Insights from "A New Way to Think: Your Guide to Superior Management Effectiveness"
The Digital Leader Newsletter — Strategies and Techniques for Change Agents, Strategists, and Innovators.
Change your mind about something significant every day — Malcolm Gladwell
As part of a recent client assignment, I needed a technique for shaking them up, motivating them to be willing to ask new questions and apply different filters. My thinking was that if I can create a degree of FUD (Fear, Uncertainty, and Doubt), I would create space for considerations and new thinking. BUT… the approach can’t just say “you need to think differently”, it needed showcase techniques and models. It needed to both shatter their long-held beliefs, and show a path forward. How do I thread this needle?
I needed a book. A book can change minds like no other tool or technique. The challenge is always in getting them to read them, especially as a team. (When asked how he learned about rockets, Elon Musk answered “I read books”)
This week, I’m giving you insights from just such a book.
A New Way to Think — Your Guide to Superior Management Effectiveness contains insights and tools I will be referring to in the future — I’m actually using a few of them already. It has many features of my favorite books:
It’s a book about “thinking” — This helps make it durable and should age well. As the saying goes, “thinking about thinking is the most important thinking we do.”
It has several concepts in it — not just one concept that is told again and again. My pet peeve is a book that is really just one idea. It should just be a blog post or article — not a book.
The concepts, or “models” as the author describes them, challenge traditional management wisdom. My underlying thesis is that the “management science” of the past is often what is holding leaders and companies back from creating a different and better future.
Read it in any order — Each of the fourteen concepts is stand-alone and the book can be read in any order. This feature speaks to its utility as a book of “tools” —>models and concepts which can be used at opportune times.
Who is Roger Martin?
Roger Martin is the former Dean of the Rotman School of Management at the University of Toronto from 1998 to 2013 and an author of several business books including Fixing the Game, When More is Not Better, The Opposable Mind, and Design Thinking (which I have also read). Martin has expanded several important business concepts in use today, including integrative thinking. He has been recognized by several business publications as one of the field's most important thinkers.
Martin currently serves on several boards, including Thomson Reuters Corporation, the Skoll Foundation, and Tennis Canada. He was previously a director of BlackBerry Ltd. (adapted from Wikipedia page)
Martin received his BA from Harvard College, with a concentration in Economics, in 1979 and his MBA from the Harvard Business School in 1981.
In a previous newsletter, I gave the highlights and comments on a podcast interview with Roger Martin on innovation
Chapters and Key Concepts
The book is composed of fourteen traditional models of management science dogma with a compelling alternative “way to think”. For example, the second concept is on creating shareholder value. Here Martin demonstrates that prioritizing customers first is a better model than prioritizing shareholders through typical stock and financial models. Martin writes “To actually create shareholder value, put your customers before your shareholders. In other words — and nobody should be surprised by this — Peter Drucker had it right when he said that the primary purpose of a business is to acquire and keep customers”1. While Martin gives good data on this point, he resists the temptation of turning any chapter into an academic treatise to prove every point. This results in an immensely readable book (or a great listen)!
Martin typically outlines mechanisms or techniques to put the new thinking into place — a new incentive, a way to structure a meeting, a different technique or approach. These concepts don’t tend to be “big transformation” initiatives, just small adjustments having an oversized impact. For example, in the aforementioned second concept on shareholder value, he outlines how executive compensation, in particular, typical short-term stock-based incentives, works against long-term results and proposes a realignment to long-term results through customer value focus.
Here are the chapters and concepts:
Competition: It happens at the front line, not at the head office.
Stakeholders: To actually create shareholder value, put customers before shareholders.
Customers: The familiar solution usually trumps the perfect one.
Strategy: In strategy, what counts is what would have to be true—not what is true.
Data: Creating great choices requires imagination more than data.
Culture: You can only change it by altering how individuals work with one another.
Knowledge Work: You must organize around projects, not jobs.
Corporate Functions: Give them their own strategies.
Planning: Recognize that it’s no substitute for strategy.
Execution: Accept that it’s the same thing as strategy.
Talent: Feeling special is more important than compensation.
Innovation: The design of the intervention is as critical as the innovation itself.
Capital Investment: Assume that its value is reset as soon as it is embedded.
M&A: You need to give value to get value.
I’ve already put a few of these concepts to work. Specifically, in concept 3 “Strategy”, Martin writes “The traditional model in strategy is to focus on asking the question: What is true? A more effective model for framing and making strategy choices is to focus on the logic behind the choice by asking: What would have to be true?” The phrasing in outlining assumptions or “future truths” making a consideration feasible has an effect of getting entrenched or biased minds to open up to new possibilities and drives a true “what could be” strategy conversation. Then constraints and other filters are applied to leave a view of the options and how one might test or proceed.
