THE FUTURE

OF MANAGEMENT

Gary Hamel, with

Bill Breen

Published by
Harvard Business School Press, 2007

Summarized by
Dudi Hidayat
NPM 0706222580
1
Content of the Book (1)
Part I Why Management Innovation Matters
1. The End of Management
2. The Ultimate Advantage
3. An Agenda for Management Innovation

Part II Management Innovation in Action

4. Creating a Community of Purpose
5. Building an Innovation Democracy
6. Aiming for an Evolutionary Advantage

2
Content of the Book (2)
Part III Imaginaning the Future of Management
7. Escaping the Shackles
8. Embracing New Principles
9. Learning from the Fringe

Part IV Building the Future of Management

9. Becoming a Management Innovator
10. Building the Future of Management

3
Understandings that We will get from
The Book
 The 21st century challenges that will determine competitive
success in an age of relentless, head-snapping change.
 The toxic effects of the industrial age management beliefs
that still predominate in most companies.
 The unconventional management practices that are
generating breakthrough results in a handful of “modern
management pioneers.”
 The radically new management principles that must
become part of every company’s “management DNA.”
 The ways in which the Internet will turn traditional
management roles upside down and inside out.
 The practical steps our company can start taking now to
build its own 21st century “management advantage.”

4
Preface

The Goal of the Book

5
For whom is this book?
 This is a book for dreamers and doers
 It’s for everyone
 Who feels hog-tied by beraucracy
 Who worries that the ‘system’ is stiffling inovation
 Who secretly believes that the bottleneck is at the top of
the bottle
 Who wonders why corporate life has to be so dispirating
 Who thinks that employees realy are smart enough to
manage themselves
 Who knows that ‘management’, as currently practiced, is a
drag on success – and want to do something about it

6
Preface
Technology of management’s Role
 On Apollo 8 command modules’ journey back to earth
(1968)
 Question: “Who’s flying the spacecraft?”
 Astronaut’ answer: “I think Sir Issac Newton is doing the
most of the driving now”
 By the same token, on company management:
 Question: “Who’s managing your company”
 Answer: “To a large extent, your company is being manage
rigth now by …
 theorist and practitioners who
 invented the rules and convention of “modern” management back
in the early years of 20th century”
 So pervasive is the influence of these patriachs that the
technology of management varies only slightly from firm to
firm

7
Preface
However, is there a need for
a new model of management?
 Unlike the law of physics, the law of management are
neither foreordained nor ethernal
 The 21st-century challenges are posing the limitation of
management model. These challenges are:
 Whiplash change
 Fleeting advantages
 Technological disruption
 Seditious competitors
 Fractured markets
 Omnipotent customers
 Rebellious share holders
 These raise the need for a new model of management

8
Preface
Management is out of date
 Think about the great product breakthrough over the last decade
or two:
 Personal computer, mobile phone, digital music, e-mail, and on-
line comunities
 Now, try to think of a breakthrough in the practice of
management that has had a similar impact in the realm of
business, anything that has dramatically change the ways large
companies are run
 Not easy, is it?
  Management is out of date
 Like the combustion engine, management is a technology that
has largely stopped evolving

9
Preface
The goals of the book
 To help the reader become a 21st-century
management pioneer
 To equip the reader to reinvent the principles,
processes and practices of management for post
modern age, by
 Outlining the steps the reader must take to first
imagine and then invent the future of management
 giving the reader the thinking tools that will allow him
to build his own agenda for management innovation
 Not to predict the Future of Management, but to
help the reader to imagine it, and then invent it

10
Preface
Chapter 1

The End of Management?

11
Management in Kauffman’s
fitness landscape
 Francis Fukuyama’s “the end of history”:
 liberal democracy is the final answer to humankind’s long
quest for political determination
 By the same token, maybe modern management, as it has
evolved over the last century
 is the final answer to the age-old question of how to most
effectively aggregate human effort
 Or, maybe not
 What if management hasn’t reached the apogee of
effectiveness and
 given the challenges that lies ahead, it isn’t even climbing
the right hill?
 Hamel: Having evolved rapidly in the first half of the 20th
century, the technology of management has now reach a
local peak [of Kaufhman’s fitness landscape]
12
The End of Management?
Management’s S-learning curve
 It was the invention of industrial management at the dawn of
the 20th century that turned enlightened policy and scientific
discovery into global prosperity
 Now, think back over the last 20 or 30 years of management
history
 Can you identify a dozen of innovations on the scale of those
that laid the foundations of modern management?
 Hamel: I can’t
  Industrial management model is languishing out at the far
end of the S-curve, and
 Maybe reaching the limits of improvability
 Need to jump to a new S-curve?

