well good morning to you all what a great pleasure to be back in London my second home I live mostly in Silicon Valley but also wonderful to be here and I'll have the good grace not to say anything about your mayor or the next prime minister or anything like that you know we started by talking Christmas talking about living in a world of exponential change and kind of that's that's a familiar trope now but it's nonetheless true that we literally live in a world where change has changed it's unexpected it's seditious it's surprising sometimes shocking and in that environment the most important question for any organization for any individual for any society is are we changing as fast as the world around us and clearly the answer for many organizations is no just about every large organization I know is right now on the backfoot they're trying to catch up to things that others have already done and you know I have a lot of experience a lot of gray hair over many decades trying to help organizations of all sizes and types become more adaptable become more innovative become more inspiring places to work and I I have to honestly tell you that often in doing that I felt like I was trying to get a dog to walk on its hind legs there was something that felt fundamentally unnatural about helping organizations change ahead of the curve to anticipate what's happening so often they were behind the curve and you know with a dog you you can kind of succeed if you get the dog's attention you get a biscuit in front of its nose and you hold that up and you take a few steps the dog will get up and it'll take a couple of faltering steps and so that's kind of how it feels to lead a project and a company maybe some of you've had that you get a team together you carve out a little space you have time you have a budget you do some brainstorming with them you think you've made some kind of progress and yet of course what happens the moment you you walk away from that dog the moment you turn your back the dog doesn't say who knew this is amazing why didn't you tell me earlier love it the dog is back on all fours that kind of a thinking to itself you're an idiot I'm a quadrupedal about and so we do the projects we do the initiatives we go from one thing it's it's you know we teach employees how to be mindful we put in agile teams we do another round of Lean Six Sigma but it's very seldom feels as if we are changing our organizations in any fundamental way and yet I think we're at a point in business history where we do need fundamental change if you think of already how radically business models have changed I'm I'm old enough I lived in the UK long enough I remember literally when there were three or four television channels and you think today with Netflix and YouTube how how incredible that difference is that truly radical change in the business model but the question is can we imagine equally radical change in our organizational model how we lead how we hire how we plan how we compensate how we allocate resources and for most of us the answers still no but I think we're gonna have to learn to be radical there too now I'm going to cover a lot of ground we are gonna go really quite quickly so if you want more resources later or you want to ask me a question or whatever here's a few ways to be in touch with me but let me start really with with a question for you to think about here we are at a Wednesday morning and I'd like you to reflect for a moment on how long your to-do list is right now when you take the personal items family items work items how many things right now are vying for your attention more than 5 or 10 or or or 20 how many things are you fretting about right now because as we're sitting here there are things important things that you're not getting done you know most of us live incredibly harried alive we we run faster every day to stay in place but from time to time in the midst of all that frenetic ISM we have to step back and ask ourselves what's the point of all of this what am I actually trying to accomplish what is worth the scarce currency of my life you know as human beings were measured not just by by what we get done we're measured by the audacity of the challenges that that we take on and none of us should be living our lives on autopilot life is is too short to work on inconsequential problems and luckily there are plenty of consequential problems today in our world there are plenty of things to inspire you and challenge you and get you thinking differently but for those of us who spend our lives in and around organisations and care about the people in those organizations what sort of challenges should we be working on you know the first management guru I think in the world an American woman Mary Parker Follett she was born shortly after the Civil War she started her career as a community organizer in Boston and edited her career giving advice to large industrial companies around the world but she had an extraordinary heart for people at work and for her her lifelong goal was to free the human spirit the energies of the human spirit at work and and she realized there were many worthwhile goals in the world as well but she believed that one of the noblest was to ensure that every human being had the opportunity to develop and profit from their unique gifts at work and her early work inspired many others people like Elton Mayo and and Kurt Lewin Douglas McGregor Erik Troost here and here in the UK edwards deming edge shine crisps are just all these people all these great management thinkers over decades ask the question how do we build work environments where human beings flourish and I wonder you know if they were thinking about us today what sort of progress would they think we've made I think about a current loo and a great management pioneer who fled from Nazi Germany and for his whole life he had an Timothy towards authoritarian structures or or Douglas McGregor who had his roots in the Christian social gospel movement and and 60 years ago wrote the book the human side of enterprise so if he was here this morning talking to you about what's going on in your organization's would he go like wow cool agile teams I would have never thought of that already go we were doing that sixty years ago in dog food factories is that really all the progress that you've made because I would argue that that the promise of truly human centric organizations and truly capable organizations is is still a distant dream the fact is our organizations are less capable than we are as human beings which sounds a little odd because they're they're filled with human beings a few years ago I was asked to talk at a conference where the subject was executing strategy through people and I wondered whether we had an alternative I thought that was the only thing you you know people are using monkeys I don't know but I thought where people talked about um people and yet in many ways our organizations are less adaptable than we are the people I know are people who take holidays of new places they go back to school they think they take new jobs they sometimes take new life partners they're constantly changing evolving resilient at their core our organizations are not that people I know are deeply creative you know whether it's poetry whether it's working on their digital photos redesigning their guard and they're always they always have some creative project but our organizations struggle with innovation the people I know every person has an inspiring story to tell about their life something they've overcome and yes so often our organizations feel like emotional dead zones so there's something fundamental that we have to change here and the data backs this up let me share some data and I have to tell you in advance most of this data kind of pisses me off you know how is it that here we are 2019 and and less than 20% of employees around the world are deeply engaged in their work that comes from data from Gallup their global workforce survey and they find that around the world only 17% of people are engaged emotionally engaged in their work 51% kind of show up everyday just are there and and and a third of them are actively disengaged these are the saboteurs if they had a chance and if we were in any other field if we were physicians here this morning and somebody told you that of the hundred people that came through your surgery last week only 17% of them had any improvement at all that that somehow you killed a third of them that would not be a good outcome that would be scandalous and yet this data has hardly changed in 60 years and and it's not about the work if you ask people about the work they do they say it's okay about 89% of people are satisfied highly satisfied some of the work is not the problem and by the way the managers aren't any happier if you look at the engagement a data for managers maybe it's even they're even less engage because they're having to be nannies and and and parents to employees and then they have the same treatment from above but it's not the work I wrote a piece some years ago for the Wall Street Journal on on this topic and they're quite a conservative newspaper so I'd ended my piece by saying it's not so much that work sucks but management sure blows and they took that out I have no idea why but didn't make it in but how can we live with this how is it okay how is it okay that 50% of employees have said they've had to change a job to escape a tyrannical or incompetent boss and those paltry engagement scores suggest that most managers are still operating out of kind of command and control differences in those engagement scores 70% of those differences are explained by the boss that you have and this this simply isn't going to change as long as power trickles down from above and until employees have the power to vote their leaders off the island and we'll figure out how to do that how is it okay that that only 20% of employees are consulted before goals are set for their own work let me share some data here this is the European workforce survey and it has an American counterpart to it I'll show you them both but we ask people are you