Episode #032 // Humanocracy // with Michele Zanini

In Episode 32, Michele Zanini, author of “Humanocracy,” joins us to discuss the evolution of management. We examine what makes traditional firms less resilient than their employees, why changing management is not only good for companies, but for the whole of society, and what this new paradigm looks like. We ask ourselves how we can build companies based on new principles, like markets, ownership, and paradox, to out-grow our bureaucracies already.
The episode was recorded in English.

The episode in a nutshell: Human’s favorite quote from Humanocracy is “Bureaucracy is like pornography; it’s hard to find anyone who’ll defend it, but there’s a lot of it about”, Mary-Jane enjoys a principle-based approach that goes on a structural level; and Michele thinks we need to stop copying what others do and experiment ourselves – revolutionary ideas and evolutionary change.
Shownotes:

Get the book and the course on Humanocracy here: https://www.humanocracy.com/
Follow Michele on his blog for management insights: https://www.michelezanini.com/
Beyond Theory Y (HBR, 1970): https://hbr.org/1970/05/beyond-theory-y

Transcript

SPEAKER_03 0:16

Hi everyone, welcome back to Corporate Therapy. As you can tell, this is an episode in English, and there's a very good reason for that, because today we have an international panel of speakers. From Frankfurt, as always. Yours truly, Human Nagafi. Hi.

SPEAKER_00 0:38

Hi. I mean, my normally I say guten Tag, that's my standard, but I cannot apply this one right now.

SPEAKER_03 0:44

Good day.

SPEAKER_00 0:44

Good day. Thank you.

SPEAKER_03 0:46

And also myself, Mary Jane. And joining us from Boston today is Michele Zanini. Welcome.

SPEAKER_01 0:55

Hi, thank you guys. Guten Tag to you. That's the extent of my German, so I use it all up.

SPEAKER_03 1:04

Some of you may already know Michele because he is the co-author of a brand new book called Humanocracy, in which he and Gary Hamill pretty much herald the new paradigm of management based on post-bureaucratic principles. And we will, of course, link the book in the show notes. But today, Michele, you were kind enough to actually join us in person, well, not in person, virtually, to talk about the contents of said book. But maybe before we do that, you could just tell us a little bit about yourself and what happened before the writing of Womanocracy and what you did in the previous lifetimes.

SPEAKER_01 1:48

Okay, yeah, sure.

SPEAKER_02 1:50

I'll try to make this long uh long story short.

SPEAKER_01 1:53

But uh I guess my career started as a public policy researcher at this place called the Rand Corporation, which is a think tank out in California. Very nice place in Santa Monica.

SPEAKER_02 2:06

Uh I had a lovely time there. And some of the work I did there was was really around um understanding the um the impact of of terrorist groups and and the way they were evolving their own organizational models. This was like in the mid-1990s, the US Air Force had just gotten bombed in in Saudi Arabia, and they uh had asked us to um understand you know who this bin Laden guy was. This is like, yeah, 1996. Uh so he was somewhat known, but not very well known, and understanding patterns of terrorism. And one of the things that we found, which is really striking, is how the information age was enabling these groups to operate in much more nimble, dispersed uh forms of organization, uh, compared to you know, like the PLO or you know, some of these other more traditional terrorist groups from the 80s that were, you know, that had like military hierarchies and offices with filing cabinets. These were you know much more loosely networked and dispersed. And and they were posing a very different threat. Um, and one that you know, uh lumbering bureaucracies in the defense department and other governments were just not very uh equipped to um to tackle. So the whole idea was you got to organize as a network to fight a network. And it's something that Stanley McChrystal, who wrote teams of teams, you know, popularized and he had that um as a strategy in Afghanistan and so on. So, so you know, but it was really important, you know, uh formative for me to just understand that in a way the strategic advantage is conferred on organizations that are managed in a very unique way. Uh, and you know, I I then went to uh from after after RAN, I went to McKinsey, I was there for for for a decade. I'm a recovery, recovering consultant, uh still. Uh, but even there, I always try to find interesting projects that they were at the intersectional strategy and organization. And and over the last decade, I've been working with Gary. Um, you know, I actually came to work with Gary as a McKinsey project because there's some sort of collaboration between McKinsey and him, and they wanted someone to kind of help them out. And you know, we've been on a mission really to um accelerate the evolution of management um because we think that's tremendously important um uh and and desperately needed, right? We we just have operating um uh you know organizational uh models, management models that are uh out of date, you know, relative to the requirements of today. And it's a problem at the level of the organization because the organization is not as capable as it could be, not as innovative, not as resilient, not as uh passion-filled. It's also a problem for the individuals working in there, in these organizations, because you know, they're just not um flourishing as much as they could. Um, and it's also a problem for society more broadly, because you know, in a way, the productivity uh and the dynamism of an economy and a society is a function of the kinds of capable capabilities that are in those organizations and and and the kind of human flourishing that is happening. And so if those two things are not happening, then society itself uh uh hurt gets hurt, you know, is penalized and and it creates all sorts of other problems. So, so you know, we yeah, as I said, and we can get into it uh a little bit more. We've been on a mission really trying to do that. And and the book represents, in a way, the distillation of our thinking and our practice uh over the last decade.

SPEAKER_03 5:28

I think it's wildly fascinating that there are such parallels with uh army and terrorism and to what organizations are going through today. Um maybe you can at first we could dive into the problem just a little bit more and talk about like you just named uh three big problems basically that uh is why we need new management models. But what is going wrong with companies today? Why do we need new management?

