Michele Zanini: How Too Much Bureaucracy Stifles Innovation

 All right, well, thank you. Thank you, Henry and good afternoon, for to everyone who's joining us or good morning. If you, like me, are on the other side of the Atlantic and thank you, Henry, for everything you do to advance the cause of building workplaces where people thrive, I'm sorry I'm not able to be there in person but delighted at the chance and share some thoughts that have a dialogue on a topic that I'm really, really passionate about, which is how to build organisations that elicit and deserve all the ingenuity, all the initiative, all the passion that the human beings can bring at work.

So, I’m going to spend a little bit of time talking about that. Let's see if I can share my slides. Let me see here. All right. So that it's not just me talking. Tell me if you can see the title slide. Yep. All right. Excellent. All right. Yeah, we can see that. All right. Great. So, here's my plan for the session.

I'd like to spend the first 10 minutes or so just to provide some context around this challenge.  Why do organisations often struggle, right? To be as capable as the people inside them and, spoiler alert, it's a set of specific practices and mindsets that are still very rooted in the kind of 19th century idea of military command structures and industrial engineering or what I call bureaucracy, and we'll get into that later.

The second part I want to focus on alternatives to this bureaucratic model, and we'll distill some lessons from organisations that have broken the mould and built work environments that maximise the contribution of all its other members, and then we'll wrap up by talking about what it takes for an organisation to make progress on this front,  and I'll set each section up for about 10 minutes, and then we'll have time for a discussion.

And before moving on to the next and last preamble, 30 minutes of me kind of unpacking some of this isn't going to, isn't a lot of time to give justice to the broader argument. So, I apologise for any students of omissions, as Henry said if you want to go a little bit deeper into theory and the practice there's a book that I recently wrote with Gary called "Humanocracy" and I'm actually working on a second edition, which will have lots of more case studies and details and that should be out hopefully at the end of this year or early next.

So anyway, let's get going, if you're ready for it and let's start with this idea of understanding with the context and what our organisation is really up against and let me start maybe with a question for you to consider in what organisations are people most inclined, right? To give the very best, right? To move fast to stretch themselves right to to challenge conventional thinking, just ponder that for a second and I'll share with you my answer to this, which is, it's a startup.

Often, it is that kind of, work environment, right? And the real advantage of a startup is not so much the business model, but the people inside it, employees that are united on a passion to break new grounds, teams are small, roles are flexible, as are policies. There are very few levels and little pressure to just conform and maybe more openness to people being their true selves as we, heard about before there are ambitious goals and timelines that really push everyone to do more with less, right? And initiative is highly valued, you're encouraged to take risks, right? So, in a way, startups are bold, simple, lean, open and free, right?

But what happens as they grow successful, as they mature, often when you come back a decade or so later, all of that has changed and this is kind of a broad pattern and let me just give you an example that caught my kind of imagination last year. And this is Meta, Facebook. So, this is a quote from Mark Zuckerberg in 2011, and one of his big theories is that all companies slow dramatically as they grow. It's actually a fact, not a theory, but okay and, but he thought, well, when we're bigger at Facebook, we’re going to be able to move as fast as we, used to when we were like, 500 employees, right?

Because we've added so much in building the culture, whatever that means, in a way, like, bureaucracy, culture for breakfast, if you're not careful and in fact, that's what happened at Facebook. Last year, he was talking a different tune.  "I don't think you want a management structure that's managing managers, managing the people who are actually doing the work."

Right, and it turns out Meta had 10 layers of management. Just kind of nuts. And how does that happen? And I think, if you've been in an organisation, how that happens, as the company grows and becomes more complex, you reach an inflection point where kind of bureaucracy grows faster than the organisation itself and you’ve seen all these dynamics. I don't have to kind of explain these to you. Right? But these are the kinds of things that happen. And pretty soon you have an organisation that is not very healthy.  You have a lot of bureaucratic plaque that stifles the flow of ideas, talent and resources around the organisation.

Now, I've mentioned bureaucracy a few times, so it's probably good to define it because it's, it's an old-fashioned term, right? It's like horsepower, right? And in many ways, it is kind of an anachronism, but it's still the basic templates for most institutions of any meaningful size, right? And these are some of the characteristics that I tend to use to describe bureaucracy. You ask yourself, how many of these apply to your organisations, right?  I would wager most, if not all of them do. Now, I have to say we have to give bureaucracy it's due. Yeah. It's why we can all afford driving our own cars, why we don't have to grow our own vegetables, unless we want to of course, and why organisations are capable of amazing feats, like producing semiconductors at the 3 nanometer scale and by the way, that's the the length at which your fingernail grows in 3 seconds. Okay. That's at the level of precision, which we are operating. And Precision, stability, discipline, reliability are all organisational virtues. I'm a big fan of those, but they're not the only virtues in today's economy, right?

