Managers are confronted with fast-changing world. The collective impacts of globalisation, the internet and social change have made it that way. There’s more to come because, as the cliché says, change happens – constantly.
Wise managers commit themselves to keeping in touch with management thinking to make sense of what is going on around them and, hopefully, to capitalise on the opportunities change presents. Management theory, then, provides context. But, nothing quite matches the experience provided by watching, listening to and working with successful managers and leaders. Experience converts theory into fact.
Management theory has its critics. But as Adrian Wooldridge, author of Masters of Management and Schumpeter columnist of The Economist writes, “the vitality of business ensures that the study of business is equally vital… management theory is not the intellectual desert that many critics imagine”.
True, there are charlatans lurking among the inflated ranks of management theorists. However, thorough investigation by two reputable economists, one from the London School of Economics and the other from Stanford, on the impact of management ideas on productivity in many countries discovered that they do dispense more than snake oil.
The researchers found that companies which use the most widely accepted management techniques outperform their peers in all meaningful measures, such as productivity, sales growth and return on capital. And it’s impossible to dismiss the impact American quality gurus like W Edwards Deming and James Juran had on Japan’s devastated manufacturing industry after the Second World War. That truly was management theory turned to account.
Management theorists are now grappling with the most complex organisational issues the world has ever seen. Managers and organisational leaders can’t, in addition to their day-to-day duties, be expected to get their heads around the myriad ramifications of this changing world without little help.
As Wooldridge also points out, it’s not just who, what and how managers manage or leaders lead that is changing: corporate forms and business models are simultaneously imploding and exploding.
Management theorists provide windows on fast-changing management and organisational landscape. They are direction finders helping to signpost routes to the future.
“Theorists are essential to management development and to explaining organisational evolution,” says NZIM chief executive Kevin Gaunt. “We identify and distil some of their most useful and relevant work, and bring it to the attention of [NZIM] members and managers generally and then, overlay it with exposure to practical management programmes. Theory and practice are as interlocking as, say, management and leadership.”
Management theory is, of course, based on the observation of management and leadership in action. That’s why it can boost productivity. Good companies, just like good managers, borrow ideas from better companies and more successful managers.
Jim Collins, author of Built to Last, Good to Great and other similar titles, relies on his researchers’ observations of the best performing businesses to identify their leadership, innovation and new production techniques. The result of all this constant searching for enterprises that excel is higher productivity and sometimes happier workers.
Admittedly, some management theories generate more heat than light. (See box story “Get with the programme, stupid” for American business writer Geoffrey James’ pick of the eight worst fads of all time.)
As consequence, the management theory industry is coming under greater scrutiny. Business school clients are demanding more responsive and relevant programmes and consultants are, at least according to Wooldridge, “being forced to be more transparent”.
Theory has its place, and managers and leaders that reject it out of hand or pay it little mind shortchange themselves, particularly now that transition and transformation are the organisational, economic, social and political orders of the day. As Global Leaders study released by the UK’s Ashbridge Business School revealed earlier this year, 82 percent of senior executives believe they “need to better understand the business risks and opportunities of social, political, cultural and environmental trends”.
Most of the executives surveyed believed that effective learning and skills development comes from “practical experience”, whether through on-the-job learning, project-based learning or some other form of experiential learning. These experiences are enhanced through “structured reflection”, for example through coaching.
“And that’s pretty much the approach we take to helping executives and organisations,” says Gaunt. “It’s the combination of thoughtful learning and shared experiences.
“The New Zealand economy is undoubtedly going through tough times and organisational resources are stretched,” says Gaunt. “But to survive and succeed, companies must equip their managers and leaders with both well-informed understanding of the evolving new world in which they are expected to perform and the opportunity to apply what they learn.”
IBM’s Global CEO study has consistently shown that senior managers are struggling with the complexities of business life. Less than half of them felt “prepared for the complexity ahead”. Organisations need to address this anxiety, says Gaunt.
And as part of that learning process, there needs to be better understanding of the “false dichotomy” around leadership and management. “The debate around which is more important and relevant doesn’t help organisational development and simply confuses the issue,” says Gaunt.
“The debate about which is better totally misses the point. They are different roles that produce different results but the individual needs both capabilities.”
According to John Kotter, author of What Leaders Really Do, if leaders cannot manage what they create, then their leadership is not effective and serves no end. And as Warren Bennis, author of the classic On Becoming Leader, said in recent interview: “The best leaders I know are both leaders and managers.”
“That’s the way it is and the way it needs to be,” says Gaunt. M
Get with the programme, stupid
Some management theories are designed more to boost consultants’ fees than productivity. Others wreak organisational havoc, intended or otherwise. American business writer Geoffrey James names his eight “stupidest management fads” of all time:
The Six Sigma quality management process.
Business process reengineering.
Matrix management.
The Plato collective decision-making process.
Michael Porter’s “core competency” conviction.
Peter Drucker’s “management by objectives”.
Tom Peters’ “search for excellence”.
“Management by God” created by Girolamo Savonarola and based on the belief that company success resides in God’s hands.
Reg Birchfield FNZIM is writer on leadership, governance & management. [email protected]
