Feb 222016
 

Managing a firm of any size has never been easy. Now, managers have to produce consistent, sustainable results under awful pressure in a world that gets messier by the nanosecond. Their customers are informed, price-conscious, vociferous, and skittish. Their organizations and processes are increasingly complex. They function within a dense ecosystem of stakeholders with shifting—and often conflicting—agendas and growing clout. They’re ever more reliant on costly and unfamiliar technologies. Risk is all around. And with a growing premium on the imagination and spirit of human beings, and with the global “war for talent” growing fiercer, they must put more effort into people matters. Their employees’ lives are changing, so the new world of work must accommodate their personal needs while also enabling them to be more effective on the job.

This collision of factors keeps managers constantly unsettled. Their need for order, control, and predictability is at odds with the barrage of novel challenges they face. So they’re naturally eager to find the management tools and techniques that will save their skin.

And help is at hand—or so we’re led to believe. Scholars, consultants, executives, writers, and other members of the sprawling management ideas industry churn out a stream of theories, concepts, frameworks, and models, which are seductively packaged, confidently promoted, and eagerly snapped up.

Yet if truth be told, the experts who should be advancing management thought and enlightening harried managers are barely moving the needle. In fact, the best that can be said of many of their efforts is that they’re weighing down organizations beneath layers of activity, hog-tying them in growing complexity, and distracting them from what they should be doing.

For close to 30 years as a consultant, I’ve had a ringside seat from which to watch managers wrestling with demons—on the one hand, with the daily grind of their work and whatever the world throws at them, and on the other, with the “solutions” drummed up by the management ideas industry. I’ve also dug deep into the past 100 years or so of management ideas to find what’s endured, what has been most influential, and what is must-do vs. nice-to-do. And the overall picture is not encouraging.

In fact, given the importance of this matter, it’s downright ridiculous.

Consider these six worrying facts:

  1. Business is the engine of society, and will fund or otherwise facilitate most of the progress we need. So the future of humankind depends on managerial performance—and that performance overall is disappointing.
  2. Most companies do not achieve even average results, and certainly not with any consistency. Their life expectancy is falling. Their financial returns have flattened or declined. And since global economic growth is likely to be slower than in the past, and lead to increasingly vicious competition, better sales and profits will be increasingly hard to come by.
  3. Managers are overloaded with advice, much of which is clearly failing them. The use of just about any management tool is arbitrary, and as there are many ways to do things, there’s no evident downside to not using almost any popular tool.
  4. Hype about “reinventing management” has not translated into reality. Most changes in management practice over the past 100 years have come in response to social, technological, or other contextual shifts. Not only has a small set of basics—the critical core—endured, but most seemingly “new” ideas are actually just more of the same.
  5. Although yet-to-be-discovered management ideas may have some impact on business performance, no one knows what these might be or when to expect them. Meanwhile, failure to excel in known practices will ensure that firms do not exploit the opportunities that exist all around them, and that profits “keep falling through the cracks.”

Finally—and this is the one that should concern us the most:

  1. The most vocal critics of management scholars’ research methods, the relevance and practical value of their outputs, their inability to add much that’s new to management thinking, and the offerings and teaching methods of business schools are insiders, not outsiders. They include some of the world’s most respected management professors and a growing number of business school deans.

The good news is that we know exactly what it takes to compete and win. And there’s compelling evidence that the way to build your competitive advantage, capture and keep customers, and stay ahead in the profit game lies in what you may already know but just don’t focus on. That if you want to be a serious competitor today and tomorrow, less really is more and simpler is better.

As my research shows, and as I explain in my new book What’s Wrong With Management And How To Get It Right (Penguin 2015), there are eight critical strategy practices that apply to all companies everywhere:

  • Growth leadership—Effective leadership that’s committed to growth, and to achieving it by growing people.
  • Fast learning and adaptation—The ability to sense and make sense of change and act on it faster than competitors.
  • Focus, value, costs—Clarity about where and how to compete, and a relentless effort to drive value up and costs down for the “right” customer.
  • Business model innovation—Continual reinvention of the way value is created, captured, and shared.
  • Resource and capability development and leverage—Accessing, attracting, acquiring, and building the strengths needed to compete, and using them to maximum effect.
  • Stakeholder alignment and support—Persuading individuals and organizations with any interest in a firm to “vote” for it rather than against it.
  • Smart sequencing and pacing—Doing the right things in the right order and at the right time.
  • Disciplined execution—Having a deliberate and systematic way to turn intentions into action with sound outcomes.

As in other fields, each of the practices is a bundle of routine behaviors, concepts, tools, or techniques. If the practices are the what you must do, these are the how. There’s a rich array of them, and there will be even more in the future because this is where much study and experimenting occurs.

You might dismiss these practices, as one professor did, as mere “tickets to the game.” Or you might be tempted to write them off because “everybody knows that already.” But don’t be too hasty. Firms don’t fail because they choose not to use balanced scorecards or Porter’s five-forces framework, or because their managers aren’t fans of Six Sigma or blue ocean strategy. But we hear every day of firms that have failed because their inattention to one or more of the eight critical strategy practices.

Companies can’t do everything. It’s all too easy to throw sand in their gears. So they’re most likely to be successful if their managers get back to the principal drivers of business results—what they absolutely must obsess about, and why—and then apply them relentlessly and in the simplest, most practical way possible.

If the past is a guide, though, the management ideas industry will continue to slow them down and confuse them. Resources and effort will continue to be squandered in ways that don’t change what they do or how they do it—and certainly don’t improve their results. We’ll rail against management fads and fashions, or joke about them, yet continue to search for the next ‘silver bullet” that might bring us salvation.

Of course, saying this is an invitation to trouble. But those who disagree need to deal with a simple challenge:

Please name one thing managers must do that we did not know about maybe 50 years ago. Just one. If that proves impossible, perhaps we should just work with what we’ve got.

 

(Note: This blog first appeared as a Thinkers50 blog in July 2015)

  •  22/02/2016