Innovation in People Management: The Path to Leadership 2.0

As we have pointed out in previous posts, everything has changed around us: people, infrastructures, organizations, markets, relationships and communication flows. The entire society has undergone transcendental changes. However, although it may seem incredible, companies are still using the same management tools of the 90s, more than a century ago. These tools are outdated. They have become obsolete, and it is clear that with them we will not be able to face the challenges of the new Era of Collaboration. It turns out, therefore, We need to innovate in the field of management as well. And that is precisely the objective of Innovation in Management , a fundamental discipline about which we still know too little, and whose ultimate goal is to significantly accelerate the evolution of management processes and practices that will define competitive success in the new Age of Collaboration.

What exactly does Management Innovation consist of? What advantages does it bring to organizations? When and how does innovation arise? Who has to lead the changes? We will try to shed some light on the subject in the following conversations.

Reasons to innovate in People Management

In the last half of the last century, special attention has been paid to the concept of innovation. Its function within human creativity, its importance in industrial development, its diffusion, its relationship with a country’s competitiveness, the role played by a government’s policies in promoting or thwarting it, and many other topics have been studied. As a result of this interest, a large number of taxonomies and classifications have been developed. The objective has often been to distinguish and separate the different types of innovation: incremental versus radical, product versus process, “blue ocean” versus “red ocean”, technology-driven versus market-driven, etc. However, despite the immense effort put into innovation, researchers have left a fundamental aspect for organizations practically uncovered: innovation in Management or Management Innovation. In other words, we still do not know how management practices and processes are invented and improved. Companies have been able to create sophisticated mechanisms to make the most of scientific discoveries, and they have used them to launch new products and to improve their operational efficiency. But very little of that creativity and effort has been dedicated to Management Innovation, which remains an almost unexplored field. It is true that most companies have specific processes in place to innovate – with more or less success – in their products and services. We cannot deny that companies tweak their compensation systems, reorganize their business units, modify basic criteria when making their annual budgets, implement new human resources policies and, sometimes, even adapt their executive development programs to the latest “fashions” in business management. But the fact is that changes in management models are usually the result of specific operational problems, and it is really difficult to find a company that has a specific process to innovate in its management practices.

This “gap” is especially striking if we take into account that we are facing an environment of globalization and accelerated changes, in which the future will be less and less an extrapolation of the past. In fact, as I have pointed out in previous conversations, there are at least 4 compelling reasons to question the practices and management models inherited from the industrial era:

1. The new opportunities for mass collaboration that Web 2.0 provides us with

2. The arrival of the first generation of Digital Natives in our schools and organizations.

3. The new structures of value creation generated by Social Networks.

4. The new emerging business models created in the new global networked economy or “Wikinomics“.

The fundamental challenge to innovate in management is to solve the 3 systematic incompetences of today’s organizations:

1. They tend to be inflexible when it comes to doing something different from what they have done up to that point.

2. Their cultures are not prone to change and, in many cases, hostile to innovation.

3. They are not very good at getting their employees to do their best.

Nature of innovation in management

We all have an idea about what a manager does in his or her daily work. We know that he plans activities, coordinates and distributes resources among different projects, motivates and aligns his collaborators, cultivates relationships with customers, and balances the needs of different stakeholders. These are, in essence, management practices, the things that we as managers do every day. Any manager will be familiar with them. These practices are reflected in the management models of companies through different business processes: strategic planning, annual budgets, operational reviews, hiring and promotion, performance management, talent management, succession planning, etc. They are also reflected in a specific organizational structure , which has to do with work environments and organizational aspects such as matrix organizations or organizations based on lines of business by markets or by functions. Innovation in management consists precisely of questioning how the Age of Collaboration, new digital talent and new models of value creation – Wikinomics – affect management practices, business processes and operational structures that we have inherited from the Industrial Age. We need to create new ways of working that are fit for the future, and we need to be more effective in identifying the old ways of working, which only made sense in the past, and which emerged to solve a problem that is no longer relevant to the organization. In short, it is about starting to experiment and build new practices, processes and structures capable of developing the collective intelligence of the organization in the new era.

“Innovation in management is the ability of companies to make fundamental changes in their management model, organizational structure or internal work processes. It involves the application of a new management practice, business process or operational structure that significantly modifies the way in which management work is carried out.” Management Innovation Lab, London Business School.

Innovation in management involves both the invention of new management models and their effective execution , so that they really generate positive results and sustainable competitive advantages for the innovative organization. Innovation in management necessarily involves significant changes in the organization that adopts it, so that their execution entails – like any innovation process – a significant level of experimentation and risk.

