Great article here from Gary Hamel: What We Learned About Bureaucracy from 7,000 HBR Readers, with the following headline insights:
- The blight of bureaucracy seems inescapable.
- Bureaucracy is growing not shrinking.
- Organizations aren’t becoming flatter.
- Bureaucracy is a time trap.
- Bureaucracy is the enemy of speed.
- Bureaucracy produces parochialism.
- Bureaucracy undermines empowerment.
- Bureaucracy frustrates innovation.
- Bureaucracy breeds inertia.
- Bureaucracies are petty and political.
Their survey seems to confirm that smaller companies are less bureaucratic.
For each completed survey, we calculated an overall BMI score by aggregating responses across seven categories of bureaucratic drag: bloat, friction, insularity, disempowerment, risk aversion, inertia, and politicking. We computed an overall BMI based on scale of 20 to 100, based on answers to the first twenty questions of the survey. On our scale, a score of 60 represents a moderate degree of bureaucratic drag, while anything less than 40 indicates a relative absence of bureaucracy.
Of the responses tallied, 64% reported a BMI of more than 70, while less than 1% had a BMI under 40.
Not surprisingly, BMI scores were correlated with organizational size. The average BMI for companies with more than 5,000 employees was 75. Of the respondents who reported a BMI of less than 40, three-fourths worked in organizations with fewer than 100 employees.
This confirms what most of us have long suspected: large companies suffer from managerial diseconomies of scale.
But be careful! Less bureaucracy in smaller companies is not synonymous with more agility! I educate CEOs and their teams from startups to global corporations that it is a fallacy to think that large corporates are synonymous with bureaucracy and startups with agility. That is a mental trap, holding agility and bureaucracy as opposites.
- The majority of startups are frenetic, hair-on-fire and seat-of-the-pants, which is not agile. It is fragile. Clearly bureaucracy is not agile. It is fragile.
- In other words, the opposite of agility is fragility and there are two ways to be fragile – the bureaucracy of most corporates and the frenetic/hair-on-fire/seat-of-the-pants of most startups.
- The majority of corporates and startups are not agile. A minority are. McKinsey’s research estimates that only 12% are in the Agile-Minority. 88% are in the fragile majority. Read more: Agility Pays.
In a world of accelerating VUCA (Volatility, Uncertainty, Complexity & Ambiguity) being in the Fragile Majority isn’t going to end well. Participate in The VUCA Report to see how you compare with your peers.
In addition, take their Bureaucracy Mass Index (BMI) Tool here: Assessment: Do You Know How Bureaucratic Your Organization Is? This measures seven categories of what bureaucracy is costing you:
- Bloat: too many managers, administrators, and management layers
- Friction: too much busywork that slows down decision making
- Insularity: too much time spent on internal issues
- Disempowerment: too many constraints on autonomy
- Risk Aversion: too many barriers to risk taking
- Inertia: too many impediments to proactive change
- Politics: too much energy devoted to gaining power and influence
Further headline insights are:
Bureaucracy is a tax on human accomplishment.
Companies like Nucor, Morning Star, Spotify, Haier, and others have demonstrated that it’s possible to run large, complex organizations with a minimum of bureaucracy, and that doing so yields substantial performance advantages.
CEOs are less likely to see bureaucratic barriers
In most organizations the costs of bureaucracy are largely hidden. Our accounting systems don’t measure the costs of inertia, insularity, disempowerment, and all the other forms of bureaucratic drag. Nowhere do we capture the costs of a management model that perpetuates a caste system of thinkers (managers) and doers (everyone else), that regards human beings as mere “resources,” that values conformance above all else, that squeezes people into slot-shaped roles irrespective of their innate capabilities, that swallows up human initiative in the quicksand of bureaucratic busy-work, and that regards freedom as a dangerous threat to alignment and discipline.
Measuring bureaucratic drag is a first step towards changing all this. As the size of the bureaucratic tax on human accomplishment becomes more visible, inaction will become more difficult to defend. If, as they claim, leaders are willing to share power, and if, as our respondents believe, employees are capable of exercising it wisely, then there’s no excuse for not getting on with the hard but eminently worthwhile work of dismantling bureaucracy.
Sadly, when it comes to bureaucracy, there’s no uninstall button. One of these barriers may be the lack of a step-by-step guide for disassembling bureaucracy. So while many may believe that radical empowerment is possible, few know how to make that happen. Where do you start? How do you overcome pockets of resistance? How do you build the right sort of culture and values? How do you prepare individuals to take on more responsibility? What supporting changes in information systems, incentives and organizational structure are necessary? Sadly, when it comes to bureaucracy, there’s no uninstall button.
That’s the work that my colleagues and I do in Agility Consulting & Training. Uninstalling fragility from startups to global corporates and installing an Agility Operating System.