SPEAKER_02 6:00

Yeah, so the um and and Gary shares this too. He came at this from the strategy lens because he he kept seeing that organizations, he was trying to get organizations to be more strategically differentiated and agile and so on. And he might even do a project with them and they would get on a new strategy or new, but then like within like you know, three, four years, you know, things would go back to the way they were. And and so he said, you know, there's there's something deeper um happening. And so when you look around the world, well, our thesis is that organizations are not as capable as the people inside them. So they're not as resilient. You know, people change jobs, change partners, you know, pick up new hobbies. They they're incredibly, you know, and and the COVID crisis has demonstrated this as well. Like in the workplace, you know, people had to adjust and come up with old ways of of uh of being productive, you know, most probably uh um kind of um compellingly in the healthcare sector, all this improvisation is innovation that was happening. And so like we are we change and are able to evolve, uh, but organizations are not, you know, they're just uh uh always missing the future, right? So there's a lot of talk about agility, but if you look at, you know, in almost every industry, the organizations that are the incumbents, you know, are always on the back foot. It's always the insurgents, you know, uh that are it's not it's not G it's not GM that is inventing electric vehicles, it's Tesla, right? It's not um you know Walmart that is inventing retail, right? It's Amazon and and so on. So like industry after industry, you see all these um all these uh you know incumbents um miss the future, and you scratch yourself and you scratch your head and you go, well, why is that um why is that the case? These uh are incredibly uh resourced, resourceful, resourced, heavily resourced companies, and they have all the capabilities to be successful, but somehow they're they're they're just they're not uh intercepting the future and you know they're leaving it to someone else. So that's you know, so they're not as resilient, they're also not as innovative. You know, the people are, you know, if you look at the the amount of creative content that it gets produced in social media, like in blogs, and you know, millions of new pieces of content get uploaded every day. Yet, you know, organizations, especially established organizations, are just not very, very, uh, very creative. Uh, and again, it's always a startup, it's always uh, you know, uh someone at the periphery of the industry that comes up with a breakthrough idea. And then lastly, you know, we are passionate, we're driven by a lot of things that inspire us, and organizations are instead emotional dead zones, right? They are uh, you know, engagement levels are you know really poor. I think it's 17% globally of people that are engaged, according to Gallup. Um, and then if you look at um other statistics, you know, the the reason why people aren't engaged is because they just don't have any agency. You know, uh another Gallup survey, the great job survey that we kind of parse through, suggests that only one in five feels comfortable, you know, feels like their their voice is being heard. You know, um uh one in one in uh eight feels like they can take risks to innovate. Um uh they you know, less than you know, about 11%, 12% feel like they can control their the way they do the their work and uh they can influence the objectives that are set. So there's just an enormous amount of human uh kind of initiative and ingenuity that gets left off. And when you look at all those three things, so they're like not as capable, they're not as capable because they're not as uh resilient, they're not as engaging, and they're not as innovative. What you what um what you're uh basically what we what we conclude is that the the problem is that these organizations are all managed in a way that make these things resilience, uh innovation, and and and passion impossible, you know, very difficult to obtain, right? Because it and and the culprit is bureaucracy, which is you know, sounds like this old-fashioned term like horsepower. And in many ways, it is an old-fashioned term, but but um it is um the kind of um or you know, organizational system that drives most organizations uh today, you know, where power is vested in positions, where authority trickles down, where it's you know, strategies set at the top, where resources are allocated at the top, where you know, leadership you know, appointments are you know kind of top down. So the big leaders appoint to the small leaders where people are slotted into you know narrow roles, uh where you know staff functions you know set the rules and enforce compliance, and and where you know the the competition, you know, uh success is measured by promotions and your level in the hierarchy, which means a lot of competition, and and where compensation again is not necessarily related directly to impact, but rather like you know, where you sit in the hierarchy. And and so these things, you know, uh conspire to creating problems, right? The kind of problems I mentioned earlier. You know, they made sense a hundred years ago when you're you you wanted to um employ a bunch of illiterate workers, you know, to churn out products efficiently at scale. Um, but now we live in a completely different world, right? So people are skilled, they're not illiterate. You know, competitive advantage is the product of innovation, not just scale. And and and change, you know, as COVID and and other trends are showing us every day, are change is hypersonic, right? Yet yet the the foundations of management have been cemented in this bureaucracy, and that's really what is uh causing causing the problem, right? So we have we, you know, it's the amazing thing is like we've made some great progress in some technology, like cars, you know, we used to drive, you know, these shitty little um cars um that made a lot of noise and couldn't go very fast in you know 100 years ago, and now we can drive a Tesla. Well, the the Tesla drives itself, right? And it's basically an iPad on wheels. And yet, if you look at the org charts of 100 years ago of IBM, and and you just like show them to someone today, they would say, Oh, you know, this looks you know, looks like today. Like we haven't made any any real progress there. And and we think that's that's a real real problem. And and that's what really drives us in in thinking about a complete a different way of of organizing.

SPEAKER_00 12:21

Yeah, I I think it's it's really interesting your point. And I I don't know if we said at the beginning, uh we reached out to you because also the new book, Hominocracy, which uh obviously from a name perspective really resonates with myself, which obviously we can recommend highly. Um, I I think what uh what you what uh what you're presenting is really interesting. The case I mean, um from my background from the new uh institutional side, the question uh in the research always was we we organize markets as markets, but internally we don't organize as markets, we organize as bureaucracies, right? And I think the term bureaucracy um coming from Max Weber, right, is this uh dehumanization of an organization, which I thought I think you also quote in your book that uh it makes stuff more predictable, it makes stuff scalable. And also looking to, for example, Ronald Coase, when he was asked why we are solving or uh why we have a tyranny in a as an organization, but outside we we we we we pledge for markets, was like yeah, but look, the value creating value is more complicated, and we need to we need to uh um how to say um uh blueprint and and engineer the process, which needs to be done what some by some smart person and other person need to do the work. However, and I think and this is also when when I talk to to leaders, this is most of the time the case they come up with, right? Because it's complicated, we need to engineer our processes and so on and so forth. But I at the same time I'm thinking to myself, um Max Weber as well as Ronald Koos, when they were doing the theories and the uh concepts, they didn't have the communication technology and the information technology we have today, which makes work completely different. And um what would be interesting for also from uh to get this from your perspective, why do you think that bureaucracy had this crazy success story over a hundred or more years? Why do you think that today it is so deeply rooted in a DNA of a company that the first thing they if they scale, the first thing I think this is also something really interesting if we look at startups, because companies want to want to be like startups, but most companies and most startups I know they try to become a corporate, like creating hierarchy and management roles and so on and so forth. I think that's it's a fine line for a startup how fast they can become a more bureaucratic uh um uh yeah, bureaucracy than corporates are. Where do you think that's it uh this this deeply rooted thing comes from?

SPEAKER_02 14:50

Yeah, and I'm a big fan of of course, obviously the utmost respect, but uh he yeah, and he I remember, I don't think we use this in the book, but there's this really interesting quote where he says that basically firms are islands of conscious power, right? In this ocean of unconscious cooperation. I think he said something like um lamps of butter coagulating in a pail of buttermilk. So this whole notion that you basically do need this level of like the market can be completely emergent and organic, but the firm has to be this kind of uh tyranny. Um and um yeah, I mean we have we have a whole chapter in in the in in the book around markets and and taking the logical markets and applying it to our to our to inside of firms, uh, because you know we feel that that's you know, this this distinction between markets and hierarchies, uh, we I we think is is not quite right. It may have been right maybe at the you know when Coase was formulating this in 1937, but yeah, certainly not today, and and it is a very unhelpful dichotomy. Uh, but back, and we can get into that if you want, like exactly what what drives that. But but in terms of why bureaucracy has been is so dominant, it's because in a way it was um really, really useful and really successful. I mean, the reason why you don't, I mean, you made grow your vegetables, guys, is because you like that as almost like a hobby. But the reason that you don't have to do that for a living is because you know, we were able to take the principles of bureaucracy, formalization, you know, stratification, specialization, and so on, and apply them so that we could get work done efficiently at scale. Like the reason why you you I mean, the the level of discipline you need to get um to uh and control to produce like um you know a five nanometer like chip, you know, that Apple produces or well designs and then someone else produces for their phones and the computers is insane. And you can't just improvise that. And so, you know, before bureaucracy became so dominant, you know, work was you know very kind of idiosyncratic and then people were like making things up and often not very efficiently. Uh, there was no real training, there's no, you know, authority was like either um based on like not your competence, right? But rather like, did you have the money? Were you the owner of this business? Or were you like a super charismatic person, right? That you know, could get people to um uh to follow you, but then like you weren't producing much. And then when you left, then the whole thing would fall apart. So, so you know, bureaucracy has given us an amazing amount of uh uh has enabled an amazing amount of progress and productivity growth and well-being. So that's all good. Um, and and in a way, because of that massive uh impact it had, it has become baked into everything we we do. Like, and we can't like almost like fish and swimming water, we can't think of an alternative because that's sort of everything we see. Like it's it's really ubiquitous. I mean, it you know, a a uh a large company uh organizes this way, a prison organizes this way, a you know, uh a social group organizes this way. Uh, even as you say, a startup, you know, once they get to a certain scale, that's that's what they they see. And you know, it is, and that's why it's so hard also to dislodge, right? And we can get into that as well, because it is so pervasive, it is a ubiquitous, it is reinforced by everything you see around you, by the education system, what you're taught in business school, um, what investors look for, um, you know, for regulators, you know, look for. I mean, you know, this whole notion that the the way you achieve compliance is by having a chief compliance officer, you know, it's just like and a big compliance function. I mean, in the book we show that, you know, there are there are lots of other ways in which you can achieve compliance and control that don't require this. But but if everybody uh you know in the world is like promoting or at least reflecting this kind of mode, it's really hard to step away from it. So, so you know, we we're kind of stuck. I mean, you said you were like into institutional kind of economics and the like. So, like in a way, we've gotten, yeah, um, we're you know, we we developed this uh a kind of framework and paradigm uh that worked really great in the maybe first part of the 20th century, and then we're kind of stuck there, even though you know our institutions could do better to solve different kinds of problems that you know we're you know we're being faced a hundred years ago.

