Why the best companies don’t just innovate – they reinvent how they manage

In 2005, Chinese home appliances giant Haier faced a defining moment. As digital disruption reshaped the industry, most companies responded with incremental improvements – streamlining operations, launching new products or adopting emerging technologies. Haier took a different path.

The company radically transformed its management model, breaking the traditional corporate structure into a network of autonomous microenterprises. Each operated like a startup, empowered to make decisions while leveraging shared digital resources. The result? Greater agility, faster innovation and a competitive edge that rivals struggled to replicate.

Haier is not alone. Across industries, the most forward-thinking companies aren’t just innovating their products—they’re reinventing how they operate. Dutch healthcare provider Buurtzorg replaced rigid hierarchies with self-managing nursing teams, improving both efficiency and patient outcomes, while Japanese multinational Kyocera introduced its "amoeba management" system, breaking the company into small, entrepreneurial units aligned with a shared vision.

Why do some companies thrive in an era of relentless change while others struggle – even as they invest heavily in digital transformation? The answer lies not just in what they produce, but in how they are managed. The world’s most innovative organizations are challenging outdated structures, redesigning decision-making processes and embracing management models that fuel adaptability.

For decades, businesses have followed a predictable playbook: optimize operations, improve efficiency and occasionally adjust strategy when required. But in today’s rapidly shifting environment, incremental optimization is no longer enough. The most successful companies are rethinking how they lead, organize and innovate – because the way businesses are managed is becoming as critical as what they produce.

In Europe, Bayer has undertaken an ambitious effort to remove layers of bureaucracy, empowering teams to take ownership of strategic decisions. Meanwhile in the US, Mastercard has restructured its organization to enhance agility, enabling it to adapt more fluidly in the fast-evolving payments industry.

Each of these cases underscores a deeper truth: companies that innovate in how they are managed gain a competitive edge that rivals cannot easily replicate. Unlike product or technological innovations – which can be copied – management innovation reshapes an organization’s ability to evolve, making it more resilient to disruption.

Breakthroughs in management practices rarely happen by accident. They emerge when leaders recognize the limits of traditional structures and create environments where new ways of working can take root and evolve over time.

Consider Haier’s transformation. CEO Zhang Ruimin recognized that rigid hierarchies were stifling adaptability, so the company restructured into a platform-based ecosystem – enabling thousands of microenterprises to operate like startups within a larger corporate framework. This approach didn’t just make Haier more agile; it positioned the company as a model for decentralized innovation.

But internal vision alone is rarely enough. The most transformative management innovations emerge when companies engage with external business ecosystems – learning from startups, industry partners and even competitors.

Buurtzorg’s self-managing model, for instance, was initially a radical departure from conventional healthcare structures. Yet by sharing its approach openly, it has inspired organizations across industries to rethink traditional hierarchies.

Similarly, companies that tap into external networks – through cross-industry collaborations or digital platforms – often uncover new management models that would not have emerged from within.

Innovation in management practices emerges from a complex interplay of forces both within and beyond organizational boundaries. Inside organizations, transformation often begins when visionary leaders recognize that traditional practices no longer serve current needs.

At Haier, Ruimin's vision of transforming the company into a platform organization sparked a revolutionary management approach that has become a model for Chinese and global companies alike.

But internal wisdom alone rarely suffices. The most profound innovations often arise when organizations open themselves to external ecosystems – whether through strategic partnerships, cross-industry learning or engagement with thought leaders who challenge conventional wisdom. This is exemplified by how Buurtzorg's model of self-managing nursing teams has influenced healthcare organizations globally.

The key to successful management innovation lies in creating organizational architectures that enable continuous evolution. This goes far beyond traditional change management—it's about building inherent adaptability into the organization's DNA. Three elements are crucial:

The most innovative organizations are moving beyond rigid hierarchies to create fluid structures that can rapidly reconfigure as needs change. Haier's transformation into a network of microenterprises represents perhaps the most ambitious example of this approach. Each microenterprise operates with substantial autonomy while remaining connected to the larger ecosystem through digital platforms and shared resources.

Successful organizations create clear pathways for new management practices to emerge and evolve. Kyocera's amoeba management system provides a structured approach to entrepreneurial thinking within the organization, while Mastercard has developed internal innovation hubs that serve as laboratories for new management practices.

While structure provides the framework, culture determines whether management innovation will flourish or falter. Bayer's recent initiative to eliminate bureaucratic layers demonstrates how even traditional companies can undertake bold cultural transformations when leadership commits to fundamental change.

For executives leading their organizations through this transformation, several questions deserve attention:

As technological change accelerates and industry boundaries blur, the ability to continuously reinvent how an organization operates will define long-term success.

Companies that treat management innovation as a core capability, not a one-off initiative, will be better positioned to navigate uncertainty, outpace competitors and seize new opportunities.

Success requires more than process improvements or leadership training. It demands a fundamental shift in how organizations design their structures, cultivate cultures of experimentation and engage with broader business ecosystems.

Companies across China, Japan, Europe and the US are already proving that while specific approaches may differ, the principles of organizational adaptability are universal.

For executives, the challenge is clear: Are you creating an organization ready for continuous reinvention? In a world where agility, ecosystems and adaptability define success, the companies that rethink how they manage – not just what they produce – will be the ones that lead. The transformation is already happening. The only question is whether your company is keeping pace.