Welcome to the Momentum Business Coaching Newsletter for
February 2008

The End of Management As We Know It

Management is out of date. The principles upon which we run companies haven't evolved to keep pace with the rapid changes of 21st-century business needs. This is problematic, as the capacity to marshal resources, lay out plans, schedule work and spur effort is central to influencing human behavior.

And when management is less effective than it needs to be, companies - and people - pay the price.

Gary Hamel addresses the need to reinvent management in his recent book, The Future of Management (2007). He posits companies will face do-or-die challenges in the near future that can be surmounted only with inspired changes in how we manage. Otherwise, companies will become relics of outdated practices and bureaucracies that stifle innovation, dispirit employees and cause obsolescence.

Overcoming Trade-Offs

Modern management has succeeded in conquering many industrial challenges. The management principles we use today tackle problems like:

• Breaking complex tasks into small, repeatable steps
• Enforcing adherence to standard operating procedures
• Measuring costs and profits
• Coordinating the efforts of tens of thousands of employees
• Synchronizing operations on a global scale

But these achievements come at a price. While the machinery of modern management forces diverse, opinionated and free-spirited human beings to conform to rules, there are big trade-offs.

Conformity squanders human imagination and initiative. While it brings discipline to operations, it slows things down. Discipline and conformity imperil organizations' abilities to react to market needs and adapt quickly. In today's climate, rapid adaptability is crucial.

What's Different Now?

Today, the pace of change is unprecedented. In the near future, the adaptability of every society, organization and individual will be stressed as never before.

The most critical question for every 21st-century company is: "Are we changing as fast as the world around us?"

To thrive in an increasingly disruptive world, companies must become as strategically adaptable as they are operationally efficient. To safeguard their margins, they must become gushers of rule-breaking innovation.

Strategic Inertia

Large organizations are not usually strategically nimble, innovative or highly engaging places to work. Many factors contribute to strategic inertia, but three pose the most serious threats to rapid adaptation:

1. Management teams' tendency to deny or ignore the need for a strategy reboot
2. Too many compelling alternatives to the status quo, which lead to strategic paralysis
3. Allocational rigidities that make it difficult to redeploy talent and capital behind new initiatives

The problem is, management orthodoxies are often so deeply ingrained in executive thinking that they're nearly invisible. They are so devoutly held that they're unassailable.

A management innovation creates long-lasting advantage when it meets one or more of these three conditions:

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

Management Innovation Defined

Management innovation changes how managers do what they do, including:

• Setting goals and laying out plans
• Motivating and aligning efforts
• Coordinating and controlling activities
• Accumulating and allocating resources
• Acquiring and applying knowledge
• Building and nurturing relationships
• Identifying and developing talent
• Understanding and balancing the demands of outside constituencies

Management processes like strategic planning, capital budgeting, project management, hiring and promotion, employee assessment, executive development, internal communications and knowledge management are the gears that turn management principles into everyday practices. They establish the recipes and rituals that govern managers' work.

While operational innovation focuses on a company's business processes (procurement, logistics, customer support), management innovation targets a company's management process.

How to Become a Management Innovator

Innovation is always a numbers game: The more you do it, the better your chances of hitting a winner.

As with other types of innovation, the biggest challenge is generating truly novel ideas. It's possible to increase the odds of a "Eureka!" moment by assembling the right ingredients.

Some of the essential components include:

• A recurring problem that demands fresh thinking
• Novel principles or paradigms that illuminate new approaches
• Careful deconstruction of the conventions and dogma that constrain creative thinking
• Examples and analogies that help redefine what's possible

Let's explore these four elements.

Commit to a Big Problem

To turn your company into a management innovator, commit to solving a big problem in a fresh way. Ask these questions:

1. What are the tough trade-offs that your company never seems to get right?
2. What are big organizations bad at?
3. What emerging challenges does the future have in store for your company?

Search for New Principles

If you want to prime your company for continuous, preemptive strategic renewal, new principles will be needed:

• Variety
• Competition
• Allocation flexibility
• Devolution
• Activism

If you want to build an organization that unshackles the human spirit, you're going to need some decidedly unbureaucratic management principles.

Deconstruct Your Management Orthodoxies

A lot of what passes for management wisdom is unquestioned dogma. Management is not ordained. It does not operate according to scientific laws. You must loosen the grip precedent has on your imagination.

As a management innovator, you should subject every management belief to two questions:

1. Is the belief toxic to the ultimate goal you're trying to achieve?
2. Can you imagine an alternative to the reality the belief reflects?

When you closely examine traditional management conventions, the space for innovation grows.

Exploit the Power of Analogy

Study organizations that are decidedly unconventional. An organization like Alcoholics Anonymous manages itself well with self-organizing groups. Bangladesh's Grameen Bank has also invented new management thinking.

Where can you look to hunt down equally unlikely analogies that suggest new ways of tackling thorny management problems?

Get Innovative

How have your company's existing management processes exacerbated big problems you need to solve?

You can wait for a competitor to stumble upon the next great management breakthrough, or you can become a management innovator now.