PDF Summary:Humanocracy, by Gary Hamel and Michele Zanini

Humanocracy explores how organizations can—and should—ditch bureaucratic ideas about the importance of employee obedience and efficiency in favor of human-focused ideals like fostering employee innovation and inspiration. By doing so, authors Gary Hamel and Michele Zanini argue, these organizations can bring out each employee’s full potential, resulting in happier workers and more successful companies.

In this guide, we’ll first explore what a human-focused company is. Then, we’ll examine both why and how you should put human-focused principles into practice. Our commentary will explore some of the science and studies behind human-focused principles and provide more actionable advice on how to put these ideas into practice. We’ll also examine some possible counterpoints to the authors’ ideas, particularly their claim that creative work can never be automated.

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(Shortform note: As a counterpoint to Hamel and Zanini, even creative work has been threatened by automation in the years since Humanocracy was written. For example, AI programs can now turn text prompts into artwork and write essays almost instantly. Such tools are still far from perfect, but as technology advances, it’s possible that computers will be able to handle creative work and problem-solving as well as any human. In fact, former presidential candidate Andrew Yang predicted that a third of Americans will soon lose their jobs to automation—including AI—and proposed Universal Basic Income as the only way to prevent a major economic downturn.)

The Pyramid of Business Needs

To further clarify why they believe that human-focused companies are important, the authors created a hierarchy of principles that they believe every company needs to embody to be successful. The highest tiers of this hierarchy are human-focused principles that can only be achieved by human-focused companies.

Like Maslow’s famous hierarchy of needs, Hamel and Zanini’s pyramid of business needs is one in which each tier supports the tiers above it; in other words, you have to start at the bottom and work your way up. They say that the most successful companies are those that build all six tiers—including the top, human-focused tiers—into their business practices.

The six tiers are, in descending order of importance:

• Tier 6: Courage
• Tier 5: Ingenuity
• Tier 4: Proactiveness
• Tier 3: Proficiency
• Tier 2: Conscientiousness
• Tier 1: Compliance

Partial Counterpoint: Meet All Needs at All Times

The authors say that their pyramid of business needs, like Maslow’s, must be built and implemented starting from the bottom and working upward. However, this strict order may not be necessary for seeing success with either hierarchy.

Psychologists generally agree with Maslow’s ideas about what humans need, but they question his claim that those needs must be met in a specific order. Indeed, the very concept of “need” implies that people should have all of these things at all times. For example, someone suffering from food insecurity—a lower-tier need—can still benefit emotionally from having close friends—a higher-tier need).

The same principle holds true for companies: Rather than thinking of the hierarchy of business needs as a checklist to be completed in order, try viewing it as a list of things to encourage at all times, from all employees. For example, a worker who isn’t especially experienced at her job (proficiency) could still have a brilliant idea about how to improve the company (ingenuity).

We’ll now examine each tier of the authors’ pyramid in more detail.

The Lower Tiers: Making a Company Functional

The bottom tier of the authors’ pyramid is compliance. Although a humanocracy runs on ingenuity and freedom, there still have to be rules regarding safety, customer service, and how company resources can be used. For example, without some rules in place, an unscrupulous employee might just take company funds for himself and produce nothing in return. In short, compliance is the foundation upon which any successful business must be built.

(Shortform note: Having compliance as the foundation of a business seems to contradict the authors’ main point: that companies should be encouraging creativity and innovation. However, some experts echo Hamel and Zanini’s view that compliance is crucial for any organization, up to a point—laws need to be obeyed, processes need to be consistent (until they’re improved), and so on. Creativity and autonomy are important, but letting employees do whatever they want would almost certainly destroy a company.)

The second tier is conscientiousness. Simply put, workers need to do their jobs consistently and carefully for an organization to function. This is closely related to the third tier, proficiency: This means that employees must have enough training and experience to do their jobs well.

(Shortform note: Again, here, the authors arguably contradict their main practice of replacing bureaucratic principles with human-focused ones: They’re saying that employees need to perform narrow job descriptions consistently and develop their skills in those specific functions, ignoring employees’ creativity and autonomy. However, providing a consistent routine and clearly defined duties—in other words, structure—is itself a very human-focused principle. Having an established routine helps people to feel grounded and confident because they know what they’re supposed to be doing and are confident in their ability to do it. Routine can be especially important for neurodivergent people, who may become stressed and upset if their routines are disrupted.)

