Inside the innovation lab

Gary Hamel’s landmark book, co-authored with C. K. Prahalad, Competing for the Future, was BusinessWeek’s book of the year in 1995.

Gary Hamel’s landmark book, co-authored with C. K. Prahalad, Competing for the Future, was BusinessWeek’s book of the year in 1995.
Inside the innovation labIts 2000 sequel, Leading the Revolution, was also a bestseller. Add on globetrotting seminar appearances and lucrative consulting assignments and Hamel remains one of the key contemporary business thinkers. Indeed, the Economist called Hamel “the world's reigning strategy guru”. Peter Senge of MIT describes him as “the most influential thinker on strategy in the Western world”. Des Dearlove spoke to Hamel at London Business School, home to a new management innovation laboratory with which he is intimately involved.

The cornerstone of Gary Hamel’s thinking is the vital importance of innovation. “My argument is the more difficult the economic times, the more one is tempted to retrench, the more radical innovation becomes the only way forwards. In a discontinuous world, only radical innovation will create new wealth,” he says. “Despite the dot-com collapse, look back over the last decade and most new wealth was created by new entrants or newer companies. Innovation drives wealth creation. There’s no other conclusion you can reach.”

Of course, this is nothing new. Hamel, and others, have been espousing the benefits of innovation for some years now. At one level, executives appear to be getting the message. They know that they can’t do the same things. Innovation is routinely identified by companies and their leaders as a top priority. The rhetoric is convincing, but is often followed by inaction.

The problem, says Hamel, is that employees lower down the corporate hierarchy have not been trained in innovation and there are few processes or support mechanisms to nurture innovation.

Hamel compares our current understanding of innovation with the business world’s understanding of quality in 1970. At that time, people knew that quality was important but didn’t know the processes or systems which could enable quality to happen.

The processes and systems, such as pareto analysis, quality circles and so on, which later became known as total quality management, were then being constructed largely in Japan.

This thinking has led to his ongoing research – alongside London Business School’s Julian Birkinshaw – which looks at the innovation of business ideas. Researchers, Hamel and Birkinshaw lament, have traditionally paid relatively scant attention to the dynamics of management innovation – the processes through which organisational principles and practices evolve and, perhaps, advance over time. While many of the landmarks of management innovation are familiar to every business scholar – think of GE’s development of the modern research lab or GM’s development of the multidivisional organisation – there is no general model of management innovation as a dynamic process.

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