Gary Hamel

Every human being has within them a creative spark, yet our organizations harness only a fraction of that latent imagination. While 79% of leaders rank innovation as a top priority, 94% say their organizations aren’t as innovative as they need to be. What gives? If innovation is so important, why do most companies struggle with it? Because few of them have taken a systematic approach to making innovation instinctive for every individual and intrinsic to the organization itself.

The winds of creative destruction are howling. Change is exponential and unrelenting. In this environment, the most important question for any organization is, “Are we changing as fast as the world around us?” Sadly, for many organizations the answer is no. Today, there are many who expect the old guard to lose. After all, in a hyper-kinetic world, resources count for less than resource-fulness, and companies that fall behind tend to stay behind.

All too often, deep change is the product of crisis—it’s belated, convulsive and typically insufficient. The challenge, then, is to build an organization that can change as fast as change itself, that possesses an “evolutionary advantage.”

If you want to win in a world of nimble, hungry upstarts, bureaucracy has to die. Young companies are bold, flexible and quick. Big companies, not so much. Research suggests that an excess of bureaucracy—too many layers and too many rules—costs OECD economies $9 trillion each year in lost economic output. Nevertheless, most struggle to imagine an alternative. Bureaucracy seems essential for achieving the control, coordination and consistency that allow large organizations to function. For decades that was true. Now it is not.

A growing number of vanguard companies are proving it is possible to buy the benefits of bureaucracy duty-free. On average, these post-bureaucratic trailblazers enjoy a 30-50% productivity advantage over their peers, and are far more fleet-footed. Svenska Handelsbanken, the world’s most consistently profitable bank, has three management layers. Nucor, the highly innovative steel-maker has no central R&D and a head office of fewer than 100 individuals. Haier, a global leader in the appliance industry, has turned itself into a “platform” of 4,000 highly autonomous “micro-enterprises.” Turns out you can be big and fast, efficient and supple, disciplined and courageous.