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Bill George

Harvard Business School Professor, former Medtronic CEO

Gary Hamel: We Aren’t in the Knowledge Economy. We’re in the Creative Economy

We’re continuing to process the great #WBF09 talks.  Gary Hamel did not disappoint in his talk on Wednesday.  He opened with a brief tour through history to assert that management is the great innovation over the last 100 years:

  • General Motors pioneered organizational structure that allowed business units to compete against each other. 
  • P&G created systems for managing intangible assets: brands. 
  • Toyota became the world leader in cars because they figured out how to make every employee an expert process manager.  Last year, their employees contributed 540,000 suggestions for improvement.

There is a revolution in management happening.  Your organization will be better off if you lead the innovation rather than follow it.  Many are doing just that already:

  • Gore: every employee can say no to any order or request.
  • IBM: invites thousands of outsiders to help your company develop its strategy. 
  • Google: gives every manager 60 direct reports. 
  • Pfizer: let’s every employee outsource the least stimulating parts of their job.

Hamel, on CHANGE: If we could somehow resurrect 1960’s era CEOs, they would find most things familiar: Resources allocated from top.  Big leaders appoint little leaders.  Even the same titles exist.  But the pace at which industry is moving, and transforming, would blow their minds.  We are at times outpacing our ability to adapt and remain resilient to market changes.

Hamel, on VALUE: We aren’t in knowledge economy.  We’re in the creative economy.  If you don’t want to employ Chinese prison labor, then you must create extraordinary value.  We assume that commodity jobs are filled with commodity people.  Routinization of work led to routinization of people.  So we need to unleash the creative capacity of every single individual.  To do that, we have to turn our management assumptions upside down. 

Hamel, on PEOPLE: You cannot command someone to be passionate.  Someone either brings it or they don’t.  So we have to change the work of managers.  We don’t get people to serve the organizations’ goals.  Our job is to build a work climate that will merit the gifts of passion and creativity.  It takes a fundamental shift in our mental models.  Here’s how to look at it: people join organizations to fulfill a social purpose.  And we want to create an organization that challenges people and gets employees to bring their talent to work. 

Hamel, on CHALLENGING DOGMA: Innovation requires throwing out dogma.  And you cannot meet the challenges those new dogmas lay down without expanding the scope of employee freedom.  One way of doing so is using peer evaluation to increase value for collaboration.  How much control do I really need when people feel responsible for their results?  When it impacts the bottom line?  When it impacts their compensation?

Hamel, on EXPLORING THE FRINGE & EXPERIMENTING:  You have to look beyond benchmarking the Fortune 500 to make progress.  You have to look at the fringe.  The Grameen Bank is a prime example of an organization that operates strictly outside the lines set by previous success stories, and managed to success anyway (or rather, because).

Nobody will give you permission to be revolutionary.  Nobody will ask you “blow up something, and see what happens.”  So, you have to be revolutionary.  Are you thinking about creating a number of risk-bounded management experiments every year?  You should be.

Hamel, on the FUTURE OF MANAGEMENT:

  • Everyone gets heard
  • Commitment is voluntary
  • Power is granted from below
  • The tools of creativity are widely distributed
  • Capability counts more than credentials and titles
  • Individuals are richly empowered with information
  • Authority is fluid and contingent on value-added
  • Resources are free to follow opportunities
  • Ideas compete on an equal footing
  • Communities are self-defining
  • Decisions are peer-based