Thursday, October 15, 2009

Gary Hamel: Management Revolution

Gary Hamel, “the world’s most influential business thinker” (Wall Street Journal) and author of best-selling book The Future of Management, had something mind-blowing to share at this year’s World Business Forum: we are in the middle of a once-in-a-century management revolution. It sounds like hyperbole, but take heed. His ideas and his examples were compelling. They also challenged us.

Hamel likened our time to that of Frederick Taylor’s, about a hundred years ago, when in 1912, his idea about something called “scientific management” – the model for today’s corporation – was so advanced, so controversial that he was called into Congress to testify. He called for a “mental revolution” among “workmen… and… management” for scientific management to take hold. He gave life to concepts like efficiency and productivity and standardization.

Our modern-day Frederick Taylor, Gary Hamel, tells us that Taylor’s revolution has plateaued and we're ready for another. Hamel’s premise is rooted in employee engagement. No more than 20% of people are engaged at work, which means there’s a lot of latent productivity and untapped innovation in the workforce – in other words, there’s room to get a lot more out of employees. And corporations today – how they’re organized and what they value – will not do it. A revolution is required.

But why must corporations revolutionize to survive? And more importantly, how can they do it?


Corporations aren’t human. And they must be to survive.

Diligence, obedience, and structure will no longer be cornerstone principles of the corporation; Passion, creativity, and innovation will be. Why is Hamel so sure? “... because the upcoming generation will accept no less.” These are young people who grew up in the meritorious world of the internet, not the authoritarian world of the corporation. They derive power from and give power to others based on content, not title. They are creative and passionate. They are the drivers of the participation economy that Kevin Roberts, of Saatchi & Saatchi, spoke of earlier at the Forum. They don’t respond to marketing but movements, not to information but inspiration. They will not put up with only 20% engagement in the workplace.

To engage and retain this next generation, the corporation will have to fundamentally morph the way they manage them.


W.L. Gore is a good place to start. The company that brought us GORE-TEX is living proof of what the next-era corporation will look and feel like. No titles. No rules. No assignments.

Sound like a slacker’s paradise? It’s not. This company, started by a DuPont engineer, recognizes over $2 billion in annual sales and has not one quarterly loss in the last 30+ years. They have found a way to create entrepreneurs and collaborators in the workplace.

Here’s how they do it:

1. No titles. Nobody has titles at Gore. When Hamel was on-site, and noticed that nobody had titles on their business cards, he asked a Gore employee, “How do you know who’s leader?” The response: “Well, if you call a meeting and people show up, that’s a good sign.”

2. No rules. There are no rules at Gore. Take for example their travel and expense policy – there isn't one. Employees can travel when they want, however they want, for as long as they want, expensing whatever they want – all on the company’s dime. How can this system work? The company simply posts travel expenses online, where everyone can see. If everyone were to see that you ordered the $1,000 bottle of wine, perhaps you’d be more inclined to buy the $20 one.

At Gore, there’s just one guideline: No “waterline issues.” No employee should take a risk that would sink the company, punch a hole in the bottom of the company’s proverbial hull, nothing that would damage its reputation or get it into legal trouble or ruin the brand. In meetings, it’s not uncommon to hear Gore employees asking each other, “Is there a ‘waterline issue’ here?” (Hamel implored us to imagine what the world would be like if the financial services industry asked the same question before the economic crisis.)

3. No assignments. Nobody at Gore tells employees what to do. They choose what they work on and who they work with. All commitments are voluntary. How do they manage this apparent free-for-all? Peer ratings. An employee rates 20 peers and 20 peers rate that employee – ranked 1 through 20. The rankings are used to determine salary.

The Challenge

It works for W. L. Gore, but how does it, or will it, work elsewhere? Such is the challenge of Hamel’s insight. While he gets us thinking (even excited) about the management revolution, he doesn’t provide all the answers (nor does he have them). What he does provide is advice on how to get there:

A. Challenge dogma. Basic assumptions in modern day management – authority trickles down, change starts at the top, senior executives set strategy, takes crisis to provoke change, freedom and discipline are trade-offs – are false. Unlearn the old; discover the new. Many innovators, including Bill Gore (founder of W. L. Gore), never went to business schools.

B. Explore the fringe. The future always starts there. Tattoos, as a small but telling example, started with sailors and bikers. Now, young women have them as body art. What will become trendy or mainstream tomorrow is at the fringe right now.

C. Experiment. “We need to be revolutionary but nobody is going let you do that,” so today’s managers must be simultaneously revolutionary and evolutionary – How? Experimentation. It’s bounded in time and risk, but allows exploration and discovery. Successful managers should ask themselves, “Am I putting a portfolio of risky projects together?”

D. Recognize natural leaders. Leaders in tomorrow’s corporation will be chosen for fairing well on new types of questions: Whose responses are rated most helpful? Who contributes the most to online forums? Whose advice is sought most often? Who responds most promptly to requests? Who is generating the most external buzz?

Hamel closed with his thesis: “Isn’t it weird that corporations are less human than us, less adaptable, less engaging, less interesting, less creative? (It’s because we apply this arcane) technology of management from 100 years ago – Management 1.0. You cannot create a company for the future unless it’s made for the human being.”

Go make it happen.

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