Innovative management: A conversation with Gary Hamel and Lowell Bryan – Final
Forward-looking executives must respond to the growing need for a new managerial model.
NOVEMBER 2007 • Joanna Barsh
http://www.mckinseyquarterly.com/Innovative_management_A_conversation_between_Gary_Hamel_and_Lowell_Bryan_2065

Joanna Barsh: So I’m a CEO. What do I do? I have the courage; I’ve got the audacious goal.

Lowell Bryan: Assuming you’re well managed, the direction that most companies need to go in is improving how they enable their people to collaborate with one another at much lower cost by dramatically reducing unproductive search and coordination costs. And that means deploying such devices as talent marketplaces, knowledge marketplaces, and formal networks to make intangible assets flow throughout the company, as opposed to going up and down vertical chains of command.
I will say that the ideas on how to organize for the 21st century have now reached a stage of maturity where people are ready to consciously innovate. It isn’t like ten years ago, when we were still trying to figure out digitization and globalization.

Gary Hamel: I would argue there’s not 1 company out of 1,000 today that has created an organization in which innovation is truly everyone’s responsibility.

CEOs tell me, “Gary, we’re really serious about innovation”—and what CEO isn’t these days? My response is to go down to first-level employees and ask them a few questions. The first question I ask is, (1) “How have you been trained as a business innovator? What investment has the company made in teaching you how to innovate?”
The second question I ask is, (2)“If you have a new idea, how much bureaucracy do you have to go through to get a small increment of experimental capital? How long is it going to take you to get 20 percent of your time and $5,000 to test your idea? Is that a matter of months or is it very easy for that to happen?”
The third question is, “(3) Are you actually being measured on your innovation performance or your team’s innovation? Does it influence your compensation?”
And finally I’ll ask, (4)“As you look at the management processes in your company, do they tend to help you work as an innovator or get in the way?” When you ask these questions of first-line employees, you quickly discover that in most companies there’s still a big gap between the rhetoric of innovation and the reality.

Joanna Barsh: Final thoughts?

Gary Hamel: In any field of human endeavor you ultimately reach a point where you can’t solve the new problems using the old principles. I think we’ve reached that point in the evolution of management. When you go back to the principles upon which our modern companies are built—standardization, specialization, hierarchy, and so on—you realize that those are not bad principles but are inadequate for the challenges that lie ahead.

Lowell Bryan: More economic integration has taken place in the past 30 years, you could argue, than in the previous 10,000 years of human history. And the organization of companies, as Gary has said, is lagging behind the changes in the world economy. But to my mind, it’s just an incredibly exciting opportunity for the world at large because, for the first time, the ability to create wealth is being liberated from the inputs of labor and capital.

Ideas are being monetized in ways never before possible, and the world is a richer place. I’m not just talking about creating financial wealth; I’m talking about a much more stimulating work environment, with more interesting jobs for employees to create more valuable products and services for the world’s consumers. It is just an incredibly exciting time to be alive.