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Humanocracy beats Bureaucracy

Humans are really good at seeing patterns and developing solutions to solve problems. It’s a gift that evolution bestowed upon us. We can create solutions to more complex problems when we interact in groups. Better ideas emerge when we can freely share our thoughts with others. Fundamentally, setting a collection of minds on a problem allows more factors to be considered and is more likely to result in a good solution.

It is therefore frustrating when we find ourselves working within structures and processes that prevent us sharing ideas freely. People are limited in the ways they can contribute to the business and the business does not have access to the full potential of its people. A lose-lose situation is created which is often accepted as ‘normal’ because alternative approaches may not be obvious.

Bureaucracies had value when they emerged in the 19th century. The ability to get many humans to act in physical unison was essential in a world that was rapidly industrialising to mass-produce products. But bureaucracies create significant challenges in the modern world where businesses need to contend with a progressively more volatile, uncertain, complex and ambiguous (VUCA) environment. Industry is increasingly interconnected to markets through the internet. This makes them subject to the rapidly changing dynamics of our VUCA world. All industries are affected.

A fundamental, implicit, assumption of a bureaucratic system is that the boss knows all the answers. This may never have been true and is certainly not true any longer. Transforming businesses away from the somewhat sterile condition favoured by bureaucracies into organisations that access all the capabilities of their people is essential to enhancing performance.

All businesses exist to add value for their customers and stakeholders. All businesses are populated with people who conduct a spectrum of valuable jobs. Connecting the individuals within the business ensures that the collective creates maximum value, bringing together all their knowledge and skills to yield better solutions.

Set out in their book Humanocracy, Gary Hamel and Michele Zanini provide a structured argument that demonstrates that businesses need to be organised in a way that allows people to perform better in the modern world. That may be obvious but achieving a humanocracy is far from simple.

What is a humanocracy? At a basic level humanocracy describes a management system where individuals use the business as an instrument to create positive impact for themselves, the business, the business’s clients, and the world. In a bureaucracy, the business uses the individual as a tool to generate outputs. In a humanocracy, the business uses the collective to achieve outcomes.

Humanocracy is constructed around post-bureaucratic principles that are designed to release the potential within all people in a business:

  • Ownership,
  • Markets (ensuring that business ideas and services are tested by using the business as an internal market),
  • Meritocracy,
  • Community,
  • Openness,
  • Experimentation,
  • Paradox (balancing competing demands and dealing with ambiguity and simplifying matters for convenience).

Each principle contributes to an internal environment optimised to excel in a VUCA external environment by aligning with fundamental human capabilities.

Humanocracy is the core component of a high performing business but it needs to be supported by appropriate structures and processes.

At Avantix, we have been developing operating models with our clients which are explicitly human-centric. We think of a business as a system that integrates people, processes, equipment, and information flows. Working with our clients, we co-create value chains that bring together the roles needed to deliver outcomes. Information flows can be designed that are easy and enjoyable for people to operate and equipment can be procured that complements the way in which the business wishes to operate.

Combining human-centric business operating models with the principles of Humanocracy enables organisations to achieve ways of working that enable them to thrive in a VUCA world.