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In this segment we're going to take a slightly different look at
the challenge of innovating your management model.
If the last three or four segments were all about the way that
organizations come up with innovative approaches to management.
This, this segment says, look, perhaps we as an organization can learn
from some of the innovative approaches taken by other companies.
And I'm going to call these outlier companies.
Why do I call them outlier companies?
Because if you any imagine any sort of distribution of organizations on
any spectrum, the outlier companies are the ones at the edges.
In other words, the ones doing unusual things.
We have the ones in the middle, the ones kind of clumped in the middle, and
then we have the outliers on the edge.
We can call them mavericks,
we can even call them deviants, we can call them unusual.
It doesn't matter what term you prefer.
The point is they're doing something unusual.
But they're kind of doing something positively unusual.
They're not falling off the end of the scale,
they're actually doing something a bit odd in a positive way.
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Ricardo Semler is a very famous Brazilian businessman.
And the story of Semco, the company that he runs,
he took it over from his father about 20 years ago, has become one of the classic
stories of an innovative approach to management in the entire world.
So he's written a book, Maverick, which you see there.
He also wrote a book a few more, a few years ago called The Seven Day Weekend.
It's about a certain philosophy of kind of,
you know, balance between work and play.
I'm not going to go through the details of their story because, again,
you can read up on about it elsewhere.
The key point is this.
He took over the company when it was struggling.
He deliberately instituted a, a very, very distinctive model of managing.
Some of the key points you see on this slide.
Employees are encouraged to set their own work hours,
to even set their own pay levels.
They actually review their supervisors,
as well as the supervisors reviewing their performance.
There are no org charts.
There's no kind of standardized ways of working.
There's no sort of corporate value statements.
It's all about empowering individuals, and
giving them a lot of freedom to figure things out for themselves.
They even elect their own corporate leaders.
Now you've heard sort of versions of this story many times over the course of this
course, so it all sounds a bit familiar but, but here's the key point, right?
20 years ago Semler came up with this model.
He got a lot of publicity about it in the late 1990s.
He wrote articles in Harvard Business Review.
He did enormous numbers of kind of conference tours and so forth.
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Why is that?
Well, one answer is, take a look at the next slide.
Three of the kind of the, the things that often happen to these sort of companies.
You know, first, first of all, Semco itself, you know, was very successful.
They grew from kind of, you know, $5 million to about $140 million in
revenues over, over the period when Semler was in charge of it.
A successful company.
But it didn't like, completely take the world by storm.
I mean, it still ended up as a sort of a medium size Brazilian company.
So when you look at companies like this, what often happens to them is some of
them grow up and become a little bit more traditional.
I mean Google continues to be fairly unusual but
is gradually becoming more like a traditional big company.
Sometimes they revert back to a traditional way of working.
Oticon is one we've mentioned several times over this course, as a company which
adopted a very innovative style of working and then, and then went back.
And some of them even get into deep trouble.
Enron being the, the case in point.
Enron spectacularly went bankrupt in 2001.
Up until that point, the five years before that, Enron was actually celebrated for
its highly innovative management style.
It had a very, an internal market system for moving employ, employees around.
Very similar to some of the models we've been talking about
over the last few segments.
So, when you put all this together, and you actually look at
what happens to these companies in terms of the amount of public awareness of them,
the chart here actually gives you a very kind of telling story.
This is the, the data on Oticon, the Danish hearing aid company, and
what this chart tells us is it over the period from 1990 when it first became
known for its spaghetti organization up until roughly the present day.
What you see is, first of all, journalists and
then consultants becoming interested in the model and then losing interest.
Academics like myself getting into the model quite a lot later, quite honestly,
in a really academic interest only, really picked up a decade after the consultants,
and the journalists, academics tend to be kind of slow to the table.
But even the academic interest waned after a time.
And so what you see is this kind of almost this classic
story of interest waxing and waning.
Of almost companies becoming fashion statements that fall out of
fashion because either they you know they, they stop doing what they're doing, or
perhaps simply because people have become bored of the story.
And you put all of that together and you see a very, very
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almost depressing story that when we see successful outlier companies, sooner or
later something goes wrong in most cases, and sooner or later interest wanes.
And what happens is that the company itself and
everything that they've done becomes discredited and
the innovative practice there behind it often becomes a little bit tarnished.
I'm not saying this happens every time.
I'm saying that, over, and I've spent many many years of kind of
studying these things, over a 50 year period.
I'm saying that in many, many cases,
innovative management practices actually end up losing their way,
and people just stop talking about them, so re-engineering is a very famous case.
Back in the late 90's, everyone was talking about re-engineering.
Today, you can't use that t, term, because it's always become now so
associated with, with cost cutting, it's actually been discredited as a concept.
So there was a bit of a challenge.
I'm not saying that there’s, that, that it's futile, the,
the next segment we're going to get into some of the ideas about how we
can actually use these innovative ideas in a positive way.
But it is absolutely the case that many of the ideas that come along,
often very valuable ideas, end up falling by the wayside for reasons that have
nothing to do with the substance of the ideas, but much more to do with, you know,
actually the kind of the, the limited time span attention of observers.
Julian BirkinshawProfessor of Strategy & Entrepreneurship
