Have you ever had a Breakthrough Idea about your business and its management? Such ideas are not the prerogative of the famous gurus whose books and lectures are full of promised breakthroughs. In fact, it’s a safe bet that most managers have thought up new ways of managing from time to time - probably not as grand epiphanies, worthy to rank with the intellectual work of people like the great Peter Drucker, Michael Porter, Gary Hamel, Clayton Christensen, etc., but still important contributions to their own functions and organisations.
PEARLS OF WISDOM
Such old pearls of wisdom certainly bear repetition. It’s less certain, however, whether allegedly new pearls always merit more than a first reading. To test that, try the first half-dozen of 20 ‘Breakthrough Ideas’ culled by the Harvard Business Review for February 2004:
1. Management must become truly professional, with a high degree of technical skill and competence, broad knowledge and ‘a primary orientation towards ethical service to society’ (that deliberately doesn’t mean service towards shareholders).
2. Growth depends on creativity, which nationally revolves round the three Ts, ‘technology, talent and tolerance’. What applies to nations and regions also applies to firms. Is your outfit racially integrated, with a concentration of ‘gay, bohemian, and foreign-born people’? Such tolerance is critical for the ‘ability to attract different kinds of people and generate new ideas’.
3. Organisation has a profound impact on strategic success. Sometimes an unrelated structural change can work strategic wonders. Always seek to ensure that the structure fits the strategy. If not, change either
the structure - or the strategy.
4. Research into the brain promises to bring management new tools. Already the imaging technology of MRI ‘helps researchers determine how potential customers respond to products and advertisements’.
5. Is there a big hidden catch in the popular sport of outsourcing? The highest profit in the value chain changes over time. What you farmed out yesterday may be what, tomorrow, you will wish you still had, coining money. So don’t be over-persuaded by today’s apparent economies.
6. Beware of ‘stupid money’ - capital that floods in (witness the dot.com financing boom) with wildly exaggerated ideas of probable pay-off, which then proceed to turn previously sane managers into Wild Things.
CUT OUT YELLING
As a bunch, the half-dozen all deal with very relevant issues, offer sound thinking, and may well stimulate sound thought in the minds of readers. But action speaks louder than thought, and some of the other Harvard ideas have the supreme virtue of telling you how to act. For example, have a specific rule against ‘assholes’ (AKA tyrants, bullies, boors, cruel bastards or destructive narcissists). Allow anybody to oppose a proposed appointment on these grounds; and also have conduct rules – like ‘don’t yell at your secretary or each other’.
Another thinker tells how to get better market research results by (a) emphasising what action to take that will best exploit the researched customer behaviour (b) focussing more studies on the longer term (c) testing theories by experiments in the field. The author here, Duncan Simester, is doing what good thinkers always do - make you look again at something you’ve always taken for granted, like treating market research as strictly a short-term fix.
Another ‘given’ that requires (and is getting) challenge is the recruitment of people with traditional MBAs as the most appropriate material for business development. Partly because MBAs are in short supply, firms have been switching to arts graduates. The experience has been so satisfactory that the latter are now being preferred to MBAs - even McKinsey & Co, the archetypal number-crunching consultancy, has moved from MBAs to arts. Ideas, it seems, are at least as valuable as numbers - which, anyway, need ideas to give of their best.
Another received view is that going public is the natural and best way for business development and exploiting success. Think again, advises another of the Harvard breakthrough contributors. Going public involves costs and burdens. Unless flotation will genuinely give you higher returns and greater liquidity, there is no point in taking this expensive step.
Otherwise, the pain will surely outweigh the pleasure - if any.
So here’s a potential breakthrough idea in itself. Ask what ways and means have I been taking as gospel, never examining their relevance or trying to develop alternatives?
The basic principle of Total Quality Management applies: whatever you are doing can always be done differently and better. Test the established modus operandi by analysis. Then try out alternatives by experiment, and finally change where change will produce clear and valuable benefits - in the here and now.
THE ACID TEST
Most of the other ideas in the Harvard Breakthrough Twenty, while covering important subjects like nano-technology, international loans, psycho-pharmacology, social networks, risk management programmes, the volatility of high-tech markets, and the possibility of developing protective ‘immune systems’ for your business, seem to me to fail the above acid test. Whatever their long-term implications, most have little direct relevance to the work of a practising manager today.
That’s part of being a true breakthrough idea.
