By Rita McGrath & M Muneer, respectively Professor at Columbia Business School, and Founder, Valize, & Fortune-500 advisor, start-up investor and Co-founder, Medici Institute for Innovation
If your company still operates like an Indian ministry with layers of approvals, ritual meetings of nodding heads, and performance reviews that measure compliance rather than creativity, it’s already living on borrowed time. The bureaucratic corporation, that grand relic of the 20th century, is fast approaching extinction.
In an HBR article, Rita McGrath (with Ram Charan) has argued that the future belongs to the “permissionless organisation”, one that thrives not on hierarchy but on autonomy, not on control but on trust. In such organisations, decisions move at the speed of technology, not the pace of paperwork. Bureaucracy is outdated and is actively corrosive to innovation, speed, and employee morale.
Nowhere is this more relevant than in India, which has become the global laboratory for organisational reinvention. With over 1600 global capability centres (GCCs) employing more than 17 lakh professionals, India houses some of the most advanced innovation and analytics hubs for global corporations. Yet even within this ecosystem, many operate less like idea accelerators and more like administrative annexes, still shackled to the slow grind of head-office approvals.
Gary Hamel and Michele Zanini, in their study of over 7,000 HBR readers, found that bureaucracy is most despised where value is actually created: at the edges. Customer service agents, engineers, and product teams feel it most acutely. In contrast, those in HR, finance, or planning see bureaucracy as a necessary safeguard. The irony is that the very people hired to ensure “organisational order” are the ones insulating themselves from accountability.
That disconnect shows up in performance. A Salesforce study found that firms with poor employee experience lose both productivity and market share. When employees feel trapped by red tape, customers feel it too. The bureaucratic delay slows progress and results in loss of competitiveness.
In the banking sector, for years, public sector banks were the poster children of hierarchical inertia, with approvals crawling up and down endless chains. Meanwhile, new-age fintechs like Zerodha and Razorpay built agile, tech-first cultures that empowered frontline engineers to make real-time decisions. The result? Fintechs captured market share and mindshare, while bureaucratic banks still wrestle with customer complaints and outdated workflows.
The numbers are staggering. Employees spend 28% of their workweek feeding bureaucratic beasts: writing reports, seeking approvals, and attending meetings that generate no new value. That’s an entire day each week wasted on process, not progress.
Contrast that with “permissionless” set-ups like those at Google’s project pods—small, cross-functional teams focused on single objectives with rapid iterations. Here, reporting is handled by intelligent dashboards, not PowerPoint decks. Approvals are algorithmic, not clerical. The result: decision cycles shrink from weeks to hours.
Even traditional conglomerates are taking notice. Mahindra Group companies have internal “war rooms” that bring together marketing, design, and engineering teams to work on time-bound missions without the interference of hierarchical silos.
The more layers an organisation has, the more politics it breeds. The HBR study found that senior executives spend 42% of their time managing internal disputes, target negotiations, and turf wars. That figure rises sharply with seniority, proving that bureaucracy incentivises politics, too. Safi Bahcall, author of Loonshots, calls it the “return on politics” problem.
When advancing your career depends more on diplomacy than on innovation, creativity dies quietly. In many companies in the traditional sectors like energy or infrastructure, “managing up” remains a prized skill, more valuable than problem-solving. Meanwhile, start-ups and GCCs that reward experimentation over obedience are snatching away their best talent.
Political behaviour—resource hoarding, blame-shifting, territorial battles—was reported as “frequent” by 70% of big-company employees. It’s little wonder that bureaucracies lose their sharpest thinkers first.
The most damning indictment of bureaucracy is its impact on innovation. Nearly 80% of employees surveyed said their new ideas faced scepticism or indifference; 96% said it was “not easy” for a front-line employee to launch a new initiative.
Compare that to the culture at 3M, which famously allows employees to spend 15% of their time on passion projects—a policy that birthed the Post-it Note. Or Adobe’s Kickbox Programme, which gives employees a pre-funded toolkit to prototype any idea without managerial approval. Closer home, Tata Group’s InnoVista platform has democratised innovation by allowing employees across its 100+ companies to submit ideas directly to a central jury, bypassing middle layers altogether.
These models thrive because they trust individuals, not hierarchies, to be the engines of creativity.
In permissionless organisations, technology replaces supervision. Routine managerial tasks, like reporting, tracking, status updates, etc. are automated. Teams are small, multi-skilled, and empowered to make decisions. Leadership sets direction, not dictation. Goals are clear, metrics are transparent, and communication is continuous. It’s a system designed for flow.
In practice, that means embracing digital dashboards over review meetings, asynchronous collaboration over endless calls, and leadership that maximises people rather than power. Fidelity, for instance, only promotes leaders who can prove they are “people-maximisers”. Those wedded to old hierarchies are encouraged to move on.
India’s rise as the back-office to the world was powered by process discipline. But its future as a frontier of innovation depends on how quickly it can shed that same discipline when it stifles creativity. The next evolution is about autonomy, not administration.
As AI takes over repetitive functions, the new advantage will lie in human imagination and speed. Bureaucracy, by design, kills both. The companies that thrive will be those that trust their teams enough to act without asking.
When ChatGPT can generate a business plan in minutes, waiting 20 days for an expense approval is suicidal. The permissionless organisation is not a utopian vision but a survival strategy.
The dinosaurs of bureaucracy may still lumber on, mistaking size for strength. But make no mistake: extinction has already begun.