Hamel: What Matters Now

Citation

Allio, R.J. (2012), "Hamel: What Matters Now", Strategy & Leadership, Vol. 40 No. 3. https://doi.org/10.1108/sl.2012.26140caa.002

Hamel: What Matters Now

Article Type: The strategist’s bookshelf From: Strategy & Leadership, Volume 40, Issue 3

In his latest appeal for innovation, What Matters Now (Jossey-Bass, 2012), Gary Hamel makes a valiant attempt to raise our consciousness about the need for a radical rethinking of management processes. He articulates new articles of faith that extol these virtues:

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  Fealty – viewing managerial resources as a trust rather than a source of personal gain.

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  Charity – willingness to put the interests of others above one’s own.

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  Prudence – a commitment to safeguard the future.

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  Accountability – responsibility for systemic consequences of managerial decisions.

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  Equity – a desire to distribute rewards relative to contribution rather than power.

Hamel’s credo emerges from a cogent analysis of the source of recent US economic woes: easy money, securitization (the plague of collateralized debt obligations and credit default swaps), the complexity of new financial instruments, excessive leverage and the resultant illiquidity when bankers began to write down their stake in sub-prime mortgages. But more insidious, according to Hamel, has been the “Shakespearian catalog of moral turpitude” that sustained the economic crisis: executive deceit, hubris, myopia, greed, and denial. Hamel rants as well against the corporate indifference to the human costs of ideological zeal, the abandonment of public responsibilities for political gain and the disinclination of regulators to raise the alarm.

Apple is Hamel’s poster corporation, and he neatly summarizes the distinctive elements of Apple’s strategy: redefine the basis of competition (design and ease of use), fuse hardware and software, master complementary technologies, lock customers in and competitors out, build a network of third-party developers (to foster the creation of a powerful ecosystem), and extend the company’s core competence into new markets (mobile devices rather than computers).

But, argues Hamel, Apple’s extraordinary performance is less the result of superior application of B school principles than the adoption of some venerable New Age behavior: be passionate, lead rather than follow, aim to surprise, be unreasonable, innovate incessantly, sweat the details, think like an engineer and feel like an artist.

While Apple is our best recent example of a positive deviant, Hamel supports his plea for management innovation by citing a number of other case histories. We all know about W.L.Gore and Whole Foods. But Hamel suggests that innovation can occur in other settings, such as St. Andrews parish of the Church of England (energizing Mission-Shaped Communities) and the Bank of New Zealand (which allowed each branch manager to set his or her bank’s opening and closing hours).

For those who cannot replicate Apple today, Hamel’s mandate is the adoption of a policy of change and adaptation to counter the entropy that afflicts all corporations. Even successful firms experience diminishing returns. Their strategies get replicated, superseded, or eviscerated by other competitors. And their very success corrupts them: they begin to think defensively, cling to inflexible business systems and fossilized business models. Their abundant resources and affluence enable an attitude of indolence.

How can we future proof our firms and prevent their inevitable decline? Hamel offers up a manager’s manual of six critical factors:

1. 1.

   Anticipation. Face the inevitable, learn from the fringe, and rehearse alternate futures

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   Intellectual flexibility. Challenge assumptions, invest in genetic diversity, encourage debate and dialectic thinking.

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   Strategic variety. Build a portfolio of new strategic options, build a magnet for great ideas, minimize the cost of experimentation.

4. 4.

   Strategic flexibility. Disaggregate the organization, create real competition for resources, multiply the sources of funding for new initiatives

5. 5.

   Structural flexibility. Avoid irreversible commitments, invest in flexibility, think competencies and platforms.

6. 6.

   Resilience-friendly values. Embrace a grand challenge, embed new management principles, honor web-inspired values.

What Matters Now is a mash up of ideas that Hamel has presented in previous books like The Future of Management and articles in both Harvard Business Review and Strategy & Leadership (“A conversation with Gary Hamel: It’s time to reinvent management,” Vol. 36, No. 2), and he echoes many of the recent proposals by advocates of positive psychology and virtue ethics. These include balancing economic and non-economic goals, and being responsive to multiple stakeholders. Still, it is useful to be reminded that we do have examples of high-performing organizations that benefit from an enlightened management style based on distributed power and decentralized decision-making.

Yet herein lies the terrible paradox. We already know how to avoid the trap of organizational senescence, the ultimate damage inflicted by corrupt and self-centered managerial behavior. Why then don’t we manage more humanistically for the greater good? Why don’t we stop exploiting our stakeholders, stop sacrificing future gain for short-term rewards? Why don’t we implement the progressive principles and processes that we are already familiar with? Hamel challenges us to try harder …

Robert J. AllioWinner of Strategy & Leadership’s 2011 Outstanding Reviewer Award. In 1973, Allio was the founding publisher and editor of Planning Review, the precursor of S&L. For the past decade, he has been a prolific contributor and a member of S&L’s team of editors.