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Bayer’s Billion-Dollar Bet on “Humanocracy”.

Apr 30, 2024

The other day, I came across a curious bit of business news: Struggling German pharma giant Bayer decided to go full in on Humanocracy in an effort to save more than $2 billion after the bumpy and expensive acquisition of agri-biotech company Monsanto. If you are wondering, no, I did not make up that word. Humanocracy is the title of Gary Hamel’s Wall Street Journal bestselling book and therefore an actual word (apparently).

The core idea behind Humanocracy is that traditional hierarchical bureaucracies in organizations stifle creativity, innovation, and human potential. Instead, Hamel and his co-author Michele Zanini advocate for a new organizational model that puts people at the center, empowering employees at all levels to contribute their full talents and capabilities. Key principles include decentralization, experimentation, purpose-alignment, agility, and adaptation. In summary—all the buzzwords and arguably all the desirable traits for an organization in today’s (and even more so, tomorrow’s) world.

Bayer, with its “1,362-page corporate handbook” and under the leadership of its CEO Bill Anderson, decided to give it a go: 100,000 of its workers are now self-organizing in 5,000 to 6,000 teams, working on projects of their choosing for 90 days at a time. If that all sounds like a bold (and possibly crazy) move, I would agree. Less for the criticism the company receives from pundits, but rather for the sheer audacity and potential implications if Bayer pulls this off.

Let’s be clear. Bayer is in deep trouble. Its market capitalization has plummeted, debt has skyrocketed north of $37 billion, and it’s facing an existential threat from the avalanche of lawsuits over its Roundup weedkiller allegedly causing cancer. So in some ways, going full Humanocracy is a desperate Hail Mary to save the 160-year-old firm from obsolescence or collapse.

But viewed another way, maybe this is exactly the kind of radical jolt Bayer (and so many of its corporate brethren) needs to reinvent itself for the future. Its legacy hierarchical model was failing catastrophically. So why not swing for the fences and do something truly transformative? If it works, Bayer could become a shining case study of an incumbent getting its act together.

That said, the challenges and risks here are immense. You can’t just flip a switch and tell 100,000 employees who are used to top-down command-and-control to suddenly “self-organize” and expect it to go smoothly. This requires extensive retraining, new incentives, and a fundamental mindset and cultural shift that will likely take years (if not decades) and involve lots of ups and downs. People will still crave leadership and direction, even if the org chart gets much flatter.

Questionable name aside, looking at what’s behind the Humanocracy label, it actually makes some sense. But, maybe most importantly, these kinds of changes take time—and time seems to be something we don’t give our leaders anymore. And many leaders don’t want that kind of time anyway—the average tenure of a Fortune 500 CEO is five years and declining, a far cry from the time it takes to truly transform a giant like Bayer. Maybe the biggest malaise of our fast-paced time is that nobody has the patience to see something through anymore.

Anderson took the helm of the company in June, 2023—he is less than a year into his tenure. Let’s hope for him, the company, and all the other incumbent businesses watching, that he has the support and endurance to see this through.