Robert Heller of www.thinkingmanagers.com looks back at the history of various management philosophies.
The business strategy lessons learnt from the "big ideas"
The present decade’s big idea in business strategy is ‘open innovation’. Enlightened companies are constantly looking for innovatory ideas wherever they can be found.
There are good and bad ways of acquiring, developing and exploiting new thinking. However, results are dependent on chance encounters of individual people, alone or grouped, and on individual opportunities, internal and external.
When I launched the magazine Management Today back in 1965, managers generally regarded their prime task as that of writing the correct rules, proclaiming them, and ensuring that they were obeyed. Innovation was generally entrusted to Research and Development units, whose ultimate bosses were mostly worried about keeping down the R&D costs and looking for ways of increasing the innovatory yield at the same time. Rule books and regimentation transpired not to be the answer. Successful innovation has consistently proved to be fluid and flexible, as well as fast and furious, or passionate.
What’s required is not least cost but the combination of Least Cost with Maximum Output - LIMO. In 1943 Lockheed gave the name ‘skunk works’ to quasi-independent small groups charged with the task of taking new ideas to completion. In the 1950s Toyota’s ‘lean manufacturing took a giant step forward from Fordism and gave power to the people, having workers cooperate in original schemes to raise quality and productivity in a powerful new blend.
In the late Sixties, managers turned their attention to planning. Planners plotted business strategy by exploring a number of ‘what if’ scenarios at the same time and creating contingency plans for them. This played well with monoliths such as Shell, but major bureaucratic tendencies were inevitable - as they were with DuPont’s response to inadequate performance around 1973, turning appraisals into all-round surveys of a manager.
However, what was potentially good for the manager was certainly not the answer for the managed. Total Quality Management won devoted fans all over Japan, but proved too radical for Westerners. The 1987 derivative of Six Sigma was closer to traditional shop floor management and won plenty of good publicity for Motorola and General Electric. However, by 2008 both were fallen stars, as was Ford, despite its brave efforts in the 1990s - again widely imitated - to ‘reengineer’ its processes by administering heavy remedial treatment in the manner long beloved by management consultants.
The most visionary of the latter backed the ‘virtual corporation’ in the 1990s. Activities were hived off, letting management concentrate on its core business. Economic pressures meant strategies moved in this direction, but ‘outsourcing’ is not a solution to basic management problems.
Licking the almost mortal wounds of the years since 2000 will not create big-idea business strategies appropriate for the digital revolution unless managers can master the basic four Ps: Purpose, Priorities, Performance, People.
However, there is a negative P that is also important: Panaceas. Universal cure-all business strategies for management ailments and shortfalls are as flawed as ways of turning worthless mortgages into gold mines, or preposterous debt into solid financing.
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