# Dematerialization, Centering Strategy, and Unbossed Organizational Structures

**Podcast:** HBR IdeaCast
**Published:** 2026-03-26

## Transcript

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I'm Audie Ignatius, and this is the HBR Idea Cast.
Harvard Business Review recently hosted the HBR Strategy Summit 2026, a day filled with expert advice and guidance from executives and academics alike.
We're sharing the highlights of this event in this special Idea Cast series.
Today we have another masterclass, this time from Rita McGrath, professor at Columbia Business School.
She sees a major shift in the economy underway that affects strategy and organizational structure.
Our economy is moving from one based on physical assets, mass production and hierarchy, to intangible assets, services, and innovation.
This shift means companies can no longer depend on long-term competitive advantage.
Instead, she'll explain how in an AI world, companies need to choose a center around which to build capacity and allocate resources.
She'll share examples from the business world, talk about what it means to have unbossed structures, and take audience questions, all with the help from HBR editor-in-chief, Amy Bernstein.
Here is that masterclass.
So this is actually some work I'm doing for a new article, and uh eventually we hope a book, which has been one of the hardest things I've ever had to write.
And the reason is that we are in this turning point between a regime based on cheap energy, physical goods, mass production, the assembly line.
Um, and that has major implications for how we think about strategy, because the regime we are moving into is increasingly based on intangible goods, on digital products, on services rather than things.
And it requires a really different way of thinking about strategy.
So if I go back to strategy texts 101, um it was all about physical things, right?
Physical uh barriers to entry, things that kept kept your competitive advantages sustainable for a long time.
And that world is just evaporating right before our eyes.
But we don't yet know what the contours of the new one are.
But what I do think we know is that dematerialization is going to wreak big implications for what strategy needs to be.
So I think there's a new concept we need, and it really has to do with how do you center a company in a world which is dematerializing around you.
And I thought I'd take an example.
So imagine that you're a diversified firm, you've got an eye care business, a consumer products business, a business that uh does, you know, off off brand, you know, off-patent drugs, uh, et cetera, et cetera.
And you happen to have a pharma business too, and you're in a capital committee decision-making body, and you've got to decide.
There are two proposals on the table.
One is uh let's build a plant to make something like excedrin, right?
It's a product we know, it's very predictable, the returns are almost certain to be guaranteed.
Um, or let's invest in this brand new therapy area called radioligands, which is nuclear-based therapy, which can attach a nuclear particle to a cell and take it directly to a cancer site.
So it's very precise targeting of the disease profile.
Uh which do you do?
Like, you know, and and in a normal company, which is diversified and has a lot of different activities, um, it's a really hard decision.
And everybody comes in with their logic and it's very political and and it's um, you know, it eventually comes down to, you know, whatever your decision rubric is.
Um, but in a centered company, uh, the decision almost makes itself.
And by centered, what I mean is you choose your center of gravity, as it were.
Um, and in the case of Novartis, which is what this story is really about, um, Vasnar Simhan, when he came into the company as CEO in 2018, he said, you know, it doesn't make any sense to me that we don't just pursue our mission of inventive medicines, you know, new medicines that are going to really treat disease areas.
And so he got rid of the eye care business, he divested the consumer products business, he divested the generic pharmaceuticals business and really sling the company down.
They went from about 104,000 people to about 76,000 and spun off all that.
Now, here's where it gets really interesting to me as a strategist.
When he took over, they had pharma, eye care, consumer products, generics, all that stuff.
And the total market cap of that company was about 120 to 130 billion, depending on what time frame you look at.
Today, I just looked this up the other day.
All those companies, if you add them all up, the combined market value is 510 billion dollars.
So look at the delta in what they've done simply by allowing each of those individual pieces to focus on what they do best.
And the culture that Nara Simhan also had that comes together with this is something that he calls inspired, so motivated by their mission, uh, curious, so constantly looking to do new things, and unbossed.
