Sophie Cohendet is passionate about start-ups and innovative environments. She has a strong interest for collaborative & open innovation as well as management innovation.
As a consultant, she works for major corporations to help them connect with their external ecosystem (start-ups, Customers, R&D Labs, Universities…) in France and abroad. Thus, she had the chance to assist the French private-label biscuit manufacturer Poult for one year.
In this post, she explains how innovating in management should be next CEO’s priority.
Nowadays, all companies are facing the same business’s challenges:
1. Environment uncertainty: over the last decade, the companies’ environment pace of change has sharply speeded up. In the coming years, changes will continue to occur exponentially, and will test the resilience of companies. The challenge is thus to intensify the strategic renewal of companies to go at the pace of the environment.
2. Hyper-competition: there are less and less entry barriers due to advanced technologies. These technologies remove transaction costs as well as distribution monopolies, and put more power in the hands of consumers. The competition can pop up from nearly everywhere and is not always in companies’ field of vision. Companies have to hyper-innovate, in other words make innovation everyone’s everyday job (No less!). They must even include other stakeholders like users and partners in this momentum (as it is the case in massive cocreation platforms for example).
3. Employee demotivation: Companies are more and more concerned by well-being of employees and their happiness at work. Employees often feel that they are only using a tiny part of their skills and potential at work, leading them to be less involved and motivated at work. Companies are struggling to create an engaging work environment that will inspire employees, and allow them to give the very best of themselves, thus retaining them within the company.
One of the answers to address these three challenges is innovation, and companies have tried it under various forms: process innovation, product/service innovation, Business model innovation, and last but not least management innovation. This last innovation refers to « anything that substantially alters the way in which the management is carried out, or significantly modifies customary organizational forms, and, by so doing, advances organizational goals » according to Gary Hamel, innovation referring thinker, and founder of the international management consulting firm Strategos.
In the current context, management innovation can be seen as the most powerful competitive advantage as it is in-depth shaping an unrivaled corporate identity (which cannot easily be copied !).
Some companies, in France and abroad, estimate that there is no point to continue to fight and survive in this changing environment with yesterday’s management practices, and have already understood why management innovation matters.
Management innovation is all about less control and authority, less of employee infantilism and more collective regulation, more of employee empowerment and autonomy… And autonomy is truly the mother of motivation. It is a real shift from an autocratic style of management to a democratic one.
Management innovation could bring answers to the three business challenges mentioned above. Actually, management innovation is key to develop company resilience, to foster innovation and to achieve greater happiness at work.
Innovation management is based on flat structures and no more on pyramids, which is a source for higher flexibility. Actually companies can react quicker than in a traditional structure to environment changes. Companies can manage with more flexibility and reactivity their core-activities thanks to small-size flat divisions or teams.
They are also able to answer quickly to new demands and opportunities induced by environment changes. As such, management innovation strengthens the companies’ resilience.
Adopt a customer-centric organization for a better flexibility and reactivity
To increase their reactivity to market changes, some companies have adopted new customer-centric organizations. These organizations are often small teams far from a hierarchical stratification! They can react quickly to clients’ needs and are animated by a leader chosen by his peers.
This is the case at FAVI (a French company manufacturing copper alloys), which has organized all the company in various mini-factories, each dedicated to a customer, to improve teams’ reactivity and flexibility. FAVI is now the European leader in gearbox forks manufacturing.
Generate and finance new strategic options
In parallel to current activities, it is crucial to generate new strategic options out of the core-business to be able to adapt to the radical changes in the core market, and prepare for the future. As an example, the French private-label biscuit manufacturer, Poult, has opened a corporate incubator to turn employees into entrepreneurs. Incubator welcomes any employee willing to launch a new activity for the group, offering him coaching, time and budget to start this activity.
The exploration of new activities by groups is sadly dependent on their ability to allocate resources towards these new innovative projects in a short-termist environment! At Poult, the yearly financial resources are no more allocated by the head of Finance but by a group of a dozen of employees representative of the different departments (Sales, Marketing, Production,…) and factories of the group. The decisions are made with new criteria studied to balance short-term and long-term decisions. This process is surely slower than in “normal” companies however the decisions taken are based on collective intelligence. Consequently, everyone in the company understands these decisions and therefore time is saved during the implementation phase.
Groups implementing management innovation are structured as networks and as such are often compared to democracies. These companies are spaces where employees are free to experiment, can give free rein to their creativity and have the right to fail. They intend to be real spaces of expression and freedom to unleash innovation and creativity to be able to react to an hyper-competitive environment. In these companies, managers and teams are constantly chasing meaningless daily processes, fight against bureaucracy (see Netflix, Editor’s note) and take care of employees’ time.
Favour the internal debate
In these companies, innovative managers constantly promote the internal debate by encouraging teams to question the strategic hypothesis implicitly shared by everyone for decades in order to enable them to innovate! New technologies, such as enterprise social networks, have considerably eased these debates, and have participated to the development of free-expression spaces in companies.
But beyond these technologies, some companies have settled up ambitious initiatives to favour this exercise, which is the case at Semco (a Brazilian manufacturer of steel-based products for naval industry). This company is managed by a 6-member committee with a rotating 6-month presidency. At each committee meeting, 2 seats are available for anyone in the company willing to express its point of view on the topic discussed on that day.
Fight against the “creative apartheid”, and take time to innovate
Most companies suffer from “creative apartheid” as Gary Hamel liked to remind us. Actually, companies have reserved the so-called creative skills to the happy few. However, companies are laden with creative employees that are dying to give their ideas and develop them even in fields like finance where creativity seems far away from their daily tasks.
Some companies, like Poult, have trained voluntary-employees to creativity facilitation, in order to develop these skills in all the areas of the group: in production, in marketing, in sales, and even in the accounting department… Seeds have been sowed, the gardener patience is now needed to collect the fruit of this training.
Happiness at work
Beyond increasing the resilience and ability to innovate, management innovation is a way to achieve greater happiness at work. Employees’ motivation is an endless question for companies, and is directly correlated to the employees’ happiness level. Step by step, some managers become aware of the power of intrinsic motivation levers: autonomy, mastery, and purpose [Intrinsic motivation levers defined by Daniel Pink in Drive : The Surprising Truth About What Motivates (2009)].
In organizations sensible to management innovation, managers spend time to convey to their teams why their job matters and is important to the rest of the organization (purpose). They also enable their teams to develop skills and get them to a point where they need to make decisions on their own (mastery and autonomy). Management innovation is required to imagine new ways to activate these levers, and create enough diversity within the company in order to help every employee to find its own path of development.
In a nutshell
Management innovation is a real opportunity to build a human company truly adapted to the future. It is undoubtedly everyone’s concern, even if the answer brought by each company depends on factors such as the company size, its context and culture.
Management innovation is a hard and long track to take, on which people first see the costs and not the benefits. Such changes in company’s organization only work when they are triggered, encouraged, and backed by the top management with an ambitious vision.
Writing this vision with all the stakeholders of the company is undoubtedly a good starting point to go into management innovation: write together “Why” you should go on that track, and the “How” will come next.