Over the last 30 years, leaders of innovative companies have been treated as the heroes of business, people who transformed our lives with their vision. That’s true, but as important as great leaders are in building an innovative company, little would happen if effective middle management did not support them

Sidhu, J.S. (Jatinder)

Sidhu, Jatinder

EUR Research Repository

ROTTERDAM SCHOOL OF MANAGEMENT, ERASMUS UNIVERSITYThe business school that thinks and lives in the future Why firms should  focus on social innovationIn conversation with Kevin Heij Middle managers:  their role in manage-ment innovationBy Jatinder Sidhu The fine line between hands-on and hands-off leadershipBy Steffen Robert Giessner and Sut I Wong The taming of desire:  lessons in consumer welfareBy Nicole Mead Shift happens:  how to manage  changing projectsBy Fabian Sting Supply and demand forecasting: more than just a numbers gameBy Stefanie Brix1st Quarter 2016Management Knowledge         RSM DISCOVERYwww.rsm.nl/discovery literature is silent on how the charac-teristics of middle management affect the C-Suite’s ability to drive changes in management practice.Two challengesSetting up our study required over-coming two serious conceptual limi-tations. First, how could we measure the amount of management innova-tion that occurs at a given company? After all, you can’t quantify it by count-ing patents, say, or sales. Unless the outcome is architecture as remarkable as the Toyota Production System, or a feature that the company can tout as an advantage to customers, such as Cognizant’s “two-in-a-box” dual-man-agement structure for its distributed offshore services, management inno-vations tend to be somewhat obscure. One way to do it, we believed, was through a close reading of annual re-ports to identify passages that refer to management innovations. Over the last 20 years, scholars and practition-ers alike have increasingly accepted the validity of this kind of quantified written analysis. Second, how could we determine which middle manager characteris-tics made people more or less likely to follow top management demands? Relational demography theory gave us a clue. This well-established theory holds that the more closely subordi-nates identify with a superior based on their shared characteristics, the easier they find it to cooperate. As one research team has noted, demo-graphic similarity invokes ‘an attrac-tion dynamic whereby demographi-but management innovations can be nearly as powerful. Toyota Motor Company’s lean manufacturing pro-cess and Procter & Gamble’s brand management structure, for instance, transformed not only their companies but also their entire industries. Some historians now argue that the whole Industrial Revolution began not with the invention of the steam engine, but with advances in management.Management innovation generally rolls out from the top down. Since mid-dle management is responsible for car-rying out the wishes of senior manag-ers, senior managers need their middle managers to understand and support the proposed changes. Obviously, the more management innovations a com-pany undertakes, the greater ability middle managers have to create delays and system failures. Yet management Indeed, without a cadre of strong mid-dle managers behind him, even Steve Jobs might not have reached the pin-nacles of success that he did at Apple. Despite this fact, most management research has focused on senior man-agers. Even when it comes to manage-rial innovation, where middle manag-ers obviously play a key role, we know more about the role of the C-Suite than that of the people in the middle. In a new study, my colleagues and I took a few first steps toward filling in that blank space, by examining mid-dle management’s impact on manage-ment innovations. Like the middle managers, man-agement innovations are under-sung heroes. Product and service innova-tion tends to get most of the glory, perhaps because those types of inno-vation are easier to see and explain, 08   |   1st Quarter 2016Middle managers: their role in management innovationBy Jatinder SidhuOver the last 30 years, leaders of innovative companies have been treated as the heroes of business, people who transformed our lives with their vision. That’s true, but as important as great leaders are in building an innovative company, little would happen if effective middle management did not support them.Management KnowledgeRSM DISCOVERY“Some historians now argue that the whole Industrial Revolution began not with the invention of the steam engine, but with advances in management.”This correlation would be particu-larly significant in management inno-vation, we believed, as a management innovation effort often demands a lot from managers. Not only must they learn how to do things in a new way, they frequently must make sure that the people they supervise also learn how to do things. This can be demor-alising for mid-level managers. It is one reason that we thought a close rela-tionship with top managers would be essential. Further, we expected that the functional role the executives played might be important: did they work for an inner-facing (such as operations or accounting) or outer-facing (marketing and sales) function? Our prediction was that when it came to managerial inno-vation, inner-facing executives would be more invested in such process-fo-cused changes. Two-step processTo test our hypotheses, we designed a two-step research process:1.  