commit are you consulted before goals get set not often can you influence decisions that are important to your work not really do you have any choice at all in in in in the colleagues you work for that's one of the most basic ideas of empowerment no we don't only six percent so so whatever empowerment we have in our lives as consumers it's not showing up at work and and you can see the consequences of this and big ways in small ways a couple of years ago this this spring two years ago the spring United Airlines had maybe the worst PR disaster since BP in the Gulf of Mexico a huge PR problem they had a plane that was filled with passengers they needed to create some space for some crew that were repositioning they had offered some incentives for people to give up their seats nobody was willing to do that they ultimately draw drugs off a 60 year old physician and gave his seat to a crew member and somebody found this and it's been viewed hundreds of millions of times incredible PR disaster and so a few months later the CEO of United Airlines Oscar Munoz was being interviewed on television and somebody that's like what the hell happened here and let me let me share what he said he said we have not provided our frontline supervisors managers and individuals with the proper tools policies and procedures that would allow them to use their common sense do you see the irony here like like tools and policies and procedures that is the alternative of common sense and yet I think for many leaders today the idea that the future of your organization rests on the ability of ordinary people every day to use their judgment that idea is simply too scary to be contemplated better wrap them up and all the rules procedures and make sure that nobody's coloring outside of the lines but when you do that you produce an organization that's not adaptable that's not creative that is not filled with inspired people and so in many organizations this desire for control has metastasized if you walk around London and most people you meet they can buy a car maybe it's a used car but 2025 thousand pounds they buy an automobile they can make that decision maybe they buy a flat the house people make those economic decisions every day and yet at work you can't requisition a 300 pound office chair without getting somebody sign on and and if we thought about this for a moment we'd understand how stupid it is this kind of soft tyranny that's just everywhere because initiative and creativity correlate with autonomy when you shrink somebody's autonomy you shrink their willingness to dream their ability to experiment and you end up with a very kind of sclerotic slow-moving organization how is it that seventy percent of jobs require little or no originality let me show you some data this is the US Bureau of Labor Statistics I think it applies pretty much around the world they major jobs hundreds and hundreds of jobs in the economy by how much originality they require and they rate that on a scale of 0 to 200 so what you can see in this little slide is you see that deciles how much creativity you require in a job so way out there at the right you see the choreographers and film producers and so on but then you see the millions of jobs by decile and you can see that the vast majority of jobs on the left-hand side about 70% of the workforce they don't expect people to bring their brains to work right what what an incredible waste of human imagination right and then oftentimes we start to assume that commodity jobs are filled with commodity people and that becomes a self-fulfilling prophecy you don't ask them to think you don't give them the tools to create and pretty soon you just assume they're incapable of doing that what sted the goal should be to increase the creative capacity of every single job if there's a single person in your organization doing their work the same way it's done in a competitor they're not really creating any value there's no differentiation there how is it that the average first level employee in a large organization today is buried under eight or more layers of management what hope do those people have you know authority trickles down at each stage the next layer carves out a little bit more of their own decision rights by the time you get to the bottom there's precious little autonomy that's left think how long it takes to get a decision made through those layers think of the helplessness that people on the frontlines have in making smart decisions how is it that that 68% of people working in large organizations believe that new ideas are greeted with hostility and skepticism this is from a survey we did with a Harvard Business Review they feel their managers have little patience for out their ideas they feel there are a few rewards for trying something new and that and the problem with creativity is not on the supply side people are plenty creative the problem is on the demand side and that our organizations have little room for the curiosity the ingenuity the the passion that is part of what makes us all human maybe here's the most worrying date of all again from a large survey 10,000 people we did the 76% of those working in large organizations say the way you get to the top is by mastering the dark arts of bureaucracy the way you get to the top is not confidence or not leadership I will come back to this it is not the way you get to the top is you learn how to negotiate targets how to hoard resources how to manage up how to manage the optics of your performance how to burnish your image how to stiff arm colleagues how to protect your prerogatives so know none of this is okay this is the reality let's not pretend otherwise none of it's okay but we shouldn't be surprised because virtually every organization today is still built atop bureaucratic principles the principles of top-down the principles of compliance and and a hundred and so years ago Max Weber the famous German sociologist he said bureaucracy develops the more perfectly the more it is dehumanized and by that measure our organization should be pretty damn perfect by now because the underlying ideology a bureaucracy is control and in any language if you take the word manage as a verb and you go to the Souris and you look up management the word manage as a verb number one synonym is to control and so employees create products and services managers control staff people control this is how you justify your value-added by weighing in on decisions by by by creating policies and so bureaucracy grows like a ratchet every time there's a new crisis we get a new cxo the chief the chief experience officer the chief digital officer the chief transformation officer and so on they build a new fee from the organization grows again let me show you a little data we've done this in several countries this is US data but again I think pretty much the same around the world here what you see is the growth of the bureaucratic class these are managers supervisors administrators support staff we took IT out this does not include the growth of the IT function but that green line you can see that index to 1983 the size of the bureaucratic class has more than doubled and this is true in most economies where all other job types have grown by only 44% and by the way we backed out external compliance this is not including you know working on government this is internal compliance and if you break that down kind of by organization what you find is that in the average organization 14% of the headcount our managers they take about 1/3 of the compensation 14% of the headcount another 4% is supports to have h our planning of finance and so on and then 13% of everybody else's time is devoted to dealing with all that bureaucratic paper-pushing so essentially in developed economies a third of all human effort is going into bureaucratic tasks and our research our data says we would have no problem in cutting that by half and if we did if we had cut the bureaucratic load by half we reallocate all of that effort we would grow GDP in the UK by about 800 billion pounds we've grown across the OECD by about nine trillion dollars and there is no other productivity solution on the horizon not investment incentives not better training nothing that would have the same economic effect as dealing with the pernicious effects of bureau sclerosis which date Jamie Dimon at JPMorgan Chase has called a disease and I think he's right and you've seen these dynamics you all work on organizations you know what happens III as I said I live in Silicon Valley I see all these young companies grow up amazing companies but as they grow they are they're subject to the same kind of creeping Bureau sclerosis you get more layers you get more staff groups that accumulate more power legal has to sign off on everything employees have a diminishing share of voice one I won't name it to be a little unfair but one kind of darling of the new economy a company that's a leader in cloud services by the time that company got to four billion dollars in revenue it has 600 vice presidents like how the hell does that happen and so think about the alternative here for a moment if you wanted to build an organization where people gave you their best every day an organization where people are willing to take risks they are willing to stretch themselves to go outside the safe precincts this management as usual who are pouched in the they're customers who felt accountable and committed what kind of organization would that be and in my experience it's a start-up you know in in in in a start-up employees are united by their passion to make a difference in the world teams are small the roles are loosely defined you don't feel you're slotted into some role they're very ambitious goals that that force everyone to think lean automatically and to be very creative and leveraging outside resources the preferred communication figures are All Hands meeting on a Friday afternoon people have a lot of freedom to take through prudent risks in other words it's a company's bold simple lean open flat and free that's the real advantage of most startups it is not the business idea business ideas are