What’s the least efficient activity in your organization? What sort of work delivers the least value per dollar? We think it’s management and administration. The fault isn’t with any particular leader, but with the top-heavy, bureaucracy-infused management structures that predominate in most organizations. We believe that an excess of bureaucracy costs the U.S. economy more than $3 trillion in lost economic output, or about 17% of GDP. Here’s the data.

According to the U.S. Bureau of Labor Statistics, in 2014 there were 23.8 million managers, supervisors and administrators in the American workforce. (This figure does not include individuals in IT-related functions). That works out to one bureaucrat for every 4.7 employees. Overall, bureaucrats comprised 17.6% of the U.S. workforce and received nearly 30% of total compensation. (See Figure 1.)

Figure 1. Employment and compensation share of U.S. managers, supervisors and administrators.

The question is, how many of these 23.8 million overseers do we actually need? We can get an answer by looking at the management practices of a small but growing number of post-bureaucratic organizations. Their experience suggests it’s possible to run large, complex businesses with less than half the bureaucratic load found in...

Innovation starts with the heart—with a passion for improving the lives of those around you. When the iPad was introduced, Jony Ive, Apple’s head of design, talked about his passion for creating things that seemed “magical”—that were so far beyond what any customer might have imagined, they seemed like wizardry. You don’t achieve this by paying attention to customers, by putting them first, or even delighting them. You do it by setting out to amaze them—and it all begins with an attitude.

You have to be achingly eager to do whatever can be done, within the limits of physics and economics, to raise the quantum of human happiness in the world.

“Yes,” you say, “but in business, we have to be pragmatic. We have to focus on things that can actually be accomplished.” Fair enough, but often, we are blindly pragmatic. We are so conservative, so utilitarian, so process-focused, so data-driven, so obsessed with meager efficiencies, that we can scarcely dream of doing something “insanely great”—to borrow one of Steve Jobs’ favorite phrases.

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We live in a world where never before has leadership been so necessary but where so often leaders seem to come up short. Our sense is that this is not really a problem of individuals; this is a problem of organizational structures—those traditional pyramidal structures that demand too much of too few and not enough of everyone else.

Watch Gary Hamel, co-founder of the Management Innovation eXchange (MIX), discuss how to make innovation an everyday, everywhere capability. In this video blog, Hamel lays out three critical questions you can use to test the depth of your organization’s innovation competence.

The need to empower natural leaders isn’t an HR pipedream, it’s a competitive imperative. But before you can empower them, you have to find them.

In most companies, the formal hierarchy is a matter of public record—it’s easy to discover who’s in charge of what. By contrast, natural leaders don’t appear on any organization chart. To hunt them down, you need to know . . .

Whose advice is sought most often on any particular topic? Who responds most promptly to requests from peers? Whose responses are judged most helpful? Who is most likely to reach across organizational boundaries to aid a colleague? Whose opinions are most valued, internally and externally? Who gets the most kudos from customers? Who’s the most densely connected to other employees? Who’s generating the most buzz outside the company? Who consistently demonstrates real thought leadership? Who seems truly critical to key decisions?

A lot of the data you need to answer these questions is lurking in the weeds of your company’s email system, or can be found on the Web. Nevertheless, it will take some creative effort and software tweaks to ferret it out.

A few suggestions . . ....

Do you feel hamstrung by your company’s IT policies? Are the IT tools you have at home more up-to-date than ones you’re forced to use at work? Do you wish you had more control over your IT environment at work? If so, you’re not alone.

A while back in the Wall Street Journal, Nick Wingfield dared to question the totalitarian policies of the average corporate IT department–and boy-oh-boy does he make some good points.

How is it that employees can be trusted to take care of important customers, safeguard expensive equipment and stay within their budgets, but can’t be trusted to use the Web at work, choose their own IT tools, or download programs onto the workplace PCs? Do IT staffers really believe that conscientious, committed employees turn into crazed, malicious hackers when you give them a bit of freedom over their IT environment? Or are the nerds in IT all secret control freaks—the sort of folks who alphabetize their DVD collections and have separate drawers for different-colored socks and put on protective clothing before pounding a nail? Either way, if they had the budget, they’d probably hire hall monitors.

Some IT folks might argue in their...

At one time or another, most of us have probably worked for a boss who was self-absorbed, vindictive, or just plain inept — a real-life equivalent to Dunder Mifflin’s Michael Scott. One of my first jobs was for an HR manager who thought the best way to humble a cocky new MBA was to have him spend hours sorting files into alphabetical order. Needless to say, he didn’t get the best out of me or anyone else that worked for him.

During the recession, companies around the world have cut costs in all the usual ways—by reducing headcount, slashing capital budgets, and trimming overheads. All these measures are vital. But in their quest to root out inefficiencies, companies should also be focusing on the hidden but substantial costs of supercilious and overbearing bosses.

A global survey of 90,000 employees by Towers Perrin , conducted in 2008, revealed that only 21% of employees are highly engaged in their work. The other 79% may be physically on the job, but they’ve left their enthusiasm and ingenuity at home. This is a scandalous waste of human capability. It’s also a virtually bottomless reservoir of creative potential that has yet to...