“The kind of idea that organizations need is what managers are trained to kill.” (Gary Hamel, in video). He was referring to innovation and entrepreneurship.
Discuss this statement drawing upon Chapters 1 to 6 of Kao et al’s book and the materials covered in the course thus far.
Entrepreneurship is defined as a wealth creation and value adding process that is in the interest of the individual and society (Kao, 2006). At first glance, it seems to be something that is beneficial on the whole. However, it appears to be not very well received by managers of corporations. In this paper I will seek to explore if it is true that ideas that are innovative and entrepreneurial is seen unfavorably by managers. Based on the materials covered by Kao’s book, it seems likely that managers are indeed trained to kill ideas that are innovative and entrepreneurial in nature. The Need for Entrepreneurial and Innovative Ideas
Gary Hamel mentioned in his speech that the time for incrementalism is over, and right now, corporations should compete based on business models and not mere products. This is closely related to another article on Corporate Entrepreneurship, which defines it as policy decisions to seek competitive advantage through innovation on a sustained basis (Mintzberg, 1983). Looking at what they have to say, it seems apparent that innovation and entrepreneurship can be beneficial to a company by allowing it to differ itself from the competition. Therefore, it seems counter intuitive that a manager would want to kill these ideas. In the following section we will seek to find out the reasons behind why this is so. Trained to Kill?
Do managers deliberately put down these ideas or is it a case of the managers being bounded by the circumstances? According to Kao, he mentions the main reason why these ideas fail to garner support is because corporations are driven by the bottom-line. Building on this point, a corporation being a profit driven is the result of it being under the pressure to offer an attractive Return on Investment (ROI) to shareholders in hope of attracting even more investments. This has led to a host of other reasons why the business environment of corporations is not conducive for the innovation and entrepreneurship. Being driven by the bottom lines results in myopia on the part of managers because they need to justify their performance though good results. These results are shown as numbers on the financial statements and they are measured within relatively short time periods of Financial Years (FY) consisting of quarters. As a result, the managers may not entertain ideas which are untested, and stick to the tried and tested formulas which more often than not result only in incremental changes.
They are also less likely to encourage innovation as the benefits of such ideas can only be felt in the long run. Therefore, there are no incentives for the managers to take on projects that may result in their bottom lines and consequently, the measurement of their performance to be less than what could be. Another pertinent point would be that business schools are churning out good employees, not good entrepreneurs. There are two reasons as to why this happens. First of all, as corporations get increasingly influential, they are able to establish their own college which promotes their brand of corporate style. This is on top of corporation already having influence over the college due to colleges’ desire for funding by these large corporations. Based on the curriculum of the Business colleges as collated in Kao’s book, we can tell that the graduates are taught the skills to be a good employee of corporations.
While the question may be asked of how is this relevant to why innovative ideas are being shot down by managers, we have to look at the long term implications the corporations “taking over” the colleges. A few years down the road after graduating from the colleges, some of the more successful ones will be sitting in managerial positions and they are likely to have achieved success following the conventional method of following the tried and tested method taught by the colleges. It will be difficult for them to comprehend new ideas that may seem risky to them because they know for certain that their methods are likely to produce concrete results. These graduates are also less likely to challenge the way corporations are run given that they are taught the exact same way corporations wants them to be. New ideas are seen as being impractical and there in the words of Kao, overly theoretical. Growth of Companies
We also have to take into consideration the different growth stages of a firm. A firm may start out small and this gives it the flexibility to innovate as compared to an established firm. The environment in a start-up company is also likely to be more exciting as there’s likely to be less red-tape. However, once a company becomes established, structures and systems will take over and that makes it harder for entrepreneurship to flourish (Ramachan et al, unknown). This corroborates the point that perhaps a manager is bounded by the circumstance in having to turn down innovative ideas. What are the Implications?
As mentioned previously, companies which fail to innovate will not be able to be a game changer and while they may be able to keep their leadership position for a short period of time, they will eventually make way for the more innovative companies.
Solving the Problem
If we accept the premise that managers are trained to kill entrepreneurial and innovative ideas then it can also be said that the managers can be trained to accept the very ideas that they are trained to kill. There are examples of companies championing innovation and entrepreneurship, the more famous being Google and 3M. We know for certain by their level of success that it is a winning formula. These are companies which have realized the importance of being innovative and their management has led by example. While these examples are few and far between, they show that there is a possibility of managers placing emphasis on innovation. As Gary Hamel said in his video, it is all about making the organization safe for radical ideas.
This is where we can bring in the idea of having a failure tolerant leader. We know that there are theories out there that advocate having managers who care less about the bottom line and more about the learning experience. Managers can be placed in an environment where innovativeness is encouraged due to necessity. This is particularly viable in the technology industry because it is fast paced and it is easy for a company to fall behind by being complacent.
Overwhelmingly, the facts point to a situation where managers are indeed trained to kill off ideas that are innovative and entrepreneurial in nature. This does not mean that we should give up trying to change these managers. While being profit oriented is not necessarily bad, an approach where innovation and entrepreneurship is encouraged should be adopted. It will be difficult as is making any other changes, but I believe that innovation and entrepreneurship will be the determining factor for the success of a company and it will only be a matter of time before companies change their stance.