I recently listened to the Eat.Sleep.Work. Repeat podcast where Bruce Daisley interviewed Gary Hamel about his new book Humanocarcy. I posted about my excitement to recieve the pre-order of it here, and am really enjoying working my way through it.
If you are a leader, manager or worker in ANY job, this book (or notes below) is a must-read.
Whilst I rarely (well, never) take notes of the podcasts I listen to, after the first 5min it was clear I needed to capture the content. There was just so much unbelievable value Gary Hamel was providing.
And so the below represents my rough notes of that interview (which includes the below quote – so simple, yet so powerful):
Cannot assume that low-skill jobs means low-skill capabilities! – Gary Hamel
What is the impact of COVID on the world of work?
- Remote work and flexibility is possible, that will continue
- Power moves to the periphery. Front-line people have had to use their ingenuity along with more freedom and autonomy so these people will not want to go back to traditional roles
- Institutional and political resilience has come up short. Organisations are poorly suited to fast-moving, demanding problems and challenges beyond COVID such as racial injustice, income inequality, environmental change, automation impacts will need everyone to turn on everyone’s creativity
What is going on with the state of trust?
- Yes very little trust, just need to look at amount of oversight, rules, policies, rule-choked processes and employees get this and know they aren’t trusted and even that their managers don’t think they are very capable
- UK amount of discretion people have in jobs has been going down in last 20years
- Only 1 out of 5 believe their opinions matter at work
- Only 1 in 10 have the freedom to experiment with new solutions and methods
- Most people can offered to buy a car or house but same people in organisations can’t order a better £150 work chair without going through crazy internal hoops and hurdles
- The way organisations are organised it is a caste system of managers and employees of thinkers/doers which causes disengagement of people from their work
- Gallup surveys show only 20% of those highly engaged in their work – this is ALARMING so something needs to change
What is the impact of bureaucracy?
- A 1/3 of wage bill goes to managers, supervisors and administrators
- A 1/3 of all hours/activities in organisations goes to bureaucratic tasks
- In US 1983-2019 the bureaucratic class has grown by 200% (doubled) in that time-frame VS growth of 50% in all other job categories
- It’s not about more regulation but the proliferation of new functions
- At same time productivity per OECD has gone down since them
- We can’t afford it anymore!
- Many examples of post-bureaucratic vanguard of firms operating with 1/2 of bureaucratic load of traditional org
- Dutch firm Birdszaard home-health employers 16,000 nurses and home-carers with 2 line managers with a span of control of 1-8000!
- They do this with dividing into small teams, give them the data they need to be self-managing, connect with a social platform to collaborate to solve problems and collaborate and share best practices, hold deeply accountable with P&Ls
- Gives all the advantages of bureaucracy with control, consistency and coordination with no drag or overhead
- Can cut the bureaucratic drag by 50% would produce 10T gain in economic output across OECD (in UK £900B) and would double productivity growth rate over next 10 years
- No other proposals on the table eg improving education, more incentives for capital investment
- Economic reason, competitive reasons, social reasons as ethically the reason to do this
How do we get there?
- Foundation for building a post-bureaucratic organisation is everyone thinking and acting like an entrepreneur, owner
- Pre-Industrial era most owners/employees 4-5 people, all customer-focused and knew each other
- As organisations scaled in line with Industrial revolution that was lost and no longer have the information to be self-organisation
- Firms that do it e.g. Haier, Nucor ensure the front-line people have the information, skills, incentives, and freedom to think/act like owners
- Still have to have coordination and tie the org together, instead of top-down it can be via collaboration
- Some organisations have ESSP but that’s not what an owner – autonomy, right to make key decisions, right of participation in the financial upside of the business
Have we over-valued consistency and scale?
- Bureaucracy invented to enable control and efficiency at scale with a top-down model
- Replicability required to do things properly at scale
- But that makes it very hard to change
- Control is important in most industries!
- But what else is important and what other ways to achieve it?
