The Next Big Thing

When deciding whether or not a management innovation is the next big thing, we should consider how long we think it will last and how much value it can generate over its potential lifespan. If an innovation is based on a “fad”, the end will come quickly; if it’s based on a “fashion”, it may last a couple of seasons; but if it’s based on a “trend”, it will last years. When you look to import innovations from other firms, try to focus on the source. Genuine innovations come from “deviant” firms that don’t follow the crowd – but not all deviants are the same:

1. Upstarts: Small, often deliberately iconoclastic firms. Valve Corporation, a video game developer, requires employees to set their own hours, select their own projects, and migrate from team to team. Such management innovations often don’t import easily into big organisations.
2. Related species: Not technically business firms, but which nevertheless provide useful insights: e.g. Alcoholics Anonymous shows how an organisation with a clear sense of purpose can function with no formal control systems. When handled with care, these organisations’ management ideas and unusual principles can sometimes be a source of inspiration.
3. Certified weird: Large, highly successful companies that operate by their own rules. Morning Star, the California-based tomato processor, hasn’t used managers for more than two decades. Beware of adopting such ideas unless your company can shield itself from day-to-day shareholder pressure.
4. Dancing giants: Large, traditional firms that experiment with unusual models. Haier, the Chinese manufacturer, created a highly decentralised budgeting process that distributes accountability to individual teams. Similarly, Shell’s R&D funding model, GameChanger, has produced many great technologies. Dancing giants’ practices serve as a pertinent source of ideas because they’ve proved they can stand up to shareholder scrutiny.

Sources: Nanninga, G. (2015) Fast Forward: The Dance of Strategic Planning, Lulu Press, Raleigh, NC; Birkinshaw, J. (2014) Beware the Next Big Thing, HBR, May.

Action Point

Determine the source of your current management innovations – are you creating the innovations or importing them?