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IMD Professor Bill Fischer speaks at the Global Drucker Forum

Giving up control to free up human talent

December 4, 2014

Bill Vienna 3

Photo copyright Peter Drucker Society Europe

When IMD Professor Bill Fischer took the stage at the 6th Global Drucker Forum in Vienna last month, he started with some strong words about how most companies manage their talent.

“Organizations hire great people and turn them into average performers,” said Fischer, a professor of innovation management at IMD. “It’s oppressive and discouraging and intolerable.”

Fischer was speaking on a panel discussion about the “creative economy” that was moderated by Forbes contributor Steve Denning and also featured Dan Pontefract from Canadian telecoms company TELUS. You can see a video of the session here.

Denning said the idea of the creative economy reflects three big shifts: from maximizing shareholder value to continuously adding value to the customer; from hierarchical management bureaucracies to more agile, collaborative leadership; and from narrow financial goals to contributions to broader social prosperity.

Fischer said some companies are embracing the shift to more collaborative ways of working, and are giving power back to their most creative people. As a result, they are unleashing their employees’ innovative talents.

He cited DSM, a Dutch life sciences and materials science company, and Haier, a Chinese firm that makes refrigerators, washing machines and television sets. As Fischer also noted in a recent HBR blog, both companies have encouraged innovation by moving power nearer to the frontline, creating self-organizing platforms and work groups in different areas of their business.

The lesson is that companies don’t need to be small or “new economy” to give up control in this way, Fischer said.

“These are big organizations in old industries that have given up control to free up human talent,” he said. “They are faster and closer to the customer and more entrepreneurial than ever before without losing economies of scale.”

Fischer said companies that are good at empowering their employees and encouraging innovation typically have three characteristics:

•  They make change normal, not episodic. They generally change when they are doing well and resources are relatively abundant, rather than when times are tough and resources are scarcer.
•  They handle changes coherently. Instead of just being a leap into the unknown, change comes with explicit objectives.
•  They have self-assured, confident leaders. The people at the top are comfortable with themselves and are willing to give up control.

“Innovation happens when people feel that they are free to innovate, while at the same time top management believes it is in complete control,” Fischer said.

The Global Drucker Forum is held annually in memory of renowned Vienna-born management thinker Peter Drucker, who died in 2005. This year’s event attracted top speakers including Clayton Christensen, Gary Hamel and Roger Martin.

You can read a summary of the discussions at this year’s event on Steve Denning’s Forbes blog.

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