- Orgs at heart are built to maximise control
- Today we need orgs to maximise contribution with free to experiment, free to respond quickly to customer needs, free to solve local problems, not waiting for permission
- In bureaucratic model everything comes top-down which makes it hard to change fast
- By the time an issue is big enough to attract CEO’s attention, often too late by then
- E.g. Intel CXOs only would go after $1B Opportunities – but how do you know what is this at this scale? Only way is if someone else is already doing it i.e. not original, innovative. Nothing starts out as a $1B opportunity VS Amazon which experiments with all sorts of opportunities at different levels VS waiting for someone at the top to say ‘this is a strategic priority’ which will rarely happen
Experimentation is part of the new Org DNA
- Pace which anything evolves is limited by the amount of experimentation that takes place e.g. humans today
- Worrying that vast majority of employees say it’s virtually impossible for front-line employee to get a small amount of time and budget to try something new
- More than ⅔ of employees say new ideas are greeted by hostility or skepticism
- E.g. central collaboration platform at a global tech retailer to share ideas and issues and real-time and treat the stores/orgs as a laboratory
- Bezos says his goal is to build the world’s biggest lab, best place to create break-out success or fail with ideas vs if know it will succeed as have data it will likely be incremental innovation
- Intel hires goes through ‘Design To Delight’ programme teaching ‘design thinking, rapid prototyping, agile, experimentation’
Is the moment now a great opportunity to experiment?
- We’ve had the tools/tech to enable remote working for over a decade
- Whilst tech becomes more available, also enables orgs to exert more control! Due to analytics.
- But data is not context and is historical
- We can assign every worker a detailed rulebook on what they need to do and somehow it aggregates into extraordinary performance. But does not reflect reality
- Battle of forces pushing decentralisation and autonomy and remotely, enabling lateral communications VS vertical challenging managers top-down
- Same complexity to drive decentralisation is also pushing to exert control especially with the old guard
- One of the ways to ‘soothe’ a leader is to go to bed at night is that there is a policy to guide everything! I.e. squeeze the complexity of the chaos and world by creating appearance of uniformity and control but reality is far from it
The paradox of forces at play:
- Consistency does matter – when I got to Apple store we expect certain things
- But we do need this and creativity on the front-line with ability to tweak and change to make the real-time trade-offs
- E.g. Nucor – unleashed the everyday genius of workers
- Tension between adaptability vs consistency
- Even if irreconcilable the eco value from scale is not what it used to be VS demand now for customised, personal experiences
- It will be a long slog
- Over 70% say the prime way to get ahead is to be a good bureaucrat! i.e. horde resources, politics, climb ladder, attain positional power
- But requires political challenge to redistribute power which no-one will like to do that
- System is working for anyone – workers, managers, leaders
- It all grows to accumulate power! We have to change that game
- Power needs to be fluid in orgs
- If adding value people or a mentor or inspiring people will follow
What;’s happening in politics?
- There’s a belief that the system is not working for them – income inequality, low wage jobs, equity
- Workers treated like commodities, resources VS opportunity to use all competencies, skills, grow etc
- Cannot assume that low-skill jobs means low-skill capabilities!
- Stop talking about low-skilled jobs!
- US Bureau of Stats – 70% low-skilled jobs are designed so people cannot use their originality
- Economically indefensible that we haven’t done more to given front-line people the opportunity to grow and use ingenuity
Can all orgs make this change away from bureaucracy?
- If you are a smaller business, what are the principles to hold scared as you grow the org
- Founding principle – humanity vs bureaucracy
- From the start highly alert to the signs of bureaucracy to stay vibrant
US Airlines example
- Needed to kick-off some people to allow crew on
- Staff did not have authority to offer correct incentives
- Passenger carried off and became worst PR disasters ever
- The CEO said workers did not have the procedures, guidelines, rules to use their own judgement! But it was the existence of too many rules that did not allow the local staff to use their own judgement
- Manual at UA is 60 pages VS manual at Southwest Air 5 pages
Haier Case Study
- Hair Chinese domestic appliances
- They wanted to build a network company
- They divided 80k organisation into 4k micro-enterprises
- All businesses had rights and flexibility akin to start-ups with significant incentives
- Tied together with internal contracts for services e.g. HR or can go outside
- Everyone’s performance – including internal contracts – is tied together on the success of the product in the market so everyone is aligned
- Make it easy to start new businesses, if new idea post it online internally and others can join, Haeir can give you access to their VC network and they will co-invest and you can leverage the Haier network
- Haier to make the journey redeployed 12k middle-managers to the micro-enterprises (or left), today three is 1 level between front-line and CEO, most firms have 8 levels