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Leading the Revolution: How to Thrive in Turbulent Times by Making Innovation a Way of Life
     

Leading the Revolution: How to Thrive in Turbulent Times by Making Innovation a Way of Life

by Gary Hamel
 

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Gary Hamel, world-renowned business thinker and coauthor of Competing for the Future, the book that set the management agenda for the 1990s, now delivers an agenda for the twenty-first century with the national bestseller, Leading the Revolution. Fully revised with a new introduction, this book provides an action plan for any company or individual

Overview


Gary Hamel, world-renowned business thinker and coauthor of Competing for the Future, the book that set the management agenda for the 1990s, now delivers an agenda for the twenty-first century with the national bestseller, Leading the Revolution. Fully revised with a new introduction, this book provides an action plan for any company or individual intent on becoming and staying an industry revolutionary. Hamel argues that to thrive in the age of revolution, companies must adopt a radical new innovation agenda. The fundamental challenge companies face is reinventing themselves and their industries not just in times of crisis—but continually. Beautifully illustrated with more than 100 full-color photos and drawings, Hamel's Leading the Revolution is an action plan (indeed, an incendiary device) for any company or individual intent on becoming and staying an industry revolutionary. Based on experiences of world-class companies, including Charles Schwab, Cisco, Virgin, and GE Capital, Leading the Revolution explains the underlying principles of radical innovation, explores where revolutionary new business concepts come from, and identifies the key design criteria for building companies that are activist friendly. It will show companies how to avoid becoming "one-vision wonders"; harness the imagination of every employee; develop new financial measures that focus on creating new wealth; and create vibrant internal markets for ideas, capital, and talent. Drawing on the examples of activists who profoundly changed their companies with their bare hearts, Hamel outlines the practical steps anyone can take to lead a successful revolution in their own firm.

Editorial Reviews


The call to arms during the American Revolution was, "The British are coming! The British are coming!" Now, Gary Hamel contends, we are in the midst of a business revolution whose battle cry is, "Change has changed! Change has changed!" More specifically, Hamel says in the 21st century innovations in business markets will no longer be incremental. Instead, they'll be "discontinuous, abrupt and seditious." This groundbreaking work from the coauthor of the bestselling Competing for the Future explores why the nature of change has changed, and offers an inspiring "manifesto and manual" for profiting from that shift.

Highlights:

  • Recounts how "the advantages of incumbency" -- global distribution, respected brands, a deep pool of talent, cash flow -- once gave companies the luxury of time to adjust to changes in their markets. But in today's world of discontinuous change, "a company that misses a critical bend in the road may never catch up ... Never has incumbency been worth less."
  • Argues that "radical, nonlinear innovation is the only way to escape the ruthless hypercompetition that has been hammering down margins in industry after industry. Nonlinear innovation requires a company to escape the shackles of precedent and imagine entirely novel solutions to customer needs."
  • Identifies "inventing new whats" as a key competitive strategy. A CEO crystallized that concept for Hamel when he told him, "I used to spend all my time worrying about the how -- how we did things, how we operated, how efficient we were. Now I spend much of my time worryingabout the what -- what opportunities to pursue, what partnerships to form, what technologies to back, what experiments to start."
  • Offers this explanation for why Silicon Valley played such a central role in changing the way business is being done: "The real story of the Silicon Valley is not 'e,' but 'i,' not electronic commerce but innovation and imagination ... It is the power of 'i', rather than 'e,' that separates the winners from the losers in the 21st century economy."

Advantages:

  • Hamel's writing is authoritative and accessible. He is clearly in command of his material, deftly interweaving his suggested strategies with the real-world events they are drawn from.
  • Like revolutionaries of all eras, Hamel is passionate about his cause. His enthusiasm for turning radical innovation into "a deeply embedded corporate capability" virtually leaps off the page. In the introduction, Hamel notes that his book is aimed at those "who are tired of playing it safe" and "those who are unwilling to sacrifice their dreams on the altar of accepted wisdom."

Related Titles:

Hamel isn't the only one to conclude we are living in revolutionary times. The director of the Aspen Institute Internet Policy Project looks at how online technology is causing major power shifts throughout society in The Control Revolution: How the Internet is Putting Individuals in Charge and Changing the World We Know. And in You Say You Want a Revolution: A Story of Information Age Politics, an ex-chairman of the FCC recounts how the U.S. government grappled to come up with a regulatory policy for the information sector. While Hamel is an admirer of Silicon Valley and its entrepreneurial ethos, a less-charitable view of America's high-tech mecca is detailed in Cyberselfish: A Critical Romp Through the Terribly Libertarian Culture of High-Tech.

