| Summary: | Today's world of uncertainty requires more and more innovation for companies to survive and thrive. Innovation can be realized when middle managers bridge the gap between top management's ideal and frontline staff's reality. This is what Nonaka and Takeuchi call “middle up-down management” in The Knowledge-Creating Company: How Japanese Companies Create the Dynamics of Innovation. Unfortunately, many middle managers, who used to be the engine driving innovation, have been struggling with middle up-down management due to rapid internal and external changes as well as companies’ failure to adapt to those changes by articulating the core role of middle managers. As a result, the companies fail to train, develop, and reward such managers. Hence, it is high time to re-analyze Japanese companies' competitive advantage from the standpoint of middle managers.
My diagnostic analysis based on a survey of nineteen Japanese Sloan Fellows and interviews of twenty middle managers in some traditional Japanese companies reveals five critical root causes contributing to middle managers' struggle with middle up-down management, including 1) deficient articulation of strategic priorities by top management, 2) organizational cultures that prevent middle managers from succeeding at middle up-down management, 3) lack of clarity and articulation of core roles and capabilities of middle managers in an uncertain world, 4) insufficient support systems to build the core capabilities of middle managers, and 5) inconsistent diversity and inclusion policy.
My extensive literature review shows that while operational management capabilities, which Japanese companies excel at, are still necessary and important to exploit the existing business, only those capabilities are not enough to support long-term competitive advantage in a world of uncertainty. Therefore, in addition to operational management, middle managers must play a role of enabling junior managers to explore, exploit and export new business models, products, and service ideas, using the core capabilities of coaching, connecting, communicating, removing obstacles together, and story-telling.
The cases of four advanced companies (Microsoft, IBM, Toyota and Itochu) suggest that the articulation of strategic business priorities, the consistent message and action by the top management to foster a growth mindset, and diverse and inclusive culture, redefinition of the core role of middle managers, and building support systems for middle managers are critical to the company’s sustainable competitive advantage.
Consequently, I generate six key methods for traditional Japanese companies to reinvigorate middle managers: 1) to reinvent the purpose and mission, 2) to re-articulate strategic business priorities by top management, 3) to foster a growth mindset in an organizational culture, 4) to re-define middle managers’ core roles and capabilities in a world of uncertainty, 5) to develop capability-building support systems for middle managers, and 6) to develop a diverse and inclusive culture.
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