Cats, Caterpillars and Business
Seasonal Wishes

Busting Bureaucracy by Eliminating Hierarchy

Breakthrough 000004140750XSmallRather ironically, hours after posting my blog last week (Cats, Caterpillars and Business), I received reinforcing information that substantiated all my points. And from no less an authority than Professor Gary Hamel. He enumerates the staggering scale of efficiencies that I alluded to but couldn't quantify for myself.

Believe me, when I talk about staggering numbers, I am not exaggerating! Talking about the US alone, he quantifies “the prize” for “busting bureaucracy” as $3 trillion p.a.! Perhaps, writing it as $3,000,000,000,000 gives you a clearer idea of just how much that is. Especially when you factor in this is an annual figure! Even if that number is 50% over-optimistic it is still significant. And what if it is conservative? No matter how successful you are, the possibilities this presents have to make you curious. 

Unfortunately Hamel’s and Michele Zanini’s article, “The $3 Trillion Prize for Busting Bureaucracy (and how to claim it)” requires permission to share, but it makes a number of noteworthy points.
  • Productivity growth is the engine of economic prosperity.
  • Bureaucracy is a product of its time and that time has passed; yet it still cements the foundations of management.
  • Productivity growth has declined by almost a third, from an average 2.36% in the 8 decades before 1972 to 1.59% since.
  • This decline is despite the advances in technology and does not auger well for the prospects of robotics and AI.
  • Bureaucracy is kryptonite to productivity which is why busting bureaucracy “offers the most promising and least speculative route to boosting productivity.”

Their rationale for this last claim identifies, expands and reinforces the points I made last week. Specifically, bureaucracy and increasing organisation layers result in:

  • Less customer facing employees with the top becoming more isolated and the organization less responsive to external stimuli. In other words the cat hair analogy I used last week no longer works.
  • A growing sense of disempowerment which makes employee engagement an issue.
  • The number of “sign-offs” also increases, adding time and friction to decision making.
  • Internal boundaries multiply and become more rigid, making resource allocation more difficult.
  • More matrix structures adding overhead and blurring accountability.
  • Centralised internal functions which turn operating units into customers only.
  • Increasing difficulty in assessing individual contribution, and more time spent wrangling over performance criteria and evaluation.
  • Executive pressure for more unity and control further reducing autonomy.

So I can happily claim the entire article reinforces and expands the point I was making. Particularly gratifying is that the authors also identify the “span of control” (i.e. the number of employees per line manager or supervisor) as 7:1, which is the ratio I used. They explain this and how they arrive at the $3 trillion p.a. figure. And they not only provide examples of organisations that have reduced hierarchy and become more efficient and productive, but also spell out the general methods these organisations used.

Yet, I am not entirely happy. That may be because the language remains much the same. Possibly unavoidable, this makes it difficult to distil what is new from the old hierarchical management paradigms. “Aversion to formal titles and job descriptions” and “multiple channels for lateral communication and ad hoc teams to address co-ordination issues” for example. These are valid and useful tips, but they fail to provide any real framework for others who want to “bust bureaucracy.”

I am, frankly, not entirely sure that I can do better, but for me the idea of creating an organic business at least provides a more solid foundation. Especially when you understand the lynch-pin: ‘Every Individual Matters’.

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If you like what you have read contact me today to discuss how my ‘Every Individual Matters’ Model could provide the catalyst to help you create a culture in which everyone cares and the business becomes our business, embedding improvement that transforms – and sustains – organic business performance.

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Bay Jordan

Bay is the founder and director of Zealise, and the creator of the ‘Every Individual Matters’ organisational culture model that helps transform organisational performance and bottom-line results. Bay is also the author of several books, including “Lean Organisations Need FAT People” and “The 7 Deadly Toxins of Employee Engagement” and, more recently, The Democracy Delusion: How to Restore True Democracy and Stop Being Duped.

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