14 May 2001  Research & Ideas

Are You Managing To a ‘T’? Time To Break With Tradition

Say hello to the T-shaped manager. In this HBR excerpt, HBS professor Morten Hansen and colleague Bolko Von Oetinger introduce a new-generation exec who shares information horizontally across the organization as well as vertically among individual business units.

 

Despite their best efforts, most companies continue to squander what may be their greatest asset in today's knowledge economy: the wealth of expertise, ideas, and latent insights that lies scattered across or deeply embedded in their organizations. And that's a shame, because capitalizing on those intellectual resources—using existing knowledge to improve performance or combining strands of knowledge to create something altogether new—can help companies respond to a surprising array of challenges, from fending off smaller, nimbler rivals to integrating businesses shoved together in a merger.

Many companies have tried, with mixed success, to leverage this underused asset by centralizing knowledge management functions or by investing heavily in knowledge management technology. We suggest another approach, one that requires managers to change their behavior and the way they spend their time. The approach is novel but, when properly implemented, quite powerful.

The entire history of the T-shaped manager at BP is one of continually fine-tuning the tension between the manager's horizontal and vertical roles, an evolution that continues to this day.

We call the approach T-shaped management. It relies on a new kind of executive, one who breaks out of the traditional corporate hierarchy to share knowledge freely across the organization (the horizontal part of the "T") while remaining fiercely committed to individual business unit performance (the vertical part). The successful T-shaped manager must learn to live with, and ultimately thrive within, the tension created by this dual responsibility. Although this tension is most acute for heads of business units, any T-shaped manager with operating unit obligations must wrestle with it.

Effective T-shaped managers will benefit companies of almost any size, but they're particularly crucial in large corporations where operating units have been granted considerable autonomy. Although giving business units greater freedom generally increases accountability, spurs innovation, and promotes sensitivity to local market conditions, it also can lead to competition between units, which may hoard, rather than share, expertise. By encouraging collaboration, a T-shaped management system can be a powerful counterbalance to such negative behavior.

Our research over the past six years suggests that few companies have recognized T-shaped management as a key to success and even fewer have enjoyed its benefits. So how do you successfully cultivate T-shaped managers and capitalize on the value they can create?

Energy giant BP Amoco—a sprawling enterprise with over 100,000 employees and operations in l00 countries—provides some provocative answers. Our in-depth examination of BP's management practices, including interviews with more than 25 business-unit and corporate managers, highlighted five specific types of value that T-shaped managers can generate. BP's experience also suggests guidelines for creating an environment in which T-shaped managers will flourish. Such guidelines are important because the benefits of T-shaped management won't be realized—will even become liabilities—if the concept is poorly implemented. A key insight: senior executives must put in place mechanisms that simultaneously promote and discipline managers' knowledge-sharing activities

Creating Horizontal Value

How do T-shaped managers create horizontal value? In their HBR story, Morten T. Hansen and Bolko Von Oetinger outline these five steps "which progress up the value-added ladder from the exploitation of existing resources and knowledge to the exploration of new opportunities."

  1. Increase efficiency through the transfer of best practices.
  2. Improve the quality of decisions through peer advice
  3. .
  4. Grow revenue through shared expertise.
  5. Develop new business opportunities through the cross-pollination of ideas.
  6. Make bold strategic moves through the promise of well-coordinated implementation.

BP exec David Nagel's typical workweek balances vertical and horizontal responsibilities. Graphic courtesy Harvard Business Review.

notebook entries

Excerpted with permission from "Introducing T-Shaped Managers: Knowledge Management's Next Generation", Harvard Business Review, March 2001, Vol 79 No. 4.

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Morten T. Hansen is on leave as an assistant professor of business administration at Harvard Business School and is currently a manager in the San Francisco office of the Boston Consulting Group.

Bolko von Oetinger is a senior vice president in the Munich office of the Boston Consulting Group and is the director of the firm's Strategy Institute.