13
The End of Management?
High Price for
Management’s Successes
 Successes
 Breaking complex tasks into small, repeatable steps
 Enforcing adherence to standard operating procedures
 Measuring cost and profits to the penny
 Coordinating the efforts of tens of thousands of
employees
 Syncronizing operations in a global scale
 Yet, these succeses have come at a heavy price

14
The End of Management?
Management has given much, but it is
has taken much in return
 It gets fractious, opiniated, and free-spirited human beings
to conform to standards and rules, but
 in so doing, it squanders prodigious quantities of human
imagination and initiative
 It brings discipline to operation, but
 it imperils organizational adaptability
 It multiplies the purchasing power of consumers the world
over, but
 also enslaves millions in quasi-feudal, top-down organization
 It has helped to make businesses dramatically more efficient,
but
 there is little evidence that it has made them more ethical

15
The End of Management?
Transcending Management’s Trade-off

 How to coordinate the efforts of thousands

of individuals,
 Without creating a burdensome hierarchy of
overseers
 How to keep a tight rein on costs
 Without strangling human imagination
 How to build an organizations where
discipline and freedom are not mutually
exclusive
16
The End of Management?
 Accelerated Reduced
changes barriers to
entry

Plummeting
communication
21st Century
costs Challenges to Uncontrollable
Ecosystem
management
Shrinking
Strategy life Digitization of
cycles many things
Increasing
Internet power

The End of Management? 17

21st Century Challenges to
management: In Conclusion
 To thrive in an increasingly disruptive world
 Companies must becomes a strategically adaptable as
they are operationally efficient
 To safeguard their margins,
 they must become gushers of rule-breaking
innovation
 If they’re going to out-invent and outthink a growing
mob of upstarts,
 they must learn how to inspire the employees to give
the very best of themselves every day

18
The End of Management?
Unfortunately,
We are limited by Our DNA
 Expecting large organizations to be strategically nimble,
restlesly innovative, or highly engaging places to work (or
anything else than merely efficient)
 is like expecting a dog to do a tango,
 dog are quadrapeds; dancing is not in their DNA
 Likewise, the managerial DNA of large companies makes
some things easy, others virtually impossible.
 Things that are entirely consistent with the genetic
proclivities of large companies:
 Reengineering, cost-cutting, continuous improvement,
outsourcing and offshoring
 They are all about better, faster, quicker and cheaper

19
The End of Management?
Our current DNA
 Management is a paradigm
 Thomas Kuhn: a paradigm is
 A criterion for choosing problems that … can be assumed to
have solutions.
 To a great extent these are the only problems that the
community will … encourage its members to undertake.
 Other problems are rejected as metaphysical … or
sometimes as just too problematic to be worth the time
 Managers are captive of a paradigm that place the
pursuit of efficiency ahead of every other goal

20
The End of Management
Our attempt to innovate management
is limited by Our DNA
 Many of the 21st century’s new management
challenges have been acknowledged in
boardrooms and executive suites, and
 here and there one finds a truly serious attempt at
management innovation
 Yet, our progress to date has been
constrained by our efficiency-centric,
beraucracy-based managerial paradigm.
 Most of us are still thinking like dogs
21
The End of Management?
Therefore,
The Revolutionary Imperative
 Kuhn’s central thesis is incontestable: real progress
demands a revolution
 You can’t shuffle your way onto the next S-curve
 You have to leap
 You have to vault
 over your preconcieved notions
 over everyone else’s best practices
 over the advice of all the experts
 over your own doubts
 Taylor: scientific management required nothing
less than a mental revolution
22
The End of Management?
Therefore,
the Revolutionary Imperative
 Could the practice of management
change as radically over the first two
or three decades of this century as it
did during the early years of the 20th
century?
 Hamel: I believe so. More than that, I
believe we must make it so.