relatively cheap I remember decades ago being inside of de mer and Ford and General Motors and and and and talking to them about the future of mobility and electrical power trains and an autonomous vehicles those ideas have been around for for a generation so it's not the business ideas so much as an organization that has those sort that can move at that speed that is that hungry does that lean and it's quite a contrast with what you find in most of the large companies that I know now at the heart of this there is a fundamental paradox that we have to resolve bureaucracy is perhaps the most important human invention of the last hundred and fifty years it was not the electric motor or the locomotive or antibiotics or indoor plumbing those are all wonderful inventions none of them would have made any difference at all if we hadn't figured out how to bring people together and do things that scale with perfect replic ability and ever-increasing efficiency that's why you can afford an incredible digital phone that's why you can take holidays around the world and afford the international air travel that's why you could have a closet filled with fast fashion so let's let's let's be clear what we learned how to do with bureaucracy the control and the consistency and the coordination those were huge benefits to humankind think about this in the next generation iPhone which will come out later this year the chip at the heart of that which will presumably be called the a13 I don't know yet but the new chip manufactured by TSMC will will be built on a five nanometer architecture that's the distance between the transistors the gates on that chip five nanometers is what your fingernail will grow in the next five seconds can you imagine building something at that kind of scale how much control do I need over how many variables to pull that off right we we need to be thankful that we have learned how to have that sort of control so that's the paradox in some ways bureaucracies made us far more capable we can do together what we could never have done alone but on the flip side it ends up making our organizations inertial intrumental and in many ways inhuman so the questions can we buy these blessings duty-free how do we still have the efficiency the cost and so on but organizations that don't kill the human soul and so I want to take the rest of the time I have with you to kind of lay out a roadmap for doing that and it's not easy but it's something you can start to do in your organization now you don't need anybody else's permission you can do it so let's talk about what we need first of all I think we have to start to count the cost you know I was watching something last night on one of the BBC channels about the war on plastic and you look around the world with with plastic and microbeads being literally in everything in in in wildlife and fish in plants in our diet in our food it's just inescapable and and 20 years ago nobody really worried about that today most organizations will do an environmental impact statement we pay attention to things that we can measure co2 emissions and we start to worry about that and the fact is most of the costs of ah cracy are invisible in large organizations we want to change that you've probably heard about the BMI body mass index have to pay attention to that let me give you another one the bureaucratic mass index how could we measure that because that 11 is most of the cost of your accuracy never show up on a P&L yeah the additional head count a little of the bloat at the top that shows up what doesn't show up is all that friction and decision-making what doesn't show up is the distortion when data is manipulated to fit the prejudices of senior leaders what you don't see is the internal rigidity that makes it hard to reallocate resources the apathy of employees who've given up trying to change the system and so on none of that shows up but it exerts an incredible cost if you start to look at how private equity is behaving today how they challenge the big company shall and Unilever and P&G and IAB Aven and the case they're making for radical change in many many organizations if you unpack their arguments you know from these activists investors most of it's an argument about a bureaucracy you're moving too slow you have too many layers you haven't had the courage to move forward and so you know taking on a few companies is great but I think as investors as stakeholders we have to start holding leaders responsible for calculating the cost here by the way if you want to do this for your organization go to HBR Harvard Business Review HBR org put in my name in the search field and and you'll see this instrument it will come up it's a survey it's free you can run it in your organization you could my benchmark yourself against others second thing is to learn from the Vanguard from organizations that have already escaped the curse of bureaucracy and you know it's it's tough because most of us most of us grew up in and around organizations that fit a common template and so it's hard to imagine an alternative right I mean just for a moment think about your organization I'm not going to go through this list but think about your organization and ask how many of these things are true eight out of ten nine ten out of ten power trickles down big leaders appoint little leaders people compete for the scarce resource of promotion I'm guessing that almost all of those things are true for your organization this is the template for bureaucracy and you find it in the Chinese prison system you find it in every University you find it in every government department you find it in Google and IBM and wherever you look this is the standard template when the Iberian explorers when the Spanish and Portuguese first went to the to the so-called new world at that time the Native Americans had not yet invented the wheel what would have been your reaction do you think the first time you saw a wheel are you kidding me we've been dragging this all these years are you serious right I want to show you some wheels I want to show you as possible and I don't I don't have enough time to unpack a dozen different case studies but I want to give you some hints and and and some hope that there are there are alternatives you know to imagine imagine an organization of 70,000 people a global manufacturing organization that's divided itself into four thousand micro enterprises four thousand where the average size is eight or nine people every single one has its own P&L it manages that little micro enterprise as its own business that is higher the world's largest appliance maker based in Qingdao China and they also bought GES appliance business and they run a seventy thousand person company like a portfolio of startups it is truly amazing think about teams coming together nobody nobody gives them assignments teams self-organize around interesting problems and when three people agree there's a problem to solve they set up a team and they tackle that that's how it works at valve which is the most popular platform for online gaming around the world think about an organization which employs our driving innovation that that frontline employees are doing thousands of experiments a year with new services and new products and they've been trained to do that where strategy is crowdsource where strategy does not start with a CEO strategies a company-wide conversation it involves everybody where do we go next where should we place our bets where there are no internal monopolies where if you're running a business you don't have to buy a support from from internal HR or internal finance or IT you can go in outside and buy that from whoever you like it's it's crazy to me that in most large companies HR in particular but also IT finance they are monopoly service providers and sometimes they talk about internal customers but that's kind of that's that's bull because customers can fire you I'm guessing most of you could not fire your HR department we got to change that and some organizations are beginning to do that imagine an organization of 10,000 people where people choose their own leaders and unchoose their own leaders and you serve at the pleasure of your team or power trickles up instead of trickling down companies where every employee feels like an owner a large bank Europe's most consistently profitable bank handles bunkin every branch is its own P&L almost zero allocated costs they make decisions on pricing of loans on deposits they run that like their own business and have enormous discretionary influence there or one of the world's largest agricultural processor that has a thousand employees and no managers at all employees contract one with another they write letters of Understanding with each other but there are no layers at all and all of these organizations everyone has extraordinary productivity advantages they have incredible engagement scores that are kind of you know just beyond belief and all of them have have turned upside down most of the priest steps of bureaucracy I was a few months ago in a plant owned by GE G's had a lot of challenges recently pretty bureaucratic company but here and there you find some amazing outposts I was in a plant that builds the largest jet engines in the world that go onto the a380 and the 787 this is a plan of 400 people almost no one here has a university education they're all highly trained but they run a plant of 400 people with a single plant manager so effectively a 1 to 400 span of control can you imagine if you went away from the conference you went back to your organization that we probably should have like a 1 to 400 span of control the world's most consistently profitable steel maker Nucor they have on average a 1 to 150 span of control a 20 billion dollar company where the head office is a hundred people and they have no no HR department at the center they have no IT department the only thing they have of the center is finance and when you talk to the to the managers they do have some you talk to the managers at new core they will tell you what we do is the least knowable work at new core we don't create products we