Innovating your management model:
Innovating your management model: Innovating your management model:
Innovating your management model: Developing new and better ways of working InterTrade Ireland Conference – 10 June 2009 Professor Julian Birkinshaw London Business School And the MLab
- Page 2 and 3: Overview 1. The failure of manageme
- Page 4 and 5: 1. The Failure of Management poor r
- Page 6 and 7: Individuals as work work Individual
- Page 8 and 9: • …by the rise of the Industria
- Page 10 and 11: Who are you happiest with? Friends
- Page 12 and 13: 2. Management Innovation Employee B
- Page 14 and 15: surprisingly little But on manageme
- Page 16 and 17: Example: The Balanced Scorecard INV
- Page 18 and 19: What does the 3. of management real
- Page 20 and 21: possible way forward: Management as
- Page 22 and 23: Alignment: Is this really how organ
- Page 24 and 25: Two very different views on long-ru
- Page 26 and 27: • Indirect Goals • Orthogonal G
- Page 28 and 29: Engagement levels by country 80 60
- Page 30 and 31: Discretionary attributes Contractab
- Page 32 and 33: • How important is each of the fo
- Page 34 and 35: Hungry community software of develo
- Page 36 and 37: ENDS MEANS A framework for rethinki
- Page 38 and 39: Eliminate unnecessary activities
- Page 40 and 41: Use “peer pressure” rather than
- Page 42 and 43: Collective Wisdom Hierarchy 65% 91%
- Page 44 and 45: Tapping networks of experts at Roch
- Page 46: points on developing your own Key M
<strong>Innovating</strong> <strong>your</strong> <strong>management</strong> <strong>model</strong>:<br />
Developing new and better ways of working<br />
InterTrade Ireland Conference – 10 June 2009<br />
Professor Julian Birkinshaw<br />
London Business School<br />
And the MLab
Overview<br />
1. The failure of <strong>management</strong><br />
2. The need for innovation in <strong>management</strong><br />
What does the future of <strong>management</strong> really<br />
3.<br />
like? look<br />
Page 2<br />
Copyright: Julian Birkinshaw
Overview<br />
1. The failure of <strong>management</strong><br />
2. The need for innovation in <strong>management</strong><br />
What does the future of <strong>management</strong> really<br />
3.<br />
like? look<br />
Page 3<br />
Copyright: Julian Birkinshaw
1. The Failure of Management<br />
poor risk-<br />
Shockingly<br />
decisions<br />
<strong>management</strong><br />
incentive<br />
Perverse<br />
“eat what you<br />
systems,<br />
kill”<br />
as a vehicle for<br />
Firm<br />
the raw<br />
perpetuating<br />
vices of capitalism<br />
Page 4<br />
Copyright: Julian Birkinshaw
1. The Failure of Management<br />
GM the stress is not<br />
“At<br />
getting results—on<br />
on<br />
on<br />
winning—but<br />
on<br />
bureaucracy,<br />
to the GM<br />
conforming<br />
System”<br />
Ross Perot 1980s<br />
Page 5<br />
Copyright: Julian Birkinshaw
Individuals<br />
as work<br />
work<br />
Individual<br />
towards<br />
together<br />
Where did the investment banks go wrong?<br />
The Market System<br />
The Firm<br />
Vs.<br />
common goals<br />
free agents<br />
Page 6<br />
Copyright: Julian Birkinshaw
What is Management?<br />
“Getting work done through others”<br />
people together to<br />
“Bringing<br />
desired goals”<br />
accomplish<br />
Page 7<br />
Copyright: Julian Birkinshaw
• …by the rise of the Industrial Corporation<br />
• …and by the rhetoric of “Leadership”<br />
How “<strong>management</strong>” got corrupted<br />
Page 8<br />
Copyright: Julian Birkinshaw
What the gurus have said<br />
John Kotter<br />
Warren Bennis<br />
A manager...<br />
· copes with complexity<br />
· plans and budgets<br />
· organizes and staffs<br />
· controls and problemsolves<br />
· promotes efficiency<br />
· is a good soldier<br />
· imitates<br />
· accepts the status quo<br />
· does things right<br />
A leader...<br />
· copes with change<br />
· sets a direction<br />
· aligns people<br />
· motivates people<br />
· promotes effectiveness<br />
· is his or her own<br />
person<br />
· originates<br />
· challenges<br />
· does the right things<br />
Page 9<br />
Copyright: Julian Birkinshaw
Who are you happiest with?<br />
Friends<br />
Parents/relatives<br />
Spouse<br />
