Today's episode, and the next days is the Future of Management and the author of that book and all the others. Gary Hamel, welcome back. Nice to be back Aidan. Great to have you back. I'm gonna tee us up with an intro this time from the preface. I thought of this book, I absolutely love the preface. I shared it with loads of people. It goes as follows. On Christmas Eve 1968, the Apollo eight command module became the first human made object to orbit the moon during its journey back to earth.
A ground controller's son asked his dad, who's flying the spacecraft. When the question was relayed up to the home bound crew astronaut, bill Anders replied. I think Sir Isaac Newton , is doing most of the driving now. Like that curious lad, Gary tells us , he'd like to pose a question, who's managing your company? You might be tempted to answer the CEO or the executive team or all of us in the middle management. And you may be right, but that wouldn't be the whole truth.
To a large extent, your company is being managed right now by a small Cory of long departed theorists and practitioners who invented the rules and conventions of modern management back in the early years of the 20th century. They are the poltergeists , who inhabit the musty machinery of management. It is their edicts echoing across decades that invisibly shape the way your company allocates resources, sets budgets, distributes power, rewards people. Makes decisions.
So pervasive is the influence of these patriarchs that the technology of management varies only slightly from firm to firm. How about that for an intro and that will echo true to so many people. Listen to the show. Gary, I thought that would tee you up to tell us why this book, what was it about? What was going through your head when you felt it was time to write it? Yeah, well, that was, I think published in 2007. So here we are almost 20 years.
On, and I guess, Aiden, the kind of evolution of this book from the one I'd written, the most recent before that was leading the Revolution, which we talked about extensively. , folks who've been with us might remember that in the last chapter of leading the Revolution, I was really talking about how do you make innovation a distributed capability? Everybody's job every day. And that means, , changing the award systems, the metrics, how you train people, and so on.
And , the more I thought about how do you build new capabilities like innovation or others we may talk about in the future, like resilience. It's clear that to change really deep things in an organization. You have to change the way they're run. And, we talk so much about business models, but it became more and more apparent to me that what really needed to change in many cases was the management model. And, very few people think about that.
And as I said, there in that preface most of the fundamental choices about how you run large scale organizations were made decades ago some centuries ago. And were just playing that forward, accepting that legacy without really questioning it. So, it was interesting as you know, I had read a lot about innovation. It been my passion for a long time all the way back to when I was a young faculty member.
And it started to occur to me like, why wasn't anybody talking about innovation and management for heaven's sakes? I literally there was like that phrase management innovation. I don't think it was even, certainly you could find somewhere who used it somewhere, but it certainly wasn't an lexicon anywhere. I went like, isn't that odd?
So part of the research in getting going for that book is I went back and I read a lot of the history of management and there, there are a few universities, there are courses on the history of management and , I'm embarrassed now, I can't remember. One of the core authors there. I'll go, I'll find it for our next episode. But I went back like, where did all of this come from?
And you see that , it was innovation after innovation, after innovations, people were trying to solve practical problems and slowly kind of layer by layer, piece by piece, process by process. We build out this kind of, elaborate model that we have today in most of our organizations. And so that was like the first question, like, where did this come from? What problem were all of those early management thinkers, innovators, trying to solve? And and I went back through history.
The second question that I spent a lot of time thinking about with some of my colleagues at the London Business School, principally Julian Birkinshaw, was like, well how important is this? Did, , did this make, , did any firms ever reap any competitive advantage out of kind of their new management thinking?
the answer turned out to be yes, and actually one of the most influential pieces I wrote, and again, or I read rather, I'll have to go back and get the exact data, but it was a book on revolutions , in military affairs. And, in warfare and because Julian and I had gone back and we'll come back and talk about this in more detail, we'd gone back about like over the last hundred or so years in industrial history, tracking these big innovations in management.
Who made them, what impact did they have? How long did it take for them to diffuse? But then we was like, no, no, we need to go back much deeper than that. So we went back literally I think this book covered about 800 years mostly European military history. But you found the same thing over and over again, that this was really super important. And again, I'll come back and give some examples, but I think that was the.
Beginning of this book of saying, Hey, if you really wanna build new capabilities, if you really wanna build an organization that in any sense is fundamentally more effective, rather than incrementally more effective, you have to look deep inside of that management model which most of us like don't even think about. One of the things you talked about was reinventing the business concept. You called it back then.
Then you talked about the mental model, and then you got to this, you're like going, well, actually the management model needs to absolutely change and we'll totally come to that when we get to the work You've done the revolutionary work you've done with hire in this book, you talk about WL Gore, you talk about Google, and you talk about Whole Foods markets, all companies that have continued to do remarkably well.
But, I wanted to go back to that history a little bit and the work of Taylor, for example, Frederick Winslow Taylor, that really is solidified and we still work to his edicts today, but. I loved in chapter one, the end of management, you talked about this concept of a fitness landscape, work by the Santa Fe Institute alumnus Stuart Kaufman, and he used this notion of a fitness landscape to describe the limits of evolutionary progress.
And you used it then as an allegory for, well, that's what happens with organizations is that the structure of them and the hierarchy of them limits the species as it tries to adapt and change. I'd love you to describe this a little bit. Give us an overview of what this was 'cause it's a beautiful metaphor.
Well, if you think of a mountain range of peaks of varying height you know, I have a home in, in the Rockies and here in, in the United States and you know, you have peaks that are 8,000, 10,000, 14,000 feet. and each of those peaks is obviously built on a foundation. It sits, you know, on a plot of earth. And if you take an analogy and well, and lemme say if you climb a. 3000 meter peak, and you get to the top, that's as high as you could go.
There's once you're on the summit and you may look around and you're like, wow, well, interestingly that peak is higher. I'd like to climb that, but you, you can't go any higher from where you are. think it's similar. We have a management model built on a set of principles on a, on a foundation, which will talk about and do course.
And so, you know, and, and, and obviously many organizations are on the top of the, basically the same hill because our organizations are very much alike, built on very similar principles. You get to the top of there and you go like, there's really no place we can go from here. Yeah, maybe we can pile a few stones or build a tower, but like we're this is where we are. And one of the thoughts in fitness and the idea of fitness landscape is that you have to go down before you go up.
So , you don't just jump from the top of one peak to a still higher peak, and so you have to go back down, deconstruct, rethink, and start over again. Now we'll see that in practice, that doesn't mean you have to tear down an organization, but at least mentally there's that idea that, hey, you have to give up a lot of how you think about this and start over again if you want to find a fundamentally higher peak of performance.
I think it'd be interesting to your readers just to give a little bit of history here because, what kind of solidified this in my mind I was saying we were, we were looking at military history, and I wanna give a couple of examples there because the question some of these kind of military historians have asked is.
