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This book presents a new management model that has evolved in Silicon Valley. The future will favor companies that can migrate to a management model, better suited for the times. The abilities to remain entrepreneurial and innovate constantly will be essential for all companies in an innovation economy. However, most firms still use industrial-age management models that are not suited to attracting and energizing entrepreneurial talent. This book imbibes latest results from a year-long study of Google’s approaches to management, and finds similar principles being applied at companies including, Facebook, LinkedIn, Twitter, Tesla Motors, and Apigee. By distilling on the aspects that work across a variety of innovative firms, the authors present a synthesis that could have profound implications for managers everywhere.



1. The World Is Changing

Today’s business world is marked by rapid and constant change. For most firms, this requires fundamentally re-inventing management, as the typical corporate bureaucracy cannot respond well. This chapter describes the multiple forces of change, illustrates the pitfalls of old-style management, and introduces a new management model for the times. The new model, used in a number of Silicon Valley companies and elsewhere, is a form of entrepreneurial management. It emphasizes dynamic capabilities, ambidexterity, and other qualities aimed at achieving adaptability, innovation and speed. It also relies on attracting and retaining top talent—specifically, highly entrepreneurial people. Examples show how this new model succeeds, and how older models fail, in industries ranging from telecom to textile manufacturing.
Annika Steiber, Sverker Alänge

2. Six Basic Principles for a Changing World

This chapter explains six core management principles that enable companies to deal with rapid and constant change. Various researchers have identified these principles, finding them to be effective in many kinds of firms. They include both organizational features and precepts for managing. The principles are: Dynamic Capabilities. A Continually Changing Organization. An Ambidextrous Organization (an “ambidextrous” company is able to optimize current operations while innovating). A People-Centric Approach. An Open, Networking Organization. And a Systems Approach. The chapter illustrates the principles with examples from companies that include IBM and a food-processing firm.
Annika Steiber, Sverker Alänge

3. Silicon Valley: A Cradle of Management Innovation

Here we take a fresh look at Silicon Valley, exploring it as a hub of management innovation, not just new technology. The chapter focuses on the management of large and growing firms as opposed to startups. We see that new ways of managing have emerged in the Valley due to two main influences: the region’s leadership in information technologies—which both demand and enable rapid change—and the entrepreneurial culture of the region. The chapter also describes the high degrees of networking and collaboration in Silicon Valley, along with the companies’ intense “people focus,” which entails recruiting and managing entrepreneurial employees. A brief history of the Bay Area shows how new management approaches grew from new thinking that emerged over many years, from the California Gold Rush through the birth of Stanford University and the early electronics industry, to the modern growth of Silicon Valley.
Annika Steiber, Sverker Alänge

4. Entrepreneurship: What It Really Is, and Why It Must Be Integrated into Management of the Firm

This chapter examines what entrepreneurship consists of, describes what entrepreneurs actually do, and shows that their function is essential to companies of all ages and sizes. (Indeed, whole companies must become “entrepreneurs.”) A new definition of entrepreneurship is developed here, drawing on insights contributed by writers from Cantillon and Say to Joseph Schumpeter, Peter Drucker, and others. The chapter shows that entrepreneurship is definitely more than the act of starting new companies; it encompasses the process of creating and exploiting new business opportunities, wherever that process may occur. Also the chapter explores why our modern notion of “entrepreneurship” has become separated from “management,” and calls for a re-integration of the two—not just conceptually but in everyday practice.
Annika Steiber, Sverker Alänge

5. A Special Breed of People

This chapter addresses two key talent questions: What kinds of people are “the right people” to recruit for today’s fast-moving business world? And how can a company attract and keep them? The people recruited by leading Silicon Valley firms are shown to be a special breed—not confined to any demographic or age group, and multidimensional. Along with having technical skills they are entrepreneurial and passionate about their work; they question the status quo, and they are adaptable and collaborative. These special people also are highly mobile, unlikely to stay with any firm for long. They will, however, be attracted to firms offering cultures and structures that let them exercise their abilities to the fullest. The chapter gives examples of recruiting and hiring processes at various companies, along with methods used to get the most from talented people during their stay.
Annika Steiber, Sverker Alänge

6. Culture: The New Black

To compete in today’s fast-changing world, a firm must have a strong corporate culture of the appropriate kind. This chapter defines what a culture is—in short, it is a set of shared beliefs about what the world is like, what is valued, and how things should be done—and from there, the chapter describes the typical attributes of a vibrant innovation-oriented culture. Such a culture enables the firm to compete for top talent as well as produce winning products. Much of the material here comes directly from the authors’ interviews and observations of leading Silicon Valley companies. Topics covered include major influences on corporate culture and steps taken by these leading firms to build and maintain their cultures.
Annika Steiber, Sverker Alänge

7. Leading for Entrepreneurship

Leading an entrepreneurial firm is quite different from managing a conventional company. This chapter explains key considerations for guiding, supporting, and inspiring teams of entrepreneurial people to produce ongoing innovation. An essential requirement is to provide direction and feedback without micromanaging or telling employees how they should solve problems. The roles of three types of leaders are discussed: top leadership, founder entrepreneurs, and mid-level leaders (formerly called “middle management”). Further, the chapter examines many ingredients of leadership, from communication and incentives to new approaches for bottom-up creativity and decision-making.
Annika Steiber, Sverker Alänge

8. The Entrepreneurial Organization Is Dynamic and Ambidextrous

Whereas previous chapters of The Silicon Valley Model have dealt with human-factor aspects of the new approach to management—such as recognizing and recruiting talented people, building an entrepreneurial culture, and personal leadership—this chapter delves more deeply into the organizational aspects. The importance of having Dynamic Capabilities is explained, along with a closely allied topic: creating an Ambidextrous organization, able to innovate while optimizing current operations. Three fundamental ways of building innovation into the firm are considered: innovation inside present operations, innovation by separate innovation units, and different approaches to open innovation.
Annika Steiber, Sverker Alänge

9. The Silicon Valley Model

This chapter presents a complete synthesis of a new management model for today’s rapidly changing business environments. The synthesis draws on all preceding chapters of the book along with research by eminent business scholars. This new model—called the Silicon Valley Model because it has been realized most fully by leading companies in the Valley—is shown to be a highly developed form of the “Adhocracy” approach that was first identified decades ago. The chapter gives a conceptual description of the new model, with graphic illustration. It then compares this new model to a traditional bureaucratic model of big-firm management, showing how the two differ in key respects. Finally, the Silicon Valley Model is shown to be congruent with the “six basic principles” for managing change that were described earlier in the book: the model supports these principles, plus other elements as well.
Annika Steiber, Sverker Alänge

10. Implications Beyond Silicon Valley

This chapter closes this book by investigating the applicability of the Silicon Valley Model to firms in industries outside the IT/Internet sectors, located in other parts of the world. We see that individual elements of the Model are in fact widely used elsewhere: Many companies have an inspiring and socially significant vision or mission, a strong investment in hiring and supporting creative people, a commitment to being ambidextrous, etc. It is not so common as yet, however, to see the entire Silicon Valley Model used as a comprehensive “management system” with all of the interlinked elements working together. One approach for introducing the entire model may be to use it first in dedicated innovation units within a big firm; examples of this approach are given and issues are discussed. The chapter (and the book) ends by reiterating the advantages of the Silicon Valley Model. It appears to be a management model extremely well suited to an era when every industry and location is experiencing waves of profound and rapid change—just as the industries in Silicon Valley have done for decades.
Annika Steiber, Sverker Alänge
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