1. Management 2.0
Labnotes
Insights, ideas and inspiration from MLab Issue 20 | September 2011
In this issue
Building a better management model Building competence through fast feedback
from the ground up Does quick feedback make a meaningful difference to a person’s
The recruitment agency, Twenty, is built on level of competence? An experiment conducted by a team at leading
values and a unique culture. Julian Birkinshaw Nordic insurance firm, If, set out to answer this question. > p14
reports on the creation and delivery of a new
Minimalist management: when less is more
management model. > p1
Do you aspire to add less value? When less really is more, perhaps
Building blocks of collaboration you should. Ross Smith thinks minimally to maximum effect. > p17
Cross-unit collaboration is increasingly a critical
Imperious institutions, impotent individuals
strategic imperative for companies. A manager
More and more of us feel that our institutions are run for the
at Siemens provides an inspiring example of
benefit of those who are leading them. Gary Hamel argues a
turning the concept into powerful reality.
powerful case for change. > p19
Julian Birkinshaw reports. > p7
Thoughts on management
Giving customers what they want
What makes the practice of management difficult? And are
When large numbers of customers visiting your
there better ways of getting work done through others?
website leave before getting a quote, something
Jules Goddard offers a challenging new way of looking at
is clearly wrong. But, what can you do? Julian
these old questions. > p23
Birkinshaw reports on an innovative response. > p11
Building a better
management model
from the ground up
The recruitment agency, Twenty, is built on values and a unique
culture. Julian Birkinshaw reports on the creation and delivery
of a new management model.
Every company is a prisoner of its past. The way it is structured and managed, and the
implicit values its people hold, are all shaped – for better or for worse – by the early choices
of the company’s founders. And once a company reaches a certain size, it is really hard to
change these basic principles and values.
So if you want to create a distinctive management model for your company, the best time to
do it is when you are starting out. Indeed, most of the well-known examples of companies
with distinctive management principles, from Google to WL Gore, were founded on those
principles, rather than developing them later in life. However, these cases are few and far
between. Most founders, unfortunately, duck the chance to create something unique, and
instead fall back on copying the dominant model that exists in their industry or, worse,
adopting whatever big company practices they have been exposed to.
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2. 2 | Labnotes
Building a better management model from the ground up continued...
While most founders miss the chance to create something unique, the founders of the
recruitment agency, Twenty, did not. Paul Marsden and Adrian Kinnersley had many years’
experience in the recruitment industry: they had seen many agencies rise and fall, and
they knew how little loyalty most recruitment professionals had for their employers. So
they decided to set up their own agency with a view to creating something distinctive
and enduring.
Motivation and values
Paul Marsden Twenty started life in January 2009, in the depths of the recession. This made getting new
Chief Exectutive
business a bit tricky, but they felt that there was no sense in waiting, as it takes time to build
a successful business anyway. Adrian Kinnersley reflected on their initial conversation:
“The very first exercise was, what do we want the business to feel like for a person who
works here? And therefore what are the values going to need to be for the business?”
A recruitment agency, after all, has few assets other than its people and their relationships,
so the two founders reasoned that they had to find some sort of raison d’etre to make them
worth working for. “We do not want to be the next Michael Page” (a large recruitment
agency) was a key mantra in these initial stages.
“We spent probably a disproportionate amount of time working through what that
Adrian Kinnersley
Managing Director experience [of working here] was going to be like, what we wanted the brand to be, how the
culture of the business would be, and then hanging that around a set of simple values that
everyone can know,” says Kinnerley. Using some outside help, and with a conscious desire
to learn from industries a long way removed from their own, the Twenty founders came up
with three core values which have now become fully embedded in the way the company
works. In Adrian Kinnersley’s words:
Life’s short – this means just get on with it! We want to build a big and successful business.
We assume clients want to deal with experts in order to recruit experts. So we only hire
people who have already proven themselves in the industry.
Crystal clear – this means no politics and complete transparency. A lot of recruitment
companies are disorganised, there is a lot of smoke and mirrors with people not knowing
what each other is doing, what each other is earning. Instead our culture is one of complete
clarity, so if something’s good, we’ll say it’s good; if something’s bad, we’ll say it’s bad.
Be eclectic – this means we celebrate diversity in our style of operating. A lot of recruitment
companies tend to have a type of person they gravitate to, so they’ll hire “posh” people from
the same schools or they might hire the young and hungry type. We’re simply trying to find
the best people, and different personality types fit different segments of the market. So they
are quite an eclectic bunch, in terms of how they solve problems for our candidates and
clients and can learn from each others unique perspective.
These values helped to push the company off in the right direction, and to guide the
founders in their initial hiring activities. And despite starting Twenty in the depths of
recession, the company grew quickly, gaining enough business to be profitable in their
second year of operation. As of mid-2011 Twenty had 40 employees working across
eight segments.
But of course values don’t mean anything if they don’t reflect the actual way people
work. So the first step, after getting the first few employees on board, was to link them
to the evaluation system. Explains Adrian Kinnersley: “Every six months our employees
get appraisal scores, and, therefore, we can rate our business on whether or not we
are living our values. And our whole career ladder is now built around these measures.
Employees can achieve promotion, pay rises, and more benefits by working in a way
that makes us both profitable and valuable, and this means among other things staying
true to our core values.”
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3. 3 | Labnotes
Building a better management model from the ground up continued...
The flip side, obviously, is that this is not for everyone. Directors are given a peer rating as
“Each time we get a to whether their teams are delivering on the Twenty values, and if their team aren’t above
the bar on these values ratings, they lose a significant proportion of their bonuses. Not
new intake, we have
surprisingly, employees who don’t fit don’t tend to last very long, although Twenty’s staff
an offsite day where
turnover is very low as it has refined its interview process to filter out those who will not
the recent recruits go thrive in the Twenty environment.
through the values and
The second step in giving the values some teeth was to ensure that new recruits bought
tell us what they mean into them. “Each time we get a new intake, we have an offsite day where the recent recruits
to them.” go through the values and tell us what they mean to them, and how they think they can
be measured,” Adrian Kinnersley explains. “And then, if on one of those offsite days they
can come up with another unique way of measuring one of the values, that goes into the
appraisal and everyone sets their bar against it. This happens every three months. We also
ensure longer term employees and directors attend these days to ensure we are aware of
what attracts new talent to the business as we evolve. This ensures the feeling of ownership
endures and we continue to hire the best available recruiters in the market.”
