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62 Organisational thunderbolts
When a management innovator is set loose inside
an organisation, watch out! Management innovation
can have thunderous results.
Management
Innovation
70 Perfectly in balance
Art Schneiderman pioneered what later became
the concept of the balanced scorecard while a vice
president of quality and productivity at Analog
Devices. We talked with Schneiderman to find out
more about the early evolution of a management
innovation.
76 Death to budgeting
Its considered one of the basics of management.
If you dont have a budget, you arent really
managing. But, UBS has made budgeting
secondary to performance and customer
satisfaction.
82 Employees first
Innovation is often focused on products. Yet the
leader of one Indian company is shifting the
business model of a 30,000-employee company.
HCL Technologies reveals how innovation can
apply to organisational systems as well.
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Organisational
thunderbolts
Management innovation the implementation of new management
practices, processes and structures that represent a significant departure
from current norms has transformed the way many functions and
activities work in large organisations. When a management innovator is
set loose inside an organisation, watch out, management innovation can
have thunderous results.
ost people consider
management a tool of the
status quo. They consider
the good manager as someone who
keeps things running smoothly; or, if
theres a problem, as someone who
restores the status quo so that the
business can keep humming along.
Consequently, when a manager
shakes up the status quo and actually
improves the way things run, the
impact (especially in large
organisations) can be thunderous.
Boeings Debbie Collard shares the
story of the manager who thought the
C-17 jumbo transport plane could be
built in a radically different way.
Collard tells of the revolution
created by Koz (most likely, Don
Kozlowski), the executive newly
charged with leading the production
of the C-17, a plane so gigantic that
its tail is four stories high. Planes
that huge require hundreds of people
to assemble them, and the tradition
is that such a plane is built in
stages, by moving it from one
position to another as the successive
work is completed. The norm in the
industry was for movement from
position to position to occur per the
set timetable, whether every
production detail was attended to or
not. At least in the case of the C-17,
prior to Koz, thats the way it always
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How it happens
Our research suggests management
innovations occur in five stages.
Dissatisfaction with status quo In
cases we studied, the internal
problem that management innovation
addressed was always some level of
dissatisfaction with the status quo.
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Invention It is customary to
assume that every innovation has a
eureka moment when the
inventor makes the key conceptual
breakthrough or proposal that
everything else follows from. 3Ms
Art Fry famously came up with the
Post-it Note concept at his local
church as he sought to keep track of
multiple pages in his book of hymns.
And people at Boeing still tell the
Koz C-17 story because eureka
moments are legendary. However, our
evidence suggests that such eureka
moments are rare. Invention is a
process in which the innovator brings
together the various elements of a
problem (dissatisfaction with the
status quo) with the various elements
of a solution (which involves some
inspiration from outside plus a clear
understanding of the internal
situation and context), but the
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Making thunderbolts
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Resources
Larry Huston and Nabil Sakkab,
Connect + Develop, Harvard
Business Review, March 2006.
A.G. Lafley, Getting Procter &
Gamble Back on Track, speech at
the Rotman School, April 21, 2003.
www.pg.com
69
Perfectly in balance
Arthur M. (Art) Schneiderman pioneered what later became the concept
of the balanced scorecard while a vice president of quality and
productivity at Analog Devices. We talked with Schneiderman, now an
independent consultant, to find out more about the early evolution of a
management innovation.
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Inspirations
The London-based consulting firm
Eden McCallum provides an
innovative take on the nature of the
firm as well as potential future
scenarios for the organisation of
consulting firms.
Launched in 2000 by Liann Eden
and Dena McCallum, Eden
McCallum is a network-based
consulting firm. Rather than having a
large headquarters and all the
overheads associated with a
conventional consulting firm, Eden
McCallum retains a minimal central
staff and utilises a network of
freelance consultants. Eden is a
former McKinsey consultant who also
held international marketing roles at
Unilever and Siemens. McCallum
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Innovative solutions
Eden McCallums proposition was
simple but scary: a consulting firm
without any consultants on the
payroll and without any proprietary
methodologies. Instead, they
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Death
to budgeting
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Designing
the culture
When the design firm, IDEO, opened
for business, its three founders
designed an organisation low on
hierarchy, big on communication, with
a minimal amount of ego. Over forty
years on it is still working.
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Picture: IDEO
IDEO at work
Open studio
Another core of the IDEO culture is
the concept of the studio. The studio
IDEO-style is not a production line
with an all-knowing, all-seeing font
of creativity standing at one end. The
star designer does not breeze in and
out while a tribe of assistants labour
over his latest creation. Most design
companies are based on a single
individual and fail when the
individual moves on. Others are
based on confrontation. IDEO works
around open critiques of peoples
The experience
IDEO now brings its design expertise
to a wider marketplace. Its work is
increasingly focused on improving
customer experiences and, even more
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The power of IDEO was to take what otherwise might have been
quite a siloed issue designers dont talk to engineers and
none of them will talk to human factors people and create a
culture in which team members respect one another.
Pegs in holes
In many ways the design studio, as
practised at IDEO, is an
organisational model in tune with
our times. It is small and creative for
a start. It is also low on hierarchy,
big on communication and requires
a minimal amount of ego. IDEOs
designers may take the starring role
in a particular project and then find
themselves back in the chorus on
the next project.
Sustaining this culture requires
dedication rather than innovative
wackiness. It starts in the
recruitment process. In comparison
to many other organisations, IDEOs
recruitment process is long and
drawn out. There are three or four
interviews. Applicants then show
their work and discuss it with a
group of IDEO people. Then they get
to meet everyone and look at the
projects underway to see how they
interact. Time consuming, but
essential, says IDEO. It wants to
know how well people will fit. The
teams have a say. We rely on each
other. Its a human business and you
have to know how to work together
and respect each other. People who
are egotistical wont make it,
reflects one.
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Employees first
Innovation is often focused on products. Yet the leader
of one Indian company is shifting the business model of
a 30,000-employee company. The work of HCL
Technologies reveals how innovation can apply to
organisational systems as well.
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Vineet Nayar: the scarce resource is not customers
2007 The Author | Journal compilation 2007 London Business School
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Building an innovative
organisation
To deliver on the promise of a
distinctive market position, Nayar
He wanted to invert the pyramid and put the power in the hands
of his employees, and he wanted to make managers accountable
to their employees, rather than the inverse.
gets negative feedback. Most
managers take the feedback very
seriously and make changes; a few
choose to move on. As Nayar
observes: This system is important
because it shows the manager is
accountable to you, the employee,
not the reverse. We are trying to add
a new definition to the word
accountability. And importantly, the
360-degree feedback is not linked to
the annual appraisal or to the
compensation package. It is open for
everyone to see, and that is enough
to encourage changes in behaviour.
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