Cover Story: Deconstructing Management Fads, Pg 2

DEFADDING CORE COMPETENCE

Fad effect: To historically-diversified business groups, who constitute the majority of corporate India, the concept of focusing on a few chosen activities is anathema. For, developing and leveraging core skills, and eschewing unrelated diversification, implies that new opportunities cannot be seized.

Defad effect: The principle of core competence is a philosophy of long-term strategy, and not a passing wave to be surfed. If employed to determine which businesses to be in--and, by extension, which ones to exit--and how to add value to it in a unique way, it can deliver unmatched and sustainable competitive advantages. Critically, following this principle involves identifying, growing--and, sometimes, acquiring--and nurturing key competencies, none of which can be accomplished either in the short run or through a casual dalliance. Indeed, the entire organisation has to be reconfigured around the core competencies it has picked. So, long-term commitment to the demands it makes of a company is essential for its benefits to be recorded--making it difficult to treat core competence as a passing fad.

The calls for radical transformation and the adoption of a new paradigm reflect a number of commonly-proposed fads about modern management: simplify, cut out, cut back, eliminate... These fads can be summarised in five trails... (But) what's wrong with these ideas? Aren't they simply putting into words what the best managers and firms are doing?... Practitioners and writers are giving these trails the status of present-day conventional wisdom Since everybody is saying these sort of things, surely, they must be right. But are they?
Management Redeemed, F.G. Hilmer & L. Donaldson

Trying to drive a square peg into a round hole should not result in scorn being heaped on either the peg or the hole. That dubious distinction should, normally, be reserved for the person displaying the palpable lack of sense in attempting what is fundamentally impossible. In the case of management practices, however, efforts to achieve results with tools that were never designed for those ends have resulted in the principle, rather than the botched execution, being faulted. Why be surprised when reengineering fails to deliver market-busting strategy? It was never meant to. Why shake your head when benchmarking cannot inspire your people to give off their best? It wasn't supposed to. Why condemn management theory because you identified a core competence which you were supposed to be good at, but found that it didn't reduce shopfloor costs? The principle you picked was intended for a different task.

It is in the fundamental mistakes committed by CEOs and managers when wielding a particular management tool that dooms the process, forcing it to be abandoned, and the theory to be written off as yet another fad that promises much, delivers little, and leaves no lasting impact. When, then, does a management technique not sink to the level of a mere fad? "Only when it is used for the right objective, to solve the right problem, by the right people, for the right length of time. Successful companies are able to combine all these elements," says Scott Bayman, 50, the CEO of General Electric India. Get any of them wrong, and the outcome will be the debris of the noble intentions, sound theory, and powerful ideas that stud the best management concepts. Muses Deepak Dhawan, 45, executive director (strategic planning), Eicher Goodearth: "For a concept not to slip into being a mere fad, the company needs to observe if it is internally ready for it apart from assessing the need for it."

Step One in defadding a management theory: identify the problem it is being used to address, and check whether a solution is feasible given that particular tool. Using the wrong medicine can debilitate your organisation. For instance, just try grafting the principle of customer-defined quality, the cornerstone of TQM, onto a pressing need for cutting down your inventories. On the surface, technique and problem may seem perfectly matched: after all, aren't pared-down inventories, going as far as just-in-time management, one of the stated objectives of quality movements? And isn't customer-defined quality the starting point of any TQM initiative? Doesn't it follow, then, that identifying what the customer wants by way of product-features will, in some mysterious way, slash inventories? Of course not, as a good manager will answer right away.

And yet, it is the forging of obviously-mistaken assumptions of this nature into a chain of cause-and-effect that leads CEOs and managers to fret because their management initiative isn't producing results. "Whether the problem you need to tackle can indeed be cracked by the management theory you're following must be worked out in advance," emphasises R.S. Pawar, 46, CEO, NIIT. After all, no theory of management can legitimately claim to address every contentious issue that arises in your organisation. To adopt the one-solution-fits-all-problems approach, therefore, is pointless. Analyses K.K. Nohria, 62, the CEO of the Rs 1,566-crore Crompton Greaves: "There are a lot of management ideas, and many managers feel that they are in conflict with one another. My own view is that these ideas are complementary, but none of them, individually, is a solution for all your problems."

Nor is it enough to ensure that the problem and the tool are matched well. Equally important is the process of quantifying your expectations in terms of specific results, measurable in rupees and paise, hours and minutes, marketshares and customer satisfaction. "That goal-setting will, immediately, enforce a validation of your expectations, which is particularly important because of the outrageously-optimistic claims that the proponents of management theories often make," cautions K.R. Ramamoorthy, 55, chairman, Vysya Bank.

Does success refer to a single project, or a company-wide initiative? Do you want a 30 per cent drop in operational costs or a 20 per cent trimming of the workforce? In the absence of such metrics, success can be equated to a wide span of achievements, ranging from halving of costs to doubling of profits. That's why setting the bar before you begin is crucial to determine afterwards whether you've succeeded or failed. Without that, virtually any result could be disappointing, compelling you to trash the particular management principle you have been using.