don't really solve those problems every day we're not the ones meeting with customers those are all our frontline employees we just make sure they have the tools they need so we don't have to be stuck and it starts from getting out if you want to go deeper on some of these this is November December last year 2018 coverage story I wrote for Harvard Business Review this goes deep deep into what hire has done I think right now the most revel genera management model in the world you go check it out and learn more if you like so learn from the Vanguard and start with new principles you know in any in any field of human endeavor we ultimately reach a point where you cannot solve the new problems with the old principles two hundred and fifty years ago people who cared about building constitutional democracies and self-government they could not start with a Divine Right of Kings they had to start with a whole different set of principles about the inherent rights of each individual to be self-determining that was a radical change in political thought a hundred years ago the early physicists trying to understand the subatomic world the ones who fought like Bohr's and Heisenberg who followed who followed Einstein they realized you could not understand that that world using Newtonian physics we needed something entirely new quantum mechanics and again I think that's where we are in business so often when we go to other organizations or maybe you talk to your consultants and and your benchmarking the question we ask of other organizations is what do they do but maybe what we should ask is how do they think because today we need not only better practices we need entirely different principles and I think you know when you think about how knowledge is created let me give you a simple little framework you start with a problem that you want to solve that could be self-government let's say or it could be radical empowerment pick your problem that will point you to certain principles if you want to build democracy whether it's UK Netherlands Germany United States Japan there's a set of principles that are the same across all of those countries principles of universal suffrage of one-person one-vote of legislative authority of Independence before the law freedom of religion those things are pretty much common the way they are then institutionalized is quite different but the principles are the same and and and you can be you can be Russia and you can have elections that doesn't make you a democracy it's not a particularly process it's the underlying principles so those principles get reified and processes which then shaped everyday practices and then drive the performance of any particular system the dilemma is most of our time most of our energy is spent around processes and practices how do they do performance reviews how do they do their budgeting and we borrow those things we bring them in how do you put together an agile team and then we're kind of mystified that nothing ever really changed but it's kind of back to my dog right you can put a dog on a tutu but it doesn't make it a ballerina it's just a stupid looking dog and so the question is how do you change you know how do you change the DNA of the critter and to do that you have to go back to first principles as it's high time we did that you know the principles of bureaucratic organizations are these we don't have to go through them you see them how they're worked out every day and some of them are fine principles but they will never they will never help you build an organization that can outrun change they will never help you build an organization where game-changing innovation happens every day they will never help you build an organization where people bring their initiative and their creativity and their passion to work every day as gifts which they are willing to give so we need a different set of principles let me talk about what some of them might be and as we kind of dig into those Vanguard organizations what are the principles we see again and again one of them is ownership people who feel like real proprietors this is my business you know most of us would rather be owners that employs in one study I saw a 62% of folks in the UK said they dreamed of owning their own business for Millennials that number is 77% and the primary reason they give for wanting to build their own business is to be in control of their own destiny and so you know while image savvy employers today we talk about like you know building the employee brand or the employee value proposition we seldom give people the two things they want more than anything else the two things that are the heart of ownership autonomy and upside if I work hard I get the fruits of my imagination success so you know we take care of the things we own we're passionate about the things we own not so much at work let me give you some data from a study this was quite interesting very simple little study they looked at what was driving turnover rates employee turnover and they looked at two things one is how much autonomy did people have in their job and then how much financial upside by the way only a tiny minority of employees have any meaningful upside in their businesses for what this study found and you can see it here it's it's it wasn't one or the other that gives you lower attrition and they're more engagement it's both if you give people more autonomy and that means also more accountability but no more upside that just seems like a burden or you even give them upside but they don't have the freedom to run their business they just feel like they're shackled let me give you some more data here just to try to drive this point home very smart chap in a University of Rotterdam I believe did an interesting study so he built an instrument to measure the attributes of servant leadership and he gave a very large scale surveys where they asked employees to rate their leaders on whether their leaders were living out these attributes of servant leadership and then they wanted to see how these correlated with a set of employee outcomes how engaged I am my satisfaction my job the level of my organizational commitment might might my self-reported performance so what you can see here of all these different leadership behaviors the only one that really makes a significant difference is autonomy right that had the highest correlation those are our squares had the highest correlation across every single thing except for performance and that not surprising there was accountability which is the flipside I make you more autonomous but then I hold you accountable for what you do right I mean if if we actually believe this and I can tell you the UK the UK data says that most employees over the last decade believe their autonomy has gone down not up and we talk all about the empowerment of Technology I can tell you what's happening more often is that new kind of digital Taylorism we are able to track and major performance second-by-second at an incredibly granular level somebody call this time cards on steroids and I can tell you in a world of control obsessed managers technology is more likely going to lead us that way than to a new era of empowerment unless we start with some different principles so you see the argument here second second principle is building organizations where experiments happening all the time everywhere right here we are this morning having a conversation as human beings for billion years after life started on this planet and we were able to do this because for four billion years life has been experimenting through sexual recombination through gene drift through mutation little bits of genetic material can't see the future but yet there's enough diversity there that when the future comes life persists why wouldn't we apply that same principle in our organizations you know if if if life had been managed by the principles of Six Sigma we would still be slime right we we had to have some mistakes in there and here and there you know you see this logic play out in Silicon Valley you know a typical a typical venture capitalist will get a thousand business plans in a year to look at they'll maybe talk to a hundred would-be entrepreneurs if they think they have promise they'll ultimately put together a fund of ten or twelve companies you know that the most likely outcome for each one of those companies is they lose everything the modal return is zero but you hope you have a good average return because somewhere in there is the next uber or Pinterest or Atlassian or pick whatever company you like the dilemma in a lot of large companies is we don't have anything in that front end we are not generating hundreds thousands of new strategic options every year we are not testing hundreds of them at low cost you know there's there's a reason right now Amazon is probably the most innovative company in the world experimentation is part of their DNA Jeff Bezos I believe we're the best place in the world to fail we have plenty of practice failure and invention are inseparable twins to invent you have to experiment and if you know it's going to work in advance it's not an experiment let's not talk about pilots anymore right a pilot means you've already figured out 90% of it and now you're going to fine-tune for perfection experiments you can't be so sure what's going to happen tell you what a wonderful story about experimentation at Amazon more than a decade ago young employee Greg Linden he had this idea that Amazon could mine some of their data and they could give buyers recommendations so they look at what you and other people were buying and they say you might also be interested in some other things so Greg took that idea to his boss his boss said no way we're not going to do that our whole ethos is simplicity you've heard of one-click Greg we're not going to put anything in front of our buyers that we just like let them check out well Greg won and rayon the experiment anyway flatly you know flatly challenged his boss went and did it the results were kind of incredible now every ecommerce company has something like this but but talking about it later