Why was it that at different points in times you had armies and navies, this is history before there was an air force, but how did you have armies and navies that had long advantages sometimes over generations? You know, how was it that the British could run all of the Indian subcontinent with, you know, a few thousand military personnel, sublets tenants and so on? you know, you, you might think, well, it was probably about weapons, right?
Whoever invented, you know, the, the English had the long bow, the French had the lightweight cannon. Was it the Spanish? Who invented the kind of three massed caravel? I can't remember, but, you know, and, and us with smart missiles or you know, now we have drones. Like that's really where advantage comes from, is, is, is the technology. And it turns out when you go back through history, that was never the case.
That, that even hundreds of years ago, I. Those technologies diffused quite quickly. You'd capture the enemy's equipment you'd reverse engineered, or better yet you'd capture the people who built them. And, you know, as, as we as the United States took a lot of the German rocket scientists after the second World War bottom to the United States, and that became the core of NASA's first rocket programs. So technology by itself really doesn't produce very long lasting advantage.
So, you know, another hypothesis well, like, it might be a brilliant general, and certainly there are times when you know that was true, but that doesn't explain anything that lasted over, , many decades. Or maybe it was tactics, but what you discover when you dig deep, it was almost always innovation. In management at an organization in some way. So the Dutch were the first to master drill.
So before an army was just a throng, it was a mob that went out and there was very, you couldn't move a lot of soldiers together quickly to reposition. And the Dutch really invented the idea of kind of military disciplined and mobility and perfected, moving large groups of people in a very or orderly way. The English invented to a large extent the regimental structure.
So your loyalty wasn't to some far distant king, but, you had this espirit de corp and a huge commitment to your regimen, and you go across England and you'll find these regimental museums with their kind of rich history and so on. And that, that, that created a cohesion and a passion of, of, of brothers in arms fighting. You look at Napoleon, who really was the first to invent an army that was fighting not for the monarch.
But fighting, fighting as citizens, you know, as Citizens' Army fighting for the Gloire de France. And with a ferocity and a passion that was actually quite new. The Austrian Army invents the idea of the general staff where you have functional experts that are advising the generals and bringing all the information together. And then the Prussian army was really the first in Europe, to select officers, not on the basis of aristocratic birth, but on leadership skills.
They had exams and they tested people. And because leadership is not really hereditary. So that was quite interesting, at least to me, looking back and going, okay, this kind of validates the fact that. The way you create long-term advantage is innovating in management in ways that really dramatically extend human capacity or allow human beings to collectively do things they had never done before. And we'll see that as we go forward into management. But that gave me a lot of confidence.
And this is a proposition that you go back, , hundreds of years and you find the same things at Military historians had found the same things we were finding about industrial organizations. One other thing maybe to just spend a moment on Aiden, is maybe just a little bit of definitional, something I like to put the idea of management innovation in a bit of a context, because you can think of almost like an innovation stack where you have different sorts of innovation.
I think, , one of the most familiar kind of maybe , at the bottom layer would just be operational innovation. You just, continuous improvement, you get better , and sometimes you can have breakthrough innovation there, I think. Walmart, fundamentally rethought large scale logistics and built the IT systems to do it. And that was quite a long lasting advantage for them. But we're all quite familiar with that now.
You see things in the UK like Ocado, where, you have robots moving through a warehouse. I think Amazon now has about one robot for every two team members at Amazon. So the operational innovation is very important. A level up from there, you have the product innovation and all the, whatever latest gadget, whatever, music player new financial derivative investment product a camera, computer, a mobile phone. But we're quite familiar with that. advantages don't tend to last very long.
They tend to be, rep. I think it was within two years of Apple coming out with the iPhone. Samsung came with something that looked functionally, very similar. a level up from that, you have innovation business models, which we've, talked about a lot, let's say in Airbnb or something like that. And then a level up from that, you have innovation in ecosystems.
So if you look at, WeChat and China, which is , these super apps that have become gateways to everything, and have hundreds of supporting apps or you look at Apple , with the app store with thousands, tens of thousands of virtual contributors. So that's more and more important. But really at the pinnacle, you find this innovation in management, I think we can say with some confidence on average, not always, but on average produces the most enduring advantages.
Well, what's interesting, , if you think about that Pyramid Aidan you think about operational product, business models, ecosystems management. And , where leaders and people put their attention. Most of our attention is down at the bottom. We're working on operational things, on product extension. Seldom really on new business models and almost no attention to innovation and management.
That's like, well that's weird that, , we're spending most of our energy on innovation in areas that are least likely to produce fundamental breakthroughs and long-term advantage. So I think if you wanna build a capacity for innovation, you gotta think about all of those layers and take them all equally seriously. I loved the, the work you did on the military and, and drawing those analogies between military, the stuff you had studied. I had loads of quotes there and ya beat me to it.
One of the ones I'll just share with our audience is history's most consistently victorious armies and navies have been those that were able to break with the past and imagine new ways of motivating staffing, training, and deploying warriors. Like you said there, for example, fighting for somebody that you could actually see, somebody that you could press the flesh with was much more different than a monarch in the distance.
And yet so many people never meet the CEOs of their organizations don't have a mission to fight for. This idea of a moral force within the organization or the army is absolutely core. And one of the things you said was even knowledge. So if you think about organizational knowledge, this was military knowledge that would be passed from generation to generation instead of just being disbanded.
And I thought there about how many times you bring an innovation team together, or perhaps they come together in a innovation outpost. They do a job, they work on a project, you have consultants there, and they all leave, they disband, and that knowledge is then lost. That capability, that muscle is lost to the organization. Yeah, I, no, I, I think that's true.
The, the other interesting thing, as you think about military in innovation, and it has a lot of parallels one of the questions that some of these historians have looked at is , there's some kinds of innovation, as I said, in weapons technology that propagates very quickly. So he says, well, that, like, that kills more people faster. Let's try that. There's other things like some of , these more organizational innovations that historically took a long time to change.
One, one of the really interesting examples in one of these books they looked at how how battle formations changed after the, in introduction of the musket. When it was, , long bows, pikes, and so on. You tend to have a lot of ranks, a very deep, a deep formation. So narrow. But then, because you have pikeman on, on the flanks protecting your flanks, and then the archers, of course, they shoot at an angle, right? The arrows go up and down.
So you're shooting over the heads of the people in front of you and you reign deadly arrows down on your enemy. The musket doesn't work that way. Right. You don't fire on that kind of a arc and you really don't wanna have too many people in front of you when you're firing the musket. So you would've thought that , as soon as the musket comes into battle, those formations quickly change. 'cause what you want is a longer formation, but with maybe only three or four ranks.
