The Future of Management by Breen Bill; Hamel Gary

Author:Breen, Bill; Hamel, Gary [Breen, Bill; Hamel, Gary]
Language: eng
Format: mobi
Published: 2011-11-30T11:41:33.697000+00:00

Eight

Embracing New

Principles

YOU CAN’T REINVENT MANAGEMENT FOR THE 21ST CENTURY without some new management principles—big ideas with the power to inspire dramatic changes in tradition-bound processes and practices. Jim Lavoie, the CEO of Rite-Solutions, a young software company based in Middletown, Rhode Island, bumped into one such principle while driving his car.

The Power of a New Principle

The story begins in 1999 when Lavoie cashed in his stock options at a leading defense contractor and left to launch a start-up. Joining him in the new venture was Joe Marino, a longtime col eague who, like Lavoie, had risen to the rank of EVP within their previous employer. In those roles, both men had been frustrated by their inability to protect inventors from an overeager horde of rule-happy “preventers.” Life would be different, they vowed, in their new company, which they christened Rite-Solutions. New ideas would always be welcome and everyone would have the chance to innovate.

Over the next five years, Rite-Solutions would grow to 150 employees and pass the $20 mil ion mark in annual revenues. Yet with this success came a renewed concern on the part of Lavoie and Marino: how could they make sure that Rite-Solutions remained an energetic, innovative community, even as it grew?

The breakthrough came in October 2004, as Lavoie was sitting in his car listening to a roundup of the day’s financial news. Wow, thought Lavoie, the stock market might be a great blueprint for building an innovative company. The market is inclusive—anyone can invest; it’s fun—most investors avidly fol ow the progress of their portfolios; and the stock market is empowering—there’s no über-investor tel ing individuals where to place their bets. Fired up by these insights, Lavoie quickly recruited a few lateral-thinking col eagues and chal enged them to find a way of building a market-based innovation process within Rite-Solutions. When the new system final y went live, it encompassed three markets: the “Spazdaq,” a market for risky ideas focusing on entirely new businesses and technologies; the “Bow Jones,” a market for ideas “adjacent” to the company’s current products and competencies; and a market for “Savings Bonds,” ideas for short-term operational improvements.

To Lavoie’s delight, the notion of a stock market caught on quickly, due in part, no doubt, to the scheme’s tongue-in-cheek lingo. Over the next 13 months, 30 internal champions launched 44 “IPOs,” each of which was a nascent idea in search of investors. In its first year, the new innovation platform added 10 percent to Rite-Solutions’ top line and accounted for 50 percent of its new business growth. Here’s how the markets work: To launch an IPO, a would-be entrepreneur prepares an “ExpectUs”—an offer document that outlines the value-creating potential of the new idea. Each new stock debuts at $10, and entrepreneurs don’t have to seek top management’s approval before launching a new security.

Every IPO has a “Budge-It” that is prepared by the entrepreneur. This document lists the short-term steps that must be taken to move the idea forward. The goal is to make

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