Businessweek Archives

Restructuring bureaucracies by incorporating democratic principles and internal markets


Bureaucracies can be found in all types of organizations, not necessarily in government agencies. Obviously, bureaucracies are pathological in the sense that they lack desire to remove a persistent obstruction to their development. They are like centrally planned economies. In most cases, they are monopolies in that as long as they satisfy the central power, they continue to exist.

In recent years, few forward-looking organizations have brought democracy and market mechanisms inside their organizations to create accountability to internal and external clients through learning and adaptation. This approach represents a massive paradigm shift, away from the assumptions of the bureaucratic mindset, which dates back to the early days of industrialization. A transformative leadership will be required.

Does your organization embrace such concepts? Is every unit in your organization a profit center? Do you have planning boards for your functional units?


Toyota's Hydrogen Man
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