Gary Hamel, in his book “Leading the Revolution,” claimed that extraordinary and revolutionary companies would win in the 21st century. Companies like Google, Skype and Facebook did not exist in the 20th century and they came to the business stage unexpectedly.
Hamel, along with Bill Breen, also wrote the book “The Future of Management” in which they talk about the innovation and management models of companies.
According to the authors, management innovation is anything that substantially alters the way in which the work of management is carried out, or significantly modifies customary organizational forms, and by doing so, advances organizational goals.
Hamel describes innovation as a novel management principle, challenging some long-standing orthodoxy; systemic, encompassing a range of processes and methods; part of an ongoing program of rapid invention where progress compounds over time. He says that we have to make innovation everyone’s daily task and we have to create a highly engaging work environment that inspires employees to give the very best of themselves.
There are barriers for innovation in corporations. We have too much management and too little freedom. We have too much hierarchy and too little community. We have too much exhortation, too little purpose.
The authors give the interesting example of Whole Foods. Whole Foods is a hypermarket chain that specializes in providing organic and healthy foods. It is a large company worth billions of dollars. The management is quite revolutionary. All of the food prices are determined in a decentralized way. Each store’s management team makes its own decisions about the prices of foods to be sold in their market. Traditionally in the retail industry prices are set by the company headquarters. There is another interesting point in the human resources field. Each store hires new personnel with the approval of current staff. The team conducts the job interview, they decide on the salary to be offered. Each member of the team has only one vote in the decision process. Moreover, the teams in the stores decide on their own salaries, salary increases and bonuses. Under normal conditions, this approach looks unacceptable because if you give power to the people to determine their own salaries, the sky becomes the limit. However, people act responsibly at Whole Foods. It would be stupid to overpay themselves because everything is transparent and traceable by the headquarters. A sense of fairness is key in democratic organizations.
The famous professional outdoor equipment company Gore Associates, the producer of Gore-Tex Waterproof Fabrics, is another example of a democratic organization.
For Hamel and Breen, democracy and democratic management are the answers for new, innovative organizations. Ideas are produced, not at the top, but across the company. However, there must be systems supporting the concept of democracy within the organization. There should be love, autonomy, egalitarianism, a sense of mission and a sense of community. People should love their company and protect it like they protect their countries. The autonomy and power to take action is very important, otherwise people will not believe that they can control their destiny. Egalitarianism is important, because if there is too much hierarchy, autonomy is not possible. An organization’s existence is dependent on its mission because each organization is created to carry out a mission. Every organization needs a community to serve and protect itself. Without it, we cannot talk about an organization.