Hamel and Zanini say that these bottom three tiers are necessary for any business, but they aren’t enough to generate profits in the crowded, modern-day marketplace. That’s why a truly successful company—a human-focused company—will continue working its way up the hierarchy of business needs.

(Shortform note: Marketing guru Seth Godin makes a similar argument in Purple Cow, although with a focus on building products rather than companies. He argues that there are simply too many products on the market nowadays, so a merely “good” product is no longer good enough. In order for your product to be successful, it needs to be special or remarkable in some way so it stands out. Hamel and Zanini are applying that logic to an entire company—it’s no longer enough to just have your employees do their jobs. To stand out in a world full of companies, you need to create an exceptional organization that encourages employees to come up with exceptional ideas.)

The Higher Tiers: Making a Company Great

The next tier of the authors’ pyramid is proactiveness. Breaking out of rigid, bureaucratic habits requires employees who are willing to take the initiative: to go beyond their basic job responsibilities to solve problems and improve the company. It also requires a company that will allow them to do so.

(Shortform note: Proactive employees and new initiatives won’t always lead to the desired outcomes—in fact, your company might go through many failed attempts before finding an idea that works, solving a problem, or improving the organization. However, bear in mind that even a failed idea can be valuable: Each failure is a chance to learn and is therefore a step toward achieving your ultimate goal of running a company that’s both profitable and fulfilling for its workers. In other words, don’t give up on building a human-focused company just because some of your employees’ initiatives don’t pan out as you (or they) had hoped.)

Proactiveness is closely related to the next level, ingenuity: having the creativity and intelligence to not just take the initiative, but also to do so effectively. An employee who’s proactive but not creative might take it upon himself to fix a problem and accidentally make it worse, or he might spend an unreasonable amount of time and energy fixing the issue when a more efficient solution is possible.

(Shortform note: How can you tell whether an employee’s idea will be effective and efficient? One possibility is to use the “Three S’s”: Is the idea a solution to a real problem? Is it the simplest solution available? And has this idea been shared with peers to refine it and look for possible weaknesses? If an idea meets all three S’s, then it’s likely to be worth pursuing.)

Finally, the highest level of the pyramid of business needs is courage: being prepared to formulate and implement risky ideas and solutions. Courage is what allows employees to truly innovate; to put themselves on the line, try new things, and accept the results whether they’re good or bad.

The Barbell Model of Risk Management

A great deal of Humanocracy is about the importance of taking risks, but Hamel and Zanini don’t offer much advice about how to do so safely or effectively. In Antifragile, risk analyst Nassim Nicholas Taleb describes what he calls the “barbell model” of risk-taking: implementing a combination of extremely safe, conservative measures and extremely high-risk, high-reward decisions.

To use the barbell model, begin by figuring out exactly how much you can afford to lose (in terms of money, employees, property, and so on). Then, gamble those losable resources on risky propositions that have the chance for enormous payoffs. The rest—the resources you can’t afford to lose—you must invest someplace safe, without worrying about payoffs or dividends. Taleb pictures this as like putting weights on either end of a barbell—investing in two extremes with significant distance between them (although real barbells should be balanced, and this model doesn’t necessarily suggest splitting your resources 50/50).

For example, an individual following the barbell model might put 90% of his money into a safe but low-interest savings account. He could then use the remaining 10% to play highly volatile stocks. If one of his stocks pays off, he could make enormous profits—if they all fail, he’s only lost the money he’s already decided he can afford to lose.

When using this model, avoid middle-of-the-road compromises at all costs. Just like you wouldn’t put weights in the middle of a barbell, don’t put your resources into schemes that only offer moderate payouts while still running the risk of losing what you’ve invested.

Something like a 401k would be the middle-of-the-road option that Taleb suggests you avoid: Your savings won’t increase by much in a 401k, and you still run the risk of losing a lot of money to a market downturn.

