Think, Play, Do: Technology, Innovation, and Organization

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Yet most companies focus their innovation efforts on developing new offerings or achieving operational efficiencies—gains competitors quickly copy. To stay ahead of rivals, you must become a serial management innovator , systematically seeking breakthroughs in how your company executes crucial managerial processes. The keys to serial management innovation? Tackle a big problem—as General Motors did by inventing the divisional structure to bring order to its sprawling family of companies. Challenge conventional management beliefs, which Toyota did by deciding that frontline employees—not top executives—make the best process innovators.


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By becoming a serial management innovator, you cross new performance thresholds—and sustain your competitive edge. To identify meaty problems, ask:. What tough trade-offs do we never get right? For example, does obsessive pursuit of short-term earnings undermine our willingness to invest in new ideas?

Is our organization growing less agile while pursuing size and scale advantages? What is our organization bad at? Creating an inspiring work environment? What challenges will the future hold for us? For example, what are the ramifications of escalating consumer power? Near-instant commoditization of products? Ultra low-cost rivals? Conventional wisdom often obstructs innovation. Ask your colleagues what they believe about a critical management issue. Identify beliefs held in common. If so, consider alternative assumptions that could open the door to fresh insights.

Thus they withhold their full engagement and passion—essential ingredients for continual organizational renewal. A more helpful alternative belief? Identify decidedly unconventional organizations, and look for the practices they apply that might help you solve your problem. It makes micro-loans to poor people with no collateral requirement and little paperwork. Borrowers—which by numbered more than 4 million—use the funds to start small businesses that benefit themselves and their communities.

Innovation: Behind the Buzzword - OpenMind

Ask: How can we make it equally easy for our employees to get capital to fund an idea? Click here for printable worksheets to test your management innovation. Are you a management innovator? Have you discovered entirely new ways to organize, lead, coordinate, or motivate? Is your company a management pioneer?

Has it invented novel approaches to management that are the envy of its competitors? Does it matter? It sure does.

Think, Play, Do: Technology, Innovation, and Organization

Innovation in management principles and processes can create long-lasting advantage and produce dramatic shifts in competitive position. Over the past years, management innovation, more than any other kind of innovation, has allowed companies to cross new performance thresholds.

Yet strangely enough, few companies have a well-honed process for continuous management innovation. Virtually every organization on the planet has in recent years worked systematically to reinvent its business processes for the sake of speed and efficiency.

Design Thinking & Innovation - UC Berkeley Executive Education

How odd, then, that so few companies apply a similar degree of diligence to the kind of innovation that matters most: management innovation. Why is management innovation so vital? What makes it different from other kinds of innovation? How can you and your company become blue-ribbon management innovators? General Electric. What makes them stand out? Great products? Great people? Great leaders? But if you dig deeper, you will find another, more fundamental reason for their success: management innovation.

As these examples show, a management breakthrough can deliver a potent advantage to the innovating company and produce a seismic shift in industry leadership. Technology and product innovation, by comparison, tend to deliver small-caliber advantages.


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A management innovation creates long-lasting advantage when it meets one or more of three conditions: The innovation is based on a novel principle that challenges management orthodoxy; it is systemic, encompassing a range of processes and methods; and it is part of an ongoing program of invention, where progress compounds over time.

Three brief cases illustrate the ways in which management innovation can create enduring success. Unlike its Western rivals, Toyota has long believed that first-line employees can be more than cogs in a soulless manufacturing machine; they can be problem solvers, innovators, and change agents. While American companies relied on staff experts to come up with process improvements, Toyota gave every employee the skills, the tools, and the permission to solve problems as they arose and to head off new problems before they occurred.

The result: Year after year, Toyota has been able to get more out of its people than its competitors have been able to get out of theirs. As this example illustrates, management orthodoxies are often so deeply ingrained in executive thinking that they are nearly invisible and are so devoutly held that they are practically unassailable. The more unconventional the principle underlying a management innovation, the longer it will take competitors to respond.

In some cases, the head-scratching can go on for decades. While other grocery chains have been slashing costs to fend off Wal-Mart, Whole Foods has been rapidly evolving an extraordinary retail model—one that already delivers the highest profits per square foot in the industry. Managers consult teams on all store-level decisions and grant them a degree of autonomy that is nearly unprecedented in retailing.

Each team decides what to stock and can veto new hires. What differentiates Whole Foods is not a single management process but a distinctive management system. Confronted by management innovation this comprehensive, rivals can do little more than shake their heads in wonder. Sometimes a company can create a sizable management advantage simply by being persistent.

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Not every management innovation creates competitive advantage, however. Innovation in whatever form follows a power law: For every truly radical idea that delivers a big dollop of competitive advantage, there will be dozens of other ideas that prove to be less valuable.

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Innovation is always a numbers game; the more of it you do, the better your chances of reaping a fat payoff. A management innovation can be defined 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. Put simply, management innovation changes how managers do what they do.

And what do managers do? Typically, managerial work includes. In a big organization, the only way to change how managers work is to reinvent the processes that govern that work.

Management processes such as 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 the work of managers.

In most companies, management innovation is ad hoc and incremental. A systematic process for producing bold management breakthroughs must include. Key changes included. Translating a novel management idea like innovation from everyone, everywhere into new and deeply rooted management practices requires a sustained and broad-based effort, but the payoff can be substantial. I have yet to meet a senior executive who claims that his or her company has a praiseworthy process for management innovation. As with other types of innovation, the biggest challenge is generating truly novel ideas.

Some of the essential components are. Chunky problems. Fresh principles. Unorthodox thinking. Wisdom from the fringe. These multipliers of human creativity are as pivotal to management innovation as they are to every other kind of innovation. The bigger the problem, the bigger the opportunity for innovation.

Nearly 80 years ago, General Motors invented the divisionalized organization structure in response to a seemingly intractable problem: how to bring order to the sprawling family of companies that had been assembled by William C. Sloan, Jr. Thanks to this management innovation, GM was able to take advantage of its scale and scope. It takes fortitude and perseverance, as well as imagination, to solve big problems. These qualities are most abundant when a problem is not only important but also inspiring. Frederick Winslow Taylor, arguably the most important management innovator of the twentieth century, is usually portrayed as a hard-nosed engineer, intent on mechanizing work and pushing employees to the max.

Awkward, inefficient, or ill-directed movements of men, however, leave nothing visible or tangible behind them.