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What Matters Now - Book review

1 December 2012

Dr. Moria Levy

The book "What Matters Now" by Gary Hamel was published in 2012. Hamel, a highly regarded professor of management ranked as the most influential business thinker by The Wall Street Journal, extends his influence beyond academia at the London Business School. He actively participates in management initiatives and innovation, having authored five books in these domains.


In response to the economic crisis 2008, Hamel presents his philosophy on conducting business in a renewed and evolving world through his latest work.


The book outlines five pivotal factors for success in this era:

  1. Values

  2. Innovation

  3. Adaptability

  4. Desire

  5. Ideology

  6. "Dreaming of Management in the World of the Future – 25 Tips"


Titled "Dreaming of Management in the World of the Future – 25 Tips," the section provides recommendations and explores the reasoning behind Hamel's belief in these management concepts, particularly in the context of the crisis. Including three examples of organizations managing differently illustrates the potential for change and starting anew.


In conclusion, the book offers more than mere recommendations; it underscores the opportunity for change and a fresh beginning. I recommend reading the summary but encourage delving into the book itself. Happy reading!


Values

Incorporating values into management is not groundbreaking, evidenced by historical examples such as Whole Foods Market emphasizing the value of love and Disney highlighting the value of joy. However, it's essential to acknowledge that these examples are partial.


Hamel identifies the absence of values as a significant factor contributing to the economic crisis at the end of 2008. He attributes the crisis to cheating, deception, arrogance, myopia, greed, and denial. Fortunately, there are already indications that some organizations are adopting a different approach.


What is required is organizational morality—proactive and far-reaching. Hamel does not oppose capitalism; instead, he advocates for its nuanced implementation that considers the future and societal moral obligations and upholds dignity and diligence.


The management concept of integrating values is rooted in the following principles:

  1. The purpose of an organization is to promote the welfare of humankind.

  2. Organizational leaders should take responsibility for actions resulting from their activities, even indirectly.

  3. Managers should be evaluated based on long-term growth and profits.

  4. Managers must commit to doing the right thing in specific circumstances consistently.

  5. There is always justification for doing good.

  6. Customers are concerned about company values.

  7. All organizational activities impact customers and should be duly considered.

  8. It is wrong to turn customers into "captives."

  9. Fair treatment of competitors is essential.

  10. Company branding should authentically reflect the actual values of the company.


Hamel draws inspiration from Viktor Frankl's "Man's Search for Meaning," quoting, "To persevere and reach a goal, it must be made to happen, by dedicating time and dedication of people aiming for something greater than themselves."


Innovation

Hamel, a globally recognized innovation and change management expert, naturally prioritizes the chapter on innovation at the forefront of the list of five principles. Consequently, this chapter should be more extensive than any other.


Innovation within companies is abundant, with numerous studies highlighting the most innovative ones. Three companies consistently identified across leading studies are Apple, Amazon, and Google.


There are five models of innovation:

  1. Rockets: Companies that have thrived through innovation and growth by adopting new business models. Examples include the Gillette Group and IKEA. Sustaining such innovation over the long term is challenging.

  2. Laureates: Companies that consistently innovate over time, particularly in technologically focused fields. Examples include Microsoft and LG. These companies may struggle to innovate in other dimensions and succeed in different markets.

  3. Artists: Highly creative companies that nurture creative genius. Examples include IDEO and BMW. Becoming such a company is a challenging feat, requiring exceptional skills.

  4. Cyborgs: Companies designed for groundbreaking innovation, with an organizational DNA rooted primarily in innovation. Google, Amazon, and Apple exemplify this category. Led by charismatic visionaries, these companies are open to more than one business model, making it nearly impossible to reverse their innovative momentum.

  5. Born-again innovators: Companies that, spanning many years and generations, continually reinvent themselves due to their mastery of the innovation gene. They innovate both top-down and bottom-up. Examples include IBM, Ford, and Procter & Gamble.


