In our previous post we argued that an excess of bureaucracy costs the U.S. economy more than $3 trillion in lost economic output, but defeating bureaucracy won’t be easy. Bureaucracy is familiar, entrenched and well-defended. The challenge for would-be bureaucracy fighters isn’t unlike that faced by campaigners who, in years past, set out to change deeply rooted social institutions such autocracy, racism and patriarchy.
Long-standing realities change only when the beliefs that underlie them change. As Thomas Paine put in Common Sense, a tract that proved pivotal to the American and French revolutions, “A long habit of not thinking a thing wrong gives it a superficial appearance of being right… .” Thus the first battle to be won is against indifference. In this regard, no argument has proved more irresistible than the one which asserts that every human being should be free to exercise and profit from their natural gifts, and that human-crafted impediments to that pursuit are unjust.
When it comes to developing your capacity to adapt and invent in a world ruled by expanding complexity and exponential change, experimentation is the ultimate power tool.
Why? Game-changing, future-shaping innovation doesn’t burst forth fully-formed like Athena from the head of Zeus. Nor is it the result of meticulous planning. Instead, it requires the generation and testing of hundreds of strategic options. It proceeds by trial and error. In other words, it’s a product of experimentation.
Experimentation is simply a process for cycling through many ideas quickly, testing assumptions, getting feedback, discarding what isn’t working, and building on what is. In other words, it’s a strategy for maximizing your ratio of insights over time and money spent.
As appealing as that sounds, it is not natural behavior for most organizations. When it comes to making decisions about whether and how to venture into new territory, running an experiment is not the first instinct of most leaders. Instead, the tendency is to turn to data and analysis, on the one hand, or personal experience and judgement on the other.
Problem is: even the richest data set can only illuminate the past and personal experience...
What’s the least efficient activity in your organization? What sort of work delivers the least value per dollar? We think it’s management and administration. The fault isn’t with any particular leader, but with the top-heavy, bureaucracy-infused management structures that predominate in most organizations. We believe that an excess of bureaucracy costs the U.S. economy more than $3 trillion in lost economic output, or about 17% of GDP. Here’s the data.
According to the U.S. Bureau of Labor Statistics, in 2014 there were 23.8 million managers, supervisors and administrators in the American workforce. (This figure does not include individuals in IT-related functions). That works out to one bureaucrat for every 4.7 employees. Overall, bureaucrats comprised 17.6% of the U.S. workforce and received nearly 30% of total compensation. (See Figure 1.)
Figure 1. Employment and compensation share of U.S. managers, supervisors and administrators.
The question is, how many of these 23.8 million overseers do we actually need? We can get an answer by looking at the management practices of a small but growing number of post-bureaucratic organizations. Their experience suggests it’s possible to run large, complex businesses with less than half the bureaucratic load found in...
Writing for Harvard Business Review in 1988, the renowned Peter Drucker predicted that in twenty years the average organization would have slashed the number of management layers by half and shrunk its managerial ranks by two-thirds. Yet despite the recent emergence of the “gig economy” and the “sharing economy,” there’s no evidence that bureaucracy is on the ropes—quite the opposite, in fact.
In 1993, 47% of U.S. private sector employees worked in organizations with more than 500 individuals on the payroll. Twenty years later, that number had grown to 51.6%. Large organizations, those with more than 5,000 employees, increased their employment share the most—from 29.4% to 33.4%.
Meanwhile, the percentage of Americans who are self-employed dropped to an all-time low. Today, of the roughly 120 million Americans working in the private sector, 62 million work in organizations that are big enough to have the trappings of bureaucracy. To this number we must add the 22 million souls who work in public sector organizations, where bureaucracy seems as inescapable and unremarkable as coffee-stained carpeting.
Within these organizations, the “bureaucratic class” has been growing, not shrinking. Between 1983 and 2014, the number of managers, supervisors and support staff employed...
Innovation starts with the heart—with a passion for improving the lives of those around you. When the iPad was introduced, Jony Ive, Apple’s head of design, talked about his passion for creating things that seemed “magical”—that were so far beyond what any customer might have imagined, they seemed like wizardry. You don’t achieve this by paying attention to customers, by putting them first, or even delighting them. You do it by setting out to amaze them—and it all begins with an attitude.
You have to be achingly eager to do whatever can be done, within the limits of physics and economics, to raise the quantum of human happiness in the world.