Ownership
A second defining feature of Twenty’s distinctive model was the founders’ approach to
ownership. They knew from first-hand experience how different it feels when you have a
significant equity stake in the business you are running. So they wanted to recreate that
feeling for their directors – the people running each segment of the business – so that they
would get access to the best talent. “The proposition we offered was that Twenty would
be like a finishing school for running your own business – you build a business, with our
support, and we will make sure you get a fair share of the rewards. We expect many of
these guys will start their own recruitment businesses when they move on from Twenty,”
says Kinnersley.
After reviewing a number of different options, the Twenty founders
developed an Enterprise Management Incentive (EMI) option scheme, with
the blessing of the UK tax authorities. The details of such a scheme are
complex, but in essence each group of employees has their share class, and
options in that share class. There is then a relationship between the profit
that they generate and the percentage of their share class that they own.
How does this work in practice? The director of one segment, say
recruitment in the IT industry, has his own profit and loss account, including
a recharge for central costs. He can make his own choices about how to
grow that business. He and his team get the standard group commission on
each person they place in a job. The directors get an annual bonus related
to the profit they generate over the course of the year. And they receive
additional equity relating to the profits left after the bonus. “It’s an attractive
system, and it enabled us to get really good people as directors. The point
is, these people feel as much ownership as we do – they know they can
make a lot of money if they are successful,” says Adrian Kinnersley.
Of course a share scheme of this sort has its limitations as well, the biggest being
that the options earned have no real value until the company either floats or gets sold.
So in structuring the company in this way, the founders explicitly committed to a
change in ownership five or six years down the road, much in the same way that private
equity companies plan for a medium-term exit from all their investments. The deal for
the directors is indeed crystal clear: stick around for five to six years, help build a
successful business, and you will make a very nice return. Leave before this, and you
lose your share options.
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4. 4 | Labnotes
Building a better management model from the ground up continued...
The scheme also encourages collaboration: As Kinnersley notes: “Although our directors
are working on building their individual bits, they are all in reality cross-owned. So by
helping each other to get up and running, the directors are increasing the value of the
potential multiple that they can get when we exit.”
Of course, some parts of the company are more profitable than others, but the share
option scheme means that everyone benefits from the success of others. And consistent
with their values, this information about different rates of profitability across the divisions is
transparent. This means that everyone has a pretty good idea what each other earns. Base
pay is not shared, but commission rates and all option plans are published for all to see.
Making it work: Living the values
With a tightly-defined set of values and a highly focused compensation model, there is less
day-to-day management work required by the two founders than in a typical recruitment
company . The directors make their own judgments about how best to develop their
business streams; the founder’s job is about ensuring the long-term direction remains
clear, and reinforcing and enhancing their chosen management model.
“We have a library, “We see our role as ensuring the growth doesn’t hit bottlenecks and that we leverage our
labeled up with experience as much as possible,” explains Adrian Kinnersley. “Take transparency, for
example, which is a key part of how we work. Last night we had a month end meeting,
the values, and
so projected on the wall for everyone to look at are all the numbers in the business, who
we have a decent generated what revenue. And decisions that we’re making in the business, and why, are
collection of books completely communicated. Moving to the new office, for instance; everyone got involved
now reflecting with the design process if they wanted to.
each of our “I was at another company where I was on the operating board, and the question kept on
core values.” coming up, how do we spin this news? My question was, why are we spinning it? If we have
to spin it, something’s not right, so why don’t we just tell people what we’re doing.
“Our values are also expressed in our physical surroundings. We have a library, labeled up
with the values, and we have a decent collection of books now reflecting each of our core
values. It’s the same with our physical space. We asked the employees, what would you
like your work place to look like? And now all the colours in all the rooms reflect the colours
of the brand, and so this a green room for financial services, orange room for commerce,
blue room for professional services. The imagery and the design on the floor is supposed to
reflect the crystal-clear water drops that are on the website”.
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5. 5 | Labnotes
Building a better management model from the ground up continued...
Growth and its limits
Twenty is currently the fastest growing recruitment agency in the UK, profitable, and
expanding to New York and Switzerland this year. Turnover in the first year was £890,000,
rising to a little over £4 million in the second year, and the budget for next year is about
£12 million.
The original plan was for about £5 million in profits in roughly five years. On its current
trajectory, Twenty is on target. If all goes well, there will be a trade sale, private equity
acquisition or listing at that point, but with the lock-in period that goes with all such “exit”
strategies, the directors know they are looking at a commitment for a few years beyond the
date of the transaction.
But how big can Twenty become? What are the limits to this model? Adrian
Kinnersley has done his homework on this issue: “Recruitment companies
tend to struggle at about 70-80 people. There’s a couple of reasons
for this. Operationally and culturally, you’re becoming a different
type of business, with different management challenges.
Someone who is comfortable managing five people
suddenly has to manage 25, and that changes a lot. And
actually space is an issue, because if you’re going to
move out of an office that accommodates 70 to 80
people then the cost differential on a space that
accommodates 100, 150 people is actually quite
significant. So committing to that, it often stops a lot
of people in their tracks.
“So what we’re trying to do is to see Twenty as a
group that houses eight separate business streams.
Our last company, Astbury Marsden, reached 70
people in just two streams (IT and finance), so we
think we can get to a few hundred employees if we
are careful about it. Of course, our new hires are more
like regular employees, but we’ve got a more generous
commission scheme than the competition, and there is
scope, if they do really well, to earn some share options in
the business area in which they’ve contributed to building. We
expect 20 per cent of the business to be owned by the people that
work in it. We’ve also hired a COO with a background in a much bigger
recruitment businesses, who we have asked to build the infrastructure to
ensure it scales. And we have a non-exec who is a culture and branding specialist, to
makes sure we keep this at the core of our growth.”