SPEAKER_00 19:25

I mean if you would ask me, I think one of the things we need is a new theory of a firm. So the idea of transaction cost theory and how we then do monitoring structure and management structure. Even though if I look to the latest uh in terms of research in organizational economics, I would say it's still based on the old paradigm where we need to control and incentivize people. But nevertheless, I would say the the zeitgeist, right? The the the the notion of today that those the bureaucracy is not good. It is cost it is heavily on cost because you have to create layers of layers of management. I think one of the business biggest business cases of McKinsey and so on and so forth is to go out and create business cases to de declutter this, right? But not really to change the governance structure. At the end, you have a flat bureaucracy, I would say, but nevertheless. But but again, I would say today, 2020, most companies say bureaucracy is bad. If you go the uh if you go somewhere and say we need to dismantle bureaucracy, everyone is with you on a let's say cognitive level. But I I really would like to read one one quote from your book, which I have here is but bureaucracy is like pornography, it's hard to find anyone who will defend it, but there is a lot about it. How is that that everyone knows that the management and and governance layers and synchronization and meeting structures and incentive models and you know the whole micro-political structure we create in large uh uh bureaucrat or organizations? How is that still a thing?

SPEAKER_02 20:58

You know, it's funny because one of the things I'm I'm a big fan of history, and um, and you know, as we were researching the book, we we dove back into what people were writing about in the in the 60s and even the 50s, and it's just amazing to me how people then were saying exactly the same things we're saying now. Yeah, so like the notion that bureaucracy is bad is I mean, it's basically been around as long as bureaucracy has been in existence because people were saying, yeah, it is dehumanizing. Even Max Ever said it's an iron cage, right? So it's destroying her humanity. But you know, it's we kind of said, well, yeah, fine, it's a stroke, it's shriveling our souls, but it's giving us a lot of good stuff. So whatever, we'll we'll take that bargain. Uh now, you know, so but but uh, you know, the um yeah in a way, like in the 60s, you I think you had more ambition. Uh you had Maslow, Leikert, McGregor, all these people who were experimenting with new ways. Of managing that, you know, like makes agile teams today look like uh, you know, whatever. It's just like uh uh half-assed attempt, uh, because they were just much more ambitious. Um, and companies were opening up their uh uh you know their organizations and saying, okay, come and try new things out, which is amazing. Like right now, we we that's sort of like not really being conceived as as something that uh you know management researchers should do, but that's what used to happen. And there were all these forecasts, you know, the bureaucracy and Warren Bennis, you know, who's uh you know legit legend around leadership and management, is wrote something, you know, he wrote, I think in 1966, you know, the coming end of bureaucracy, saying within 25 years we'll get rid of it, you know, because you know, in an age where, you know, you know, things are so turbulent and information and knowledge is what drives value, all this stuff, you know, it's just gonna be like this ridiculous prosthetic limb that we don't use anymore. So we're gonna get rid of bureaucracy. And even like uh Drucker, Peter Drucker said, I think in 1988, he had this article basically saying, you know, within 20 years, 2008, we'll have like half the layers and a third of the managers, or a third of the managers, half the I forget exactly, but like a radical restructuring because, as you say, Uman, he said, look, you have in for you know, people are like knowledge workers, you know, so um they're skilled, and you know, in information technology allows them to coordinate horizontally. So this whole notion of having the hierarchy up and down, you know, you know, is is obsolete. But as you know, we demonstrated in the book, bureaucracy has only gone up, you know, layers have only gone up. If McKinsey comes and cuts, you know, SGNA or the number of layers, within five years, it's back. It's it's like it's like um you know, it's like kudzu grass. You know, you know, familiar with kudzu grass, it basically you cut it and then it grows again like that, you know, because it's it's a it's a self-replicating machine. So so it's a tremendous challenge, and you gotta be a little bit humble about about this because you can't say, well, you know, it's it's it's it's it creates lots of dysfunction. People hate it, therefore we can rest easy, and you know, we're gonna find we're gonna sort we're gonna solve this problem on our because it's like, why wouldn't you? Uh, but you know, the same was true many years ago. So, so you gotta have to you have to confront the the obstacles, right? Because saying it's not, it's like it sucks, it's not good enough for the 21st century isn't enough. And so, and the biggest barriers are the following, I think. One, it's um it is it is so ubiquitous, as we said before. So you're like, I I can't even imagine um an alternative. Like, what how else would I do compliance? Like, or or whatever. Like, how would I make sure that I this my organization doesn't get off the rails? So that's one thing. This so lack of models and ubiquity. The the second thing is that you don't really understand the cost as much. So you're really good at companies in their accounting system. You you're you have the background here in Humanian accounting. So accounting systems are fantastic at uh telling you the inefficiency of um or the cost savings you get by consolidation, centralization, whatever. But they tell you very little about the loss of resilience or loss of innovation that comes from those kinds of steps, right? So they're you're fighting a one-sided battle where the accounting system treat in a way it steers you towards trade-offs that are uh almost all about exploit and not explore, right? They're all about like, let's just maximize efficiency and not so much and maximize flexibility and whatever. So so we have, you know, the the the costing is not as as clear. Like um, I mean, you feel like it sucks, it's not good, but like you can't, where's the business case, right? Um, third, um, you know, uh it's it's um hard to know where to begin, you know, because it's not like you can change one piece and and that and that's like the end of the story. It's a complicated intertwined system of practices. And so, you know, you're trying to change the system. And so, you know, how do you do that? Um, uh, it's it's daunting. And and then where do you start? Like what's what is the migration path? How do you get from A to B? Right. And and then the last one, which is really important, I think, is is a question of power. So, you know, people that are you know at the top of the organization, you know, their their life is you know pretty good, right? And so why would they change? It's like it's like I think we might have this in the book, the analogy, and Gary made this, you know, it's like telling LeBron James, who's like plays, you know, is basketball star for the LA Lakers, saying, Hey LeBron, you're fantastic at basketball, but now we want you to pick up volleyball. Like, you know, like I've just you know, I've just played this game, I'm really successful. Why do you want to change my rule, the rules of the game? I don't want to change the rules of the game. So so you gotta deal with all of those issues and and and you gotta be cognizant of that, right? Because just saying that um the system isn't working isn't enough, right? So you gotta be really thoughtful about how you how you tackle all these different pieces.

SPEAKER_00 27:00

I think one one one point you brought up, I think is really interesting to look into the history. Uh, you brought up Douglas McGregor, right? He was uh talking about Theory X and Theory Y, I think in the 60s, right? So he and we can we can uh put this in the show notes. There is an article from uh Harvard Harvard Business Review uh uh from the it's called Beyond Theory Y from John Morse. I have it here. Uh it it just says in one line the second often called participative approach, sorry from English, focus on the desirability of involving organizational members in decision making so that they will become more highly motivated. That statement in the whole article is from the 70s. Talking about getting innovation, getting participation from people in the organization is I would say as old as we know we do this management stuff. And also I think this this example is actually in the book from Kurt Levin, who was doing these trainings with the management, right? Bringing top leadership from top levels and really helping them to understand, understand their role in the organization and their impact in the organization. But also, I think in the not I know that you also in the book point out that after they go back into the into those bureaucracies, after a short period uh of time, they become the old ones, they become the bullies, they become the not so good managers, right? And I think sometimes to myself, maybe in the past, our approach was to look at the leaders, to look at the talents and try to do some mind shift stuff with them and not to look at the structures. Basically, one one one example I always bring, I'm fascinated. Why are we talking so much about mindset instead looking uh at those structures and processes we create where we hope that people invest cognitive energy to overcome them to become good managers? But at this but if in your daily work you won't.

