In Peter Senge’s book The Fifth Discipline, he talks about various learning disabilities that organizations have. The one I want to talk about here is referred to as The Myth of the Management Team. It reflects the desire for management to appear as a cohesive group that is pulling in the same direction. For many management “teams,” to achieve and maintain that image of being a team, it means descent is frowned upon and that joint decisions are watered down compromises.
As Harvard’s Chris Argyris has discovered through his research, most organizations reward those who promote senior management’s views. Those who oppose or ask probing questions, or generally rock the boat, are penalized.
In thinking about current examples of this, Nintendo comes to mind. They appear to be wedded to a basic strategy of making hardware as the vehicle for software developed in house. Over the years, that has led to the development of some fairly popular franchises such as Mario who is a character featured in many of the Nintendo games that can be played only on Nintendo devices.
In November, 2012, Nintendo launched their new game console called the Wii-U. It has taken about a year for them to sell about 4 million of these versus the recent launch of the new Sony Playstation 4 where it sold 4 million devices in 2 months. Microsoft’s new Xbox One sold 3 million during its first two months. This caused Nintendo to recently announce they were dropping their target of $1 billion of operating profit for the fiscal year that will end in March, 2014 and instead they now expect to lose a bit over $300 million.
The Wii-U Problem
The problem with the Wii-U is that there is no software that’s developed especially for it as there had been with prior launches, such as the very successful Wii. With Wii, Nintendo was the first in the marketplace with the motion sensor controllers, and they offered several new family oriented games and videos that were a tremendous hit. They sold over 100 million Wii units. Unfortunately, there is really not much new at all with the Wii-U and consequently, they are getting disappointing results.
Most analysts believe that what Nintendo badly needs to do is to squeeze more out of the Mario franchise by licensing it to other companies who would build software that could be played on a variety of handheld devices as well as tablets. Let’s face it, that’s where the gaming action is these days. Another option is to allow independent software developers to create products that would run on Nintendo hardware. Nintendo refuses to do these things. In fact, they continue to refuse to do anything but focus on yet another hardware device.
Nintendo seems be a perfect example of Senge’s warning about tight-knit management teams that generate the kind of social pressure that to be part of the team, you have to follow the party line. In the case of Nintendo, the management’s party line seems to be: we are a hardware company that makes our own software to run exclusively on our hardware.
If you step back and look historically, there have been some classic disasters due to Senge’s Myth of the Management Team. One would be Kodak fading into oblivion as it kept tight focus on film photography as the world converted to digital. Another would be Blockbuster as it kept opening more and more retail stores as the world moved to DVD’s by mail and eventually digital streaming.
Senge’s reminder is a good one: it’s absolutely imperative that leaders give plenty of room in the organization for the folks who constantly rock the boat but often come up with some of the most creative ideas that can be tested and potentially exploited in the marketplace. That’s how companies win big on an ongoing basis. It’s a cultural issue that allows this kind of mental freedom for people to think of brand new ways to do their business. Good leaders understand this very well and create that kind of culture.
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