Ferrari's CEO on Diagnosing and Treating Bureaucratic Bloat

Ferrari's CEO on Diagnosing and Treating Bureaucratic Bloat

Soon after Benedetto Vigna took the wheel at Ferrari in 2021, he realized he needed to steer the legendary automaker away from bureaucratic roadblocks and toward a more agile, innovative future.

Vigna's first move was a listening tour, connecting with 300 employees at every level. These conversations quickly revealed that Ferrari had too many layers of management, and critical information was getting trapped in silos. In one particularly telling meeting on cybersecurity, there were nine layers of management represented, and it was the most junior participant who added the most value.

As Vigna put its it, Ferrari suffered from an excessively high "bureaucratic mass index," or BMI—a phrase suggesting he may be a fan of Humanocracy (wink, wink). Vigna's cure for bureausclerosis included flattening the hierarchy, opening up communications, and pushing decision-making as close to the edge of the organization as possible.

For instance, to put customers and products back at the heart of decision-making, Vigna bumped test drivers up three levels, giving them a direct line to engineers. He also had factory workers drive the cars, so they could viscerally understand what they were building (the experience brought some to the brink of tears).

These steps have clearly paid off. Over the last couple of years Ferrari's stock has nearly doubled, making company more valuable than General Motors and Ford.

Plenty of executives gripe about bureaucracy, but few actually take the time to gauge its impact and map out a plan to pare it back. So take a page from Vigna’s playbook. Ask yourself, "what's my organization's BMI?" And more importantly, "what am I doing about it?"

For more, read this this excellent Wall Street Journal piece by Ben Cohen (free link):