Learn More About Gary Hamel
How do you build an organization that’s as daring, resilient and innovative as the times demand? How do you banish bureaucracy and master the art of entrepreneurship at scale? How do you unleash the initiative and ingenuity of every team member? How do you triple the pace of organizational transformation at a third of the cost?
London Business School Professor Gary Hamel, Ph.D., has been working to answer these critical questions since the 1980s, when he watched the auto industry in his native Michigan get out-maneuvered by new global rivals. Seeing first-hand how inertia and incrementalism could cripple an industry and ruin the lives of employees, he has dedicated himself to helping companies anticipate the future and build tomorrow’s essential advantages today.
Named the World’s #1 Business Thinker by The Wall Street Journal and co-founder of The Management Lab, an organization that builds platforms and tools to support high-velocity change, Hamel is a sought-after speaker and advisor for the most prestigious leadership events around the globe. As a consultant, he has led change initiatives in many of the world’s most admired companies, helping leaders design break-out strategies, create entrepreneurship at scale and enlarge their capacity for innovation — work that has created billions of dollars in market value.
Mastering the Art of Entrepreneurship at Scale
Hamel beliefs that entrepreneurship is the most powerful force for creating progress and prosperity. As a long-term resident of Silicon Valley, Hamel has seen the transformative power of innovation close-up, and has advised numerous start-ups. The problem is that to build a vibrant economy, one needs more than inventive start-ups. Collectively, U.S.-based “unicorns”—private, venture-backed companies worth more than $1 billion—are worth just 3% of the value of America’s 500 most valuable companies. Point is, every organization needs to be infused with the spirit of entrepreneurship.
Entrepreneurship isn’t just about creating new businesses; it’s about searching relentlessly for better solutions, being fearless and moving fast, doing more with less, and focusing obsessively on the customer. Unfortunately, as organizations grow, they lose their pioneering zeal. Slowly, they move from offense to defensive, and soon, their most ambitious employees migrate elsewhere. But this isn’t inevitable. In his work, Hamel has proven that it’s possible to rekindle the spirit of entrepreneurship in even large, complex global companies. One standout example is Haier, the world’s leading appliance maker and parent company of GE Appliance in the U.S. As Haier’s chief transformation officer, Hamel partnered with Zhang Ruimin, Haier’s CEO, in building an organization where everyone has the freedom, incentives and upside to think and act like an entrepreneur. This meant dividing a 50,000-person organization into 4,000 business units, reassigning 10,000 managers to customer facing roles, substantially shrinking central staff groups and using technology to optimize coordination across operating units. Today, Haier is widely acknowledged to be one of the world’s most radically, and effectively, managed companies. It consistently redefines customer expectations and out-performs its peers.
While Haier’s model may be unique, Hamel believes every organization must similarly commit itself to mastering the art of entrepreneurship at scale. Critical steps include resetting aspirations, enlarging front-line decision rights, training employees to think like businesspeople, pushing P&L responsibility as low as possible, making everyone directly accountable to customers and achieving coordination through collaboration rather than centralization.
Making Innovation a Core Competence
Every leader knows innovation is essential. Innovation is the only insurance against irrelevance, the only guarantee of customer loyalty, and the only way to out-perform the average. Despite this, 94% of leaders say they’re dissatisfied with their organization’s innovation performance. Too often, innovation happens despite “the system” rather than because of it.
Hamel’s research, and his vast experience as a consultant, has taught him that it takes a systematic approach to build build a capacity for continuous, breakthrough innovation. Every systems and process—has to be retooled to facilitate, rather than frustrate, continuous game-changing innovation.
In Hamel’s experience, organizations often take a piecemeal approach to innovation, or view it as the work of a few specialized units—like R&D or a corporate incubator. Instead, he argues, leaders must work to make innovation a core competence. Intuit, the financial software company, provides an example. That means retooling every system and process — planning, resource allocation, performance management and employee development — so it facilitates, rather than frustrates, continuous game-changing innovation.