So what that means is not you get to do whatever you want, but it means is smart people with a passion for their mission get to take the initiative.
And I think a beautiful example of this, it took place in uh last year's Super Bowl when they sponsored an ad, and the ad was called Your Attention Please, and the ad shows basically video of women's breasts, right, left, and center in every context you can imagine.
And then it shuts down, the screen goes blank, and the um the message is uh so much attention.
Uh, but six million women watching this program, which is the Super Bowl, uh, could be diagnosed with breast cancer uh with this year.
And uh and then Wanda Sykes comes on and gives a pitch about how early detection really helped her navigate this.
Could you imagine a staid pharma company ever coming up with something like that?
I it was just a breakthrough, and I was mesmerized just watching this.
Uh, but they had the courage to say it's in the service of our mission to catch people's attention when they're paying attention and in a way that isn't sort of stuffy and pharma-like.
And so the evidence for the increasing intangibility of our economy is quite profound.
If you took sort of a slice of the top companies in the world in 1970 or so, uh, the bulk of what constituted their value would have been the typical things we think of plant property equipment, tangible assets.
If you took the same snapshot today, the bulk of what companies are valued at is intangible.
It's patents, it's software, it's technology.
It's it's not tangible anymore.
And that fundamentally changes the boundary conditions under which strategy needs to be uh performed.
So I think this critical challenge of the strategist, before you even get to things like what moves, what market, where do I go, it's really figuring out what the center of your company is going to be.
And in the case of Novartis, it was really centered around this mission, right?
Delivering inventive medicines that are going to really fundamentally cure uh issues in several very defined um uh disease areas.
Now, what does this do for you?
It creates a bounded opportunity set, so it makes it clear what we're going after, but also what we're not.
And you know, strategy is fundamentally about making choices.
It resolves these kinds of capital allocation dilemmas.
It becomes absolutely clear.
Of course, you're gonna go for radio ligands if that's what your company centered on, and it enables this permissionless, unbossed approach to managing your organization.
So if you think about the typical bureaucracy, right?
Um, typical hierarchical bureaucracy, it was built to deliver mass production at mass scale.
And it was very effective at doing that.
But we're not in that world anymore.
As uh Bayer CEO Bill Anderson, who's two years into uh real transformation at that company said, you know, there was a time for hierarchical command and control organizations, the 19th century to be precise.
So uh we're looking at something very different now.
And I think the the contours are beginning to become clear, and we do see some examples of companies that are actually doing this.
So here's some questions to think about as you think about how might we design a permissionless organizational structure which can do the kind of innovative things that Novartis is doing.
Um, and and some questions to think about.
So the first question I would ask is have we made things as simple as possible?
And this is a picture of Sharon Price John, one of my strategy heroes.
Um, she's the CEO of Gilde Bear workshop.
Here's a fun fact: if you had bought shares of build a bell workshop, build a bear workshop in uh 2020 and held them till today, you would be doing better than if you'd bought the same amount of shares in NVIDIA today.
So she's really turned that company around.
But she has a mantra.
She says, you know, the the the that she calls SDSS times two.
Stop doing stupid stuff, is where you start.
So look around your organization.
What are the practices that are no longer fit for purpose?
What are the procedures that were put in place because somebody did something really bad 27 years ago?
Um and you know, what could you safely stop?
And then once you've cleared some space by stop doing the stupid stuff, then you can do the second SDSS, which is start doing smart stuff.
And I think it's just a really simple way of thinking about how do we get some of the complexity, the organizational drag out of what we're doing.
Second question is are we truly leveraging loosely coupled small teams?
And this, of course, was made famous by Jeff Beats Bezos and the two pizza rule.
But if you think about the coordination cost of navigating in a hierarchy, um, if you have to go to 15 different departments to get something approved, right, your communication overhead is just really massive.
But if you can keep it to three people, six people, twelve people, that's sort of the sweet spot.
And what we're seeing is loosely coupled but mission-aligned small teams really outperforming large organizations.
