As the change in sentiment starts to bite, and governments become more aggressive in challenging monopoly power, CEOs will need to find new routes to profitability and growth. Their best bet: committing wholeheartedly to creating organizations that allow human beings to do their best work, unfettered by the shackles of bureaucracy.

Though expensive and usually belated, reorganizations are widely regarded as the only way to realign an organization with its environment. As a report by the Boston Consulting Group put it, “Rapid change requires companies to reorganize faster than ever before.” Good luck with that!

What’s needed are radically new organizational models that downplay formal structure. In a world of relentless change, trade-offs need to be made as close to the front lines as possible. Boundaries must be malleable. Resources, rather than being hoarded, must flow unhindered toward promising opportunities. Interunit coordination must be the product of nimble, self-organizing communities and market-like transactions rather than blanket policies or cumbersome councils. In short, we need organizations that, like the biosphere, the internet, or a vibrant city, are more emergent than engineered.

As he [Ken Iverson] explained in his book, Plain Talk: Lessons from a Business Maverick,

Most of today’s corporations were conceived as command-and-control organizations. The founders of integrated steel mills, for example, clearly assumed that the “genius” of the organization resided almost completely in management … In contrast, we built Nucor under the assumption that most of the “genius” in our organization would be found among the people doing the work. 2 3 From the outset, we shaped our business to let employees show management the way to goals that once seemed unreachable.

So while companies spend millions of dollars on “leadership development,” they invest next to nothing supporting bottom-up entrepreneurship. This has to change. Unleashing the problem-solving, business-building energies of every team member is essential to building a humanocracy.

The irony, of course, is that large organizations are open. Employees interact with thousands or millions of customers each day. Executives and managers talk constantly with suppliers, consultants, regulators, and other stakeholders. Why, then, hasn’t open innovation made a bigger difference? Why isn’t the typical corporation as resilient and innovative as a city or a university? Because, to put it bluntly, they’re often run by people whose minds are hermetically sealed against unconventional ideas.