Innovative management: A conversation with Gary Hamel and Lowell Bryan

Here is a brief excerpt from another outstanding interview featured online by The McKinsey Quarterly, published by McKinsey & Company and conducted by Joanna Barsh. To read the complete article, check out others, obtain subscription information, and sign up for free email alerts, please click here.

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Forward-looking executives must respond to the growing need for a new managerial model.

“Sometime over the next decade,” warns renowned strategy guru Gary Hamel in his new book, The Future of Management, “your company will be challenged to change in a way for which it has no precedent.” (Note: Gary Hamel with Bill Breen, The Future of Management, Harvard Business School Press, 2007) What’s even more worrisome, he argues, is that decades of orthodox management decision-making practices, organizational designs, and approaches to employee relations provide no real hope that companies will be able to avoid faltering and suffering painful restructurings.

McKinsey partners Lowell Bryan and Claudia Joyce, in their recently published book, Mobilizing Minds (Note: Lowell L. Bryan and Claudia I. Joyce, Mobilizing Minds: Creating Wealth from Talent in the 21st-Century Organization, New York: McGraw Hill, 2007), arrive at a similar conclusion from a slightly different perspective. They find that the 20th-century model of designing and managing companies, which emphasized hierarchy and the importance of labor and capital inputs, not only lags behind the need for companies today to emphasize collaboration and wealth creation by talented employees but also actually generates unnecessary complexity that works at cross-purposes to those critical goals.

Forward-looking executives will respond to this looming challenge, these authors conclude, by bringing the same energy to innovative management that they now bring to innovative products and services.

The opportunity is substantial. Against the backdrop of the digital age’s dramatic technological change, ongoing globalization, and the declining predictability of strategic-planning models, only new approaches to managing employees and organizing talent to maximize wealth creation will provide companies with a durable competitive advantage. It won’t be easy. As companies discard decades of management orthodoxy, they will have to balance revolutionary thinking with practical experimentation to feel their way to new, innovative management models.

Hamel is the founding director of the Management Innovation Lab, a nonprofit research organization with offices in London and Silicon Valley dedicated to accelerating the evolution of management practice. He recently joined Bryan for a conversation on the subject of management innovation. Joanna Barsh, a director in McKinsey’s New York office, moderated their discussion.

Joanna Barsh: What is the opportunity both of you have identified and how did you spot it?

Gary Hamel: For almost 20 years I’ve tried to help large companies innovate. And despite a lot of successes along the way, I’ve often felt as if I were trying to teach a dog to walk on his hind legs. Sure, if you get the right people in the room, create the right incentives, and eliminate the distractions, you can spur a lot of innovation. But the moment you turn your back, the dog is on all fours again because it has quadruped DNA, not biped DNA.

So over the years, it’s become increasingly clear to me that organizations do not have innovation DNA. They don’t have adaptability DNA. This realization inevitably led me back to a fundamental question: what problem was management invented to solve, anyway?

When you read the history of management and of early pioneers like Frederick Taylor, you realize that management was designed to solve a very specific problem—how to do things with perfect replicability, at ever-increasing scale and steadily increasing efficiency.

Now there’s a new set of challenges on the horizon. How do you build organizations that are as nimble as change itself? How do you mobilize and monetize the imagination of every employee, every day? How do you create organizations that are highly engaging places to work in? And these challenges simply can’t be met without reinventing our 100-year-old management model.

Lowell Bryan: I arrived at the same point from a slightly different perspective. McKinsey asked me about 12 years ago to try to understand the impact of technology and globalization on our clients. We concluded that these forces were creating a fundamental discontinuity. Or to put it differently, that technology and globalization were creating a set of opportunities that didn’t exist before.

We observed that companies were struggling to take advantage of the opportunities created by digitization and globalization because their organizations were not designed for this new world.

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To read the complete interview, please click here.

Joanna Barsh is a director in McKinsey’s New York office.

The Winning Factor: A book review by Bob Morris

The Winning Factor: Secrets from a Veteran Olympic and Corporate Coach
Peter Jensen
AMACOM (2012)

How and why a “development bias” can help you to become the very best you can be

Opinions vary as to what the decisive factor is for an individual to win or succeed but agreement is almost unanimous that efforts to win or succeed must be guided and informed, at times driven by what Peter Jensen characterizes in this book as “the role individuals choose to play in their own development.” According to decades of research conducted by K. Anders Ericsson and his colleagues at Florida State University, peak performance is the result (with rare exception) of 10,000 hours of deliberate, iterative practice under strict supervision by an authority in the given field (e.g. chess, athletics, creative and performing arts), whatever it may be. Natural talent and luck are also factors but of much less importance. Jensen notes, “Coaches with a strong developmental bias are always concerned with encouraging their performers to engage their Third Factor [in addition to genetics and environment], to get passionate about developing themselves.”

