Humanocracy by Gary Hamel and Michele Zanini is an eye-opening read on the many advantages people can bring to organizations when free from the traps of bureaucracy.
They sum up the entire argument with an early quote: “Human beings are creative. Organizations are (mostly) not.”
I’ve witnessed the innovation-killing, power-hungry mechanics of bureaucracy before. The ugly side of systems gone wild was too much for me and I left to start my own company.
It’s nobody’s fault: growing organizations need systems for administration and order. Most companies don’t notice the moment the systems get taken advantage of. Suddenly the systems and organizational structures are given more attention than selling and producing work for customers.
A layer of bureaucratic fat forms on the cow, slowing everything down and centralizing it in favor of the status quo.
Humanocracy is an extremely well-researched book covering the dangers and alternatives to bureaucratic sickness, suggesting the way forward has been in front of us the entire time. Here are five things I learned from reading it:
The traditional hierarchy is broken
Back in the day, there wasn’t an accepted way to organize your workforce for the scale of industry.
As industry grew in the early 20th century, the rise of factory work and the assembly line led to the standard hierarchy of boss, manager, and worker: a structure still adopted today and one that rings familiar to anyone working in a large company.
But there’s a problem: the workforce changed without addressing our organizational models.
Only 89% of the population was literate in 1890 with an average of just 8 years of education. Today, over 99% of the population is literate and completes more than 12 years of schooling. It’s fair to say the traditional hierarchy made more sense when most workers needed to be told what to do and everything about the work was routine and standard.
Not only is the world and workforce different, the rate of change is the highest it’s ever been (and the slowest it will ever be again).
The last twenty years have given birth to the internet, streaming, AI, and Crocs. Innovation demands creativity and novelty, but traditional hierarchy favors obedience, status quo, routine, and specialization over bottom-up thinking and disruptive ideas.
It’s why startups like Netflix and AirBnb made a killing against the incumbent, monolithic enterprises of their industries: speed, innovation, and a notable lack of policies and red tape.
The advantages of startups have more to do with their culture than their expertise, so why don’t large businesses pivot to match them? Because…
Bureaucracy is a terrifying enemy
Gary Hamel and Michele Zanini argue the traditional way organizations distribute power, control, and permission protects the status quo:
- Compensation depends on your job title, not the value or potential
- Politicking and confidence matter more than competence and merit
- Power and decision-making are centralized at the top of the hierarchy
The biggest hurdle to organizational transformation is that most change requires shifts at the top of the pyramid, but the system is set up to reward holding positions near the top. To topple this in favor of a different way of working is to commit professional harakiri.
Those in power are reluctant to give it up. Unfortunately, they also have the most influence over change, and the most incentive to keep things the way they are.
Another bummer of the traditional hierarchy is the limits imposed on ambition and changemakers near the “bottom” of the pyramid. Job roles are designed to be thoughtless, specialized positions, based on skills and contained by policies and silos, which makes it very hard to suggest ideas to the rest of the business, let alone impress the need for organizational change.
People are treated as resources, robbed of agency, and told to stay in line. Humanocracy outlines 5 weapons bureaucracy uses to stay alive:
- Familiarity: most organizations know how to implement a hierarchy
- Complexity: the web of influence and power structures is hard to navigate
- Status Quo: momentum to repeat the past
- Results: bureaucracy works, even if it’s suboptimal
- Self-replication: agents of the matrix will fight tooth and nail to keep it
The fight isn’t hopeless, but it’s not easy. Knowing your enemy is the first stage of any wartime strategy. The second is to know your own offense, and the great news is…
People are more capable than bureaucrats think
A central theme in Humanocracy is the human capabilities for creativity, decision-making, and innovation.
Bureaucracy favors the system over the people in it, protecting it at all costs. That isn’t to say there aren’t good people in positions of power, but the system isn’t set up to recognize the contributions of its people.
Consider the massive gap in understanding between the C-Suite and frontline staff.
People at the top of the hierarchy are expected to make decisions on behalf of the entire company. The quality of these decisions depends on the understanding of the leadership team. Sure, they can ask questions and walk around the “factory floor” to broaden their process, but they aren’t ever going to be omniscient.
Except they don’t have to be omniscient when the next best thing is available: the wisdom of the crowd.
Poll and average the answers of a random group of 100 people on almost any subject and they are going to be more accurate versus a single opinion on a subject, even by an expert.