SPEAKER_02 29:00

Yeah, you need both, really, right? You need you need the you need the you know, change. Uh I think it's fair to say that change does start with the individual, and you gotta have we talk about uh you know detoxing your bureaucratic beliefs, uh, which is what these you know Kurt Lewin and others did at these not to get too geeky about badger history. Maybe your listeners are not gonna care that much. Knock yourself out. But no, but they would do, as you say, Roman, they would just like they had like tens of thousands of people that would go to these like offsets for two weeks, like GM or ATT would send like hundreds of people. I mean, I unthinkable these these days, right? You just do like a MOOC on Coursera or whatever. That's or or or you just go for like a couple of days, or or but they would go for two weeks and then there would be like almost like spiritual experiences where you you were you were there with a bunch of strangers and and then you would get a bunch of feedback about your your your style, your your views, and and you people would break down and cry and go, Oh my god, I've been such an asshole to all my subordinates, I'm gonna be better, right? They would come back like reborn, and actually some of them quit because I don't want to go back to that environment. But the ones that the ones that went back, yeah, as you say, you know, like if you're operating the system where you know, that's not the MO, that's not what gets rewarded, that's not what you know, you're gonna revert back to type. But you know, but it does start with the individual, and then you definitely need to do the work of changing the structure. And and again, changing the structure and the operating system isn't just I mean, the other thing that drives me crazy, not that I don't want to go on rants on this show, but but the the whole notion of cutting and pasting another company's model, and then thinking that that's gonna make you whatever, you know, as good as that company, it's just insane, and it's incredibly lazy and superficial. Like, so uh, like, oh my god, like we need to be agile. Who's an agile company? Spotify. Oh my god, so we gotta be like Spotify. We're just gonna call ourselves tribes and squads and lead scrum masters or whatever the hell, and you know, nothing really changes underneath, right? And so, and then like two years later, like, oh my god, that was a failure. Okay, well, you know why? Because you actually didn't do any, it was like theater, you know, you did it was like theater, and um and it's hard work. I mean, it it you gotta commit yourself. I mean, you know, so some and and I understand what CEOs might want that and what consulting firms might offer that because in a way, like it's easy, like, yeah, six months. I'm gonna get myself this state.

SPEAKER_00 31:27

It's consumable.

SPEAKER_02 31:28

Yeah, it's a consumer.

SPEAKER_00 31:29

Something you can you can buy, it is marketable, it is computable, you can buy this package. I mean, uh uh I was talking to someone in Germany who has a uh who was doing a larger transformation project with one of the top three management consultants, and he was like, the first thing they did was a three-day basically brainwash session where they were pumping the top management on the new thing, right? And they could buy this, it has a start, it has an end, afterwards, mindset change.

SPEAKER_03 31:57

Yeah, something similar that that happens is um that um fixes that work in one area, for example, project management, right? We have agile project management, just scrum um and so on, that this is used as a remedy for the entire organization, as in this will fix everything because now we're flexible, now we're agile. However, it's just that one team manages a project, maybe in an agile way, but that does not mean that the company uh itself is more flexible or more innovative. Um and I think that you and Gary have a really interesting approach also in the book where you say it's it doesn't make sense to start with or go directly to the practices because there's a lot of stuff that comes before that, right? And you've just said you need to address the problems that are that are there and you need to work with principles um and not just take any practice that works somewhere and paste it on a project, uh a problem that is maybe in a completely different context uh and won't make sense there.

SPEAKER_02 33:05

Yeah, I should say agile. I don't want to diss on agile in general. I think it's a fantastic uh framework and teams should use it and and whatever. I was just thinking of companies that go and try just naively to just go in and and try to yeah uh deploy it, you know, to their operations. And then, as you say, Mary Jane to say, okay, well then let's just find a way to scale this and somehow. And some of the scaling methodologies that I've seen, I'm not very familiar with them. They just you look at them the chart and it just makes your head hurt. Like it's you know, so hard to understand exactly what's going on. But anyway, that's a separate topic. But on on on on the on the um on the point of principles, yeah, that's so it's so so right, Mary Jane, because and we, you know, we we the book has this title with the ocracy, human ocracy, and but it's very different from um other ocracies that have come up recently, called ocracy and sociocracy and others, in the sense that it's not a very prescriptive framework. Um, yeah, there, you know, if you look at some of the companies we took with we feature in the book and beyond, you know, higher and nucore and sense gehandelsbanken and uh W agore, Morningstar, you know, and so and Birdsorg and others, there are some general features, you know, that are similar, like they have all have very small units that are nimble, there are very few layers, you know. Frontline teams have a lot of autonomy, you know, roles are flexible, you know, influence is less the product of position, but more like competence. And the competence is typically peer attested. It's your peers that tell you whether you're adding value or not, you know, where a coordination happens, but it's through collaboration, right? Not top-down control, where compensation correlates with impact and where everybody thinks and acts like a like an owner. So there are features like that, but what the most important thing you should take away, I think, from these examples we have in the book is less what they do, but rather how they think, right? And then that really was the animating, you know, kind of uh idea behind the core of uh section, the middle section of the book, which is all around these principles. Because you know, when we look around these vanguards, you know, what we found is that what was more important where that they were um, well, they all started with a different paradigm, which is people are, you know, the relationship between the institution and the individual. So in a bureaucracy, the the individual is the resource, it's the instrument, right? And so the the idea is like, how do we get how do we squeeze more productivity out of the instrument, the the resource to generate profit, right? Um, and you know, in a lot of these companies, you know, the relationship was reversed. You know, it's the organization that is the tool that people use, right, to better their lives and the lives of the people that they serve. And and so um the the idea is not to maximize conformance and compliance, but rather maximize contribution, right? So there's this kind of paradigmatic difference. You know, we you know, people are at the center of the organization, and the organization is what we use to multiply your impact. Um, and all these companies do that. So, and if you start there, you're basically, I think, 50% uh of the way. Because from when you start with that paradigm, then ideas will come on how to manage that will you know start to maybe look a little bit more like the companies we mentioned in the book that are progressive and so on. But then more what these uh companies do, you know, beyond this paradigm, is that they do instantiate in their model, uh, in their management model, a set of principles that um we uh you know we have we've identified, um uh and I'll just name them to you quickly, but the principles of ownership, meritocracy, markets, experimentation, community, openness, and and the last one, which is kind of interesting, is paradox. Uh, you know, but and and these, you know, these were our that's our list. It's not the definitive list. I'm sure there are other principles uh that that matter. We just kind of thought about these seven and this tried to distill them. And and what these companies do is take these principles and and which we think are principles of systems that are very adaptable, very innovative, you know, very um kind of energetic, and then say, How do you take these principles and apply them to how you're how you're managing yourself, right? Um and so and and then the task of an organization that wants to embark in this journey is to take these principles and think, okay, how does how can I make this work where I am?

unknown 37:42

Right.

SPEAKER_02 37:42

And you may end up with a very with a with a model that is not like higher, it's not like Bertzorg, it's not, you know, there may be commonalities at a high level, but it's specific to you, right? Based based on applying these principles. Um, because you know, it's crazy. Again, just another quick rant. Somehow we all get the fact that uh business models need to be differentiated. Like you need to be, you know, you need to have your own model uh to succeed in the marketplace. But when it comes to the management model, you just like, oh, I just need to do best practice, whatever the hell. No, it has to be as as different, as you actually, the more idiosyncratic your model is, the harder it is for others to copy, the more enduring is your advantage.