My children<br />
Coworkers<br />
Clients/customers<br />
Alone<br />
Boss<br />
3.3<br />
3.0<br />
2.8<br />
2.7<br />
2.6<br />
2.4<br />
2.2<br />
2.0<br />
Source: Richard Layard<br />
(Rating is on a 15 Page<br />
scale)<br />
10<br />
Copyright: Julian Birkinshaw
• We need to recapture the “spirit” of <strong>management</strong><br />
– Good executives are leaders and managers<br />
– Management is not just how work gets done in large,<br />
The reinvention of <strong>management</strong>?<br />
industrial-age companies<br />
• We need to become more innovative about <strong>management</strong><br />
– Are there new or alternative principles that we can apply to<br />
the challenge of “getting work done through others?”<br />
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Copyright: Julian Birkinshaw
2. Management Innovation<br />
Employee Benefits<br />
1800s<br />
Assembly Line<br />
Pension plans<br />
1900<br />
Industrialization of R&D<br />
Scientific Management<br />
The multi-divisional structure<br />
Brand Management<br />
1920<br />
1940<br />
Human Relations Movement<br />
Skunkworks<br />
TQM / Lean Manufacturing<br />
Outsourcing<br />
1960<br />
Quality Circles<br />
Corporate Planning<br />
Scenario Planning<br />
Enterprise Resource Planning<br />
1980<br />
Stage-gate investing<br />
Quality of Work Life<br />
Six Sigma<br />
Business Process Reengineering<br />
Open Innovation<br />
2000<br />
Economic Value Added<br />
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Copyright: Julian Birkinshaw
• Management<br />
High<br />
innovation<br />
Industry architecture<br />
•<br />
• Industry architecture<br />
Potential<br />
long- for<br />
innovation<br />
Business <strong>model</strong><br />
•<br />
• Business <strong>model</strong><br />
term<br />
advantage<br />
innovation<br />
• Product<br />
innovation<br />
• Operational<br />
Page 13<br />
innovation<br />
Low<br />
Copyright: Julian Birkinshaw
surprisingly little<br />
But<br />
on <strong>management</strong> innovation<br />
research<br />
Number of citations<br />
(Title or abstract)<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
Technology Product Strategic Management<br />
Page 14<br />
Type of innovation<br />
Julian Copyright: Birkinshaw<br />
Source: Business Source Premier Index, March 05, 2007
How does <strong>management</strong> innovation happen?<br />
MOTIVATION<br />
EXPERIMENTATION<br />
IMPLEMENTATION<br />
VALIDATION AND AND LABELLING<br />
Page 15<br />
Copyright: Julian Birkinshaw
Example: The Balanced Scorecard<br />
INVENTION<br />
MOTIVATION<br />
Businesses experimenting<br />
Art<br />
How How do do we we monitor Art Schneiderman<br />
with experiments alternative <strong>model</strong>s...<br />
nonfinancial as as well<br />
with with<br />
well “Corporate<br />
as as financial metrics?<br />
Scorecard”<br />
at at Analog Devices<br />
IMPLEMENTATION<br />
Scorecard is is<br />
implemented and and<br />
developed inside inside<br />
the the company<br />
VALIDATION, LABELLING<br />
Kaplan writes writes about about the the<br />
“Balanced Scorecard”<br />
and and attracts interest<br />
from from many many companies<br />
Page 16<br />
Copyright: Julian Birkinshaw
from my<br />
Observations<br />
on the process of <strong>management</strong> innovation<br />
research<br />
• Innovation can occur on two levels<br />
– New <strong>management</strong> practices, ways of working<br />
– New rhetoric, new ways of describing the work<br />
• Most <strong>management</strong> innovation is incremental, often using<br />
new language to describe old ideas<br />
• Radical <strong>management</strong> innovations are rarely sustained, and<br />
rarely get diffused<br />
Page 17<br />
Copyright: Julian Birkinshaw
What does the<br />
3.<br />
of <strong>management</strong> really look like?<br />
future<br />
Flat<br />
Decentralised<br />
Empowered<br />
Self-organised<br />
Values-driven<br />
Virtual<br />
Engaged<br />
Page 18<br />
Copyright: Julian Birkinshaw
• Many aspects of our current <strong>model</strong> of <strong>management</strong> are<br />
• We have lacked (up to now) the impetus or the enabling<br />
has there been so little <strong>management</strong><br />
Why<br />