And people duck as they're reloading and people stay on the shoot. Well, back and looking at, they estimated it took about a hundred years for that to change. And the question is like, why did it take so long to figure this thing out? It looks fairly obvious. And the answer is it like three generations of generals had to die. Because as you were saying a minute ago, that's how they've been trained. That's like, this is how we, , this is what a military unit looks like.
And so you start to, and there's, I think there's a super, super important insight in here, which we may come back to as well, that. Traditionally organizational innovation, badly, badly lags technology innovation. And I see that I, I won't give too many examples. Now we can come back in another episode. But you see right now, even like right now with AI is we use these technologies mostly in ways that kind of buttress the status quo, that pave the cow path, right? In incremental ways.
Because you never see a different way of using the technology until you go back to the fundamental starting point and think much more deeply. And what occasionally happens, it happened in the US Army after the second World War, it happened again during some of these battles with Al-Qaeda and ISIS is at some point, you go back to doctrine, right? You stop thinking about tactics, information, technology, and you say, okay, what's our fundamental doctrine? And so, , one of the huge changes.
Over the last half a century more was armies found themselves much more often fighting asymmetric warfare, right? You were not fighting another army. You were fighting gorillas or terrorists or something that were deeply embedded in civilian populations. So that kind of asymmetric warfare needed a very different way of thinking, and in the end needed fundamentally different organizations.
Because, , you can't beat a diffused information enabled network of terrorists with a centralized command structure using traditional weaponry, like never gonna work. And so the faster,, or the more frequently, or at least seriously, you think about, okay, what's the underlying doctrine? What is our org? What was our organization built to do? What are the fundamental assumptions we have about people at work? And so on. You know, then you have some chance. Finding a new and better way.
But if you can't go back to that level, then you're stuck with very incremental approaches. But a lot of what I've tried to do in my work is to close that gap between , technology making it possible to bring people together to do new things and yet, we're stuck with these very old, hierarchical organizational models. But but yeah, there's a lot to learn from military history that you go like, yeah, it's not exactly the same, but there's a lot of analogies and lessons to learn.
That's so fascinating, man. The idea of the technology changes, which is the weapons, but you hold onto the old structures. It reminded me of your friend and colleague, Zhang Rumin, and he said that after the arrival of the internet, we realized that under this triangular hierarchical structure, people had a difficult time adapting.
So we reorganized ourselves as an entrepreneurial platform and it speaks to exactly that same thing, but also this idea, you and I have both agreed on that this work, all your work all, all this research that you've done on these shelves behind me and all that we've talked about, it's pervasive. As you said, this is still within organizations. It's very, very hard and hopefully we don't have people, we don't need people to die out, but maybe we need the mindsets to die out.
Yeah, and I think that's, the whole question like . Do you really have to wait and just be patient until it is so damn obvious that the old thing isn't working. And that's what happened to the US and Vietnam, right? , the world's leading superpower gets humiliated so you, you really wanna do this without having to , go through that kind of an experience. So can we actually recognize this as an important sphere for innovation?
Can we think deeply about, well, what are the principles that underlie this? And why this kind of sort versus another sort, can we actually put our minds to thinking about what might be a different way of doing it? It's quite interesting. again, we just take everything for granted. But, but virtually every system process that you find in a large organization was invented, right?
This isn't , this isn't like come down on tablets and still like human beings who invented this., I think of, I'll give a few examples. You go back in the very early 20th century Thomas Edison, co-founder of General Electric was asked this really amazing question, which is, can we bring management discipline to science? So people have been doing science forever, , all the way back to Copernicus and so on. And yet it was it was very disorganized, when you got a breakthrough, like, who knew?
And so by bringing some discipline to this, Edison was able to say, we are now going to get a minor breakthrough every six months. Sorry. How do, yeah. And a major breakthrough every year. I can't remember exactly the timing, but like, we're gonna put this thing, put discipline behind it. And within a couple of decades, GE had half of the world's industrial patents, which is like unbelievable.
And of course , they lived off of that heritage for decades , and ultimately squandered it in some ways. But that was like, that was a new idea. How do you bring discipline to size? You go forward , a few decades , and General Motors was this big sprawling empire that had been built through acquisitions, had a lot of different brands, , and the chairman of the time, Pierre DuPont was saying like, how do I manage something so complex, so many different brands? It's just like this vast empire.
And he turned to a young staffer, Alfred Sloan, after whom the Sloan School that MIT is now named. And he said like, how do I, how do we manage something this big, this complex in some kind of systematic way? And Sloan invents the Divisionalized organization saying, okay, we're gonna have centralized finance and strategy, but decentralized manufacturing and marketing to some degree. And we're even gonna let these brands compete head to head. Which is like, well that's a crazy idea.
And of course, that, that kind of basic architecture became the architecture for almost every multi-business company in the world. Every company of any size has General Motors, DNA in it. And unfortunately for GMA for gm, it was the last time they were really a management innovator. You go forward a couple of decades and you see Toyota after the second World War. Japan is in ruins. Toyota's a relatively small company.
They have ambitions to be a global car leader, which you go like, how the hell do you think you could do that? But they realized they had fewer people, fewer resources. So the only way we can compete is if we get more ideas out of those people. And so they were one of the first companies in the world to train every single, you know, employee, blue collar, whatever, in, in problem solving, statistical process control, Pareto analysis.
You give these people the right to stop a billion doctor, billion dollar production line. And, you know, and again, we've talked to other episodes, it took a long time for their competitors to figure out what they were doing. But that was a management innovation. Or you, you know, you go forward and you look at for example, open software development. You know, most, most of the software platforms we now use Hadoop and uh, and Linux and so on, have been built on you know, out of open innovation.
And I think, you know, the latest release of Linux has about 25 million lines of code in it, about 15,000 contributors. Like where did that idea come from that you could build like one of the most sophisticated, complex things on the planet with almost no management structures, at least no formal management at all. And, you know, it was interesting when, when this whole open source started to take off, there was a young Indian engineer at at Microsoft watching this.
And he wrote what, what became quite an, a famous internal memo. And he said, for the first time in our history as a company, we are not competing against another product or even another company. We're competing against a different philosophy. do you, you know, build large scale software And so every one of these companies, Microsoft, they all now have, they mimic that same kind of approach.
So you just see this, you know, you go back and, and look at all this innovation and what, what, and, and by the way, there, it's, it's quite interesting. Aiden, if you look at many of the companies that came to dominate the industrial economy, companies like Shell, Unilever, Procter and Gamble, IBM, general Electric, these were all serial management innovators, IBM, , there, there was a time when I think a lot of corporate CEOs understood this and took this super, super seriously.
, GE invents industrial r and d, they invent management training. They invent management by objectives. They were one of the first to really develop systems for talent development. Built the first corporate university. We're one of the first companies to do true strategic planning. Also the strategic business unit. I mean, just, they took this like super, super seriously.
