Radical management: it’s happening

Citation

Randall, R. (2011), "Radical management: it’s happening", Strategy & Leadership, Vol. 39 No. 3. https://doi.org/10.1108/sl.2011.26139caa.001

Radical management: it’s happening

Article Type: Editor’s letter From: Strategy & Leadership, Volume 39, Issue 3

In this issue, the first two articles propose systems for reinventing how corporations are managed. The twin messages they articulate: one, corporations are failing their stakeholders by wrongly favoring some more than others or by not managing discontinuity through best practices that foster continuous innovation; two, it’s time to try something else. One article lays out a system of sustainability – 23 principles and practices that promote long-term viability. The other explains how to implement five management behaviors that, if instituted together, can promote the continuous innovation of offerings and operations.

As a result of working with these authors and reading manifestos by other leading strategic management thinkers that also call for a reinvention of management, I’m confident that we are witnessing a best-practice revolution. When respected management thinkers like Michael Porter[1] and Gary Hamel tell management to re-boot, then it’s time. It’s not as if the failings of hierarchical, shareholder-first management are a secret. So it should be no surprise that many of the principles of radical management are quietly being adopted by leading companies around the world, to a greater or lesser degree. By my count there are currently at least three cutting edges in the management revolution:

1. 1.

   Management reinvention – this theory offers company-wide rapid-business-model development as a response to market discontinuity. To compete successfully despite frequent and sudden change, firms have to foster the competencies that promote continuous innovation in both offerings and operations. In practice, managers shift their focus from producing low-cost or high-differentiation offerings to satisfying customers. They become enablers instead of controllers, coordinate their organizations through dynamic linking of teams and customers rather than command and control, make social and customer values their prime concern, and communicate so as to further stakeholder conversations. Leading advocates are Gary Hamel (“It’s time to reinvent management,” S&L V36, N2), Stephen Denning (“Masterclass: The reinvention of management,” S&L V39, N2 and “Reinventing management: the practices that enable continuous innovation,” in this issue), John Hagel in The Power of Pull, and others.

2. 2.

   Corporate sustainability – This system could be called “surviving in the long term by applying stakeholder-beneficial principles to guide the investment of corporate resources.” Many managers confuse it with “green” initiatives, which is just one of its aspects. To gain a fuller understanding of the proposal, I recommend reading the Gayle Avery and Harald Bergsteiner article in this issue, “Sustainable leadership practices for enhancing business resilience and performance.” Avery and Bergsteiner offer examples of many thriving corporations that practice sustainability principles.

3. 3.

   Shareholder returns vs. strategic satisficing — Do shareholders get preferential consideration or should rewards be doled out to all stakeholders based on their strategic contributions? Pragmatic satisficing, keeping everybody happy, has long been the default choice of many decision makers. That is, when they are deciding whether to invest for low-cost or high differentiation, to raise the dividend or seek a promising acquisition or to develop internal talent or solve talent shortages with a joint venture, their preferred choice often seems to be “both.” In this way, managers seek to flourish by satisfying their most powerful stakeholders most of the time. In recent years, a few companies have made satisficing a strategic decision. Costco, for example, aims to win by paying its employees more because it believes their high performance is crucial to success and rewarding its shareholders less than its competitors. Time will tell if satisficing is mere pragmatism or an effective long-term strategy.

All the reinvention, sustainability and satisficing models ultimately have to pass one test: do they promote the renewal required for long-term vitality, and ultimately for survival? To gain insight into this question, I urge you to study the two “radical” systems offered in this issue. Arguably, an organization that is specifically designed for adaptability and renewal will perform better over time or be more likely to survive than one that seeks to maximize the interests of one group of stakeholders – shareholders, executives, environmentalists or any others.

Good reading,

Robert RandallEditor

Notes

1. Porter, M. and Kramer, M. (2011) The big idea: creating shared value, Harvard Business Review, January-February, available at: http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1