What about technology? Is the traditional recruitment industry going to be disrupted by Google
or someone else? “These days as a recruiter, you have to be an aggregator rather than a
database. In other words, how we sell our service to a client now is not ‘we’ve been going
20 years, we’ve got hundreds of thousands of CVs’. Instead, the pitch is ’we have superior
expertise at extracting and delivering the talent for your business’,” says Kinnersley. “So some
parts of the recruitment business have already been automated, other parts are gradually
changing. But there are still important parts of the business systems where human touch
is vital. For example, a significant proportion of the placements wouldn’t happen without an
expert intermediary ensuring everyone’s expectations are managed, and the careers of the
candidates are remaining on track for their ambitions. You can’t automate the emotions of a
decision making process as complex as this, when families, career’s, money, and locations are
all factors unique to each individual.”
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6. 6 | Labnotes
Building a better management model from the ground up continued...
Key insights
Take time to build the right values and systems at the outset.
The founders of a successful company have a lot to answer for: some, such as David
Hewlett and Bill Packard, are still revered decades later for their vision and wisdom;
others are quietly forgotten as the next generation of leaders find themselves saddled
with ill-thought out or outdated ways of working. Paul Marsden and Adrian Kinnersley
could easily have followed the conventional wisdom in their industry, and adopted the
implicit management model everyone else was using. But they were open-minded
enough to question this conventional wisdom, and to ask themselves if there were better
ways of working.
To think like an owner, you have to have enough of a stake to
make a difference.
Perhaps the biggest problem facing organisations of any size is that employees are
not owners. We are often exhorted to think like owners, but the fact is we aren’t. So we
do things that simply wouldn’t make sense if it were our own company – we shirk, we
take time off, we spend budgets because we have them, we fly business class because
we are allowed to, and we have meetings and conversations to cover our backsides.
Start-up companies don’t have these problems, because the owners and the employees
“Research in a variety are the same people. To some extent mutually-held companies, such as John Lewis,
address these problems, but because individuals have such a small stake they still fall
of settings has shown
prey to these pathological behaviours. Twenty is an interesting example of a company
that the prospect of that is trying to spread the true feeling of ownership among all its directors, and so far it
a clear finishing line seems to be working – though it becomes harder the bigger the company gets.
up ahead helps to
A medium-term exit focuses the mind and increases engagement.
increase motivation
Research in a variety of settings has shown that the prospect of a clear finishing line
and engagement. ”
up ahead helps to increase motivation and engagement. This is why many companies
divide work up into discrete projects or ‘campaigns’. So Twenty is cleverly engineering
its ownership model to get its employees thinking of the company as one five-year
project, at the end of which they will all reap a handsome return. Of course, private
equity companies do this as well with their portfolio companies, but it is very rare to see
a start-up venture build such an approach at its outset. It does make you ponder, why
do we assume that companies should be built as if they were to last forever? There are
benefits in having timeless goals, but there are also benefits in having much shorter-
term goals as well.
Julian Birkinshaw (jbirkinshaw@london.edu) is Professor of Strategy &
Entrepreneurship at London Business School, and Senior Fellow of the Advanced
Institute of Management Research. His latest book is Reinventing Management
(Jossey Bass, 2010).
NEXT ARTICLE: BUILDING BLOCKS OF COLLABORATION
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Accelerating the evolution of management

7. 7 | Labnotes
Building blocks of collaboration
Cross-unit collaboration is increasingly a critical strategic imperative for companies.
A manager at Siemens provides an inspiring example of turning the concept into
powerful reality. Julian Birkinshaw reports.
This is a story of how a large division of Siemens sought to develop a new integrated offering
for its major global customers. Or, rather, it is the story of one mid-ranking manager, Christian
Doll, who took it upon himself to help Siemens develop such an offering. Like many corporate
entrepreneurs before him, Doll pursued an opportunity that went way beyond his formal job
description: one that required input from people far beyond his sphere of influence. He made
some mistakes, but he did some clever and innovative things, and ultimately the project was
a success. There are lessons for all of us in Christian Doll’s Service Sourcing Project.
Doll worked for Siemens IT Solutions and Services (SISS), a 40,000-person division of
Siemens competing in the enormous IT services sector, against the likes of Infosys,
Accenture and EDS. In this brutally competitive industry, clients demanded integrated
solutions that were both innovative and low-cost. Siemens, with its high cost base, was
increasingly seeking to deliver solutions that used people from third-party suppliers as
well as its own people.
In 2007, Doll was assigned to a large bid where the client was asking Siemens to provide
on-site services for handling technical problems in 100 countries. “We did not have these
technicians in our organisation. We had to purchase services for an 80,000-person client
in a hundred countries. And that was a real challenge,” Christian Doll later reflected.
While the bid team eventually made this project a success, Doll felt it was a complex and
high-risk game they were playing. “I wanted to do something about this, to avoid the
situation occurring again.”
How might Siemens have done things differently? Doll recalls his thinking: “Developing a
proposal for new business can be complex. It’s vital to engage with potential third party
service partners as early as possible in the proposal development process, especially for
multi-national service projects. Procuring the services of these third party providers can be
a long process, lasting anything from six to 12 months. It draws on different skills, roles and
input from various departments in pursuit of the best providers. For example, we need input
from procurement, the delivery organisation, solution design, key customer account teams,
legal support, quality audits, risk management, and project management for the transition
and service transformation. Then, after contracts are signed, we have to deliver on our
promise, which again involves multiple functions working together.
“While there is a clear need to proactively manage these partners, our business wasn’t
set up to do this efficiently. We had limited processes, resources and experience in this
area. The bid development process was thus far more complicated than it should have
been and this had the potential to damage our competitiveness. This was the challenge
that I wanted to address.”
Consider, for a moment, the magnitude of this challenge: Doll wanted to get eight internal
divisions of Siemens to collectively rethink the way they would work with external providers,
so that they could come up with an innovative offering for their global clients. There may be
tougher management challenges out there – reworking a bank’s compensation system comes
to mind – but this is about as tricky as it gets. And consider, also, that this was not Doll’s
official job, it was simply something he felt was sufficiently important that it needed to be
Christian Doll
done anyway. “It was not my job to think about processes across the organisation; it was my
job to design services for customer needs,” he recalls.
