How to change the way businesses relate to people by Gary Hamel @FortuneMagazine October 30, 2013, 2:19 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons (TheMIX) — To build a business that’s fit for the 21st century, leaders need to figure out how to nurture and reward contributions from employees, customers, suppliers, and other stakeholders. Organizations must focus both on unleashing individuals’ capacity — designing environments that inspire people to contribute their full imagination, initiative, and passion — and on aggregating people’s capabilities — making use of social, mobile, and digital technologies to enlist and organize talent across boundaries to do actual, meaningful work with each other. Unfortunately, most companies lack the ability to reconfigure and make use of such resources. That’s because a majority of organizations operate according to industrial-era practices that were designed to maximize standardization and top-down authority. Most organizations are prisoners of two persistent and pernicious structural models: the pyramid and the value chain. The good news: the old paradigms are already crumbling. With the rise of new technologies (digital, mobile, social, and Big Data) and the principles they represent (such as transparency, collaboration, meritocracy, openness, community, and self-determination), top-down structures are giving way to more collaborative and social approaches. Employees are enlivened by openness, autonomy, participation, and flexibility. Global cement and construction material maker CEMEX built a global collaboration platform called Shift to involve its 40,000 employees in setting the direction for the company. In just a few years, Shift has spawned hundreds of active communities with the power to make decisions on the future of the organization. At the same time, customers have become more active (and powerful) contributors, collaborators, critics, and evangelists. In some cases, customers or “users” are the company. Consider Valve Software’s platform for user-driven development and community, Steam. The most vibrant companies are re-imagining their boundaries and connecting with partners and stakeholders. LEGO is experimenting with a portfolio of approaches, from its global network of free agent designers to its user-driven innovation platform, CUUSOO. More than ever, leaders must recognize the value of individual contribution. Individual ingenuity, initiative, and passion are critical to business success. Yet these deeply human qualities cannot be “ordered up” from on high. They must be nurtured. This means that organizations must build new models of engagement that emphasize the power of the individual over command-and-control. And it means that leaders must focus on energizing and enlarging the community rather than managing it from the top down. These new approaches and technologies are available to just about anyone — from global companies to emerging startups to individual innovators to citizen groups to cross-sector initiatives. That’s why we are launching the SAP Unlimited Human Potential Challenge — to unearth and celebrate the individuals and institutions that are working to improve working life in a meaningful way. We are seeking the most progressive practices and innovative ideas to help people develop new capabilities. For example, how could an organization and its leaders… Invert a company’s organizational pyramid to create more autonomy, participation, and flexibility? Create and organize a community of volunteers, customers, or independent agents? Give employees, external contributors, and other stakeholders a greater say in shaping the company’s most important decisions? Inject the voice of the customer and other relevant stakeholders into every decision, and to make the insights and observations of every individual matter? Demolish the silos that inhibit contribution, and allow employees, partners, suppliers, customers, and other stakeholders to engage with the organization on their own terms? Redefine the work of leaders to focus on engaging and expanding the community? Rethink a company’s sources of “talent” and devise clever ways to discover and reward hidden genius? By sharing a real-world story or contributing an idea, you can help us make a dent in a big problem — making all organizations fit for the future (and fit for human beings). Gary Hamel, Polly LaBarre and Michele Zanini are the co-founders of the MIX (Management Innovation eXchange). Learn more about the SAP Unlimited Human Potential Challenge.