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Why Good Managers are Bad for Innovation

Robynne Berg - Monday, July 01, 2013

 

 

How to manage the conflicts between good management and innovation practice. 

Is finding the right strategies for profitable growth in a fast changing business environment a major challenge for your business? You’re not alone. Most leaders are feeling similarly challenged and sometimes overwhelmed by the rate of change and a volatile business environment.

Over recent months we’ve witnessed the demise of many respected businesses, whilst watching others battle to come to terms with what seems like a new world order.

In Australia we have witnessed retail icons including Myer, David Jones and Harvey Norman grapple to come to terms with the disruptive impact of the digital economy.

Meanwhile our two most respected publishers – Herald Weekly Times and Fairfax have laid off journalists and executive teams, reduced circulation and clamoured to find both revenue and relevance as the market shifts to business models based on free content and digital distribution. 

But hold your judgement! To think any of these businesses are struggling because they have been badly managed would be a mistake. It’s easy to assure ourselves that businesses fail because they have been poorly managed; it gives us a false comfort that we might be safe. The reality is that in today’s fast paced digital economy well-managed businesses – large and small – will continue to fail at an ever-increasing rate. It seems paradoxical doesn’t it? 

In fact many businesses are struggling or have failed precisely because they are well managed. The good management practices so long lauded by business thinkers and pundits, in today’s economic and business environment are leaving many of us caught underprepared and unable to respond effectively to disruptive change.

In Clayton Christensen’s ground-breaking book ‘The Innovators Dilemma’ he demonstrates how the practice of good management: listening and responding to our best customers, refined business processes and success-oriented cultures prevent businesses from identifying and responding to the disruptive shifts in the business environment. Good management practices may foster incremental innovation but they blind managers to the disruptive innovation that could wipe them out.

Fairfax believed it was leading the way in digital media. They were making constant incremental innovations to keep up with digital change. They thought they were on top of it; until an unexpected device called an iPad attracted a mass of readers online and disrupted the industry. The problem with disruptive change is that it first impacts us moderately and then without warning it blindsides us and wipes us out. It’s not because we lost focus or failed in terms of our management practices but because our current practices and cultures are not designed to respond to disruptive change.

Management training is in part responsible. In the years you spent building your management career you learned to be risk adverse and intolerant of failure. You focussed on establishing effective processes that increased productivity. You listened to your best customers and enacted incremental improvements to leverage your market position. As a good manager you focussed on celebrating successes and short-term wins. You have been tasked with creating certainty for shareholders, stakeholders and staff.

Sadly these practices can hinder innovation. Good innovation practice requires you to look beyond your assumptions and create a very different mindset, culture and set of business processes. It requires you to become comfortable with risk –risk being the life partner of innovation. Agile experimentation must be at the heart of your business and you must thereby become tolerant of – in fact you must embrace – failure. Your processes must be flexible and designed to respond quickly to a fast changing market place. They must be able to deal with ambiguity; an oxymoron given process is about creating productivity based on predictability.

So what does this mean for you? 

 

The reality is that be a successful leader in today’s business environment you must embrace these two opposing practices and find congruence within the ambiguity. For your business to grow in the future you will need to build your business around good innovation practices as well as good management practices.

This means you and your business will need to learn to operate in an environment and develop a culture that is ostensibly contradictory. You will need to become familiar and comfortable with ambiguity and change. You and your team will need to be able to shift your perspectives and be comfortable with expanding your viewpoints across many aspects of the business.

Creating an innovative organisation requires a mindset, business culture and operational processes that will enable innovation to take place. And it all begins with you.

The Leader's Innovation Charter

Creating an innovative mindset and culture begins with you. Do you know how you feel about the competencies listed in the right column of the above table? Do you feel you have competencies in each of these areas or does it leave you feeling a bit resistant and uncomfortable?

Before your organisation’s mindset or culture can change you must come to terms with you own attitudes, beliefs and behaviours.  Your attitudes, beliefs and behaviours will determine the business’s capability and capacity for innovation and growth. It’s important therefore that you take the time to understand firstly the changes you must make personally to lead innovative change and then to reflect on your business.

The Leader’s Innovation Charter is a self reflection tool that will help you understand your current position and attitude to innovation and determine the changes you need to make to develop your innovation competencies and management practice.

Once you have taken time to reflect on your personal position this charter asks to you to look across your business. What attitudes and behaviours does the organisation reward and what does it punish? Does the organisation support an innovative culture beyond paying lipservice to it?

This is the time for honest self-enquiry and robust conversations. Once you have identified where you are now, you can decide where you need to be tomorrow. You can then ask how you will get there. It’s at this point you start along the innovation pathway.

Download innovation charter

Questions? If you have questions relating to this article or the leaders innovation charter please contact me at info@bergconsulting.com.au and I will either answer your question directly or publish it in my next newsletter.

Comments
Andrew McLorinan commented on 10-Jul-2013 11:00 AM
Well observed - a useful piece. There is a natural organisational tendency towards conserving the current order, as well there can be little culture, capacity to fund or tolerate what the americans call "skunk works". But the promotion or tolerance of some entrepreneurial activity is necessary to different degrees in different industries. What is missing from the piece (and space probably didnt permit) is distinguishing the form of the innovation and the sectors where that is critical. Does continuous improvement (ISO, Six Sigma etc) fall within or outside this framework? Is publishing and retail (highlighted here) particularly vulnerable to rapid change because of the web? Could you not argue that the industry failures cited are strategic in nature not managerial ie. railroads failed to "innovate' into airlines in the early 20th century because they defined their business as rail transport rather than transport - we are a publisher or papers not an information supplier. Is your paper about good management practice with strategic failures in publishing and retail as examples?
Keith De La Rue commented on 01-Aug-2013 08:52 AM
David Snowden's "Cynefin" framework is useful here. It highlights the distinctions between the "ordered" world of the 20th century - where good management worked - and the "complex" world of today, where innovation is more relevant. Companies that cling to old approaches in the face of complex environments will continue to fail. Cynefin provides insights into the best ways to approach complexity, and yes, it's all about innovation, rapid prototyping and "safe-fail" approaches.

Happy to discuss further next time we meet at the CPX!

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