Frequently asked questions about the Lab:

What do you mean by the term “management innovation”?

A management innovation is a marked departure from traditional management principles, processes and practices or a departure from customary organizational forms that significantly alters the way the work of management is performed.

Why is management innovation important?

Management innovation has dramatically transformed the way many functions and activities work in large organizations. Consider how our ability to manage the consistency of manufacturing processes has evolved: from Ford’s introduction of the moving assembly line in 1913 and Western Electric’s invention of statistical quality control in 1924; through the quality revolution begun by Toyota and other Japanese companies in 1945; and on to such recent innovations as the ISO quality standard and Motorola’s Six Sigma methodology.

Is the history of management innovation really useful?

A historical perspective is useful because it reminds us that nothing about our current ways of working is inviolable. There are management innovations underway all the time in large organizations. Many fail, some work, and only a few make history. Over time the most valuable ones get picked up and are diffused across entire industries and countries.

If it is so important, why haven’t I heard about it before?

Good question. Despite its importance, management innovation remains poorly managed and poorly understood. Most companies have no formal process for management innovation. It is typically left to occur in an ad hoc fashion, and successful management innovators frequently observe that they succeeded “despite the system” not because of it. Academic research provides surprisingly little help either.

Doesn’t management innovation occur – or not occur – in the same way as technological innovation?

Our research reveals two important points of difference that make management innovation a distinct process.

The first is a much more significant role for external change agents – academics, consultants, gurus, and ex-employees. They often provided the initial inspiration for a management innovation, and they frequently helped to shape and legitimize the innovation as it takes hold.

The process has a highly interactive quality. It typically takes place on the fringes of the organisation rather than in the core, and through the relations between conceptually-oriented managers and managerially-oriented external change agents.

The second point of difference is a more diffuse and gradual process than typically seen in technological innovation. Most management innovations take several years to implement, and in some cases it is impossible to say with any precision when the innovation actually took place. To some degree this can also be the case with technological innovations, but the subtle nature of the process was particularly acute in the management innovations we studied.

Is there a distinctive management innovation process?

Yes. First, the internal problem that management innovation addressed is always some level of dissatisfaction with the status quo in the innovating company. We use the word dissatisfaction because it covers a multitude of situations – from a nagging operational problem through a strategic threat to an impending crisis.

Second, while management innovators are characterised by their desire to make their company a better place, they also need inspiration – examples of what has worked in other settings, analogies from different social systems, or unproven but alluring new ideas. Our research does not suggest any particular patterns in terms of the sources of new ideas, but it reveals a breadth of thinking among the management innovators that allows them to strike out on their own path, rather than just adopt a proven model applied by a competing firm.

In every case of management innovation we have studied, we asked about the “eureka” moment when the new practice, process or structure was first dreamed up. But perhaps not surprisingly, the eureka moment never materialized. Our evidence suggests that eureka moments are rare. Invention is a process in which the innovator brings together the various elements of a problem (i.e. dissatisfaction with the status quo) with the various elements of a solution (which involves some inspiration from outside plus a clear understanding of the internal situation and context), but the manner in which these elements are brought together is typically iterative and gradual.

The next critical stage is for the management innovators to generate validation for their new idea inside and outside the organisation. This leads to a wider acceptance internally and externally, which can then result in adoption by other organisations.

What can we do to improve our company’s capacity for management innovation?

  • Become a conscious management innovator
  • Create a questioning, problem-solving culture
  • Seek out analogies and exemplars from different environments
  • Build a capacity for low-risk experimentation
  • Become a serial management innovator