Leaders that relinquish control over tactical decisions and strategies can leverage the power and collective wisdom of their workforce while also empowering them. Engaging the workforce in this way also increases the lateral knowledge that plays a role in producing more innovation.
Steve Jobs notes his irrelevant time studying typography was instrumental in how he approached product design. Creating space for your workforce to engage in ideas traditionally gate kept by the top of the food chain taps the tremendous diversity of experiences and expertise of the humans in the business.
Humanocracy is more than just moving decision-making power. Its biggest chance of success exists because…
Principles trump mechanics
If you want to become a world-class golfer, you won’t get far trying to copy the swing of Tiger Woods. You’re better off learning about his mindset, values, and principles because everybody brings a different set of physical advantages and disadvantages to the game.
The same idea applies to organizations.
Change that’s rooted in values and philosophy has a higher chance for success than change based on a set of specific step-by-step, structural moves. Culture has too much say in things to rely on systemic adjustments for improvement.
Cue Peter Drucker’s famous line, “Culture eats strategy for breakfast.”
(I don’t apologize for quoting Drucker two newsletters in a row.)
Any system that involves people relies on the human spirit and collective efforts. Agile isn’t useful because of its rituals and meetings: it works because of the manifesto that holds the whole thing together.
Belief in a set of values and principles contextualizes change. It’s easy to forget why certain practices exist. The activities are a means to an end, not an end in themselves. Scrum practitioners would do well to understand this when they attempt to force change by believing more in the rituals than the beliefs they serve.
Bureaucracy holds the policies, processes, and permissions above everything else. By failing to ask why something is done they strengthen the status quo and drift without an anchor into the darkness of protocol.
The United States was founded on principles. As the authors note:
“…America is a country that was invented by geniuses to be run by idiots… bureaucracies, by contrast, seem to have been designed by idiots to be run by geniuses.”
America believes in freedom, liberty, respect, and free speech. The systems built atop these values exist to promote them (or should). Bureaucrats, on the other hand, create systems and policies to protect their thrones of power and influence instead.
Humanocracy believes in the values of:
- Autonomy and trust
- Community and networks
- Compensation that follows competence
- Rewarding merit and value regardless of title
And these aren’t too idealistic to put into practice when you understand that…
Self-management is the future of work
I was suspicious of the book’s thesis. Are organizations really this trapped? Is bureaucracy really causing so much harm?
I don’t actually have a problem with bureaucracy as a concept: I’m mobilized by the impact it has on ambitious people. Too much red tape shreds creativity. Innovation follows. And then, when a company stops innovating, it is swallowed up by a hungry startup ready to take over the world.
Can startups (or big companies) avoid or escape bureaucracy? Absolutely.
In a series of case studies and explorations, the authors highlight large companies already onboard the humanocracy train. But they don’t call their organizational models “humanocracy” any more than corporations refer to themselves as “bureaucracies.”
They’re both outcomes of the internal company structure.
Nobody working at Morning Star (a tomato processing plant) has a boss. Instead of a boss, everyone has a statement. A Personal Mission to connect their purpose to the roots of the company.
Work and structure are based on values and principles instead of hierarchies. Teams develop organically in response to initiatives. Leaders rise through merit and reputation, not title.
Actually, nobody has a title.
Morning Star believes in the capabilities of humans to flourish and work together productively for the well-being of mankind. They constantly challenge conventions to find areas for improvement.
Instead of a dusty rule book of Dos and Don’ts, people establish contracts and accept responsibilities in dynamic roles that continuously evolve. They hold each other accountable and rely on strong character over vague expectations.
Another business studied by the authors is Haier. You’ve probably stored a sandwich in one of their refrigerators at some point.
Under the sheets, Haier is a collection of thousands of micro-enterprises. Tiny businesses inside the business that operate very independently inside the network of other businesses in Haier.
Decentralization demonstrated at the highest level: Haier is a $52B company. Humanocracy not only works, but it’s also possible to leverage in companies of any size.
Networks of teams offer a suite of advantages that pyramid hierarchies can’t:
- Entrepreneurial freedom to take risks, fail, and explore opportunities
- Accountability to internal units you’re partnered with: nobody is required to work with you
- Speed through lateral networks and simplified approval systems
- Authority existing closer to the experts and tacticians
Humanocracy is a quiet revolution. As more startups usurp industry players and refuse to sell out to the bureaucrats attempting to buy them, a way of operating that rewards the ingenuity and potential of the human spirit will grow more commonplace.
Every day we rely on the status quo is another barrier in the way of faster innovations that impact human productivity, health, and happiness.