And at some point, and we'll talk about it, a lot of these CEOs like said, now I'm gonna go do deals, or we'll just do cost cutting, or, , something else. But they, they lost sight of how important this is. And so I think that's why, if you think of innovation as a te management, as a technology, think we're, and you think of technology as a S-curve. know, starts not much innovation really hard. And then some people start to innovate. You build on other innovations.
A pace of innovation starts to go fast. But then at some point you reach the limits of that paradigm and the innovations become more incremental. I think we are way out on the flat part of that s-curve right now. I can't think of for sure. I can't, I can think of almost, no, almost no fundamental management innovation in my lifetime. all of it comes before I, I was born and that's, a long time ago. So, you know, it's a little bit like the combustion engine.
Like that's like fine, , now we're doing turbocharging and, esoteric things and , combinations with hybrid batteries and so on. But at some point a new paradigm. So I think we can come back to kinda why we lost, , sight of how important this is. But I think we did, and I think that's why we're you know, stuck now. I love that you mentioned the idea of that nobody came down and went, this is the best way to do it possible.
And if we think back to the fitness landscape and the fact that's the S-curve, the top of the mountain is the top of the S curve, we need to come back and reassess because the landscape has changed. And I thought we'd remind people. One of the great companies Gary talks about was WL Gore and how Bill Gore actually looked at and he. Trying to find this new operating model for management. Couldn't find it. So he made it up.
And that's actually the point that you have to make it up for your unique configuration. But I thought we'd revisit the start of the S-curve we're on, and the people responsible for that. And again, not criticizing them, it's not their fault. They invented this. This was Frederick Winslow, Taylor and Taylorism. This all idea of taylorism, but also Max Weber. The renowned German sociologist and a contemporary of Taylor who viewed bureaucracy as the pinnacle of social organization.
He said, experience tends universally to show that , the purity bureaucratic type of administrative organization is from a purely technical point of view, capable of attaining the highest degree of efficiency, and is in this sense formally the most rational known means of carrying out imperative control over human beings. So this was all about control, where people weren't very disciplined when they were coming to work. They did what they want.
They weren't measured, , they took as long as they took to get the job done. And it was this change and this drive towards efficiency that we're still stuck with. I'd love you to give us a little taste of the history. you know, and that's why the, I, the, the real history of, of management obviously goes back as far back in human history as we can go, but probably what we would think about as kind of modern management, it's not so modern anymore, I guess, really is the late 19th century.
It's, it's, it's happens before. Before the 20th century, but it's, you know, it's the early railroads they had to run on time. You know, you had the systems to do that. It was, you know, some of the early factories in the Midlands and England turning out fabric and, and, and garments and so on. And so as we've started to bring people to work, right? Never, never really before had we had hundreds or thousands of people at work in, in the same enterprise doing related things.
So that was an immense challenge, like how the heck do coordinate hundreds, thousands of people and, and choreograph all of that. We just like never done that before. And of course, this was a time when simply the ability to do, do the same thing with predictability was like, like nobody had ever done that before. If you had a blacksmith or you had a Cooper or you had a. You know, a tailor, every piece was different and every individual was you know, doing their own thing.
So, you know, this goes back to Adam Smith and the pin factory and the fact that when you had specialized labor, you know, rather than somebody making the entire pin themselves, you, you watch productivity go up, you know, many, many, many fold. you know, it was a series of innovations, but all of them were focused on those challenges. How do you, how do you make this more predictable? How do you get more specialization? How do you have more control?
Because to do anything in a repeated way requires control, and it requires compliance to the work standards, to the budget, to the timescale. So you need people who are, you know, are going to comply. So at the heart of this was a mass. socialization effort because we were taking people who had been you know, farmers, craftspeople homemakers, whatever their occupations were, and suddenly you're in a factory you gotta work.
You gotta do it exactly the same way every time at, and you have to show up at work at the right time. And this is pretty new for human beings, right? I mean, we could, we can be conscientious and work hard, but working in that kind of disciplined order taking rule driven environment that was like human beings had really never, ever before had done that.
So, you're gonna have to remind me 'cause I, I wanna come back with a little bibliography for people who wanna go deep into this, but there was, there's an interesting book called Manufacturing the Employee, I might have mentioned that before, that kind of talks about all this, how this happened. And initially a lot of people thought this was a really bad idea and. And still do. And they had a, a, a derogatory term for these employees called wage slaves. So you and now are slave to your boss.
And you know, you'd lost almost all your agency and you were just, you know, a a, a flesh and blood cog in what really was a machine. And that's why , uh, Weber at the same time, you know, he could say, and, and he said, there's nothing else that superior to bureaucracy is a way of doing things in a, in a highly replicable, efficient way. He would also call it an iron cage. And and he said, and I'll give you, this is almost a direct quote.
He says, bureaucracy is perfected to the extent it is dehumanized. So to the extent you can take the human element out, the intuition, the curiosity, the obstreperousness the laziness maybe, but to the extent you take all of those things out. And of course what happened is, yeah, we took out some of those maybe less desirable human things, but we also took out almost everything that made us human, other than the fact that we could just show up , and do the same thing over and over again.
So, you know, if you really wanna think about our organizations, they're really a mashup at the court. They're a mashup of two ideas. They're a mashup of military command structures, which go all the way back, , through history to the Romans, and much farther back than that. and of the principles of industrial engineering, as you said Taylorism and galrith and all the other people who are working in that mode.
So that's, , that's what we have and on those kind of, those two core ideas and immensely effective. The fact that, and it's interesting when people talk about, , like what happened in the industrial revolution? Why did suddenly , economic prosperity start to go up? Why suddenly did we have all of these amazing products and services and so on? And life started to get better? And people tend to point to the technology advances. You know, we got the steam engine, we got electricity , and so on.
And I think that's partly true. I think that's a much less important story because if, if you, if we hadn't learned how to bring people together to do things at scale and, and replicate and, and therefore reduce prices, all of these things would've been curiosities. You know , when Ford opened, in 1930, they opened the plant that's gonna build the Model T. at the time it's the biggest plant in the world.
It's 900 feet long has, you know, its own railway line and coal comes in at one end and cars come out of the other end. Nobody in human history had built something of that size and complexity. Never. The pyramids are a simple thing, maybe hard to get the stones up, but conceptually you just pile rocks in a particular way.
This was a level , of organization that the world had never seen before it allowed Ford, I think that the model T at about a 15, 18 year production run, it allowed them to reduce the cost of the model T by 69%. From 800 and something to $250 over that timeframe and made mobility affordable to millions upon millions of people around the world. So just an unbelievable accomplishment.
