To build future fit organisations leaders must embrace ‘management 2.0’
Outdated management practices are leaving organisations ill-equipped to deal with the challenges of the 21st century, Gary Hamel told delegates at London Business School’s global leadership summit this week.
“There is nothing that has been more disruptive over the last couple of decades than technology. In that change most organisations have struggled to stay relevant,” he said. “We are held hostage by an old management model. It has left us with organisations that are too incremental at the same time as innovation and passion drive performance.”
Initiative, creativity and passion are positively correlated with autonomy, yet control is at the core of current management philosophy and authority for strategy and direction lies with a small group of people, said Hamel, visiting professor of strategy and entrepreneurship at LBS. While the average person can buy their own house, put them inside a large business and they can’t even buy a chair without permission.
“It’s impossible to find an executive around the world who wants more bureaucracy but I’ve met few who can suggest an alternative,” he said. “We have flattened the hierarchy but we haven’t got rid of it. We encourage employees to speak up but we don’t let them choose their leader.”
We are in a period of enormous change and if we want to build new organisations we need to embrace new principles - or “management 2.0” - including meritocracy, transparency, openness and, crucially, experimentation as “the pace at which anything can evolve is related to how much experimentation is going on”.
Ultimately, said Hamel, the companies that will be the most successful are the ones that adapt their management practices more quickly than the rest.
“All of us have grown up around organisations that fit a common template,” he said. “More and more we are going to take on the role of management but leadership too is going to get distributed to the entire organisation. In the end it is about the courage to stand up and challenge the things we have taken for granted.”