They're kind of table stakes. They're necessary, but not sufficient, right? We need to do more than that, right? We need to inspire initiative and increase innovation and enable organisations to intercept change proactively as opposed to be on the back foot. And the problem is that bureaucracy stifles these things, stifles inspiration, the initiative, the ingenuity that are really required if you want to build organisations that are daring, that are resilient, they're creative.

And in our work, we've identified seven ways, and I'm sure there are more even, in which bureaucracy kind of stifles human achievement.  And I would even say human happiness in organisations, right? It ossifies structures and processes. It creates very long pathways of approvals and decision making. It caps opportunities for individual contributions. Your kind of confined to do your job, right? And you can deviate from that. And you’re probably going to encounter a lot of resistance. It frustrates the rapid redeployment resources. It makes everyone focus on their particular silo as opposed to the whole. It makes the organisation very conservative and very political as well, right?

And its why incumbents at large organisations entrenched in the operating of the industry for a long time are often very slow to respond. Right? I mean, you can see this in EVs and so many other industries, like where you kind of expect the newcomers to update and upstage the old timers.

And it's not just about the organisational performance that suffers, but also the human experience inside these organisations, people are not really bringing the best of themselves at work. And there are lots of data points for this. One of my favorites is Gallup.  They do this global workplace survey, and they report that only 20 percent of employees around the world are fully engaged in their work, so that means the other 80 percent they're not bringing their ingenuity, their initiative and their passion to work.

And imagine, this applying this kind of p attern to, like, another professionally, like the medical profession saying, a doctor visiting, the doctors going to the hospital helps 1 patient out of 5. I mean, that's kind of insane, right? But we somehow have resigned ourselves to the side reality when it comes to organisations that it's something that we need to actively fight against.

And here’s why I think this is like, a really big deal. Right? Picture for a moment, a hierarchy of work-related capabilities, like a bit like Maslow's hierarchy of needs, right? So, at the bottom, you have obedience and of course, you have to have an organisation that where people are capable of following, rules around the brand, around assisting clients. Of course, that's important. You also want people to be diligent. You want people who are willing to work hard and take responsibility for results. And of course, you'll want people to have the requisite skill to have the expertise to do their job properly. Now, these capabilities are essential, but they seldom create value, right?

These are kind of commodity capabilities. If you want to win in the economy, you need to do much more. You need people who are, have initiative, who are self starters, right? Who aren't just being asked, don't wait to be asked to do something. They'll just take matters in their own hands to add value or solve a problem for the customer. Equally critical, creativity, the ability to reframe problems and do something that is more than just, hey, let's copy what someone else is doing. And really push the boundaries of what's possible at the very top. You want passion, right?

You want people who are willing to stretch themselves and take risk for a worthy cause. And these things: initiative, creativity and valor, you cannot command them. In a bureaucratic way, you can encourage it, but then employees decide, do I bring these gifts to work or not? Right? And as the Gallup data suggests, the answer is usually no.

And sometimes it's hell no. Right? And I think that really needs to change. Now, 1 of the reasons why bureaucracy runs rampant in our organisations is because it's kind of hard to measure. We have a sense that it's there, that it's a problem, but we often lack the tools to dimensionalise the cost.

Right? So, to help do that, we've created a little instrument called the bureaucracy mass index and it kind of helps diagnose the prevalence of the barriers.  That I mentioned earlier, you might want to check it out and you can compare your answers to 16, 000. Other people have taken it but let me just give you a couple of data points from the survey.

This is about one, a question we asked about, like, how easy it is for someone who is not superseding or to start something new. Right? And these are the responses where people working in firms with more than 5,000 people. So only 6 percent believe that it's an, there's an easy approach to do that.

Right? And no wonder innovation is something that happens, very seldom in large organisations or another one. This is, probably, one of the most depressing statistics. I've seen from the survey, which is how, to the extent to which politics determine who gets ahead and how how people have influence and empowering organisations.

And the bigger the organisation, the more politics plays a role. Not very surprising. But the fact that two thirds of the people believe this to be the case for large organisations is pretty disheartening. All right. So that's just a quick kind of. Overview and and of, like, the challenge and, the question I have for you is, is, what aspect of kind of bureaucracy?

What are the barriers to a human achievement? Do you think are most toxic and need to be addressed? And so, here's the list again of these 8 buckets. And I would love to get your take on which one of these you think is. Most important or most toxic. And, maybe you can even share an anecdote of how this has impacted you or the organisation more broadly.

Henry Stewart: Okay, folks, have you got any questions for Michele? 

