We live in a world transformed by the Internet, so why would anyone wish to work for a company managed along industrial-age principles?
Think about it: Why — how — should we go from an environment of creativity, connectivity and diversity to one of secrecy, favoritism and bureaucracy?
Excellent questions — and one of the major ideas in Gary Hamel’s compelling new book, “The Future of Management,” written with Bill Breen of Fast Company magazine.
Hamel, management professor at London Business School, sketches out a scenario of management innovation in which ideas from all levels of an organization are solicited, considered and funded when appropriate.
His casual and frank writing style makes this akin to a one-on-one management master-class he is holding for you every morning for a week at Starbucks. No decaf allowed.
Future Shock
Hamel knows that skeptics doubt they’ll see widespread changes in their lifetime. He concedes it will be an evolutionary process. But he also contends that organizations will have no choice but to innovate, and the book is bursting with ideas and suggestions for managers to create their own futures.
He has the credibility and respect to be taken seriously. Besides his teaching and consulting, he is the co-author of one of the most influential business books in recent history, “Competing for the Future,” which popularized the concept of core competencies.
Hamel’s work in the new book is based on his own research and that of other colleagues at London Business School. He also interviewed executives at Google, W.L. Gore (makers of Gore-Tex fabric and many other successful products), IBM, Best Buy and other companies.
Although there have been many product, process and strategy innovations in business, Hamel says, management innovation has been much rarer. Yet, historically, companies that have exploited this advantage became world leaders.
Pioneering examples: General Electric (perfecting the management of the R&D laboratory), DuPont (allocating capital), Procter & Gamble (building and managing brands-intangible assets), Toyota (tapping into the problem-solving wisdom of all employees), and Visa (which he calls the world’s first “virtual” company).
The Next Generation
What’s needed is a new generation of management innovation. Hamel’s study of Google — for which he interviewed CEO Eric Schmidt; Marissa Mayer, vice president of search products and user experience; and other executives — uncovered 21st-century management-innovation principles, including:
70-20-10. The shorthand formula for how Google spreads its engineering resources: 70 percent for enhancements of the base business, 20 percent on services extending the base and 10 percent on fringe ideas that may pay off down the line.
Hire smart people and don’t micromanage. People stay focused more because of their colleagues on small teams, rather than supervisors peering over their shoulders: “Position and hierarchy seldom win an argument.”
Founders awards. Teams that create and execute revolutionary ideas that make lots of money may be eligible for quarterly awards that can be worth millions of dollars in restricted stock.
Stay connected and transparent. Workers have many online, internal tools for sharing ideas and finding out what others are working on, individually and in teams.
Companies need people who are flexible and adaptable, and those who find meaning in their work are more likely to exhibit these qualities. At Google, people “revel in their capacity to democratize knowledge.”
Higher Purpose
In discussing Medtronic, the leading company in heart devices, Hamel notes that its employees rally around the mission “to restore full life and health.” He asks readers what higher purpose their companies serve and hopes the answer is not shareholder wealth.
How can new, potentially profitable ideas surface from any employee in a company? Hamel uses the example of software company Rite-Solutions, which has developed internal stock markets with whimsical names but serious aims: Spazdaq, for risky ideas involving new business ventures, and Bow Jones, for extensions to what the company already does.