And we're even beginning to see now the unit of value creation is right at the level of small teams or even individuals.
We've got our very first single person unicorns now to think about.
So think about how much overhead you're putting on these teams and does it really make sense?
Are we really taking a stewardship position?
And this is this idea of being centered on the long-term vitality of your company.
And I'll take Fujifilm as an example.
Um, they had the same challenge Kovac had, which was their major profit making business was becoming obsolete by the advance of technology.
Um, and they saw it coming.
And they said, you know, we're centered on our technology.
We will use that technology in any market where it makes sense.
And so they took a group of people that were dedicated to figuring this out.
And what you saw was they went from cameras and film into medical imaging into cosmetics, into anywhere the technology makes sense because they're a technology-centered firm.
So they don't really care what markets they're serving.
What they care about is the long-term wellbeing of the company.
Then I think there's a question about operationalizing for diversity.
Do we have people who don't all think the same?
And this is a real challenge because there's a tendency in companies to hire the same kind of people to look for the same kind of background.
So be thinking about do we have different backgrounds, different experiences, different socioeconomic levels weighing in on our decisions.
And that's what I call healthy diversity.
Have we built in trial and error learning in a high uncertainty situation?
The only thing you can count on is that you don't know what you don't know.
So what you have to do is experiment.
And I love this example.
This is from Netflix, and they actually have a program called Chaos Monkey that goes through their code.
And you can only imagine how much technology a company like Netflix runs.
And then they let this thing loose on their code and it systematically breaks pieces of it in order to test how durable it is.
Well, what that has the side effect of accomplishing is this trial and error learning that you're gonna get more and more learning as the code kind of figures out where the weak spots are.
I think this is fascinating.
And then lastly, are we making space for emergence and for innovation right at the edges of the organization where everything really uh where the knowledge that we need to do things uh really lives.
Uh this is an example from Adobe.
This is what they call their kickbox program.
And it starts with a red box with a $1,000 gift card in it that any employee can request and do an experiment with.
It's such a simple idea.
And yet, when I talk to people in large organizations and say, hey, if somebody on a loading dock had an idea, what would they do with it?
And usually I get back a black stair.
There's no process, there's no mechanism.
And yet that person is right at the coalface with your customers and your suppliers and what's going on in your world.
So I think it's just you're massively important that you figure out how to get those ingenious people that are working in your organization the ability to uh do new things.
So let me wrap up and then we'll have time for questions.
Um, I think the turning point is here.
You know, we're past question whether our economy is transitioning towards something that's you know more much more permissionless.
Uh, choosing your strategic center to me is the most significant decision that you're gonna make.
You want clarity about who we are and who we're not.
Um, I do think centering can unlock enormous value, as we saw with the Novartis example.
Um, and I think organizational design is increasingly becoming enmeshed with strategy, right?
It used to be treated as two separate things, and I don't think that's the case anymore.
What you're building is what's going to be effective in the marketplace.
And um, this unbossed structures can really release uh human potential.
Let's go to some of the questions that have been coming in from our audience.
Uh Mark, who leads AI strategy for his organization, asks, how might the power of the unbossed apply to AI strategy?
Oh, I think it's central to it.
Um, but you know, I think the the way that a lot of companies are looking at AI is just kind of backwards.
So back in the day, right?
You know, would you have said, what's my electricity strategy?
Of course not.
Um what you would have done though is you would have given people the tools to experiment to figure out what this new possibility opened up for you.
And I think AI's like that, right?
So in an unbossed organization, people will feel free to run experiments, to share their what they're learning with other people, to connect with other teams.
So I think it's encouraging this um climate of experimentation that's gonna allow people to really use AI in an unbossed way.
Yeah, no doubt.
Um Richard, who's the CEO of Eastside People asks, I'm here from the not-for-profit sector.
What insights can be borrowed from corporate strategy to the social sector?
Oh, that's a great question, and I think a very important one.
I think what happens to a lot of not-for-profits is they get dragged into mission creep.