And if you look between 18 70 19 sorry, 1870 2015 16 when I last looked, if you, if you look at the increase in productivity, you know, the UK started at a slightly higher level, but, but they've had like 20 times productivity growth over that time period. Japan has had 60 times productivity growth, meaning that the amount of value that one human being can produce grew, , between 20 and 60 times. Like this is like, it's just mind boggling.
If you go back in that pre-industrial world where you had about 2000 calories of human effort every day that you could do something with, and that was all you could do, and suddenly we had these ways of. And by the way, energy is an important part of this, but you have these ways of vastly amplifying, human capacity and in a way that creates the middle class. So yeah, , without that invention , of managerial bureaucracy we don't have the modern world, right?
We don't, we don't have prosperity on any scale at all. And I think , that was a , far more important invention any particular scientific invention that happened in that era. But we very seldom celebrate that , , I often ask people, , I ask my students like, make a list of the top 10 innovations of the last 150 years. I've asked that question a hundred times. Nobody has one said management, which is like, it's an incredible blind spot, but we don't think of it in that way.
I was reading about the history of Taylor and how, for example. Taylor helped win the war for the allies because the factories were then able to create armaments, et cetera, because they were so, but, but all the, all the men it was back then were away at war, so they brought women and elderly people who couldn't go to war into the factory. So they had to try and spark them up some way to get more productivity outta them. But it was the origin.
Also, I read in Michael Pollin's book of coffee breaks or tea breaks, because that gave even more productivity. So you made me think it's this really nice thing to have a coffee break, but it gets more productivity out of it. But I, I'm linking this then to, you mentioned Ford. What I found so fascinating with the history of Ford was.
That because he had such a perfect system like Taylor's system, it was so perfect and it was all driven by this, you can have it in any color as long as it's black. The whole idea of the Model T, he stopped listening to people at the edges who were going, our customers want a car that's covered. Our customers want cars that are different colors. They want style. And he ignored that because it broke the system and it also meant he had to retool the factory.
And I'm bringing this back to what you said about the in army. You know, we have these new weapons, this new technology, we need to change the formation. You get stuck in the ru you mentioned the, oxcart, the cattle ruts, and you get stuck in a mental one as well. And this seems to be the pervasive problem is that I have a system that works. The landscape changes, the world changes, the new technology comes in, and I'm stuck with that until maybe that management dies out.
We all have this tendency to hang on to our legacy beliefs particularly when, you know, they've been effective for us. But , I think it's even worse because, , bureaucracy is built to be a replication machine. That's what it's there for. and so anything that, you know, anything that you change is disrupting that, right? It's like , we spent all this energy, all this effort, decades figuring this thing out. How do we get this?
Like, and then you go like, okay, now we gotta like, stop it and change it and do something else. You know, we'll, we'll, we'll talk about Nucor, the steel company in, in another episode, super innovative company. But one of the things there, and I'll, I'll just give you a contrast. You know, Henry Ford once said is reputed to have said why is it that every time I ask for a pair of hands, a brain comes attached? He really, he just wanted meat wear, right?
He wanted these like semi programmable robots that would serve the machines. And so, you know, somebody was gonna do their own thing. Fricking that's like a problem for me. if I look at Nucor and are we gonna talk about Toyota as well in this sphere? You know, Ken Iversson, who was really the, the. The architect of Nucor's management system. He said, we started by building a company. Our, our core idea was the genius lies in every human being, not in the management.
And so our whole goal was to build a company where people are inspired to bring that thinking to work every day. So in contrast, you know, at Nucor, employees in a plant will shut down the plant because they wanna experiment with something new. We gotta just stop this 'cause we're gonna use a new method or a new tool, or we wanna produce a different grade of steel. And they have to make that decision. Like, okay, we're gonna surrender a little bit of efficiency, but we need to do that.
Because if you don't, you're never gonna invent anything new. And you know, but if you leave that decision to somebody at the top of the company, you go like, and the same thing at Toyota. You know, the, the idea that you would let frontline employees stop a production line when they saw a quality problem and go like, okay, we need to figure out how, like. That was just anathema. No, keep the damn factory running, right? This is how you make money. It's efficiency and it's throughput and so on.
So yeah, that's, so the dilemma with bureaucracy is, you know, anything, anything that you want to do that's new, different, whatever is a threat to the core principles, the engine, the economics of that. So, yeah, it's hardly surprising that. Let's move to some of the antidote for this because. People are nodding, going, yeah, you just describe my company. But one of the big shifts was the move to knowledge work and we're left with this physical work.
The way Ford had tooled up his factories, et cetera, was for two physical work. And now we're in a knowledge economy, but the structures still are that way. So the knowledge needs to get to the top of the organization. And in chapter three, you outline the three most formidable challenges that confront companies in this new century. One was dramatically accelerating pace of strategic renewal in organizations large and small. The second was making innovation everyone's job every day.
And the third was creating a highly engaging work environment that inspires employees to give the very best of themselves. They were huge shifts from that old physical manufacturing world to a knowledge economy. I. Yeah, and I think they challenge, , back to my point about military doctrine, they challenge the very doctrine, right? This is not about, and again, , we'll come back to this, we'll go deeper here, but it's not.
You can't build a fundamentally more capable organization if you're starting by, by tweaking process and so on. Even things like agile teams are not going to do it. yeah, you look at these new realities and, , accelerating change has, again, even in the industrial area, , the world is changing very fast at that time. So we've had this kind of geometric curve now for a long time, for a century and a half. So wherever you sit on that curve, it looks like it's accelerated. 'cause it is.
And to you, you go, oh my gosh. But it's accelerated a pace in those last few decades that we've never had before. And interesting. It might be interesting to something your readers, if you think about like, why do you have exponential change? What has really driven that? I would argue there's two things that have long histories behind them. But one of them is increasing computational power.
So you go back to the first mechanical adding machines and so on, Babbage and so on, , banks, everything. We just got way more productive. And then you get the first primitive computers and now we get quantum computers and we get ai. And so the more you can compute, the more you can model a system, understand it, changed the system and so on, and that, that has grown exponentially. Right?
I mean, literally, if you look at that curve, if you look at like an Nvidia , GPU, it's just, it's unbelievable. Or you look at a new, you look at a new Tesla, and I won't even remember, but it's like trillions of calculations per second. the other thing that changed was how densely connected we were. So the, whenever you start connecting people together, you multiply the number of combinations of which you can put resources, talent, and so on together.
