“Consider this question: If workers are hobbled by 1,000 rules, does it make a meaningful difference to reduce them to only 900?”
The answer is No. In fact, this is precisely why most attempts at fighting bureaucracy fail – and why true transformation requires starting completely fresh.
Bill Anderson, CEO of Bayer, knows this and isn’t afraid to admit it. When he took the helm in June 2023, he discovered a company paralyzed by bureaucracy. Instead of trying to optimize the system, he looked at the company’s “1,362 pages” of employee rules and knew the entire structure needed to change.
Breaking the Stranglehold
As Anderson stated in Fortune, “There was a time for hierarchical, command-and-control organizations – the 19th century, to be exact, when many workers were illiterate, information traveled at a snail’s pace, and strict adherence to rules offered the competitive advantage of reliability.”
The modern reality is different. Today’s Bayer employs highly skilled experts, operates at digital speed, and competes in markets where, as Anderson observes, “the most reliable companies are the most dynamic.”
The challenge wasn’t just the encyclopedic rulebook. The organization’s “12 levels of hierarchy” created what Anderson called “unnecessary distance between our teams, our customers, and our products.” In today’s innovation-driven market, this industrial-age structure threatened the company’s future.
Unleashing Innovation
Anderson’s solution? “Dynamic Shared Ownership” – a radical model that puts 95% of decision-making in the hands of the people actually doing the work. Instead of annual budgets and endless approvals, self-directed teams work in 90-day sprints with the autonomy to make real-time decisions.
The results are already showing. Take Vividion, Bayer’s independently operated subsidiary. Operating in small, autonomous teams, they went from FDA approval to first patient dosing in just six weeks. They’re now on track to produce one or two new drug candidates for clinical testing every year.
Speed Becomes Reality
The impact extends across the organization. Bayer’s scientists have transformed their plant breeding process, reducing cycles from “five years down to merely four months.”
In the consumer health division, teams have accelerated their development timelines significantly, reducing product launch schedules “by up to nine months” in Asia. Within their first two months under the new system, these teams generated millions in additional value.
While financial markets remain uncertain about this transformation, one crucial metric suggests it’s working: employee retention has improved. The scientists, researchers, and product developers – the people doing the innovative work – are showing their confidence in this dramatic shift toward autonomous operation.
Why This Matters & What to do Next
For most of us, the question isn’t whether our organization has too much bureaucracy – it almost certainly does. The question is: what are you going to do about it?
Try this – Create a small, autonomous team with a 90-day mission. Give them real decision-making power and see what they can accomplish when freed from bureaucratic constraints.
Remember Anderson’s key insight: reducing rules from 1,000 to 900 won’t create meaningful change. Real transformation requires the courage to fundamentally rethink how work gets done.
For anyone who’s ever felt the soul-crushing weight of bureaucracy, Bayer’s radical reinvention offers hope. Maybe the path to innovation isn’t through better rules and processes, but through the courage to trust in human potential.
I firmly believe that there are certain things in life that you automatically say Yes to. You do not ask questions or pause to consider context. You simply say Yes:
Painkillers after a medical procedure
Warm blankets
The opportunity to listen to brilliant people talk about things that fascinate them.
So, when asked if I would like to attend an Executive Briefing curated by MIT’s Industrial Liaison Program, I did not ask questions or pause to check my calendar. I simply said Yes.
I’m extremely happy that I did because what I heard blew my mind.
He went on to tell the story of a meeting between Elon Musk and Toyota executives shortly after Musk became CEO. Toyota executives marveled at how quickly Tesla could build an EV and asked Musk for his secret. Musk gestured around the factory floor at all the abandoned hunks of metal and partially built cars and explained that, unlike Toyota, which prided itself on being lean and minimizing waste, Tesla engineers focused on learning – and waste is a required part of the process.
