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How Middle Managers Make Innovation Possible
A conversation with Rita McGrath, a top expert on strategy and innovation
What inspired you to look at the plight of middle managers?
I was looking at companies that were struggling to innovate, and I wanted to understand why. What I found is that a lot of the work on new ventures involves making connections across the company and finding resources that may not be formally available — particularly when it comes to an innovation that isn’t a direct fit with the current strategy of the company.
I examined when innovation broke down and when it worked well. When it did work, it was usually because a middle manager was making the connections, finding the resources, providing a shield for people working on the venture so they didn’t get interfered with by senior management, and doing the political work to say, “Hey, this is a legitimate activity.” And this was systematic across almost all of the companies I studied.
So why don’t middle managers get credit for the part they play in getting new ventures off the ground?
Often, this work isn’t part of their official responsibilities and gets taken for granted. And that’s part of the problem. If you look at a middle manager’s job description, it will have items like “increase operational efficiency” or “decrease costs by 5 percent.” But where does it say to elbow people out of the way so that your venture gets protected; beg to get assets moved over to the production line that you need; negotiate with universities to get the intellectual property; and protect your people from undue interference by senior managers? These specific activities that middle managers do to make innovations happen are not part of the discussion.
When you look at the innovation literature, there are some suggestions that middle managers should take this role. But relative to all the writings about what senior leaders or managers of a specific venture have to do to make it successful, there isn’t much attention being paid to middle managers. Middle managers aren’t necessarily the ones who come up with the idea, but once the idea is identified, they’re the ones who know what to do within the organization to get it moving.
How should companies encourage middle managers and make their roles easier?
When you look at how you structure your budget, you want to leave some slack to the discretion of the people in the middle. They need to have resources available. Very tightly run organizations often don’t do that, so they end up with very little for middle managers to work with. That’s the first step.
The next step is creating the right context and communication between the senior manager and the executive level, and the middle. For example, when Alan Lafley, the CEO of Procter & Gamble, says he wants 50 percent or more of the innovations the company works on to come from outside, that gives his middle managers permission to search for ideas that are not necessarily traditional P&G ideas. If he hadn’t done that, they couldn’t have done their jobs.
Essentially, he created a context that allowed him to get out of the way and empowered middle managers to pursue innovations. This doesn’t mean telling middle managers to do whatever they want. This is about having a different kind of discipline and a different kind of communication. It’s empowering, while setting limits.
Is driving innovation something that middle managers really want to do?
Many do, but some feel that it’s a career risk, for good reason. Innovation is a process that unfolds unpredictably over time. Imagine three managers. Manager A has a brilliant idea and launches a venture, and it fails. B observes what A did and sees that now A is disappointed and bitter, because the culture of the company condemns failure of that nature. B thinks A had a good idea but carried it out the wrong way, so B starts a venture to pursue a new take on the idea. This also fails. C looks at the trials of A and B and realizes that their efforts taught him something about this market. C launches a venture, and it succeeds beyond anybody’s dreams.
Who’s really responsible for the success? A, who had the idea, B, who tested the market in new ways, or C, who actually made the thing work? Companies aren’t good at figuring that out. C ends up a hero and rises in the hierarchy, and A and B are regarded as failures, or at least as less successful. The incentives are very skewed. Even worse, A and B will often leave and use what they have learned to start a new venture in competition with their original employer.
I just finished a study of success and failure in a portfolio of ventures at a big corporation. Out of 37 ventures, we found that 21 were shut down completely, but pieces of them were used in other ventures or carried over to the core business. There’s an awful lot of activity generated by the ventures, but they can’t be measured simply as successes or failures. More broadly, this is one of the biggest problems with innovation programs. Companies are simplistic in how they judge ventures, and they don’t allow for the multiperiod, multisequence activities that are really what innovation is all about.
Why do so many people flinch at the term middle managers? Even middle managers themselves don’t seem to regard it as a desirable job description.
In the 1980s, middle management got a really bad name. People thought that companies with large middle-management ranks were bloated, bureaucratic and inefficient. So a lot of organizations took a meat-ax to their middle management ranks. They delayered and downsized and empowered their low-level employees. What they wound up with was a lot of top-tier managers staring at one another in the executive suites, wondering what happened to the innovations. What happened was that all the managers who had the network connections, who knew where the technology was, who understood how the company worked were gone.
Maybe middle managers need a new image?
I think it’s time for an extreme makeover. The problem is middle managers don’t get a lot of recognition for their role in innovation, which is one reason why I wanted to write about this topic. A lot of what they do is behind-the-scenes work. It’s vital, but it’s not visible. When it’s time for the ribbon cutting, the CEO is there. When it comes to who’s regarded as the innovator or inventor, that’s the venture manager. The people who made it all happen are nowhere in the picture.
Companies should also recognize that innovation doesn’t need to be a scary process. There are tools and insights out there that are readily available if you’re willing to reach for them. Companies often make the same mistakes over and over again, primarily by applying practices that work well in the existing business to innovations. For instance, one key principle we found is to recognize when you are operating on the basis of assumptions and to reward people for making better assumptions, not necessarily for coming up with the right answer. Another is to worry a lot more about the cost of failing than the rate of failing when you are investing in innovation — you can afford a lot of mistakes if they are inexpensive, and making small mistakes is often the only way to learn. Innovation is different from running a conventional business, but it doesn’t have to be mysterious.
Read the original piece on Columbia Business School’s Ideas and Insights blog.
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