So again, you look at how densely we're connected today, the amount of mobile data that's moving around the world, what the internet did, and so on. So literally both of those, Aidan in your lifetime because if, if, and I've looked at these over many, many decades, both computational power and con con connectedness reach a serious infection point around the year 2000 and have been going like this ever since.
like never before have human beings lived in a world where so much is changing at the pace, right? Or lemme say it differently. We've never lived in a world where the future is so little a reflection of the past, right? When, when, and, and it's particularly interesting, you know, if, if you're a kid growing up, you know, if you go back a couple of generations, kids grew up more or less in the same world as their parents. It wasn't very, very different. Right?
I mean, Lily, if you, if I go back to, let's say me and my great grandparents, they had, they lived exactly the same way that people came before them did. Maybe you had a slightly better plow or you had something. Now each generation is growing up in a world that's unfamiliar to their parents. Right? You know, when you were growing up, you would've never thought, and God help if you have daughters or children, ho hopefully not think about it.
You would've never thought, we live in a world 16, 17 to 18 year olds are going to plastic surgeons and saying, can you make me look like my Instagram image? Like, no, you would not have predicted that, , as a possibility. Or, or when young men are suffering from erectile dysfunction because they're spending so much time on porn. Right. That is not something that, that would've occurred to you.
So, , we live in a world of our own making, but where, is, , one of the most important questions today for any organization, are we changing as fast as the world around us? And the answer is often no. So that's like, that's let's say a fundamentally new reality. And, and our institutions were never built for that. And of course , if you want to change faster, that change is driven by innovation. You have to have this capacity for reimagining and innovating and so on.
And, , we talked about this quite a bit last time, but the number of companies in the world that have said, I want innovation to be everybody's job, or this has to be like truly a core competence, I can count on a couple of hands. That's how powerful the legacy of the past is. and then of course you don't get innovation unless you have people who show up at work every day inspired. We'll talk about all these things , , at greater length. yeah, I think those are. Those are new realities.
The fact that you have to re-earn your success month by month, year by year, not decade by decade or century by century, right? That, the line between, being a leader and being irrelevant can now be measured. At some point we'll talk about intel and how do you go, literally in a generation from being the greatest semiconductor in the world to be pulled apart, right? So yeah, , these are some of the new challenges.
There are others, but, these are, this is the equivalent to suddenly being, you know, having to fight an asymmetric war and having to go back and rethink your doctrine because a big formation with big weapons is like very little help in this at all. And that's where we are as, as businesses. That thing about, you know, Intel, for example, people working in Intel 20 years ago thought it was one of the most stable organizations in the world.
And that's the thing that I really, really want to emphasize by covering these books and by going back and bringing people on the journey of your to of work is because it's hard to read the label when you're inside the jar. That if you're working in the organization and you're so focused on how you're rewarded, what you're measured on, you miss the bigger picture, miss the shifts that are happening around you. So it's that thing that I really want to emphasize.
I thought , we'd jump into the agenda for management innovation. So what do you do about this? And you mentioned it there, Gary, that the first thing to do is think big. And you mentioned here Nobel Prize winning zoologist. Peter Mear and how he said dull or ping problems yield dull or ping answers. So you need to really think big in order to inspire people, especially in a knowledge economy. You. Well, I think, yeah, I mean we've, we've talked a little bit about ambition before and how.
Setting, you know, setting a goal that is stretch for you compels innovation. Like I clearly can't get from here to there with more of the same. And so, you know, I think I, I made this argument in another session that, you know, there there are no, no organizations, you know, outperform the aspirations and the most organizations are more aspiration constrained than they are resource constrained. But the same thing is, so that's true.
You know, if you're thinking about if you're thinking about strategy and, and, and you know, if you're Elon Musk and you say, Hey, we need to become an interplanetary species. Well that's gonna drive some innovation if you wanna do that. Like, we can't do that the same way we're, you know, right? So talk about that maybe later. But it's also true with management, I mean, if, if, where does the incentive come to fundamentally rethink how you lead, plan, organize, allocate, and so on, and.
You know, you, you, you have to see these challenges out there that are just gonna demand much better organizations. You know, if you, if you think of the number of things, Aidan, and you know, it's a fairly, it is a fairly daunting list.
But if you think of the number of things right now, the challenges that are facing, you know, humanity around the world, whether that's, you know, refugee crises, whether that's pandemics rogue states state backed cyber crime declining economic mobility, global indebtedness de-globalization is going on. Now huge amount of economic migration you know, threats to privacy. Fundamental questions about what does it mean to be human in a world of you know, genetic manipulation and AI and so on.
Like, there is an enormous. You know, of challenges we have to figure out as a species. And, you know, my argument has been that to, to, to meet these challenges, we just need organizations that are fundamentally more capable than the ones we have right now. Right? That are, that can change faster, that are more innovative, that are more courageous.
And so I think, you know, and we'll get into this more when we talk about my latest book, but I think if you're a leader today, you have to believe that the challenges your organization is gonna face is already facing and certainly will face those challenges, lie outside the performance envelope of that old management model. Like we've, we've just exhausted that.
You know, I, I go back, you know, when, when, when Weber talked about, well, one of the, the great advantages of a bureaucracy, he talked about discipline, reliability, precision, and so on. Hey, we've been working on those things for a hundred years. Like we've been working to be a little bit more reliable, a little bit more disciplined, a little bit more predictable. And there's some industries like education and healthcare we still have a lot more to do.
They have a, a unique challenge because they're in a, in a sense they are 19th century industries still trying to get into the 20th while they also have to get into the 21st simultaneously. So they have their own unique set of challenges. But we've been, you know, we've been down on those mines for a hundred years at the coalface, like, and those seams are pretty much empty. And, you know, not many organizations are gonna win because you're a little bit more disciplined, a little bit more.
Those are like table stakes. People just assume that you have those.
So to make this commitment as, as you were talking about, you know, bill, bill Gore you know, that was a very interesting, he had, he had worked at DuPont, I believe, and he had been part of several skunkworks teams at DuPont, an idea that got borrowed from Lockheed and Aerospace, but where, you know, DuPont put together these small teams focus on some big problem a lot of comradery kind of relief from a lot of the corporate bullshit dedicated budget. You could move fast and so on.
And he started asking us like, why doesn't the whole organization work like this? Why don't we, why isn't it, why isn't it a team of Skunkwork teams rather than that's a little, you know, a little pimple on, on Bureaucracy's ass somewhere. So, you know, and that was like a super ambitious thing to say, and I think he was driven. Not by any big existential crisis. He was driven by how do we create a, a workplace where people can do their very best work every day.
But I think unless you have some, you know, unless you recognize the limits of the existing model and or have a real belief that, you know, we, we just can do way better. You probably don't have the courage to just challenge the status quo. Because you mentioned Gore there. I, I was gonna cover each of the, you have a chapter on. Gore, you have a chapter on Whole Foods and have a chapter on Google.
