Gary Hamel on the Future of Management

This is a beautiful presentation where Gary Hamel argues on the need for “management innovation”. 
   Video Summary

1. The way we manage organizations hasn’t changed much in the last 50 years.
2. Why do we need a “management change”
• we are the first generation to face an inflection point in the “pace of change”
• Exponential growth in CO2 emissions, # of internet connections, # of Data Storage devices,  # of mobile devices connected to web, genes we have sequenced …..
• Creative disruption is forcing forcing companies to innovate day in – day out
• Knowledge is becoming a commodity.  Companies must “CREATE” new knowledge to differentiate
3. Companies must become : ADAPTABLE, INNOVATIVE & ENGAGING to succeed.
4. Challenge “Management” dogma to be a management innovator
5. WEB: the operating system for innovation

Do you know the “Effectiveness” of your Research, Development & Engineering?

A couple of questions that have plagued most RD&E managers and decision makers are:

a)      How effective is my RD&E?

b)      What are the returns from my RD&E investments?

The Booz Global Innovation 1000 Survey points out that the top 20 R&D spenders of the world spent $128 billion in 2009 alone; an average of 8.3% when expressed as a % of sales.  Apparently there is no correlation between spending huge amount of money and financial success in the market place.  Apple, considered as one of the most innovative companies, spent 3.1% of sales on R&D and churned out phenomenally successful products while Microsoft spent almost 16% of its sales and wasn’t as successful.  

The point is that decision makers are essentially blind while navigating their R&D ship.  They are missing out on identifying the true levers within their RD&E function that are most critical towards achieving their business objectives.  Worse, they are possibly misdirecting available funds. 

RD&E Effectiveness can be expressed as a ratio of the value (in $) generated by RD&E over time to the RD&E investments ($). 

Stanley Black and Decker Inc.’s DeWalt division is a maker of power tools for professional contractors. They observed their customers (carpenters) in action and came out with a 12-inch miter saw. It was a best seller!  Google keeps coming with innovative products time and again. We all know how:  It allows engineers the freedom to work on projects of their choice for 10% of company time.  But does that mean any company that allows 10% of company time to its engineers be as innovative as Google? Unfortunately, NO!  Think about DeWalt again..many companies spend a fortune on “identifying consumer needs” but then does every product hit the sweet spot ? NO!   Dewalt did it because not only did it correctly identify the pain of its customers; it also channelized its resources and learning into engineering projects which delivered the exact product that the market always wanted.

The key to maximizing RD&E effectiveness is the capability to channelize diverse inputs into most relevant projects that produce outputs which deliver business results.  To be able to derive sustainable extraordinary returns from their RD&E investments, organizations should make an effort to

1. Establish the linkage between its strategy, projects, outputs and business targets
2. Determine the value created by RD&E : IP, Knowledge, products and services
3. Identify the high impact levers of effectiveness

(Blog also posted on: http://ers.hclblogs.com/author/chinmay-kale/)