Reprint: R1405B
Innovative management ideas that bubble up in other companies pose a perennial quandary for leaders: Should you attempt to borrow new ideas, and if so, which ones and how? Even the most promising practices can be disastrous if they’re transplanted into the wrong company, writes Julian Birkinshaw of London Business School.
Broadly speaking, there are two ways to borrow from innovative companies, he argues. The first, observe and apply, is the most commonly used approach for adopting new management ideas. It can and does work well, but only under limited sets of circumstances: when the observed practice easily stands alone or involves just a small constellation of supporting behaviors (think of GE’s well-regarded succession-planning process) and when a company’s management model or way of thinking is very similar to the originator’s (think of two software firms that both use the Agile development approach).
The second method is to extract a management practice’s essential principle—its underlying logic—and ask a series of questions to determine if it is right for your firm, including: How is your company different from the originating firm? Are the goals of the practice important to your organization?
Many management innovations are launched with great fanfare, only to fade in popularity. With careful analysis, you can avoid falling prey to this hype cycle. And even if it turns out that a borrowed idea isn’t right for you, the analysis will help you better understand your own management models and sharpen your practices.
Where do new management practices come from? A few emerge fully formed from the minds of academics and consultants, but the vast majority come from corporate executives experimenting with new ideas in their own organizations. A case in point is the online retailer Zappos, which is replacing its traditional hierarchy with a self-organizing “operating system” known as holacracy.
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