Humanocracy: How to Create Organizations as Amazing as the People Inside Them

Gary Hamel Transcript

Gary Hamel is the author of five books including bestsellers What Matters Now and The Future of Management. His upcoming book is called Humanocracy: Creating Organizations as Amazing as the People Inside Them, which comes out in August.

Gary has been on the faculty of the London Business School for more than 30 years and he is the director of the Management Lab. He has been named “The World’s leading expert on business strategy” by Fortune magazine, “the management innovator without peer” by the Financial Times, and he has been ranked by The Wall Street Journal as the world’s most influential business thinker. He is also a fellow of The Strategic Management Society and the World Economic Forum.

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There are some companies that seem to dominate at strategy and innovation–like Google, Airbnb, and YouTube. These companies found a way to create rule breaking strategies that have pushed them into the forefront in their industries. But why is it that some companies can figure out how to do that, while others (the majority) have such a difficult time innovating? That is what Gary has been trying to figure out over his career and what he found was that most organizations are alike–they are all using the same bureaucratic model that stifles creativity, innovation, and adaptability. As organizations we need to move away from this old way of leading, but how?

Why we haven’t moved away from bureaucracy

One of the major reasons why organizations have not been able to move away from this outdated model is because leaders do not trust their people. But because of that lack of trust, it ends up being a self fulfilling prophecy. If leaders feel that they have to treat their people like children because they can’t be trusted, the people will feel that and they will stop making decisions on their own. If leaders try to control every aspect of the work, then what motivation does the employee have to do something new and innovative?

Gary says, “I make the point in the book that there’s a great irony in the fact that most of us, you know, at some point in our life, we’re going to buy a car or two or three as we go through life, many of us will ultimately buy a dwelling of some sort. And yet those same human beings go to work and can’t requisition a $300 office chair without somebody’s permission. And we know from a kind of academic research that when you shrink somebody’s autonomy, you also shrink their creativity, you shrink their courage and people just kind of give up. And so, where they may be very engaged in other parts of their life, they’re not very engaged at work.”

The reason why Gary wrote his book was because he became frustrated looking around at a majority of companies that aren’t focusing on innovation. They are only changing when they face a crisis and have to change. And while 87% of CEOs think innovation is the top three priority, 94% will tell you their organizations are not very good at it. So Gary wanted to help organizations to see that you cannot become more capable of innovation if you don’t change the structures and principles that have kept organizations in a stand still up until now. He also saw that organizations are not utilizing their people to the fullest. Not only that, they are actually holding the people back.

We have been using the wrong definition of leadership

There are many definitions of leadership, if you ask a room full of 20 people to define the word you will probably get 20 different answers. But Gary says we have been defining it all wrong. Over the last few decades the words leader and manager have been used interchangeably. And usually when we think of leaders we think of the top 20 people inside a company who make all the decisions.

How does Gary think we should define leadership? He says “Ask yourself, if you had no budget at work, if you had no title after your name, what can you get done? And so people who need the stick of bureaucratic authority to get something done, I don’t think most of those people are leaders, maybe very good administrators, they’re not leaders. Leaders are people who know how to mobilize the people around them, know how to get folks to move forward together, and can be catalysts in making that happen. But they’re not necessarily defined by a particular place in the organization. So probably, since Drucker was writing, we really know how to train managers, I don’t think then or now we really know how to train leaders. But we kind of gave everybody a battlefield promotion when we started referring to managers and leaders. My argument is there are not a lot of managers who are leaders, anybody can be a leader. It has nothing to do with credentials. It has nothing to do with hierarchy, whether you have the courage, the compassion, the sense of community to step up and make something happen, even when you lack that positional authority.”

So should we get rid of the concept of management altogether? Gary says, we may need to change our language when it comes to management, as it does not refer to a layer of the company or a certain elite group of people. Management is really anything that helps us combine our efforts, do something consistently with purpose effectively multiplying our individual work. Gary believes most people and most teams today are capable of managing themselves. So we need systems and processes of managing together, but we don’t need multiple ranks of managers who see their primary role as control and oversight.

How Adidas got rid of bureaucracy

Gary worked with Adidas and they brought him in to help them get rid of bureaucracy and to build a more innovative culture. They were lagging behind Nike and Under Armour in North America and they wanted to fix that. Gary says that in this instance he was able to train a couple thousand employees on how to think like business innovators. These employees were frontline, retail people who were now trained in innovating and then the company opened up the conversation to get ideas from these employees. Thousands of ideas were created in these open meetings and it got the employees excited and inspired for the first time in their careers. This was so successful they had a second round, but this time they focused on their manager model. They opened up the conversation about the business and the manager model to thousands of employees, which took a lot of courage on the part of the CEO. But that courage paid off big time.

A lot of times it is the CEO standing in front of the organization giving their perspective on problems and issues. They are the ones giving the roadmap for how to move forward. But what if any individual inside the company could give an opinion, could have their voice heard, could help solve problems.

Gary says, “ If you look back at all the people who changed our world, that’s what they do, they’re not waiting to be asked. They do not assume they’re helpless because they don’t have a title after their name. They see a problem. They build a community. They go, they build. They try something and they go from there. So these are the hackers. These are the activists who’ve changed things. And it’s kind of amazing to me that, you know, I hear all these CEOs that say, “Gary, our organization needs to change faster”. So I ask them a question, “have you trained every employee to think like an activist? Do they know how to build a prototype? They know how to build a community around them to go try something.” “No,we’ve never done that.” So how can you complain that your organization can’t change fast enough? Well, you haven’t taught every single person how to be an agent of change in your organization.”

The 7 Principles of Humanocracy

In his book, Gary shares seven principles of humanocracy that define the DNA of a Human-Centric organization. They are:

• The Power of Ownership–Companies have a wealth of talented employees, but they aren’t given ownership of their work. Which means their ideas never see the light of day. Employees want to be passionate, engaged, and inspired. So give them the power to do so.
• The Power of Markets–While markets can’t function in the absence of appropriate regulatory structures, they are unmatched in their capacity to harness human wisdom and initiative.
• The Power of Meritocracy–If you want a human-centric organization you can’t have rigid hierarchies that make executives king-like and employees like underlings. Hierarchies should be natural and dynamic, based on an individual’s performance, not title or tenure.
• The Power of Community–As human beings we are programmed for community. We need to feel like we belong and that we are part of something bigger than ourselves. Leaders need to strengthen the bonds of community within the organization.
• The Power of Openness–It is important for everyone in the organization to feel that they can voice their opinions. And people should be encouraged to voice different opinions and not feel they have to agree with the boss. Diversity of thought, background, culture, etc…is extremely important to the success of an organization.
• The Power of Experimentation–The pace at which any organization evolves is determined in large part by how many experiments it runs. You shouldn’t let your organization sit still and wait for a crisis to change. In good times and in bad, you must go try something new.
• The Power of Paradox–Conundrums are what make life interesting. You have to help your organization become a master of paradox. When you can master it, work will become more interesting and the organization will be more capable

If we want to see change inside our organizations, we can’t keep defaulting to the old way of work. As Gary shares in his book, “We need to embed new human-centric principles in every structure, system, process, and practice. If we’re serious about creating organizations that are fit for human beings and fit for the future, nothing less will do”

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