here's what Greg said he said in my experience innovation can only come from the bottom those closest to the problem are in the best position to solvent everyone everyone must be able to experiment learn and iterate position obedience tradition they should have no power could you imagine your CEO saying that position obedience tradition should hold no power unless they're willing to say that your organization loses because if you think about it and found it was it was it was it was a British systems engineer Seibert Titian Ross Ashby back in the 1950s he coined a very influential idea called requisite variety and at heart is very simple it says if the variety of experimentation inside of a system doesn't match the variety of stationed outside the system the system will soon no longer be viable if you're not experimenting on a broad front internally somebody's going to find the weak point in your business model someone else creates the future a company that understands this very very well is a world leader in financial software personal financial software for tax and small businesses into it about a six billion dollar company with 50 million customers around the world they've they've been doing extraordinarily well highly resilient constantly morphing their business model building new ecosystems that bring tax preparers and individuals together and Scott cook a longtime CEO he spent the early part of his career at Procter & Gamble and it was so frustrated that they seem to have no appetite for exploring truly new ideas and he vowed that if he ever built his own company he was going to change this well he found it into it and sure enough after a few years he could see the same kind of bureaucratic toper right they were hiring a lot of managers from outside and they believed their job was to keep everything buttoned down nailed down you know razor-sharp analytical skills but nobody was willing to stick their neck out and try something new so one day sitting in another marathon planning session Scott had had enough and he literally slammed his fist on the table and he said never again are we going to have as I said never again are we gonna have decision by bureaucracy decision by PowerPoint decision by persuasion or decision by power never again now if you want us to do something you run an experiment you bring us back data not opinion and then we'll look at it henceforth he said it's going to be decision by experiment and that wasn't just a thought they've really backed this up and they've made it very systemic every employed into it goes through a course on design thinking called design for delight it's a week-long course to build skills and empathy and idea development and how do you design an experiment every employee gets 10% their time unstructured time that they're supposed to hold back to do experiments and teams can Bank this time so you can get a dozen I've seen even a hundred people will Bank that time and then they use it all it was to do something really big and important every new project is formed as a discovery team and you need at least three people but once you have three people willing to work an idea you get kind of real status in the organization and and in a typical team they want something from engineering from product development and from design adding to it they say we want a hacker a hustler and a dreamer on every team and those teams wants their structure they have enormous amount of freedom to to run their experiment across into it they have 200 innovation catalysts these are really seasoned innovators who've been through several of these discovery teams and so you'll get attached to one of those individuals as as as a mentor every discovery team also gets a gets a sponsor an executive sponsor of some type so you have access to resources and and and their mentoring and so on there's a budget that set aside every unit has a certain part of its budget that set aside for funding experiments staff groups have to support this as well the legal department dramatically simplify the rules that you need to follow to do an experiment in fact at Intuit you can do an experiment with up to 30,000 customers without having to get any permission from legal at all so so unlike almost any other company I know they took this idea of experimentation and they said let us let us make this systemic let us teach people give them the tools make sure the support is there that's what it means to take a principle and then work it out in your management model another principle meritocracy you know the most common feature of any organization around the world is that top down pyramid asks ask anybody to draw a picture of their organization and you're likely to get that pyramid and that pyramid that is not a hierarchy of career activity of imagination of a boldness of our dasa t that hierarchy is a hierarchy of administrative capability and we'll come back to that theme in a moment but you know in a formal hierarchy decisions are correlated with rank the bigger the title the bigger the decision you get to make and that has all kinds of toxic consequences that I'll talk about for a moment let me show you something that was sent to me this this came as a PDF and I pulled out this one thing and put it in in a slide this was something that went to 70,000 people in an organization all of you would know and so you have the different behaviors they want people to have execute with excellence and so on but then you see across the top the hierarchy executives managers and then kind of individual contributors the peons notice just this one behavior what have they just told 95 percent of their organization you don't have to think about the future worry about those new disruptive business models those unmet customer needs that is not your job our job at the top is to think about strategy that's why we're paid all this money but I can tell you my friends this is a bad bet there is no evidence and there is no evidence that CEOs make good strategic decisions no evidence at all on average you know I heard I shouldn't name names I will because I just frustrated me know and I came across something a couple weeks back the former CEO twice CEO and chairman of Procter & Gamble AG Lafley and I believe this is in the pages of Harvard Business Review he drew he wrote this he said there are some opportunities that only the CEO can see and some calls that only they are able to make that my friends is horseshit right it's just absolute horseshit they are no in fact it's almost the opposite when you were insulated by multiple layers right when you walk to a meeting and you have opinion and everybody nods their head yes because you're the boss you were in the worst possible situation to see the future coming you know I saw this over years at Microsoft you know think about a lot of the things that have happened in 30 years in software graphical user interface invention of browsers the portal all the way up to you know cloud and AI until recently until the last few years when Satya Nadella came and took over at Microsoft for about 30 years Microsoft had been late to basically every import and trend in their industry late and late and late and late again in 2007 when the iPhone came out Steve Ballmer said there's no chance this will ever get any market no chance I made a presentation in Microsoft in the year 2002 very senior group and I talked about the end of the personal computer age like that was over and the network would be at the center and the PC was just one more device and somebody came up to me at the end quite upset and they said Gary around Microsoft we do not talk about the post PC world we talk about the PC plus world and I could really think of anything to say but I finally said you know the future doesn't really care a fig about your preferences it will do what it does and I'm not picking on anybody Microsoft these are my friends it's not about one company this is about every company right if you feel about why why why why almost always in large organizations why is change always behind the curve because by the time an idea or a problem is big enough to capture the scarce attention at the top it is already too late you are on the backfoot that is why virtually every change program is a catch-up program and in that when we believe that that strategy and direction starts at the top as most consultants do as most employees do but if you believe that what that means is a small group of people has the power to hold the organization's capacity to change hostage to their own personal willingness to adapt and change how stupid is that and that's why I change happens in footsie hundred companies and fortune 500 companies the same way it happens in porty governed dictatorships it is belated it is convulsive and it is expensive and we can do better than this but we got to change our thinking you know when somebody in your organization if somebody uses this term the leadership team the leadership team who do they mean by that all right typically I hear that phrase and it means these people I can tell you every one of those three words is wrong there is no tha about leaders there are leaders everywhere there's not a leader or that team there they're leaders across an entire organization if we give them the chance the word leadership the people at top are not necessarily leaders leaders I can tell you does not correlate with rank if you want to know whether you're a leader or not I'll give you the simplest possible test take away the title after name you no longer have any positional authority by the way in today's world if you have to use positional Authority to get things done your leadership Authority is eroding so just forget the title after day number one number two you have no budget you have no resources that are kind of yours and your command and number three you have no sanctions so take away those things and then the question is what can you get done what can you get done in your organization where you no longer have the big stick of bureaucratic power if you can still do something amazing by God you're a leader if not mm maybe you're just a bureaucrat how would