Thursday, November 09, 2020

Stepping Away from the Status Quo

In the United States, this week's election has marked a clear decision to move away from the status quo in search of new and better ways to run American politics. In business too, there is an urgent need to leave behind our old, broken ways of leading others and find a better, more civilized approach to organizing our corporations.

Thanks to Lisa Haneberg and Business Innovation Insider, I noted an interesting article by Gary Hamel of London Business School on the topic of business innovation. In it he says:
. . . some forms of innovation deliver more in the way of competitive advantage than others. My research, and that of my colleagues at the London Business School, suggests that management research—fundamental advances in the way companies allocate capital, motivate employees, organize activities, create strategies, and set priorities—has the most potential to create long-lasting competitive advantage. Indeed, if one looks back over the last 100 years of industrial competition, it is management innovation, more than any other sort, that has produced big and enduring shifts in industry leadership.
Hamel points out how odd it is that organizations devote resources to other types of innovation, yet ignore fundamental change in how they run the business itself and the lead the people who work there. In the same article, he says:
Given the power of management innovation to deliver peer-beating performance, it is odd that so few companies possess a well-honed process for continuous management innovation. Today, it’s a rare company that lacks a formal methodology for product innovation. . . . Yet a troll through the pages of the world’s leading business magazines quickly reveals the steerage-class status of management innovation. . . . When it comes to innovation, most companies have a barn-sized blind spot. Perversely, the sorts of innovation that are least likely to produce long-term competitive advantage—operational innovation and product innovation—are those that invariably get the most attention.
Why is this? Why are top executives missing a whole area of potential advantage to their businesses? Hamel sees the answer in an old-fashioned, blinkered, and negative view of management. He believes that executives still assume that there are “immutable laws of human nature” that constrain the range of feasible options for mobilizing and organizing human effort, and that circumscribe the scope of management innovation.

There are so many obsolete assumptions still locked into the management ideas being passed around, or even taught in some business schools.
Certainly, many leaders still cling to ancient beliefs, never more than folk tales, about management. Take the so-called “span of control:” that there are fixed limits to the number of people one person can effectively supervise. This old saw may have applied in the days when all supervision had to be done face-to-face, using nothing more than one’s unaided voice, but it has almost no validity today. I suspect it dates back to the time when leadership was based on what happened in battles. If you have to shout to your soldiers on the battlefield, of course the number you can lead is limited: probably to the three or four people on either side of you—the magic figure of six or eight subordinates.

It goes further than this, though. There are so many obsolete assumptions still locked into the management ideas being passed around, or even taught in some business schools. There are supposed to be obvious limits to what can be delegated and how far employees can be trusted. It is assumed that most individual employees are unwilling to set aside their own self-interest tin favor of the interests of the corporation as a whole. As Hamel says:
Whether these limits are real or self-imposed (mostly the latter, I think), they offer a reassuring alternative to the premise that it is a lack of imagination that most severely constrains management innovation.
Too many corporations and their leaders cling to imitation as the way forward, encouraged by consultants intent on peddling “industry best practice” as the answer to all problems. These consultants too, despite their huge fees, are deficient in imagination and innovation. They almost have to be. Their business is based on selling the same advice, pre-packaged, to multiple clients. Besides, like all-successful businesses, they know their customers. The consultant who tries to sell radical change—especially if it threatens the preconceptions of those in charge—will never do as well as one who sells what his or her client wishes to hear.

There is plenty of imagination and radical thinking present in most organizations. Sadly, it’s not usually at the top. It’s trapped amongst middle-managers, who are assumed to best employed merely in carrying out the orders sent down from the top.
Imagination is what drives successful business; imagination, intelligence, and open-mindedness to change. None of these qualities are as common at the top of corporations as they need to be. The status quo represents yesterday’s thinking, when we need today’s and tomorrow’s. There is plenty of imagination and radical thinking present in most organizations. Sadly, it’s not usually at the top. It’s trapped amongst middle-managers, who are assumed to best employed merely in carrying out the orders sent down from the top.

Top managers have a vested interest in keeping things as they are, because that is the way of thinking and acting that got them to the top. Only the exceptional leaders—the few visionaries who rise far above the mass of mediocre corporate administrators—have the insight and courage to accept that what got them to the top needs to be set aside in favor of what will propel their organizations forward, even if it threatens their own areas of expertise. Instead of assuming that employees will never set aside their own self-interest in favor of the needs of the business, executives should look hard in the mirror. If there ever has been a group who appear automatically to put their personal standing and self-interests in front of the needs of the business, it is CEOs and other corporate executives. Recent history proves it.

Let go of the status quo. It is rarely useful and never deserves much respect. In saying it is time for change, I am saying only that life moves on, and we must move with it or perish.

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beej199 said...

Changing organizations involves an element of risk. Middle management tend to be risk averse, why change when things can trundle on as they are.

Often middle managers are not given the freedom to take risks because of strict accounting and budgeting procedures and a lack of risk being taken at the top. The pressure to "maintain" performance is just as great as the pressure to "improve" performance.

A culture of change comes from a more improved and managed control of the risks that come from change with less pointing of fingers and blame and more acceptance of mistakes and learnings. Organizations that grasp this are in a better position to take advantage of new opportunities at all levels not just middle management or senior people at the top.

6:06 AM  
Carmine Coyote said...

Thanks for your comment, beej199.

I'm not sure middle managers are as risk averse as many people claim. As you rightly point out, they are often prevented from taking risks by all kinds of rules. And they know that, in many companies, even honest mistakes are rapidly punished.

Mistakes and risk are parts of life we cannot remove. You're right to say that less blame and finger pointing would help organizations handle risk in a much more rational and effective way.

Keep reading, my friend.

7:57 AM  

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