SPEAKER_06 38:24

Right?

SPEAKER_02 38:24

I mean, that's you know, so like you know, so hopefully people uh will get that from the book that you know you and from our just general work that you you know it's you you have to strive to for a model that is fit for you as an organization, not not copy someone else's.

SPEAKER_00 38:41

Um I I think one of the principles which when I talk to managers or to leaders resonates with them, but they have no clue what that means in order to implement and to make it run is this the power of markets. I think if you look today, uh if you look at today at companies and look at budgeting processes, resource allocation process, everything what is allocation and coordination, it's steering, right? Is trickling it down and try to steer a company in a certain direction. And one of the principles you you you guys are pointing out in your book as a solution is why not to think about those some of those processes as markets where uh a balance is happening and and uh uh and it's not steered by a central unity. Um, could you explain this a little bit more in detail? How do you what do you exactly mean with this and how that may look like for for people in positions who are thinking about how could I could I implement markets in my bureaucracy?

SPEAKER_02 39:46

Yeah, well, so markets, and you gotta in a way unpack markets because it means many, many things to different people or it has different advantages. But I guess the two that are probably maybe worth focusing on today is um one is just the uh um you know the fact that they can aggregate disperse inputs um together, right? And so like very really efficient at taking the wisdom of the crowd, right? And distilling that you know to a price or to uh you know a certain kind of type of transaction. The other thing that they are great at is allocational agility, you know, they just move resources, you know, where where where it makes sense, where they're most productive. So how do you how do you how would you take those kinds of how would you try to um get those uh advantages of a market inside the company? So the way you gotta think about it is um lay out your your management model, and there's um I can send you a link to some frameworks we um we can we can have in the show notes, but but you can think of it as a set of um systems and processes and a set of structures and roles. So you have like the the physiology and the physiognomy of the firm, right? So take a few of the processes. So uh you know when you develop plans, for instance, you know, uh how about doing a prediction markets, you know, to test uh uh what your organization thinks how well the product will do. Uh, you know, we have an example of Intel that has done that, you know, they ran this experiment, which is really, really good. And what they found is that the the crowd was you know much more uh precise about how forecasting the sales of that product than the people in finance department that, you know, or the product manager that was supposed to do that, who's supposed to be the expert. So, how can you tap into the collective wisdom uh of the crowd? I mean, even when it comes to setting direction and uh you know, thinking about the strategy of the firm, you know, trying to do a prediction market around different opportunity areas. Um, and again, you know, this is a concept that has been around for 20, 30 years, uh, you know, and and it's proven to be prediction markets are proven to be quite effective if done in the right way. Um, James Surwiecki wrote this book called uh The Wisdom of the Crowd, I think, which was a lot about this kind of thing, crowdsourcing and the like. Uh, but you know, part of again, part of the problem might be a political economy problem of uh, you know, someone in charge of that product saying, Well, I actually don't want to know what the what the crowd thinks, because if the crowd, you know, thinks X and I do Y, and the crowd is right, then my ass is on the line. So there's so so you gotta be a little bit bold and say, you know, no, no, like you know, we gotta we gotta kind of like try this and see what happens, and no one's gonna be punished or whatever. And we can get into like how do you experiment with these things so that you know this doesn't blow up or doesn't create all this resistance. But you know, running prediction markets it might be one thing when it comes to allocating resources. So instead of doing it the way the Soviet Union does, where there's one pot of money that comes from the top down, right? There's one exists. Yeah, yeah, exactly. Big spreadsheet, then it's cascades and whatever, and it ends up being last year plus two percent or whatever. So try to be like Silicon Valley, create different uh uh different venture capitalists, different areas of funding, so that if you go and don't get the funding from you know the Polybureau, maybe there's some there's someone else that is willing to fund your. So you multiply the sources of funding, you know, for coordination coordinating activities, you know, have um internal contracting between units. We have an example of hire uh that does that, you know, where they they disaggregate into little micro enterprises and then they enter into agreements with each other. Um when it comes to you know, a talent, create a true market for talent, you know, so people get deployed um to the highest opportunities and where there's a real match between their skill set and and and and so on, as opposed to being the property of a particular business unit. Or even one company that we worked with did this internal gig market. You know, they had products that were uh seasonal, consumer goods products that were seasonal, um, and they were peaking at different times. So they said, well, you know, you know, sometimes you have people like doing you know, hockey hockey products that are really not that busy in the spring. So maybe they can work on uh running uh shoes or whatever. And you know, and so you know, you kind of create a more uh dynamic way of balancing resources. Or, you know, and when it comes to structures and roles, you know, one of the one of the things you could do is create internal multiple providers for the same product. Uh and yes, maybe you know, to um if you use a traditional accounting method, it might look like waste, but you know, but the level of dynamism and service uh quality is so much higher that you you may you may you know you'll do much better in in the end. So, you know, uh we have lots of examples. One that we I've learned about recently, it's not in the book, is this company called Kusville. They're like a Russian uh grocery uh chain. They're still like a startup. Well, I mean they have 10,000 people, it's a private company that will do an IPO next year. And what they do is whenever like a back office department gets beyond a certain level of size, they split it. And so you have like two legal departments, two IT departments, and whatever. Because they said that we don't want to add layers, it's just gonna make it so unresponsive. So, like, you know, now you have these little uh um yeah, back office functions that compete for business with each other, and yeah, maybe yeah, we might save a little bit of efficiency if we had a little bit more efficiency if they're all one department, but it's gonna be so um uh unresponsive that we'd rather have a little bit less efficiency and more and more responsiveness. So, anyway, those are just some ideas who might have like how you take this idea of a market and try to kind of implement it in different areas of the organization and different kind of gears that that power the the management model.

SPEAKER_00 45:38

I I think one if I think about it, one thing is what is really interesting, or what what I see some leaders have challenges because how they are socialized and the methods and tools they're trained with is what you explained is this um I think Natsim Taleb calls this in anti-fragility the functional redundancy that if you want to have an anti-fragile uh system which can uh deal better with dynamics and with shocks and so on and so forth, you need to create this functional redundancy. And I'm gonna promise you, every classic management book does not understand this concept of function. Why is that a good thing? And as you said, if you are in hyper dynamic and there is a lot of stuff changing, which may be different today versus maybe 50 years ago, is that uh creating this innovation capability uh uh and uh a market I and I think the higher example is quite quite interesting because at the end, higher is with the trend, right? Maybe even if they are creating a trend versus most of bureaucratic organizations uh try to run behind a trend, right? And I think this is a completely change in paradigm, a completely change in perspective. And I and I'm thinking more and more, because I mean for people who are in this business of helping organizations to to go to this transformation, um sometimes think to myself, um is that a problem? Like for us, at one point we understood we cannot convince people of this, they need to be aware of this happening. And I mean, obviously you're doing this much longer than us, and you are you're doing also, I mean, today I would say that's a zeitgeist again, right? It is easier to talk about this, but how do you see this change in acceptance and also in experimenting? Again, like markets is so revolutionary for organizations to think about internal labor markets, internal other coordination uh coordination markets. How do you see this change in trend that organizations are more willing to go those directions experiment?

