This morning I made one of my too infrequent visits to Alex Bellinger’s excellent Smallbizpod, and had a listen to his interview with Doug Richards, serial entrepreneur and one of the Dragons.

Alex asked Doug what the one thing a small business should do in the current business environment. He said constantly look at cash and costs. This already had my attention and then he said something that really made me listen.

When looking at cost cutting, reducing headcount is not the place to start. In fact, getting people onside in the search for effective cost cutting is the best thing to do. He said:

“We underestimate the capacity of people to rise to an occasion. We frequently set them metrics and targets and say ‘this is what we want’ and thus limit opportunity to rise up. People are almost always better than we give them credit for and we rarely let them have the freedom to prove it to us.”

Hurrah!!

This is exactly what The Smart Work Company is about. I have seen this sort of creativity and problem-solving in action so many times. It is astonishing how much brain potential many businesses are wasting. Fortunately for me, Doug Richards thinks that:

“There is no better time to start paying attention to all the people with all the ideas you should have been paying attention to for the past couple of years”.

Now would be a great time to begin to transform lack of trust and limiting attitudes into the sort of high-performance cultures that will see business through this sticky patch and ready to take on the world when the upturn comes. It will come, won’t it?

I have been immersed in Gary Hamel and Bill Breen’s The Future of Management, agreeing with much of what I am reading and also thinking, ‘Well yes, we know that”.

Competitive Advantage

Professor Hamel says that management innovation yields competitive advantage when:

the innovation is based on a novel management principle that challenges some long-standing orthodoxy;

the innovation is systemic;

and / or the innovation is part of an on-going program of rapid-fire invention where progress compounds over time.

The emphasis is Professor Hamel’s. He describes in some detail the fact that “it took the American car makers 20 years to decipher Toyota’s advantage”. Regarding shopfloor operators as innovators and change agents was not new to Toyota but it was new to the American carmakers, who “tended to discount the contibutions that could be made by first-line employees, and relied instead on staff experts for improvements in quality and efficiency”.

My doctoral thesis 14 years ago was about exactly that – what did management practices look like in factories where shopfloor operators enthusiastically contributed to problem-solving and continuous improvement? And what about when they resisted?

My subsequent work has in one way or another been about how businesses systematically design and put in place organisational systems and processes that enable customer-focused and high-performance ways of ways of working, which make the most of people’s tacit knowledge, creativity and experience. This includes what I have been calling new ways of working, for example flexible and mobile working, although there is not much new there. Professor Ursula Huws and colleagues were researching experiences of teleworking in 1987 and writing about it in 1990.

Much of what business leaders need to know to create adaptive organisations, the effectiveness of which depend on the active and willing contribution of people’s knowledge and skills, is already well-documented and evidenced. If ‘new’ means old knowledge that businesses are not currently acting on, then that’s a view of novelty I can cope with.

He is spot-on with his view that innovations must be systemic, that is embeded in processes and methods. This is crucial.

The Chosen Ones?

I was having trouble agreeing with the third condition for innovation yielding competitive advantage. It is the rapid-fire bit that niggled me. This sounded a bit too like the Wild West innovation from Enron days. Surely not? According to Madeleine Bunting, Enron boasted about having the brightest MBAs and the company fostered an intensely competitive corporate culture, which “encouraged daredevil entrepreneurial freedom among its youthful employees”.

Likewise, this article from Malcolm Gladwell probes companies, including Enron, who with McKinsey’s encouragement adopted a differentiation and affirmation approach to “singling out and segregating their stars, rewarding them disproportionately and pushing them into ever more senior positions”.

To me this is abhorrent and disruptive. It is, I think, also foolish. Many years ago the UK academic Mick Marchington wrote an article called Fairy Tales And Magic Wands, in which he criticised accounts of new management practices. It has been years since I last read the article but from memory two things stand out. I remember him commenting that published case studies were skewed towards ’success’ stories. The other point I remember him making was about impression management, where managers seeking promotion would instigate a pilot initiative and the move into a promotion before it was complete. This bred initiative fatigue and scepticism in those left behind with a stalled project.

Rapid-Fire Invention

Reading on through the book, you find that one of the issues in the proposed agenda for management innovation is making innovation everyone’s job. That’s more like it. Building responsibility for continuous innovation (doing what you do better or differently) into job design is well-understood. Plus, the suggested approach to becoming a management innovator sounds quite ’steady as she goes’, emphasising supplementing rather than supplanting existing management processes and commiting to revolutionary change by taking evolutionary steps.

So that’s OK, then.