Marketed as ready-to-use processes, and frequently disseminated in easily digestible forms, even the most profound management ideas can suffer from misuse by a company hungry for the latest techniques. "Plucked off the shelf, these ideas are deployed without the commitment that they demand from top management. Also, not every organisation is ready for these concepts," says N.R. Narayana Murthy, 52, the CEO of the Rs 143.81-crore Infosys Technologies. Sure, every preacher of the new management gospel cries himself, or herself, hoarse from the pulpit, clamouring for the CEO to buy into the theory before implementing it. Suggests Pankaj Munjal, 36, executive director, Hero Motors: "For any management concept to work, and not turn into a fad, the direction has to flow from the top. The CEO has to be completely immersed in implementing the process. Each company has to choose a concept by its needs, and tailor the concept to suit these needs."

Alas, many companies pay no heed to this. With the result that the principle is administered like the commoditised antibiotic from the hospital stores, without any attempt by the CEO to understand it and adapt it to his, or her, company's specific needs. "Just as no two companies are alike, neither are their problems or goals, however striking the superficial similarities," says Manoj Badale, 31, former CEO, Monitor Company (India). How, then, can both benefit from the same readymade package of solutions? Indeed, different systems and cultures demand different forms of intervention even if the issues resemble one another. For instance, a productivity problem--measured in terms of, say, man-hours per unit of output--in a systems-driven organisation may need a reengineering-based solution; in a people-centric company, it may be best addressed by bottom-up empowerment.

Obviously, no management theory can be used successfully unless it is adapted to the unique needs of each organisation. That, in turn, demands the commitment of everyone in the organisation, across as well as up and down hierarchies and processes. But the ready availability of answers--the hallmark of packaged management concepts--lulls corporations into believing that such intensive and extensive involvement is unnecessary in the case of management techniques. The result, usually in that order, is disaster, followed by disillusionment, followed by the discarding of the idea. Warns Bala V. Balachandran, 60, distinguished professor of accounting, J.L. Kellogg Graduate School of Management, US: "When a management idea creates a mess because of wrong usage, it's written off as a fad." Listen.

Reengineering was invented by Dr Jonas Salk as a cure for quality programmes. Just kidding...

Businesses flock to reengineering like frat boys to a drunken cheerleader Reengineering involves finding radical new approaches to your business processes. On paper, this compares favourably with the `quality' approach, which involves becoming more efficient at the things you shouldn't be doing.
The Dilbert Principle, Scott Adams

Used interchangeably, and with no distinction between the ends they target, different management techniques cannot but be reduced to flavours of the month, grabbed and abandoned at regular intervals. However, the successful use of management theory springs from combining the benefits that each can generate, so that overlaps are minimised, and the gains are felt as widely across the organisation as possible. Indeed, even if none of today's management scientists has done it themselves, the world of business is tantalisingly close to a theory of unification of management thought. In this equivalent of physics' Grand Unification Theory, different strands of management thought can be brought together to create a cohesive model for the successful organisation.

Its parts, of course, are the major management theories and techniques that every CEO is familiar with. They complement one another, targeting different parts of your organisation, and offering different benefits. The aggregate? A multi-moduled management model for company-wide implementation. With their areas of application clearly demarcated, the simultaneous pursuit of multiple tools and techniques will become possible.

Don't forget that organisations are complex systems, and no management tool can be deployed in a watertight compartment without affecting the other parts of the organisation. For instance, if business processes are reengineered, compensation systems have to be changed. Or, if cross-functional teams are introduced on the shopfloor, the process by which organisational vision cascades into individual goals will have to be, accordingly, adjusted. Observes Cyrus J. Guzder, 52, the CEO of the Rs 194.30-crore Airfreight: "We have stayed away from TQM, which is such a powerful and awesome discipline that unless you make it self-sustaining, and not a top-down approach, it destroys itself. That does not mean we do not need it, but we must prepare for it." Sums up Edwin Clarke, 62, the group vice-president (personnel & administration) of the Rs 2,486-crore UB Group: "If the processes associated with implementing a management idea are not carried out alongside, it is bound to fail." Thus, the integration of diverse streams of management thought is not just a theoretical inevitability, but also a practical necessity.

As corporations around the world are discovering, turning management theories into corporate bubblegum is easy: just buy the latest brand, chew on it till the flavour has been extracted, spit it out, and unwrap the next product on the shelves. Far tougher--but mandatory if defadding is on your agenda--is to extend both the time-horizon and your commitment to the principles you are using. Few management ideas yield concrete results in anything under two years, and with anything less than the original quantum of energy invested in it. Even after you've bypassed all the wormholes to failure, long-term participation is essential to prevent the principle from becoming a here-today-gone-tomorrow fashion trend. Cautions the well-known management guru Peter Senge, 50: "I think it is best not to focus on becoming a learning organisation as that will mean little to most people beyond a faddish term. Few realise the depth of personal change required in this journey which will, sooner or later, call into question people's deepest assumptions, and old habits of thought and action. None of this is quick, and any organisation unwilling to work for at least five years should not waste its time starting out."

The alternative, of course, is to treat each idea as a fad, taken up with enough tom-tomming to attract shareholders' attention, please the stockmarkets, and assure customers that improvements are around the corner--and to ensure that you're always using the latest technique. Unfortunately, staying on top of the management fashion curve will only mean sacrificing the real benefits that the serious--and there is no denying that there are as many frivolous as there are valuable ones--theories could have generated for you. As the 39-year-old Adams himself says: "I hope no one is managing their company according to Dilbert-IAN wisdom. That would be scary. If it is happening, I hope it passes quickly." After all, fads fade. But wisdom is eternal. And enabling you to understand the difference between the two is the real goal of the science of management.