Speaking

In what sort of organization are people most inclined to give their best—to stretch themselves, take risks, and challenge conventional thinking? In what sort of organization do people feel most connected to the customer, most accountable, and most committed? In my experience, the answer is a startup. In a successful startup...

• Employees are united in their passion to break new ground
• Teams are small, roles are loosely defined, and policies are flexible
• There are few levels and little pressure for conformance
• Ambitious goals and tight timelines challenge everyone to do more with less
• The imperative of scaling fast creates an eagerness to leverage outside resources
• There are few formalities and the preferred method of communication is an all-hands meeting
• Initiative is prized, and individuals are encouraged to take prudent risks

In other words, a startup is bold, simple, lean, open, flat, and free. Not the words you'd use to describe the typical large company. What does this mean for your business? Just this: If you don't create room for aspiring entrepreneurs inside your organization, they'll leave and compete with you from outside.

It's no accident that many of the world's most resilient companies operate more like a collection of startups than a top-down monolith. If you want an organization where people spend all of the their time inventing the future and none of their time fighting bureaucracy, then every employee needs to think and act like an entrepreneur.

From Walmart to Amazon to JPMorgan Chase, CEOs denounce bureaucracy as "a villain," "a disease," "a destroyer of value." They understand that bureaucracy saps initiative, inhibits risk taking, and crushes creativity. It's a tax on human achievement that costs OECD economies nearly $13 trillion each year in lost economic output. Nevertheless, most organizations struggle to imagine an alternative. Bureaucracy seems essential for achieving the control, coordination and consistency that allow large organizations to function.

For more than a decade, I've helped progressive organizations bust bureaucracy and unleash a torrent of ingenuity and initiative. In addition to learning from the post-bureaucratic vanguard, success hinges on three things:

• Mindsets: The first step is challenging the ideology of "controlism" that underpins bureaucracy. Control is important, but when it becomes an end in itself, it spawns a bureaucratic apparatus that saps organizational vitality.
• Motivation: Organizations get serious about busting bureaucracy when they start to measure its hidden costs. Every organization needs to calculate its BMI—"Bureaucracy Mass Index"—quantifying time and money wasted on unnecessary paperwork, pointless box-ticking, redundant reviews, and tortuous approvals.
• Models: To remake management, first study the mavericks. Organizations like Haier, Nucor, and Buurtzorg have built thriving businesses by dismantling bureaucracy—proving that radical organizational reinvention isn't just possible, but profitable.
• Migration: You don't build a post-bureaucratic organization with a grand, top-down change program. Instead, you must build migration paths by launching many radical yet practical experiments designed to test and refine new, "post-bureaucratic" practices. The payoff: an organization that is flat, open and free.

Innovation is the lifeblood of every organization: it's the only insurance against irrelevance, the only defense against commoditization, and the only guarantee of continued customer loyalty. Many leaders understand this, yet most are disappointed in their organization's innovation performance.

For industry incumbents, the problem isn't a lack of resources or a shortage of human creativity, but a dearth of pro-innovation values, practices, and skills. What companies need is not just a handful of game-changing ideas, but an organization where innovation is instinctive for every individual, and intrinsic to every system, process and activity. This requires a focus on:

• Equipping individuals to think like business innovators—teaching all associates how to upend conventional thinking, intercept emerging trends and invent novel solutions to deep customer needs.
• Creating a pro-innovation environment—retooling every management process to ensure they facilitate rather than frustrate game-changing innovation.

As human beings, we are born with a creative impulse, with an innate desire to use our imagination to better the world around us. Yet too often, our organizations end up being less innovative than the people within them. Working together, we can change this.

Never before has leadership been so critical, and never before has it seemed in such short supply. The problem may have less to do with leaders as individuals than with the top-down structures in which they operate. In most organizations, the responsibility for setting direction, developing strategy and allocating resources is highly centralized. Maybe that mattered less in a world where change was better behaved, but today, senior management's monopoly on "strategic leadership" can rapidly turn a leader into a laggard.

Beyond these structural limits are the limits of existing models of leadership. In the past, leaders needed to be technically proficient administrators. In the future they will need to be...

• Entrepreneurs who are driven by a passion for game-changing innovation.
• Partners who collaborate across boundaries for the good of the enterprise.
• Architects who work to build tomorrow's essential organizational capabilities today.
• Catalysts who engage and enroll others in the ongoing work of transformation.

A company striving to build a leadership advantage will therefore need more than a gifted CEO and a corporate university that serves up tasty educational morsels to the "high potentials." It will need an organizational model that gives everyone the chance to lead if they're capable; and a leadership model that helps everyone to become more capable.

As the early 20th-century management pioneer, Mary Parker Follett, put it: "The most essential work of the leader is to create more leaders."

Transformational-change initiatives have a dismal track record. In the mid-1990s, Harvard Business School professor John Kotter claimed that nearly 70 percent of large-scale change programs didn't meet their goals, and virtually every study since has shown similar results.

This is hardly surprising. Today, organizations are challenged more rapidly and profoundly than ever before. Yet they cling to a bureaucratic change model which, like the bureaucratic leadership model, is no longer fit for the purpose. "Change management" is a bit of an oxymoron. There's no way radical and systemic change can be designed and deployed top-down—not if it's going to be proactive, fine-grained, and eagerly embraced.

In the years ahead, the most effective change efforts will be socially constructed. Change must roll up, not out. The leader's job isn't to design a change program but to build a change platform—one that allows anyone to initiate change, recruit confederates, suggest solutions, and launch experiments.