23
The End of Management?
Therefore,
the Revolutionary Imperative

 Admittedly, there’s not much in

 the average MBA curriculum,
 management best seller, or
 leadership development program
 that would sugest there are radical alternatives to
the way we lead, plan, organize, motivate and
manage right now.
  That’s why this book!!!

24
The End of Management?
Chapter 2

The Ultimate Advantage

25
The stack of innovation

Management innovation

Strategic innovation

Product/service innovation

Operational innovation

26
The Ultimate Advantage
What is management innovation
 Anything that
 substantially alters the way in which the work
of management is carried out,
or
 significantly modifies customary
organizational forms,
and, by so doing,
 advances organizational goals

27
The End of Management
Management innovation is a new way
of doing work of managament
 Setting and programming objective
 Motivating and aligning effort
 Coordinating and controlling activities
 Developing and assigning talent
 Accumulating and applying knowledge
 Amassing and allocating resources
 Building and nurturing relationship
 Balancing and meeting stakeholder demands

28
The End of Management
Management innovation encompasses also value-
creating changes to organizational structures and
roles
 A new way of connecting those entities that are parts of- or related to company

 Business units
 Departments
 Work groups
 Communities of practice
 Suppliers
 Partners
 Lead customers
 Example: InnoCentive = a new ways of aligning effort, coordinating activities,
and applying knowledge

 A global market for scientific expertise that allows company to bid out tough
technical challenges to a network of more than 70,000 scientists around the
world
 Within three years, it has channeled more than $1 million

29
The End of Management
Target of Management innovation as compared to
target of operational innovation
 Operational innovation  Management innovation
 Procurement  Strategic planning
 Manufacturing  Capital budgeting
 Marketing  Project management
 Order fulfillment  Hiring and promotion
 Customer service  Training and development
 Etc.  Internal communication
 Knowledge management
 Periodic business review
 Employee assessment and
compensation

30
The End of Management
Why management innovation
 Because management innovation pays
 When compared with other sorts of
innovation, it has an unmatched power to
create dramatic and enduring shifts in
competitive advantage

31
The End of Management
The power of management innovation
 General Electric: Managing science
 DuPont: Allocating capital – ROI concept
 Procter & Gamble’s: Managing intangible assets
– formalized aproach to brand management
 Toyota: Capturing the wisdom of every
employee
 Visa: Building a global consortium
 Napoleon Bonaparte: new ways of motivating,
staffing and training, and deploying warriors

32
The End of Management
Management innovation
is hard to imitate
 Amazingly, it took nearly 20 years for America's carmakers to
decipher Toyota's advantage.
 Unlike its Western rivals, Toyota believed that first-line
employees could be more than cogs in a soulless
manufacturing machine.
 If given the right tools and training, they could be problem-
solvers, innovators, and change agents.
 Toyota saw within its workforce the necessary genius for never-
ending, fast-paced operational improvement.
 In contrast, US car companies tended to discount the
contributions that could be made by first-line employees, and
relied instead on staff experts for improvements in quality
and efficiency.

33
The End of Management
Caveats
 Not every management innovation creates a competitive
advantage
 Some are incremental; Some are wrong headed; Many
never pay off
 Management innovation follows a power law:
 for every 1,000 oddball ideas, only 100 will be worth
experimenting with;
 out of those, no more than 10 will merit a significant
investment, and
 only 2 or 3 will ultimately produce a bonanza
 No single management innovation will pay competitive
dividends forever

34
The End of Management
Management myopia
 Appearance of the term in business magazine
over the last 70 years
 “Technology innovation” and “Technical inovation”
appeared in 52,000 articles
 Strategic innovation (“business inovation” and
“business model innovation”) appeared in more than
600 articles
 Management innovation (“management inovation”,
“managerial innovation”, “organizational innovation”
and “administrative innovation”) covered by only less
than 300 articles

35
The End of Management
Three reasons
why management myopia
 Most managers don’t see themselves as
inventors
 Many executives doubt that bold
management innovation is actually
possible
 Most managers see themselves as
pragmatic doers, not starry-eyed
dreamers

36
The End of Management
Chapter 3

An Agenda for Management

Innovation

37
What distinguishes our age from every
other?
 It is not the world-flattening impact of
communication
 It is not the economic ascendance of China and
India
 It is not the degradation of our climate
 It is not the resurgence of ancient religious
animosities
 Rather, it is a frantically accelerating pace of
change
 Hence, the most critical question: Are we
changing as fast as the world around us?

