Management Innovation

Management Innovation
Julian Birkinshaw, Gary Hamel and Michael J. Mol
Academy of Management Review, October 2008

Over the past half-century, scholars around the world have produced a vast body of aca­demic research on innovation.  While most of this research has focused on technological innovation, management innovation has not received as much attention.

In fact, very few businesses have expertise in the area of management innovation.  A typical large organization might employ hundreds of scientists with technological innovation skills but few, if any, with proven management inno­vation skills.

In “Management Innovation,” in the October 2008 Academy of Management Review, the authors explain how to create new management ideas and put them into practice.

Let’s start with a definition.  Management innovation, as used here, is the invention and implementation of a management practice, process, structure, or technique that is new to the state of the art and is intended to further organizational goals.

Here are five examples of management innovation:

  • The modern assembly line was a new set of practices and processes with
  • the goal of improving production efficiency and lowering costs.
  • The Toyota production system was a new organizational structure for dealing with complex, multiple-product, and multiple-market firms.
  • Total quality management was a new set of practices and processes aimed at reducing quality defects and improving customer satisfaction.
  • The spaghetti organization was a new organizational structure with the objective of increasing employee initiatives and overcoming problems of hierarchy.
  • Activity-based costing was a new practice and technique for assigning costs aimed at providing more realistic cost assessments.

To create management innovations like these, it’s necessary to use a rigorous process.  The four phases of the innovation process are as follows:

  • Motivation is concerned with the factors that lead individuals to consider developing their own management innovation.
  • Invention is an experiment out of which a new hypothetical management practice emerges.
  • Implementation is the technical process of es­tablishing the value of the new management innovation in a real setting.
  • Theorization and labeling is a social process whereby individuals inside and outside the or­ganization make sense...