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8. 8 | Labnotes
Building blocks of collaboration continued...
Building and focusing the team
Doll knew what he wanted to do, and at a personal level the timing was right because he
had signed up for a part-time MBA in innovation and business creation at the Technical
University of Munich. This gave him access to a host of new techniques and ideas. So what
were the first steps?
Doll began canvassing his colleagues, beginning with his boss who supported the proposal
to set up the service sourcing project. He approached some 20 people in different roles
below board level. All of them agreed that the sourcing and management of third party
service providers needed to become more professional. They were prepared to support the
project and offered help, for example by assigning resources to the project. This buy-in
from key stakeholders was crucial in getting the project off the ground. Doll says: “The main
challenges at this early stage were to approach the right stakeholder at the right time and to
convince colleagues about the processes and tools that we planned to use during the project.
This buy-in ensured that both the project team and supporting management boards (steering
board, advisory board) were defined and assigned. Managers allocated employees to the
project team and even volunteered to be members of the management boards. An important
result of this process was that the employees actively involved in the project came from all
those departments with a perspective on service sourcing and/or field services.”
While sanctioned at corporate level, the project team members also had to continue with
their day jobs. Much of the work was undertaken out of hours because local legislation
prohibited employees working more than 40 hours a week. This out-of-hours requirement
meant that the project had to enthuse all those people involved. Doll continues: “It had to be
designed in such a way that everyone really liked what they were being tasked to do. Without
this enthusiasm, why would they give up their spare time? I think this is a valuable lesson in
any project of this nature.”
“It had to be designed At around the same time as Doll’s service sourcing project got underway, a new team was set
up within the business to manage the operational aspects of working with external partners.
in such a way that
While this began to address the delivery aspects of third party relationships, it still left open
everyone really liked the issue of how best to engage with subcontractors during the earlier stages of a project.
what they were being The focus of the service sourcing project was thus sharpened: to propose a new model for
tasked to do. Without the sourcing of services from the external market. The team agreed to come up with a vision
this enthusiasm, why and strategy for managing external service sourcing – with a specific focus on field services.
would they give up The team analysed the situation for field services management at both a local and global
their spare time?” level and identified the different field services components and the opportunities to integrate
them into a comprehensive new business concept. The outcome was a presentation of the
new business concept to the Siemens IT Solutions and Services management boards being
set-up for this specific project. This latter event would throw up an interesting lesson in how
best to communicate a new or innovative idea.
Prototyping the future
Using ideas from the MBA programme, Doll used a fairly standard process with six key steps:
Knowledge exchange using mood boards and storytelling techniques; Ideas generation and
brainstorming; Modelling and discussion; Prototyping of the business concept; Feedback
during play phase (road shows); and Finalisation of the business concept prototype and
conclusion of the project.
But he also decided to push some slightly unusual ideas, especially in the area of visualising
and prototyping new ideas. “I decided to use LegoTM building blocks to help model the
service processes in 3D. Often it is hard to express something abstract or complex in words,
so I asked the team members to build a model, a prototype, out of Lego. While it’s not a new
idea, it was certainly something that provoked a reaction in the team members.
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9. 9 | Labnotes
Building blocks of collaboration continued...
“The first time the Lego bricks came on the table, people were really confused
– we are playing with Lego, is that leading to anything? So I came up with
a very small Lego model, where I showed how the top-level process
might look; and with that they understood and it became an
important part of our work.
“Everybody was buying in except one person. He couldn’t
get beyond the idea of Lego as a children’s toy,
preferring instead to illustrate our business concepts
in PowerPoint. His was the only real dissenting
voice. I had a tough discussion with him, in front of
the others, and at the end the others felt trust in my
approach and they wanted to try it out. The guy who was
not happy to work with Lego never again showed up in
the project. It was a key learning – sometimes people
cannot cope with a new way of working.”
Doll has no doubt about the value of using prototypes. “Performing innovation projects,
working with prototypes in a trial and error-mode and involving customers and stakeholders
along the whole innovation project lifecycle can help to reduce uncertainty and ignorance
while developing new products, services or processes. As a result the risk of failure for a
newly developed approach (products, services, processes) can be significantly reduced.
Prototypes can be used in several phases of an innovation project to discover, develop and
communicate new ideas. Nowadays there are several tools available to generate prototypes.
Lego is just one of them.”
Selling the concept
While the value of using the Lego prototypes was clear to the service sourcing project team,
they didn’t know how it would look to the steering and advisory boards. As Doll recalls,
“Everybody was worried: how would management react if they see a big Lego town on the
meeting table?
Doll sensibly got some early buy-in: he showed the Lego town to one senior member of the
steering board. “At first this executive was shocked, but I took him through the logic and
he liked the idea. He gave me the backing I needed to sell it to the others”. In fact, during
one board meeting, the Lego prototype helped to push things forward: “I remember one
board meeting where they were first confused, but then the most senior guy on the board
said, thank you for using Lego, now I understand better what your ideas are about, but I
am encouraging you to be more crazy; it’s too soft, too conventional at the moment.” So
in further workshops the team developed the service concepts still further: for example, a
Global On-Site Services (GOSS) structure was put forward for a department responsible for
managing service contracts with service providers in the delivery phase.
But the Lego prototype also proved to be something of a distraction when Doll presented
the final project findings to the steering board. He was given an hour to convey the project
findings. He worked up a PowerPoint presentation and, to help clarify things, he brought the
prototype with him to the meeting. As he recalls: “I wanted to explain the main ideas using
the sophisticated Lego prototype, but there was one person on the board who I was not able
to brief up front. She raised an issue that was not part of my presentation and that killed the
whole presentation. I spoke to one of them afterwards, asking where I had gone wrong, and
he said, the prototype is good for fostering discussions, but that is not what you want in a
Board presentation. That was a lesson learnt for me.”
What were the outcomes? Despite the problems at the final board meeting, many of the ideas
developed by the Service Sourcing project were implemented. The details are confidential,
but they included novel ways of pre-selecting service providers and defining a “best and
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10. 10 | Labnotes
Building blocks of collaboration continued...
final offer” to the customer, as well as much greater clarity around who should be responsible
for starting an engagement. Some of the more ambitious ideas did not work out – for example
one idea to use open-source principles for delivering field services was deemed too radical.
