21st Century Management
March 6, 2011
I do not profess to be an expert on business management nor have I spent time at world’s foremost academic institutions and management schools.
However I do spend a lot of time with clients from very small to very very large companies and I read a lot of books and blogs from some innovative management thought leaders.
One common theme that has become a persistent under tone in all my activities is the changing nature of business management. Interestingly while many many terms have been used to describe it I would say that the commonality by all is that the shift is human. It’s all about HOW and WHY rather than WHAT and WHEN.
There is only one driver for this. Differentiation.
Companies that have been hugely successful using traditional optimisation focussed hierarchal management models are changing their models. Cisco’s John Chambers is an often sighted example making a shift from a “command and control” model to what they term as “boards and councils” (Google for a number of interviews but here is one that provides a good explanation). Another great example is HCL Technologies “reverse accountability” model (again covered in many articles including HBR but a short synopsis here)
These two, and a number like them, are great examples where innovation in management is well underway. These, and others, are ground breaking organisational wide transformations that will be watched by CEO’s and Business School professors the world over. But why are they doing this?
Successful companies who are leaders in their markets, why fix what is not broken?
There are so many cliche’s that I could use here I could take up 5+ pages, but here are two to provide some insight:
– Only the paranoid survive
– It’s harder to stay in the lead than to get to the lead
Quite simply it’s about differentiation.
Now I sighted two massive global organisations, large organisations always get the celebrity status. But what’s interesting is what smaller organisations around the world are changing as well, sometimes in even more radical ways.
In last week’s blog I talked about The Interaction Age, an age where competitive advantage would come from tapping into people’s creativity and that the way in which these interactions and cognitive thought processes would evolve and be supported would be very different than we have ever seen before. A shift from systematic processes to creative processes. This shift requires more of a leadership focus (not with standing as Tom Davenport so eloquently states in this article that we should not throw the baby out with the bath water – we still need management and we still need to manage – but the management style and approach will change).
So where does that leave us…
- We still need to do all the things we have done (optimise, measure and manage)
- But we know need to enable creativity and less “control”
In short we need to challenge conventional wisdom but not lose our corporate memory.
One of the more common (and just plain frustrating comments – as it is often mis-used usually by those trying to sell something and has become a buzzword(s)) is “Business transformation”.
Wikipedia defines “Business Transformation” as:
Business transformation is a key executive management initiative that attempts to align an organisation’s initiatives relating to people, process and technology more closely with its business strategy and vision. The initiative aims to support and help innovate new business strategies and to meet long-term objectives.
Business transformation is achieved through efforts from alignment of the areas of people, process and technology towards an outcome-based end-state such as (for example) 50% increased revenue or 25% improved customer satisfaction.
It can be defined as:
changing appearance – by improving services to customers
changing shape – by review and reappraisal of what a business should do, by working with partners and by making better use of all types of resources
changing form – by improving the way the business works, and embracing new organisational structures, skills, processes and technology
Alternatively, organizations can achieve business transformation through new technology, business models and management practices. As of 2010 business transformation is considered an essential part of the competitive business cycle.
The definition is appropriate and is a key focus of CEO’s globally. However what we are seeing is that where organisations traditionally their management efforts on building bigger, better, faster and cheaper products, that no longer provides differentiation. CEO’s the world over from small to large companies are having to look at creative ways to innovate, gain and retain competitive market advantage.
They are in fact having to “transform” not only the appearance or shape or form of their companies, they are in fact having to transform all THREE, at once.
In their 1979 (yes 1979) paper for MIT Toward a Theory of Organizational Socialization John Van Maanen and Edgar H. Schein state that:
At heart, organizational socialization is a jejune phrase used by social scientists to refer to the process by which one is taught and learns “the ropes” of a particular organizational role. In its most general sense, organizational socialization is then the process by which an individual acquires the social knowledge and skills necessary to assume an organizational role. Across the roles, the process may appear in many forms ranging from a relatively quick, self-guided, trial-and error process to a far more elaborate one requiring a lengthy preparation period of education and training followed by an equally drawn out period of official apprenticeship.
Are we talking about culture here? Of course, but we are also talking about thought leadership.
Breaking the paradigm of “this is the way we have always done things around here”. How do you change the appearance, shape and form of a company at once, if everyone keeps doing what they have always done?
It requires a whole new way of working, empowering people.
- Encouraging new ideas, new ways of doing business
- Open innovation
- Crowd sourcing
- Social media
What’s going on it’s management are evolving.
Trust, and therefore decision making, is being freed, but not just internally also externally to customers, suppliers and partners. Allowing those who do the work, to make the decisions.
What’s holding back this brave new world are two things:
1. Resistance to and fear of letting go control
2. The tools (they exist but are not deployed appropriately to assist this transformation) to support the massive collaborative notion of equality and the ability to leverage organisational and outside creativity and still meet the traditional corporate objectives tied to shareholder value
One theme that the more successful organisations have in common is purpose. This is not “shareholder value”. It’s more than the “job” requires, it’s a more noble cause. Many place their customers goals and outcomes at the center of everything they do. There is a shared and common focus on the customer’s outcomes (usually not financial). This does not mean “improving the customer experience” or simply making idle statements about “customer is king”. It’s examples like we make Hospital Management Systems, but our customers (hospital administrators) save lives, so our cause is to “save lives”. This approach empowers employees to take the company in directions and effort never before realised when just “cutting code” on a new version of the technology.
I am so excited about this shift in management culture and models the next decade is going to be one of profound change in the way that companies work with their customers (be they businesses or consumers).