courage yet to do something about it, but we’re moving in the right direction.
Tomas: I’m happy to hear that. You often mention companies like Buurtzorg and Haier. In the Leading Complexity program earlier, we had speakers like Annika Steiber and Bill Fischer talk about Haier, and this year we are happy to have Jos de Blok as a participant or speaker. Do you have any new suggestions for companies working in this way, or are we still talking about the same ones?
Gary Hamel: There’s certainly a lot to learn from those organizations, but there are others we can learn from as well. One of the companies I’ll talk about in the program is Ingersoll Rand. This is a 100-year-old US manufacturing company that was, at one point, put together through a private equity company. They’ve rolled out a new model called shared ownership, which includes financial upside, business literacy, and more decision-making power. They’ve seen extraordinary growth in productivity, and every performance measure has gone up. We’re seeing new companies all the time moving in this direction.
Tomas: That makes me really happy to hear. Great, thank you very much for this interview. Looking forward to seeing you in the Leading Complexity program this fall. Thank you very much, Gary.
Gary Hamel: My pleasure.
Join our Leading Complexity Program to learn more from Gary and how to thrive in the age of upheaval. Sign up here.