Responsibility for implementing these ideas was handed over to the manager responsible for
service delivery to external providers. Some members of the project team joined that group,
“The creation of which by 2011 numbered 50 people. Doll himself moved out of Siemens IT Solutions and
knowledge is a key Services in 2010 and joined Siemens Corporate Technologies, an internal consulting group
discipline for companies helping the company to be more innovative – something he feels very passionate about.
trying to achieve a Lessons
competitive advantage The power of collaboration. Large organisations don’t make collaboration easy – the formal
via innovation.” structures and incentive systems push us into silos and it takes a lot of effort to overcome
these pressures. But for a business like Siemens IT Solutions and Services, effective
collaboration isn’t optional – it is the essence of what it is offering its customers. So projects
like the one Christian Doll put together will have to be become the norm. In reflecting on
his experience, Doll observed: “Our service sourcing project convinced me that drawing on
stakeholder input and interviews with relevant parties to gather information, combined with
prototyping and mood boards, really can bring new ideas to fruition.”
Prototyping accelerates innovation. Karl Weick’s famous dictum “How can I know what I think
until I see what I have said?” reminds us that innovation is an iterative process, not a linear
one. We try something out, we make sense of it, and then we try something else. Prototyping is
essentially a way of accelerating the natural cycle of invention, development and reflection. As
Doll observes, “The creation of knowledge is a key discipline for companies trying to achieve
a competitive advantage via innovation. As part of this, prototypes can be used in several
phases of an innovation project to discover, develop and communicate new ideas. It’s true
that building a 3D prototype for an intangible product might seem strange at first, but it is a
powerful enabler as the project progresses since it helps to overcome misunderstandings and
thus increases productivity in all phases of a project.”
Navigating the corporate immune system. Life as a corporate entrepreneur is never dull:
Christian Doll saw himself navigating through a “corporate immune system” that seeks to
reject alien bodies and it is testament to his tenacity and skill that he survived. The tactics
he employed are well known: he made a compelling case for change, he got early buy in
from his boss, he built advisory boards to co-opt potential detractors into the project, and he
neutralised the threat from those who didn’t like his approach. But he made mistakes as well,
and he was agile enough to adapt his project accordingly.
Something old, something new. One specific challenge Doll faced was how radical the
project should be. If he had broken too many rules, the corporate immune system would
have rejected him; but if he had done things entirely in the traditional way, nothing novel or
interesting would have emerged from the project. The Lego-based prototype was a case in
point: he took a risk in pushing it and it helped the team come up with creative ideas, but
it also disrupted his final board presentation. Corporate entrepreneurs, it seems, have to be
conformists and mavericks at the same time – they need to judge which rules to break, and
which ones to follow.
It goes without saying that the Service Sourcing project was risky, but in Doll’s view the value
it created far outweighed any potential negatives. He concludes: “This approach to innovation
can help to reinvent both a company and its products as it copes with competition in a
constantly changing environment.”
Julian Birkinshaw (jbirkinshaw@london.edu) is Professor of Strategy & Entrepreneurship
at London Business School, and Senior Fellow of the Advanced Institute of Management
Research. His latest book is Reinventing Management (Jossey Bass, 2010).
NEXT ARTICLE: GIVING CUSTOMERS WHAT THEY WANT
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Accelerating the evolution of management

11. 11 | Labnotes
Giving customers
what they want
When large numbers of customers visiting your website leave before
getting a quote, something is clearly wrong. But, what can you do?
Julian Birkinshaw reports on an innovative response.
The leading Nordic insurance firm, If, was worried about the quality of the online experience for
its customers. Too many dropped out of the buying process before getting a quote. It took this
problem as the starting point for an innovative experiment.
First, a team was set up to test the hypothesis that by increasing customer centricity in its
operations, If could improve customer satisfaction and increase sales. Central to the six-man
team’s approach to tackling this hypothesis was the decision to directly involve customers.
This, it was believed, would yield greater customer satisfaction leading to a higher hit ratio,
resulting in an immediate increase in sales.
Richard Koch
The experiment focused solely on the purchasing experience. As If’s head of marketing and
communication Katarina Mohlin explains: “We had just 6-8 weeks to design, implement
and analyse a prototype model that would put our hypothesis to the test. For this reason, we
needed to focus on an understandable and manageable area of our online business. We chose
the customer purchasing experience in our private insurance business.”
Experiment scope defined
The experiment team of Katarina Mohlin, Jonas Billberg, Tiina Autio-Begley, Ville Haapalinna,
Lars Karlsson and Jörgen Hidén recognised that the speed of the digital world meant the
typical three-year design, develop, test, pilot, launch cycle for new service launches would not
be quick enough to affect a transformation of the company’s online presence. The truncated
timeframe was ideal for this experiment. It meant that shortcuts would have to be used, outside
the more traditional project management model.
For example, they quickly decided to avoid writing and seeking approval for a formal business
plan – that would have taken far too long. The experiment scope was defined as follows:
• Focus on private customers in Sweden buying car and home insurances
• Analyse current understanding of existing online purchase experiences
From left:
• Create a prototype of the optimal customer centric online purchase experience
Jörgen Hidén
Katarina Mohlin • Run usability tests on the prototype to verify (or not) the hypothesis based on customer input
Tiina Autio-Begley
Ville Haapalinna
• Create recommendations for new online purchasing process.
Inset from left:
Jonas Billberg With the scope agreed, a pragmatic division of tasks saw two work streams being established.
Lars Karlsson
The first of these was a usability analysis, for which a series of usability tests conducted the
previous year provided an excellent baseline. The second work stream focused on setting up
and testing the prototype online purchasing experience.
Work stream 1: Usability analysis. Following advice from the company’s marketing team, rather
than re-inventing the wheel, the team dug out the previous year’s usability study findings.
These flagged a number of issues with the existing website. Customers felt the whole process
was too long, with too many questions to answer before they could actually make a purchase.
In addition, If put all its products on the home page, seeing it as a shop front for its own
purposes, rather than making it easy for the customer. Customer feedback was, “I only want to
buy one insurance, so let me do that first and then I might consider buying more”.
