Book: The Future of Management

  • Read: February 2012
  • Rating: 8.0/10

The Future of Management by Gary Hamel is a pretty interesting concept. Rather than focusing on business model innovation or product innovation, this book discusses how companies need to start focusing on management innovation. It’s a pretty novel idea and Gary makes a pretty good case. Unfortunately, I don’t know how much of it is immediately applicable. It seems like a lot of the things the book discusses is pretty much what people in my generation expect anyway. Only time will tell, I guess.

My Notes

“Technology” of management has now reached a local peak

Question: whether we actually need a new management model

Today, it’s not just the occasional company that gets caught out by the future, but entire industries.

Digitization of anything not nailed down

New companies (globally) exploit the legacy costs of the old guard

Modern management isn’t just a suite of useful tools and techniques; it’s a paradigm. More than a way of thinking- it’s a worldview, a deeply held belief, about what types of problems are worth solving, or are even solvable

Real progress demands a revolution

Management Innovation = anything that substantially alters the way in which the work of management is carried out, or significantly modifies customary organizational forms, and, by doing so, advances organizational goals

Management Innovation yield competitive advantage

  1. innovation is based on a novel management principle that challenges some long-standing orthodoxy
  2. innovation is systemic, encompassing a range of processes and methods
  3. innovation is part of an ongoing program of rapid-fire invention where progress compounds over time

Management dogmas are often so deeply ingrained as to be nearly invisible

The Innovation Stack:

  • Management Innovation - difficult to duplicate due to the fact that some heresies are more heretical than others
  • Strategic Innovation - bold new business models
  • Product/Service Innovation - ever-accelerating pace of technological progress gives upstarts the opportunity to leapfrog yesterday’s pioneers
  • Operational Innovation - heavily depends on the quality of a company’s IT infrastructure

Innovation is always a numbers game

  • Most managers don’t see themselves as inventors
  • No one expects managers to be innovators
  • Many executives doubt that bold management innovation is actually possible
  • Most managers see themselvels as pragmatic doers

Dull or piffling problems yield dull or piffling answers

“We can see and feel the waste of material thing. Awkward, inefficient, or ill-directed movements of men, however, leave nothing visible or tangible behind them.” - Frederick Taylor

Maximize changes of precedent-breaking management innovation = devote yourself to problem that is consequential and inspiring, essential and laudable

  • What’s the “tomorrow problem” that you need to start working on right now?
  • What’s the frustrating “either/or” you’d like to turn into an “and”?
  • What’s the espoused ideal you’d like to turn into an embedded capability?
  • What’s the “can’t do” that needs to become a “can do”?

Are we changing as fast as the world around us?

Goal is to build organizations capable of continual, trauma-free renewal

Strategic Inertia:

  • Deny strategy reboot
    • Every business is successful until it’s not
    • Top management is surprised when “not” happens
  • Dearth of compelling alternatives to status quo (strategic paralysis)
    • Resist the temptation to prematurely focus their resources on one or two ideas
    • Worry less about weeding out low-probability ideas, and more about building a diverse portfolio of nonincremental strategic options
  • Allocation rigidities: difficult to redeploy
    • Legacy programs get richly funded year after year
    • Most companies have monopsony on new ideas (one buyer)
    • Resource allocation is typically biased against new ideas, since it demands a level of certainty about volumes, costs, timelines, and profits

If folks don’t appear to be creative at work, it’s not because they lack imagination, it’s because they lack the opportunity

Creativity is a human aptitude- it can be strengthened through instruction and practice

Yesterday’s heresies become tomorrow’s dogmas (and innovation stalls)

Real brake on innovation is the drag of old mental models

Deeply held belief about inherent superiority of a business model

It’s hard for founders to credit ideas that threaten the foundations of the business models they invented

Innovation takes time

Whole Foods:

  • Critical decisions should be made by those most directly impacted by the consequences of those decisions
  • Peer pressure substitutes for bureaucracy
  • Open books are the only way to build a company that is bound by trust

The biggest obstacle to management innovation may be what you already believe about management

First ask: is this consistent with our unique values and our sense of mission

Willing commitment is many times more valuable to an organization than resigned compliance

Management Innovation often redistributes power

  • Most managers support the idea of empowerment, but to empower employees you must disenfranchise managers

Google: evolutionary advantage over time

All of us are held hostage by our axiomatic beliefs

Distinguish between beliefs that describe the world as is and the world as it is and must forever remain

Too much authority has been vested in too few people

Management Orthodoxy: If you allow people the freedom to innovate, discipline will take a beating

Whose interests does this belief serve?

Is this belief true because we have made it true?

Employees need managers for the same reason 13-year-olds need parents: they are incapable of self-regulation

Principles of modern management:

  • Principle / Application / Goal
  • Standardization / Minimize variances from standards around inputs, outputs, and work methods / Cultivate economies of scale, manufacturing efficiency, reliability, and quality
  • Specialization (of tasks and functions) / Group like activities together in modular organizational units / Reduce complexity and accelerate learning
  • Goal alignment / Establish clear objectives through a cascade of subsidiary goals and supporting metrics / Ensure that individual efforts are congruent with top-down goals
  • Hierarchy / Create a pyramid of authority based on a limited span of control / Maintain control over a broad scope of operations
  • Planning and Control / Forecast demand, budget resources, and schedule tasks, then track and correct deviations form plan / Establish regularity and predictability in operations; conformance to plans
  • Extrinsic Rewards / Provide financial rewards to individuals and teams for achieving specified outcomes / Motivate effort and ensure compliance with policies and standards

Set the benchmark for adaptability:

  • Life, markets, democracies, religious faith, and the world’s most vibrant cities
  • Life -> Variety
  • Markets -> Flexibility
  • Democracy -> Activism
  • Faith -> Meaning
  • Cities -> Serendipity

Experimentation beats planning

All mutations are mistakes

Markets are all about allocational efficiency

Operational efficiency is not the same as strategic efficiency

In democracy, power flows up and accountability flows down (note: that’s what we would like to believe)

Diversity begets creativity

The most essential work of the leader is to create more leaders

Anomalies are discomforting

What does it mean to be in charge if your views have to compete with everyone else’s views?

Senior management fears a snowball of dissent

It is through creativity that each of us asserts our humanity and individuality

Let people set their own direction

To be adaptable, a company must be capable of spawning new businesses

There is no surer way to undermine a new business venture than to measure it by the profits generated, rather than by the learning accumulated

If you want to test a new idea, test it first on yourself

Iterate: experiment, learn, experiment, learn

Give “ordinary” employees the ability to hack management processes