SPEAKER_02 47:44

Yeah, well, it it they are, you know, when you when you conceptualize these changes um at scale, they are radical departures. So you can imagine how companies will go, oh yeah, that's cool. Okay, well, maybe we'll do it next year or something, and then they you know do something do something else. They uh but um the the way you address that is by you know basically saying, look, you have a you can have a very radical and kind of aspiration, like a revolutionary goal. Like we want to blow up these bureaucracies and create all these kinds of market like mechanisms inside, but you get there in like you get there in um in steps. Like even the the the astronauts to go like go to the moon or whatever, they still you know have to put like one boot uh at a time, right? You know, so and so that's that's the what we try to do is kind of uh in the latter part of the book and our work is kind of demystify this change process and saying, look, um you don't have to have all the answers figured out, and you don't have to like flip, you know, have it all in mapped out, all the changes, then flip a switch and just kind of all the lights come on and it's a completely different system. Rather, you need to evolve your way there. And so think about this less as sort of like a change process, you know, like an engineering pro problem, right? Which is typically how change management is done. Like, oh, you know, we've got to build a bridge, you know, so you know it's got to start and end, and we've got to figure it all out, and then tell people what to do. And and and then once we build it, we're done. No, it's more like um it's a never-ending process. And it's more, I think, I mean, the analogy for me is less about bridge building and more. We have this uh, you know, hacking, you know, like and not not like not hacking like the people that steal your credit card information, right? But but hacking like the way Linus Torvalds conceived it uh when he started Linux, which is to say, we gotta create something new to beat Microsoft, and I'm gonna get going, but I want everybody else to contribute and pitch in, right? And so he ended up creating this like massively complex operating system with I don't know how many millions of tens of millions of lines of code assembled by 16,000 people, uh, you know, in a massively kind of parallel trial and error process, right? And and and so we we think that that's how you change an organization as well, right? So you kind of open source it. Um, and and you do it through experiments. Uh so you know, people under understand they need to do lean startup methodologies and you know, prototyping, design thinking, all this stuff, right? Sprints, you know, when it comes to to products that they sell in the market or services. But honestly, like you can do the same thing for management processes. So some of the examples I mentioned earlier, you know, like a prediction market, like you you can kind of do that, you know, like in one part of the organization, you run it for a year or six months, and you see what happens, and then you scale it if it works. And we have examples in the book on like both uh you know, some of these hacks and then the process for for doing that. But you know, you can be very scrappy. And and the important thing also is not to wait. I mean, obviously it's great to get the CEO on board, that's nice. Uh, but you don't have to, like, because some of these things you can start in in this smaller perimeter, or you can try to get a little coalition, horizontal coalition to happen where you're all trying different things, and then you know, and then you kind of try to um push for for broader scaling once you've tried it in enough places and there's enough of a uh you know, kind of enough of uh enough data um to to validate that it's a good idea. So you know, so radical evolution, you know, uh revolutionary goals, evolutionary kind of methods. Yeah, that's the way I would do it. Go. There you go.

SPEAKER_03 51:29

No, but my question goes away from this. So maybe if you have a question that goes, I don't have a question.

SPEAKER_00 51:34

Actually, for those people who want to uh who are really interested in this and want to read the book, there is this part which I mean I'm working obviously. I did also a step-by-step approach where today with this understanding of this, but there was this thing you guys explained, which was for me that's really uh it brings it to the point, like it boils it down that I think where you have this paradigm problem, principle, process, practice, performance. Well, I would say a lot of companies have this, they understand the paradigm needs to be changed, but they start with performance and practice, but most of the time they don't touch the problem, the principle, or the process. Like uh there are so many companies where they say we need to do we need to be agile, nimble, post-bureaucratic, and then they say, but and we are doing agile or scaled agile or whatever. And then I'm asking I'm asking them, yeah, but how do you do your reviews? What how are your your job description? What is your uh incentive model and management model? And like, no, no, we don't touch this. You're like, but you're not changing anything. And I think in your book, again, I think for me, also because you also explained this, the old paradigm, and for me was that was like a really um uh how do I say a cool moment to read this and like hey, you guys really brought it down. Um and I can tell everyone who's uh also consultant in this context, it was it is also really useful if you work with your clients and have this uh framework.

SPEAKER_02 53:03

And it also I think it's a good test because if you start, if you say, Oh, I have I embraced a new paradigm, but then you start at uh you get a level of performance and practice, then you you may either not have a like your commitment may be very very uh uh skin deep, not not very strong, right? Uh, and so it's like you're almost doing it for for show. Yeah, and I think look look how cool we are, look, you know, oh yeah, or or you may understand it, but yeah, you're like, okay, you're not really serious about it, you know. And so it's because like you know, there are all these um all these people that are like you say, oh, innovation is a top priority, and our test to them is sort of okay, well, uh, so are you let three questions like are you training people, like everyone in the company to to think and act like a business innovator? Do they do they have like do they understand how to generate unique insights from you know, trends, from uh the customer, uh, from industry, orthodoxies that can be challenged and so on. So, are you training people to be innovators? Because you can't just expect people to innovate like what you know without any training. It's like saying, Oh, go play golf, and you don't play golf, you're given a set of clubs and you you hit like some shitty shots, and that oh, you know, oh you you can't you can't play golf. Yeah, you haven't taught me how to play golf. It's ridiculous to me. That you know that anyway, so that's one. So if you're serious, you're gonna train everybody to be to be an innovator. Second, you're gonna give people the resources um and the opportunity to innovate. So do they have time to try things out? Do they have the permission to run an experiment, you know, to do some market research and so on, right? And then and then the last thing is, you know, are they kind of compensated uh, you know, for and are and are leaders held accountable for innovation performance? Like if you if you if the answer is no to all those three questions, you're not serious about innovation. You can say you are, you could have an incubator, you know, with and the best description I found of an incubator is a hipster money pit. It's I think a lot and I start. I mean, I'm like not all incubators are like that, but yeah, give me an example of an incubator that has made a huge difference to a company's uh trajectory and business performance.

SPEAKER_00 55:18

I would say maybe there are startup incubators in Silicon Valley, but they're not corporate. And I would say if you go to the corporate, and I totally agree with you because I was part of one, and the problem I also agree is I cannot tell too much, but there was I I remember we we invested in something, and it was more for the marketing that in from in the outside we communicate, we are doing innovative stuff, and second, that we can also do employer branding with this, but at the end, everything was the same. Um, and I think that's also I think for for employees, like I was a young consultant in that company, whatever company that was, it's also frustrating because you get this hypocrisy, right? You get this, you say A, but everything you do is B. And that's for me, uh, that was also frustrating. And uh and maybe one thing you said about uh uh about let me say it differently. One observation I'm making is that the topics we talk about, like agile or whatever, right? Those those frameworks and tools who could make teams and companies more uh innovative or or or that more dynamic to react to the market, is that most of the time HR people are talking about this. And I think uh those topics we're talking about because most of the time, if we talk about organization, we end up to talk to HR people. And no offense to HR people, but I think that's a highly strategic topic. And I think, and this is one credit I can really give to this book you guys wrote, is it feels like it is written for a C level person. It feels that and it all and it has feasible solutions. And I can really say this because we have already applied this in leadership workshops, um that it addresses the strategic problem and not is not talking about this practical or performance uh discussions. And I think I hope more and more uh this thing ends up as a topic on a list of a C level person or CEO, for example, and not to HR business partners. Again, no offense to HR people listening to this, but I think it needs more attention. And uh yeah, I think I mean before that book, you and Gary wrote a lot of stuff in uh uh HR, uh sorry, uh HR, Harvard Business Review.

SPEAKER_03 57:39

Yeah, it's PR, not HR.

SPEAKER_00 57:41

Yeah.

SPEAKER_02 57:42

Well, yeah, and Major, you may have a question. The only thing I would say is that we hope the book resonates with CEOs, but we also hope the book resonates with people who are like you know at the at the at the edge of the organization, people who are you know frontline people, maybe not uh, you know, maybe the for you know junior supervisors or you know, people you know, or even like people that don't have any managerial responsibility. Because like yeah, we hope that it creates a bit of an enthusiasm to be an activist inside of your company.

