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  • What’s the big idea?

    first_img Previous Article Next Article Writing recently about management ideas that have come to the fore in thepast couple of years, the Harvard Business Review compared the currentsituation to a summer’s night: the air is full of interesting noises andfragrant smells, but no single clear message is coming through. There has not been a “big” management book, the kind that comes upwith a new idea that somehow clarifies, at least for while, what is happeningaround us, since Daniel Goleman’s Emotional Intelligence in 1998 – earlierexamples were Prahalad and Hamel’s Competing for the Future (1994) and Hammerand Champy’s Re-engineering the Corporation (1993). Significantly, the latterhas been updated and revised, for while there are lots of wannabe managementgurus claiming to be, or being promoted by publishers, as being the nextCharles Handy, Tom Peters, Michael Porter or whoever, the actual possessors ofthose big names are showing no signs of yielding their positions as leadingthinkers. Primarily, they and a few new names are preoccupied with making sense of anumber of confusing and sometimes paradoxical issues: Why is it that the various manifestations of e-business are not deliveringon their promise? Is there any point in having a strategy when the business world changes frommonth to month? Are radical measures such as outsourcing a good idea when you don’t knowwhat tomorrow’s core competencies are going to be? How is business going to react to the changing nature of work, the issuesraised by globalisation and the demographics of ageing populations? Idea 1 Knowledge workers are volunteers, not employees Peter Drucker As a prime example of the longevity of today’s thinkers, take the legendaryPeter Drucker who, at 92, continues to make incisive observations aboutmanagement and social issues. Much of Drucker’s recent writings have been aboutthe lessons to be learned from the way voluntary bodies are run. His argumentis that as power in the workplace has shifted from the bosses to knowledgeworkers, they are effectively becoming volunteers, who join the organisationbecause they believe in what it is doing. They could get a job anywhere, so theobject of leaders is to articulate and maintain the sense of purpose that keepsthem there. Another of Drucker’s big concerns – not unnaturally – is what society is todo about the fact that people are living longer and retiring earlier. Therapidly growing numbers of brain workers are not worn out when they retire, asbrawn workers used to be, but in the post-industrial economy we are stilltreating retirement like we did in the mid-20th century. Apart from the factthat this is becoming fiscally unaffordable, the bored, underutilised elderly,increasingly still active in their 70s, and the resentful younger workers whosetaxes support them, have the makings of a looming social problem. One answer, he says, is to get away from the old economy idea of apromotion-oriented career to one where lifelong opportunities to developpersonal interests and skills are an important aspect of reward. LessonSee the world upside down Drucker has seen more change than anyone writing about management today. Ithas made him wary of assumptions about technology or markets – although he hasmade a fair number of them himself. “Look at the world upside down,”he recommends. “Suppose the opposite were true? Build organisedabandonment into your system.” Idea 2 Think and act like an outsource provider Tom Peters Tom Peters, whose influence is perhaps second only to that of Drucker, hasalso seen a lot of change in his 30-odd years as a guru – and has often got itwrong, as he cheerfully admits. His answer to his critics is that changeoccurred even faster than he had forecast. He acknowledges that companies readthe message of change but says they are too slow to adapt. Mergers and acquisitionsare not the way to do it – mating two dinosaurs does not produce a gazelle. In fact, Peters casts doubts over the whole future of organisations as wenow know them, in the new economy. He believes that the organisational model ofthe future is the professional service firm – architects, engineers, legal andmedical practices. They have projects and assignments rather than continuouswork. Turning to functions within companies, notably HR, he advocates that theyshould think of themselves as a professional service unit and behaveaccordingly. They should think of the divisions and departments in theircompany as clients, identify the nature of their business and pitch for it.”They pay your bills,” he admonishes. “If you don’t perform,they can and will take their custom elsewhere… alas, one rarely even hearsthe word “client” during a visit to an average HR department.” LessonLearn from professional service firms Outsourcing is the big threat to HR departments. To avoid that fate TomPeters advocates that they reconfigure themselves as professional service firmsand pitch for internal business on the basis of cost and quality. Idea 3 Old-economy elephants and modern-thinking fleas Charles Handy Peters’ ideas are not that far removed from those of Charles Handy, althoughHandy sees himself as a social philosopher rather than a management guru.Handy’s view of the future is one of what he calls “elephants andfleas”, also the title of his latest book. The things which really count now are speed of action, adaptability tochange and creativity. These are the characteristics of his “flea”business model. There is still room for elephants, the big, old-economyorganisations – in fact, we need elephants to preserve order and stability –but elephants need to understand the role of fleas. He points to the filmbusiness, where a company such as Steven Spielberg’s Dreamcast hires talent(fleas) as and when it needs it. A key skill of the elephant will be to know where to find the fleas andassemble the right team of them, but that has little to do with the kind of HRmanagement you see in old economy companies. “It’s a new kind ofrelationship,” says Handy. “In the old loyalty and job security-basedorganisation, employees were prepared to hand over the ownership of their ideasunconditionally, but