Paul Gapper: Just an example, if I can give an example of of it. Which was during Covid in the NHS. Because so much was happening so quickly, all the rules fell away, and surgical teams started being able to make up rules as they went and they became vastly more efficient and since that time, all the layers have come back in, and all the approval layers have come in, and they've all slowed back down and so forth. But it happened because it had to happen. But what it proved was, they were able to, as small teams, create spontaneously better systems than several days of management could have done. 

Michele Zanini: Yeah, that's such an important point, Paul and typically when a crisis happens, power does move back to the periphery because the center is just overwhelmed, right? But as the crisis subsides, things go back to the way they were.

And so, the challenge is how do you, how do you operate in that way, without a crisis, right. I mean, one of the things that I’ll update the book with is, is operation warp speed and another Covid era example in the public sector of incredible speed and laterality which saved millions of lives, and then the question is, how do we get government or organisations in general to operate at warp speed without having to face an existential crisis, right? That is the ultimate challenge. It can be done, but it's not easy. For sure.  Saw a question from Jason around over large staff functions.

So, what I mean by that is that, often a sign of a bureaucratic organisation is when you have a lot of policies, procedures. And tools really being handled centrally by finance by H. R. compliance. And the idea is that the way you get order and control is by having one, sync up and follow the same rules and procedures set by these experts at the top of the organisation.

And the alternative to that is actually that you distribute the responsibility for control of compliance and those things to people in the front lines or in the line and and make their jobs a little bit richer, a little bit broader a good example of that is Buurtzorg. I'm not going to get into that today, but you might have heard about them, they're like, home health services organisation in the Netherlands. They basically have a 10,000 person organisation in terms of nurses working there in teams and they have, I think, 50 people at the centre. Right. The work of managing and dealing with HR issues, dealing with finance issues is distributed across the organisation.

So that’s what I mean.  Okay, Michaela. That's all right.  Let’s keep going. All right. Let me see here.  So, am I still sharing the screen? No, I don't think so. Okay.  So, all right, let me go back here.  Okay give me a second to get to the right place and I promise, that's all like the Debbie downer all the bad news that I wanted to give you.

We're now going to turn to more positive things. And let's see here. All right and talk a little bit about   a potential   alternative because, you might ask, bureaucracy stinks, but as opposed to what is there really an alternative. Right? And I'm happy to report that the answer is yes, right?

That you can be as disciplined and controlled as a larger organisation, but still innovative and inspiring as a startup. And there’s a number of companies around the world that are doing this. Henry can certainly talk about his own experience at Happy, right? And they're all proving that you can have the cake and eat it too, right?

You can be more efficient and more proactive and more inventive and more inspiring as a place to work, and I wanted to give you a couple of examples just to make this, really, really tangible from very different organisations, and maybe as I walk through this, at least a couple of examples, you can think about what are similar aspects of how they're organised and managed and lead and  what are different ones.

So, the first one will take us to Sweden and to learn more about Handelsbanken, they are based in Stockholm and, they operate in the UK. I think they have hundreds of branches in the UK. About 10, 000 employees around the entire system. And they’ve been outperforming the industry for 50 years.

And on a variety, of measures. One of the things that is most remarkable is that they're being able to, kind of in a way, master some of the most difficult trade offs in banking. So, they are able to grow right? And at the same time, not take a lot of risks and and not depersonalise their customer service.

Their customer service numbers are, in addition to their economics, are off the charts. And and this comes from a, really at the root of this is not so much their business model or their IT system and things like that, but rather the way they approach their, their management model, right?

And so let me unpack some of the key features. So, the governing thought, right? At Handelsbanken is decentralisation. So, the branch is the bank, right? So, unlike most other branches, you might find where the branches are essentially glorified sales and service centres, the branches at Handelsbanken own the profit and loss, they make decisions on what credit to extend it to whom, the pricing of some of their products, the staffing, their customer outreach and all of that. Right?

And so, they act like little startups, each branch does and being autonomous doesn't mean that you are free from performance pressure. You still need to deliver certain results.  They have this metric and banking called Cost Income ratio, which is an efficiency measure, so there's a level that you need to be at 40% or lower for that and if you, as a branch manager are underperforming, you'll get replaced. Like, you're not free. You're free to succeed. You're not free to snooze, right?

One of the big reasons why branches exercise their autonomy responsibly is that it's possible is that they have skin in the game. So, they make a loan to a customer, and they will hold that loan on their books to maturity. So, if there's a problem with that loan, it will hit their profit and loss, they're not kicking it to some other unit that deals with working out that debt, and so they will exercise that autonomy judiciously.

