This is Part II of a series on Gary Hamel's thoughts on management.
Business strategist Gary Hamel has a few qualms with the current management system in place at companies large and small.
He claims companies have poured too much time and effort into restructuring and refining operating systems, while neglecting to reenvision management models.
"The fundamental underlying assumption is that companies over the last decade have spent a lot of effort reinventing their operating models. They've reinvented their supply chains, logistics, customer support. They've spent billions with SAP and Oracle and IBM. They've webified the supply chain – huge and important investment there.
"More recently, a lot of companies have been completely rethinking their business models, largely thanks to the impact of the web and the web's power to dematerialize, to dislocate, to disintermediate, to deconstruct. Pretty much every business has to think about how the web is going to influence its business model.
"What leaders and managers have spent very little time doing is thinking about how they reengineer the management model – the way they create strategy, allocate resources, hire, promote, evaluate and so on, yet I think that’s where the real limits to performance lie.
"… If you look at what has made Silicon Valley Silicon Valley and what now is powering these new crowdfunding sites like Kickstarter, it's the notion that every idea should be able to compete on an equal footing and on its own merits for experimental capital. Silicon Valley is this almost completely meritocratic marketplace for ideas.
"Like who the hell was Mark Zuckerberg. Right? Why does he get funded? Because he has an amazing idea! He wasn't EVP or SVP. He wasn't a large division. He was an amazing entrepreneur.
"And what's important is that in Silicon Valley and now even more so with these crowdfunding sites, there are multiple sources of experimental capital. There's no single person who has the power to say "no" and kill an idea. Most entrepreneurs, they'll go to three or four or a dozen angel investors or VCs before they get somebody to fund them.
"In most large organizations, if you have an idea, there's only one place to go for funding; it's up the chain of command. If you don't get funding from your boss or your boss' boss, the idea dies. It's just stupid. That's the way the Soviet Union worked, right?
"That’s a fundamental flaw in the resource allocation process in most companies. We make it very difficult for people to get the time and resources to experiment with new ideas because you have to go up that chain of command, and if your idea does not fit with the priorities or the prejudices of your boss, it probably dies there."