The Higher Tiers Are Challenging to Reach, but Necessary

The top three tiers of the authors’ pyramid—proactiveness, ingenuity, and courage—are only possible to achieve when workers are engaged with and devoted to what they do. Remember, employee engagement can’t be brought out through bureaucracy and managerial orders; it only happens when people truly believe that their work is exciting and important, and that it therefore deserves their absolute best efforts.

Although they may be difficult to achieve, Hamel and Zanini believe that those top three tiers define the best businesses. This is because companies that encourage all employees to proactively generate ideas have the greatest chance of generating outstanding ideas.

In general, the companies with the best ideas will be the most successful. However, truly great ideas are very rare. Therefore, a company that sources ideas from all of its employees will have a huge advantage over one that relies on a small team of executives or experts. In other words, if you tap into a larger pool of ideas, you have a greater chance of finding the next outstanding one due to the sheer number of ideas at your disposal.

Before Collecting Ideas, Devise a Mission

In The Fifth Discipline, Peter Senge makes a similar argument regarding pooling ideas from as many people as possible: He agrees that more people coming up with more ideas means a better chance of finding great ideas. However, Senge says that before encouraging idea-sharing, it’s important to first give your organization a common mission: an audacious and exciting goal that will inspire your workers to look for new ways to accomplish it. In other words, to effectively use the top three tiers of Hamel and Zanini’s hierarchy, you must first figure out exactly what your company wants to accomplish and how doing so will improve the world.

Devising an inspiring mission is crucial because it will focus your company’s efforts—employees won’t just be coming up with new ideas that may or may not be relevant to your company’s future. Instead, they’ll come up with new ideas about how to reach clear and relevant goals. Having an inspiring mission will also increase employee engagement, granting your employees access to the top three tiers of the authors’ pyramid.

Building a Human-Focused Company

Now that we’ve discussed what human-focused companies are and why they matter, we’ll present some tips for building one of your own. Note that the authors’ purpose here isn’t to give you a step-by-step process for starting a new company—countless other books and business guides already do that—but rather, to make sure that the company you build upholds human-focused principles.

To begin with, remember the main goals of a human-focused company: minimizing bureaucracy and maximizing each employee’s creative potential. Achieving these goals will require building human-focused principles into every aspect of the company, from daily operations to executive decisions.

Hamel and Zanini say that it’s often better to start your own company and build it around human-focused principles from the ground up—bureaucracy emphasizes stability and control, and as such, existing companies that rely on it naturally resist change. Furthermore, power in a bureaucracy tends to be concentrated in the hands of a few decision-makers at the top of the organization, so if you’re not one of those decision-makers, then you’ll have an even harder time turning an existing organization into a human-focused company.

The authors add that, if you’re not in a position to start your own company, you can still encourage human-focused principles among your team members and any employees who report to you. For example, assign people important tasks, then give them the autonomy to carry out those tasks as they see fit—don’t get directly involved unless they ask you for help.

(Shortform note: Since the purpose of a human-focused company is to create a work environment that works for everyone, one way to encourage human-focused values at a grassroots level could be to ask your colleagues what they think about the current state of your workplace. Hamel and Zanini have designed a workshop that helps small teams to identify how bureaucracy is holding back the company and brainstorm human-focused solutions to improve morale and productivity.)

How to Lead Organizational Change

Unfortunately, starting a new company from scratch as Hamel and Zanini suggest isn’t feasible for many people. Difficult though it may be, you might find that working to change your current organization is a more realistic option. But how can you institute large-scale change in your workplace?

Leadership expert and consultant John Kotter writes in Leading Change that spearheading organizational change is a seven-step process. While some of his advice is only possible for an organizational leader to enact (particularly Step 7: update the company culture), much of it can be implemented by any motivated employee.

1. Create urgency. Make sure everyone understands why this change has to happen and why it has to happen now.

2. Make a team. Put together a group of people with diverse skill sets to lead the organizational change.

3. Develop your vision. Make sure you have a clear and specific idea of your company’s future. In other words, what are you ultimately trying to accomplish by making this change?

4. Sell your vision. Prepare a statement that you can distribute through the organization explaining what your vision is and why it’s right for the company. Make sure your statement is clear—avoid jargon—and invite feedback on and discussion about the vision.

5. Clear the way. Identify obstacles to change and overcome them. Common obstacles include pushback from supervisors and managers and insufficient training among core staff.