SPEAKER_03 58:12

But I think what the book shows is that it's not it is, I mean, it's culturally, right? So at the core of it, you care about people and it it shows. Um but it's not just about making people more happy, but it's about the whole enterprise, right? It's about making uh society better, making companies better, and making people more happy. So it doesn't uh look at just the the happy go-lightly uh uh facade, right? But uh really does go to the core.

SPEAKER_02 58:45

Yeah. Well, and even on the people, on the people side, um I don't know if people at Nucore, I mean, I think they're happier, but it these are environments where you have to perform. So this is not like you're going on vacation or you're working like halftime and getting paid 2x. But you know, so they get a lot out of their people, but yeah, we we think that they are, you know, um, they're you know, uh at Gore, like every person that you work with can have an input on your performance review, so you're gonna be on your toes, yeah, with everyone. You're gonna try to be super helpful to everyone and not tell them, oh, screw you, you're you know, you're like someone like somewhere else in the organization, you have no input on my compensation. No, no, everybody does. Everybody who works with you, so like it's you know, it could be kind of uh you know, stressful maybe even sometimes, but but in general, yeah, I think people flourish and therefore they're happier in the end. But it's not but it's an important point to make. This is not just about like, oh, you know, getting nice snacks in the cafeteria or whatever, you know?

SPEAKER_03 59:46

Yeah.

SPEAKER_02 59:47

Um, sorry, Mary Jen, did you have a you were gonna ask a question?

SPEAKER_03 59:51

Yeah, so uh what is a big question to me is also how did you guys research this book? Because you uh distilled all these practices or these principles, um, and it it's turned out really great. But I wondered like how did you how did you do this? How did you go about this? How did you um talk to the companies and what was your research process?

SPEAKER_02 1:00:13

Yeah, well, it was a five, it was a five-year project at least. It's just you know, so that at the beginning was a ton of uh background research, a lot of circle research, a lot of secondary data to trying to distill this to um, I mean, Gary had written some stuff before. Future management, in a way, is the prequel to this, you know. Um, so there was a little bit of a framework, but you know, there was even getting to understanding the cost of bureaucracy and trying to quantify that. So there's a lot of number crunching. There's a lot of numbers in the book. I did most of those, but um, but there was, you know, because we wanted to make this like you know, super quantitative and and and and um uh yeah, you know, you know, you can really build a business case, right, for for this. And a human case, yeah, in a human case, because it's not just yeah, I mean, you see these numbers of people, and how I mean the thing, the number that I find most shocking is you know, when you know the Bureau of Labor Statistics in the US has it scores different jobs depending on different skills. One of the skills that they score people jobs on is uh originality, creativity. And so you can tell, like, okay, a welder, how original is that you know, choreographer, CEO, salesperson, you know, they all get scored. Uh a zero to a hundred, a hundred is really important, zero not so important. And if you apply those uh uh scores to the number of people working in those jobs, well, you end up with like almost 110 million people who are in jobs where originality is not important. Uh so like 70% of the workforce. And you look at that and you go, okay, are these people like incapable of original thinking? Or and so you know, or or is it that we just assume they're they're stupid and and we don't even give them the opportunity? Because I think a lot of the stuff that we find around even now, like uh, you know, World Economic Forum talking about skills of the future, and oh, we need to reskill people and like, yeah, maybe, but you know what? A part of it is you know, it may not be a supply problem, maybe a demand problem. That is like you're or you're structuring jobs so that they're shitty jobs, not because people there are incapable, but you just you have a prejudice. So there's a lot of like a lot of number crutching to come up with things like that. Uh, and then you know, we did a lot of primary research. We've been to hire, I've been to hire into China and and in in America that have general uh electric appliances. So I've visited them several times. The hire was the most difficult company to research because their their model is so unique and and complex. And I don't speak Chinese, so the language was not an easy thing to deal with. Um, and but you know, New Court, we went to their mills, talked to a bunch of people. You know, we just as you know, at uh Michelin, we have a great story of Michelin and how they evolved their model to become more to increase autonomy at the front line. So I visited a bunch of their plants, talked to a bunch of their workers. So there's a lot of primary research. And then, you know, the other thing I would say is around the principles, the thing that was the biggest, you know, the problem well, problem challenge conceptually, because each of these principles is on a topic that is like its own body of literature, with you know, so like how do you take markets or community and try to distill that to something that is tractable? Yeah, and so like and so that you know, we thought, well, you know, we're gonna have one one chapter or two chapters, you know, with the principles, and then we said, no, no, we this each principle needs to be its own chapter, and then each there's I mean, you you you'll probably see how many footnotes we have there. That's a good proxy for how many things we had to read so that we could say something intelligent in general, but because we had the cases, but we how do you frame the cases in a way that is so anyway? It was uh it was uh that's kind of their the the process if of of writing this, uh, which you know I think uh took took took a lot of uh out of us. I think Gary's like on a holiday now in terms of like I'm not writing anything new for for some time, I'm done.

SPEAKER_00 1:04:11

Yeah, I think um what is also really interesting in this book at the end, what you called hack, you have also a method, right? I think it's a practical tool, which again we can prove that it is highly practical, to get meat on the bone, to say, you know what? We talked about all this high-level thing that people are coming into this building and living most of their life in tyranny because of a manager and blah blah blah, and that's bad. Yeah, we agree, all is bad. Now let's get on, get it on, and then you have this hacking process where you and I think it is from a logical perspective, it is real done really nicely how you go through a problem, through a process, apply one of the principles, and come up with I think with it with a nice approach, safe to try, right? An experiment. I think in the book you have an experiment with travel cost. How why not doing travel cost differently? Um, I think this is also a really nice approach how companies and people in companies could say that's a stepping stone, right? And the evolution evolutionary step.

SPEAKER_02 1:05:17

Exactly. Yeah, you gotta start to think experimentally about your process. I mean, you could and you could take, you know, you could kind of work your way to more complicated things over time and start start easy. Like you may want to have a much more democratized or you know, a strategy process that is much more open to different viewpoints, but maybe you know, the way you start uh just another example, we don't have this in the book, but we tried it with the companies you know, have a strategy, have a shadow strategy process. So you have the old geezers doing the traditional strategy process, and then you replicate that with like the millennials, for instance. And they go through the same stages, and then you compare notes, okay. Are there insights or ideas or trends or priorities that the The younger group or the more junior group came up that we just could not even see, right? Because you know, I mean, one example we have it. I don't know if we have we do have it in the book, Adidas North America. We helped them with this innovation academy where you train people to think and act like innovators. Some of the ideas that came the people came up with were one idea was esports. So, you know, you know, play people playing video games for a living, right? And they're actually athletes, these people that do it professionally. Uh they train and so on. So this this train people are saying, well, yeah, people are saying, you know, um, we need to create like apparel and other gear for esports. So, like, this idea would never ever come up to someone who's like 50 years old that doesn't even know what a PS4 is, PS5, um, a World of Warcraft or whatever, you know, League of Legends. They don't even know what that stuff is. Yeah, well, I mean, because I I I'm familiar with the idea. No, I have three kids, I've stopped video gaming a long time ago. But um uh, but but you know what I mean, like and so you you open up, and that's a super easy thing to do. Just uh you know, have another group of people run a strategy session and and see what they come up in the end, and then you can make it more difficult. You can have you know, you can build in some mechanisms for funding that are you know, but but but start start with a simple experiment like that that should open people's eyes, and and and you can kind of take that and apply it to different parts of the company and and try and you know, and so because our urge is to uh see oh, you know, become a management lab, you know, try your own lab, you know, a laboratory of management experiments and manage that as a portfolio, just like you manage an innovation portfolio.

