Streamline Training & Documentation: Differentiation through Management Innovation

Monday, May 19, 2008

Differentiation through Management Innovation

As one route to differentiating yourself from your competition, Gary Hamel recommends actively pursuing continuous management innovation. Hamel defines management innovation as

a marked departure from traditional management principles, processes, and practices or a departure from customary organizational forms that significantly alters the way the work of management is performed.

But how does one do this? In a February 2006 article in the Harvard Business Review, Hamel argues that a particular management innovation will create a sustained advantage if it meets at least one of the following conditions:

The innovation is based on a novel principle that challenges management orthodoxy.

The innovation is systemic, i.e., it encompasses a range of interconnected processes and methods.

The innovation is part of an ongoing program of invention, such that progress compounds over time.

As for the actual process used to generate unique ideas for management innovation, Hamel cites four important components:

Home in on a big problem whose solution requires fresh thinking. For example, you might decide that you need to do a better job in managing the trade-off between short-term earnings and long-term growth.

Use creative principles or paradigms that can generate new approaches. Hamel advises asking yourself two questions: What things exhibit the attributes or capabilities that we'd like to build into our organization? What is it that imbues those exemplars with their enviable qualities?

Analyze the current management orthodoxies that constrain thinking within your organization. Hamel suggests asking two questions about each piece of received wisdom: Is the belief toxic to the ultimate goal we're trying to achieve? Can we conceive of an alternative to the realtiy the belief reflects?

Examine examples and analogies that can help widen what people in the organization consider to be within the realm of possibility. Hamel makes a pitch for using prediction markets to aggregate people's expectations concerning the prospects for any given project.

Hamel summarizes by arguing that the key to positioning the organization for continuing management innovation is a "deep and systematic review of your firm's management processes [which] will reveal opportunities to reinvent them in ways that further your bold objectives." You can then experiment to see what is actually workable: "The goal is to build a portfolio of bold new management experiments that has the power to lift the performance of your company ever higher above its peers."

To get the full flavor of Hamel's argument, you should look through the entire article. You can decide for yourself which of the examples he cites are relevant to your own situation.

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Labels: Innovation, Management practices

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