that is no longer the case. They know that the assets ofthe organisation are largely made up of what is in the heads of the people theyemploy.” So the fleas are striking up new bargains with the elephants. LessonAppropriate rewards “When the titles of a film roll at the end, what we are seeing is thefleas visibly being given the credit for their contribution,” says Handy.They will also expect a much greater share in the fruits of success than thearbitrary reward structure of the old-economy organisation allocated to them.Developing appropriate reward systems for the new economy is a key task for HR.Idea 4 Strategic innovation Gary Hamel Gary Hamel uses the same metaphor as Peters in describing how what he calls”legacy companies” are stumbling as they deal with change throughmergers and acquisitions. He talks of them as “dinosaurs mating inJurassic Park” and doubts whether they will make it. The future, he says,belongs to companies that are not burdened by legacy thinking and whichconstantly strive for strategic innovation, by which he means innovation thatchanges the very nature of competition. His critics wonder if this is going too far – there have been as manyfailures as successes in radical innovation. Recognising this, his most recentarticle in the Harvard Business Review calls for a balance between evolutionand revolution. LessonSurvival of the boldest Hamel appears to part company with the champions of consensus and sharedmeaning in organisations. He is more interested in those who go beyond itsboundaries into uncharted territories of products and services. Idea 5 Disruptive innovation Clayton Christensen The most articulate exponent of corporate radicalism is Clayton Christensen,a Harvard Business School professor who gave an enthralling presentation at theHay Group International Conference in Florence last May. He believes that trueinnovation comes from disruption. Christensen, an engineer by training, hasbeen researching the puzzle of why it is that some of America’s apparently bestmanaged technology companies have run into trouble. The answer, he thinks, isparadoxical. “Just because they invested in technologies that wouldprovide their customers with new and better products, studied market trends andinvested in innovations that promised the best returns, they lost theirposition of leadership.” In order to escape commoditisation, they addedall manner of bells and whistles which in fact went beyond what their customerscould use or were willing to pay for. You only have to look at mobile phones tovalidate that observation. What they should have done is to seek out new products and markets, even tothe point of competing with their own established brand. This may mean lowermargins and markets that appear to be too small to be viable. But this is wherethe competition is being incubated and where the threat to their position isgoing to come from. Sandra Van Der Merwe, a South African-born professor atLondon’s Imperial College Management School, suggests that companies shouldthink in terms of market space, rather than market share, tomorrow’s ratherthan today’s customers. LessonSustaining and disruptive technologies The innovator’s dilemma, says Christensen, is that strong first-moveradvantages occur in disruptive technologies with low margin products and/or inmarginal markets. Sustaining technologies are based around data on establishedmarkets, careful planning and predictable costs and revenues. To survive,companies need to be active in both and encourage appropriate HR policies inrecruitment and reward. Idea 6 Ethical policies: the new competitive advantage Michael Porter Another guru whose ideas have been evolving is Michael Porter, recentlydescribed in Wired magazine as the most famous business school professor in theworld. Pre-eminently noted as an economist and business strategist, in whichrole he has been a consultant to big corporations and governments all over theworld, he found the whole notion of strategy being challenged by the dotcomrevolution of the 1990s. What was the point of having a strategy, asked thesceptics, when the world was changing so quickly that a strategy was out ofdate as soon as you came up with it? Porter says this confuses operational effectiveness with strategy. Ideassuch as total quality and speed to market are not strategies, they are thingscompanies should be doing anyway. Strategies are things that make themdifferent. Difference is important because pursuing operational effectiveness,worthy though it is, ultimately leads to competition on price. Strategy has a more interesting outcome, which Porter outlined in a lectureat the London Business School last winter. He believes that how a company isperceived by its stakeholders – who include the general public – is emerging asa source of competitive advantage. Therefore policies on ethics, governance andcorporate responsibility will fall into this category. LessonLeadership and strategy Porter sees the role of the CEO as that of the chief strategist. Thousandsof ideas pour into a company every day from all sorts of sources and interestgroups. The CEO is the person who makes the choices on the basis of his visionof what makes the company different – the source of its strategic advantage, inother words. Idea 7 Today’s poor; tomorrow’s customers CK Prahalad Disruptive technologies and the thinking related to them can get companieslooking at markets in an entirely new way. CK Prahalad, co-author with GaryHamel of one of the landmark books of the nineties, Competing For the Future,has been turning his attention to India, where most of the population live farbelow the poverty line. Not an interesting commercial proposition, therefore,but Lever Hindustan has made an important discovery. People in rural areascannot afford a couple of dollars for a bottle of shampoo but they can affordfive cents for a small sachet of the stuff. Selling five-cent sachets is muchmore profitable than selling bottles, and they can be marketed through anexisting distribution network of small wholesalers and tiny village stores. One of the banks has made a similar discovery. It has found out thatextending microcredit for amounts as small as $25 can be good business,provided