Mid Autumn Holiday Management: The Ultimate Advantage Of Experience Innovation

In the past few years, I and two colleagues at London Business School have been studying the history of management innovation. So far, we have studied more than 100 items in the past two centuries.

What are the reasons why Ge, DuPont, P & G, TOYOTA, VISA and so on are the world's most successful companies in the twentieth Century? We know they have great products, strong executive power and visionary business leaders, but it is not difficult to find out that they have made remarkable achievements in management innovation.

Scientific research management.

In the early twentieth Century, General Electric applied the innovation of "industrial laboratory", which improved most of Edison's invention results.

Ge applied the principles of application management to solve the chaos of scientific research, which enabled Edison to make a small invention every 10 days and achieve a major technological breakthrough every 6 months.

In the early twentieth Century, Ge became the largest patent company in the United States.

Allocate funds.

DuPont achieved a leading position in capital budgeting technology in 1903 through the use of ROI.

A few years later, DuPont also developed a standard method for comparing the performance of different product sectors.

These management advances have solved the problem of how to allocate funds in the face of many attractive projects.

DuPont's new decision-making tools make it an industrial giant in the United States.

Management of intangible assets.

P & G's leading position in the packaging industry originated in the early 1930s, when Procter & Gamble began to develop brand management methods, and profit from intangible assets was an original idea.

Procter & gamble then gradually created and managed its brand. By 2007, P & G's 16 commercial brand portfolios were worth up to $1 billion.

Draw the wisdom of every employee.

TOYOTA is the most profitable automobile manufacturer in the world. Its success is to enable all its employees to pursue efficiency and quality continuously. In this respect, few enterprises can match it.

For more than forty years, TOYOTA has always firmly believed that "ordinary" employees have the ability to solve complex problems, which fundamentally enhances their ability of continuous improvement.

Some people call the TOYOTA production system a "think making system".

In 2005, TOYOTA received more than 540 thousand improvement proposals from Japanese local staff.

The establishment of a global consortium.

VISA has become the world's first "virtual" enterprise due to its successful organizational innovation.

When viza bank set up a consortium in the United States in the early 1970s, it hoped to become a Brand Company everywhere in the world.

At that time, the key issue of management was the establishment of a form of organization that could cooperate with grass-roots organizations, standards and brand building so that banks could better serve their customers.

Today, VSA's network has more than 2 trillion and 100 billion dollars in trading volume, which accounts for 60% of the total global credit card pactions.

These cases outline how management innovation helps enterprises establish lasting advantages, and other factors can not play such a role.

From innovation to advantage

The pformation of management innovation into a competitive advantage requires at least one or more of the following three conditions.

First, innovation is based on new management principles and challenges some traditional principles.

Second, innovation is systematic, including processes and methods.

Third, innovation is unremitting and progress has been made over time.

Take the automobile industry as an example, why did the American auto industry fail to learn the super efficient production system of Toyota Corporation for decades? A few years ago, I asked a senior executive of a big American car company.

In a elegant hotel, when we spent our luxurious dinners drinking coffee, a senior financial officer said they had just completed the twentieth year high definition work of Toyota Corporation.

I asked loudly: "in twentieth years, and in nineteenth, eighteenth, seventeenth years..."

What I haven't learned before? "My unspoken question is like the pungent cigar smell in the air.

After an embarrassing depression, an executive gave his own explanation.

20 years ago, we sent young people to study in the Toyota Corporation. These young people praised TOYOTA after coming back, but we sneered at it.

We think that Toyota Corporation only occasionally realizes "zero inventory", and it is impossible to produce cars with very few defects in life.

After 5 years of observation, we gradually realize that TOYOTA's advantage is a "full staff culture", such as "harmony" culture.

American workers will never adopt this "family style" work style.

Toyota Corporation's visit to the United States has not been influenced by American culture, and has achieved the same outstanding performance as that of Japan.

Over the next 5 years, we studied the production system of TOYOTA, including their factory automation, relationship with suppliers, punctuality system, etc.

Although we continue to carry out the high standard positioning work, but in our own factory, we can not achieve the desired results.

In the past 5 years, we have truly discovered that the success of Toyota Corporation lies in its distinctive management ideas and principles: enhancing the ability of employees and enhancing the sense of responsibility of leaders.