We decide with our hearts and justify with our heads – even when leasing office space
John E. Fernández, Director of MIT’s Environmental Solutions Initiative, shared an unexpected insight about selling sustainable buildings effectively. Instead of hard numbers around water and energy cost savings, what convinces companies to pay the premium for Net Zero environments is prestige. The bragging rights of being a tenant in Winthrop Center, Boston’s first-ever Passive House office building, gave developers a meaningful point of differentiation and justified higher-than-market-rate rents to future tenants like McKinsey and M&T Bank.
49% of companies are Silos and Spaghetti
I did a hard eye roll when I saw Digital Transformation on the agenda. But Stephanie Woerner, Principal Research Scientists and Executive Director for MIT’s Center for Information Systems Research, proved me wrong by explaining that Digital Transformation requires operational excellence and customer-focused innovation.
Her research reveals that while 26% of companies have evolved to manage both innovation and operations, operate with agility, and deliver great customer experiences, nearly half of companies are stuck operating in silos and throwing spaghetti against the wall. These “silo and spaghetti companies” are often product companies rife with complex systems and processes that require and reward individual heroics to make progress.
What seems like the safest option is the riskiest
How did 26% of companies transform while the rest stayed stuck or made little progress? The path forward isn’t what you’d expect. Companies that go all-in on operational excellence or customer innovation struggle to shift focus and work in the other half of the equation. But doing a little bit of each is even more risky because the companies often wait for results from one step before taking the next. The result is a never-ending transformation slog that is eventually abandoned.
Academia is full of random factoids
They’re not random to the academics, but for us civilians, they’re mainly helpful for trivia night:
50% of US robots are used in the automotive industry
<20% of manufacturing job descriptions require digital skills (yes, that includes MS Office)
Data centers will account for 8-21% of global energy demand by 2030
Energy is 10% of the cost of running a data center but 90% of the cost of mining bitcoin
Cities take up 3% of the earth’s surface, contain 33% of the population, account for 70% of global electricity consumption, and are responsible for 75% of CO2 emissions
Why say Yes
When brilliant people talk about things they find fascinating, it’s often because those things challenge conventional wisdom. The tension between lean efficiency and innovative learning, the role of emotion in business decisions, and the risks of playing it too safe all point to a fascinating truth: sometimes the most counterintuitive path forward is the most successful.
Here’s a head-scratcher when it comes to scaling innovation: What happens when your innovative product is a hit with customers, but you still fail spectacularly? Just ask the folks behind Smashmallow, the gourmet marshmallow company that went from sweet success to sticky situation faster than you can say “s’mores.”
The Recipe for Initial Success
Jon Sebastiani sold his premium jerky company Krave to Hershey for $240 million and thought he’d found his next billion-dollar idea in fancy French marshmallows. And initially, it looked like he had.
Smashmallow’s artisanal, flavor-packed treats weren’t just another fluffy, tasteless sugar puff – they created an entirely new snack category. Customers couldn’t get enough of their handcrafted, churro-dusted, chocolate-chip-studded clouds of happiness. The company hit $5 million in sales in its first year, doubled that the next, and was available in 15,000 stores nationwide in only its third year.
Sounds like a startup fairy tale, right? Right! If we’re talking about the original Brothers Grimm versions. Corporate innovators start taking notes.
The Candy-coated Vision
Sebastiani and his investors weren’t content with building a successful premium regional brand. They wanted to become the Kraft of craft marshmallows, scaling from artisanal to industrial without losing what made the product special. It’s a story that plays out in corporations every day: the pressure to turn every successful pilot into a billion-dollar business.
So, they invested. Big time.
They signed a contract with “an internationally respected builder of candy-making machines” to design and build a $3 million custom-built machine and another with a copacker to build an entirely new facility to accommodate the custom machine.
Bold visions require bold moves, and Sebastiani was a bold guy.
The Scale-up Meltdown
But boldness can’t overcome reality, and the custom machine couldn’t replicate the magic of handmade marshmallows. It couldn’t even make the marshmallows.
Starch dust created explosion hazards. Cinnamon wouldn’t stick. Workers couldn’t breathe through spice clouds. The handmade ethos of imperfect squares gave way to industrialized perfection. Each attempt to solve one problem created three more, like a game of confectionery whack-a-mole.