A real breakthrough surely enables people and organisations either to do new things, or do old things in a new, radically better way. On that definition, managers produce breakthrough ideas all the time - as noted, not grand ones that will change the face of all management, but good notions that will help their own work.
Indeed, everybody has their own modus operandi, a way of managing that hasn’t been handed down from on high, but which they have worked out partly for themselves. You may have been influenced, either knowingly or subliminally, by reading, hearing and learning.
Peers and superiors may have acted as mentors and coaches. The ethos of the organisation can be a very powerful influence, too, both negatively (‘that’s not the way we do things round here’) and positively, establishing group norms that improve cohesion and effectiveness. But you still have a degree of free will.
How you use that freedom can make the determining difference. My own one-time career in publishing, for instance, really hinged round launching new ventures. To this very day, I’ve not come across a textbook or an expert in new venture management, although it’s of basic importance to growth and profit. Your new product or other venture may be brilliant. But unless the idea is effectively executed, the thinking becomes worthless. The British company EMI had a world-beating idea - the brain scanner - but the breakthrough ran into ruin through botched execution.
The starting point is obvious, and common to all management tasks, not just new launches – though with these it is critical. The start consists of asking and answering one simple question: What do I want to achieve? The answer should be equally clear and simple. In the case of my publishing ventures, I was being paid to launch new publications that would capture a defined group of readers and thus appeal to a defined number of advertisers.
CLEAR QUESTIONS
The next questions were also clear. When was the launch date? How much time did I have? With that answered, I could work backwards to the start of the project, fixing the key dates by which stages had to be completed and (very important this) building in as much leeway as possible to cushion the project against setbacks, delays and difficulties. Before any of those stages could begin, though, I had to complete what I nicknamed ‘the set-up’. All the needed resources (mainly the human ones) had to be in place in goodtime and organised around their allotted tasks.
Get the set-up right, and you’re in business. Get it wrong, and the project is doomed - at best, to a false start, at worst, to total collapse. Looking back over this management structure now, I can see that, like the latest ideas of the gurus, it includes familiar features of good, old-fashioned management. Starting from the end of the project and working backwards to the first step is that old friend, Critical Path Analysis, for example. But the technicalities, which turn on the application of logic, must be brought to life by the illogical human factors of imagination and drive.
From the start you need an overall vision of what will be achieved. How will you be able to relate the parts to the whole unless you know the whole? Financial targets are not part of the vision. I wanted those new publications to make much money for the owners, of course. But that would be the delightful outcome, and the incontrovertible proof, of having produced the right magazine for the right people in the right way. In every business, the same Golden Rule applies. Profit is not an objective, but a result, an outcome.
The Rule was first expressed to me by the late Lord Weinstock in the 1960s. He had produced a truly spectacular turnround of the General Electric Company. His methods were, however, unpopular in much of British business. He managed by imposing strict budgets which enshrined lofty targets for return on capital, and he insisted on the budgets being met.
This emphasis on profit responsibility was thought by some to be un-British, so Arnold Weinstock, talking tome, was at pains to rebut the idea that he was a mere profit merchant. ‘Profits’, he said, ‘are what you get from doing things right’
Two decades later, I was therefore very surprised to hear him insisting that profit was the only thing that mattered. The gulf between those two remarks is the gap between the younger Weinstock, a dynamic and enterprising manager, and the conservative financier he became. He had always been risk-averse, but had moved from minimising risk (the art of the great entrepreneur) to its instinctive avoidance. The consequence for GEC was its near-disappearance. But there was more to that disaster, as another of the Harvard contributors, Bronwyn Fryer, has discovered.
POSITIVE ATTRIBUTES
Fryer says that companies which, very unlike GE Cunder Weinstock and his heirs, focus on ‘amplifying positive attributes such as loyalty, resilience, trustworthiness, humility and compassion...perform better, financially and otherwise’. This idea, which has been dignified by a new piece of jargon (POS, or ‘positive organisational scholarship’), has the immediate ring of truth. It also goes to the centre of the vein which runs through the Harvard Twenty - a shift from ‘hard’ strategies and tactics (typified by the profits-first school) to the ‘soft’ values which are no less powerful for being more difficult to measure.
If you want loyalty, resilience, etc. from colleagues, you have to live by the same principles yourself. There can be no gulf between excellent thought and effective action. That can be the best Breakthrough Idea of all.
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