SPEAKER_00 1:07:45

Um, I think one one of the interesting things uh um what I thought about after reading your book was basically you are creating uh a new role, a new um reason of being for top management, right? Is like so what I imagined after reading the book, I was like, it feels like we are creating management as a platform, like Facebook is a platform, whatever. They are giving a system tools and contract security and escalation level, right? And then you you change the way management works from steering a system and then more it's like more regulated. It's like it's like being in a democratic, uh, free economy where the the state is not telling us do X or Y, but basically they're incentivizing or decentivizing us to do a certain thing. But at the end it emerged in the market, right? And this is my my feeling when I was when I was reading the book that uh basically we are changing the way uh top management works, decluttering middle management at the end, because we don't need monitoring uh elements, and then having a free system, a free market uh uh um at the edge, right? Where where people do stuff and using the tools which are provided.

SPEAKER_02 1:08:59

That's a good way to put it. I mean, I I think on you know, two three things. Uh one, there are gonna be fewer managers, as you say, uh because the work of managing is syndicated, it's distributed, and more people do that. So, like instead of having uh compliance, a huge compliance function, you know, you know, have people self-regulate, peer review, and so on. We have an example, I think, of Nucor and the audits. They they run steel plants, they're the safest steel plants in the industry. They don't have a compliance function, they have you know, they do peer review. So, like one plant goes to the other plant and conducts a safety audit, and they're really harsh, harsh with each other. So, so yeah, so you have fewer middle managers because the coordination can happen in parallel, more management tasks are done by people who are not managers because like the work of managing doesn't go away. You you just don't need a professional class of people, and then the last thing is that the you know, you probably still have some layers and some people at the top, but yeah, their role is more of an architect, an architectural role than uh than uh than an operating role. Um, and you know, like Zhang Rumin of Hire, you know, his idea is to you know to create an environment where people find there are opportunities for the company. He's not gonna decide, well, should we get into this or that? I mean, he he may have some strategic vision around, for instance, in the case of hire being uh a dominant player in the internet of things and connected appliances, but that's as far as it goes. You know, and then he lets the organization run to get there in a kind of self-regulating kind of kind of a way.

SPEAKER_03 1:10:35

Yeah, I think it's uh absolutely fascinating because as you said earlier, right, it takes both the individuals and the structural elements because obviously higher has structural elements that are unparalleled. Um you can't find the same anywhere else, uh the way they work. But also having this belief that this is the right thing to do and uh letting it go. And as you said earlier, right, power is a big uh hindrance at the moment to uh break up bureaucracies, is they the people in power need to also be able to let go eventually.

SPEAKER_02 1:11:11

But you know, and the valid proposition for them is that you know you will be happier too, uh, and you will have you unleash more value and you like to see your other people you know for flourish.

SPEAKER_03 1:11:22

And so I you know, it doesn't have to be a zero-sum game, you know, and for the for the less uh selfless ones, maybe you'll go down in history as a as a management guru.

SPEAKER_02 1:11:33

Exactly. Well, there's always a little bit of that, you know, even in the little bit of you know, you you want to be recognized, yeah, for sure. Yeah, yeah. But um it is possible, and even higher, you look, it's uh you look you look at it and you go, Oh my god, it looks like almost like an alien spaceship. How did they get there? But you know, they tried shit out and some of it didn't work, and so like again, like don't look at the snapshot, you have to look at the evolution. So, like 20 years ago, they didn't look anything like they look today. Yeah and they tried, they started the you know, these micro enterprises in the sales, you know, uh and marketing area because that's like makes more sense. They deal with the customers, they're more standalone, and and and some internal contracting they did didn't work, it was too clumsy, but they kept trying, they kept iterating, and now now they are where they are, and you know, they're now stay standing still, they're continually. I mean, the thing is that is really frustrating about hire for me is like I write about them and then I call them, say what's going on. They're like oh, we moved on to the next thing, and you're like, Jesus, like you know, like you have to I have to come back and learn more things about you. Like, can you guys stop? I can't write fast enough, but but but they are very much like that, right? And um, and uh, you know, there's no reason why other companies can't follow their can't follow their model, you know, their process, not their practices, yeah. They're the way thinking. Yeah.

SPEAKER_00 1:12:49

But it's really interesting how you're describing it is basically that your organizational attitude or your organizational configuration is basically the competitive advantage of today. I mean, in the past, it may be your market share or your price or whatever. Today is how good is your organization able to configurate to a changing environment, and that's competitive advantage.

SPEAKER_06 1:13:10

Yeah.

SPEAKER_00 1:13:11

That's like a new portal.

SPEAKER_03 1:13:13

And that is yeah. Brilliant. Um, I think if I take anything more than uh that what you just said, Human, which I think is a very nice uh closing statement, also, is the revolutionary vision and evolutionary path to get there uh to create this competitive advantage on based on your organizational model.

SPEAKER_02 1:13:35

That's right.

SPEAKER_03 1:13:37

I thank you very much for coming here today, Michaela. Is there anything else that you would like to uh tell the world or um give our listeners or Germany?

SPEAKER_02 1:13:47

Yeah, oh well, the only thing I would say is well, uh we hope the book will come out in German. Uh, I'm not sure the timing, uh, but hopefully next year we'll see. Uh, but in the meantime, yeah, it's available, obviously available in English. The other thing is if you get the book, you will have access for now to this course that we uh designed called Hack My Org, which is all you know geared towards the individual kind of, and it could even be a consultant for sure, who wants to kind of uh take some of these ideas and apply them and learn more about them. So it's a good companion to the book. And so if you have the book, uh go check it out at humanocracy.com forward slash course. Um, and if you don't have the book, you can check it out and then maybe you'll be convinced to get a copy. But uh, you know, right now it's as I said, it's it's a it's a fairly significant uh you know experience, it's about four hours of video lectures, and then we have interviews with a bunch of people and tools and so on. And so it's Gary and me, and you know, so we think it's a good deal uh and it's worth worth checking out.

SPEAKER_03 1:14:50

Absolutely. And all the examples that we talked about today that you mentioned, they're also really nicely explained in the book and the course. Um, and if you could follow us in this podcast, I am absolutely positive that you can read the book because it's written very accessibly. I'm positive that's possible.

SPEAKER_00 1:15:09

Maybe one last thing uh in terms of if someone is really interested, I think if you have in a book and then you sign yourself up for the course, you can invite four to five co-workers, right? I think there is this that's right.

SPEAKER_02 1:15:20

You can take it as a team. Yeah, and we have one example of a company that is now having like 50 people on it at the same time. So, you know, if you if you want to do it for for larger groups, you can you can there's an email you can ping us and we can do a custom custom version. So I think you know that's that's our that's our desire to just uh make sure that you know people start doing this. Uh you know, put your boots on and so we say, like if you're tired of the bureaucratic bullshit, you can uh you can moan about it or you can pick up a shovel. And we hope you can pick up you you'll pick up our shovel.

SPEAKER_00 1:15:54

I mean basically I can recommend all all the content you guys publish on uh on the journals of Harvard or the books. Everyone who's interested to say, look, we need to do we need to do a revolutionary uh idea and do it in an evolutionary way. Uh I can highly recommend. And I think this is also uh also your your contribution on higher. I think the article of 2018 was the end of bureaucracy, right? Um the higher story. Also I really recommended read. Um yes.

SPEAKER_03 1:16:28

Right.

SPEAKER_00 1:16:29

I think we could talk for hours.

SPEAKER_03 1:16:30

Yeah, I think all of the principles, all of the things that you mentioned in the book is probably worth their own podcast. Um, but for now, thank you so much uh for taking the time for this one. Okay. I hope you have a great day.