38
An Agenda for Mangement Innovation
Three of the most formiddable
challenges
 Dramatically accelerating the pace of
strategic renewal in organizations large
and small
 Making innovation everyone’s job, every
day
 Creating a higly engaging work
environment that inspires employees to
give the very best of themselves

39
An Agenda for Mangement Innovation
 Denial or
Too much ignorance A dearth
exhortation, of new
too little strategic
purpose options

Impediment to
Too much management
management Allocational
innovation
too little rigidities
freedom

Creative
No Slack apartheid
Old
Mental
Model

An Agenda for Mangement Innovation

Factors contribute to strategic inertia
 The tendency of management teams to deny or
ignore the need for a strategy reboot

 A dearth of compellig alternatives to the status

quo, which often leads to strategic paralysis

 Allocational rigidities that make it difficult to

redeploy talent and capital behind new initiatives

41
How to remove strategic inertia
 Impediment #1: Denial
 How do you ensure that discomforting information
isn’t ignored or simply “explained away” as it moves
up the hierarchy?
 Impediment #2: A dearth of new strategic
options
 How do you build a management process that
continually generates hundred of new strategic
options?
 Impediment #3: Allocational rigidities
 How do you accelerate the redeployment of resources
from legacy programs to future-focused initiatives?

42
An Agenda for Mangement Innovation
How to Make innovations everyone’s
job
 Impediment #4: Creative apartheid
 How can you enroll every individual within your company
in the work of innovation, and equip each one with
creativity-boosting tools?
 Impediment #5: The drag of old mental models
 How can you ensure that top management’s hallowed
beliefs don’t strightjacket innovation, and that heretical
ideas are given the chance to prove their worth?
 Impediment #6: No slack
 How can you create the time and space for grassroot
innovation in an organization that is running flat out to
deliver today’s results?

43
An Agenda for Mangement Innovation
How to Create a Community of
purpose:where everyone gives their best
 Impediment #7: Too much management too
little freedom
 How do you broaden the scope of employee freedom
by managing less, without sacrificing focus, discipline
and order?
 Impediment #8: Too much exhortation, too
little purpose
 How can you create a company where the spirit of
community, rather than the machinery of bureaucracy
binds people together?
 How can you enlarge the sense of mission that people
feel throughout your organization in a way that
justifies extraordinary contribution?

44
An Agenda for Mangement Innovation
Chapter 4

Creating a Community of
Purpose

45
Creating a Community of purpose:
where everyone gives their best
Management Innovation Whole Foods’ Distinctive
Challenge Management Practices

How do you empower  Give employees a large dose

people by managing less, of discretion
while retaining discipline
 Provide them with the
information they need to
and focus? make wise decision, and
then
 Hold them accountable for
results

46
Creating a Community of Practice
Creating a Community of purpose:
where everyone gives their best
Management Innovation Whole Foods’ Distinctive
Challenge Management Practices

How do you create a  Manage as if you really

company where the spirit of
community binds people
together?
believe that the interest of
stakeholders are
interdependent
 Create a high degree of
financial transparancy
 Limit compensation disparity

47
Creating a Community of Practice
Creating a Community of purpose:
where everyone gives their best
Management Innovation Whole Foods’ Distinctive
Challenge Management Practices

How do you build an enlarge  Make the pursuit “Whole

sense of purpose that merits Foods, Whole People,
extraordinary contribution? Whole Planet” as real and
tangible to employees as
the pursuit of profits

48
Creating a Community of Practice
Chapter 5

Building an Innovation
Democracy

49
Building an Innovation Democracy:
Making innovations everyone’s job
Management Innovation W.L. Gore’s Distinctive
Challenge Management Practices
How do you enroll everyone  Do away with hierarchy
in your company as an  Continually reinforce the
innovator? belief that innovation can
come from anyone
 Collocate employees with
diverse skills to facilitate
the creative process

