Feature

What the papers say

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.


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    This was first published in June 2000

     

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