LeaderShip Edge

November 2007 :: The Future of Managment

"Can you imagine dramatic changes in the way human effort is mobilized and organized in the years to come? Can you envision radical and far-reaching changes in the way managers manage? Don't be dismayed if the answer is 'no'"

- Gary Hamel from his book "The Future of Management"

In today's business environment, competitive advantages rapidly erode. Entire industries are transforming and being overwhelmed by new developments.

The Internet is shifting power from companies to consumers.

Product and strategy life cycles are shrinking.

Deregulation and globalization are opening up entire industries to an onslaught of nimble low-cost competitors.

The Fact is organizations using yesterday's rigid management principles are not adaptable or creative enough to handle these challenges.

The Problem is innovation is stifled by the norms of organizational structures. Individuals who deviate from this structure are identified as renegades and discouraged from contributing.

The Outcome is organizations deal with change in a traumatic fashion. They aren't nimble, they aren't creative and they aren't proactive.

The Solution is management innovation. For far too long companies stuck to the same corporate regime. Products and branding are refreshed regularly, but the process by which we organize resources, plan and aggregate effort has remained untouched.

The Ultimate Advantage

Management innovation isn't just any innovation.

"When compared to other sorts of innovation, it has an unmatched power to create dramatic and enduring shifts in competitive advantage".

Ever wondered why all companies have the same hierarchy with CEOs and VPs?

Management innovation is "anything that substantially alters the way in which the work of the organization is carried out, or significantly modifies customary organizational forms, and, by doing so, advances organizational goals".

Three conditions are needed for successful management innovation:

1. A novel management principle that challenges the norm. The more novel the idea, the more difficult it will be for competitors to match the innovation.

2. A web of management innovations that is difficult to emulate. A systematic web of innovation becomes unique to the core of an organization.

3. Ongoing innovation and invention which creates exponential difference over time.

Not every management innovation creates a lasting advantage. The key is to keep innovating and challenging existing processes.

Escaping the shackles

Hamel says "'it's not human nature that limits the pace and scope of management, it's our unexamined beliefs".

To escape the process of conventional thinking you have to "distinguish between beliefs that describe the world as it is, and beliefs that describe the world as it is and must forever remain".

Which assumptions in your firm need to be challenged?

Adaptability

What is adaptability?

Adaptability is an aptitude that strengthens an organization's ability to be constantly creative and empowering to its employees. Hamel points to five key points of adaptability:

Markets: Increasing choices and moving resources to high-value uses.

Life: Promoting variety and selection.

Democracy: Creating an environment of activism and open challenge to create change.

Faith: The search for purpose, meaning and significance.

Cities: Increasing the ability to make discoveries by accident.

The Fringe

"You can't see the future if you're standing in the mainstream".

The fringe is where you should be looking for management innovation ideas. Hamel wants you to implement six challenges into your organization.

Whole Foods, W.L. Gore and Google. What do they have in common? They are the "fringe" in management principles today. They encourage management participation at all levels, allocate resources to foster creativity and behave proactively.

Yet Hamel says these companies aren't good enough. It's just the tip of the iceberg in management innovation.

In Our Opinion
The Beacon Group's Keys to Fostering Management Change

These are the questions you should be asking in your organization:

Creating a democracy of ideas: How can your company encourage more open exchange?

Amplifying human imagination: What has your company done to make your employees innovators?

Reallocating resources for adaptability: How do you allocate experimental capital?

Aggregate wisdom: How do you tap into the intelligence of all employees in your organization?

Minimize the influence of old paradigms: Is executive decision-making determined by foresight or by the past?

Allow everyone to participate: Can people choose where to make their best contributions in your organization?