For example, at Intuit, every employee is trained to think like an innovator and has “unstructured time” to work on new ideas. It’s easy for employees to fund and launch experiments, and every leader is accountable for mentoring innovation. Further, staff groups like finance and HR are expected to help innovators by removing bureaucratic roadblocks.
Hamel has taught hundreds of thousands of people to think like innovators, using a curriculum based on interviews with more than 100 of the world’s leading business innovators. He’s also helped many organizations do the hard work of building a pro-innovation culture—one that encourages and supports innovation from everyone, every day.
In his work, Hamel often uses a proprietary technology platform that facilitates large-scale collaborative innovation. With technology, it’s possible to rapidly build a portfolio of breakout ideas, quickly identify the most promising, and then ensure they’re adequately supported across the organization.
Freeing Your Organization from the Grip of Bureaucracy
A wealth of evidence suggests that large companies tend to be inertial, incremental and (often) inhuman. They often find themselves placing catch-up, are frequently disrupted by upstarts, and seldom get the best from their people. Gallup estimates that only 20% of employees around the world are highly engaged in their work—hardly a surprise when only 1 in 5 employees believe their ideas matter at work, and a scant 1 in 10 are free to experiment with new methods, solutions and products.
In his Wall Street Journal bestseller, “Humanocracy: Creating Organizations as Amazing as the People Inside Them” (Harvard Business Review Press, 2020), Hamel observes that while human beings tend to be resilient, creative and passion-filled, their organizations are not.
Hamel terms these disabilities “core incompetencies,” and believes they are the inevitable result of bureaucracy — management structures and systems that disempower employees, value conformance above all else, tolerate mediocrity, fracture accountability and sap productivity.
Hamel notes that, “As human beings, we’re extraordinarily resilient, creative, and passion-filled, but our organizations, as currently structured, systematically squander these uniquely-human capabilities.
Hamel’s indictment of bureaucracy is backed up by extensive evidence. For example, between 1983 and 2022, the number of managers and administrators in the US workforce grew by nearly 150%, while employment in all other job categories grew by a meager 45%. Hamel estimates that an excess of bureaucracy costs the global economy more than $18 trillion per year in lost output—and notes that every organization pays its share of this “bureaucratic tax.”
Many leaders know their organizations need to be flatter, faster and more flexible, but struggle to reduce the deadweight of bureaucratic drag. Periodic programs aimed at simplification and overhead reduction seldom produce lasting results. Hamel believes we can and must do better. Bureaucracy may have made sense a century ago, when most employees were illiterate, information was expensive to gather and distribute, and administrative skills rare, but over the decades it has become an untenable impediment to speed, creativity and engagement.
In “Humanocracy,” Hamel lays out a pragmatic game plan for uninstalling bureaucracy and building something better in its place — one that is revolutionary in its goals, and evolutionary in its execution. The solution, Hamel argues, isn’t to launch another top-down change program, but to empower leaders across the organization to experiment with new ways of leading, planning, budgeting, coordinating, and compensating. These “hacks” need to be focused on embedding new post-bureaucratic principles in the organization’s DNA — principles like ownership, meritocracy, openness and community.
As an example of a hack, Hamel points to a large pharmaceutical company that experimented with a new way of managing travel costs. In a test, they eliminated all travel restrictions for 100 employees, and instead posted everyone’s travel expenses online. The hypothesis was that transparency might be more effective in controlling travel costs than a thicket of rules—and that’s what they discovered. In the test group, travel expenses fell by a third. Just as important, the new-found freedom also increased engagement.
In “Humanocracy,” Hamel offers detailed case studies of organizations that have gone bureaucracy-free, like Buurtzorg, the largest home health provider in the Netherlands that operates a network of 16,000 nurses, divided in teams of 12, with only two organizational levels and a head office staff of less than 100. Widely hailed as one of the world’s most effective healthcare organizations, Buurtzorg is proof that a highly regulated environment is no excuse for bureaucratic bloat.