By 2022, Smashmallow was gone, leaving behind a cautionary tale about the gap between what customers value and what executives and investors want. The irony? They succeeded in their mission to disrupt the market – by 2028, the North American marshmallow market is projected to more than double its 2019 size, largely thanks to the premium category Smashmallow created. They just won’t be around to enjoy it.
A Bittersweet Paradox
For so many corporate innovators, this story hits close to home. How many promising projects died not because customers didn’t love them but because they couldn’t scale to “move the needle” for a multi-billion dollar corporation? A $15 million business might be a champagne-popping moment for an entrepreneur, but it barely registers as a rounding error on a Fortune 500 income statement.
This is the innovation paradox facing corporate innovators: The very pressure to go big or go home often destroys what makes an innovation special in the first place. It’s not enough to create something customers love – you must create something that can scale to satisfy the corporate appetite for growth.
Finding the Sweet Spot
The lesson isn’t that we should abandon ambitious scaling plans. Instead, we must be brutally honest about whether our drive for scale aligns with what makes our innovation valuable to customers. If it doesn’t, we must choose whether to scale back our ambitions (unlikely) or let go of our successful-but-small idea.
After all, not every marshmallow needs to be a mountain, but every mountain climber (that’s you) needs a mountain.
‘Tis the season for “year in review” and “top 10 lists.” As fun (and sometimes frightening) as it is to look back, it is just as fun (and sometimes frightening) to look ahead. After all, as innovators, that is what we naturally do. So, in anticipation of the year ahead, here are 5 Must Reads to make 2025 far more fun than frightening.
(listed in alphabetical order by author’s last name so I can’t be accused of playing favorites)
Pay Up! Unlocking Insider Secrets of Salary Negotiation by Kate Dixon
This book is for everyone, especially… people who want to earn what they deserve
This book solves the problem of…the black box that is compensation and the fear of negotiating for what you’re worth
This book creates value by… Outlining a step-by-step system to:
Understand key terms and concepts and apply them to your situation
Research the information you need to confidently and competently negotiate
Know what to say and do (and NOT say or do) in the moment
Why I love this book: Full disclosure – Kate and I are friends, so I’ve had a front-row seat to her wisdom and humor (how many compensation books invoke Beyonce?) and the jaw-dropping impact she gets for her clients. I’ve even gifted this book to others because I know it works!
Disrupt Yourself: Putting the Power of Disruptive Innovation to Work by Whitney Johnson
This book is for everyone, especially… people who are rethinking their careers and are ready for change
This book solves the problem of… knowing how to start redefining your career (and yourself)
This book creates value by… Turning Clayton Christensen’s Theory of Disruption into four principles for self-disruption, including:
Identifying your disruptive strengths
Stepping backward or sideways to grow
Patiently waiting for your career (and legacy) to emerge
Why I love this book: Two quotes: (1) “Disruption starts as an inside game” and (2) “Constraints can be the perfect remedy if you are having a difficult time.”
Live Big! A Manifesto for a Creative Life by Rochelle Seltzer
This book is for everyone, especially… people who want to experience daily joy and creativity
This book solves the problem of…feeling stuck in the day-to-day reality of life, uncertain whit how to begin, and afraid to make big, drastic changes
This book creates value by… Offering 20 tips for:
Becoming a person who Lives Big, including slowing down, aligning to your purpose, and being patient
Acting big, including listening to your intuition, embracing change, and carrying on
Savoring the small joys of life, including the gorgeous design of the book
Why I love this book: Rochelle’s Discovery Dozen exercise is a game-changer. I learned this tool when she was my coach, and I have continued to use it for everything from naming my business, to deciding if/when/how to act on an opportunity, and writing articles.
