A moment of truth
The combination of widening budget deficits, an aging population and increasing competition from emerging markets is set to exacerbate the imbalances in public finances in developed nations around the world. There are no easy answers – pure belt-tightening might have a huge social cost. Achieving significant growth seems to be the only alternative.
Craig Barrett, former CEO and Chairman of Intel, has formulated it like this: “We cannot save our way out of the crisis, we must innovate it!”
Yet it is more than innovation in products and services. Innovation needs to comprise business models, organisation processes, public private partnerships, government services and the social sector. Ultimately we will have to innovate innovation itself. A combination of productivity increases and incremental and game-changing innovation will be the ingredients for growth and future prosperity. The time may also be over where we the West were the hub of the world for understanding and managing innovation. As the late and much missed C K Parahalad has demonstrated in his influential book The Fortune at the Bottom of the Pyramid, new ways of innovating are being created in emerging nations that might revolutionise innovation in the developed world. In the recent special report on innovation in emerging markets in The Economist Adrian Wooldridge provides impressive indications for a rapid shift in the centre of gravity for innovation in a world turned upside down.
What might be called “Innovation 3.0” must include system-level transformation taking into account the increasing interdependence and complexity of companies, economies and social systems. Innovation 3.0 is not just a quest for competitive advantage by individual institutions, a strategy game or sand table exercise for business and policy makers – it is the lifeline for 21st century society.
Hence, this is the moment of truth for management. Transformation, managing and accompanying profound change in
70 Management Today | March 2012
organisations and reinventing the institutions of our society is an unprecedented challenge. Will this require reinventing management itself as postulated by a recent book from Julian Birkinshaw (Reinventing Management, Smarter Choices for Getting Work Done, Jossey Bass, 2009)? Or does it mean – as Fredmund Malik would argue – to finally apply the fundamentals of management as established by Peter Drucker and other great management thinkers (Führen Leisten Leben, Campus 2006)?
Challenges and opportunities Can it be done? Is there a realistic chance to make the 21st century an age of pervasive and systemic innovation and of deep transformation? Will we be able to manage both continuity and change to avoid a catastrophic system crash? Where are the opportunities and how realistic is it to assume we can make this work?
In his prescient way Professor Drucker pointed in the 1960s to the rise of the knowledge worker and knowledge becoming the key resource in a post-capitalist society.
With some 30% of the population in developed economies dealing with knowledge in non-routine and creative ways there is still a huge untapped potential for increasing this pool. This is the big challenge for the education system – increasing the quantity of people benefitting from advanced education and improving quality and relevance at the same time.
The underlying social challenge is to avoid yet another divide – the knowledge divide between those who can participate in the creative economy and those who are excluded.
The first and foremost challenge relating to knowledge work in modern organisations will be the liberation of latent creative and innovative potential. The level of autonomy required by knowledge workers is in stark contrast to the reality in most organisations that still use bureaucratic top-down approaches. However, with knowledge
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