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Saturday, February 04, 2006

Gary Hamel & Management Innovation

Gary Hamel adds management innovation to the five main types of innovation: product innovation, process innovation, organizational innovation, marketing innovation and business model innovation. As he outlines, management innovation has produced the most pronounced shifts in business productivity. Though this should be part of the organizational innovation – the idea looks well presented. In the latest issue of HBR, he writes that a management innovation creates long-lasting advantage when it meets at least one of three conditions:
- It is based on a novel principle that challenges the orthodoxy;
- Iit is systemic, involving a range of processes and methods; or
- It is part of a program of invention, where progress compounds over time. For organizations like GE, P&G, and Visa, management innovation is the secret to success. A management breakthrough can deliver a strong advantage to the innovating company and produce a major shift in industry leadership. Few companies, however, have been able to come up with a formal process for fostering management innovation. The biggest challenge seems to be generating truly unique ideas. Four components can help:
- A big problem that demands fresh thinking, creative principles,
- Paradigms that can reveal new approaches;
- An evaluation of the conventions that constrain novel thinking;
- Examples and analogies that help redefine what can be done

He provides a framework to question existing set of processes in terms of ownership, objectives, decisions, metrics and documenting all these may provide the means to reinvent management processes. Courtesy of Innovation Insider, came across this note by Christian sarkardiscussing the paper and pointing to this handout framework as well – which can be used to look at building management innovation practices.

Earlier, Gary highlighted the need to fire up innovation within the business ecosystem. As he saw it, a set of principles that has been baked into every organisation of any size in the developed world: replication; hierarchy (as you went up the chain of command people had more discretionary authority); specialisation (where you grouped together people who had similar skills), and so on. This “organisational DNA” is fine, but as change accelerates some of these things can have increasingly toxic effects. The desire to get rid of variety leads to a mistrust of experimentation. Saying that hierarchy can lead to arrogance but innovation is not anarchy, he urges companies need to be bold - and romantic.
Through five strategies, he explained that things could change within enterprises.
- Increase the ratio of employees who think of themselves as innovators
- Increase the ratio of radical innovation to incremental innovation.
- Increase the ratio of externally sourced innovation to internally sourced innovation.
- Raise the ratio of learning over investment.
- Raise the ratio of long-term commitment and remain consistent in your goals
. Wait for more to come from Gary in the near future on this.

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