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The New Realities that Call for New Organizational and Management Capabilities

The New Realities that Call for New Organizational and Management Capabilities

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“The only people who can change the world are people who want to. And not everybody does.” -- Hugh MacLeod

Is it just me or is the world changing faster than ever?

I hear from everybody around me (inside and outside of Microsoft) how radically their worlds are changing under their feet, business models are flipped on their heads, and the game of generating new business value for customers is at an all-time competitive high.

Great.

Challenge is where growth and greatness come from.  It’s always a chance to test what we’re capable of and respond to whatever gets thrown our way.  But first, it helps to put a finger on what exactly these changes are that are disrupting our world, and what to focus on to survive and thrive.

In the book The Future of Management, Gary Hamel shares some great insight into the key challenges that companies are facing that create even more demand for management innovation.

The New Realities We’re Facing that Call for Management Innovation

I think Hamel describes our new world pretty well …

Via The Future of Management:

  • “As the pace of change accelerates more, more and more companies are finding themselves on the wrong side of the change curve.  Recent research by L.G. Thomas and Richard D'Aveni suggests that industry leadership is changing hands more frequently, and competitive advantage is eroding more rapidly, than ever before.  Today, it's not just the occasional company that gets caught out by the future, but entire industries -- be it traditional airlines, old-line department stores, network television broadcasters, the big drug companies, America's carmakers, or the newspaper and music industries.”
  • “Deregulation, along with the de-scaling effects of new technology, are dramatically reducing the barriers to entry across a wide range of industries, from publishing to telecommunications to banking to airlines.  As a result, long-standing oligopolies are fracturing and competitive 'anarchy' is on the rise.”
  • “Increasingly, companies are finding themselves enmeshed in 'value webs' and 'ecosystems' over which they have only partial control.  As a result, competitive outcomes are becoming less the product of market power, and more the product of artful negotiation.  De-verticalization, disintermediation, and outsource-industry consortia, are leaving firms with less and less control over their own destinies.”
  • “The digitization of anything not nailed down threatens companies that make their living out of creating and selling intellectual property.  Drug companies, film studios, publishers, and fashion designers are all struggling to adapt to a world where information and ideas 'want to be free.'”
  • The internet is rapidly shifting bargaining power from producers to consumers.  In the past, customer 'loyalty' was often an artifact of high search costs and limited information, and companies frequently profited from customer ignorance.  Today, customers are in control as never before -- and in a world of near-perfect information, there is less and less room for mediocre products and services.”
  • Strategy cycles are shrinking.  Thanks to plentiful capital, the power of outsourcing, and the global reach of the Web, it's possible to ramp up a new business faster than ever before.  But the more rapidly a business grows, the sooner it fulfills the promise of its original business model, peaks, and enters its dotage.  Today, the parabola of success is often a short, sharp spike.”
  • “Plummeting communication costs and globalization are opening up industries to a horde of new ultra-low-cost competitors.  These new entrants are eager to exploit the legacy costs of the old guard.  While some veterans will join the 'race to the bottom' and move their core activities to the world's lowest-cost locations, many others will find it difficult to reconfigure their global operations.  As Indian companies suck in service jobs and China steadily expands its share of global manufacturing, companies everywhere will struggle to maintain their margins.”

Strategically Adaptive and Operationally Efficient

So how do you respond to the challenges.   Hamel says it takes becoming strategically adaptable and operationally efficient.   What a powerful combo.

Via The Future of Management:

“These new realities call for new organizational and managerial capabilities.  To thrive in an increasingly disruptive world, companies must become as strategically adaptable as they are operationally efficient.  To safeguard their margins, they must become gushers of rule-breaking innovation.  And if they're going to out-invent and outthink a growing mob of upstarts, they must learn how to inspire their employees to give the very best of themselves every day.  These are the challenges that must be addressed by 21st-century management innovations.”

There are plenty of challenges.  It’s time to get your greatness on. 

If there ever was a chance to put to the test what you’re capable of, now is the time.

No matter what, as long as you live and learn, you’ll grow from the process.

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