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Management Challenges: The Management Revolution has brought with it challenges that must be met

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The Millennium marks a watershed. After 2000, companies will not survive long unless they join a threefold revolution - in management itself, information technology, and global markets. The three feed off each other. The radical changes in management have become inseparable from those in technology. Without either the global revolution could never have developed such power.

The technology of information and communications did not create the triple revolution, but is the great enabler. Technology is expediting the onrush of organisations into brilliant new modes of management: not only global, but interactive, innovative, collaborative, anti-hierarchical, user-friendly. But the technology and its suppliers are themselves changing at critical speed, which puts further intense pressure on managements. They cannot stand still: they have to ride the revolution.

It did not spring full-born out of cyberspace. The late Twentieth Century revolution in management was accelerating well before the Internet rewrote the business books: the first Website opened as late as 1993. The revolution is being driven by irresistible forces: fragmentation of markets, anarchic technologies, more demanding customers, intensified competition and general over-capacity have all helped to undermine the old principles of business economics.

Old-style physical strengths have been superseded by intangibles. As the battle switched to the arena of ideas, the IT revolution both sponsored and responded to management's unstoppable advance into the era of 'globalisation and knowledge'. Both depend heavily on the information powers of hardware and software and the connective abilities of telecommunications - as the Harvard Business Review acknowledged in a landmark celebration of its 75th birthday. Nothing in the first seventy years had hinted at the seismic upheaval of the five ending in 1997.

The special edition included a chart of the long progress since 1922 from 'scientific management' (whose chief hardware was the stop-watch) to the Age of Information. As the chart maps the approach of the Millennium, the Internet, Intranets and Extranets combine as a great arrow, swooping upwards. Whether the purpose is measuring results, adding value, running sales and marketing, or managing people, the leadership of organisations now hinges on present and future digital breakthroughs.

THE NEW CORPORATE ARMOURY
The new corporate armoury includes integrated database systems, 'virtuality' (in which company, customer and supplier are wired together), mass customisation, and flexible organisational forms. These developments, along with many others, are changing the nature of management. A networked company is a different kind of company, but most managers do not yet appreciate the difference.

Even the special edition of the HBR shows a strange lag in perception. It lists scores of its 'influential' articles and 'classics'. Most have no direct, and little indirect, connection with IT. The exceptions include, in the early mainframe era, 'managing to manage the computer', an understandable concern in 1996. In 1974, the horizons had expanded: now readers were told about 'managing the four stages of EDP growth'.

That must have failed. In 1979, the 'crisis in data-processing' needed to be tackled. Five years later, the frontiers of the Brave New World were at last crossed. The problems of managing the machines receded into the past as managers were told that IT 'changes the way you compete.' So it does. Then why have so few 'influential classics' covered IT's revolutionary impact since 1984? Has even Harvard run behind the pace of the revolution, and the realities of what we call 'Silicon Management'?

Merely to stay in business, IT companies, in Silicon Valley and elsewhere, have been forced to take the lead in developing brand-new managerial concepts. As Business Week enthused: 'With their flatter, more democratic organisations, giant talent pools, enormous web of interlocking relationships among companies, super speed and can-do culture - especially the can-do culture', the young electronic leaders 'are changing the rules of management.' But the magazine is right to add that, outside micro-electronics, the business world has been slow to follow these exciting paths.

True, management strata are fewer, product life-cycles shorter, dress and manners more casual. But that hardly adds up to a revolution. Read that anniversary issue of the HBR, and you sense that these tentative steps will have to be overtaken by giant strides - and quite soon. Thus, for all the headlong advance in IT, as Peter Drucker points out, 'approximately 90% or more of the information any organisation collects is about inside events.' If you think that can create victory, think again. Mark the words of Paul Saffo:

'Increasingly, a winning strategy will require information about events and conditions outside the institution: non-customers, technologies other than those currently used by the company and its present competitors, markets not currently served, and so on. That information may already exist: harvesting the data and, still more, making sense of the crop has been the essence of the alleged "information overload."'

The problem is not just the mass of information, but its management. The argument goes back all the way to 1966; only now the issue isn't managing costly hardware and expensive software, but managing incredibly cheap information to achieve enriching results - or to avoid impoverishment. Only consider the sad story of Encyclopaedia Britannica, whose sales halved in half-a-dozen years in front of the onslaught of CD-ROMs selling at a thirtieth of the price.

How can you compete with a product that costs only $1.50 to make when your's requires $200-300? You can't. That information was available to Britannica; so was the fact that its direct sales force, now superfluous, was the company's major cost; so was the knowledge that people bought Brittanica to do right by their children - an aim nowadays achieved by buying them a PC that comes complete with a reasonably adequate bundled encyclopaedia. The facts were not properly managed, and business disaster followed.

The state of the information revolution mirrors that in management itself. What needs to be done, and what works elsewhere, is evident. The problem is sluggish response, which is an ugly feature of hierarchy: information can only move in steps up and down hierarchical pyramids: each step imposes delay and effort. Authors Philip B.Evans and Thomas S.Wurster, both of Boston Consulting Group, argue instead for 'hyperarchy' - and they offer a prime example: the World Wide Web.

Within a totally flat structure, all information on the Web is available to everybody who has access. Also hyperarchical is 'the pattern of amorphous and permeable corporate boundaries characteristic of the companies in Silicon Valley' - the pattern described above. More conservative models offer no real alternative to the Brave New Web World, even in the medium term. Not only can $200 not compete with $1.50: old 'legacy systems' in management are as disadvantaged as they are in IT. The options are expiring fast. Quite soon, the choice will lie between the new model or nothing.


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