A Tasty Review
I thought this review of A New Way to Think at Amazon was helpful:
Reviewed in the United States on May 3, 2022
More recently, Marshall Goldsmith asserted that "what got you here won't get you there." My own opinion is that what got you here won't even allow you to remain here, much h less get to there, however "here" and "there" are defined. Warren Buffett once suggested that bad habits are too light to notice until they are too heavy to break. Business models consist of a cluster of individual and organizational habits. Over time, people become hostage to what James O'Toole so aptly characterizes as "the ideology of comfort and the tyranny of custom."
Roger Martin wrote this book to help those who read it to think differently about the essentials of management: context (competition, stakeholders, and customers), making choices (strategy and data), structuring work (culture, knowledge work, and corporate functions), and key activities (planning, execution, talent, innovation, capital investment, and M&A).
Martin acknowledges that all of the now dominant models make sense but need to be re-evaluated from time to time. He focuses on fourteen of what he characterizes as "new or different models" that can provide any organization "a better likelihood" of achieving better results "than the model it replaces. And I would welcome the next thinker who will improve on each of my models."
Each is based on a core principle:
1. Competition happens at the front line where there is interaction with customers, not at the head office.
2. To actually create shareholder value, put customers before shareholders. That leads to organizational success...and enrichment of shareholders.
3. Unconscious habit is a much more powerful driver of customer behavior than is conscious loyalty.
4. In strategy, what counts is what would have to be true -- not what is true.
5. Creating great choices requires imagination more than data.
6. You can only change culture by altering how individuals work with one another.
7. You must organize knowledge work and workers around time-bound projects, not jobs.
8. Corporate functions need strategies to be effective to the same extent that operating businesses do.
9. Recognize that an effective strategy selects goals and risks rather than try to control them on an uncertain path.
10. Accept that "execution" is essentially the same as "strategy."
11. Treat each talented employee as an individual with unique needs and desires as the key to attraction and retention.
12. The design process for approving and launching an innovation is as important as the innovation itself.
13. Treat an asset as what it is worth immediately after conversion from unfettered to embedded capital...and calculate its ROI based on that embedded value.
14. A key goal in any acquisition should be to provide more value to the acquired entity than the corporation receives from the entity.
Obviously, no brief commentary such as mine can do full justice to the material that Roger Martin provides in this brilliant book but I hope I have at least indicated why I think so highly of him and of his work. No one has a better understanding of the WHAT and WHY of effective management. One man's opinion, the greatest value of his countless books and articles as well as decades of classroom teaching is primarily found in his explanations of HOW.2
Do You Really Have a Strategy?
I might be overstating this…but I don’t think so…
Most companies do not have a true “possibilities” based strategy process or an approach for building this strategy. Most corporate strategy functions focus on “planning” consisting of groups making commitments and asking for resources and then resource allocation and budgeting. This is important — but it is not a process of considering deliberate “what if” possibilities.
The same should be said about innovation. Most companies discuss and intellectually realize that they have to innovate new products and services, new value propositions, and new solutions for “jobs to be done” — but they do not create a system for innovation or a system and culture embracing “experimentation”. As Bezos says on this topic,
One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.3
Your Homework
Shocker! — improve YOUR thinking and read A New Way to Think — Your Guide to Superior Management Effectiveness. Better yet — read it as a team and discuss these concepts might apply to your business. Give me a call if you need some ideas on running an executive “book club” concept like this.
Onward!
John
PS — This is the third book review I’ve done. If you have a suggested book for a future review, please send me a note (info@rossmanpartners.com). Here are the two other book reviews
About The Digital Leader Newsletter
This is a newsletter for change agents, strategists, and innovators. The Digital Leader Newsletter is a weekly coaching session focusing on customer-centricity, innovation, and strategy. We deliver practical theory, examples, tools, and techniques to help you build better strategies, better plans, and better solutions — but most of all, to think and communicate better.
Martin, Roger L.. A New Way to Think (p. 39). Harvard Business Review Press. Kindle Edition.
https://www.amazon.com/New-Way-Think-Management-Effectiveness-ebook/product-reviews/B09KHKWB7B/ref=cm_cr_dp_d_show_all_btm?ie=UTF8&reviewerType=all_reviews
https://www.sec.gov/Archives/edgar/data/1018724/000119312516530910/d168744dex991.htm
An excellent reference to help recalibrate any firm in today's digital era