It took us nearly 20 years to figure out the advantages of Toyota Corporation.

Unlike western enterprises, Toyota Corporation firmly believes that front-line workers are not insignificant in the cold manufacturing machinery. On the contrary, if they want to provide enough tools and training, they can effectively solve problems, and will be innovators and innovators.

Toyota Corporation recognizes that these employees can only help enterprises achieve continuous and rapid process improvement.

The US automobile companies ignore the contribution of the front-line employees. They attach importance to the advice of the functional experts on quality and efficiency.

Such a disdain for the wisdom of workers in the frontline even Henry Ford complained all the time: "why can we use the hands of workers, where their minds go?"

After 40 years of accumulating efforts, Toyota Corporation has gained more from its employees than its competitors, and its market share and market value are also growing.

Today, car companies in the United States are trying to use their wisdom, but in fact, they conflict with the management system based on able people, so they have little effect.

As is shown in this example, dogmatism in management is often deeply rooted in enterprises.

Therefore, when an enterprise is engaged in management innovation, the greater the management innovation, the longer the reaction time of its competitors, and sometimes even tens of years.

The core competitiveness of enterprises is a complex complex, including assets, skills, management and so on.

An enterprise is like a big tree. The trunk and several main branches are core products. The finer branches are the business units. The leaves, flowers and fruits belong to the final product. The roots that provide nutrients for the trees and support the fixed functions are the core competitiveness of the company.

To produce fruit that is different from others, we must have branches, trunk and roots that are different from others.

The flourishing leaves do not tell if they are strong. In turn, roots and trunk must grow luxuriant branches and leaves to grow stronger or else they will only die.

What really works for core competitiveness is the ability to integrate branches, trunk and roots into a large tree.

For enterprises, this is the ability to integrate all kinds of skills and knowledge and bring into play effective management.

Knowledge and skills can be acquired, but the invisible management capability of integrating them is difficult to imitate.

This "asset specificity" has two functions: first, the external competitors form a barrier to entry, and the two is to promote the joint efforts of the employees toward the strategic goals of the enterprises.

If our management innovation is systematized, it will be difficult for our competitors to imitate the reform from individual innovation to manifold management processes.

It is useless to have a limited and one-sided observation of competitors' unique management practices system, just as a few lines are difficult to weave a beautiful Persian carpet.

Of course, companies also need to adhere to the established management advantages. In this regard, Ge Corp has done the best in the world.

Although everyone is imitating General Electric, including its kutton Weill School of management in New York, the 360 degree evaluation system, the way to encourage managers to cooperate, the last elimination system, few companies can achieve Ge level.

GE's excellence is not only a breakthrough in management but a long-term, persistent effort to improve management, resulting in a series of management breakthroughs.

In 2006, Ge launched a leadership development plan aimed at developing managers' ability to enhance their organic growth.

Any company that wants to learn GE's leadership will find it difficult to keep pace with GE.

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New connotation of management innovation

Management innovation is a way to fundamentally change management. It is a significant way to change the organization form of customer oriented and ultimately promote organizational goals.

In short, management innovation will change the way managers do things and improve organizational performance.

Innovation comes from multiple levels: operational innovation, product innovation, strategic innovation and, of course, management innovation.

Each level can contribute to the success of an enterprise, but if we arrange the innovation at these levels, we will find that the higher level of innovation is more important for value creation and the maintenance of competitive status, and management innovation is undoubtedly the highest level of innovation.

Understanding this is of great benefit to further attention to management innovation.

At the bottom of Pyramid is operational innovation.

In a super competitive world, excellent operational capability is very necessary. But if there is no innovation like TOYOTA's management and IKEA's business model, it is very difficult for business innovation to produce a decisive long-term business advantage.

There are several reasons for this.

First of all, the effect of operation often depends on the level of the company's information system facilities.

However, the development and dissemination of software and hardware is fast, which makes the advantages of information technology difficult to sustain for a long time. This is a well-known common sense.

Secondly, many companies now outsource their business activities to third parties, while the third parties often serve multiple companies in the same industry. Therefore, there is no incentive mechanism for a company to establish an excellent advantage.

When outsourcing offshore service helps a company to maintain a stable competitive state, it can not bring a distinct exclusive advantage to a company.