They also have a generous profit sharing program that pays, irrespective of your role, the same amount every year. And then, basically, becomes a nest egg for an employee who stays there for most of his or her career and now this fund, and therefore employees, own about 10% of the bank, right?

And that keeps people focused on the long term health of the institution as opposed to right in the next cycle. Another important reason why this works at Handelsbanken transparency is. So, every bank can see their performance on a variety of metrics across the entire system.

So, it's easy to spot which branches are doing well and which are not and if you're not doing as well as others, you can learn, you can find out who's doing that particular thing really well, whether it's managing loan quality or managing headcount or whatever and you can ask them for advice.

And this is what legendary, longtime CEO of Handelsbanken, Jan Wallander put it, right? Peer pressure is an important part of the process. The executives are not really pushing people, they're just advising, creating a system where people find their way. The other thing that is really interesting about Handelsblanken is that they're super lean back to this idea of staff functions, right?

Super lean in terms of how many layers of management and how many people work in central administration. So, I think there's only two layers between the branch manager and the CEO, and this is like a 10, 000 person organisation and this ends up giving them a real cost advantage, right? So, the branches cost more than your typical branch at, Barclay’s or whatever, but there's far less overhead to control them.

So, in the end, you actually get more efficient. So, you can be decentralised and highly efficient and the last reason last thing I want to say about Handelsbanken is that one of the reasons why overhead is so low is that centralised services such as IT and HR, which still exists are very accountable to the branches.

So, they basically charge services based on actual usage and not some sort of unintelligible allocation and rates are negotiated every year between a committee of branch managers who drive kind of a hard bargain with the staff functions and if the branch managers are not happy, they can go outside.

So, there’s a deep internal focus on the customer.  So that's Handelsbanken and this model has been around for many, many decades, very stable, very inspiring. Let me give you another example across the pond. This is an industrial company called Ingersoll Rand. They do flow control and compressor equipment. They're based in North Carolina and, it’s an amazing story that's come up in the last 10 years and the CEO, Vincente Reynal was, driven really by him and his desire to build an organisation where everyone thought and acted like a real owner, and they took several steps to make this happen and I'm just going to go through these fairly quickly for the sake of time.  The first thing that they did is that they gave equity grants of worth more than 250 million dollars to employees, and they did this in 2 stages because they kind of grew and acquire different companies over time that detail is important.

What's important is that this is one of the largest equity grants ever given to employees in an industrial company and this, by the way, these shares went to non managerial employees, and they amounted to about 40% of their salary and these are gifts. They're not stock options. They're like, literally here’s some shares. You can do whatever you want with them. Most of them actually have kept them and benefited from holding them because the company has done really well.

Now, as this was happening, the company also flattened the pyramid, so they went from about 10 layers of management to 4 and they created an autonomous team, both in production and in white collar jobs and this is a quote that illustrates the kind of different mindset that created, right?  The people went from saying, this is not the company I work for, but this is sort of my company. This is my factory; these are my machines. These are my tools and I'm going to take care of them because I'm an owner. Right?  And so anyway, skin in the game was really important and, sort of also the autonomy, but you also need to give people the information, the tools to act judiciously as owners and so one of the things that they did,  they trained people in the economics of the business, even front line people, because,  they said,  you cannot be  empowered unless you know exactly what to do, right and how to drive the business forward, how to improve it.

One quick example I'll give you is around managing cash, which sounds   a little trite, but it's actually really important and it's important for industrial business with low margin and they back in 2017, they were struggling with managing cash. So, you know inventory, it’s all cash tied up in inventory and in accounts payable. So, what they did is instead of calling a consulting firm to ask them how to manage that, they said, we’re going to train every employee in the cash conversion cycle, which is here in its full glory, and we're going to unleash them and tell them, look, help us drive a better way to manage cash and a lot of cash, right? And they did that through a training program that covered every single employee over, 4 sessions about 30 minutes long and over time, they were able to unlock about 200 million dollars in cash by just training people on how to manage this better, right?

And I was recently talking to Vincente, and he told me that training that they did, unlocked about 200 million dollars, this all everything they've done to improve the employee experience reduced turnover and that was like, another 200 million dollars worth of value. And then the energy initiative that these employees used to drive the business forward unlocked another 2.5 billion. So about three billion dollars’ worth of value from this, right? And the human impact of share ownership at Ingersoll Rand has been pretty remarkable as well. So, they went from the 19th percentile on the Gallup engagement rankings that I mentioned earlier to the 90th, right? And they also created a ton of wealth creation for employees, so this $250 million grant that I mentioned earlier, it's now worth 750 million, right? So, it made a huge difference to people's personal lives as well. Now, these organisations are all kind of trying, to go away from this kind of system, right?