But, but I, I think I'd direct people towards reading the book because I don't want to labor too much on those examples. You need to read the book to get the feel of those, and Gary does a great job of covering them. But I thought I'd mention just Whole Foods, because Whole Foods as an organization was a totally different model and we know how successful that was acquired by Amazon, et cetera, IPO as well. But it was the ambition and the purpose.
People worked for a purpose, and it was the difference between working as a community. That was the big thing that you talked about there. Yes, and I, you know, I got to know John Mackey, the co-founder of Whole Foods quite well an immensely inspiring individual. I have to say, I don't know how much, you know, I wrote this before the acquisition by Amazon, so I don't know how much of the culture that I write about there survived that. You know, Amazon.
a very different culture and probably doesn't look at frontline employees in the same way that Whole Foods did. But maybe just a couple of little thoughts there. Things I found very interesting, you know, again, when you looked at their model I'll, I'll just, I'll maybe point out two or three things that were, that I found very interesting.
One was that every little team, you know, working in every little part of, of a Whole Foods, you know, store supermarket, was economically accountable for their little department, whether that is fresh produce, whether that's, you know, dairy, whether that's frozen foods aisle, whether that's, you know, diet supplements or whatever. And so those, those little teams and they were teams had bonuses that were tied to the profitability of that department.
you had very what you would call low level frontline people who were economically vested in that. that little business. It wasn't micro business that they were running. We'll see shades of that at higher. And they all had the financial information. They understood which products were making money, which weren't, they had a lot of freedom to vary the merchandise mix, which typically you do not have in a chain retailer.
You just like take what central merchandising you put it on the shelf exactly where they tell you and how party, because they're selling safe shelf space to the big you know, big brands and they demand, you give them so much. But, but Whole Foods didn't do that. So that was one very, I mean, you have people who really feel like this is my business which is super, super rare in these organizations. Another interesting feature was that got hired by their peers.
So if you wanted to work for Whole Foods and you got through the first round of interviews, they would put you with a team for a couple of weeks and a probationary period. But at the end of that period, it took a two thirds vote. vote of that team to hire you. You know, if, if you think about like, what, what should empowerment mean at the, at the very minimum empowerment should mean I have a little bit of a voice in who's working next to me all day.
And so, so that, that, so every, like, I either hired you or you hired me. A simple thing. But, and of course, because you want your department to do well and because you have financial incentives, you, you're looking for people who are gonna really pitch in and work hard and do a good job. So that was like also very, very interesting thing. We'll talk maybe in another episode about their compensation system, which was like quite interesting.
But the other thing is they gave the vast majority of of their share options, stock options. To lower level of employees. So in most companies, about 90% of 'em goes to the top team at at, at Whole Foods. It was just the other way around. so super, super interesting model, but far more interesting than that is when I talked to John Mack and I said, so like, you know, did this stuff come from?
You know, how did you end up with a management model that's like so weird and so different, but, but yet makes a lot of sense. He said, I wanted to build a workplace based on love instead of fear. And I can tell you now, this is a couple of decades ago, but that was the first time ever, ever in my career I had heard a CEO or a founder use the word love in relation to how their company worked.
You know, you might say, you know, I love a wonderful red wine or something, or I love a sunset, but I'd never heard anybody talk about that. Herb Kelleher founded Southwest Airlines. He used the same kind of language and John was also one of the few cos another one would be Richard Branson. Another one would be the, the folks at Nucor, but one of the few cos who said got it backwards, right?
We think that shareholders come first, they come last, not, not in the sense that they're not important, but just as a logical thing. If I create this great place to work for employees, they're gonna do amazing things and my customers will love them. And if customers love the experience of work shopping with us, then our shareholders are going to do very well. So customers first, you know, sorry, employees first, customers second, because as a leader, I can't do much with, with my customers.
That's the, like the people who have that role every day, that's their job. My role is to create this amazing place to work. Where people are excited to be here. They feel respected, they feel loved, they feel it feels like a community to them. There's a lot of trust. And if I create that, then they're gonna do amazing things for the customers. And that means our shareholders do well.
Also. So, yeah, and of course that it really got me thinking like, how can we, you know, words like, like beauty truth love, community, the things that are most important to us as human beings. How the hell, this language doesn't even show up in our organizations. Like, people can't even like, talk about it without feeling like weird or self-conscious and like, man, we, we've screwed this thing up. We've completely dehumanized. I mean, you know, favor was right.
We've dehumanized our organizations to the point where the things who are most important to us as human beings like our cringe making, if we even talk about them, like, we gotta dig ourselves out of that pit somehow. I shared that excerpt with Kim Clark, who was the former dean of Harvard Business School. He wrote a book with his children, Erin and Jonathan called Leading Through.
And Erin, his daughter , she was a former Deloitte md and she said that when she was speaking at events and she used this word love, she'd see like half the audience throwing their eyes up to heaven today, like still today. So that's pervasive , in organizations today, and people think you've lost it if you start to use that real human language as well, which is why I found it so interesting that Mackey was talking about it back then.
But, you were saying about Mackie, he really created his own model that worked for him. I found that really interesting that these organizations that you, these case studies you did like, , gore did the same. He was like going, how do I create the same model? How do I remove the facade that everybody has inside an organization about things work? And he goes, I couldn't find it, so I just made up myself.
And I thought that was interesting about the Gore aspect, that, and also , he created it and he was 45 and I thought that was really interesting. Him and his wife were both 45 and they poured their own money into this, so they had to make it work and they had to find a model that worked. And maybe we'll share a bit on Gore and what you found most fascinating about them.
Yeah. Well, again, I think the origin story is super interesting, as you say you look at all of these companies and I, or, or virtually all of them that have these these positive deviance that have post bureaucratic, anti bureaucratic management models. know of only one of them that was started by somebody who had an MBA. And, and mostly he thought what he'd learned was bullshit and he had to turn it inside out. And that was Chris roofer at Morningstar, the tomato processing company.
So, yeah, I mean, if you go through a typical MBA program or if you've worked in now, he was. The good thing about, about Bill Gore is he had worked on these Conco team. He's like, Hey, you know, if he had never had that experience, I don't think he could have created Gore. And so yeah, you, as with all kinds of innovation, you, you gotta start, you gotta think as an outsider and you gotta like be able to step back and like, well, why the hell do we do it that way? That seems a little bit crazy.
And and that's, you know, that's hard, hard to do particularly if you spend a long time immersed in one, one kind of environment. I think the other I want, I wanna say we can come back to go, but I wanna say one other thing about John Mack in this kind of idea of love and your point about, you know, people rolling their eyes. I think one of the things that makes it really difficult to talk about that just how cynical our organizations have become.
