Management Innovation

Last week I wrote that “management innovation” is about reinventing your management model. So what exactly is a management model? The management model defines what managers do and how they do it. So what do mangers do?

Peter Drucker once said management is “Getting things done through other people”.

This entails 3 elements: (1) things, (2) getting them done, (3) through other people.

(1) Things

So what “things” are we talking about?

What is it that managers try to achieve? What is the objective of management? On the highest level, it is to ensure the survival of the organization. Making money is a means to an end. To achieve long term survival organizations need to be able to adapt themselves to the changing environments (remember that fit Darwin wrote about?). They need to be resilient. They need to able to renew themselves and adapt to changing circumstances. Thus we could say that management is the task of making sure the organization adapts to a changing environment. To do so the strategy, organizational structures and processes, the culture and the people, or their skills, need to be constantly renewed, adapted and further developed to make them fit the new environment. Of course there are many different ways and theories on how to achieve this adaptation and renewal.

Survival needs 3 things. You could also say that the big objective of survival needs to be broken down to make it manageable:

1. Strategic objectives: Build potential for future success. Enable the organization for future success. (The long-term view if you like.)
2. Operational objectives: Exploit existing potentials and generate profits from them. (The mid-term view.)
3. Financial objectives: Generate profits and cash to ensure liquidity. (The short-term view.)

(2) Getting them done

So how to get these things done? By coordinating and aligning effort and activities, and allocating resources and assigning talent. This is usually done by defining and implementing organizational structures and processes, controlling how well the objectives are achieved, and rewarding their achievement.

(3) People

Of course managers done do all of this on their own. (Even if some of them tend to believe they actually do. Some might also have that feeling because of the sheer amount of work. Or delusions of absolute power.)

People need to be hired, trained, developed,… Their efforts need to be aligned and most managers think that need to be motivated as well.

Of course this view looks at employees in particular. I would argue that not only the relationship to employees, but also to other stakeholders and shareholders need to be build and nurtured. Not only the employees’ demands need to be taken into account, but also those of these other stakeholders. And very often it’s not only about taking them into account, but also balancing them carefully.

All 3 elements entail a vast array of processes like strategic planning and execution, budgeting, project management, internal communications, hiring, training and development, business planning, knowledge management, periodic business reviews, employee assessment and compensation. (thanks to Gary Hamel for this extensive list).

When it comes to reinventing all these processes and management practice, it seems that, at least for the time being, engagement and involvement of employees plays a vital role. Companies move a away from tide controls from the top and the illusion of having everything under control. Organizational structures and processes become looser.

I suggest to start the processes by mapping out how you do and organize all these processes. How do you set objectives? How to do coordinate your employees? Once having outlined your management model, think about what you can change and what a radical departure from current practices looks like.

Of course this kind of reinvention of management relies on that 50 year old definition of Drucker! So how innovative can it be? It might be a first step leading to some new possibilities. But how radically different will they be? How far will they push the practice of management really?

I put forward a more radical idea: what if we reinvented the very notion of what management does altogether, instead of relying on that 50 old year definition? Watch out for future posts!

Tagged as: Innovation, Management Innovation

At the management innovation conference at Copenhagen Business School in early September academics and practitioners gathered to share their insights, challenges and research on management innovation.

A theme that emerged pretty soon was the discussion around what management innovation actually is. While some were requesting a definition and insisting on the need of a definition to be able to further research and develop this young field, others thought it sufficient to describe what the author of a paper meant by management innovation, so that papers could be clearly identified and clustered. Still a third stream argued that the field doesn’t need a definition at all and will benefit from multiple viewpoints. While this last approach might be helpful in academia it certainly is not in business. (At least from my experience. Feel free to comment.)

Businesses need a framework, a model, to think through the issues involved. Otherwise it is nearly impossible to make a decision or even just have a fruitful discussion. Without such a definition, the discussion will focus more on what it is we are discussing (just like it did in Copenhagen) instead of producing a tangible result.

So here’s my shot at defining “management innovation”. Consider it being a blend of academia and practice, my 10 cents and those of others. (And thanks again to all participants of the conference for their thoughts and ideas.)

• Management Innovation vs other types of innovation: What distinguishes management innovation from other types of innovation? Gary Hamel writes “Management innovation is 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.” and further “…management innovation targets a company’s management processes (note: as opposed to business and operational processes) – the recipes and routines that determine how the work of management gets carried out on a day-to-day basis.” While Hamel seems to focus on reinventing how management works, Birkinshaw and Mol add that it also changes what managers do. “…it is about innovation in management principles and processes that ultimately change the actual practice of what managers do, and how they get it done. It is different to operational or process innovation, which is about how the actual work of transforming inputs into outputs, gets done.” They also note that management innovation has to be undertaken to further the company’s goals.
• Theory vs practice: The qualify as a management innovation the idea you might have, needs to be put in practice. The idea is nothing, action is everything. Management innovation leads to new management practices.
• Incremental vs radical: At the moment web 2.0 tools are becoming popular among organizations. Usually these initiatives start as an experiment before being implemented on a larger scale throughout the enterprise. According to Prof. Birkinshaw of London Business School this is also the case with management innovation. Many practices that might seem radical when looking back started with small, incremental experiments, often only in one area of the company, before being rolled out and adopted by others.
• Adoption vs new to the world: By definition an innovation is something new. And it is something new to the world and not only a company. Reinventing the wheel or using the wheel just because somebody else does, does not count as a management innovation. We have already a name for such a practice: it’s called “benchmarking” and adopting “best practices”.  It doesn’t help us at all if we start giving the same thing a new name, just because it’s more sexy to talk about “innovation” than “best practices” at the moment. That’s old wine in new bottles. Management innovation has to be new to the state of the art! Period.

Have a look at my innovation map for further differences to other types of innovation.

Management innovation targets management processes, practices and tools. It changes what management does and/or the it gets done. So what does management do? This is defined by the company’ or manager’s “management model”. So “management innovation” is “management model innovation” if you like.

Next week I’ll explore the idea of “management model” a bit further and we’ll have a look at the CEO of Lego’s management model. So be sure to check back.

Tagged as: Innovation, Management Innovation