we know and so there are leaders everywhere the folks that taught by the way are probably not a team these are not 10 or 15 selfless individuals working as a tightly-knit squad and maybe maybe just a little bit of history is useful here back in the early years of the Industrial Revolution and what it really started to take off late late 18th or late 19th early 20th century and we started having to bring thousands of people to work we needed a new breed of employee called a manager they didn't exist and so business schools stepped in to supply that need Wharton was founded in the late 1890s Harvard in the early in the 20th century and so on and around the world the London Business School all these schools they got set up to fill this demand for this new person called a manager who had set budgets assigned task review of performance looked for variances and and and so we created thousands millions of people who had those skills while writing in 1966 Peter Drucker codified pretty much everything we knew about what it meant to be a good manager landmark book and by the way in this book Drucker uses the word manager more than 200 times he uses the word leader I think 11 times and so what happened around about this early 70s early by the 1980s business schools consulting companies we started to say you know what we can't sell that management stuff anymore that's like a commodity like administration is just to come up we got it we got to sell something new oh yeah we're gonna go to all those managers and we're gonna tell him if you come on our courses and you pay us this money we're gonna give you an immediate performance upgrade we're gonna turn you into leaders now let me tell you there is no evidence and this is not just Gary Reed Reed Barbara Kellerman's book the end of leadership from Harvard Reed Jeff Pfeffer from Stanford read his book on leadership BS we known almost nothing despite 4050 years of trying we know almost nothing about how to build leaders very little evidence that the 40 50 billion dollar-a-year industry here is actually producing people who are true leaders Eric Eric Schmidt write to chairman recently of alphabet of Google here's what he said we reward people for being close to the top outrageous CEO salaries or being closer to transactions that's Investment Banking but big rewards should be given to the people who are closer to great products and innovations pay outrageously good people outrageously well regardless of their role or tenure if compensation correlates with rank in your organization that's going to be a problem because administrative capability does not correlate with with with any kind of market-based success and yet our organizations are still fundamentally an aristocracy of administrators because a hundred years ago that was a rare skill it is no longer a rare skill what are companies doing to change that let me give you one really interesting example it's the world's largest hedge fund Bridgewater and associates remarkably successful Ray Dalio their founder pretty radical thinker let me start with with a quote from him he said I wanted to create a system that could effectively weigh the believability of different people to come to the best decision and I knew that without such a system we'd either end up with you know we lose both the best thinkers and the best thinking and we'd be stuck either with kiss-asses or subversives who kept their disagreements to themselves so what he was essentially saying I want to be able to separate out your competence from your title because these don't correlate and I also know that on different decisions we need different hierarchies that can't be one hierarchy if it's a new product conversation that's one if it's a regulatory maybe somebody else is an expert so they create a quite a simple system called the dot collector and it works like this you have a device on your smartphone your tablet and any meeting at any point on several criteria you can give your colleagues or ranking and I think there's seven or eight top-level criteria underneath those there's quite a few more so you go in and you think that person is like so smart and so capable there let me go up up rank them or you know what this person is talking rubbish I don't believe him and you can down rank them and then anyone anyone can go online and look at everyone's rating on all of these different areas average person at Bridgewater will get more than 2,000 P ratings in a year and in any particular meeting your share of voice depends on how believable your colleagues think you are this is how power is going to work in the future power will not attach two positions power will be a product of your peer attested competence which is by the way exactly the way it works in academia I don't get any influence from my Dean or from my title I get influenced when at the end of the term the students say Gary you did a good job or colleagues say Gary that was a good article we think it should be published but power has nothing to do with any particular title another core principle Marcus on average margaret's are smarter than hierarchies for proof of that for evidence look at the performance over the last 50 years of the New York Stock Exchange which is outperformed every company on the New York Stock Exchange markets are very good at doing what organizations struggle margaret's are very good at moving resources from old things to new things there's there's there's there's no there's no emotional connection there's no nostalgia there's no concern about cannibalization let's just sell your shares here move it somewhere there and an aggregate average investors make smarter decisions than the best trained CEOs in the world and companies are beginning to understand this they're there they're beginning to understand you cannot let big decisions be made at the top I'll give you a little personal story I was working a few years ago with a Korean company will not tell you their name we had trained several hundred young people to think like game-changers taken through a quite an intensive course and then we set them to work inventing new business models and a couple of kids came to me said Gary we have something like amazing this is out eight years ago seven eight years ago I said yeah tell me about it as well you know this is all going to be on your smartphone you walk into a club a pub a bar and and and you know you can have your social profile we'll use geolocation you can see other people are there and if you think you might want to meet somebody you can let them know that and then maybe there's like a real physical connection and we said like this is gonna be like a cool way for people to connect I said yeah that seems cool so he then took that idea to the internal investment committee the average age of the investment committee 55 years old and so we had these lovely all-male Korean guys 57 years old looking at this new idea team made their presentation first comment from one of the old guys laws so like your let me understand you're at your club with your friends why are you on your phone yeah okay well because we're all on our phones and then we show each other what we're doing and it's kind of but they couldn't understand why would you just be with your friends before sagging crush they had and and and and let's say you have a connection why would you leave your friends that's rude to walk away with your friends to meet somebody else and we had to explain because all your friends are going to enjoy the spectacle in the end we didn't get the money six months later mark Andreasen funded tinder and kind of X billion swipes later that's kind of all history so you cannot have big decisions made at the top it's there's simply not enough bandwidth not enough experience and some smart companies are beginning to recognize this iBM has you know as in in recent years has been trying to know where to place their bets with AI what they call cognitive computing and rather than make that decision the top they created an internal market they invited more than 200,000 people to submit ideas on what the company should do with AI and they gave every one of those individuals two thousand dollars of virtual currency to bet on the best idea so you turn the entire organization into angel investors so out of that the first round there is about eight thousand ideas that got winnow down to five thousand kept getting winnow down through peer review and some expert review and finally get down to the 50 best and you get real funding but they understand you have to exploit the creative energies of the entire crowd not a few people both define those opportunities because if you want to build strategy today you better diverge before you converge you need to create those thousands of strategic options to have any hope of finding the best another principle is community you know in the UK you've heard a lot of talk in the last few years about lowliness there are public policymakers around the world who've declared loneliness and epidemic and in our kind of mobile hyper busy digitally mediated world we are more and more struggling to find the kinds of relationships that mean the most to us relationships that are that are that are face to face that personal that are positive that are reliable and you might imagine that work would be a place where people could build those relationships turns out that hasn't been mostly true again I a Gallup study found that only two out of ten people at work say they have a close friend there and I don't know how Gallup is modeled this out but according to them in any case if we double that profitability goes up by 12% because this is this is not about people just feeling good at work I mean as important as that is you know today the problems that are most were solving and worth we're solving and any business are new problems that cross organizational boundaries and I need people that have a lot of social capital built up they they care about each other they're willing to take risks with each other there's a lot of trust they're emotionally invested they'll go the extra mile without that kind of community I can't solve the