Reimagining Leadership (or How to Inspire Greatness)

Hamel’s research and consulting convinces him that a hierarchical leadership model, where authority correlates with rank, is no longer fit for purpose. Says Hamel, “in a world of head-snap- ping change, an organization with seven or eight management layers will be at a profound disadvantage.” Part of the problem is speed: by the time a problem or opportunity is big enough to capture the scarce attention of those at the top, an organization is already on the back foot. That’s why most change programs are catch-up programs. Put bluntly, centralized power is incompatible with proactive transformation.

Hamel notes that when asked to sketch a picture of their organization, most employees will draw the familiar pyramid—with the CEO at the top and front line employees at the boVom. While this model is simple and scalable, it’s not a community, a network, or a social graph. Instead, it’s the exoskeleton of bureaucracy. Pyramidal organizations demand too much of those at the top, and too little of everyone else
—and in so doing squander vast quantities of initiative and ingenuity.

A topdown power structure stifles dissent, over-weights experience, rewards politicking, and impedes innovation.

Hamel believes there’s a better way. As evidence, he points to Nucor, America’s largest and most profitable steel company. Nucor operates with two-thirds fewer managers per capita than its largest peers. It’s head office has less than 100 staffers, and its front-line teams are ridiculously 3 “I think it’s some kind of tomb.” empowered. (Any employee can spend up to $50,000 without a manager’s sign-off.) Having out-performed its peers for decades, Nucor offers convincing proof that when you equip people to lead themselves, overhead costs go down and productivity soars.

The job of reimagining leadership is particularly vital for organizations that hope to attract and retain Gen Z employees. Having grown up with social media, young employees are wary of positional power. They believe leadership is defined by followership. Unfortunately, there’s a tendency in many organizations to apply the word “leader” to anyone with subordinates. Hamel believes this is a mistake. In his view, the difference between a leader and a bureaucrat is the ability to inspire others to acts of greatness. This takes courage—a willingness to take on challenges above one’s pay grade; a contrarian mindset—an ability to uncover unorthodox solutions to knotty problems; compassion—a selfless devotion to a mission that inspires others; and community—an understanding of how to bring diverse constituents together in common cause.

Beyond helping his clients develop post-bureaucratic leadership skills, Hamel has vast experience in working with companies who are eager to unleash the ingenuity and initiative of every team member by inverting the pyramid. Critical tasks include: making leaders accountable to the led; equipping font line teams with the skills and accountability to be self-managing; embedding staff functions in operating units; building dense collaborative networks; and tying compensation to peer-attested competence and impact.

Hamel believes that to succeed in the age of upheaval, organizations must become less verIcal and more horizontal. Every organization must become a “community of communities.” As an example, he points to the consortia of more than 3,000 scientists and engineers that built the Atlas detector at CERN’s Large Hadron Collider. Through the clever use of small teams and horizontal connections, and with no formal hierarchy, the Atlas consortium built the world’s most complex piece of machinery, on time and on budget.

This shift from vertical to lateral can be discomforting for managers who are used to relying on formal authority to get things done, but it’s telling that according to Gallup, middle managers are even less engaged than those they oversee. This is hardly surprising. It’s not much fun riding herd on adults who don’t think they need a surrogate parent at work. Hamel’s experience has taught him that when managers shift from controlling to coaching, everyone’s job gets better. Like Mary Parker Follett, the early 20th century management guru, Hamel believes the most important job of every leader is to create more leaders.

Building an Evolutionary Advantage

The winds of creative destruction are howling. Change is exponential and unrelenting. In this environment, the most important question for any organization is, “Are we changing as fast as the world around us?” Sadly, for many organizations the answer is no. Today, there are many who expect the old guard to lose. After all, in a hyper-kinetic world, resources count for less than resource-fulness, and companies that fall behind tend to stay behind.

All too often, deep change is the product of crisis—it’s belated, convulsive and typically insufficient. The challenge, then, is to build an organization that can change as fast as change itself, that possesses an “evolutionary advantage.” Such an organization would . . .