Finally, more and more consulting experts who have many years of experience have extended the experience of successful enterprises to ordinary enterprises, which further weakens the advantages from operation.

The second level of innovation is product innovation.

There is no doubt that a product favored by customers will bring many orders to the company, but without strong patent protection, many products will soon fade out of the market.

In addition, the rapid change of technology has made the new industry fast surpass the star of yesterday, which makes the breakthrough products rarely bring the industry leading position to the company.

The next step is strategic innovation, such as the creation of a bold business model. This mature enterprise has to be on the alert.

Europe's leading cost companies, Irish airways, Apple's iTunes music store, Zara fashionable, and affordable women's clothing, are classic examples.

A very threatening business model can generate hundreds of millions of dollars in revenue for the founders, but this unique business model is easily deconstructed and often hindered by the original management system.

WAL-MART seems to be invincible in the discount retailing industry, but there are still some retail businesses that are booming.

Frontier airlines, Jet Blue, Air Tran airlines of the United States also got a slice of the strategic innovation from Southwest Airlines.

India's leading outsourcing companies such as Infosys and Vipro are already industrial giants, but watch out for the strategic and decisive enterprises to erode the low wage advantage of India at all times.

The above shows that innovation at all levels is not the same.

When enterprises encounter large and numerous problems, management innovation can produce an advantage that is difficult to imitate.

Many executives have found that it is much easier to adopt a breakthrough business model than to discard the inherent management concepts inherent in them.

Watch out for management myopia

Not every management innovation can create competitive advantage.

Some of them have little effect, some have directional errors, and many are useless.

Of course, other levels of innovation will also be so.

Like other levels of innovation, management innovation follows the principles of the rule of law: radical changes in management practices, and a large number of ideas of low value and weak influence.

However, this can not be a reason for not innovating.

Innovation is a game of probability. The more you do it, the more chance you will get.

In addition, no intention management breakthrough can achieve permanent competitive gains.

Historically, many companies have only temporarily overturned traditional ideas, and they can not only thrive on this point.

Ford motor and general motors were outstanding management innovators.

Ford motor not only developed the sports assembly line, but also innovated in management methods, and later became the largest vertically integrated enterprise in the world.

General Motors also invented the mode of departmental management.

But nowadays, their management patterns are as plain as their cars. Their real management revolution is nearly 100 years ago.

Although management innovation has such great power and can help enterprises achieve unmatched performance, it is strange that there are too few enterprises that constantly manage innovation.

Looking up the leading commercial magazines in the world, we can see the innovative "last class" status: over the past 70 years, there are more than 52000 articles on the topic of "technological innovation" and "technological innovation", and more than 3000 articles on "product innovation". More than 600 articles on "strategic innovation" (including "business innovation" and "business model innovation") are fashionable nowadays.

There are only 300 articles about "management innovation", "organizational innovation" and "administrative management innovation", and most of these documents are propagating rather than innovating management ideas. This is a reflection of the wrong practices people are accustomed to and unwilling to lead.

Nowadays, every CEO claims to be an advocate of innovation, but once he manages innovation, he is full of embarrassment.

There are three reasons for this.

First of all, most managers do not regard themselves as innovators.

Unlike those technical experts, marketing experts and strategic experts, innovation is not the central task of general managers.

No manager wants to be an innovator. Instead, they are willing to use others' ideas to achieve growth and profitability.

Second, many executives question whether such bold management innovation is realistic. Developers and product developers believe that the next big breakthrough is at hand, and how many executives think they may seize the next opportunity to manage the revolution. Strangely, managers are indifferent to the rapid progress of science, and are also calm about the stagnation of management practices.

Faced with this shortcoming, many executives believe that the existing laws of human beings limit human activities and organizational effectiveness.

They do face many limitations, such as the number of subordinates who can manage, the degree of responsibility decentralization, the degree of trust in employees, the degree of personal obedience to the overall interests of the company, etc.

These restrictions may exist, but some of them are self imagined.

In fact, it is the lack of imagination that limits management innovation.

Third, many managers regard themselves as actual operators rather than idealized dreamers.

In their eyes, the progress of management is dependent rather than revolutionary.

But we will see that things can be changed and future developments require us to change.