Saturday, 25 June 2011

Business 'Gurus' are still way out of date ... but are slowly catching on!

Gary Hamel, a supposed well-known 'business guru' (from the United States) recently dropped in and talked to Peter Day's "World of Business" programme on his latest UK trip to visit to the London Business School.

Peter Day started by referring to all the soul-searching going on following the credit crunch... e.g. with regard to the ways banks work, markets work, and the kind of values/purposes of companies operating in such markets ..."

Day then went on to highlight how people are starting to challenge conventional wisdom on how businesses operate ... and suggested 'behaviour' currently appeared rather 'shabby' ... referring to a lack of trust ... 

Hamel started by discussing the 'values crisis' ... and the fact that most CEO's focus almost "exclusively on shareholders and making the numbers, with everything else going to hell". 

He went on to highlight how the web is starting to bring transparency and accountability, and said "we have to call them to account for the underlying values they bring to business ... particularly the banks ..." and said "we cannot have leaders of institutions whose primary motive is greed ..."

What we are now seeing (e.g. Egypt) is how people can mobilise ... if they choose to ... but Hamel noted how people are currently too complacent (i.e. apathetic) ... he said "people need to call leaders to account ... demand more transparency ... and demand more from them as consumers ..."

Peter Day referred to the need to address the lack of trust in business, and the fact that efforts currently focus too heavily on quarterly reports and short term profits. Hamel went on to describe the challenges ahead ... e.g. the need for honor and courage ... and the need to refocus on innovation and the production of value (looking beyond short-term profit) ... as well as a business environment where people become accountable for how they treat others, the environment etc ... (i.e. the role of enterprise in the wider world).

Hamel also referred to the lack of responsiveness in organisations, and the fact that innovation often involves taking money away from traditional activities, in order to invest in the future (which top-down organisational structures fail to support)! He said alternative approaches are becoming "clearer now" ... ones which involve empowering people, allowing people to collaborate and innovate, with all the data (and decision making powers) they need, and with everyone accountable (and rewarded) for their actions ... but he said we are being held hostage by 100 year old beliefs.

Most of the leaders of very progressive organisations, if they went to business school (and most of them didn't), have thrown most of what they learnt out! Hamel went on to say "There comes a point time in human endeavour, and I believe we are there in management now, when we have to go back and challenge first principles ... and old models" ... as such models had not had to face up to challenges such as ... changing very fast, being socially accountable, or innovating systematically ... 

Hamel referred to the need for a paradigm shift, siting fundamental shifts in understanding within other disciplines in the past. For instance, Hamel highlighted how "there was no way of understanding the sub-atomic world by starting with Newtonian Physics, and it had had to go through a fundamental paradigm shift" ... and he concluded "that this is also going to have to happen in business" ... (NB the shift in understanding will not come from business schools themselves, as they are 'wedded' to existing doctrine, which is also 20-30 years out of date)!

He referred to the need for a new management model and governance model, and said most people teaching in business schools now know that "what they're teaching in business schools isn't relevant now". Hamel also said that they are trying to find out "where to go next", and went on to say that they may not lead the next revolution ... "it might come from managers themselves, and/or from people in social sciences and biology, who have a lot more to say on this [than business schools]" ... (indeed ... it has, and will continue to be, developed by forward-looking people who are commonly referred to as "creative outsiders", and whose ideas are almost always initially ignored/rejected)! 

Hamel said new models are still kind of fuzzy ... but Peter Day quizzed him about the bankers and the "perils they are leading people into" ... Hamel said he was still "amazed at their state of denial", with groups such as Goldman Sachs being pulled up in front of US Congress, "for selling toxic products to their customers, whilst betting against these products on the other side"!

He said "people can't be passive anymore" ... and made it clear that current leaders/executives are "living on borrowed time" ... 

Hamel is beginning to catch on ... but this knowledge (and much more besides) was uncovered (and made available to the world) a number of years ago (21st Century Management in a Lean World) ... and the World of Economics is also heading for a similar paradigm shift too (i.e. towards Leanomics) ... though a small, greedy (and power hungry) minority, who currently exploit (and profiteer from) the existing (and failing) system, will fight tooth and nail to resist such paradigm shifts ... and in this way Hamel is actually right ... people can't afford to be passive (i.e. ignorant or apathetic) anymore ...