that a repayment ethic is in place – which is the case in manydeveloping countries. And once an economy gets moving these tiny sums soon getlarger. LessonSearch for new markets The growing disparity between the world’s rich and poor is caused not bylack of skills but by access to goods and services. CK Prahalad says India isbursting with intellectual capital which cannot be developed because bright butpoor people cannot afford computers. The answer is to provide access totechnology, maybe through something similar to automatic teller machinesoutside banks. The big new markets are in the developing world but it needs ashift of mindset to see this. Idea 8 Organisational learning Peter Senge Peter Senge, who made his name with The Fifth Discipline, an influential butsome- what cerebral book on organisational learning, is not a regular on theguru circuit. He was, however, attracted to the Florence venue for last year’sHay Conference because of the resonance between the direction his own ideashave been taking and what was happening in Florence in the 15th century. There are parallels between the impact of technology on the businessenvironment now and the huge leap forward in painting triggered by therediscovery of perspective, but equally significant is the fact that theRenaissance put human values at the centre of the way people viewed the world.Senge, too, thinks we have to re-order our values, not necessarily in a religioussense but in line with what is necessary for sustaining the planet. The world, he says, is not a mechanism but a set of interdependent systems.The natural order of things is: produce, recycle, regenerate. With theappearance of the industrial economy it has been: sell, use, discard. Thatcannot continue and it need not. For instance, BP is shifting its perspectivefrom oil exploration and production to finding sources of renewable energy,expressed in the reworking of the BP logo: Beyond Petroleum. Senge, who has a Master’s degree in engineering, is clearly no technophobebut he is concerned about technology getting out of control if it is not seenas part of an interdependent system. He is worried, for instance, about thedisenfranchisement of people who are not up to speed on technology and evenmore about what the technology is making possible. Bionic man, a creature put together from transplants and geneticallyengineered spare parts, is no longer a figment of science fiction but we havenot thought through the consequences of that. In the words of the HarvardBusiness Review – its tongue only partly in its cheek – “Get ready for theultimate in luxury goods: a whole new version of you.” LessonBeware of implications In The Fifth Discipline, Senge advanced the idea that organisationallearning could only take root if the relationship to everything else that wasgoing on within it – the whole system – had been thought through. In his newwork, he is extending the idea of systems thinking to the planet as a whole.All our actions must take their wider consequences into account. Idea 9 The networked economy Don Tapscott Don Tapscott is the author of Becoming Digital and is widely regarded as theleading guru of the Internet economy. Tapscott draws some interesting parallelsbetween this and the pre-industrial economy. He talks, for instance, of agoras,a word in ancient Greek for a market where buyers and sellers interacteddirectly and bargained for prices. He points out that this is very similar towhat happens on Internet auction sites. The Internet economy has profound implications for customer relationshipsand for marketing in general. In the context of Senge’s systems, it also hasfar-reaching effects on government. How will taxes be collected and publicexpenditure funded if an increasing number of transactions take place on theInternet LessonHR in the new economy Tapscott shares the view of current management thinkers that we are movingtowards a networked economy of alliances, projects and ad hoc relationships ofvarious kinds. But he does not see this as the end of HR. On the contrary,managing networks and an adjunct workforce is a key challenge in the digitaleconomy. Idea 10 Successful e-strategies Rosabeth Moss Kanter In her most recent work, notably her book Evolve! Succeeding in the DigitalEconomy of Tomorrow (Harvard Business School Press), Professor Kanter has beenexamining the circumstances in which companies fail or succeed to meet thechallenge of e-business. They turn out to be remarkably similar to some of the principles of”make a little, sell a little, make a few more” put forward by Petersand Waterman in In Search of Excellence, published more than 30 years ago. Writingabout one small domestic appliance company, she says, “When in doubt,create small experiments. Pick one loaded for success that doesn’t require muchchange and one that demonstrates the virtues of changing. “Don’t bet the company and don’t waste time. Just act, simply andquickly, to have something concrete and positive to convert sceptics.” LessonMaintaining good relations Success in the digital world, says Professor Kanter, is not a technologicalproblem, it is a human one. “Without good relationships and diplomats whocan negotiate across all parts of the organisation, obstacles will never beconfronted or overcome.” Her research throws new light on the puzzlingproblem of why B2B is not catching on to anything like the extent forecast evena year ago. Tribute to the authorThis article was the last pieceGodfrey Golzen wrote for Personnel Today’s sister publication, globalhr, beforehe died this summer at the age of 71. He had a great talent for spottingtrends, especially in the field of management. He was a management journalistwho could get beyond the jargon, and explain what was going on with greatclarity and wit.  Godfrey helped launch HR World in 1997. Although Godfreystepped down as editor in 1998, he continued to contribute to globalhr(formerly HR World) under the ownership of RBI. He also contributed to TheTimes and authored several management books. Godfrey will be a fondly remembered presence on the HRconference circuit. Related posts:No related photos. Comments are closed. What’s the big idea?On 23 Oct 2001 in Personnel Todaylast_img read more