A good book can change someone’s mind. The right book at the right time can change someone’s life. That is true in the lives of our businesses, as well. If you’re here reading this, I’m sure you have experienced that reality. There is a reason you continue to look to books for ideas and inspiration. You know what is possible. You believe in possibilities, and in the power of a good book.
Roger Martin’s new book, A New Way to Think: Your Guide to Superior Management Effectiveness, tackles the outdated models we use to structure and run our businesses and offers new ways of thinking we can use to replace them. He proposes fourteen new models (or new ways to think) in all, dedicating a chapter to each, but I’ll focus on just a few areas here.
We have covered many books about the flaws of shareholder maximization here over the years. It is a theory that has held sway in business for over forty years, and that has undermined businesses, markets, and our public life in the process. But Martin points to another casualty: the very shareholders the theory purports to benefit. As Martin sees it, “The harder a CEO is pushed to increase shareholder value, the more the CEO will be tempted to make moves that actually hurt the shareholders.”
That is because managing shareholder expectations by managing (some might say manipulating) the stock price is a short-term game with short-term gains, and comes at the cost of managing the company itself. If you’re managing outsider’s expectations rather than inside operations, you are sacrificing real, “long term gains in operations-driven value” for “temporary gains in expectations-driven value.” Instead of focusing on shareholder value and expectations, finding out what customers value and meeting their expectations puts businesses on solid ground in the real economy. Shareholder value should be a happy byproduct of that focus, not the primary focus.
To actually create shareholder value, put your customers before your shareholders.
STRATEGY & DATA
When considering strategy, Martin suggests we focus not on what is currently true, but on what would have to be true for us to consider upending the status quo and change course. Rather than a well-structured analysis of current data, it is far more constructive to develop hypotheses — “or structured possibilities”—that can inform what direction to move the company. This frame is future-focused on new options and choices, and the analysis is then on future possibilities rather than current problems, in which we can easily become mired. As Martin writes, “Constructing strategic possibilities, especially ones that are genuinely new, is the ultimate creative act in business.”
But there is a bit of a catch, “To generate such creative options, you need a clear idea of what constitutes a possibility. You also need an imaginative yet grounded team and a robust process for managing debate.”
The pages in which Martin lays out the rules for this process are some of the most practical, yet inspiring in the book. We often tend to think of rules as constraints on creativity, but they are often exactly the opposite, and the framework he provides could be just what you need to put what seems like an unattainable or nebulous goal—a real, honest-to-goodness strategy session—well within reach.
Because of Martin’s experience with P&G and other larger corporations, his examples are often focused on larger organizations, but the breadth and depth of the material provides lessons for all. For example, you may not have to worry about how to structure many layers of multiple business units or how to manage a complex corporate hierarchy, but Martin’s insight that competition “happens at the front lines more so than at the head office” is essential to understand for any size company. And if you work in a larger organization in which you do have to worry about those power dynamics, it is even more important to understand.
Corporate leaders tend to focus on competition at the company level, but customers are choosing between products—and in service businesses the people they enjoy working with—rather than companies. Big Tech has been more successful than most industries at locking us into the products and services they offer across platforms, but even there Martin reminds us that “Even though many Mac users like Microsoft’s Office suite, it doesn’t convert them to Windows.” We choose products that meet our needs, not companies to be loyal to, so: “It is up to the rest of the company to help the people on the front lines, where the revenue comes in, to satisfy those customer needs.”
In his insistence that every level of a business’s most important work is to provide support and value to the level below it, Martin flips the paradigm of who we work for on its head. Our ultimate responsibility is not to those above us, but to support and serve those “below” us in the company hierarchy, those closest to the customer, and the customers themselves.
As I said at the beginning of this review, a good book can change someone’s mind. A New Way to Think can change the outdated models our minds use to shape nearly everything we do. So many of the improvements he suggests seem self-evident to me, but he provides ample evidence to back them up so you don’t have to take my word for it, or take them at face value. If you simply open up the book and open your mind, I believe they’ll make a difference. They may even change your life, or at least the life of your business.
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