That manages compliance, right. To one that unleashes, contribution, right? So, they're kind of going from, bureaucracy to humanocracy as we like to put it, and it's not a prescriptive system, humanocracy, different organisations will do things differently depending on their context and their history.

But I think there is a shared set of practices, right? That are quite different from the bureaucratic model I mentioned earlier, right? So, there are very few layers, you have people who are really accountable to the teams that are doing the work.  They are disaggregated.  They're defined by small teams, driving their own piece of the business forward and, careers are based on accomplishment, not advancement up a managerial hierarchy, because there's not much of a hierarchy, right? So, and there's a lot of coordination effort that happens laterally, not through vertical command and control. So anyway, that those are some of the defining elements of what might be, an alternative model and what I'd like to do next with you is to get your take on which of these elements are most critical as you think about your organisation.

Which of these things do you think would be most helpful in driving human accomplishment and human flourishing at work? So, I'll turn it back to Henry for our second interactive segment. 

Jane: We've got a question. 

Henry Stewart: Yeah, Michelle. Is that Michelle? 

James: I was just on our table, it's James, we were talking about number eight. Individuals compete to add value, wondering whether collaboration does it have to be competition rather than collaboration?

Michele Zanini: Yeah, no, it’s a fair point and I do get that pushback.  Yeah, you definitely need collaboration and maybe competition is the wrong term because it implies the kind of zero sum nature, but what we wanted to distinguish here is between the way typically    people get ahead in organisations, which is a zero sum game.

There are only so many people at the top, and you're competing with your peers to get that slot above you, right? And so that creates all sorts of crazy political behaviors, and so instead, it's more about friendly competition for who's adding value. And there’s no bound on limit, right? To how much you can create because you're not competing for the scarcity.

So, that is promotion and I'll have an example of that, but that's kind of the intention of that of that element.

James: Yeah, that makes sense.

Michele Zanini: Kristina, Kristina, ask your question.

Kristina: Okay. So, I was just wondering, we had a little chat about this in our room, is where do you start break down an embedded or established bureaucracy, especially if you're not the leader?

Michele Zanini: Oh, that's the perfect segue to the next section but, and I won't get into, too much, unfortunately, again, for time constraints, but I think there are ways for you wherever you sit to to start an experiment with new ways of managing.

And then the other thing is that beyond your little unit and what you can do, there is a lot of scope for creating a horizontal movement. Across the organisation, where you can get more people to catalyse change and create create a movement that is kind of hard for those at the top to stop, right? Because the CEO has, let's say the CEO has like 1000 power units and, the front line worker has like 1 power unit. If you get enough frontline workers together to push for change and catalyse change, then,  that can have a real impact and I'll mention some of this and I can go deeper if you'd like, but I agree because if you just wait for the enlightened CEO to show up, you might have to wait a long time.

So, it’s something hopefully you can kind of get going without anybody's approval. 

Kristina: Thank you.  So just create your little bubble and hold on to it and don't give up. 

Michele: Yeah. Well, and there's more that you can do, and I'll show you an example in a little bit.

There's more you can do, to try   to take a policy that is like, blatantly stupid, for instance, or something that doesn't work. There's more you can do than just complain about it. There are ways you could experiment. With changes to those policies that are powerful and also risk bounded.

So, you're not going to blow up the whole company and therefore they're probably more acceptable for people. And so, we'll talk a little bit about that.  Okay, very experimental, very scrappy.

Thank you. These are excellent questions and I appreciate the engagement. So, yeah, so how do we go from here to there? Like, how do you let’s, because in a way Handelsbanken is an interesting example. Because, but it was like Lady Gaga. It was kind of born that way. Actually, it wasn't really born that way, but they faced an existential crisis and this young while under the CEO came in and reset the whole organisation, their model.

Most most companies are not facing an existential crisis and if they do, maybe it's too late. So how do you, how do you make progress on this?   Without without, being on the back foot. Right? And I think. The first thing you need to do is recognize the power of management, innovation, or organisational innovation.

I think, and I think this is like a very underrated concept. And so let me just spend a few moments talking about it. So, because when it comes to innovation, a lot of people think about it at the level of the kind of the operating model, the business model, et cetera. Right? Very, very few think about it at the level of the management model, but breakthroughs in management, the way you lead, you organize, you work have paid bigger dividends in, in, in, in performance and innovation in technology products or strategy.

Right? You just think about the invention of the industrial R & D lab by General Electric or brand management or lean production and bottom up problem solving the Toyota spearheaded. Right? And so, our take is that leaders will need to be as bold and as committed to reinventing the organisational model, the management model as they've been in reinventing the, the operating model.