Reviewed by MH - July 25, 2000

Publishers Weekly
Hamel's first edition of this volume, published in 2000, urged managers help lead a business revolution by embracing change-developing e-commerce, participating in joint ventures and engaging in selective cooperation. Centuries of incremental progress have given way to a time of revolution, Hamel argued, and companies must change or die. His revised version keeps the focus on far-reaching innovation-imagine the kind of future you want for your company, Hamel urges, and then go out and create it-but he makes sure to dismiss the "helium" of the dot-com bubble and focus on meaningful business change. He highlights Cemex, the third largest cement company in the world, as proof that "new attitudes and new values can change an old industry"; UPS, too, gets the nod as another "gray-haired revolutionary." (Unsurprisingly, Hamel's positive Enron profile from the earlier edition gets the axe.) Hamel's presentation is powerful and his core argument that corporate leaders must be more entrepreneurial remains convincing; the worst that can be said about this volume is that, by rehashing his earlier writings, Hamel may not be fully following his own advice. (Dec.) Copyright 2003 Cahners Business Information.
Antoinette Farnham Stepanek
[A] clever book...Hamel makes a strong case that bringing fresh thinking to the job can produce wealth as well as satisfaction—and rekindle passion for the work, regardless of what it is.
Business Week

Product Details

ISBN-13:
9781591391463
Publisher:
Harvard Business Review Press
Publication date:
01/01/2003
Edition description:
Revised Edition
Pages:
333
Product dimensions:
6.60(w) x 9.42(h) x 1.19(d)

Read an Excerpt


Chapter 2: Rising Expectations, Diminishing Returns

Maybe you're in one of those hot, young companies with millions in revenue and billions in market cap. That's cool, but you'd be foolish to mistake Internet investment fever for a rock-solid business concept. Sure the new economy demands some new math-companies can grow more quickly than ever before because they are less constrained by physical capital than ever before. But sooner or later you company's earnings performance will have to match its valuation, so you'd better be damn sure your company has a business concept that will live up to that implicit promise. If it doesn't, I'd hold off on pledging those stock options as collateral on a multi-million-dollar house.

If you're under 30, you may not remember that the personal computer industry spawned dozens of "hot" companies-Osborn, Kaypro, Commodore, and AST Research to name a few. But only one, Dell, was a wealth-creating superstar throughout the '90s, and even its share price sat on a plateau for most of 1999. So is your company going to be Kaypro or Dell? Are you going to join the ranks of Yahoo!, AOL, and Amazon.com, or get washed down the drain of companies that were unable to recognize and change a decaying business concept? Let me be clear: there are even more poorly conceived, ultimately uneconomic, me-too business concepts in the new economy than there are in the old. And even the best ones decay rapidly in the fetid environment of the Internet. If you're not extraordinarily adept at perpetual innovation, that e-business wave of hype your company is riding on right now is going to crash.

The Revolution of RisingExpectations

Every year investors raise the bar. Read an annual report from a decade ago, and you're likely to find a company chairman bragging about exceeding the prior year's performance. Back then you just had to beat yourself. Then investors began demanding more: "We don't care how you did against yourself. We want to know how you performed against your bestin-class peers." So the bar went up a few feet. Every diversified industrial company was pressed to meet the standards set by General Electric. Every retailer was expected to match the returns achieved by Wal-Mart. And every software company was measured by Microsoft's yardstick. Navel gazing was out; financial benchmarking was in.

Then the bar went up again. Investors said, "Wait a minute. You may be doing okay when compared to your peers, but what about the absolute standard of 'economic value added'? Are you actually earning more than your cost of capital?" Amazingly enough, the idea that a business should earn its cost of capital struck many executives as a new thought. Clearly more than a few had slept through Finance 101. So diligent executives across the planet began weeding out projects that couldn't promise a positive net present value. J. C. Penney, Toys "R" Us, Siemens, and dozens of other companies signed up for the EVA diet. Investors said, "Make those assets sweat".

As investors became more demanding, and less patient, CEOs felt the heat. John Akers (IBM), Kay Whitmore (Kodak), Roger Smith (General Motors), Bob Allen (AT&T), Gil Amelio (Apple Computer), Eckhard Pfeiffer (Compaq), Doug Ivester (Coca-Cola), and dozens more got the boot or slunk off into early retirement as investors grew weary of empty promises. The message of this bloodletting wasn't lost on the survivors: deliver or else.

Today's investors have an unquenchable thirst for ever higher returns. Cisco, Charles Schwab, AOL, Lucent, Amazon.com, Gap, Yahoo!, Dell, and Microsoft. None of these companies is more than a generation old. Yet their collective market cap at the beginning of 2000 was nearly $1.5 trillion, or close to 10 percent of the total market cap of all publicly listed companies in America. These companies were the stock market stars of the 1990s. But the bar is going up get again. There's a new crop of wealth creators whose eye-popping returns are once again resetting the gauge of investor expectations: CMGI, Terra Networks, Akamai, Ariba, Conexant, COLT Telecom Group plc, Sycamore Networks, and Scoot.com plc are just a few of the come-from-nowhere chart busters that started the new century with $20 billion-plus market caps. Sure, some of these companies will crash and burn, but their stratospheric returns, however temporary, have further fueled investor passions.