50
Building an Innovation Democracy
Building an Innovation Democracy:
Making innovations everyone’s job
Management Innovation W.L. Gore’s Distinctive
Challenge Management Practices
How do you make sure that  Don’t make “management”
top management’s hallowed approval a prerequisite for
initiating new projects
beliefs don’t strangle  Minimize the influence of
innovation? hierarchy
 Use a peer-based process for
allocating resources

51
Creating a Community of Practice
Building an Innovation Democracy:
Making innovations everyone’s job
Management Innovation W.L. Gore’s Distinctive
Challenge Management Practices
How do you create the time  Carve out 10 percent of
and space for grassroot staff time for projects that
innovation when everyone’s would otherwise be “off
budget” or “out of scope”
working flat out?  Allow plenty of percolation
time for new ideas

52
Creating a Community of Practice
Chapter 6

Aiming for an Evolutionary

Advantage

53
Aiming for an Evolutionary Advantage:
Building Company that is as Nimble as
Change Itself
Management Innovation Google’s Distinctive
Challenge Management Practices
Open up the strategy process –
How do you guard against

make sure it isn’t dominated by the
the dangers of hubris and old guard
Keep the hierarchy flat – don’t
denial?

insulate top management from the
views of front-line employees who
are in the best position to see the
future coming
 Encourage dissent

54
Aiming for an Evolutionary Advantage
Aiming for an Evolutionary Advantage:
Building Company that is as Nimble as
Change Itself
Management Innovation Google’s Distinctive
Challenge Management Practices
How do you create a steady Make it easy for folks to experiment with new

ideas – give them time (the “20 percent” rule)
flow of new strategic and minimize the number of approval levels
Build a “just try it” culture – emphasize “test


options? and learn” instead of “plan and excecute”

Create outsized rewards for individuals who

come up with game-changing ideas
 Don’t truncate the business definition

55
Aiming for an Evolutionary Advantage
Aiming for an Evolutionary Advantage:
Building Company that is as Nimble as
Change Itself
Management Innovation Google’s Distinctive
Challenge Management Practices
How do you accelerate the  Encourage people to work
reallocation of resources on “out of scope” projects –
formalized with the
from legacy projects into 70/20/10 rule
new initiatives?  Give people the freedom to
do market experiments so
they can build a solid case
for their ideas

56
Aiming for an Evolutionary Advantage
Goal of showing 3 cases
 Not to hold them (Wholefood, Gore and
Google) up as paragons of “excellence” or
“greatness”
 The 3 cases demonstrate
 That it really is possible to defy management
ortodoxy and still run a successful business
 That you can flout conventional management
wisdom and still ship product on time, satisfy
exacting customers, and deliver
mouthwatering results

57
The 3 cases shows that:
 We haven’t reached the end of
management
 We really can reinvent the way
big companies are structured
and run

58
Chapter 7

Escaping the Shackles

59
How to escape the Shackels
 Going to war with the Precedent
 The Outsider’s Advantage
 Questioning Our Inheritance
 Temporary Truths
 Uncovering Shared Beliefs
 Getting at the Why
 Asking the Right Questions
 Separating the What from the How
 Exposing Self-interest
 Distinguishing Choices and Consequencies
 The Value of Persistence
 Contrarian to the Core

60
Escaping the Shackles
Chapter 8

Embracing New Principles

61
21st century management principles
 Life  Variety
 Experimentation beats planning
 All mutations are mistakes
 Darwinian selection doesn’t need SVPs
 The broader the gene pool, the better
 Markets  Flexibility
 Markets are more dynamics than hierarchies
 Build the market and the innovators will come
 Operational efficiency ≠ strategic efficiency

62
Embracing New Principles
21st century management principles
 Democracy  Activism
 Leaders are accountable to the governed
 Everyone has a right to discent
 Leadership is distributed
 Faith  Meaning
 The mission matters
 People change for what they care about
 Cities  Serendipity
 Diversity begets creativity
 You can organize for serendipity
 Pigeonholes are for pigeons, not people

63
Embracing New Principles
The coexistance of 20th and 21st
century management principles
 Creating and maintaining a healthy tension
between the control-oriented principles of the
20th century and the adaptability-enhancing
principles of 21st, isn’t going to be easy
 There’s every reason to believe that the
contrasting creeds of modern management and
post-modern management really can coexist in
one company

64
Embracing New Principles
Chapter 9

Learning from the Fringe

65
Learning from the weird
 For inspiration on our management innovation
journey Hamel urges us to “look some place
weird, some place unexpected, far beyond the
boundaries of ‘best practice’”
 Because “uncommon insights usually come
from uncommon places”;
 for example, from people like Mary Parker Follett,
whose observations from a career of organizing
urban community centers are far more relevant today
than those of her contemporaries in early industrial
management.

