* Leadership

Freeing Managers To Innovate

Big companies often have difficulties capitalizing on their wide-ranging resources. Siemens identified a key to success: people must believe they have “permission” to venture into uncharted territory

Harvard Business Review

A large global company can reap tremendous gains if people from different product groups and regions work together and strike out in new directions to meet customers’ needs. But big organizations are often stymied by traditions and territoriality that obstruct this kind progress. If corporate headquarters tries to intervene directly, it risks arousing resentment in the field. 

At Siemens, we found an answer to this problem: it turned out that managers needed to believe that they had “permission” to tackle goals beyond their formal job descriptions and their assigned business units. Successful cross-unit initiatives depend on moving into other people’s territory and tackling new kinds of responsibilities. Siemens’s headquarters had already begun preaching this message of innovation and collaboration. But not enough was actually happening because few people felt sufficiently bold to venture out of their own safe areas.

A start-up company that needs new entrepreneurial kinds of managers can go out and hire them as it builds its organization. By contrast, established companies like Siemens, a worldwide provider of everything from gas turbines to mobile phones, which already has tens of thousands of managers around the world, has no choice but to find a way to make its old managers into new ones. So this attribute became the central goal of an in-house management development program that was created for all managers in the late 1990s. Many companies have established “active learning” curricula focused on the study of cases and other real-life problems. But we realized that changing people’s behavior is less about intellectual learning than it is about blasting them loose from nearly impenetrable, self-imposed—and company-rewarded—boundaries. We started our people off with some classroom teaching, but the bulk of the program put them in teams working on actual projects.

These “business impact projects” had to show measurable results and typically lasted about four months. It wasn’t enough for a team to recommend a new marketing strategy or propose a new procedure for product development. We didn’t want the end result to be a paper no one would read. Instead, we wanted people to get their hands dirty in the real work of organizational maneuvering and achievement.

Once a team settled on an opportunity to pursue, they had to recruit a “coach,” usually a high-level executive in the business area that the team was focusing on. Executives were free to decline these requests; some teams had to try several times before landing their coach.

Even harder was getting support from other Siemens managers who might be affected by their plans. For example, a team in Latin America worked on a business plan to sell Siemens’ servicing skills, such as power-plant maintenance, apart from sales of the machinery. The team tried to conduct an inventory of the company’s existing capabilities for servicing the machinery it sold in the region—and immediately ran into roadblocks. “I had to call one guy every day for a week to get the data we needed,” recalls one member of the team.

The team members ended up experimenting with a variety of methods for getting the information they needed—from persuasion to collaboration to the straightforward appeal to a higher authority when they felt it was necessary. As one team member recalls, “In Latin America, Siemens businesses have often been rivals as much as partners.” Driven by an esprit de corps and by the pressure to achieve, the team convinced many of the regional service managers that their project could contribute in useful ways that would support rather than undermine those service managers’ roles. That came in handy in the operational stage, when the team identified a few target companies for a sales pitch. At the very end of their business impact project, they landed two contracts in Colombia and one in Brazil. 

Some teams never really got going, but many others had experiences similar to those of the Latin American group. A Scandinavian team found that salespeople working for Siemens’s companies in Norway and Sweden were focused almost exclusively on maximizing business within their own countries. As a result, customers with a presence across the region weren’t receiving proposals that covered their needs in both countries. But to achieve a unified Swedish-Norwegian offering for those clients, the team had to invent new mechanisms and forge new alliances. Its work included getting agreement on a single account manager for each customer and allocating income and profit to what were formally separate sales regions. That meant quickly earning the trust of people who didn’t know them and had not invited them to help—a difficult task when most managers were used to trusting only those people they had known for years.

In each case, it helped that the teams consisted of people from different product areas, functions, and geographies. But diverse teammates and their existing contact networks weren’t enough; the projects wouldn’t work without each team figuring out how to win support from people who had little interest in—or who even felt threatened by—the team’s efforts.

In interviews after the projects ended, nearly every participant reported a new perspective on their old organizational comfort zones. At first, they said, they had felt liberated by their status in the program—as though they were immune from risk. But in retrospect, they came to understand that the program conferred no special status on them at all; their previous hesitation toward risk-taking had been largely self-imposed. The program had given them the unique sense of “permission” to venture that they had actually had all along. 

There may be easier ways to “grant permission” than setting up an entire management training program. But at Siemens, corporate directives to collaborate weren’t bringing about the needed changes. Only the internal pressure to accomplish real results energized people enough to blaze new paths of opportunity.