over the last half-century?<br />
innovation<br />
effective and necessary<br />
• We are “stuck” with an inferior <strong>model</strong>:<br />
– It suits those in positions of power<br />
– Most of us cannot envision an alternative<br />
– Innovation in <strong>management</strong> is perceived as risky<br />
technologies to make significant changes<br />
Page 19<br />
Copyright: Julian Birkinshaw
possible way forward: Management as a<br />
A<br />
set of choices among known alternatives<br />
conscious<br />
Business Model<br />
Management Model<br />
Choices firms make about:<br />
Choices firms make about:<br />
• Sources of revenue<br />
• Defining objectives<br />
• Motivating effort<br />
• Cost structure<br />
• Coordinating activities<br />
• What to make / buy<br />
• Allocating resources<br />
Page 20<br />
• How to make a profit<br />
Copyright: Julian Birkinshaw
ENDS<br />
MEANS<br />
A framework for rethinking <strong>management</strong><br />
Managing<br />
objectives<br />
Managing individual<br />
motivation<br />
Managing<br />
across: activities<br />
Managing<br />
down: decisions<br />
Alignment<br />
Obliquity<br />
Page 21<br />
Copyright: Julian Birkinshaw
Alignment: Is this really how organisations work?<br />
Page 22<br />
Copyright: Julian Birkinshaw
A more oblique path to success…<br />
“Employees First, Customers Second”<br />
Vineet Nayar, President HCL Technologies<br />
Page 23<br />
Copyright: Julian Birkinshaw
Two very different views on long-run goals<br />
must continuously<br />
“We<br />
superior financial<br />
achieve<br />
operating results<br />
and<br />
simultaneously<br />
while<br />
create a better<br />
“To<br />
life for the<br />
everyday<br />
to high ethical<br />
adhering<br />
standards.”<br />
many people.”<br />
Page 24<br />
Copyright: Julian Birkinshaw
3M<br />
General Electric<br />
Hewlett Packard<br />
IBM<br />
Johnson & Johnson<br />
Marriott<br />
Merck<br />
Nordstrom<br />
Procter & Gamble<br />
Sony<br />
Walt Disney etc.<br />
Pursuit of a<br />
higherorder<br />
vision results<br />
in greater<br />
longterm<br />
profitability<br />
Obliquity pays off<br />
Page 25<br />
Copyright: Julian Birkinshaw
• Indirect Goals<br />
• Orthogonal Goals<br />
• “Leap of Faith” Goals<br />
Different types of oblique goals<br />
A<br />
B<br />
A<br />
B<br />
D<br />
A<br />
C<br />
Page 26<br />
B<br />
Copyright: Julian Birkinshaw
ENDS<br />
MEANS<br />
A framework for rethinking <strong>management</strong><br />
Managing<br />
objectives<br />
Managing individual<br />
motivation<br />
Managing<br />
across: activities<br />
Managing<br />
down: decisions<br />
Alignment<br />
Extrinsic<br />
Obliquity<br />
Intrinsic<br />
Page 27<br />
Copyright: Julian Birkinshaw
Engagement levels by country<br />
80<br />
60<br />
40<br />
20<br />
0<br />
USA<br />
Germany<br />
UK<br />
Korea<br />
France<br />
China<br />
India<br />
Japan<br />
Highly Engaged Moderately Engaged Disengaged<br />
Page 28<br />
Source: Towers Perrin, Global Workforce StudyExecutive Report<br />
Copyright: Julian Birkinshaw
• Think back to the last piece of work you did<br />
• What were the key features of that project?<br />
• Discuss in pairs, 60 seconds<br />
A quick mental exercise<br />
you were fully engaged and highly<br />
where<br />
motivated.<br />
Page 29<br />
Copyright: Julian Birkinshaw
Discretionary<br />
attributes<br />
Contractable<br />
attributes<br />
A hierarchy of engagement<br />
Passion<br />
Creativity<br />
Initiative<br />
Diligence<br />
Competence<br />
Obedience<br />
Page 30<br />
Copyright: Julian Birkinshaw<br />
Source: Gary Hamel
Intrinsic<br />
Extrinsic<br />
work for<br />
Doing<br />
material<br />
direct,<br />
work to gain<br />
Doing<br />
or status<br />
work for its<br />
Doing<br />
sake: for<br />
own<br />
rewards<br />
recognition, to fit in<br />
innate pleasure<br />
Extrinsic<br />
Motivation<br />
Internalised<br />
Extrinsic<br />
Intrinsic<br />
Motivation<br />
(Theory X)<br />
(Theory Y)<br />
Motivation<br />
Page 31<br />
Copyright: Julian Birkinshaw
• How important is each of the following factors to you?<br />
More<br />
importance<br />
Why do some people work longer hours?<br />
– Salary<br />
– Benefits<br />
