Management Innovation : problems, facts and 10 lessons for the future
April 7, 2010
God bless Jon Husband : he pointed me via a Twitter conversation to his telling blog post (Will Enterprise 2.0 drive management innovation) on Fast Forward blog, where he quotes Gary Hamel FAN-TAS-TIC book : The Future of Management.
To start with, Gary Hamel is not an obscure blogger or some kind of geek preparing the internet revolution. He has been ranked the most influential business thinker by the Wall Street Journal ahead of personalities such as Thomas Friedman or Bill Gates. Therefore, it won’t be as easy for corporate afficionados to dismiss his theories as it may be to dismiss Cluetrain Manifesto’s chapters by Chris Locke ou David Weinberger (regardless of how brilliant these are).
This is fascinating essay. Lucid, smart, driven by a relentless desire to find the truth and to help the reader find the one of his company.
- Change has never been so fast or happening to such a scale. Nowadays not only advantages erode rapidly but whole industries are crashing (airlines, music …)
- Barriers of entry have never been so low because of deregulation and technologies. Therefore, companies are now facing ultra low cost competitors.
- Internet offers a light speed disintermediation between producers and consumers
- Strategy life cycle is shrinking. New Business is faster than ever
- Customers (and employees !) have never been so well informed thanks to the internet and the amount of information available to them
Looking into these management issues, Gary Hamel analyses how management works today and how innovation prone it is. Well, not much since :
- All companies gets obsessional about innovation and yet don’t apply any at management level
- Right now, your company has 21st-century Internet-enabled business processes, mid-20th-century management processes, all built atop 19th-century management principles.
- 19th century management will just not work to manage knowledge workers in a world-changing at such breathtaking space.
- Management is extremely conservative because it is based on unchallenged beliefs and politics of people willing to keep their status, power and benefits
- The only solution to survive and succeed in an ever-changing business environment is to be adaptable
- You can not be adaptable if the whole company is controlled by a heavy and fossilized hierarchical chain of command. Adaptable eco-systems (life, markets, cities) are not reduced to mere vertical top bottom flow of information and processes but on peer-to-peer democratized flat systems
The Future Of Management goes through different real life use cases and tell the remarkable stories of enterprise very famous world-wide for their amazing innovation ability.
- Small operating units
- No bosses but leaders that get things done and are excelling in team building
- Team free to fire its boss
- High Trust / Low fear environment
- Willing commitment instead of assignment
- 20% time to personal project.
In terms of quality of workplace :
For the 13th consecutive year, W. L. Gore & Associates has earned a spot on FORTUNE magazine’s list of the “100 Best Companies to Work For.” Only a dozen other workplaces have appeared in every edition of the rankings. The company, known for everything from waterproof, breathable GORE-TEX fabric to life-saving medical devices, is No. 13 on this year’s list, now posted at fortune.com/bestcompanies. (fibre2fashion)
Whole Food Market
WFM is the most profitable food retailer chain in the US according to their profit / sq foot ratio. 3000% increase in revenue between 1992 et 2007. Rules :
- Small units (up to 8 people)
- associates are empowered and accountable
- Trust and equity : executive can not earn more than 19 times of the lowest salary
- Strong purpose and common cause : quality and healthy food, local producers
Again extremely innovative and rather successful company.
- Network of lateral communication
- Small work units (3 to 4)
- Position and hierarchy don’t win an argument.
- Grueling recruiting process
- Collaborative tools (MOM, MiscList)
Out of the real life stories above, Gary’s extracts the following lessons for management innovation :
- Management innovation is critical. Because systemic management brings advantages that are tough to replicate.
- Principles matter. Whole Food Market is quite representative in this respect : love, community, trust transparency, mission are the principles the whole company has based its success on
- The main obstacle to management innovation is the belief that there is no other way to manage an organisation. Ask : who benefits from the status quo ?
- Management innovation redistributes power. When people are empowered (responsibilities, accountability) their job makes more sense and they are more likely to get more engaged and passionate about. And engaged and passionate people are happier and more productive
- Costs of management innovation are more obvious than benefits. For instance, WL Gore cluster of factory plants sounds ridiculous in terms of costs savings for business orthodoxy. But in practice, it offers cross business learning to the people in the company. How to measure such intangible assets as adjacency, autonomy, agility, commitment ?
- Management innovation that humanized work is irresistible : the three main case studies (Whole Food Market, WL Gore, Google) this book is based on are exhilarating examples on how empowering people fosters a grand slam in organisation success : innovation, profits, and employee engagement. This is leveraging Gary’s pyramid of human capabilities.
- Experience managers are not the best in terms of innovation and MBA is an obstacle to management innovation. In all 3 real cases above, CEOs are graduated in computer science, philosophy and chemistry. As Gary Hamel puts it, not doing MBA, they are not been told what NOT to do. Which echoes the David Heinemeier Hansson presentation : Unlearn your MBA.
- Small is the new big. All these companies have chosen to have small operating units
- Manager is more a producer of the show rather than being the lead to quote Cristobal Conde.
- Internet is the best metaphor of for 21st Century Management. This is where we go back to Jon’s insightful blog post :
Whether we like it or not, we are passing from an era in which things were assumed to be controllable, able to be deconstructed and then assembled into a clear, linear, always replicable and thus static form to an era characterized by a continuous flow of information. Because it feeds the conduct of organizations large and small, it is a flow that necessarily demands to be interpreted and shaped into useful inputs and outputs.
If you have any interest in management, do yourself a real treat and read this book. It contains many questions that will help you rate your organization in terms of management innovation : very useful.
Surprisingly enough, this book concludes on the Internet as a metaphor for management. This is the perfect introduction to another Harvard Business Press release : Enterprise 2.0 new collaborative tools for your organization toughest challenges book by Andrew McAfee.
We are now faced with this chicken and egg question type of question : who was the first in the 2.0 landscape : Management 2.0 or Enterprise 2.0 ? This has to be the subject of another blog post …