Just about everyone is familiar with the story of Alfred Nobel, inventor of dynamite and namesake of the famous Prizes – or at least they are familiar with one version of it. The standard version of the tale is that he invented dynamite for construction purposes, then, shocked at how the world was using it to blow each other up instead of to build things, he bequeathed his fortune to establish the Prize to promote world peace. Maybe that’s how it happened and maybe not. Al’s old man was a military contractor for the Czar of Russia and the family fortune was made as a result of Immanuel Nobel’s insight into good ways to blow people up, so how bothered Alfred was is a bit questionable. In any event, whether it was a fit of conscience or, more likely, a futile attempt to score points with a woman named Bertha von Suttner, he changed his tune.
Gary Hamel seems to be in the midst of a similar journey, although I have no reason to think his motives are to impress some woman. Hamel, for those who do not know of him, is regarded as perhaps the greatest management wizard alive – the heir apparent to Peter Drucker. He describes himself as "the world’s most profound business thinker", so modesty is obviously not one of his strong points, but there are plenty of other folks around who share that view of him. The Economist calls him "the world’s reigning strategy guru." This mantle of genius has been placed on him largely on the strength of an article he wrote for the Harvard Business Review back in 1990 titled "The Core Competence of the Corporation". The one sentence summary is that a company should figure out what it is good at and concentrate on doing that thing very well, and not worry too much about getting good at the rest.
Just as the invention of dynamite for construction purposes inadvertently made Alfred Nobel the Father of Weapons of Mass Destruction, the origination of the concept of core competency turned Hamel into the Father of Outsourcing. I don’t think Mr. Hamel intended for just about every big corporation to take him so seriously that they would use his theory to outsource every company function except the one thing they figured was their ‘core competence’, but that’s what happened. I especially don’t think he expected them to decide that their true core competence was finance or advertising, instead of value adding activities like engineering and manufacturing. Regardless, Hamel’s theory of core competence has probably hollowed out more factories than Nobel’s dynamite ever did.
Hamel’s scheme was so wrong – at least the standard corporate application of his scheme – that even the fellows at Wharton are questioning the idea of breaking up value streams to isolate and only worry about core competencies. It would have saved the whole bunch of them a lot of time and effort (not to mention a bit of inconvenience all of this caused for a few million people who lost their manufacturing jobs) had they all just read a couple of articles about lean.
Better late than never, however. Like Nobel with his Prize to atone for some of the damage done, Gary Hamel is opening up a ‘Management Innovation Lab’ at the London Business School this Fall so they can rethink the whole mess. I think that he is going to get it right this time. I think that Mr. Hamel may be in the right position at the right time to have history remember him not as the guy who gutted manufacturing with his hair brained core competence notions, but as the guy who tossed Alfred Sloan out of manufacturing once and for all.
I am not a "profound management genius", nor am I a "strategy guru". Anyone who would pay me the ridiculous sums that Gary Hamel and his peers get to give a speech is out of their mind. When asked what I am, my typical answer is that I am itinerant manufacturing bum. I have worked in just about every kind of factory at every level from machine operator to plant manager. I write, I consult and I speak from time to time to just about anyone who wants to talk about manufacturing. My formal education is pathetic. My success with lean manufacturing has been little more than standing on the shoulders of giants like Ohno and Shingo and taking credit for their genius. Rebirth of American Industry is nothing more than a compilation of the logical and obvious conclusions I came to from trying to understand why so many good, smart and conscientious manufacturing executives have failed to succeed in lean transformations. I want to make this clear before I launch into the real point of this post.
The impetus for creating the lab is a series of brilliant insights – that Toyota actually deploys a different management system, not just a different factory operating scheme – that the Sloan model has some weaknesses, including insanely trying to boil something as incredibly complicated as a factory down to a couple of simple equations – that business schools and their graduates know next to nothing about the origins and assumptions behind the management principles they memorize – that Henry Ford actually was the innovator of management principles and not just assembly lines. I know that just about all of this comes right from the pages of my book. The lesson to take, however, is not that I am a genius on par with Gary Hamel. No, the lesson is that it has taken this long for the leading guru among all of the leading strategic gurus to figure out what is patently obvious to me and all of the other itinerant manufacturing bums out there.
The bottom line: I am not a deep thinking wizard – I merely write and say what many, many manufacturing people know to be true. CEO’s can save themselves an awful lot of time and an awful lot of money by just going out into the factory and asking all of the itinerant manufacturing bums already on their payroll what is wrong and what needs to change. The alternative, I guess, is to wait a few more years, then pay Mr. Hamel’s fee to tell them.