We looked at the text of the an-nual reports of 33 organisations operating in the Netherlands be-tween 2000 and 2008. With ad-vanced computer-aided content analysis software, we analysed where and how often certain management innovation-related words (such as adopt, implement and transform) came up in the annual reports of each company. We sorted by numerical efficiency ratios such as reorganisation ex-penses and overhead ratios, and managerial productivity.erally understood role. Dissimilarity, meanwhile, leads to increased con-flict because of perceived differences in values, aloof demeanour, and/or miscommunication. To us, this pattern suggested that companies where the middle managers most closely mir-rored the demographic of their sen-ior managers in terms of age, gender, educational level and function should be the ones where middle managers would be the most receptive to their superiors’ ideas, which would ulti-mately lead to more energetic pursuit of their initiatives.cally similar individuals accentuate the positive attributes of each other and derive a positive social identity.’ In addition, the closer someone sees someone else as being like him or herself, the more likely he or she is to see the other person as reliable, trust-worthy and competent. Conversely, the dissimilar tend to be perceived as more dishonest, untrustworthy and uncooperative.The more similar middle managers feel their superiors are to them, the more likely they are to take on tasks that go beyond the scope of their gen-1st Quarter 2016   |   09Middle managers: their role in management innovationBy Jatinder Sidhuwww.rsm.nl/discovery bottom of the company is crucial. And second, keeping up with advances in management innovation is also crucial. The competitive advantages of techno-logical and product innovation have become relatively short-lived, eroded by low-cost, high-skilled global compet-itors, reverse engineering, and weak-ened intellectual property protection. Jatinder S. Sidhu is Associate Professor of Strategic Management, Department of Strategic Management and Entrepreneur-ship, Rotterdam School of Management, Erasmus University.  EMAIL   jsidhu@rsm.nlThis article draws its inspiration from the paper The Conjoint Influence of Top and Middle Management Characteristics on Management Innovation, written by Mariano L.M. Heyden, Jatinder S. Sidhu, and Henk W. Volberda and soon to be published in the Journal of Management. Next studiesSimilarly, the limited nature of our management data made it impossible for us to answer a number of impor-tant questions, such as whether having a similar length of tenure at a company is an important contributor to identifi-cation between middle managers and senior managers. Although our work suggests that similarity between the middle and top tier managers reduces the need for communication, executives may not be better served if they are able to hire people who resemble themselves. On the contrary, a number of studies have found that it may hinder other kinds of innovation. In product development, for example, diversity has been shown to spur creativity. We think that compa-nies may be better off drawing a more positive lesson instead: if you want to make sure you get the benefits of di-versity without the downside of more misunderstandings, it may be a good idea to place more emphasis on inter-nal communication. Further research will clarify some of these mechanisms, but some of the most important lessons around man-agement innovation adoption are al-ready clear.  First, keeping communi-cation lines open from the top to the “…greater similarity in the educational level and functional experiences of senior managers and middle managers did correlate with the presence of management innovations…”Management KnowledgeRSM DISCOVERY2.  We matched these findings with data pertaining to 8,000 middle and senior managers who worked at these 33 companies over the same eight years – records obtained from a large, globally-recognised human resources consultancy. The records identified only the individual’s po-sition, gender, educational level and function. The results did and did not sur-prise us. On the one hand, we were surprised to learn that age and gen-der did not correlate to the number of mentions of management innovation we had found in any of the companies. On the other hand, greater similarity in the educational level and functional experiences of senior managers and middle managers did correlate with the presence of management innovations as we had hypothesised.As with most research, our study contains a few limitations. Although we believe content analysis is a useful tool for measuring management inno-vation, it’s akin to those chemical tests that can measure the presence or ab-sence of something but not its strength. This approach tells the researcher that management innovation is occurring, but it can’t distinguish whether it’s an incremental or a radical innovation. 10   |   1st Quarter 2016 RSM ExpertiseThe Department of Strategic Management & Entrepreneurship at RSM offers unparalleled exper-tise in a wide range of areas of im-portance to managers and scholars. These areas are grouped under the themes of strategic management, strategic entrepreneurship, and global strategy. More information about the department and its work can be found at:      WEB   www.rsm.nl/sme

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Middle managers: their role in management innovation

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Middle managers: their role in management innovation

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