Keeping abreast of current management theory is vital, but trawling
through endless journals to sort the wheat from the chaff is
extremely time-consuming. Monica Seeley comes to the rescue with a
summary of the latest issues that affect IT directors
The avalanche of product releases, cold calls and IT-related
journals that land's daily in the lap of the IT director shows no
sign of slowing up. There is barely enough time in the day to check
your e-mail, let alone do all the background reading that
management gurus blithely recommend.
But if you neglect your homework your CEO might surprise you by
referring to an article spotted in some management journal, and
asking you for your views on it. So, to help you keep up to speed
with what the board is talking about, here is a round-up of current
themes to emerge from the sphere of corporate management.
Globalisation
Globalisation and managing the virtual organisation are not
especially new challenges, rather it is the way that executives are
thinking about the issues that is changing.
Of particular concern is the question of how to work in a
multinational culture and make overseas operations profitable.
There is no doubt that the global brand will dominate. However, a
recent survey from Templeton College (University of Oxford) reveals
that organisations often struggle to make their overseas operations
as profitable as the home-based one.
Then there is the global-but-local paradox - how to think
multinationally but act locally. This often necessitates adapting
to different paces of technological take-up, and different needs
for internal governance requirements.
Prahalad and Oosterveld highlight this dichotomy in Transforming
Internal Governance: The Challenge of Multinationals (Sloan
Management Review, spring 1999). They stress the need for a global
vision, many different strategic alliances, distinguishing between
task and social performance and being innovative about finding new
opportunities for business outside the traditional models. Making
this happen often requires moving from "zones of comfort" to "zones
of discomfort". The problem, in their view, is that senior
executives lack the skills to handle alternative management models
that enable this change.
Other commentators suggest that eventually the location will
become subservient to the quality of the services delivered. The
key is to adapt existing structures to meet emerging markets.
Cisco, BP and Dell are all masters at cherry picking parts of
existing businesses, plucking out people, processes and products to
form new, highly focused business units.
For a good review of these issues and how the winners are
organising themselves see Eisenhardt and Brown's article, Patching
and Restitching Business Portfolios in Dynamic Markets (Harvard
Business Review, May/June 1999) and Eisenhardt and Galunics' more
recent article, Coevolving: At Last, a Way to Make Synergies Work
(HBR, Jan/Feb 2000).
The other issue facing many global organisations is managing the
virtual team. While modern communications technology enables us to
keep in touch, human contact still forms a vital part of any
relationship. Anthony Barnett's Anywhere but There (Director, Feb
2000) reviews some of the commonly cited advantages of teleworking
and shows the associated pitfalls.
Barnett points out that for the advantages to outweigh the
drawbacks just giving people the technology is not sufficient.
Training in how to manage both oneself and the team is vital, as
well as how to use the technology properly, yet less than half
those surveyed in a recent US survey claimed they had had adequate
training.
Watad and DiSanzo's The Synergism of Telecommunting and Office
Automation (SMR, winter 2000) provides a good case history of the
implementation of a teleworking programme a US pharmaceutical
company's sales force. It contains a useful framework for
establishing cost benefits and a model for IT in such
operations.
If you are asked to provide advice in this area, you would do
well to scan the bimonthly journal Flexible Working published by
Eclipse and look at www.employment-studies.co.uk and
European Telework Online.
Customer loyalty
In e-commerce the buyer is king, and customer loyalty can be
destroyed in an instant. Companies need to recreate online the
experience customers enjoy in the bricks and mortar situation,
exploit the wealth of customer information on offer and create Web
sites that retain users.
Schneider and Bowen's Understanding Customer Delight (SMR,
autumn 1999) highlights the fact that customer satisfaction does
not automatically translate into loyalty. Customers who experience
poor service often feel outraged and their loyalty can be destroyed
very quickly.
Schneider and Bowen explore the dynamics of customers' emotions
and suggest a model that reflects the customers' need for security,
justice and self-esteem in any sales transaction, rather than the
more traditional approach of just aiming to meet customers'
expectations.
Co-opting Customer Competence by Prahalad and Ramaswamy (HBR,
Jan/Feb 2000) puts forward the proposition that one consequence of
the Web is that customers are becoming far better informed. They
suggest suppliers should therefore build on and harness their
customers' competence to develop the relationship.
Co-opting customers' competence involves engaging them in a
meaningful dialogue, listening to them and being prepared to manage
diversity. To some extent, the notion of co-opting customers'
competencies is linked to Scheider and Bowen's concept of creating
self-esteem within the customer. These are all concepts that are
easy to write about, and hard to put into practice.
There is little doubt that the winning customer relationship
management strategies will be those that both provide satisfaction
and appeal to customers' inner emotions.
For an insight in to some of these issues and how winning
organisations, such as Amazon are tackling them, see the following
books:
- Blown to Bits by Evans and Wurster - how to create the third
generation of winning Web sites (Harvard Business School
Press)
- The Experience Economy by Pine and Gilmore (Harvard Business
School Press)
- Permission Marketing by Godin - how to capitalise on the rich
stream of customer information available from the Web (Simon &
Schuster)
Managing knowledge
Knowledge management is an old chestnut, but now the concern is
about protecting not just the intellectual assets but also the
hidden processes that can create a unique competitive advantage.
For example, how Dell sells computers online, or Amazon's One-Click
shopping process.
Many organisations now realise that they can establish a
propriety advantage by patenting the sales processes that form part
of their intellectual assets. The big question is how far an
organisation can go before it crosses the boundary of
anti-competitive procedures. For an insight in to these issues, see
The Knowledge Monopolies (The Economist, 8 April 2000) and
Discovering New Value in Intellectual Property by Rivette and Kline
(HBR, Jan/Feb 2000).
Another issue is managing the surfeit of Web-based information
and sorting the wheat from the chaff.
Increasingly, there is a move to the information broker or
"infomediary". An infomediary can act at both the macro
(organisational) and micro (personal) level. At the macro level
they seek and manage information about your customer and act as
custodian of this asset. In light of the ongoing battle over
customer privacy, the custodian role is very appealing to both
customer and seller.
Infomediaries can act as "marriage brokers" to help clients find
the appropriate series and products. Some of the travel dotcoms and
financial services sites fulfil this role, for example. This looks
set to become one of the more established and robust rolesfor
emerging dotcoms and presents new opportunities for the
intermediary.
Required reading is either Hagel and Rayport's original article,
The Coming Battle for Customers (HBR, Jan/Feb 1997) or their recent
book Net Worth.
Disruptive innovations
Clayton Christensen coined the phrase "disruptive innovations"
to describe any technological development that is not just about
producing a product that is better and faster but one that is
radically different and does the job not only better, but
differently and in a more appealing way. Classic examples are the
3.5in disc, Swatch watches and wireless application protocol (Wap)
devices.
With the advent of e-commerce, we now have "disruptive services
and processes". Examples are Schwab with online trading and out of
town shopping centres such as Blue Water. These disruptive
innovations can knock large holes in the bottom line.
Clayton Christensen's Innovators Dilemma and his more recent
musings (HBR, Mar/ Apr 2000) are a must for coping in an
environment where disruptive innovations are becoming the norm.
While not denying the importance of being customer-focused,
there are times when it is important not to listen to existing
customers' demands. In the Innovator's Dilemma, Christensen starts
by providing examples of how by being too introspective and
focusing solely on demands for continual improvements companies can
miss the chance to create innovative products. He goes on to
explore the different, management and marketing skills and customer
relationships that are needed to take disruptive innovations to
market.
Kim and Mauborgne in Strategy, Value, Innovation and the
Knowledge Economy (SMR, spring 1999) assert that the winning
customer strategies are those which offer "value innovation" rather
than "value imitation". This again represents a form of disruptive
innovation.
Sustainable development
At one time it was unfashionable to talk about community
awareness. Organisations such as the Bodyshop were slated for
suggesting that there was more to the bottom line than straight
profits.
But now the in-words are "sustainable development" which, to use
Chris Patten's definition, means "balancing progress with
environmental care and social responsibility". For a good
exposition of what is at stake see Business Ethics (The Economist,
22 April 2000), and John Browne's Reith Lecture
(www.bbc.co.uk).
Hart and Milstein in their article Global Sustainability and the
Creative Destruction of Industries (SMR, autumn 1999) suggest that
organisations must view markets as one of three groups: developed,
emerging, and surviving. Each group has different opportunities to
create sustainable developments.
They provide strategies for working within each market and
metrics against which organisations can benchmark themselves.
Failure to differentiate markets like this will, they posit, result
in a new round of creative destruction which epitomised the greed
of the 1980s with disasters such as Bhopal and the Exon Valdiz.
Indeed, we may already be witnessing creative destruction
re-emerging with the recent spread of genetically modified
seeds.
Organisations are increasingly being judged both by shareholders
and employees on the value they add to the community. Consequently,
sustainable development has suddenly risen up board room agendas.
There is even a dedicated Web site with a forward by Tony Blair.
The work-life balance
The portfolio career theme was made popular in the early 1990s
by Charles Handy in his book The Empty Raincoat. This is starting
to re-emerge as many executives find themselves made redundant
through mergers and acquisitions. There is also a trend among high
flyers to take off and do some voluntary work.
It is very much about taking ownership of your career rather
than leaving it to the organisation. Rhymer Rigby in Management
Today (May 2000) has coined the term "promiscuous managers" to
describe those job hoppers who constantly move from organisation to
organisation. In a recent survey, Management Today found that 67%
of managers no longer believe in the "job for life" and ranked it
bottom of a list of key demands for their life. In the under 35 age
group, 77% ranked it bottom.
The other side of the coin is staff retention. It is not just
the IT profession that is concerned about keeping its best staff.
The board is also worrying about what incentives other than money
it needs to offer the brightest and best, while at the same time
letting go those who no longer fit the organisation's needs.
Essential reading is Cappelli's A Market-Driven Approach to
Retaining Talent (HBR, Jan/Feb 2000). The January edition of
Director explored some of the ways UK companies are devising
employee benefits to meet the move towards a better quality of
life, such as allowing employees to order goods online and have
them delivered to the office. Waitrose is trying this with
organisations including British Airways and the BBC.
To retain talent, Cappeli posits that rather than trying to
fight promiscuous management syndrome, executives should accept the
situation and look for ways to adapt to it.
Be honest and assess how long you actually need the person for.
In fast-changing times, certain skills may not be needed forever.
Executives should consider different ideas such as outsourcing
(interim managers), cross-training employees so that they can fill
in for others and organising work around project teams which only
have a short life span.
Cappeli likens the situation to an overflowing river: if its not
possible to build a dam, a more practical solution may be to manage
the flow of water.
If you are a promiscuous manager, both Director and Management
Today often carry reviews of the top 25 organisations and their
managers, which you might find useful when considering where to
make your next stop. For example, in Management Today (April 2000)
there was a review of the top 20 leaders of the 21st century. The
March edition of Director looked at some of today's top
entrepreneurs and revealed that while there may be a move towards
flatter structures, this may mask a heavy command and control
culture from the top.
Lastly, tied in with the work-life balance is the return to
religious values. It is not just the archbishop of Canterbury who
is talking about a need to revisit one's religious belief in this
age of greed. There have been articles in Business Week (November
1999), and SMR Summer 1999 (A Study of Spiritualism in the
Workplace - Mitroff and Denton) that highlight how some prominent
members of the business communities, here and in the USA, are
taking time out to redress the work-life balance in this area.
While the economy grows and the e-commerce revolution continues
to create dotcom millionaires overnight, one could be forgiven for
asking if we are witnessing a return to the more fundamental
deep-rooted theories of work as postulated by Maslow (1943) and
Herzberg in the late 1960s. Financial gains are becoming sublimated
by the need to achieve self-actualisation and an intrinsic level of
work-life satisfaction.
These themes and their potential impact for the IT department
will be explored in more detail in Dr Seeley's workshop "The
Organisation of the 21st Century", held at next week's IT Directors
Forum.