interesting problems maybe the best example of that of any large pump in the world is the US airline Southwest they are consistently the most profitable airline in the world by a long ways they are the most highly rated airline in North America which I grant you is a very low bar but I think they would do well anywhere around the world their share price has been pretty much outstanding and one of the one of the toughest problems in the airline business is to turn around an airplane at the gate and you might think that's predictable it's not every time you have a unique challenge the baggage has arrived late from another flight or the passengers are late or you have a passenger with special needs or there's a mechanical problem or something has happened with the weather and so you need the baggage handlers the gate agents the mechanics the pilots the cleaning through the caterers all of these people have to work together as a team they have to swarm that problem and solve it together it is not at all unusual at Southwest if the plane has arrived a little late they're short of time the pilot will walk down the aisle picking up the rubbish along with a cleaning crew or someone will go down to help load bags if they're understaffed there and so most of their success comes from the speed at which they can turn their planes around what that means is they have their planes are in the air more often than any other airline around the world and when you unpack all of that it's all about community right it's people are brought together by a mission they care about they still believe in their heart that they are like on the earth to make flying affordable and fun for every human being that was their founding mission and it's still real to them every single employee is taught to think like a businessperson flight attendants and baggage handlers go through in-depth training about return on assets and protic - they can tell you whether their flight is profitable or not based on the passenger load they can tell you on on uncertain metrics if we improve what that will do to my profit sharing account if we improve that metric this year all that data is transparent all the financial data to every employee and there's that's another point of sharing we're all looking at the same scoreboard the company for years has emphasized the the ability to be yourself at work and it started with their founder Herb Kelleher who had show up in strange costumes and was quite willing to make an idiot of himself and poke fun at himself and that was that was part of the spirit there because you can't build a community unless people can be themselves at work so they'll they'll tell jokes and they'll do funny things on the airplane I've had flight attendants hide and the overhead bins and give you quite a shock when you open it but they're encouraged to do that teams are very much self to self kind of empowering a decision-making local airports those teams very seldom ask permission anyway anybody else a lot of accountability to your peers they make a big point of be egalitarian her but I always tell people there's not a single job that's more important than another job we don't think about jobs in that way that pilots are more important or managers are more important and then a big emphasis on family basically every corporate event is a family event everyone you know at work you're asking how are your kids doing how was your holiday but they've emphasized building that family connection now most of us we have two kind of faces we have two selves we have the professional self that shows up at work as polished professional and so on and pretty unemotional and then we have the personal the private self that sticks its head out only when we think it's kind of safe to do so and I think you know there's there's often been this idea that you really don't bring your private self to work in fact we kind of end up with it with the worst of both worlds we end up with work completely invading our private lives and answering phone calls from the boss on the weekend and so on so it completely evade our private lives and yet we can't really bring our own selves to work and yet I can tell you if you're going through a divorce if you're struggling with a child who's caught an addiction if you've lost a parent if you're facing a surgery and you have to spend eight or ten hours at work and you can't talk about that you suffer your work suffers you can't expect colleagues to be engaged in a work if they're not engaged with each other there's a reason that the corporate stock ticker for Southwest Airlines is L u V and a herb Keller he said a company is stronger if it's bound together by love instead of fear let me ask in your organization could you sit at a meeting tomorrow coming back from this conference could you say or the next day could you say to your colleagues at a point you know what we really need is an organization has a lot more love in it I think you'd struggle with that most people would because the language of business has become so banal so secular so so hollow that we can't even talk about the things that are most important to us at work anymore as counter her sad and he passed away about a month ago he said the tragedy of our time is that we've got it backwards we've learned to love techniques and use people so if you want to build a human aa cracy you got to start with different principles the goal of bureaucracy was to maximize control for the sake of efficiency the goal of human RC is to maximize contribution for the sake of impact and it takes a different set of principles and and and you're not going to build these into your organization all at once uninstalling bureaucracy is not going to happen and one armageddon-like battle so let me finish by telling you a few practical things of where and how to get started if you want to beat bureaucracy you don't start with your boss your boss's boss you start where you are you start with the people around you because there's a challenge here if you haven't noticed that people have power are often reluctant to give it up and you know bureaucracy is a massive multiplayer game that millions of people around the world have learned to excel at they've learned how to negotiate targets and hoard resources and stiff-arm and so on they've they're good at that and if you come tomorrow and you say we're going to change this game we're gonna go to an ordination a hyper flat teams choose their leaders radically empowered what's my new role there how do I win in that kind of a game you know when we when we did our survey we asked frontline employees what are the barriers to busting bureaucracy they said bureaucracy is familiar we all know it it's hard to imagine how to run a big company without it and they said in people at top don't really want to give up their power that was a very different perspective than when we asked director level people I'm old enough to remember the last head of the Communist Party Mikhail Gorbachev I I think he really did believe in glasnost and perestroika he wanted to change the Soviet Union the peasants presumably wanted a better life but he mostly failed and a de Russia is still an authoritarian regime run by an autocrat and he failed not by any fall of his he failed because he could not change the nomenclature ax he could not change the apparatus he could not change all the directors of the senior vice presidents in fact no leader can I don't care how progressive your CEO is he or she will run out of life and time before they convinced one-two-three-four a dozen twenty fifty people to change their roles to rethink how they create value you can't defeat bureaucracy top-down let me give you an alternate model 100 and some year-old tire company one of the industrial giants of Europe invented the world's first pneumatic tire first radial I mean amazing history of innovation but a few years ago they were stuck they had done everything the consultants told that lady rationalised product lines and factories they had done Six Sigma and Lean Six Sigma they you know they they done the script and their productivity was just absolutely stuck by the way as is productivity growth across the entire oacd it is not by accident that bureaucracy is going up and productivity is going down and Michelin got that so they aim to change it but not with any big top-down kind of change management program a factory manager who had been running a factory in China Bertram ballerinas his name he'd come back to HQ and he was in an industrial relations role and he said I think we can start to change this and he had a word for what he wanted to accomplish a French kind of Anglo French word responsabilité how do we push the responsibility down autonomy down down down and so he didn't go to the CEO they didn't get a whole bunch of HR people to script this out to redo the job descriptions to put people through you know hours of reeducation camps instead he went into factories not even to factory managers he went to front level supervisors and one at a time he talked to them and he said would you be willing in your team with your 20 or 30 people across three shifts would you be willing to run an experiment for the next year in which you give your power away and I can't tell you how to do this I don't I don't have a script there's no plan you're gonna help us figure this thing out I can tell you broadly kind of what we're trying to accomplish there's a bit of a from - and what you do is a leader but that's about it are you willing to do it and by the way you get no relief from your business responsibilities you still have to deliver all of your goals well after this like proselytizing plant to plant a plant he found 38 plant leaders who are willing to go on the journey with him and he said you call me if you run into really some big problem but mostly we're gonna leave you alone I'm gonna resist the urge to be checking in on you and to have milestones and after three months to try to take all of this and jam it into one like super model thing we're gonna have every now we just do you work for a year we're gonna come back and we'll see where we are