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Smart use of technology can aid organisational change


Professor Gary Hamel

London Business School, and Director, Management Innovation eXchange

Professor Gary Hamel says that technology can eradicate bureaucracy — but that, first, organisations need to ask how they can dismantle hierarchy and improve employee empowerment.

Mediaplanet: You’ve argued that all organisations need to be adaptable, inspirational and innovative. But how many established organisations truly are all of these things?

Gary Hamel: Very few. Most are inertial and incremental. The challenge that most of them have runs very deep, right to the level of their DNA. To understand the problem properly, we have to look at the management of organisations — and by ‘management’ I mean the tools and methods they use to mobilise and organise their employees to productive ends. This encompasses budgeting, planning, resource allocation, hiring, motivating, rewarding and co-ordinating, etc. In most organizations, the management model is bureaucratic at its core. Unfortunately, top-down, rule-driven bureaucracy comes with enormous costs. For example, in a bureaucracy, senior executives have responsibility for setting strategy and making big decisions — which means that an organisation’s capacity to change depends on the willingness of a few people at the top to learn and adapt.  When leaders are reluctant to write off their own depreciating intellectual capital, the organisation falls behind.

MP: How can technology help change things?

GH: The question isn’t: ‘How can we use technology to automate and simplify HR tasks?’ As worthwhile as that may be, the real question should be: ‘How can we use technology to change the fundamental character of our organisations in a way that makes them fit for the future — and substantially increases autonomy? For example, one of the things that technology allows an organisation to do is engage its entire workforce in a conversations about emerging challenges and opportunities, so that everyone has the chance to help co-create strategy and direction. This is already happening in a few progressive companies like Red Hat, the enterprise software company.

Pictured: Gary Hamel being interviewed by Terri Kelly, CEO of W.L. Gore. Photo credit: Matt Hamel

Technology can also help his reinvent the way resources are allocated, and new ideas funded. In most organisations, the way to progress an idea is to take it up the chain of command. But if your idea doesn’t dovetail with the priorities or prejudices of your boss, it won’t get any traction. Imagine, instead, that there was an internal version of Kickstarter, the crowd-funding site, and that everyone within the firm had a small budget they could spend on any idea they thought was promising. That would create an internal equivalent of Kickstarter.  If you want innovation in an organisation, no single boss should have the power to kill an idea.

Technology could also be used to create internal, peer-judged measures of leadership capability. In the same way you get a Klout score that measures your reach on social media, every leader would have a score that would correlate not with their formal position, but with the value that others attached to their contributions.  We should also be using tech to give front-line people a lot more customer and financial information, so that they could make better real-time decisions.  Better information is a prerequisite for more empowerment.

MP: Is there a temptation for companies to think that layered on technology will solve all their problems? Do they need to go back to reassess their HR structures first?

GH: Well, yes: but that’s not to say that layering on technology can’t work. For example, there’s a really smart HR tech company called HireVue which is using super-sophisticated software and evaluation tools for recruitment screening. But there is a limit to how far that will take you. That’s because in HR — and in business in general — we are facing a set of challenges that lie outside the performance envelope of our old management model. Our organisations were never built for a world of accelerating change. So we can layer on technology, but if we don’t ask ourselves how we can dismantle hierarchy and drive much deeper levels of empowerment, the impact of any technology will be restricted.

Pictured: Gary Hamel and Eric Schmidt, Executive Chairman of Alphbet Inc. Photo credit: Matt Hamel

MP: What questions would you ask HR professionals today, regarding their use of technology?

GH: How are you using technology to turn employees into entrepreneurs? For example, what percentage of employees are working on something that could be a game-changing innovation – and what percentage of these would say that there is a big financial upside for the company if it was successful? What percentage have the freedom to make key decisions? What percentage are intuitively creative about how they leverage their resources? What percentage measure progress in days, rather than in quarters or years? Unfortunately, in most organisations, the answer would be: a very, very small number.

MP: Can technology help eradicate bureaucracy?

GH: I’m optimistic that bureaucracy can be defeated because there are plenty of examples where entrenched social systems have changed in the past, such as aristocracy, slavery, and patriarchy. Those things didn’t change because somebody said: ‘If we change them, it will make us more effective, productive and wealthy.’ They changed because somebody said these things are wrong. These things are unjust. And that’s the argument we have to make about bureaucracy, because most organisations are wasting more human capacity then they are using — and that’s unacceptable. How, for example, could anyone justify the fact that, according to a recent Gallup survey, only 13% of employees around the world are fully engaged in their work? The good news is that when human beings finally come to a consensus that something needs to change, we’re pretty good at figuring out how to do it. And remember, we now have a new generation coming to work who grew up using the internet and believe that organisations should be similarly flat, open and meritocratic. And, secondly, we now have access to new collaborative tools that allow us to aggregate wisdom and knowledge and bring people together to solve very complex problems in non-hierarchical ways.

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