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12. 12 | Labnotes
Giving customers what they want continued...
“In a nutshell,” says Jorgen Hiden, “our customers were telling us that the purchasing
process was too complicated. They wanted to see prices quickly with nothing else getting
in the way. We also carried out some analysis of when customers dropped out of the
“The seniority of the purchasing process and this too suggested that the earlier we showed the price and the
experiment team fewer questions customers had to answer, the less likely they would be to drop out of the
members – all process early.”
were heads of their Work stream 2: Design and prototype. This work stream used the findings from the
respective business usability analysis to work on the design and test a prototype of a new purchasing
experience. They contracted with an external web agency for the website build. “We had
– clearly meant that
two key factors to consider,” notes Katarina Mohlin. “First, we wanted to make the process
decisions pertaining to
fast and simple, so our customers could quickly get an estimate for their insurance.
risk could be made by Second, we needed to ask ourselves what questions were an absolute requirement in
the project team.” order to give a good price estimate, such as their social security number and vehicle
registration number. Our objective was to reduce 12-15 underwriting questions down to
between two and six.”
The team recognised that reducing the number of questions
would have a risk implication for the business. Mohlin continues:
“We asked how much knowledge about the customer and their
risk profile we really needed, bearing in mind that the more we
know about a customer, the better able we are to manage the
risk. So, in a sense, we had to make a trade off between this and
attracting and retaining more customers with a simpler online
experience. In reality, when we ranked the questions we needed
to ask, the absolute priority ones didn’t really change; it was more
a case of weeding out the unnecessary questions.”
The seniority of the experiment team members – all were heads
of their respective business units, such as the head of distribution
for Sweden and the head of business development for the Baltic
countries and Russia – clearly meant that decisions pertaining to
risk could be made by the project team. There was no ‘selling in’
of the concept because these were the very people from whom
permission would be sought if it was a less senior team.
In addition, the prototype design stage involved a number of
people with direct customer experience, such as the internet
sales manager for Sweden. This provided a vital customer
perspective, before testing on actual customers began.
Usability tests
Nine customers were invited to take part in the usability test. They were representative of
different age groups, gender and place of residence (town or country). Says Mohlin: “We
wanted them to have some internet experience, but didn’t need them to be experts. After
all, we were trying to test a simpler purchasing experience.” The participants performed
12 tasks using the prototype and were asked to think out load because they were filmed
during the process. “We wanted to gauge their reaction to different elements of the
purchasing journey,” recalls Mohlin. For that same reason, the mouse movements of each
participant were observed to assess how confidently they carried out different tasks.
And the result? There was unanimous approval for the new, simpler purchasing process.
Indeed some of the participants found it hard to believe that buying insurance could be
so easy. Importantly, they were able to provide feedback on ways to improve the prototype
and this resulted in some fine tuning after the test period.
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13. 13 | Labnotes
Giving customers what they want continued...
Next steps
The experiment team believes it has strong evidence for taking the prototype and moving
into a real life pilot. It accepts that as a prototype tested only on a handful of customers
in one country, the findings are not conclusive, but all the findings support the initial
hypothesis: increasing customer centricity will improve customer satisfaction and
increase sales.
The team has recommended the introduction of a new purchasing process, based on a
simpler, more user-friendly web interface.
So what does the experiment tell us about the process of making change happen
quickly? The team lists a number of factors in its ability to develop a hypothesis, design,
implement and test a prototype and recommend next steps in just eight weeks:
Tight timescale: The restricted timeframe was, in fact,
a factor in the experiment’s success. “It focused us and
meant we had to cut away all those project management
methodologies that add to the time of making change
happen,” says Katarina Mohlin. “We had to identify
shortcuts, like using existing usability studies, rather than
setting up a brand new focus group.”
Senior level team members: “We had decision makers
in our team. This is very important and allowed us to
circumnavigate certain processes, such as drawing
up a business plan, which would have taken too long.
Essentially, we had all the necessary permissions and
resources within our group – it got us from A to B
very quickly.”
Experiment vs pilot: As with other If experiments, the
value of developing a prototype is huge. “This was an
experiment, not a pilot,” notes Jorgen Hiden. “This
wording is crucial, because it is about allowing an idea
to be quickly and cost effectively brought to fruition as
an experimental prototype. A full-blown pilot, on the
other hand, requires a detailed business case with cost
rationalisation and typically follows a prescribed project
management methodology. Prototyping is both cost
effective and fast.”
Inspiration/innovation: The team chose to try out new
ways of measuring customer responses to the prototype.
They videoed the customers and analysed their mouse
movements so there was no doubt about their reaction.
And finally, the Customer Centric experiment team believes that this should be just the
start of a portfolio of customer centric development projects. “Based on our experiment,
we recommend making the involvement of customers mandatory in all our development
work to increase sales and customer satisfaction,” concludes Mohlin.
Julian Birkinshaw (jbirkinshaw@london.edu) is Professor of Strategy & Entrepreneurship
at London Business School, and Senior Fellow of the Advanced Institute of Management
Research. His latest book is Reinventing Management (Jossey Bass, 2010).
NEXT ARTICLE: BUILDING COMPETENCE THROUGH FAST NEXT PAGE
FEEDBACK
Accelerating the evolution of management

14. 14 | Labnotes
Building competence
through fast feedback
Sometimes it’s the little things that count: like someone giving you
feedback on a job well done or a helpful tip on how to improve a
business process. Could such feedback actually make a difference to a
person’s level of competence? An experiment conducted by a team at
leading Nordic insurance firm, If, set out to answer this question.
A competent and knowledgeable sales team reflects favourably on its employer.
But just how easy is it to improve the competence of your salespeople? As part of an
ongoing programme of experiments aimed at investigating and prototyping new business
models and services, a team at If set out to test the simple hypothesis that feedback
improves competence.
The decision to focus on this aspect of competence came after the experiment team (of
Klaus Thomsen, Morten Byholt, Torgeir Jacobsen, Tell Tornblad, Marketta Helokunnas,
and Morten Thorsrud) uncovered some interesting statistics: 70 per cent of all workplace
learning is acquired on-the-job, 20 per cent from colleagues and 10 per cent from formal
training courses.
