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October 06, 2007

The Rhetoric and Reality of Management

Futureofmanagement3_3

THE FUTURE OF MANAGEMENT
from Gary Hamel is a must-read for all us businesspeople.

Gary, along with the wordsmithing help of Bill Breen, writes that management innovation lags far behind the significant innovation we’ve experienced in business with product development and business model development. He presents an argument explaining how outdated management practices, and not operating or business models, is the true culprit for why businesses fail to perform.

On page 35, Hamel writes … “Today, every CEO claims to be a champion of innovation—so why the barn-sized blind spot when it comes to management innovation?” In other words, there is a gap between the rhetoric and reality of management.

Interesting premise, eh?

Hamel is a proponent of management models which empower employees to be creative, be given room to experiment with new ideas, be rewarded for successes, and be held accountable for driving the business. Whole Foods Market, W.L. Gore, and Google are highlighted in the book as businesses practicing innovative management systems.

These case study companies Hamel highlights all have developed a corporate culture where bottom-up employee-driven innovation helps to fuel the success of the business. Unfortunately, businesses have failed to develop a company culture where every employee is given an opportunity to truly impact the business.

Hamel suggests there are three obstacles for why businesses fail in creating a management culture that is innovative, evolving, and ever-effective:


#1 | Too Much Management, Too Little Freedom
“Anyone who has ever run a university, a film studio, or an open-source software project will tell you that getting the most out of people seldom means managing them more, and usually means managing them less. It means giving fewer orders, worrying less about alignment, and spending less time checking up on folks.”

#2 | Too Much Hierarchy, Too Little Community
“Hierarchies are very good at aggregating effort, at coordinating the activities of many people with widely varying roles. But they’re not very good at mobilizing effort, at inspiring people to go above and beyond.”

#3 | Too Much Exhortation, Too Little Purpose
"A moral imperative can’t be manufactured by speech writers or ginned up by consultants. It can’t be cobbled together in a two-day off-site. Rather, it must grow out of some genuine sense of mission, possibility, or outrage. A moral imperative is not something one invents to wring more out of people. To be regarded as authentic, it must be an end, not a means.”


If you enjoy chewy business fodder, I recommend reading Gary Hamel’s THE FUTURE OF MANAGEMENT. This book will probably go down as my vote for the smartest business strategy book of 2007.

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Comments

Innovation for the sake of innovating? Seems to me like Mr Hamel has jumped on the "innovation bandwagon".
The whole exercise begs several questions:
1 - is it possible to innovate by mandate?
2 - if there isn't much innovation that is perhaps because things are good as they are, really, "more, better, cheaper" is not always a real paradigm
3 - innovation equals risk... is he willing to risk his own money and career to prove his point?

It's interesting that Hamel notes today, every CEO claims to be a champion of innovation.

Did he ever try this test? Call 25 companies ranging in size from say Procter & Gamble to Jack in the Box. That's a range of say $60 billion to a little over $200 million a year in sales. Now try this.

When the receptionist answers ask to speak with, "the person in charge of innovation driving the growth of your company." We all know the answer is the CEO, but in phoning 100 companies last year, 98% of the people answering the phone didn't know who that person was. The other 2% suggested we speak with a [metaphorical] Phil in packaging design. "Oh, I see. Phil in packaging design is driving the growth of Playtex. I thought it was CEO Neil DeFeo."

If the CEOs are the champions of innovation, why don't the employees know this? Is there no trickle down? Are they so disconnected from their organization? Of course they are. Most of the workers are just wholesaling their time for a paycheck. Does this just not matter in a company where business as usual prevails? Is innovation just a PR buzzword? Has Playtex had an innovation since the 18 hour girdle?

It was only 3 years ago that Boston Consulting Group did a study indicating that 97% of the CEOs polled expressed disappointment in their innovation return on investment. The very next year that number fell to 47% because the CEOs kicked the PR guys in the butt for dropping their drawers. Did anything change in that year? No. Were newly designed products launched? Yes. But updating the look of a refrigerator, mop or toaster is not innovation - an incrementally greater number of refrigerators or mops were not sold. Making the old look new never was innovation. It just prompts replacement sales. But standards have dropped so far in consumer packaged goods and durables that you can go to the top of the class just by hiring a design consultant.

Let's keep in mind Hamel has been trumpeting the Innovation angle for years as a consultant, teacher, and writer. This angle isn't new to Hamel. What is new is how he challenges businesses to get innovative with their staid management practices.

Adelino ... when you read Hamel's book you'll learn he advocates bottom-up employee innovation and implores businesses to create a company management culture where employees are given the time and accountable to get creative.

Hi John,
I thought I was on your blogroll! Oh well, it's been a long time since I visited. Enjoyed it and leaving a post. Thanks! Would like to discuss your view of Starbuck's Think Earlier campaign some time.

Martin wrote, "If the CEOs are the champions of innovation, why don't the employees know this? Is there no trickle down? Are they so disconnected from their organization? Of course they are. Most of the workers are just wholesaling their time for a paycheck."

Hmm ... you are singing from the same Hamel hymnal.

Here's another test. First, ask the CEO's (or Division President, or Group Executive, or whatever) what they think is lacking in their organizations and 90%+ of them will say something like "innovation," or "new ideas." I know, I've done this study, and CEOs constantly complain that "My people aren't bringing me new ideas, just the same old stuff." Then, the second part of the test: ask the line managers who report in to this pooh-bah whether they think new ideas, new innovations are rewarded around here. 90%+ of these line managers will answer with "All I ever hear from the higher-ups is 'MAKE THE QUARTER.'" Line managers, without exception, believe that all they are rewraded for, all they are directed to pursue, is a strategy for cutting budget to bring in the Quarter's committed number. it is certainly true, as one of the other commenters put it, that "Innovation by mandate" won't work -- innovation by exhortation is doomed -- but "innovation in January, budget cutting in March" is equally doomed.

Adelino ... when you read Hamel's book you'll learn he advocates bottom-up employee innovation and implores businesses to create a company management culture where employees are given the time and accountable to get creative.

Markus and John:
I will read his book but I am not sure how what you describe will address my points.

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