Right? So, your kind of need to engage in organisational R & D, right? And when I talk about the management model, it’s really just the collection of systems and processes and structures that organisations use. I mean, there's an architectural component, right? That provide the scaffolding and then there is a set of processes and activities around planning, finance, compliance and the like, right?

And the choices organisations make around these elements matter a lot, right? They inform how resources are allocated, how people get rewarded, whose voices get heard, right? How different units sync up with one another, and you have to work on this. In a very systematic kind of continuous way and the way that it is bold and a new and innovative, as you're not just thinking what everybody else in your industry is doing and and kind of taking the best of that.

Because like, what if everybody sucks? Right? So, you kind of need to think, much more boldly than that and let me just give you a couple of examples of kind of management innovation. So, 1 is around, how do you make progress on some of these elements that I talked about to you earlier? Like, how do you get peer to peer co-ordination?

How do you get people to engage in friendly competition to add value? How you do not bound rewards based on position but based on value added on impact. Right? And so, I'll give you an example really focused on on this element of the management model. Like, how do you reinvent our performance?

Management happens and how its performances is rewarded. And this example comes courtesy of W L Gore. Some of you might have heard of the organisation and if you wear rain proof apparel, waterproof apparel, you're likely using one of the products, they invented the Gore Tex technology and lots and lots of other products.

They're consistently ranked as a highly innovative company and as a great place to work they have about 11, 000 people working there and they describe themselves as operating as a lattice, not a hierarchy, and employees are working in small teams and here's how their performance review works at Gore.

So, once a year, every associate is asked to compile a list of 5 to 20 colleagues who have first hand knowledge of their work, right? And then these denominations are used in a pure rating process, based on kind of pairwise comparison. They've evolved the system. So, this new iteration has this kind of pairwise comparison element to it.

So, for instance, assume that Henry and Michelle both list me as a potential reviewer, in this case, the algorithm will identify the match  and I will then be asked to indicate, which of the 2,  Henry or Michelle contributed more to Gore's success over the course of the year and, this happens 10,000 times and so you have a collection of comparisons, between people that you've been exposed to and and it creates a pretty natural contribution ranking for every associate. Right? And, armed with these rankings, then you have local contribution committees that review compensation data to ensure that an individual's pay reflects his or her, peer derived rating and also stays in sync with that of other peers who are really the same. So, there is calibration, right? So, for instance, if the average compensation increases 4%, the increase for someone who has been, rated highly might be 15 % or so. Right? And this system is very interesting because it pushes everyone to think about how they could add value.

Right? And encourages collaboration, right? Because if Henry comes to me, or I go to Henry and asking for or request help on something like, I’ll think twice about telling him to get lost. Right? Because I might get dinged at the end of the year. Right? And so, you're reporting to your peer, not to a boss, and you're more inclined to go the extra mile for colleagues, right? So, and this is really a driving force at Gore that they want people to really be invested in building a better business as opposed to winning kind of the promotion tournament that I was mentioning earlier.

So, that's one kind of example, and as I mentioned, Gore has been at this since the beginning, but they've evolved the system, perfected it, adapted it so that it could work at a large scale. So that's that's one example. Another example, and this is much more kind of scrappy and experimental and something that I think can be done by many organisations  and this is at the intersection of this idea of transparency that I mentioned earlier in the case of  Handelsbanken and compliance, which is people,  a collection of processes and organisations that are often not   favourites in companies and this comes from a pharma company where a group of mid level managers again, not CEOs,  they're really committed to getting rid of bureaucracy and there are many processes they could have chosen to work on, but they focused on travel planning and expense policies, which  was this frictionless  as a rug burn there.

Right? So, there were strict guidelines for who could travel for what purpose. So, which airline, which class of service, a hotel and rental card choices, similarly constrained and so one manager said, “I'm responsible for like, 100 million dollars in sales, but when I'm traveling, I have to check whether I can get reimbursed for a $3 , £3 cup of coffee, it's insane. I'm treated like a child", right? Then and that irked people quite a bit and so what they did, being a pharma company, is they ran an experiment and they had treatment and control groups. I have about two pairs of treatment and control groups and about 200 people in this is like a 70, 000 person organisation.

So, they pick 200 people working in the field and working at headquarters and they were told the treatment groups, right? were told that, for 90 days, they'd be able to make their own travel arrangements. No pre trip authorisations, no post trip audits, but there was a catch, right? You basically have to have all your travel expenses posted online for everyone to see.

We still need your receipts, so you have to post them and it's going to be transparent and so it was really driven by a few hypotheses. The first is that autonomy and transparency would simplify travel planning, reduce frustration and probably not have too much of an impact on costs. Right? And the core idea was that sunlight is the best disinfectant, right? Not a thicket of rules. So, at the end of the trial, they analyse the results and they found, not surprisingly, that people are spending less time on travel and expense matters and even this, like, very simple change in policy, it generated quite a bit more satisfaction, people felt like they were less patronised.