Klaus Thomsen, Head of Sales & UW, Commercial Denmark, recalls: “With such a clear
distinction it was obvious to us that we should focus our experiment on an aspect of on-the-
job learning. We began to hypothesise that learning was being hampered because we do
not give or receive enough feedback on how we’re doing. We’re all so busy in our work that
there is little time for feedback.”
Academic research bears out the team’s thinking that the quality and frequency of feedback
improves competence levels. The team had a six-week timeframe in which to develop the
test model, implement it and measure the results. This time limit shaped the nature of the
experiment, as Thomsen notes: “We had to work quickly. We couldn’t spend weeks on
planning because this would eat into the amount of time to actually conduct the experiment
and measure the outcome.”
The team quickly decided that simplicity was the key. A simple, rapid experiment, efficiently
managed could be equally as effective as a long drawn-out experiment. And they were
right. It was vital to select an area of the business that was small enough to be able to move
quickly, yet important enough for the results to be taken seriously at a wider corporate
From left:
Tell Törnblad – Sweden level. Thus the experiment focused on the business sales channel in Denmark and elicited
Klaus Thomsen – Denmark feedback from its customers.
Morten Thorsrud – Norway
Torgeir Jacobsen – Norway
Marketta Helokunnas – Finland Keeping things simple
The process of gathering this feedback was also kept as simple as possible. Questions
put to the customers were pared down to the minimum needed to provide an adequate
measure of changing competence levels. 100 customers were initially invited by the Danish
sales team to take part, with 60 agreeing to do so. The experiment team offered both the
salespeople and customers an incentive to take part: the chance to win an iPad. The price
of two iPads (one for the sales winner and one for the winning customer) was the extent of
the cost of running this experiment.
Any requirement for new IT system builds would have added significantly to these costs
– and to the time needed to get the experiment up and running. As such, the team opted to
use an existing IT tool for managing the experiment process.
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Accelerating the evolution of management

15. 15 | Labnotes
Building competence through fast feedback continued...
After an initial face-to-face sales meeting with one of the Danish salespeople, each
participating customer was sent an email with a link to a questionnaire asking the
following questions:
ged? 1 2 3 4 5
oriented and enga
n seen as service
Was the sales perso 1 2 3 4 5
vice?
n give enough ad
Did the sales perso 1 2 3 4 5
d
out your branch an
n know enough ab
Di d the sales perso
your needs? 1 2 3 4 5
at
ation regarding wh
n give clear inform
Did the sales perso next steps?
er the meeting –
should happen aft 1 2 3 4 5
nal
les person’s perso
perience of the sa
What was your ex
These questions were drawn up the experiment team but verified by the sector leaders
in sales. This ensured buy-in from the sales teams involved. Customers were asked to
respond to the questions immediately after the If salesperson called on them.
The team members were aware that a proper test required careful measurement before
and after feedback was provided to the salespeople on how they were doing. So they
carefully waited until they had got the first 20 responses back before starting to provide
the feedback. This would provide a baseline against which any changes in customer
perception about the salesperson’s performance could be measured. The customer
ratings were then measured in two further time periods, after 40 responses and then
after 60.
Improving competence levels
The results were significant, and highly satisfying. A clear improvement in performance
was visible between the initial feedback session and the ensuing two stages, exactly
as predicted. Customer feedback showed that the salespeople were more responsive
and better understood their problems as the experiment progressed. Ascertaining this
result within the experiment period was, once again, down to keeping things simple.
Customers rated the salespeople on a scale of 1-5 with 5 being the highest. At the
experiment outset, the average rating stood at 4.1. When the experiment concluded the
average rating stood at 4.5.
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Accelerating the evolution of management

16. 16 | Labnotes
Building competence through fast feedback continued...
Some areas showed more improvement than others. Question 1, for example, (Was the
sales person seen as service oriented and engaged?) began the survey with a rating of
4.1 after the first phase of feedback and finished with a rating of 4.8. Question 4 (Did
the sales person give clear information regarding what should happen after the meeting
– next steps?) began with a relatively low rating of 3.9 and ended with a rating of 4.5.
“Rapid feedback of this type can lead to behavioural
changes. The experiment results leave us with no doubt
that customer feedback can have a significant impact on
competence levels.”
Just one question showed no improvement in the customer perception of competence:
question 3 (Did the sales person know enough about your branch and your needs?).
This came as no particular surprise to the experiment team as Morten Byholt explains:
“Customer feedback on the other four areas of competence could elicit a rapid response
on the part of the salesperson. For example, someone hearing that they weren’t
giving enough information about ‘next steps’ simply needed to ensure they had this
conversation at their next customer meeting. But the question concerning knowledge
of the customer’s branch and needs would necessitate the salesperson spending
time finding out more about his customer – and time was something we didn’t have
in this experiment.”
Experiment outcome
Rapid feedback of this type can lead to behavioural changes. The experiment results
leave us with no doubt that customer feedback can have a significant impact on
competence levels. This is not exactly news; after all, it was the hypothesis that the
experiment set out confidently to test. So if this is a known fact, why is feedback not
part of a consistent approach to learning as opposed to being delivered once a year in
an annual appraisal? “It’s all about the knowing-doing gap,” comments Klaus Thomsen.
“We know feedback matters and our experiment reinforces this. But when it comes
to the day to day reality, we often fail to do it right.” This is a very common problem
in large organisations.
In addition to supporting the hypothesis, the experiment team also demonstrated the
value of keeping things simple. Klaus Thomsen says: “By refusing to get bogged down in
designing an elaborate experiment and by engaging with all the stakeholders (customers,
salespeople, sales leaders) in a simple, straightforward manner, we have shown that it
is possible to affect change in a very tight timeframe. Even the fact that one of the areas
customers were asked to rate showed no improvement supports the argument that the
simpler a change is to implement, the more likely it is to happen. Yes, keeping things
simple really does work.”
Julian Birkinshaw (jbirkinshaw@london.edu) is Professor of Strategy & Entrepreneurship
at London Business School, and Senior Fellow of the Advanced Institute of Management
Research. His latest book is Reinventing Management (Jossey Bass, 2010).
