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.

To paraphrase the Nobel acceptance speech of Austrian economist Friedrich Hayek:

If managers are to do more good than harm in improving organizational performance, they must learn that in a complex environment, they can’t acquire sufficient knowledge to orchestrate the desired outcomes. Instead, they must use whatever knowledge they have not to shape results as a craftsman shapes a piece of handiwork, but to cultivate growth by providing a proper environment, much as a gardener does for plants.

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.

Zhang often reminds his colleagues that it’s impossible to engineer a complex system from the top down. It has to emerge through an iterative process of experimentation and learning. When asked how Haier can accelerate its transformation, Zhang has a simple answer: run more trials and replicate the most successful ones faster.

The key to Handelsbanken’s unrivaled performance is its highly unorthodox organization model. In 1970, Jan Wallander, an economist 9 working at a regional bank in northern Sweden, was appointed as Handelsbanken’s CEO. At the time, the bank was losing money and was embroiled in a dispute with regulators. As Wallander analyzed the bank’s underperformance, he became convinced that overcentralization was the culprit. The bank’s bloated head office and rigid planning process made it unresponsive to shifts in economic conditions and customer needs. (At the time, loan approvals took two months to complete.) Moreover, senior bankers had made a spate of poor credit decisions that had imperiled the balance sheet.