Interestingly, I mean, I'll ask you, what do you think happened to the cost in the treatment group? Do you think they went up down say the same?  And I’ll tell you the team that ran ran this experiment thought that the cost would go a little bit higher, a little bit higher.

But they thought this could be a   price worth paying for the increasing autonomy and the less time spent on low value, added administrative functions. What ended up actually happening is that the cost went down for the experimental group. So, and again, this is like a simple experiment, but it kind of offers a good lesson, I think in how to challenge a kind of boneheaded policy,  instead of complaining about it, try to hack it, try to run an experiment, overcome your learned helplessness and say, oh,  this can only happen if  the  CHRO, the head of compliance blesses it and obviously you need some sort of the air cover, but the ask for running an experiment like this is much smaller than it would be if you were trying to overhaul the whole system all at once.

Right? And I think this is a really important point, you need to be very experimental in changing your management practices, just the way you're very experimental and very, focused on building prototypes when it comes to a new product and service. Right? And my experience.   The change that happens, and I can get into this in the Q&A, if you'd like, but this kind of experiment that I described to you, you can do this at scale where you're inviting a lot of people inside the organisation to help you.

Let's say that the issue is reducing friction or increasing innovation, just ask people for ideas on what they might do? How might they change the different ways in which the companies are managed and organised?  And then try to think about experiments where you test some hypotheses and then the ones that work, you kind of scale.

Right? So, and you can do this with  large groups of people, thousands of people, and you generate that critical mass of ideas, but also constituency or change, that, as I mentioned earlier, is really hard for people to stop and I can kind of get into maybe some examples of how this works in practice if you'd like, but maybe now I'll turn it back to you and ask you, like, what is your idea for kind of revolutionising how your organisation is led,  managed, and organised? Like which of these elements of the management model would you change with? Understanding that often, you’ll have to eventually change all of them, right, in some way, but is there one that you think is particularly a prime target for a breakthrough management innovation?

So that that's my question to you for our next segment.

Claire Lickman: We did have one in the chat from Jason earlier, he was asking, did people feel safe to call out any expenses that seemed too high? 

Michele: There wasn't, there was some feedback, there were some people asking questions, but remarkably I think there was a lot of self discipline. So, people in general, people did the right thing and didn't submit anything that was very questionable because they knew that others would be watching.

There was a few back and forth, but in general, not a lot of very responsible behavior, which is, by the way, also true when we do this work, and we open up discussions around sensitive issues.  How should we think about, doing leadership development or, what are the biggest barriers to unleashing human potential inside the organisation?

 Leaders often worry that people are, when you open things up, are going to be very incendiary and go on rants and very polemical, but my experience is that people typically are quite responsible and take whatever freedom and voice that they have very seriously. 

Henry Stewart: Okay. Jane, jane, tell us ask your question.

Jane: Yeah. I just wondered if you had any examples of Humanocracy in the healthcare sector, which here in the NHS is a large, we operate in large NHS trusts, sometimes with thousands of employees that are then broken down.  So, we're all meant to function by   universal rules and universal pay scales, and yet we are trying to be dynamic and nimble at the frontline to do things differently that will actually work. But there are so many layers above that.

Michele: Healthcare is extremely challenging.  I struggle to come up with good examples, especially at large scale. The 1 that I'm sure you're familiar with. If not, I can give you the 30 second version is it's Buurtzorg. They do home health care, which nursing home for nursing  and  the interesting thing about Buurtzorg is  it was funded by a nurse who was working in that kind of context you describe and said,  I can't change it from the inside, so I need to go outside and create Buurtzorg as a non-profit that then contracts with the government, contracts with health care insurance companies to deliver services and and,  they now have the largest share of that sector in the Netherlands, and they've inspired other organisations to act the way they do, which is to empower frontline nurses to basically do what's right for patients and unencumbered by all that, all those layers, all those processes.

And they've done that in a way that not only improve health outcomes, but also makes nurses happier and they'll work more efficient and and and now birds are trying to do this in other sectors. I know there are GPs in the Netherlands who have taken the same idea. They call themselves “Buurtz doctors”.

So, they're trying to create the, you know GP practices that operate in this kind of way, where they are able to self manage and they're supported by a small center to do with deal with the administration. It's too early to tell whether that works, but to me, that's the best example, and I know they're also doing it with mental health, they created little bubbles of Buurtzorg that go beyond home health and home nursing.  It is too early to tell, but it does give me a sense that it's possible. Right? It gives me hope that it's definitely possible. And it's just a matter of, like, trying this, demonstrating it works, and mustering the political will to make the change.

