A large-scale movement to transform bureaucratic management is under way. Models of “the organization of the future” have emerged in a number of very large organizations. “Sleeper cells” of the new way of managing have sprung up in many more organizations. Alarmingly for some, firms operating in the new way are often so successful that they are putting traditionally managed firms out of business.
In 2018, the Drucker Forum hosted several presentations that illustrated a future of post-bureaucratic firms, each with a unique “feel.” They each have a somewhat different story. Yet the stories have some important common threads.
Living a narrative.
Post-bureaucratic firms sees themselves as living a narrative of where they have come from and they are being run the way they are. The story both expresses and inspires the passion of those living and implementing the story. In each story, making money is the result, not the goal.
The management models of these firms all have different names and labels. Each firm uses its own terminology to describe what it is doing. Some of the firms like Vinci have been operating this way for many decades. Others have been at it for a shorter time.
The management models of these firms all have a home-grown feel to them. They have emerged organically over time. None of them has occurred as a result of imposing a system or model from without. This is one reason for the differing nomenclatures.
The journeys of each firm tend to be bottom-up in spirit and orientation, not top-down. They are based on pull, rather than push. In each case, the top has been supporting and inspiring change driven largely from below.
While outsiders might characterize the stories of these firms as reflecting “human-centered organization” or “human beings creating value for other human beings,” by and large, the executives of the firms themselves use humbler and less abstract home-grown labels.
Common features of the business models of these firms include:
Customer-obsessed: These firms are obsessed with adding more value for customers and end-users. They are aligned with Peter Drucker’s dictum that there is only valid purpose of a firm, to create a customer (taking “customer” to include “end-user”). They all stress getting close to customers, understanding customers, interacting with customers, drawing on customers, changing their structures and doing whatever is necessary to add value to customers. In some cases, customers become almost part of the firm.
Small is beautiful: They all emphasize getting big things done in small units, small teams, small everything. Big complex problems are descaled into tiny pieces that can be handled by these small units or teams, which are often self-organizing. Processes and procedures are less important than inspiring energy and innovation. The primary focus is on passion and commitment, not rules and structures. The emphasis is on enablement, rather than control.
Networks: These firms are run as networks or ecosystems, rather than top-down command-and-control models. They tolerate and even encourage significant “organizational messiness.” Values and culture are key features that help maintain consistency and coherence.
Some characteristics of the performance of these firms include:
Holistic: The post-bureaucratic approach applies to the whole organization, not just the R&D department. It includes talent (formerly HR), accounting, procurement, finance and so on.
Operating at scale: These firms have shown that they are capable of operating at very large scale. Those presenting at the Forum included organizations with more than 100,000 employees. Some of the largest and fastest growing firms on the planet espouse similar narratives.
Profitable: These are organizations in the private sector (although similar developments are beginning to emerge in the public sector.). They make a lot of money, although making money is the result, not the goal. Post-bureaucratic management is thus not about tradeoffs. In fact, the new way of managing has helped public corporations overcome adverse pressures from the stock market and hedge funds to give priority to maximizing shareholder value.
Imperfect: Yet none of these firms is, or claims to be. perfect. They are all on journeys and the journeys continue. Their very success has turned some of them into quasi-monopolies, giving rise to the risks that monopoly always brings. Issues of privacy and exploitation of personal data, creation of sweatshops are also present in some cases. In other cases, there are steps backward after steps forward.
Adapted from a 12-9-18 post by Steve Denning at forbes.com.