You know, a big donor says, Well, I'll give you the money, but only if you do, you know, teenage pregnancy and then somebody else's, well, I want you to do whatever.
So I would take a page out of the Harlem Children's Zones playbook and um what their what their CEO basically said was, you know, I'm going to really define my mission incredibly clearly.
And his mission was so that children growing up in places like Carlum could have the same opportunities in life that children growing up in a middle class suburb would have.
And what that means is there's a lot of stuff he's not going to do, right?
He says, would it be better, you know, if parents were married?
Sure.
You know, would it be better if they had jobs where they could make good money?
Sure.
But that's not my mission.
My mission is just focusing on these kids and what we can do for them.
So I think the centering idea is absolutely important.
The second thing that's different for not-for-profits is that are you doing something that a market is not going to do?
So are you filling a need, closing a gap, doing something where uh, you know, there's there's not an economic driver for it?
Um, because why else would you why else would you be there?
And then I think the third thing that is really relevant is how can you guarantee a flow of resources in support of your mission, which may involve doing things that generate revenue?
Ryan, CEO of Golden Advisory, is asking, I work mostly in healthcare where the mission statements are paragraphs.
To borrow to borrow from this.
Yeah, I think we've all seen them.
Uh to borrow from this inspiring Novartis case, does the organizational mission need revisiting?
Perhaps a simplification itself?
Or is that missing the larger point that you're making here?
I think the simpler it is, the better.
And you know, Vas Narasimhan at Novartis has been remarkable at how clearly he has spelled out for people what the company's all about, what they're going to do and what they're not going to do.
And uh he's also very visible and very articulate.
Um he does videos all the time.
Uh he's really carrying that mission to a very personal level to every single person in the company.
They they really take advantage of multiple, multiple communication channels.
But the message itself is simple.
Curious, inspired, unbossed.
You can remember that, right?
Um, and I think that's what uh we want we we want to encourage companies to do because once it gets paragraph length, it starts to lose people's ability to remember.
It stops being able to drive behavior.
Curious inspired unvossed.
It's gone in my notes.
Okay, Shonda from Austin asks how do you best balance giving autonomy to the teams to to leave way for innovation while ensuring that the team is also working toward the same goals as an organization or team.
How do you ensure that we're moving in the same direction?
I have that question too, Rita.
Absolutely.
And I think this is where the centering idea is so important.
So let me give another example.
There's a South Korean fintech uh firm called TOSS.
So in like in America, we Google things in South Korea, they toss things.
They serve something like 25% of all of the South Korean population.
And they were founded by a dentist, a guy named S.G.
Lee.
Toss's mission is to remove frictions in financial services.
That's their center, right?
So anything that removes a friction, they're good about.
And what they do organizationally is they have what they call the directly responsible individual.
So if someone is taking on a task or taking on a project, uh there's there's one person who's DRI, and then they have a team around them.
Uh their promotions are not vertical.
They don't even talk about senior versus junior.
It's like an irrelevant concept to them.
And your scope of responsibility determines how you get paid, how you advance what you do in that company.
And so, as an example of the kind of thing this empowers, um, they had a YouTube chat, YouTube channel, and the YouTube channel does what a FinTech YouTube channel would do, right?
How much do you need for retirement and where should you put your excess pay?
Um, and then one of their teams said, Well, wait a minute, there's other ways money shows up in people's lives and started a second YouTube channel, which is all about money and sort of culture.
So, how does money fit into sports teams and how do the Kardashians spend their money?
And you know, how does money resolve?
Now, in a typical large hierarchy, right, there would have been a YouTube czar, and the YouTube czar would have made all the decisions about what programming goes on that that channel.
And that would have been that, right?
With this very um uh mission driven, but what he calls uh loosely coupled system, this second YouTube channel could emerge, and nobody has to ask permission to do that.
And you know, by the way, if it hadn't worked out, they would have just taken it down.
You know, it's a no-regrets move, but it frees up the organization to experiment like that.