As a process, innovation management has some elements in common with the other types of innovation. After all, it is about motivating key people in the organization, pooling ideas and resources in new ways of doing things, acting as champions of new ideas within the organization, creating coalitions with key stakeholders for success and getting senior executives to support our idea, knowing how to use our political skills to avoid the usual inhibitors, and overcoming internal resistance. However, there is the paradox that,

despite occupying the top of the innovation value-added pyramid -formed, as can be seen in the image, by operational innovation, innovation in products and services, technological innovation and innovation in management– Innovation in management is perhaps the discipline to which less attention has been devoted. Perhaps the reason is that, unlike technological innovation in products and services, innovation in management affects the entire organization, and The value created is usually intangible in nature, so it is not easy to patent and can hardly be separated from the organization in which it was created.

Innovation in management in practice

Management Innovation is not a mere theoretical introspection. The practical application of this discipline is essential for organizations to obtain improvements in productivity and real competitive advantages. In fact, although they may not be presented as such, many of the success stories that are explained in the MBAs of the best Business Schools are precisely the result of innovations in management. In these cases, success has been due to changes in management practices, processes and structures. These changes have generated more competitive advantages – and more lasting over time – than many of the well-known product innovations that emerged in the world’s best research and development centers. Examples include Procter & Gamble’s brand management, the creation of the Visa financial services consortium, Toyota’s personnel policies, talent management at General Electric, Sun Microsystems’ virtual work environments and, more recently, the personnel management models of Whole Foods or Google.

After more than 30 years working in high-innovation environments, my experience tells me that innovation in management is usually driven by real needs for change in the organization. The origin may lie in the difficulties in maintaining positive and growing operating results, or in a loss of competitiveness in strategic products and markets for the organization. On many occasions, there is nothing authentically original: each innovation builds on previous innovations, recognized as best practices in a specific sector. Examples of this modality could be the development of the Balanced Scorecard by Robert Kaplan (1992), and the reengineering of business processes by Thomas Davenport (1993). The reality is that, in practice, innovation in management is never easy: the process takes time, scepticism is to be expected and, on many occasions, most innovators in management are seen by the “legacy” of organizations as true dissidents. But it is clear that the new global world of accelerated change requires new ways of managing our creative talent. It requires new organizations that are more transparent, flexible and capable of adapting to changes and, ultimately, new ways of creating value through people. In the face of these powerful challenges, innovation in management can provide our organizations with a clear competitive advantage.

How can I contribute?

It is clear that the changes that are required are neither obvious nor easy, much less after decades of practices inspired by orthodox management. To survive, we will need to balance revolutionary thinking with practical experimentation within our organizations, and with learning from the best practices of the pioneering companies in our sector. I propose three suggestions with which you can contribute to improving the capacity for innovation in the management of your organization:

• It fosters a culture of innovation. After years of working with innovation, I have no doubt that the first ingredient is to have an innovative environment in the company. It is very difficult to innovate in an environment that is not open to change. This means that from the CEO to those who make up the last level of the organization, they must be convinced of the need and benefits of innovation in management. It fosters a culture that questions the status quo and that faces the challenges of the organization in an unusual way, looking for new ways to address future challenges, exploring new ways and avoiding easy answers to problems. The key is to create flexible organizations, designed for people, in which leadership and innovation is a job shared by all.

• Develop your skills as an innovator in management. It is simply a matter of putting the same creativity and passion into innovation in management that you now dedicate to innovation in products and services. Create your own innovation system. A system that allows you to question the status quo and launch innovation initiatives with a limited number of people and resources, to validate the results of the proposed changes at each level of commitment. It is about giving new ideas a chance without paralyzing the organization’s ability to achieve its day-to-day results.

• Look for analogies and best practices in different settings. The types of solutions you can consider vary depending on the problem you’re trying to solve. Explore your competitors’ solutions and best practices. They may not be directly applicable to your organization, but it’s a practical way to open your mind to different management paradigms and, in many cases, it’s a good way to open your mind to new alternatives that are outside of your management mindset.

The recipe is simple: experiment, learn, and adapt. You’ll find that the biggest challenge isn’t coming up with new ideas—I’m sure you have plenty of ideas on how to improve your organization—but escaping old ideas, and the legacy of orthodox management that sustains and sustains them.

If you dare to participate in the conversation, I would like to know your opinion on innovation in management.

*You can see the content of this post summarized in the following presentation: