Writing recently about management ideas that have come to the fore in the
past couple of years, the Harvard Business Review compared the current
situation to a summer’s night: the air is full of interesting noises and
fragrant smells, but no single clear message is coming through.
There has not been a "big" management book, the kind that comes up
with a new idea that somehow clarifies, at least for while, what is happening
around us, since Daniel Goleman’s Emotional Intelligence in 1998 – earlier
examples were Prahalad and Hamel’s Competing for the Future (1994) and Hammer
and Champy’s Re-engineering the Corporation (1993). Significantly, the latter
has been updated and revised, for while there are lots of wannabe management
gurus claiming to be, or being promoted by publishers, as being the next
Charles Handy, Tom Peters, Michael Porter or whoever, the actual possessors of
those big names are showing no signs of yielding their positions as leading
Primarily, they and a few new names are preoccupied with making sense of a
number of confusing and sometimes paradoxical issues:
Why is it that the various manifestations of e-business are not delivering
on their promise?
Is there any point in having a strategy when the business world changes from
month to month?
Are radical measures such as outsourcing a good idea when you don’t know
what tomorrow’s core competencies are going to be?
How is business going to react to the changing nature of work, the issues
raised by globalisation and the demographics of ageing populations?
Knowledge workers are volunteers, not employees
As a prime example of the longevity of today’s thinkers, take the legendary
Peter Drucker who, at 92, continues to make incisive observations about
management and social issues. Much of Drucker’s recent writings have been about
the lessons to be learned from the way voluntary bodies are run. His argument
is that as power in the workplace has shifted from the bosses to knowledge
workers, they are effectively becoming volunteers, who join the organisation
because they believe in what it is doing. They could get a job anywhere, so the
object of leaders is to articulate and maintain the sense of purpose that keeps
Another of Drucker’s big concerns – not unnaturally – is what society is to
do about the fact that people are living longer and retiring earlier. The
rapidly growing numbers of brain workers are not worn out when they retire, as
brawn workers used to be, but in the post-industrial economy we are still
treating retirement like we did in the mid-20th century. Apart from the fact
that this is becoming fiscally unaffordable, the bored, underutilised elderly,
increasingly still active in their 70s, and the resentful younger workers whose
taxes support them, have the makings of a looming social problem.
One answer, he says, is to get away from the old economy idea of a
promotion-oriented career to one where lifelong opportunities to develop
personal interests and skills are an important aspect of reward.
See the world upside down
Drucker has seen more change than anyone writing about management today. It
has made him wary of assumptions about technology or markets – although he has
made a fair number of them himself. "Look at the world upside down,"
he recommends. "Suppose the opposite were true? Build organised
abandonment into your system."
Think and act like an outsource provider
Tom Peters, whose influence is perhaps second only to that of Drucker, has
also seen a lot of change in his 30-odd years as a guru – and has often got it
wrong, as he cheerfully admits. His answer to his critics is that change
occurred even faster than he had forecast. He acknowledges that companies read
the message of change but says they are too slow to adapt. Mergers and acquisitions
are not the way to do it – mating two dinosaurs does not produce a gazelle.
In fact, Peters casts doubts over the whole future of organisations as we
now know them, in the new economy. He believes that the organisational model of
the future is the professional service firm – architects, engineers, legal and
medical practices. They have projects and assignments rather than continuous
Turning to functions within companies, notably HR, he advocates that they
should think of themselves as a professional service unit and behave
accordingly. They should think of the divisions and departments in their
company as clients, identify the nature of their business and pitch for it.
"They pay your bills," he admonishes. "If you don’t perform,
they can and will take their custom elsewhere… alas, one rarely even hears
the word "client" during a visit to an average HR department."
Learn from professional service firms
Outsourcing is the big threat to HR departments. To avoid that fate Tom
Peters advocates that they reconfigure themselves as professional service firms
and pitch for internal business on the basis of cost and quality.
Old-economy elephants and modern-thinking fleas
Peters’ ideas are not that far removed from those of Charles Handy, although
Handy sees himself as a social philosopher rather than a management guru.
Handy’s view of the future is one of what he calls "elephants and
fleas", also the title of his latest book.
The things which really count now are speed of action, adaptability to
change and creativity. These are the characteristics of his "flea"
business model. There is still room for elephants, the big, old-economy
organisations – in fact, we need elephants to preserve order and stability –
but elephants need to understand the role of fleas. He points to the film
business, where a company such as Steven Spielberg’s Dreamcast hires talent
(fleas) as and when it needs it.
A key skill of the elephant will be to know where to find the fleas and
assemble the right team of them, but that has little to do with the kind of HR
management you see in old economy companies. "It’s a new kind of
relationship," says Handy. "In the old loyalty and job security-based
organisation, employees were prepared to hand over the ownership of their ideas
unconditionally, but that is no longer the case. They know that the assets of
the organisation are largely made up of what is in the heads of the people they
employ." So the fleas are striking up new bargains with the elephants.
"When the titles of a film roll at the end, what we are seeing is the
fleas visibly being given the credit for their contribution," says Handy.
They will also expect a much greater share in the fruits of success than the
arbitrary reward structure of the old-economy organisation allocated to them.
Developing appropriate reward systems for the new economy is a key task for HR.
Gary Hamel uses the same metaphor as Peters in describing how what he calls
"legacy companies" are stumbling as they deal with change through
mergers and acquisitions. He talks of them as "dinosaurs mating in
Jurassic Park" and doubts whether they will make it. The future, he says,
belongs to companies that are not burdened by legacy thinking and which
constantly strive for strategic innovation, by which he means innovation that
changes the very nature of competition.
His critics wonder if this is going too far – there have been as many
failures as successes in radical innovation. Recognising this, his most recent
article in the Harvard Business Review calls for a balance between evolution
Survival of the boldest
Hamel appears to part company with the champions of consensus and shared
meaning in organisations. He is more interested in those who go beyond its
boundaries into uncharted territories of products and services.
The most articulate exponent of corporate radicalism is Clayton Christensen,
a Harvard Business School professor who gave an enthralling presentation at the
Hay Group International Conference in Florence last May. He believes that true
innovation comes from disruption. Christensen, an engineer by training, has
been researching the puzzle of why it is that some of America’s apparently best
managed technology companies have run into trouble. The answer, he thinks, is
paradoxical. "Just because they invested in technologies that would
provide their customers with new and better products, studied market trends and
invested in innovations that promised the best returns, they lost their
position of leadership." In order to escape commoditisation, they added
all manner of bells and whistles which in fact went beyond what their customers
could use or were willing to pay for. You only have to look at mobile phones to
validate that observation.
What they should have done is to seek out new products and markets, even to
the point of competing with their own established brand. This may mean lower
margins and markets that appear to be too small to be viable. But this is where
the competition is being incubated and where the threat to their position is
going to come from. Sandra Van Der Merwe, a South African-born professor at
London’s Imperial College Management School, suggests that companies should
think in terms of market space, rather than market share, tomorrow’s rather
than today’s customers.
Sustaining and disruptive technologies
The innovator’s dilemma, says Christensen, is that strong first-mover
advantages occur in disruptive technologies with low margin products and/or in
marginal markets. Sustaining technologies are based around data on established
markets, careful planning and predictable costs and revenues. To survive,
companies need to be active in both and encourage appropriate HR policies in
recruitment and reward.
Ethical policies: the new competitive advantage
Another guru whose ideas have been evolving is Michael Porter, recently
described in Wired magazine as the most famous business school professor in the
world. Pre-eminently noted as an economist and business strategist, in which
role he has been a consultant to big corporations and governments all over the
world, he found the whole notion of strategy being challenged by the dotcom
revolution of the 1990s. What was the point of having a strategy, asked the
sceptics, when the world was changing so quickly that a strategy was out of
date as soon as you came up with it?
Porter says this confuses operational effectiveness with strategy. Ideas
such as total quality and speed to market are not strategies, they are things
companies should be doing anyway. Strategies are things that make them
different. Difference is important because pursuing operational effectiveness,
worthy though it is, ultimately leads to competition on price.
Strategy has a more interesting outcome, which Porter outlined in a lecture
at the London Business School last winter. He believes that how a company is
perceived by its stakeholders – who include the general public – is emerging as
a source of competitive advantage. Therefore policies on ethics, governance and
corporate responsibility will fall into this category.
Leadership and strategy
Porter sees the role of the CEO as that of the chief strategist. Thousands
of ideas pour into a company every day from all sorts of sources and interest
groups. The CEO is the person who makes the choices on the basis of his vision
of what makes the company different – the source of its strategic advantage, in
Today’s poor; tomorrow’s customers
Disruptive technologies and the thinking related to them can get companies
looking at markets in an entirely new way. CK Prahalad, co-author with Gary
Hamel of one of the landmark books of the nineties, Competing For the Future,
has been turning his attention to India, where most of the population live far
below the poverty line. Not an interesting commercial proposition, therefore,
but Lever Hindustan has made an important discovery. People in rural areas
cannot afford a couple of dollars for a bottle of shampoo but they can afford
five cents for a small sachet of the stuff. Selling five-cent sachets is much
more profitable than selling bottles, and they can be marketed through an
existing distribution network of small wholesalers and tiny village stores.
One of the banks has made a similar discovery. It has found out that
extending microcredit for amounts as small as $25 can be good business,
provided that a repayment ethic is in place – which is the case in many
developing countries. And once an economy gets moving these tiny sums soon get
Search for new markets
The growing disparity between the world’s rich and poor is caused not by
lack of skills but by access to goods and services. CK Prahalad says India is
bursting with intellectual capital which cannot be developed because bright but
poor people cannot afford computers. The answer is to provide access to
technology, maybe through something similar to automatic teller machines
outside banks. The big new markets are in the developing world but it needs a
shift of mindset to see this.
Peter Senge, who made his name with The Fifth Discipline, an influential but
some- what cerebral book on organisational learning, is not a regular on the
guru circuit. He was, however, attracted to the Florence venue for last year’s
Hay Conference because of the resonance between the direction his own ideas
have been taking and what was happening in Florence in the 15th century.
There are parallels between the impact of technology on the business
environment now and the huge leap forward in painting triggered by the
rediscovery of perspective, but equally significant is the fact that the
Renaissance put human values at the centre of the way people viewed the world.
Senge, too, thinks we have to re-order our values, not necessarily in a religious
sense but in line with what is necessary for sustaining the planet.
The world, he says, is not a mechanism but a set of interdependent systems.
The natural order of things is: produce, recycle, regenerate. With the
appearance of the industrial economy it has been: sell, use, discard. That
cannot continue and it need not. For instance, BP is shifting its perspective
from oil exploration and production to finding sources of renewable energy,
expressed in the reworking of the BP logo: Beyond Petroleum.
Senge, who has a Master’s degree in engineering, is clearly no technophobe
but he is concerned about technology getting out of control if it is not seen
as part of an interdependent system. He is worried, for instance, about the
disenfranchisement of people who are not up to speed on technology and even
more about what the technology is making possible.
Bionic man, a creature put together from transplants and genetically
engineered spare parts, is no longer a figment of science fiction but we have
not thought through the consequences of that. In the words of the Harvard
Business Review – its tongue only partly in its cheek – "Get ready for the
ultimate in luxury goods: a whole new version of you."
Beware of implications
In The Fifth Discipline, Senge advanced the idea that organisational
learning could only take root if the relationship to everything else that was
going on within it – the whole system – had been thought through. In his new
work, he is extending the idea of systems thinking to the planet as a whole.
All our actions must take their wider consequences into account.
The networked economy
Don Tapscott is the author of Becoming Digital and is widely regarded as the
leading guru of the Internet economy. Tapscott draws some interesting parallels
between this and the pre-industrial economy. He talks, for instance, of agoras,
a word in ancient Greek for a market where buyers and sellers interacted
directly and bargained for prices. He points out that this is very similar to
what happens on Internet auction sites.
The Internet economy has profound implications for customer relationships
and for marketing in general. In the context of Senge’s systems, it also has
far-reaching effects on government. How will taxes be collected and public
expenditure funded if an increasing number of transactions take place on the
HR in the new economy
Tapscott shares the view of current management thinkers that we are moving
towards a networked economy of alliances, projects and ad hoc relationships of
various kinds. But he does not see this as the end of HR. On the contrary,
managing networks and an adjunct workforce is a key challenge in the digital
Rosabeth Moss Kanter
In her most recent work, notably her book Evolve! Succeeding in the Digital
Economy of Tomorrow (Harvard Business School Press), Professor Kanter has been
examining the circumstances in which companies fail or succeed to meet the
challenge of e-business.
They turn out to be remarkably similar to some of the principles of
"make a little, sell a little, make a few more" put forward by Peters
and Waterman in In Search of Excellence, published more than 30 years ago. Writing
about one small domestic appliance company, she says, "When in doubt,
create small experiments. Pick one loaded for success that doesn’t require much
change and one that demonstrates the virtues of changing.
"Don’t bet the company and don’t waste time. Just act, simply and
quickly, to have something concrete and positive to convert sceptics."
Maintaining good relations
Success in the digital world, says Professor Kanter, is not a technological
problem, it is a human one. "Without good relationships and diplomats who
can negotiate across all parts of the organisation, obstacles will never be
confronted or overcome." Her research throws new light on the puzzling
problem of why B2B is not catching on to anything like the extent forecast even
a year ago.
Tribute to the author
This article was the last piece
Godfrey Golzen wrote for Personnel Today’s sister publication, globalhr, before
he died this summer at the age of 71. He had a great talent for spotting
trends, especially in the field of management. He was a management journalist
who could get beyond the jargon, and explain what was going on with great
clarity and wit.
Godfrey helped launch HR World in 1997. Although Godfrey
stepped down as editor in 1998, he continued to contribute to globalhr
(formerly HR World) under the ownership of RBI. He also contributed to The
Times and authored several management books.
Godfrey will be a fondly remembered presence on the HR