And today they've got these thriving two channels, and the second channel is introducing TOS to people who couldn't care less about pensions, right?
Um, and so it's it's a win-win on all dimensions.
And so what Mr.
Lee will talk about is he said, very, very tightly aligned on mission, which I would describe as centering, very loosely coupled.
Great.
Um, so Vivian asks a question that a lot of people have an interest in, which is how do you concretely organize an unbossed company?
What should what should leaders go back and start doing tomorrow?
Um, well, I think the first thing that people will talk about is you need to get real clarity about where decisions live.
Uh, and Voss, more of artists will tell you there's three kinds of decisions, right?
There's there's decisions that are pretty clear and obvious, and those should be pushed as far through the edges as they possibly can be.
Um, and and let the people with the most information there make those decisions.
Then there are kind of complicated decisions where what you want to do is you want to assemble as much expertise as you can.
So a company like Novartis has experts in all kinds of things.
So you you you assemble those and you kind of work your way through what your options are and you arrive at some kind of decision.
And then there are the complex decisions where you know you really don't have the information you'd like to have.
And that's where you know you really need judgment, you need a judgment call.
Um, and you need to be comfortable as a leader with making those decisions, knowing that you might not be right, and with what perhaps 60 to 70 percent of the information that you want.
And what they'll tell you is the thing that kills uh momentum in companies is not making a decision, and that's a lot of times that's people's default.
So I think step one is figuring out what your decision structure is going to be.
Uh, then I think step two is um making people understand what's inbounds and what's not.
So, you know, we always talk about oh, freedom uh and accountability, right?
And everybody loves the freedom part, nobody wants to deal with the accountability part.
So I think you have to really be thoughtful about how you design your incentives, what you're teaching people is the right thing to do, and then you really want to make clear what the mission is.
So when uh Nara Simhan came into Nove Artists, it was a very different company, it was a pretty traditional hierarchy, and so to really implement this unbossed idea, he worked very closely with his head of HR at the time.
Um, and they did multiple, multiple layers of management training, uh, instructing leaders to model the behaviors specifically, what is it look like?
How does it feel?
How does it make you act.
Very, very specific guidance on what they should be doing.
And some leaders loved it and really engaged, and some really didn't, and either exited or were shown the door.
Um, so I think it it's it there's a lot of training that's involved.
There's a lot of preparation.
So, a couple of things to watch out for.
Don't just say, Congratulations, you're empowered, and lead.
And you know, if I've been in a hierarchy my whole life, I don't know how to do things like resolve conflicts, I don't know how to do things like have difficult conversations.
I'm used to the boss settling things when there's a dispute, you know.
So you need to train people and you need to give people the tools to self-manage.
A great example of this, and there's a terrific book uh on this, is um Morning Star Corporation, which has uh extensive training and very few layers of management.
They don't they don't even have what they call managers.
And what the way that they operate the company is on uh the basis of a thing called a colleague letter of understanding.
And so if I'm working with you, we write a formal letter to each other saying this is my commitment to you, these this is what I'll be held accountable for, this is by when, this is the resources I need, that-da-da-da-da-da.
And if you give people the ability to exercise the power that used to be concentrated in a management layer, most people are ingenious, most people mean well, and most people want to do a good job and get a lot of gratification out of that.
So there's a whole kind of complex of things that you can start to do.
But I'd start with decisions.
Where do decisions get made?
Great.
Um, so we have time for one more question, and I hope a short-ish answer.
Okay.
So let's see.
Uh Elena asks, uh, can you please talk a little bit about balancing question two about small teams with question four about having healthy diversity?
How do you do that?
Oh, well, it becomes really easy because if you've got a small team, you know what the diversity profile is of each person, right?
Um, and and do you want, you know, just give your numbers, right?
Do you want diversity in terms of uh background training perspective, whatever?
And if you've got a team of six or seven, you can pretty easily work through that.
That was Rita McGrath, professor at Columbia Business School.
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I'm Audie Ignatius.