a year you're later they bought these 38 pioneers together they had extraordinary stories to tell they talked about having their employees often what a leader would do is they take one team member at a time and they follow the leader for three or four days watch every email every phone conversation say what what could we do better than what our boss is doing and pretty soon these teams are doing their own production scheduling they were doing their HR issues working that out within the team some of them decided to go to a Ford a 12 hour work week or whatever incredibly empowered teams the leaders were having so much more fun they were no longer getting phone calls at 3:00 a.m. in the morning from the third shift of the problem they felt like they were building up these people and and and so they started to codify this again not from the top they created an online platform where people could share what they've done they built a whole map of how this might look and then then they had a dozen plant managers ready to raise their hands so now they've been running experiments at the level of an entire plant and what made this impossible to kill was it was happening in 38 places and there wasn't any great grand plan that you could attack and say you got it wrong that's like this was grassroots that's that's how change happens not top down it happens bottom up and I will tell you my friends we need to stop talking about change management change management is an oxymoron right no no real radical change ever happens top down in that way if you're trying to do something that's truly new you can't manage it all you can do is help it to emerge I mean changed changed management's like it's like saying Scottish cuisine or or I don't know a man bun or something it just doesn't make any sense give me one other very quick story added ass this is something we did with the North American part of the German sportswear company they compete with Nike and Under Armour in the US it's the biggest market for added ice in the world very tough market for years they've been losing market share margins were half of their competitors business was just absolutely losing its relevance and they had a new CEO mark king who came in he said friend ease that Gary what do we do I said like we got to change the DNA of this place we gotta ask people how would we reinvent our management model if we were serious about innovation so we created an online MOOC and over a period of several months we took thousands of their employees through some instruction you know we talked about all these principles what does it mean to be truly experimental what does it mean to have real ownership and think like an entrepreneur so each week we would have a new principle and then at the end of that we would ask people what would you change if we took that principle seriously if we took the idea of meritocracy seriously what do we change the idea of experimentation what do we change and those employees over a few months created 800 management hacks maybe we should publish everyone's compensation data maybe we should have users involved at the earlier stages of product development maybe we should have team rewards rather than individual 800 small ways ideas for hacking the old management model those got about 9,000 peer ratings it was clearer to see which ones people thought that impact the teams then came together and took the top 20 of those hacks and turned them into real experiments the way the way you you you change bureaucracy is one really smart at a time it has to be something that happens experimentally radical in intent evolutionary in execution right no one's going to give you permission to blow up the old model nor should they but you can do experiments anywhere I'll give you two two quick ones and then we're done I have good friends at an Australian software a company called Atlassian they are experimenting all the time with how they manage and organize one of the things they did a couple of years back was to start to experiment with their employee evaluation and you know this is typically once a year it's fairly fraud there's not much value in it and so they said can we go to something that's like happens all throughout the year every couple of weeks we're gonna load up a question on people's portable devices let them answer that and then we'll have a conversation with their leaders so they left the old system in place they didn't change that don't blow up the old thing but they did this new thing and they had one of the questions they said it's does your boss or your manager understand what you love and what you hate and they had kind of a uniquely Australian rating system it may not work everywhere in the world but that just started as a little experiment how easy is it that in a large German company we were working with one of the first experiments we did and they've now done hundreds of these one of the first experiments is we realise that Dom in this company you had to get permission to travel on business is that true everywhere I don't know but you Lillian your boss had to give you permission to take a business trip and then worse they would tell you which airline you were supposed to fly on which hotels the stay and how much you could spend I mean it's literally like treating people like children who presumably knew how to organize their own travel so in one division in one country for one month we brew up all of those restrictions we said you can travel on business any time you like if you want to fly Emirates first-class knock yourself out any hotel but when you come back we need receipts so when they brought the receives back we published all of the receipts online everybody's travel data was there for the whole company to see what do you think happened travel expenses go down happiness goes up and we need no more honors and much less bureaucracy and then we scaled that up but it started in the safe little container as one little experiment my dream for you is that you'll go out of this conversation today you'll get your team together you'll take one of those principles that you thought was important maybe it's openness or experimentation or meritocracy you'll spend a couple hours with your team and you'll say guys if we were serious about this what's something we could start to change right where we are what kind of a little experiment could we run and then we'll learn from it we'll share it but this is how complex things could change so I hope you'll go away today with a bit of a passion for building organizations that are fit for human beings I think bureaucracy today is is a new is kind of like a modern intellectual slavery or kind of a modern apartheid it locks up the energy and the imagination of millions of people and yet somehow we're okay with this you know if you think back 250 300 years ago we most people just assume that that aristocracy was the only way that you could get Civic order there were no alternatives but today almost none of us could imagine living in a world where your social status is determined at birth and where your rights are just you know there can be taken away at any time by an all-powerful sovereign 200 years ago slavery was just seen as this lamentable but maybe unavoidable human condition wherever you look back throughout all human history some poor souls had just ended up being property and today we think about that is it's completely repugnant a hundred years ago the assumption was that that that patriarchy is just like a fact of life that men will always have economic social reproductive privileges that women don't have and now we think that's a stupid idea and I think bureaucracies of that same class and you know if you go back and you look at how those systems changed how they ultimately fell it did not happen with utilitarian argument nobody said we're going to get rid of aristocracy because we want a merchant class to a urghhh which is of course what emerged in the UK first in the 17th century enormous flowering of individual initiative and so on you didn't need a royal warrant anymore to start a business and you need the guilds to tell you enormous explosion that wasn't the argument the iron was people need a right of self-determination slavery did not become it horan to us because we found better ways of picking crops if he came in Horan because you could not treat a human being that way the same with patriarchy it wasn't it wasn't that we suddenly needed women in the workforce and so these things fell not because of utilitarian argument they fell when somebody finally said this is wrong you know the great Enlightenment thinker Thomas Paine he put it like this he said a long habit of not thinking a thing wrong gives it a superficial appearance of being right we could no longer as economies as individuals as organizations we can no longer afford the dead weight at that old man data model is a technology that was born in another era but most employees were illiterate when information was expensive to move when change was gradual we can no longer afford it if you want to take some of the learning from today if you go to LinkedIn go to their education thing this is a free course you can put my name in you'll find a free course on how to bust bureaucracy there take it back use it if you couldn't get any value out of it you can share it with your colleagues I'll be signing books later have a new book coming out soon that will go a lot deeper to this for now let me leave you with one challenge now let's figure out how to get this to you if you have the guts I'm gonna ask you to put something up on the wall of your office your cubicle your workspace whatever it is a little sign maybe it'll provoke some conversation warning this is a bureaucracy free zone pettifogging desk jockeys butt-kissing suck ups meddling head office Dooley's half footed bean-counter self-important staff weenies sadistic bosses and pencil-pushing blowhards will be named shamed and run off the property if you have the guts to do that you put it in a tweet or send it to me I'll make sure the world sees it good luck god bless you thank you so much thank you thank you