6. Set small goals to produce small victories. As you implement large-scale and long-term change, keep people motivated and determined by setting achievable milestones and celebrating when you pass them.

7. Update the company culture. Once you’ve accomplished your change, make it stick by incorporating it into the company culture. For example, if your goal was to boost employee satisfaction, you might try relaxing the company dress code or guaranteeing more vacation time in employee contracts. Make sure your organizational leaders are on board with the new culture—you might find it necessary to replace the most recalcitrant supervisors or managers.

Remain Vigilant Against Bureaucracy

It might seem easy to avoid bureaucracy when building a human-focused company from scratch, but the authors warn that the bureaucratic mindset is pervasive. You’ll probably be tempted to secure your control over the new company and improve your workers’ performance through strict rules and systems.

That’s why you must always remember the reason you’re doing this in the first place: because that kind of bureaucratic, authoritarian control doesn’t work. Your company will be more successful—and your workers will be happier—if you instead encourage them to find solutions to their own problems and empower them to carry out those ideas.

Hamel and Zanini also encourage you to regularly reflect on ways you’re being bureaucratic and determine whether that bureaucracy is absolutely necessary. Also, encourage your employees and co-workers to point out bureaucratic behavior within your company—remember the “web of accountability.”

(Shortform note: While the authors warn strictly against bureaucracy here, it often does help organizations to run efficiently and effectively. Clearly defined duties, chains of command, and reporting systems allow large numbers of people to work together smoothly, while rules and regulations ensure that everyone is treated fairly (in theory, at least). This might be why people slip back into the pervasive bureaucratic mindset, even when they’re trying not to: because, in many ways, it works. What Hamel and Zanini are really opposed to is micromanagement, as we discussed earlier. In other words, the authors aren’t really against the concept of bureaucracy—they’re opposed to what they see as its misuse in the modern workplace.)

Start With Yourself

Clearly, building a human-focused company—or converting a bureaucratic one—is a huge undertaking. You’ll have a lot of work to do, and it can be hard to know where to begin. However, Hamel and Zanini believe that the best place to start isn’t with any part of the company, but with yourself. Specifically, they argue, you have to undo the damage that bureaucratic thinking has done to you. Bureaucracy isn’t just inefficient and tedious—it’s harmful to the psyche. Thinking of people (including yourself) like parts of a machine erodes your faith in human creativity, autonomy, and growth.

Therefore, before you can effectively build a human-focused company, you have to restore your belief that every person can do great things. Doing so will allow you to commit yourself fully to, and then implement, the human-focused principles laid out in this guide.

How to Heal Your Psyche

Restoring your belief in humanity’s potential is much easier said than done, especially if you’ve worked in a bureaucratic system for years or even decades. Psychologist Jill Suttie suggests five practices you can follow to start the healing process:

1. Consume various kinds of media. Modern news sites and social networks tend to promote negative stories and ideas about humanity—fear and anger get people to click, which increases those sites’ engagement and therefore their revenue. However, there are countless stories of courage and kindness happening every day as well, so make an effort to find those stories instead.

2. Post positivity instead of negativity. It’s often tempting to get into arguments on social media sites, but it’s not likely that you’ll change anyone’s mind—and you’ll only make yourself unhappy by trying. Instead, post uplifting stories that will put you, and the people who read your posts, into a more positive mind frame.

3. Get involved in a cause you believe in. Volunteer work and charity can inspire you, boost your mood and mental health, and help you feel connected to something greater than yourself. Remember that one of Hamel and Zanini’s key points about human-focused companies is that they allow people to work toward goals they believe in—so, you could implement a volunteering drive at your workplace to create meaningful objectives for your employees or colleagues to work toward.

4. Practice mindfulness. It’s easy to get caught up in negative thoughts and habits. Take some time each day to meditate, quiet your mind, and open yourself up to everything that’s presently happening around you. This will break you out of harmful thought patterns and make you more receptive to new, uplifting ideas.

5. Seek uplifting experiences every day. Take just 20 minutes a day to seek out stories and experiences that uplift you instead of depressing you. For example, you might read about brave and generous people, watch a video about amazing accomplishments, or indulge in an episode of a feel-good TV show.