One of the things that really helped Buurtzorg is support from the Dutch Ministry of Health and a minister who spent time with the Buurtzorg nurses and, came away in tears, understanding how that, that work was fundamentally better.  And that minister then said, we need to kind of help Buurtzorg thrive and export this model more broadly.

So, we need that as well. I mean, you need the example, but then you also need the political will. Sorry, very long question, very long answer to your question, but hopefully somewhat helpful. 

Henry Stewart: And also, there's somebody who wants to know if it can work in the charity sector. 

Michele: Yeah, I mean, Buurtzorg is, Buurtzorg is a non-profit.

I mean, in a way it should work better. Right because you don't have necessarily the same level of it may be short term pressure, I mean, I know non-profits have their own short term pressures as well. But yeah, I mean, it's a universal model. I've seen, this can work anywhere really and that's one of the things where I’d often get push back. Well, you don't understand. It doesn't work.  In our sector, because it's highly regulated or whatever. Yeah, maybe there's some constraints and maybe your solution will be different, but I think there are ways to experiment, take these principles and apply them in whatever context you operate in.

Okay, Jacq?

Jacqueline: It's really just a question of what, what it looks like, because I think we're trying to do this at our place of work, which is tiny. So, you're talking about thousands. We've got 16 part time workers, charity, domestic abuse and anti poverty. And, but we still have four managers and one of those managers manages a supervisor as well and there's 16 of us.

But that's less than it was, but the idea of managers being more accountable to our teams.  So, what does that, how does that look like? What does that look like in reality? I mean, it's not just about bureaucracy, is it? Or is it? 

Michele: Yeah. Well, so first of all, you might want to say like, what is the work they're doing that it really adds value?

And what that is, isn't what is it really adding value and, and the, even the work that they're doing that value, how much of it can, should they be doing or much of it? Should you be doing? As I said before, like, even at a place like birds or the work of managing doesn't go away. Just, you don't have managers, but everybody's a manager.

And so, a nurse at Buurtzorg does financial record keeping or deals with recruiting and other things on their own, so they're like mini managers, right? And so, making managers accountable is really having you as sort of persons on the receiving end of being managed a way to express this is actually helpful, this is actually a method to hold, know, to basically vote your leader or your manager off the island if they're not adding value.

I mean, there's a really good example of this very kind of unusual management system from China from a company called Haier. They're [one of] the largest appliance maker[s]. But if they are also organised in small units, but if a unit doesn't do well, like in terms of performance over a couple of quarters, the employees can basically say, I want a leadership election. We want to challenge this person who is not leading us effectively.

So, you need to have mechanisms with teeth, not some sort of anonymous 360 survey that doesn't go anywhere. But people need to be able to say, like, we're not getting the value we need from managers, from our manager and real recourses. 

Henry Stewart: Okay, over to you Maureen. Who's got a question?

Maureen Egbe: Everything's clear. We're happy. We're happy. Happy. Henry, happy.

Henry Stewart: You're happy, you're okay?

Maureen Egbe: Yes, yes, yes. We've got thumbs. Okay. Thank you.  Okay. No questions. No question.  Let's move on. 

Michele Zanini: Henry, can you just give me just two minutes? Because I wanted to just leave us with just a couple of parting thoughts and by the way, your questions, your feedback has been very helpful. And I look forward to continuing this conversation with you online if you want. You can find me there. But, as you think about re-imagining your organisation, I really would like to challenge you to aim really high.

Because as managers and leaders, we often seem to suffer from ADD, Ambition Deficit Disorder, right? We're negotiators, we're organisers, we're enforcers, but we're seldom dreamers, adventurers, rebels. And I think that if you want to create organisations that are radically more human centric, right, you need really to change that.

Right. And so.  Too often when, you’re challenged to do something that is radically different, the, the question is like, who's already done it and it's, it's a legitimate question, right? Like, of course, like, maybe there are some benchmarks that can inspire us and so on, but, but I think that the fundamental question you should start with is, is, is it worth doing?

Right, this is the little, like, insight lander, which is operates a $150M drill, and it was shipped to the surface of Mars.  NASA didn't benchmark anybody. They decided this is worth doing. Right? And so. I think we need to be, as ambitious as, as management practitioners.

Right. And so, as you seek, ways to now enable, extraordinary accomplishment, please don't be afraid to to aim high.  I don't think there's a more noble goal; the one of making organisations more daring, more resilient, more human centric. And so, with that, I thank you for your attention for your questions, your discussion, and I look forward to continuing the dialogue after the conference is over.

Thank you so much. Thank you so much.