“Yes,” you say, “but in business, we have to be pragmatic. We have to focus on things that can actually be accomplished.” Fair enough, but often, we are blindly pragmatic. We are so conservative, so utilitarian, so process-focused, so data-driven, so obsessed with meager efficiencies, that we can scarcely dream of doing something “insanely great”—to borrow one of Steve Jobs’ favorite phrases.
Our #MIXMashup Twitter feed crackled with energy throughout the event. In review, it offers up a vibrant collective picture of the highlights, big ideas, special moments, and little details. To make it easy for you to relive the event, we’ve culled through thousands of clever tweets to come up with an abridged Tweet Report.
These represent the ideas you swarmed around and that resonated throughout the day. Along with the big insights, we were gratified to see so many tweets about the energizing connections, enlivening setting, nourishing food, and refreshing design.
Large organizations of all types suffer from an assortment of congenital disabilities that no amount of incremental therapy can cure. First, they are inertial. They are frequently caught out by the future and seldom change in the absence of a crisis. Deep change, when it happens, is belated and convulsive, and typically requires an overhaul of the leadership team. Absent the bloodshed, the dynamics of change in the world’s largest companies aren’t much different from what one sees in a poorly-governed, authoritarian regime—and for the same reason: there are few, if any, mechanisms that facilitate proactive bottom-up renewal.
Second, large organizations are incremental . Despite their resource advantages, incumbents are seldom the authors of game-changing innovation. It’s not that veteran CEOs discount the value of innovation; rather, they’ve inherited organizational structures and processes that are inherently toxic to break-out thinking and relentless experimentation. Strangely, most CEOs seem resigned to this fact, since few, if any, have tackled the challenge of innovation with the sort of zeal and persistence they’ve devoted to the pursuit operational efficiency. Their preferred strategy seems to be to acquire young companies that haven’t yet lost their own innovation mojo (but upon acquisition most likely will)....
The full agenda for the 2014 MIX Mashup (November 18-20, 2014) is posted. It’s going to be two days of agenda-setting thinking and in-the-trenches storytelling around such questions as: How do we change the way we change ? What will it take to (finally) kill bureaucracy ? How can you embed innovation ? How do you hack management?
If you’re not already excited to spend two days with the most pioneering leaders, courageous hackers, and agenda-setting thinkers reinventing organizations, here are TEN reasons not to miss this year’s event :
We’re delighted to announce several new speakers for this year’s MIX Mashup (New York City | November 18-20, 2014) .
First up: Denise Young Smith, Apple's head of human resources and a new force for post-bureaucratic practices inside the company, will talk about what it takes to cultivate a switched-on community of contributors at every level—and what a true culture of inclusion looks like.
We are getting revved up for MIX Mashup 2014—and we hope you are too. We’re working hard to develop a program and create an experience that’s even more powerful and rewarding than our inaugural event.
We’ll be featuring the most provocative and pioneering thinkers and leaders reinventing organizations and changing the way we change; we'll go deep into the insights and lessons learned by in-the-trenches management innovators, and we'll not only inspire, but equip you to launch your own experiments and make a real impact in your own organizations and the wider world.
Today, we’re delighted to share some of the speakers we have lined up for you, as well as some of the core themes we’ll be exploring together.
There is a lingering notion in the world of business and beyond that organizations are things with four walls, that employees are people who report to work inside them every day for years on end, that work is a matter of executing on defined “KPIs,” and that success is a product of climbing ladders and exerting an ever-greater span of control.
Heiko Fischer , founder and Chief Resourceful Human at Resourceful Humans Consulting
Tuesday May 20, 2014 at 8am PT/11am ET/5pm CET
What if our organizations were as human—as resilient, inventive, and inspiring—as the human beings who work inside them?
Heiko Fischer has been working at the frontlines of that question for years—first inside a range of organizations and now as the “Chief Resourceful Human” leading a movement to create “100% Democratic Entrepreneurship, 0% Bureaucracy” in every kind of organization.
Join us for a lively session on:
Hacking HR: learn how Heiko and his team designed themselves out of a job and distributed the work of HR into the line at Europe’s largest videogame company Minimum dose management: how do you spread autonomy and accountability across an organization and create a truly participatory, collaborative, and high-functioning operation? The future of leadership: what is the work of leadership when power is distributed and autonomy and accountability are the ruling principles How to hack: how do you get started where you are? How do you stage small-scale...