66
Learning from the Fringe
Learning from the weird

“You can’t see the

future if you’re
standing in the
mainstream.”
67
Learning from the Fringe
Learning from the Fringe: the Web
 Creating a democracy of ideas:
 Compare the typical corporate autocracy with
the “thoughtocracy” of the Internet.
 How might your organization find ways to
encourage a similarly open exchange?
 Amplifying human imagination:
 Interner reinforce the human propensity for
mindful, joyful creativity.
 So, “What has your company done to help all
these ingenious people become fully empowered
business innovators?”

68
Learning from the Fringe
Learning from the Frange:
Silicon-valley
 Dynamically reallocating resources –
Silicon-valley:
 Create a market to connect “out there” ideas
with small doses of experimental capital from
multiple potential funding sources—a sort of
internal Silicon Valley.
 Aggregating collective wisdom:
 Improve executive decision making by tapping
on-the-ground intelligence that exists throughout
the organization.

69
Learning from the Fringe
Learning from the Fringe: Nokia’s lose
to Samsung; Open source
 Minimizing the drag of old mental
models – Nokia’s los to Samsung:
 Make sure that executive influence is
informed by foresight rather than history.
 Giving everyone the chance to opt-in
– Open soure community:
 Create an open source system so that people
can choose where to make their best
contributions.
70
Learning from the Fringe
Chapter 10

Becoming
a Management Innovator

71
Rules for Managament Innovators
1. To solve a systemic problem, you need
to understand its systemic roots
2. At least initially, it’s easier, and safer, to
supplement an existing management
process than supplant it
3. Commit to revolutionary goals, but take
evolutionary steps

72
Becoming a Management Innovator
Rules for Managament Innovators
4. Be clear about the performance metrics
your innovation is design to improve
5. Start by experimenting in your “own
back yard”, where the political risks are
the lowest
6. Whenever possible rely on volunteers

73
Becoming a Management Innovator
Rules for Managament Innovators
7. Diffuse potential objections by keeping
your experiments fun and informal
8. Iterate: experiment, learn, experiment,
learn
9. Don’t give up: Innovators are persistent

74
Becoming a Management Innovator
Chapter 11

Forging Management 2.0

75
 Dimension of Management Effectiveness
Amplifying
effort

Passion
Management
Creativity Innovation

Initiative

Intellect

Diligence

Obidience

Forging Management 2.0

Aggregating
effort
Hamel bets that
Management 2.0 are like the Web
 Everyone has a voice
 The tools of creativity are widely distributed
 It’s easy and cheap to experiment
 Capability counts for more than credentials and
titles
 Commitment is voluntary
 Power is granted from below
 Authority is fluid and contingent on value-
added
 The only hierarchies are “natural” hierarchies

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Hamel bets that
Management 2.0 are like the Web
 Communities are self-defining. Individuals are
richly empowered with information
 Just about everything is decentralized
 Ideas compete on an equal footing
 It’s easy for buyers and sellers to find each
other
 Resources are free to follow opportunities
 Decision are peer-based

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Final Remark: Fit for the Future
 Technology of management must be
reinvented, and will be reinvented
 The only question is:
 Who’s going to do the reeinventing
 Deeper, nobler reasons to take on the
challenge of management innovation:
 This is your opportunity to build a 21st century
management model that truly elicits, honors, and
cherises human initiative, creativity, and passion.

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Critical Questions for Us:
 Hamel only discusses company management. How it can
be adopted in Public organization is still a big question!
 Hamel Assumes the prevalent of modern management
practices (Management 1.0).
 How about public organizations in developing coutries that
are hardly practicing modern management, will it be
possible that they can be a pioneer in building a 21st
management practice (Management 2.0)?
 This is a very huge challenge!
 Hamel assumes the prevalent of ingenious high-qualified
employees
 To what extent is this the case in our public organizations?

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