The Management of Innovation and
the innovation of the Management
Dr. Willy A. Sussland
Mens sana in corpore sano
The ancient Roman said: “a healthy mind in a healthy body. We can say a healthy innovativeness requires a healthy and innovative management. In Part One of this paper, I have shown 7 debilitating disconnects that hamper strategic and organizational effectiveness. Such strategic and organizational constraints prevent traditional organizations from taking full advantage of the collective creativity of the life-forces of their enterprise.
As Tom Kelley suggested, the <innovation of the management> should eliminate all the strategic and organizational constraints. (1) Of course, the program of management innovation should also do that, but first the business-leaders must understand what will stymie and what will support such a program.
To change or not to change
Nothing happens until people do something !
Actions produce reactions, and the <innovation of the management> brings up the questions like: who needs it ? and why now ?
Let me list hereafter some good reasons for not launching a program of management innovation.
¨ Strategic and organizational constraints – such as the 7 disconnects mentioned in Part One of this paper – tend to spread and cover the whole the field like weeds. Eradicating them is a backbreaking, and often futile endeavor since bad habits - like weeds - tend to come right back.
¨ Programs of management innovation take a long time, and they face a lot of overt and/or covert resistances. And so, a CEO who is close to retirement will find it easier to leave the program for his/her successor.
¨ Executive surveys show that such programs have a 30% chance of success !
However, there are also a number of convincing reasons for the CEO to launch a program of management innovation, including the following.
¨ When the leadership allows the efforts of innovation to taper off, the enterprise looses the partnership with core customers and suppliers who migrate to more performing competitors.
¨ Business-leaders see innovative enterprises move ahead, and nobody likes to be left behind.
¨ The innovators want to carry on, and, based on the successes they have achieved, they will press the leadership to lift some of the strategic and organizational constraints. The innovation-capabilities that have been developed will prove a powerful ally in the implementation of the program of management innovation.
The transformation of a traditional organization in an innovative enterprise
“Change before you have to” Jack Welch
A typical reaction of business-leaders who wish to innovate their management is to look at innovative enterprises, and also at traditional organizations that have been transformed in innovative networking enterprises. Of course, all enterprises are somewhat unique, but the critical success factors/critical failure factors of such programs stand out, and explain the disappointing success of such programs.
Programs of management innovation are carried out in a traditional way, i.e. imposed by the top management, and carried out by a swat team are clearly too heavy for the senior managers to carry all the brunt. And so, they end up changing some of the peripheral issues.
Where there is a will, there is a way !
Let me turn around that old saying, and submit that seeing the way will boost the resolve to launch a program of management innovation. Hereafter, I will outline the principles of the program of management innovation presented in my work. (2)
Organizations do not innovate, people do !
Innovations are made by people, with people, for people.
And so, in order to transform a traditional organization in an innovative enterprise, the business leaders may have to innovate the way people think, the way they behave, and the way they act.
To innovate the way people think, the organization needs to remove the eye-lids, and to apply a systemic & strategic approach. To innovate the way people behave, the organization needs to establish a collaborative mode of management. To innovate the way people act, the organization needs to implement systematically & swiftly the best practices.
Arthur Andersen Consulting submitted that “companies can only perform if everybody performs together”. Therefore, the life-forces of the organization should think along the same lines and strive to achieve the same goals. The people should behave in a collaborative way. Last but not least, everybody should apply the same kind of practices.
Mind you, innovative networking enterprises need to leave a lot of elbowroom and apply a lot of tolerance. However, the leadership must point all the life-forces of the organization in the same direction, going at the same speed.
Let me outline the 3 sets of principles that underpin the advocated program of management innovation.
The systemic and strategic approach
Management – as it has often been pointed out – is a team sport. So, let me take as an example a professional game that is very popular over here, namely football. Each of the players has a particular function in the frame of the strategic plan. However, they all want their team to score, everybody helps the best-placed team mates to score a goal. The team-management recognizes the goal-scorer as well as the people who assisted the goal-scorer.
The players are not stuck to a particular place in the field, they are not stuck to a very specific job. They all look at the overall objective, and they try to do the best in a constantly changing setting. Particularly in our turbulent environment, it is essential that everybody sees the big picture, understands where he/she fits in that picture, and sees where everybody else is going. As holds true in professional football, there are prepared schemes. But, if the reality does not allow the players to implement the trained schemes, they must be able to improvise and to innovate.