There are no more widows and orphans. With a new economy aborning and billions of dollars of potential wealth up for grabs, every investor wants a piece of the action. Forget the high jump, investors expect you to pole vault. No longer are they fretting over whether or not you're earning your cost of capital. Nor do they care how you're performing against your equally underwhelming peers. Instead, they're asking whether you're likely to join the pantheon of wealth-creating superstars. Perched atop their IRA and 401(k) nest eggs, millions of investors are obsessed with beating the market. If you can deliver outstanding shareholder returns, you're a god. If you can't, you're a bum.

I can already hear you making excuses. "That's fine for Amazon.com or Cisco," you say, "but we're in a mature industry. We're not a start-up. We're not some Internet comet." I don't buy it. Wealth creators come in all sizes, can be found in all kinds of industries, and must often overcome the inertia of tradition and precedent. Scan the list of companies that delivered record-breaking returns during the 1990s, and you'll see companies such as Gap, Harley-Davidson, SunAmerica, Clear Channel, The Home Depot, Progressive Insurance, and Merrill Lynch hardly high-tech shooting stars.

It's not easy to become a stock market supernova, and it's even harder to stay one. At the same time that petulant investors have been demanding edge-of-the-atmosphere returns, the percentage of companies that have been delivering better-than-average returns has been steadily declining. In 1999 only 30.8 percent of the S&P 500 companies outperformed the S&P average-in terms of total return to shareholders. That was down from 58 percent in 1992, and the second lowest percentage in more than a decade. (In 1998, 27.6 percent of the S&P 500 did better than average.) Put simply, 7 out of 10 companies underperformed the market in 1999. By definition 50 percent of the S&P 500 outperformed the median, but fewer than 1 in 3 outperformed the mean. The discrepancy between the mean and the median is evidence that a few outstanding performers are simply outdistancing the rest of the field.

The brutal truth is this: there is an ever-growing population of mediocre companies and an ever-diminishing population of truly great performers. The explanation for the performance gap is simple. Companies that spent the past decade trying to wring the last ounce of efficiency out of tired, old business models have now reached the point of diminishing returns. Their strategies have become virtually indistinguishable from their competitors'. And with top management's attention focused internally on process and systems, they've left themselves wide open to unorthodox innovators. Only a few companies have escaped this writhing mass of mediocrity. Only a few companies have been successful in inventing entirely new business models, or in profoundly reinventing existing business models. These are the companies up there in investor heaven.

It is impossible to meet the rising expectations of shareholders without actually creating new wealth. To create new wealth you must innovate-in ways that competitors are not or cannot. You can't buy your innovation "off the shelf" from the same tired, old consulting companies your competitors are using. Cisco, The Home Depot, Pfizer, Charles Schwab, Yahoo!,...

What People are Saying About This

Richard Branson
Most people on the front line of business know there is a revolution going on, but wake up each day not knowing in what direction we are heading. That's what makes the current environment both frightening and exciting. Gary Hamel captures the moment with a no-holds-barred assessment of the issues facing companies all around the world as they struggle to catch up with the new economy. (Sir Richard Branson, Chairman, Virgin Group)
Kenneth Lay
Gary Hamel's 'revolutionary entrepreneurship' model represents a substantial advance in our understanding of what companies must do to become outstanding innovators. It should influence not only top management but also all employees who are, indeed, the CEOs of their business lives. (Kenneth L. Lay, Chairman and CEO, ENRON)
Steve T. Jurvetson
As venture capitalists, we like to finance swarms of startups that kick the stuffing out of established companies. So please put this book down. Now slowly back away from the counter…. Because if you and your company put Hamel's revolutionary principles to work, it's going to be a lot harder for our start-ups to take your company by surprise. (Steve T. Jurvetson, Managing Director, Draper Fisher Jurvetson)
Arthur Blank
Gary Hamel captures the new competitive business environment, one in which dreams and reality merge. Leading the Revolution will inspire innovation at all levels and provide insight into opportunities for rewarding revolutionary thinking in new and bigger ways. (Arthur M. Blank, President & CEO, The Home Depot, Inc.)
Peter Schwartz
In today's world of continuous discontinuity, radical innovation is not a luxury-it is necessary for survival. As always, Gary Hamel has seen the challenge ahead of others. His Leading the Revolution is a call to action and a handbook for business revolutionaries. Your fate-and the fate of your company-depends on joining them. (Peter Schwartz, Chairman, Global Business Network)
Michael Dell
Revolutionaries in the new economy are those leaders and companies willing to change the strategies that once made them great. Gary Hamel's clear and powerful blueprint for radical innovation is eye-opening for any business. (Michael Dell, Chairman and CEO, Dell)

Meet the Author


Gary Hamel is a founder and chairman of Strategos, and Visiting Professor of Strategic and International Management at the London Business School. He is the co-author of the international bestseller, Competing for the Future.

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