NEXT ARTICLE: MINIMALIST MANAGEMENT: WHEN LESS IS MORE
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Accelerating the evolution of management

17. 17 | Labnotes
Minimalist management:
when less is more
Do you aspire to add less value? When less really is more, perhaps
you should. Ross Smith thinks minimally to maximum effect.
In 1855, Robert Browning published a poem about the Italian Renaissance painter Andrea
del Sarto, introducing the term “less is more”. The phrase was adopted by architect Ludwig
Mies van der Rohe to describe minimalism as an “aesthetic tactic of arranging the numerous
necessary components of a building to create an impression of extreme simplicity, by enlisting
every element and detail to serve multiple visual and functional purposes (such as designing a
floor to also serve as the radiator, or a massive fireplace to also house the bathroom)”.
A few weeks ago, a manager I know said something great as we discussed his influence on
his team’s culture. He quipped, “I need to work on adding less value.” This could be one
of the greatest aspirations for the future of management ever articulated, and the perfect
slogan for Management 2.0. Call it “minimalistic management.” It takes a confident leader to
recognise that the natural tendency to dive in and offer an opinion, to justify their existence by
“adding value” with their “leadership” actually disrupts, confuses, and derails the team, rather
than helps. While managers may feel these actions and behaviours are valuable, gratifying,
and serve the organisational goals, “the managed” may not see it the same way.
Less can truly be more. How many employees do you know who are asking for
more management?
The hardest part of minimalism is knowing when you’re finished –whether you’re building
a house, making a painting, or offering feedback to an associate. The most difficult task for
a manager is to step back, trust, and refrain from helping and giving guidance to the team.
Dwight D. Eisenhower got it exactly right: “Motivation is the art of getting people to do what
you want them to do because they want to do it.”
What does that mean for managers today? Perhaps we should spend more time holding
up mirrors and guardrails for the team, rather than directing, micro-managing and “adding
value”. Instead, managers might first try trusting their people and experimenting with
increased autonomy. As employees gain confidence and traction, and those training wheels
start to come off, so do the manacles of “direct supervision”. Whether those shackles take the
form of process, metrics, feedback, or status reports, minimalist management can liberate the
supervised and supervisor alike and unlock unheralded levels of contribution.
On the Management Innovation Exchange (MiX) website, there are dozens of examples
illustrating the inverse relationship between “management” and genuine accomplishment:
• Demolish Management: “The option for an organisation in this era of rapid change
combined with the relentlessly higher expectations of end-users, is to disestablish
leadership and management positions, decentralising and de-layering the organisation.
Management could be reduced to only those positions that oversee functions such as the
finance and human resources (if the latter is not managed by the teams). Leadership could
be distributed throughout the teams for them to collaboratively manage as they choose.
By reducing the desire to control, with the absence of controllers, and with collaborative
direction setting open to everybody within and across teams, creativity and entrepreneurial
talent will be unleashed and organisational buy-in will increase.”
• Trust is a Business Asset of Value: “There is evidence that a high-trust organisation would
expend less resource “managing” staff than would a low-trust organisation. An element of
self-management develops.”
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18. 18 | Labnotes
Minimalist management: when less is more continued...
• In Matchfinder.com, Raina Ameer suggests a minimalist approach: “Research has
shown that command/control management is not the most effective way to lead a project
team. Employees are potentially more motivated when working in teams than when
working alone. One reason for this is the idea that people feel more accountable to fellow
team members who monitor performance more closely than a traditional supervisor.”
• In “2011 and we are still sitting in traffic?” Chris Barber touches on a similar vein:
“For managers, the ability to trust employees to be doing their jobs, while out of sight,
will be something new and it will require a thorough analysis of task identity, task
interdependence and appropriate two-way communication policies. For employees,
the characteristic of a household will vary widely. Consideration will need to be given to
factors such as interruptions associated with children in the household and the size and
layout of the household itself. In general, financial arrangements such as the cost of a
providing broadband access to a residential address, the consistency of technology, the
lack of social contact and the ability for an employee to bond with an organization will
require careful planning.”
• In “Nobody’s As Smart As Everybody: Unleashing the Quiet Genius Inside the
Organization”, Jim Lavoie says, “It’s not the leader’s job to think up all the great ideas
or to have all the answers –but to cultivate the motivation and channels for the “quiet
genius” and collective brilliance of the organisation to emerge and develop. The process
is as important as the outcome One of the ancillary benefits of the idea market is that
it provokes everyone in the company to think (on a daily basis) about how to grow the
company –and shifts the balance of work toward meaningful value-creation.”
• In “How to Tell if You are a Natural Leader”, Gary Hamel says, “Think about your role
at work. Now assume for a moment that you no longer have any positional authority
– you’re not a project leader, a department head or vice president. There’s no title on
your business card and you have no direct reports. Assume further that you have no way
of penalising those who refuse to do your bidding –you can’t fire them or cut their pay.
Given this, how much could you get done in your organization? How much of a leader
would you be if you no longer held even a tiny, tarnished sceptre of bureaucratic power?”
Minimalist artists reduce their work to the smallest number of colours, values, shapes,
lines, and textures. In 1929, Ukranian artist David Burlyuk, in the catalogue introduction
for an exhibition of John Graham’s paintings at the Dudensing Gallery in New York, wrote:
“Minimalism derives its name from the minimum of operating means.”
Can managers minimise operating means? Can managers – in the words of Mies van der
Rohe – create an impression of extreme simplicity?
In the creative world, minimalism was a reaction against the formal overkill and
pretentiousness of other forms of art. Perhaps the idea of minimalism in management,
as a reaction to formal overkill and pretentiousness of conventional management is
worthy of consideration?
Add less value. The beauty and elegance is in the austerity.
Or, to take a liberty with one of the great minimalist minds, Thoreau: “That [management]
is best which [manages] least.”
Ross Smith has worked in every corner of the software industry for over 20 years and
is currently a Director of Test at Microsoft. This article was a prize-winner in the recent
www.managementexchange.com/M-prize M-Prize competition on the MIX (www.managementexchange.com).
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