Hamel argues that “tomorrow’s most successful organizations will be the ones that evolve their management models faster than their competitors, in ways that make them more resilient, inventive and inspiring.”
Reinventing Leadership for the Age of Upheaval
Hamel’s research and consulting have convinced him that the hierarchical leadership model, in which authority correlates with rank, is no longer fit for purpose. Says Hamel, “in a world of head-snapping change, an organization with seven or eight management layers is at a profound disadvantage.” In his view, there’s a reason incumbent organizations often miss the future. By the time a problem or opportunity is big enough to capture the scarce attention of those at the top, the organization is already on the back foot. The world is so complex and volatile, that no small group of leaders at the center can plot the future and craft strategy. That’s why most “change” programs are “catch-up” programs.
Hamel notes that when asked to sketch a picture of their organization, most employees still draw the familiar pyramid — with the CEO at the top and frontline employees at the bottom. While this model is simple and scalable, the traditional hierarchy is not a community, or a network, or a social graph. Instead, it’s the exoskeleton of bureaucracy. It demands too much of “the few” and too little of “the many,” and in so doing squanders vast quantities of initiative and ingenuity.
A top-down power structure stifles dissent (it can be dangerous to disagree with someone who controls your career), over-weights experience (long-tenured leaders often resist new ideas), mis-directs competition (employees compete for promotion rather than for impact), discourages initiative (often the safest path is to do only want your boss asks) and frequently misaligns power and competence (when advancement depends more on one’s political skills than real value-added.
In Hamel’s view, the hierarchical model is so familiar that it’s little wonder most leaders doubt there’s an alternative—but fortunately there are role models. Nucor, America’s largest and most profitable steel company operates with about a third the number of managers per capita as its largest peers, and its frontline teams are ridiculously empowered. Production crews are largely self-managing, and any employee can spend up to $50,000 without a manager’s sign-off. Nucor’s attribute the company’s success to its belief that when you equip people to lead themselves, overhead costs go down and productivity goes up.
The job of reimagining leadership is particularly vital for any organization that hopes to attract and retain Millennial and Gen Z employees. Having grown up with social media, young employees are wary of positional power and belief you’re a leader only if others willingly follow you. In large companies, by contrast, there’s a tendency to apply the word “leader” to anyone who has subordinates. Hamel believes this is a mistake. In his view, a leader is someone who plays a catalytic role in helping others succeed. And, like the early 20th century management guru Mary Parker Follett, Hamel believes the primary job of leaders is to create more leaders.
In Hamel’s view, the difference between a leader and a bureaucrat is the ability to do amazing things done even when you lack formal authority. The critical force multipliers for any leader are courage—a willingness to take on challenges above one’s pay grade; a contrarian mindset—an ability to uncover unorthodox solutions to knotty problems; compassion—a selfless devotion to mission that inspires others; and community—and understanding of how to bring diverse constituents together in common cause.
Beyond helping his clients develop next generation leadership skills, Hamel has vast experience in working with companies who are eager to “invert the pyramid.” Critical tasks include shifting the mindset of senior leaders from managing to enabling; making leaders accountable to the led, rather than the other way around; giving frontline teams the skills, information and accountability they need to be self-managing; embedding staff functions in operating units; building dense, collaborative, networks across the organization; and tying authority and compensation to peer-attested competence and impact.
Hamel believes that to succeed in the age of upheaval, organizations must become less vertical and more horizontal. Every organization must become a “community of communities.” As an example, he points to the consortia of more than 3,000 scientists and engineers who built the Atlas detector at CERN’s Large Hadron Collider. Through the clever use of small teams and horizontal linkages, and with no formal hierarchy, the Atlas consortium built the world’s most complex piece of machinery on time and on budget.
This shift from vertical to lateral can be daunting for managers who are used to relying on positional power to get things done, but Hamel’s experience tells him that in the end, everyone’s job gets better.
Gary Hamel is available to advise your organization via virtual and in-person consulting meetings, interactive workshops and customized keynotes through the exclusive representation of Stern Speakers & Advisors, a division of Stern Strategy Group®.