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Almost every organization eventually hits a wall. In the early days, a company feels like a speedboat: a 30-person team spots an opportunity over lunch, makes a decision, and executes by dinner. But as that company scales to 5,000, 10,000, or 100,000 employees, the speedboat becomes a tanker. Decisions that once took minutes now require weeks of sign-offs, meetings, and bureaucratic navigation.
The conventional wisdom is that bureaucracy is an inevitable byproduct of size—a virus that infects a healthy organism as it grows. Bill Anderson, CEO of Bayer, fundamentally disagrees. Leading a 160-year-old pharmaceutical and agricultural giant with nearly 100,000 employees, Anderson is currently orchestrating one of the most radical management experiments in modern corporate history.
In a candid conversation with HubSpot co-founder Brian Halligan, Anderson details how he is dismantling the traditional corporate hierarchy to rebuild Bayer from the ground up. This isn't theoretical; he is flattening layers, expanding spans of control to impossible levels, and killing the annual budget. The goal is to prove that even a massive legacy organization can operate with the agility of a startup.
Key Takeaways
- Bureaucracy is structural, not viral: Complexity isn't an external infection; it is the result of how an organization is designed, specifically through excessive management layers and functional silos.
- The "Dynamic Shared Ownership" model: By drastically increasing the span of control (managers coaching 15 to 90+ people), companies can force a shift from "command and control" to autonomous execution.
- Kill the annual budget: Replacing year-long financial prisons with 90-day cycle planning allows teams to reallocate resources based on current realities, not outdated predictions.
- Peer-driven performance: Employees generally trust peer feedback over manager evaluations. A robust peer review system provides better data than a single manager’s perspective.
- The danger of "professional managers": Hiring managers solely to manage people often accelerates bureaucracy. Leaders should remain close to the product, the science, and the customer.
The Anatomy of Bureaucracy: It’s Not a Virus
Most leaders treat bureaucracy as a disease that invades a healthy company. They launch "bureaucracy-busting" initiatives, hoping to cure the patient. Anderson argues this diagnosis is fatal because it ignores the root cause. The organization isn't sick; it was built incorrectly.
It's not that the organization is healthy and then it gets a virus. Is actually the composition of the organization is what's creating bureaucracy.
Nobody wakes up in the morning deciding to be a bureaucrat. Bureaucracy is the natural output of a system designed with 12 layers of management, functional silos, and decision-making authority trapped far away from the customer. If you have to ask seven people for permission to do something, you aren't suffering from a bad culture; you are suffering from bad architecture.
At Bayer, the solution wasn't to ask people to "be less bureaucratic." It was to physically alter the architecture. Anderson reduced management layers from 11-12 down to 6-7. However, he notes that simply removing layers is insufficient if the underlying operating system—how decisions are made and how money is allocated—remains the same.
Radical Restructuring: Dynamic Shared Ownership
To prevent managers from falling back into micromanagement, Bayer deployed a counterintuitive tactic: they made it impossible to micromanage. By drastically increasing the "span of coaching" (Bayer’s term for span of control), the nature of the manager's job changes by necessity.
From Command and Control to Coaching
In a traditional structure, a manager might oversee five or six people. This ratio allows the manager to direct daily activities, approve minor decisions, and essentially do the work of their subordinates. Anderson shifted this average significantly. Some leaders at Bayer now have 90 direct reports.
When a manager moves from leading five people to leading 90, they physically cannot maintain a command-and-control relationship. They cannot approve every expense or dictate every task. Instead, their role shifts to removing bottlenecks, providing strategic clarity, and ensuring the team has the resources it needs. The team effectively owns the business, and the manager becomes an enabler rather than a gatekeeper.
The Death of the Annual Budget
Perhaps the most entrenched corporate ritual is the annual budget—a process where financial resources are locked down months in advance based on predictions that are often obsolete by the time the fiscal year begins. Anderson views these detailed budgets as "money traps" that stifle agility.
Bayer has replaced this with a 90-day cycle system.
- Tier 1 (High-Level Commitments): The company maintains high-level financial targets promised to investors (e.g., total spend and total revenue).
- Tier 2 (Dynamic Flow): Internally, resources are not locked into thousands of cost centers. Instead, teams review priorities every 90 days.
The investors don't care how you got it. They want to know what you delivered. Business is a lot more like jazz than it is like Beethoven.
Every quarter, teams assess their progress. If a project is stuck waiting for regulatory approval, its funding and talent can be immediately redeployed to a team that is moving fast. Teams form, dissolve, and re-form based on the work required, not the org chart drawn a year prior.
Rethinking Performance and Compensation
As organizations flatten, the traditional "boss evaluates subordinate" model breaks down. A manager with 50 reports cannot deeply know the day-to-day impact of every individual. Bayer’s answer is to lean heavily into peer feedback.
The Power of Peer Reviews
Anderson points out that in almost every organization, employees believe their peers have a more accurate view of their performance than their boss does. At Bayer, the 90-day cycle includes a peer review where colleagues answer two simple questions: What was this person’s major impact, and what could they have done better?
Ratings are simplified into three categories:
- 1: Great job, high impact.
- 2: Outstanding, performing above expectations.
- 0: Needs improvement.
Decoupling Feedback from Cash
Crucially, Anderson warns against mechanically linking these peer ratings to bonuses. If a 1.2 rating automatically equals a specific bonus multiplier, the system gets weaponized. People start trading high ratings ("I'll give you a one if you give me a one") or hesitating to give honest feedback because they don't want to hurt a colleague's wallet.
Instead, the manager—equipped with peer data, team outcomes, and their own observations—makes the final compensation decision. The peer feedback informs the decision but doesn't dictate it via an algorithm.
The Founder’s Dilemma: Scaling Without Losing Soul
For founders navigating the treacherous jump from 100 to 1,000 employees, the temptation is to "adult up" by hiring professional managers from large corporations. Anderson advises caution. The "professional manager" often brings the very playbook that creates sclerosis—rigid planning, layers of approval, and a focus on internal politics rather than the customer.
Missionaries vs. Mercenaries
A common fear in scaling is the shift from "missionaries" (early employees obsessed with the vision) to "mercenaries" (employees just doing a job). Anderson challenges this binary. He argues that most people have the capacity to be missionaries if the environment allows it.
The policeman who spends his weekends passionately organizing volunteer home-building trips is a missionary in his spare time and an employee in his day job. The goal of the organization is to stop suppressing that natural enthusiasm with bureaucracy. When people are given autonomy and a direct line of sight to their impact, the "mercenary" mindset often evaporates.
Leadership Transitions
Whether a CEO is hired internally or externally, Anderson believes they must adopt a turnaround mindset. Even in successful companies, a new leader shouldn't just "keep the lights on." Maintenance mode is a myth; you are either changing or dying.
If you come in and find everyone says they can't get anything done, but the engagement survey is high, that's dangerous. It means the organization has become content.
Conclusion
Bayer’s transformation suggests that the trade-off between scale and speed is a false dichotomy. By flattening the organization, trusting the workforce with genuine autonomy, and operating in rapid 90-day cycles, even a historic giant can maneuver like a startup.
For leaders at any stage, the lesson is clear: Complexity is not a badge of honor, and hierarchy is not a safety net. The most effective leaders are those who admit they don't have all the answers and build a system where the people closest to the work have the power to do it.
