Gary Hamel

Leadership & Strategy: Out with the Old, In with the New Management Model

"The biggest constraint is a legacy management model that empowers a few but disempowers the many," Gary Hamel says.

Business strategist Gary Hamel envisions a future in which employees are empowered to create change within their organizations. 

And lean strategies, while a start, don't go far enough. 

He has in mind something a bit more radical. 

Hamel, an author, a professor, a manufacturing thought leader, wants to toss out the current management model and redistribute the power. 

Here Hamel discusses his concept for a new management model, a model that transitions top executives from decision-makers-in-chief to vision sculptors.

See Also: Lean Manufacturing Leadership Best Practices

"Organizations around the world are now facing a set of challenges that lay outside the performance envelope of our old management model. The biggest gating factor or the biggest constraint on organizational performance is not strategy. It's not operational management. It's not leadership. It's not technology. It's not talent. The biggest constraint is a legacy management model that empowers a few but disempowers the many. 

"We've made small steps in changing that but they've really been baby steps. The whole idea of kaizen and the idea that started with Deming's work in Japan with Toyota and other companies that you could teach ordinary employees to be extraordinary problem solvers, that was a very important first step in challenging traditional top-down structures. 

"The idea was that you would teach people with 10 or 12 years of education, you would teach them statistical process control, and Pareto analysis and you give them the right to stop a $2 billion production line if they saw a quality problem and you give them the training and the skills to fix that problem and to test it.

"I mean, that truly was a radical idea and it took a lot of Western companies a generation to really master that because, at its heart, it was a redistribution of power and authority to the front lines from factory supervisors and foremen down to first level employees. 

A Radical Change

"What I envision going forward is something really quite more radical, where not merely the responsibility for performance improvement but the work of managing itself, of scheduling, of allocating, of hiring, of prioritizing, that that work more and more gets distributed out to the edges of the organization. The reason I think that's going to happen is that that an all top-down model just leaves too much human capability on the table…

"Many companies today claim to be serious about innovation. It's obviously been a hot topic now for a couple of decades and more. Yet I know of almost no companies that have trained every single employee, including the unionized hourly workers, in the principles and practices of innovation; that have actually taught people how to be business innovators.

"And it's not that complicated to do -- teaching people how to be sensitive to unarticulated customer needs; teaching people how to think about the company's skills, competencies and be creative in imagining new ways to leverage them; teaching people how to be attentive, to be alert to what's changing in the environment around them and to think about how those discontinuities might be used to change a business model. 

"It's very possible because we've done it to thousands of people. It's very possible to teach people how to be innovative but most organizations haven't done it, and I think partly it reflects a kind of creative apartheid, if you like, and a belief that there are a few people who are really creative but most people aren't. 

"Well, if you look at the web today, that idea is rubbish on the face of it because you find enormous creativity all over the web from very unexpected people. Right? You find amazing YouTube videos from people who've never been to film school, amazing blogs from people who have never been to journalism school and so on. 

Realizing Employee Potential

"We have a management model that is fundamentally disempowering; therefore it leaves a lot of human capability on the table. It's interesting that, you know, despite those early starts with Deming and others 30, 40 years ago, we really haven't made very much progress. That's really my passion -- to change that. 

"The gating factor is not skills shortages. It's not a relatively high cost of labor. It's not lack of strategy, lack of leadership, but it's that management model. In particular, it's two things about that management model I'm going to talk about just briefly. One of them I've already mentioned. It's an architectural problem. The basic architecture of our organizations is built around that top-down model.

"In fact, if you think about it, most large companies, their management model is a mash up of two things -- of ancient military command structures that go back at least four or five thousand years and then also of industrial engineering, you know, the principles of workflow design, process optimization, continuous improvement that trace its roots back to scientific management with (Frederick) Taylor, then got a big update in the 1980s in Japan and so on. 

"But for all of our talk about being very progressive and being in a world of enormous change, basically the heart of our organizations, at the core, the architecture is still built on those ancient military command models. And they are, by their very nature, not adaptive. I mean, we just know from a ton of research that centralized things are not very adaptive. I think they're two primary problems with that traditional top-down hierarchy, as I say, a model that structurally and preemptively empowers the few but disempowers the many. 

"If you go around the world and you look at, in any language, you take the word "manage" as a verb, "to manage something," in most languages around the world, the synonym for manage is control. And that's not necessarily a bad thing. Right? I mean, to run an organization of any size you need a lot of control.  

"The dilemma is that control has become kind of an end in and of itself. Employees produce products and services, but managers manufacture control. The dilemma is: Control is great for producing efficiency and focus and discipline, but now in the creative economy where I need also adaptability and innovation and people who are truly inspired, control is not enough.

"Because to build an organization that's adaptable and innovative, I need freedom. People need freedom to sometimes waste time, put their feet up on the desk, think in new ways. They need freedom to experiment, to prototype new products or new ad campaigns. They need freedom to go around channels, to reach out across the organization, to put teams together in new ways. When people don't have that freedom, you end up with an organization that is highly efficient but is not very adaptable or innovative. 

For a more complete discussion of Gary Hamel's thoughts on leadership, visit iw.com/hamel-leadership.

"One of the challenges we have today in business is recognizing that we do have these architectural ideological legacies that now we have to challenge. We need different sorts of structures and we need to build our organizations around different sorts of principles that give as much weight to freedom as they do to control." 

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