Because we may not talk about love, but we talk about a lot of other things that people know is bullshit, right? , we talk about integrity and people see all kinds of shortcuts taking place, or as we talked about last time, they will see ways in which we are purposefully profiting from customer ignorance. I get pissed off at this, at the size of, let's say my, my, my cable television bill I call them and they go and I say, Hey, I'm gonna defect. I'm gonna go to like YouTube TV or something else.
I'm gonna cut the cable. And they go like, well, we can give you a much better deal. And they finally put me to the customer retention people, and I'm going like, why the hell didn't I know that? why do I, why didn't you, like, why didn't you just adjust my bill rather than let me go on at some legacy price, which is really no longer your best price, but you're so happy. Like, so, we hear people talk out integrity.
We hear them talk about customer focus , , or we hear them talk about, , employees are our most important asset and we just know that's bullshit. We know here's, , here's a little aside for any leader in a company, if you're using words like integrity, employee engagement, customers first, anything like that, I want you to stop saying that shit, unless you have a bunch of examples of where you guys have actually made hard sacrifices for that goal.
If you haven't, if you know if you, if, it actually ranks practically number five or six or 10, right? And if everybody could point to things that we're doing that are not consistent with that value, just like, shut up. Don't talk about that thing. Like get, you know, sort it out and just, and, and, and make the changes you need to make. So that really is as important as you say it is.
But I think there's this just yawning rhetoric reality gap in so many companies, which is why, we just have this endemic of cynicism. So I think that's a lot of why at the moment, like people would be very disinclined to even use this word, because of course people are gonna roll their eyes, right? So that's just a little assignment for anybody listening. Look at these highfalutin value-laden terms that you're using and then ask, like, ask your employees, where are we not living up to that?
Do you have the guts to do that? Ask employees where are we not living up to that? And then let's, fix that. And then maybe you have the capacity to talk about these things without people rolling their eyes. But I certainly understand why they do. I'm gonna share because you said that a, a great thought experiment you share in the book and this.
Maybe we'll leave our audience with this and we'll touch back on Gore and we'll touch back on Google and Whole Foods the next day, and particularly the paradoxes of trying to lead in a new way that you have to accept these kind of trade-offs the whole time in order to do that. But there was a thought experiment that you had.
You said, suppose you knew that in 12 months time, a looming financial crisis would force you to cut the salary of every employee in your company by a third, assume further that your company is running very lean and that every associate is making an indispensable contribution. Now, if the goal is to minimize the risk of a mass exodus when the financial crunch finally hits, what changes would you make over the next few months to keep your colleagues from jumping ship?
I absolutely love that, man, because I don't think anybody read that before the Covid pandemic hit. This is about the importance of a moral imperative in an organization. How do you get people to get behind your company? How do you get them to stay there , rather than just staying for the paycheck? It is a, it's a big question and one that is gonna deserve more time than we have right now. But I would start with this. 'cause there's a lot of things that are important in doing that.
Mostly not the things we typically think about the hygiene factors, but you really do have to believe that your business thrives or dies on the emotional connection people have with you as an employer. And that your primary responsibility as a leader is to make that connection stronger and to give people really great reasons for hanging with you when things are difficult. And again, I do not think you can fake this.
I had a conversation, I dunno if it made it in, into any of my books, but I had a conversation with one of the CEOs at Nucor, again, just an exceptional company. And I said, how do you introduce yourself to new employees? Like, what's, what, what, when somebody meets you, right? And blue collar employee or the CEO, and like, tell me like, how does that, how he said in any, when I have interactions, I try to do this.
He said, the first time I talked to one of my employees, our employees, the conversation's entirely about them. It's not about business. Tell me about your family. Tell me about where else do you work? How did you get here? Why did you come here? What's going on in your life? What are, what is challenging you right now? What do you worry about at night when it's not, when you're not thinking about work?
And he said like, I really wanna know who they are as a human being and I want to connect like heart to heart in that way. and then he said, the second time I'll meet them. The question is about work, but my only question is, what do you need from me? Like, what is frustrating you? What would help you do a better job? How are we not supporting you? Technology, training, leadership. Tell me what I, what we need to be doing to make your life better work.
And he said, only in the third conversation will I say anything about who I am, what our bigger mission is, what we're trying to do, and so on. And so I think I, I can give you, we'll go deeper maybe later into kind of some heart to heart stories, but I think people sense that , super clearly, whether that's part of the culture or not. And and whether they're actually truly treated as human beings or not. And, you know, it's not all that complicated.
People want, they, they wanna believe that, that they're working on something that makes a difference. I. They want to feel like they're part of a community, that they have people around them that care for them as human beings. They want to believe that they have the freedom to make a difference, that they're, they're empowered and not drones and to share in that success. And they want the chance to grow and to, to advance their skills and so on.
And to the extent that everything around them is working to those ends, like they'll do extraordinary things to the extent it's not, they won't, but, but, but you don't build that kind of culture and you don't build those things into the employment context unless you have leaders who I think are just like deeply, deeply human at their core. And sadly, I do not think that is what we, that that is not.
The ethic, the ethos, the feeling that we select for when we're promoting people, often in organizations. But yeah, and, and so if you look at the people, we'll talk about this I'm sure at some point too, but if you look at the people that had the courage to do what, what Gore did, what John Mackey did what, what Ken Iverson that group did at at at Nucor and so on, none of them went down that path because hey, we're gonna be more profitable, we're gonna be bigger, you know, more productive.
All of 'em said this is the right thing to do for human beings. And they had faith that we can get the other things to work, right? We can figure out how to make a profitable business, we'll work in the business, but, but if you don't get that thing right, whatever you built is gonna be fragile. And it's just, you know, you think it's like so obvious. I, I saw this piece, this is now a few years ago, three or four years ago, in, in in, in, in the US Business magazine.
Walmart was doing some, and, and pardon me if I get this wrong, 'cause I'm remembering an article, Walmart had started to do some experiments with, with paying people more because Walmart was having like 30% turnover every year. And you know, they were very miserly with healthcare and so on and so on. They were experimenting what happens if we pay people more and they like crap. Like, like they did a better job.
And I don't think it was because it's just the pay 'cause like, you feel just a little bit of respect coming your way. And it was like, and it was so the, the, the reaction's like, wow, who knew? And you're going like, honestly, who knew? So Anyway, that's we'll come back to that theme. That's why my next book was called Human Ocracy. But all of these companies, that's the problem they were trying to solve. How do you build a work environment that deserves the very best that people can give?
Beautiful. Nice way to finish it, man. And I, I feel getting to know you more and getting to read the books and see how they developed. I see that what you're really doing is trying to unlock better leaders, to create better organizations so the people working there have better lives. So I certainly see that red thread from reading through your work. It's always a pleasure. Thank you for joining me for Part one of the Future of Management, , Gary Hamel. Thank you for joining us. A pleasure.