Gary Hamel still talks and writes with the passion of a revolutionary. In a recent blogpost, the management writer played with his own theory of the “core competencies” of companies, conceived with the late C.K. Prahalad, by pointing out their core incompetencies of inertia, incrementalism and insipidity.
I listened to him telling the Global Peter Drucker Forum that the corporate bureaucracy plaguing companies such as Delta Air Lines, Tesco, Samsung and Salesforce.com must be “put to death”. Managers need to shed vestigial beliefs handed down by “long-dead CEOs, ego-polishing consultants” and dry scholars, he said.
Stirring stuff. But while there is plenty of idealism on tap at gatherings of management thinkers, it increasingly comes with a refreshing chaser of realism.
It is no disrespect to idealists and firebrands to point out that an “Arab spring” of populist management reform is unlikely. At large companies, incremental change may be one of the best ways to achieve a radical transformation. Speaking in Vienna, birthplace of management thinker Peter Drucker, Professor Hamel said change should not come only from small greenfield start-ups; their older, larger “brownfield” cousins also need to find a path to a new way of managing.
One prerequisite, is that companies should stop appointing “default managers”, who are content merely to fit in with the old framework. “Organisations are hiring great people and turning them into average performers — and they’re doing it very, very fast,” warned Bill Fischer of IMD business school. Another is to stop assuming that change in corporate structure — say, from publicly listed companies, to employee ownership — will automatically put an end to mismanagement or reignite innovation.
It is more important to ensure there is no dominant monoculture of one corporate form.
“Brownfield” corporate leaders also need to see, and even experience, new models of organisations similar to their own that are successfully changing management systems. However, favourite examples of flat-hierarchy or super-transparent companies such as Ricardo Semler’s Semco, the Brazilian engineering group, WL Gore, US manufacturer of Gore-Tex fabric, or Morning Star, the self-managing Californian tomato processor, are in danger of overuse.
In any case, it is hard to convince a conventional manager that peer-based pay and mutual “understandings” between colleagues, which replace conventional compensation policies and contracts at Morning Star, could transfer to a traditional organisation.
Examples cited in Vienna could expand the canon of management innovation a little. Professor Fischer has been studying DSM, a Dutch coalminer that has turned itself into a life sciences and materials science group. It has overcome the blight of centralisation that often afflicts innovation projects by running them in parallel — what it calls a “bowling alley” approach — on a platform that allows innovators a greater say in how innovation as a whole is pursued.
Haier of China, already something of a pioneer in the use of self-organising units that compete internally for opportunities, has spun off its logistics arm — “de-Haierising” itself, in Prof. Fischer’s words — so it can offer its China-wide expertise to competitors.
The next step must be to take such cases out of the classroom and present the practical advantages to interested companies. Steve Denning, the veteran management writer, is launching a “learning consortium” of such organisations. Members arrange site visits to highlight to the others the practical benefits and risks of applying emerging management practices.
Contradictions will have to be overcome: Salesforce, which Prof. Hamel castigates as a bureaucratic monster, is an exemplar of “agile” management for Denning. Some paradoxes must be embraced: Prof. Fischer points out, for instance, that only “self-assured, courageous, top-down leaders” will be comfortable enough to liberate people to develop new ideas and change management practice.
These are the same leaders that sometimes balk at abandoning the power they have built up. But by opening up and testing new ideas from across their companies and beyond, far-sighted leaders could achieve a more radical transformation than they ever anticipated — even if it starts with small steps.
— Financial Times