The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever by Michael Bungay Steiner
This book is for everyone, especially... busy managers who want to be better people leaders
This book solves the problem of…balancing hands-on management with team empowerment and individual development
This book creates value by… Guiding you through seven questions that help you:
Work less hard while having more impact
Break cycles of team overdependence and workplace overwhelm
Turn coaching and feedback from an occasional formal event into a daily habit
Why I love this book: A copy of the 7 questions sits just below my monitor, reminding me to be curious, dig deeper, and that every decision is a choice to do one thing and not another.
Readers Choice!
Version 1.0.0
It’s audience participation time! In the comments below, drop YOUR recommendation for a 2025 Must Read.
Last week, InnoLead published a collection of 11 articles describing the root causes and remedies for killers of innovation in large organizations. Every single article is worth a read as they’re all written by experts and practitioners whose work I admire.
I was also inspired.
In the spirit of the hustle and bustle of the holiday season, I gave into temptation, added my own failure mode, and decided to have a bit of fun.
The 12 Killers of Innovation
(Inspired by the 12 Days of Christmas yet relevant year-round)
On the twelfth day of innovating, management gave to me:
12 leaders short-term planning
11 long projects dragging
10 cultures resisting
9 decisions made too quickly
8 competing visions
7 goals left unclear
6 startups mistrusted
5 poorly defined risks
4 rigid structures
3 funding black holes
2 teams under-staffed
And a bureaucracy too entrenched to change
Want to write a happier song?
Each of the innovation killers can be fended off with enough planning, collaboration, and commitment. To learn how, check out the articles:
“We identified four opportunities for market expansion, all adjacent to our current business, and entry into any one of them is almost guaranteed to materially grow our business. But no one is doing anything.”
I wanted to be surprised. Instead, I sighed and asked the question I knew he couldn’t answer.
Short-termism: “The CFO is worried we may miss the quarter, so we’re starting to make cuts.”
Size: “We have a new President coming in who wants to put his stamp on things, so he’s cutting anything that won’t double out business in three years.”
Scarcity: “We’re implementing a new process, and this would just be one thing too many for people to handle.”
The business my client described has doubled in the past five years. After fifty years of steady, reliable, and predictable revenue, its top line suddenly became the mythical “hockey stick of growth.” The technological driver of this change is more likely to be the “new normal” than a fad, so the business is expected to double again in the next five years.
Leadership isn’t worried about delivering the next quarter, year, or five years. They know that they have the resources they need and can access more when the time is right. They’re confident that the opportunities identified are feasible and meaningful.
Yet, they will not act.
I’m not afraid. I’m biased!
Behavioral economists, psychologists, and sociologists explain situations like the above by pointing out our “cognitive biases”—the “irrational errors that are programmed into our brains.” For example, the first three horsemen could be known as Present Bias, the hard-easy effect, and Loss Aversion.
While it’s comforting to blame programming bugs beyond our awareness and control for our “irrational errors,” this approach lets us off the hook a bit too easily.
I’m not biased. I’m afraid!
Fear is at the root of most, if not all, of these biases because emotions, not programming bugs in our brains, drive our decisions.
The study of how our emotions impact decision-making didn’t take off until the early 2000s. It really accelerated in 2015 when professors from Harvard, UC Riverside, Claremont McKenna College, and Carnegie Mellon published a meta-study on the topic and declared:
The research reveals that emotions constitute potent, pervasive, predictable, sometimes harmful and sometimes beneficial drivers of decision making. Across different domains, important regularities appear in the mechanisms through which emotions influence judgments and choices.
Bottom line – we decide with our hearts and justify with our heads.
Our hearts are afraid that we’ll lose the respect of our peers and loved ones, the reputations we’ve worked decades to build, the physical goods and intangible experiences that project our societal status, or the financial safety of a regular paycheck.
And, as my brilliant and kind sister told me, “These feelings we feel, these feelings are real.”
I’m afraid and biased and brave!
Next time you see someone (maybe you?) do something “irrational,” get curious and ask:
What cognitive bias are they falling prey to?
What is the fear that’s driving that bias?
How can you help them to be brave, live with the fear, and move forward?
I’m curious…when was the last time you were afraid, biased, and brave?