•Rush out to meet the future.
•Change before it had to.
•Consistently redefine customer expectations.
•Capture more than its share of new opportunities.
•Avoid unexpected earnings shocks.
•Consistently out-perform competitors.

Building an evolutionary advantage requires more than new practices—it also requires new principles. Most organizations were built on the principles of standardization, formalization, specialization, alignment and discipline. These are fine principles, but now we must embrace new principles: experimentation, openness, meritocracy, freedom and audacity. These cannot be mere buzzwords, but must be embedded deeply in structures, systems and behaviors.

Building an evolutionary advantage may seem like a Herculean task. It’s not. In his pioneering work, Gary Hamel has demonstrated that with courage and tenacity, any company can learn to outrun change.

Busting Bureaucracy For Good

If you want to win in a world of nimble, hungry upstarts, bureaucracy has to die. Young companies are bold, flexible and quick. Big companies, not so much. Research suggests that an excess of bureaucracy—too many layers and too many rules—costs OECD economies $9 trillion each year in lost economic output. Nevertheless, most struggle to imagine an alternative. Bureaucracy seems essential for achieving the control, coordination and consistency that allow large organizations to function. For decades that was true. Now it is not.

A growing number of vanguard companies are proving it is possible to buy the benefits of bureaucracy duty-free. On average, these post-bureaucratic trailblazers enjoy a 30-50% productivity advantage over their peers, and are far more fleet-footed. Svenska Handelsbanken, the world’s most consistently profitable bank, has three management layers. Nucor, the highly innovative steel-maker has no central R&D and a head office of fewer than 100 individuals. Haier, a global leader in the appliance industry, has turned itself into a “platform” of 4,000 highly autonomous “micro-enterprises.” Turns out you can be big and fast, efficient and supple, disciplined and courageous.

For more than a decade, Gary Hamel has been helping progressive-minded organizations “uninstall” bureaucracy. Doing so requires three things…

•Motivation: Organizations get serious about busting bureaucracy when they start to measure its hidden costs. Every organization needs to calculate its BMI—“Bureaucracy Mass Index.”
•Models: It’s hard to begin a journey when you can’t imagine the destination. Luckily, the post-bureaucratic pioneers help point us in the right direction.
•Migration: You don’t build a post-bureaucratic organization with a grand, top-down change program. Instead, you must build migration paths by launching many small, yet radical, experiments designed to test and refine new, “post-bureaucratic” practices. The payoff: an organization that is flat, open and free.

Innovation From Everyone, Every Day

Every human being has within them a creative spark, yet our organizations harness only a fraction of that latent imagination. While 79% of leaders rank innovation as a top priority, 94% say their organizations aren’t as innovative as they need to be. What gives? If innovation is so important, why do most companies struggle with it? Because few of them have taken a systematic approach to making innovation instinctive for every individual and intrinsic to the organization itself. For innovation to become a genuine core competence, organizations must …

Build creative capital. While most people have creative instincts, it takes practice to learn to think like a gamechanger. You wouldn’t expect someone to hit a golf ball 200 yards down the fairway without a bit of training. So it is with innovation. The quickest way to increase the innovation output of any company is to teach everyone how to upend conventional thinking, intercept emerging trends and invent novel solutions to deep customer needs.

Re-tool the management model. Over the past decade, many companies re-engineered their operating model for speed and efficiency. Few, though, have retooled their management model for innovation. This is now an imperative. Every management system—planning, resource allocation, performance management, compensation and training—must facilitate rather than frustrate innovation. Companies that fail to take a systematic approach to this challenge will soon find themselves preempted by their competitors and abandoned by their customers.

Over the past three decades, Gary Hamel has taught hundreds of thousands of individuals how to imagine and build the future. He has also helped many of the world’s most admired companies design and build innovation-friendly management practices. The result: boldly creative teams and billions of dollars added to the top line.