For Innovation to Flourish in Your Organization, 'Bureaucracy Must Die'

For Innovation to Flourish in Your Organization, 'Bureaucracy Must Die'

In Part 1 of IndustryWeek's conversation with Gary Hamel, the influential author and business strategist explains why the modern management paradigm could be stifling innovation in your organization.

Noted business strategist Gary Hamel is troubled by what he sees as "a persistent rhetoric gap around innovation."

Sure, innovation appears on just about every CEO's list of top priorities. And it's on almost every corporation's list of core values.

But if you ask front-line employees why innovation is so important to the success of their organizations -- and what tools they've been given to innovate -- you're likely to get blank stares.

"Certainly the thing that I find frustrating is that despite all of the rhetoric around innovation for a decade or more, I would argue that most companies have not yet made innovation everybody's job everyday," says Hamel, whose latest book is titled "What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition and Unstoppable Innovation."

There are several reasons for that disconnect, Hamel contends.

Gary Hamel: To be innovative, companies need to reinvent their management systems.

For one thing, the fundamental principles of modern management are rooted in bureaucracy and top-down control -- which are "toxic to innovation," Hamel says.

"If you go back and look at the late 19th century and early 20th century, when pioneers like Frederick Taylor and Henry Ford and others were inventing modern management, their overriding goal was to turn human beings into semi-programmable robots," asserts Hamel.

"So you had the steel mills and the auto factories and the railway yards and so on, and what you essentially wanted was individuals who were as reliable as the machines they were serving."

A century later, that same management ideology "remains the philosophical cornerstone of virtually every large-scale human organization," he writes in "What Matters Now."

Unfortunately, Hamel writes, precision, stability, discipline, reliability and conformance -- the goals of the industrial-age management methodology -- "are merely table stakes" in today's global economy.

"Today, our institutions are up against new challenges: a rapidly accelerating pace of change, hyper-competition, the commoditization of knowledge, and ever-escalating demands for social accountability," Hamel writes.

" ... [W]e need organizations that are passion-filled, creative and malleable. Problem is, these organizational attributes are inversely correlated with bureaucratic control."

Lightning in a Bottle

The other big reason why innovation isn't embedded in the DNA of most companies, Hamel argues, is that many firms view innovation as the equivalent of trying to catch lightning in a bottle.

"There's still a belief in a lot of organizations that innovation is kind of this unpredictable spark of genius that can't be engineered, that can hardly be encouraged, and it either happens or it doesn't happen," Hamel tells IndustryWeek. "Moreover, there's often a kind of creative apartheid where the assumption is that innovation fairly random, and that while there are a few people who are really innovative, most people aren't.

"And I think it's completely wrong-headed."

Human beings, Hamel counters, "were born to create," and have proven time and time again that they are more innovative, adaptable and inspiring than the organizations for whom they work.

"It's important to remember that the idea of an employee is maybe 125 years old," Hamel says. "Human beings were not born to be employees. We're not somehow genetically inclined to be employees."

'A DNA-Level Problem'

Becoming an innovative company starts with the recognition that it's "essentially a DNA-level problem," Hamel asserts.

"What we've done is we keep layering on new practices onto our organizations -- the CEO slush fund, the venture fund, the skunk works, the innovation awards -- without changing the DNA," Hamel says. "So you have to take a step back and say, 'OK, if we want truly innovative companies, they need to be built around a new set of principles.'"

In this hyper-competitive global economy, any company that is going to thrive -- let alone survive -- over the next decade or two "is going to have to reinvent its management systems at their core," Hamel adds.

"To put it simply, bureaucracy must die," he says.

"You cannot have an organization that's innovative and adaptable, and structurally empower a few people and disempower everybody else. You can't compete that way anymore. You're just squandering too much human imagination."

Reinventing your management system from the ground up might seem like a daunting challenge. But Hamel points out that companies have something powerful working in their favor: human nature.

"The good news today is we are actually now trying to make our organizations more human than less human," Hamel says, "because the qualities that our organizations lack today are the essential qualities that make us human."

"So in that sense, I think we have an easier challenge ahead of us. Yes, we're trying to undo 125 years of industrial-age thinking. But we're actually not trying to change the fundamental nature of human beings."

This is the first article in a two-part series. In Part 2, Hamel explains that reinventing your management system doesn't have to be a "grand top-down redesign." Instead, he details a simple "experiment" to get your firm started on a path toward innovation.

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