Jensen explains how executives who aspire to become effective leaders can develop a Third Factor, the key to their own performance. Those who are results-driven pursue peak performance with relentless self-improvement. The aforementioned 10,000 hours of deliberate, iterative practice under strict supervision by an authority in the given field is one part of the occasion. Serendipity (for lack of a better word) is another. Ultimately, however, success depends on a third factor – the winning factor – and that is, as indicated, the role an individual plays in his or her own development. In competitive athletics, for example, that would be Hall of Fame NFL players such as Jerry Rice and Walter Payton who exhausted those who trained with them during the off-season

As Jensen explains, supervisors (he uses several such terms interchangeably) must possess the scope and depth of experience, qualities of character, self-discipline, knowledge, and skills (especially communication and instructional skills) to provide the direction and support needed by those for whom they are directly responsible. Only when they trust and respect their coach can that person ignite self-motivation to take ownership of the process. According to Jensen, exceptional coaches all possess self-awareness, ability to build (and retain) trust, ability to use compelling imagery, ability to identify barriers that emerge, and finally, recognize the value of adversity as a necessary – and valuable – means by which to measure progress and reveal character.

All of the information, insights, and counsel that Jensen shares in abundance can be of incalculable value in almost any domain of human activity. I see almost unlimited applications in the business world, for example, notably (invoking horticultural terms) developing “gardeners” with “green thumbs” who are expert at “growing” high-performance people, many who later also become “gardeners” with “green thumbs.” All organizations (whatever their size and nature) need effective leadership at all levels and in all operations areas. In a single volume, Peter Jensen explains how to pursue that worthy goal. However, achieving it and then sustaining the consequent culture will ultimately depend on more than agreement to participate by those involved. They must also “buy in” and take full ownership, bringing a passion to their shared initiatives that simply cannot be denied. But only if it is their “garden” can they and it thrive.

Do You Know What You Don’t Know?

One of the most dangerous and potentially damaging forms of ignorance is not knowing what you think you know but don’t. This inevitably results in false assumptions and premises on which incorrect decisions are based, leading to….You get the idea. The causal relationships that defective reasoning generates are incalculable…and often disastrous.

Here is a brief excerpt from a first-rate article written by Art Markman for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.

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You probably don’t know as much as you think you do. When put to the test, most people find they can’t explain the workings of everyday things they think they understand.

Don’t believe me? Find an object you use daily (a zipper, a toilet, a stereo speaker) and try to describe the particulars of how it works. You’re likely to discover unexpected gaps in your knowledge. In psychology, we call this cognitive barrier the illusion of explanatory depth. It means you think you fully understand something that you actually don’t.

We see this every day in buzz words. Though we often use these words, their meanings are usually unclear. They mask gaps in our knowledge, serving as placeholders that gloss concepts we don’t fully understand.

For example, several years ago, I attended a corporate meeting where the vice president spoke about streamlining business practices in the coming year. During the talk, executives around the room nodded in agreement. Afterward, though, many of them discussed what streamlining actually meant. None of the people who had nodded in agreement could exactly define the mechanics of how to streamline a business practice.

At the other end of the spectrum, an upsetting instance of knowledge gaps in the last decade was the profound misunderstanding of complex financial products that contributed to the market collapse of 2007. Investment banks were unable to protect themselves from exposure to these products, because only a few people (either buyers or sellers) understood exactly what was being sold. Those individuals who did comprehend these product structures ultimately made huge bets against the market using credit-default swaps. The willingness of companies like AIG to sell large quantities of credit-default swaps reflected a gap in their knowledge about the riskiness of products they were insuring.

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To read the complete article, please click here.

Art Markman, PhD, is the Annabel Irion Worsham Centennial Professor of Psychology and Marketing at the University of Texas at Austin. He is the author of Smart Thinking: Three Essential Keys to Solve Problems, Innovate, and Get Things Done and currently editor of the journal Cognitive Science. He also consults regularly through his company Maximizing Mind. Follow him on twitter @abmarkman.