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September 1, 2010

Topic: Executive Management

Reference: Murray, Alan. “The End of Management.” The Wall Street Journal, August 21-22, 2010.  W3.

The extent of the economic downturn has every senior manager re-examining her approach to business. One need only drive around to see all of the vacant commercial property bearing witness to the massive drop in business activity. That review is not only taking place on a micro level but a macro level as well. The whole notion of he corporation is being re-evaluated in light of the recent problems with BP and the tendency to maintain business as usual long after dynamic change is called for.  Organizations struggle with change and often miss out on opportunities because of a refusal to place the right bets on new developments.

September 1, 2010

Topic: Executive Management

Reference: Murray, Alan. “The End of Management.” The Wall Street Journal, August 21-22, 2010.  W3.

The extent of the economic downturn has every senior manager re-examining her approach to business. One need only drive around to see all of the vacant commercial property bearing witness to the massive drop in business activity. That review is not only taking place on a micro level but a macro level as well. The whole notion of he corporation is being re-evaluated in light of the recent problems with BP and the tendency to maintain business as usual long after dynamic change is called for.  Organizations struggle with change and often miss out on opportunities because of a refusal to place the right bets on new developments. In the referenced article the commentator makes a similar observation. “Corporations are bureaucracies and managers are bureaucrats. Their fundamental tendency is toward self-perpetuation. They are almost by definition, resistant to change.” The problem is that this tendency runs counter to the speed of change and the current rate of adoption for new technologies. Facebook for example has been adopted at a rate that is multiple times faster than the telephone. The speed of change suggests not only creative destruction (Joseph Schumpeter), but also instant irrelevance. The commentator suggests that this results not from bad management but rather from tried and true principles of good management. “They allocated capital to the innovations that promised the largest returns. And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster projects.” If true, this strongly suggests that the manager’s toolbox is urgent need of an overhaul. What do you do when following clear doctrine can lead you into extinction? I believe the answer is that you have to look at problems differently, bring new resources to bear, and brake the cycle of thinking that helped to create the problem in the first place. One way to do that is to benchmark different industries instead of the ones that you usually follow. Another may be to adopt universally better business practices from models that previously have not been in the mix (e.g. mission driven organizations). Google for example has adopted a cooperative model that allows its staff to spend a portion of time on projects assigned to others and to work on developing new products. That is a model smasher. According to the commentator “the new model will have to instill in workers the kind of drive and creativity…more commonly found among entrepreneurs.” This is a huge challenge, but one that should be embraced and supported across the board. The alternatives are not very good.