And so, every person has to see business as a system, see the objectives of their enterprise within that system, and collaborate with others in order to optimize the creation of value in the business with and for the significant stakeholders.
The systemic approach spells out that the significant stakeholders include the customers, the suppliers, the personnel, the relevant communities, and the shareholders. The systemic approach also spells out the elements of the business-value, namely the following 5 strategic resources: the Corporate Capital, the Talent Capital, the Market Capital, the Life and Time Cycles, and the Financial Capital. (2)
Because of space limitations, I cannot explain here the 5 strategic resources, but let me point out that 4 out of 5 strategic resources are intangible resources, and that the Financial Capital is the only tangible resource. We have long realized that enterprises depend mainly on the Intangible resources in order to excel in the creation of business-value.
Kaplan & Norton have posited: “Over 75% of the firm’s value is not derived from intangible resources, which are not captured by financial metrics”. However, many organizations continue to belittle the systemic and the strategic approaches by focusing on short-term financial results, which – according to Dr. W. E. Deming – leads “managers to get (financial) results any o’ way, mind not necessary”.
The model of the 5 strategic resources that I present in my last book breaks down each of these strategic resources in 5 resource-components. Thusly, the life-forces of the organization can see who, where, and how business-value is created/destroyed on the value-chain. Unlike traditional organizations where people encountering problems receive reprimands, the innovative networking enterprises that apply Total Quality Management welcome an early detection of difficulties and rush help and resources to solve the problem.
Recurring problems generally point out to strategic and organizational constraints that have to be eradicated.
The stimulating and synergistic approach
Stimulation is like a switch that turns people on, that galvanizes psychological and physical energies, that powers inspiration and innovation. People that are told what to do generate just the energy needed to get the job done, mind not necessary. People that are self-reliant and self-responsible are self-stimulated, and the more important the task, the stronger their stimulation.
To put this principle into gear, people should be involved in process of defining and of deploying the business-strategy. The size and scope of their involvement depends on the competences of the individual and of his/her team.
I have expanded on the process of <Management by Policy>, and developed the <Model of the Two Rings>, which breaks down the strategic process the following 4 sub-processes, namely: the check & challenge, the alert & innovation, the planning & synergies, and finally the process of strategic and organizational deployment. (3) The senior management, the operations management, and the chiefs of the shared services participate in the first 3 sub-processes. They set the strategic objectives, and they deploy them top/down, however they let the strategies to be proposed bottom/up.
Thusly, the process of strategic and organizational deployment involves several levels of management in the process, and it takes full advantage of the ideas and of the intelligence of the life-forces of the organization.
Once the strategies have been finalized and structured in projects, the teams assigned to the project have to organize the collaboration of other individuals or groups inside and outside the enterprise. In the process, the teams form their networks, and they agree with their partners on the distribution of the roles, of the responsibilities, and of the resources. Thus, the strategic deployment is coupled with an organizational deployment, and all is done collaboratively so as to foster commitment, cooperation, and collective creativity.
The collaborative mode of management relies on the self-managed teams to create value in the business, and on the business-leaders to steer and to support the actions of the teams and of their networks.
The systematic and swift approach
The systematic and swift approach empowers teams/self-managed teams to run the assigned project(s).
They plans and the reviews concerning the creation of business-value are based on the configuration of the 5 strategic resources. I propose the <Returns on Total Resources> as a method to evaluate the performance on the resource-components. (4) While tangible assets can be measured in financial terms, some of the resource-components can only be estimated. However, as Andersen Consulting submitted: ”being approximately right is more important than being precisely wrong”.
They adopt the business-practices that are constantly updated and innovated. They review and report their performances.
If the leadership has decided to launch a program of management innovation, then its implementation must be collaborative, systematic, and swift.
The best way to manage the future is to create it !
In the second and last part of my paper, I have discussed the 3 sets of principles that underpin the innovation of the management. Starting with the principles rather than rushing into details helps to create a foundation of understanding. It is true that the devil lies in the detail, but if you follow the devil, it may lead you to hell.
(1) Tome Kelley “The Art of Innovation” Curency Book 2001
(2) Willy A. Sussland “The Innovative Enterprise – How to transform a traditional organization
in an innovative networking enterprise” - Chapters Seven - Beijing Xingshengle 2015 (simplified Chinese)
(3) B. Colins & E. Huge “Management by Policy” ASQC Quality Press 1993
(4) Willy A. Sussland “The Innovative Enterprise – How to transform a traditional organization
in an innovative networking enterprise” (Chapters Eight)