A conversation with Gary Hamel: Transformation of leadership, step-by-step

you know in 1890 it would have been very difficult for anybody to imagine Ford Motor Company right 25 years later here's this company iron ore NAT one end model T out the other end massive industrial scale everything that needed to go to to be invented to allow that kind of you know vertical integration and all the new management techniques management science that God invented but ask somebody to describe that in 1890 making half a million vehicles a year by 1915 very hard to describe I think we're a similar kind of inflection point where and and I will tell you if somebody if you're a CEO and if you're waiting for that model to emerge like that's not a good thing you know if you're waiting to benchmark somebody else that's not what leaders do in most organizations we don't call people employees anymore I mean maybe somebody does but we call them team members or associates and we recognize that in the creative economy most of that wealth creation is coming from people out there rubbing up against customers innovating certainly true in a service economy the experience economy we talk more and more about co-creation with our customers with our business partners so already I think we've understood that that value is created more and more out there on the periphery but we still have these organizations where I would say too much power and authority is is is is reserved for people the top of the pyramid and ultimately yes I think the structures the compensation the decision-making has to catch up with this new reality you know I found it kind of interesting most companies are quite now comfortable with 360-degree review where your peers your subordinates and so on review your performance in the best cases that's all online and everybody can see it but I would argue the next important step is going to be 360-degree compensation because if you show me an organization where compensation is largely correlated with with hierarchy I can tell that's not going to be a very innovative or adaptable organization people are going to spend a lot of their time managing up rather than collaborating there'll be a lot of competition that goes into promotion up that formal ladder than competing really to add value so increasingly compensation has to be accorded a value created wherever you are rather than how well you fought that political battle what you did a year or two or three years ago that made you an EVP or whatever so you know I think our organization's argument we are going to catch up to this new economic reality but it's going to take a while because that old hierarchical that that formal hierarchy that is one of the most enduring social structures of humankind I think making this transition and it can seem quite daunting in a way but I think making the transition it will happen step by step it will happen small experiment by small experiment where we start to say what can we do what can we do in our organizations to enlarge the leadership franchise we can break big units into smaller units create more opportunity for people to be leaders we can make the P&L much more visible to people so you and and tie their own performance into that so you feel like you have a real stake in the business we can start to syndicate the work of executive leadership by opening up the conversations about strategy and direction and values and so on we can start to use more peer based systems to collect feedback on who's really acting like a leader and who's not so I think there are a lot of small incremental steps that you can take in that direction where do you experiment what can we do both to create more opportunities for leadership but also to help to teach people what does it mean to exercise leadership when you don't have formal Authority how do you mentor people how do you build a coalition how do you live in the future so other people want to follow you how do you become one of those connectors that is bringing ideas and talent and resources together which that's again a critical work of leadership today so giving people those new leadership skills that allow you to exercise leadership get things done even when you don't have a lot of formal positional Authority I would love to be in an organization where everybody has been trained everybody believes they have the possibility of doing that but it's going to happen one small step at a time and as a CEO my goal would be whatever those small steps are I want to be taking more of them and I want to be taking them faster than anybody else because the extent I unleash the latent leadership talent across my entire organization to the extent I become reliant on a few people top to see the future and respond in time I'm going to have a more successful organization

Channel: McKinsey & Company

Views: 18,194

Keywords: business, leadership

Id: _mCmecrnLUM

Length: 4min 53sec (293 seconds)

Published: Thu May 23 2013