Gary Hamel: Don’t Be a Dinosaur

By Michael Fitzgerald

November 30th, 2007 @ 12:11 pm

Categories: Management

Tags: IBM Corp., Gary Hamel, Strategic Planning, Operational Accounting, Strategy, Management, Finance, Michael Fitzgerald

Gary Hamel ends his ‘Future of Management’ with a two-chapter ‘how-to’ section, aptly titled ‘Building the Future of Management.’

The first looks closely at two real-world attempts to create more innovative companies. Hamel starts with IBM’s efforts to take its world-beating research and turn it into new lines of business, instead of repeating mistakes like the router and the relational database, both IBM inventions that mint money for others. This initiative was started by a frustrated Lou Gerstner (see the 2nd item from this page in IBM’s 2000 annual report How we manage our portfolio for better value ) and continues today (here’s an interesting look from 2005 from Fast Company, Building a Better Skunkworks). Hamel sets up various problems in developing a new line of business, like the tendency to kill a new venture due to budget pressure, and shows how IBM has tried to address these. At the end, he assembles five broader lessons managers can learn from IBM’s experiences. He gives IBM the benefit of the doubt for having changed its culture to one that is much more nurturing to innovations and credits these changes with helping IBM’s revenue to weather the sale of key businesses, such as its PC operation (IBM’s revenues are down from 2005, when it sold the PC business, but after two years of being flat at about $91 billion, company revenues were up 7 percent through the nine months ended Sept. 30).

Hamel projects a brighter future for IBM because it has so gamely wrestled with a difficult management task.

Of course, IBM’s CEOs backed this project. So his second section showcases how a vice president with no mandate and no budget turned his company on to harnessing the wisdom of its internal crowds. That would be Best Buy, where a marketing VP named Jeff Severts got a series of internal forecasting markets off the ground, despite both a lack of funding and significant internal opposition from important power blocs in the company. What Severts pulled off is well worth a read to those who think only the CEO can get a company to embrace new ideas. Hamel tops it off with five more lessons. (here’s a link to a Best Buy page on its market, which it calls TagTrade).

Hamel ends his book with a chapter titled, lamentably, ‘Forging Management 2.0.’ The title is lamentable not least because ‘2.0’ has at this point all the oomph of slapping “New and improved!” on some box. Nonetheless, keep reading. Hamel sums up with a sweeping recap of his argument that the business world is going through a sweeping change in the way it is organized. Those who have relied on hierarchy and free markets must understand the power of global communications networks that work in real time. To paraphrase the historian Bruce Catton, in such an environment, managers have become masters of their own fate, but they may not have had the proper training. Hamel doesn’t have all the answers – he says at the end that he wrote this book “not to predict the future of management, but to help you invent it.”

It is, then, a manager’s self-help book to the future. And it is a natural follow-on to a different ‘Future of’ book published by Harvard University Press, Tom Malone’s “The Future of Work” (2004). Malone laid out an argument that the companies of today, with their vast size, their centralization, their hulking hierarchies are “merely a temporary aberration – an interlude of centralization – between periods of largely decentralized organizations.”

In other words, the 20th century was the Jurassic era of industrial organization. The industrial dinosaurs are headed to extinction. Smart managers, though, can turn their companies into mammals.

What Hamel has done is take that premise and made it easier for managers to try to implement it. His battery of questions, to-dos, and homework are meant to help you help yourself. It is, then Hamel has given us the Purpose-Driven Life for business managers.