– Opportunities for advancement<br />
– Intellectual challenge<br />
– Level of responsibility<br />
– Contribution to society<br />
– Job security<br />
Page 32<br />
Copyright: Julian Birkinshaw<br />
Source: Sauermann and Cohen, 2007
• And which of these actually affects number hours worked?<br />
– Salary<br />
– Job security<br />
POSITIVE<br />
EFFECT<br />
NEGATIVE<br />
EFFECT<br />
Why do some people work longer hours?<br />
Intellectual challenge<br />
–<br />
Level of responsibility<br />
–<br />
Page 33<br />
Copyright: Julian Birkinshaw<br />
Source: Sauermann and Cohen, 2007
Hungry<br />
community<br />
software<br />
of<br />
developers<br />
Clients<br />
needing<br />
software<br />
developed<br />
Topcoder’s unique approach to motivation<br />
Page 34<br />
Copyright: Julian Birkinshaw
• Twice winner of the TopCoder<br />
Tomek Czajka<br />
Open<br />
• What motivates him?<br />
– Love of programming<br />
– Status/recognition among<br />
his peers<br />
– Possibility of winning the<br />
prize<br />
Page 35<br />
Copyright: Julian Birkinshaw
ENDS<br />
MEANS<br />
A framework for rethinking <strong>management</strong><br />
Managing<br />
objectives<br />
Managing individual<br />
motivation<br />
Managing<br />
across: activities<br />
Managing<br />
down: decisions<br />
Alignment<br />
Extrinsic<br />
Bureaucracy<br />
Obliquity<br />
Intrinsic<br />
Emergence<br />
Page 36<br />
Copyright: Julian Birkinshaw
Emergence<br />
Bureaucracy<br />
Drachten, The Netherlands<br />
Page 37<br />
Copyright: Julian Birkinshaw
Eliminate unnecessary activities<br />
• Objective: Organic growth<br />
• Biggest orthodoxy: The<br />
budgeting process<br />
• Solution: Elimination of<br />
traditional budgeting,<br />
each desk head now<br />
evaluated on ROI versus<br />
peer units<br />
3.2<br />
2.6 2.6<br />
3.5<br />
4.1<br />
Est.<br />
5.1<br />
01 02 03 04 05 06<br />
Profit before tax for Wealth<br />
Management (ex US) in CHF Billion<br />
Page 38<br />
Copyright: Julian Birkinshaw
Simplify processes to enable coordination<br />
CONSULTANTS<br />
CLIENTS<br />
Page 39<br />
Copyright: Julian Birkinshaw
Use “peer pressure” rather than formal rules<br />
Page 40<br />
Copyright: Julian Birkinshaw
ENDS<br />
MEANS<br />
A framework for rethinking <strong>management</strong><br />
Managing<br />
objectives<br />
Managing individual<br />
motivation<br />
Managing<br />
across: activities<br />
Managing<br />
down: decisions<br />
Alignment<br />
Extrinsic<br />
Bureaucracy<br />
Obliquity<br />
Intrinsic<br />
Emergence<br />
Hierarchy<br />
Collective wisdom<br />
Page 41<br />
Copyright: Julian Birkinshaw
Collective Wisdom<br />
Hierarchy<br />
65%<br />
91%<br />
Page 42<br />
Copyright: Julian Birkinshaw
• How do we encourage people across the organisation to<br />
Exploiting collective wisdom at Lloyds<br />
pursue their business ideas?<br />
Employees trade Bank<br />
•<br />
to predict success of<br />
Beanz<br />
innovation projects<br />
Project champions can<br />
•<br />
shares in their<br />
issue<br />
convertible to<br />
projects,<br />
Beanz<br />
Bank<br />
Page 43<br />
Copyright: Julian Birkinshaw
Tapping networks of experts at Roche<br />
Page 44<br />
Copyright: Julian Birkinshaw
ENDS<br />
MEANS<br />
How people think <strong>management</strong> will change<br />
Managing<br />
objectives<br />
Managing individual<br />
motivation<br />
Managing<br />
across<br />
Managing<br />
down<br />
Alignment<br />
Extrinsic<br />
Bureaucracy<br />
Obliquity<br />
Intrinsic<br />
Emergence<br />
1 2 3 4<br />
Hierarchy<br />
Collective wisdom<br />
FIVE YEARS<br />
TODAY<br />
Page 45<br />
FROM NOW<br />
Copyright: Julian Birkinshaw
points on developing <strong>your</strong> own<br />
Key<br />
Model<br />
Management<br />
• There is no one best way<br />
• Management <strong>model</strong>s operate at the level of<br />
principles which then drive specific practices<br />
• Your <strong>management</strong> <strong>model</strong> should be a conscious<br />
choice:<br />
– To suit the task at hand, the challenges you face<br />
– To enhance <strong>your</strong> distinctiveness<br />
Page 46<br />
Copyright: Julian Birkinshaw
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