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And what is it that imbues those exemplars with their enviable qualities? You know that in a world of accelerating change, continuous strategic renewal is the only insurance against irrelevance. Specialization, for all its benefits, limits the kind of cross-boundary learning that generates breakthrough ideas. The quest for greater standardization often leads to an unhealthy affection for conformance; the new and the wacky are seen as dangerous deviations from the norm. Elaborate planning-and-control systems lull executives into believing the environment is more predictable than it is.

A disproportionate emphasis on monetary rewards leads managers to discount the power of volunteerism and self-organization as mechanisms for aligning individual effort. Deference to hierarchy and positional power tends to reinforce outmoded belief systems. So where do you look to find the design principles for building a highly adaptable organization?

You look to systems that have demonstrated their adaptability over decades, centuries, even aeons. For more than 4 billion years, life has evolved at least as fast as its environment.


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Nature inoculates itself against the risks of environmental change by constantly creating new genetic material through sexual recombination and mutation. Variety is one essential principle of adaptability. Markets, too, are adaptable.


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Over the past 50 years, the New York Stock Exchange has outperformed virtually every one of its member companies. Competition is a hallmark of both markets and evolutionary biology. On the NYSE, companies compete to attract funds, and investors are free to place their bets as they see fit. Decision making is highly distributed, and investors are mostly unsentimental.

As a result, markets are very efficient at reallocating resources from opportunities that are less promising to those that are more so. In most companies, however, there are rigidities that tend to perpetuate historical patterns of resource allocation. Executives, eager to defend their power, hoard capital and talent even when those resources could be better used elsewhere. Legacy programs seldom have to compete for resources against a plethora of exciting alternatives. The net result is that companies tend to overinvest in the past and underinvest in the future. Hence, competition and allocation flexibility are also important design principles if the goal is to build a highly adaptive organization.

Constitutional democracies rank high on any scale of evolvability. In a democracy, there is no monopoly on political action. Social campaigners, interest groups, think tanks, and ordinary citizens all have the chance to shape the legislative agenda and influence government policy. Whereas change in an autocratic regime comes in violent convulsions, change in a democracy is the product of many small, relatively gentle adjustments.

Tracking offshoring and outsourcing strategies in global supply chains

If the goal is continuous, trauma-free renewal, most large corporations are still too much like monarchies and too little like democracies. To reduce the costs of change in your organization, you must embrace the principles of devolution and activism. Whatever big management challenge you choose to tackle, let it guide your search for new principles.

For example, maybe your goal is to build a company that can prevail against the steadily strengthening forces of commoditization—a problem that certainly demands management innovation. Around the world, companies are outsourcing and offshoring business processes to vendors that provide more or less the same service to a number of competing firms.

Businesses are collaborating across big chunks of the value chain, forming partnerships and joining industrywide consortia to share risks and reduce capital outlays. Add to this a worldwide army of consultants that has been working overtime to transfer best practices from the fast to the slow and from the smart to the not so clever. As once-distinctive capabilities become commodities, companies will have to wring a whole lot of competitive differentiation out of their ever-shrinking wedge of the overall business system.

Surprisingly, scholars have paid little attention to the process of management innovation. First we identified significant management innovations from to To whittle this list down to the most important advances, we evaluated each innovation along three dimensions: Was it a marked departure from previous management practices? Did it confer a competitive advantage on the pioneering company or companies? And could it be found in some form in organizations today?

In light of these criteria, here are a dozen of the most noteworthy innovations. To beat back the forces of commoditization, a company must be able to deliver the kind of unique customer value that can only be created by employees who bring a full measure of their initiative, imagination, and zeal to work every day. The machinery of bureaucracy was invented in an age when human beings were seen as little more than semiprogrammable robots. Bureaucracy puts an upper limit on what individuals are allowed to bring to their jobs. Where do you find organizations in which people give all of themselves?

You might start with Habitat for Humanity, which has built more than , homes for low-income families since Share a beer with a few of the part-time hackers who have churned out millions of lines of code for the Linux operating system. Each of these organizations is more of a community than a hierarchy. People are drawn to a community by a sense of shared purpose, not by economic need. Control is more peer based than boss based. Emotional satisfaction, rather than financial gain, drives commitment. For all those reasons, communities are amplifiers of human capability. Whole Foods, you will remember, long ago embraced the notion of community as an overarching management principle.

To fully appreciate the power of a new management principle, you must loosen the grip that precedent has on your imagination. Painful as it is to admit, a lot of what passes for management wisdom is unquestioned dogma masquerading as unquestionable truth. How do you uncover management orthodoxy? Pull together a group of colleagues, and ask them what they believe about some critical management issue like change, leadership, or employee engagement. For example, if the issue is strategic change, you may find that most of your colleagues believe that. Empirically, these beliefs seem true enough, but as a management innovator, you must be able to distinguish between what is apparently true and what is eternally true.

And yes, just about every story of corporate renewal is a turnaround epic with the new CEO cast as corporate savior. But is this the only way the world can work? Why, you should ask, does it take a crisis to provoke deep change? For the simple reason that in most companies, a few senior executives have the first and last word on shifts in strategic direction.

It usually takes a crisis to motivate deep change. As a management innovator, you must subject every management belief to two questions. Second, can you imagine an alternative to the reality the belief reflects? Take the typical assumption that the CEO is responsible for setting strategy.


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Yet, if the goal is to accelerate the pace of strategic renewal or to fully engage the imagination and passion of every employee, a CEO-centric view of strategy formulation is unhelpful at best and dangerous at worst. Is there any reason to believe we can challenge this well-entrenched orthodoxy? Look at Google. The company organizes much of its workforce into small, project-focused teams with only a modicum of supervision one Google manager claimed to have direct reports! Its developers post their most-promising inventions on the Google Labs Web site, which gives adventurous users the chance to evaluate new concepts.

Few companies have worked as systematically as Google to broadly distribute the responsibility for strategic innovation. Its experience suggests that the conventional view of the CEO as the strategist in chief is just that: a convention. And when you hold other management maxims up to the bright light of critical examination, you are likely to find that many are equally flimsy. As old certainties crumble, the space for management innovation grows.

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Self-organizing teams. These are newfangled notions, right? Each of those important management ideas was foreshadowed in the writings of Mary Parker Follett, a management innovator whose life was bracketed by the American Civil War and the Great Depression. Vested with little formal authority and faced with the challenge of melding the competing interests of several fractious constituencies, Follett developed a set of beliefs about management that were starkly different from those that prevailed at the time.

As is so often the case with innovation, a unique vantage point yielded unique insights. If your goal is to escape the straitjacket of conventional management thinking, it helps to study the practices of organizations that are decidedly unconventional.

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With a bit of digging, you can unearth a menagerie of exotic organizational life-forms that look nothing like the usual doyens of best practice. Imagine, for instance, an enterprise that has more than 2 million members and only one criterion for joining: You have to want in. It has virtually no hierarchy, yet it spans the globe.

Its world headquarters has fewer than employees. Local leaders are elected, not appointed. There are neither plans nor budgets. Metreaud All beginnings was, providing the Download Sport Und to solve this company or views badly in any activity without the next community of the speed.

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The Offshoring Challenge: Strategic Design and Innovation

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