Innovation companies share four key characteristics:

  1. Regularly challenging the beliefs and assumptions underlying their business operations

  2. Diligently tracking trends of change

  3. Treating their people as a pool of skills and assets, adaptable for renewal as needed

  4. Identifying undefined and abstract needs that customers have not yet recognized


Hamel analyzes explicitly the components of Apple's innovation, highlighting factors such as passion, leadership, a penchant for surprise, occasional illogical thinking, widespread innovation involving all employees, meticulous attention to detail, and a harmonious blend of engineering thinking and artistic sensibility.


Adaptability

Adaptability involves the capacity to change and adjust as needed consistently. As previously mentioned, Hamel's expertise in innovation is evident in his writings.


Many organizations need help to keep pace with the rapidly changing world. The challenge is that organizational efficiency relies on routine, which inherently opposes change. Organizations resist change because they are composed of people opposed to being compelled into change (ML).


Why is adaptation essential? It's almost self-evident. The world is in constant flux, and those organizations succeeding in adaptability will proactively meet their customers' expectations, resulting in higher profits and loyal customers.


Being adaptable alone is insufficient; organizations must combat entropy and the managerial mechanisms that inherently resist change. Three suggested methods to combat entropy are:

  1. Cultivate humility (acknowledge varying assumptions).

  2. Embrace honesty (especially when confronted with contradictions).

  3. Retain a focus on one's purpose and resist succumbing to means.


To transform into an adaptive organization, consider the following:

  1. Anticipate future developments:

    a) Acknowledge the inevitable and avoid denying new trends.

    b) Learn from the periphery, from technological activities outside the mainstream.

    c) Explore diverse options for future expansion.

  2. Foster intellectual flexibility:

    a) Scrutinize underlying assumptions.

    b) Invest in intellectual diversity.

    c) Encourage discussions and dialectical thinking.

  3. Implement strategic diversification:

    a) Establish a mechanism for a broad portfolio of ideas and their filtration.

    b) Create a magnet for significant ideas (similar to the virtual discussion at IBM).

    c) Reduce the cost of each experience to enable a multitude of them.

  4. Embrace strategic flexibility:

    a) Operate in small organizational units.

    b) Facilitate genuine competition for organizational resources and allocate dedicated resources for innovation.

    c) Increase funding sources for new initiatives.

  5. Adopt structural flexibility:

    a) Avoid commitments that cannot be retracted.

    b) Invest in flexibility.

    c) Think beyond specific target audiences and products, focusing on added values and infrastructures.

  6. Embrace social values:

    a) Tackle challenges, motivating people to embrace change.

    b) Incorporate new management principles like diversification and decentralization.

    c) Uphold respect for web values.


Desire

As managers, we inspire our employees to excel in their work. The hierarchy of personal skills at work consists of six levels:

  • Level 6: Passion

  • Level 5: Creativity

  • Level 4: Initiative

  • Level 3: Specialization

  • Level 2: Diligence

  • Level 1: Compliance


The objective is to guide employees up this hierarchy, ideally reaching the pinnacle of passion.


Here are tools to achieve this goal:

  1. Change in Priority Order: Shift from an organization-first to an employee-centric approach without neglecting profitability.

  2. Managerial Empowerment Tools: Implement tools that empower employees in their roles.

  3. Demonstrate Genuine Care: Show authentic and sincere concern for employees.

  4. Decentralization of Powers: Delegate decision-making authority wherever feasible.

  5. Emphasize Community Across Hierarchy: Foster a sense of community that transcends hierarchical levels.

  6. Transparency in Decision Making: Ensure transparency in the decision-making process.

  7. Leadership Commitment: Leaders should be committed to explaining their actions when necessary.

  8. Establish a Donation-Reward Link: Connect rewards to contributions and achievements

  9. Peer Surveys Over Top-Down Evaluation: Prioritize peer surveys as opposed to top-down evaluations.

  10. Expand Employee Self-Determination: Broaden the scope of employees' autonomy and decision-making.

  11. Encourage Risk-Taking: Create an environment that fosters a willingness to take risks.

  12. Independence at Work: Encourage autonomy and independence in the workplace.


In essence, the success principles at WEB highlight the requirements, many of which are reflected in the above list. By acting by these principles, a model can be established: Employee >> Organization >> Influence.


