The End of Bureaucracy

Description

While most business leaders recognize that bureaucracy squashes initiative, risk taking, and creativity, it continues to thrive. In a complex global environment, it's seen as a necessary coping mechanism. Many look to start-ups for an answer. But the most promising solution may have emerged in an unlikely place: the world's largest appliance maker, Haier. Under a renegade CEO, it has been divided into 4,000 self-managing microenterprises. About 250 are market facing ("users"), and the rest ("nodes") supply them with components and services like IT and HR support. Users can hire and fire nodes--or contract with outside providers--as they see fit, and nodes' revenues are tied to their users' success. Ultimately, everyone is accountable to the company's customers. Everyone is also encouraged to be an entrepreneur. All targets are ambitious, and rewards are tiered, performance based, and potentially hefty. So far that formula seems to be working beautifully, producing 18% yearly revenue growth for a decade and $2 billion in market value from new ventures.

Keywords

Entrepreneurship Organizational management Organizational structure Organizational transformations