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"Ask an assortment of people to draw what their organization looks like," began author and business thinker Gary Hamel, who spoke at the recent Manufacturing in America event hosted by Industry Week and Siemens Industry.
"Ninety-nine percent draw a classic top-down organization chart," Hamel said. "This has been humanity's most durable social structure. The pharaohs built the pyramids with it. It was the architecture for Henry Ford's automotive empire."
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It's also the exoskeleton of bureaucracy. "Bureaucracy systematically empowers the few, dis-empowers the many, but it's still the standard in virtually every organization," Hamel said. "It's military command structure and industrial engineering, the Roman Legions and Six Sigma. But, it comes with an invisible 'management tax' that is competitively untenable.
"Organizations are nowhere near innovative or adaptable enough. We see it in churn rate and how quickly companies lose market position. Bureaucratic 'drag' grows disproportionately with company size. It's why my students want to work in young companies they think are more nimble."
But Hamel added many of those small innovators can and will get caught in the same wet cement as they grow larger. The ratio of managers to front-line staff begins to go up, the decision cycles get longer, policies proliferate.
So is there a way out of this?
Hamel told us about Morning Star, an agricultural processor. It's the world's largest processor of tomatoes. In 30 years, Hamel reported, "They've driven out most of their competitors the old-fashioned way — they 'out-competed' them."
In a mostly blue-collar company with few degree-related jobs, its organizational vision reads in part, "All team members will be self-managing professionals, initiating communications and the coordination of their activities…absent directives from others." "Absent directives from others," Hamel said, means you don't get a boss, and yet everyone's your boss. You make a detailed, KPI-rich contract with your upstream and downstream peers about what you need to do for them.
"Each employee has an unbelievable amount of discretionary authority," Hamel said. "There's no central purchasing, nobody to go through. There's total transparency, so the effect of potential decisions can be totally understood. People compete to grow their responsibility, but always by service to others to help solve problems."
If you make bad decisions, your colleagues might fire you, so collaboration is an absolute necessity. If you're letting fellow employees down, the peer process finds a remedy or you leave. Hamel said it's a radically decentralized, totally synchronized company the likes of which we've never seen.
Morning Star might be too radical for many companies, but I think it does provide an intriguing jumping off point for a company that's trying to think differently about its way of doing business.