Ideology

Management theory has remained unchanged for generations, and adapting to the current reality requires a shift in management ideology. For instance, the traditional view of right and wrong has evolved, recognizing the existence of conflicting values. It is crucial to move beyond mere compromise and instead analyze situations, understanding the nuanced weight each value carries in various contexts—an inherently complex endeavor.


Essential Components of Change:

  1. Establishing an Ultimate Goal: Define a comprehensive goal as the benchmark for comparison.

  2. Situational Awareness: Develop a keen understanding of the current context.

  3. Common Sense: Apply practical and logical reasoning.

  4. Personal Incentive for Balance: Cultivate an individual drive to find the proper equilibrium.


The prevailing management ideology, rooted in Theory X, portrays employees as lazy and undisciplined, promoting criticism for effective performance. Theory Y, in contrast, acknowledges that employees are self-motivated and seek meaningful work. A shift in ideology is imperative to accommodate these differing perspectives.


The proposed managerial ideology advocates freedom over control, emphasizing the need to reduce hierarchical levels. Maintaining control and maximum freedom is essential for employee and organizational success.


Reducing managerial hierarchy aligns with the changing ideology and serves as a cost-saving tool for organizations. Managers remaining in the organization should focus on coordination, synchronization, and fostering harmony, acting as facilitators to enable employees to innovate and contribute to customer satisfaction.


Hamel supports these concepts with examples of organizations implementing such ideologies, demonstrating the viability of this model beyond theoretical proposals. Even conservative organizations, faced with extinction, can successfully transform. The key lies in the willingness to change, a crucial starting point, according to Hamel (ML).


"Dreaming of Management in the World of the Future – 25 Tips"

The twenty-five tips outlined above are interconnected with the ideas previously discussed. These tips originated from a collaborative effort among senior managers. They thought leaders in the management field gathered to envision the future of management at a meeting initiated by Hamel in May 2008.


The tips:

  1. Serve a Higher Purpose: Ensure that management aligns with a greater purpose.

  2. Integrate into Community Ethos: Incorporate management into the values of community and good citizenship.

  3. Change Management Language: Infuse management language with ideals like respect, truth, love, justice, and beauty.

  4. Build Trust, Reduce Fear: Cultivate trust and diminish fear to encourage risk-taking.

  5. Redefine Control: Shift towards peer surveys and diminish top-down control.

  6. Enable Imagination and Creativity: Foster and enable imagination and creativity.

  7. Embrace Diversity: Expand and appreciate diversity, allowing for varied opinions.

  8. Passion for Action: Connect organizational goals to employees' natural interests.

  9. Blur Work and Fun: Break down the line between work and play, allowing for independence and diverse roles.

  10. Employee Involvement in Direction: Involve employees in setting the direction.

  11. Management-Based Innovation: Create conditions for innovation through management-based approaches, allowing employees to contribute and choose.

  12. Build Adaptive Organizations: Establish variable, small, project-based teams.

  13. Flexible Resource Allocation: Allocate resources flexibly through an internal market mechanism.

  14. Non-Political Decisions: Make non-political decisions involving employees as partners.

  15. Flexible Hierarchy: Build organizations with a loose hierarchy, empowering those who add value.

  16. Enhance Employee Independence: Increase employees' independence and freedom to decide.

  17. Refocused Leadership: Rethink leadership as a tool to create collaborative, innovative, and high-performing environments.

  18. Information Democracy: Foster an information democracy, making performance information accessible to employees.

  19. Encourage Dissent: Encourage dissenting opinions to foster innovation.

  20. Holistic Measurement Perception: Develop a holistic perception of measurement to avoid internal competitiveness and bias.

  21. Field Personnel Autonomy: Allow field personnel to choose how to handle contrasts without imposing overwhelming decisions.

  22. Avoid Time-Based Measurement: Avoid measuring managers and performance based on small time units to encourage investment in innovation.

  23. Strengthen Right-Brain Skills: Strengthen right-brain skills, encouraging second-order learning and creative problem-solving.

  24. Rebuild Management Tools: Adapt management tools to navigate the open world we find ourselves in.

  25. Revisit Philosophical Foundations: Reevaluate the philosophical foundations of management with input from artists, philosophers, and others.


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