Dr. Gary Hamel, faculty member at Harvard and chairman of Strategos, a strategy innovation company, presented the keynote address at The Graziadio School’s Management Update program in May. Dr. Hamel’s presentation, The Alliance Advantage, was based on his newest book of the same name. After the event, GBR Editor Dr. Scott Sherman asked Dr. Hamel to describe his concept of organizational activism for the Graziadio Business Review.
GBR: One of the central parts of your discussion today was the need of the individual within the organization to become an activist. You mentioned some of the issues at the organizational level about activists…What do you think are some of the personal challenges that an individual manager needs to understand to be an activist?
Hamel: Certainly one thing is that it takes a certain amount of courage. When you talk to individuals, you hear a lot of passion and courage…”We need to change this and change that…” But, when you see this same individual stand in front of senior management, they turn the volume down from 10 to 5. They don’t have the courage of conviction.
One of the things I’ve always told my MBA students is, “Go to work each day believing you’re independently wealthy.” It’s a hard kind of fiction to maintain but, if you don’t have that basic sense of integrity and freedom, it’s all too easy to get into a situation where you’re spending most of your time polishing the egos of the people you work for.
I like to make a distinction between courtiers and activists. Courtiers are there to make royalty feel good. I meet all kinds of those people in large organizations. The interesting thing is, even though they don’t take many political risks, most people around them know that they aren’t making any positive difference in the organization.
Secondly, I mentioned not being parochial. If you look at great activists through history, even though they were often fighting for one particular part of society, Susan B. Anthony and Martin Luther King, Jr. for example, they very much had a view that what they were advocating was good for everyone. I make a distinction between Martin Luther King, Jr. and Malcolm X. Martin Luther King, Jr. was not apologetic in saying that black people have been extraordinarily badly treated in this country, but his argument was that, as a society, it benefits us all if we respect each other and treat each other as equals. You can not have islands of prosperity in a sea of despair in this country.
But I think a lot of people in organizations are always defending their own corner, function, or business unit. So, as soon as they open their mouth, people around them immediately discount what they’re going to say because they know that it’s parochial. I think if you start out with a view of…”I really want to do what’s right for everybody here,” it’s a kind of honest selflessness that you need. Then, it’s impossible for someone to say, “Of course she would say that because it’s great for her…” Instead, you want them to say the opposite…”Gee, that’s a very courageous thing for them to champion because, you know, they don’t get any immediate benefit out of that.”
If you want to be an activist, look for issues where the immediate payoff for your colleagues in the organization is large but where the immediate payoff for yourself may not be so large.
GBR: When you look at the idea of activists, I’m immediately brought to the idea of “martyr.” Does the activist need to have a willingness to become a martyr?
Hamel: I think there are many principled people who have resigned from companies over serious differences of opinion in how the company could be run. And, if you look at that as martyrdom, yeah. I think sometimes you get to a point where what you see is either morally repugnant or just makes such bad business sense that you walk away from it.
I was speaking recently with Jim Clark who was the founder of Silicon Graphics. Jim believed passionately that Silicon Graphics had to either embrace the microprocessor or make workstations much less expensively…or they’d become an irrelevance. Even though he was the chairman, he wasn’t able to make this argument prevail at Silicon Graphics so he resigned. He said, “If you guys aren’t willing to do this, then I can’t, in good conscience, preside over something that I think is going to turn this company into largely an irrelevance.” When he talked about this, you could tell it was a hugely painful thing for him to do. So, yeah, sometimes I think there’s an equivalent of corporate martyrdom that is necessary.
But, you know, you can’t be an activist if you’re dead. And so the activists who have been most successful are ones who learned to live within current institutional constraints. In that sense, they are not anarchists and they’re not terrorists. An anarchist wants to stir things up for no particular outcome. A terrorist may have a cause but not know how to pursue the cause within the boundaries of society. But an activist is someone who can work within the boundaries to make change happen.
GBR: You suggest that individuals work within the organization, but you also say that people should work as though they are independently wealthy which implies a belief that one could exist without the organization. Is there a disconnect here?
Hamel: No. If I believe that I have options as an individual, and I’m investing in my own learning and in my career so that I have other options, then I increase my capacity to be honest. What I’m calling for there, is to work within the boundaries, but not to work within all the boundaries. You can’t create change unless you are breaking some boundaries. The question is what those boundaries are. Most companies have some accepted core values and beliefs that you don’t want to violate.
At Charles Schwab, one of their published values is empathy with customers. I’ll give you an interesting example of that kind of activism. Like most companies, Schwab looked at all of their accounts and found that a lot of their smaller accounts that didn’t trade very often were actually unprofitable for the company because of the costs to service these accounts. So top management, without much consultation, decided to start charging a monthly fee on all of those small accounts. A lot of companies do that.
But Schwab had also instilled a value that you treat all investors equally. Well, they announced this policy and started charging this fee and, sometime within this particular year, they had many of their sales people together, and it transpired that many salespeople thought this was really unfair. They said, “We are here to serve the individual investor, that’s how we built the company…Penalizing them because they don’t have a lot of investments doesn’t seem fair.”
To the credit of senior management, although they could have made a very good argument that everybody else does this or whatever, they said, “All right, we’re not going to do it anymore,” and they wrote every customer a letter saying they were rescinding the charges. They said that it was far more important to keep that organizational value alive than to win that one policy battle. In that sense, you had a kind of collective activism in which people just stood up and said, “You know what, this just doesn’t seem to be thing to do.”
So, yes, you’re working within the boundaries of value and respect, but you’re not necessarily working within the boundaries of habit and policy and procedure. That’s the distinction.
GBR: Thank you very much.