Transforming management theories

2011

Leaders love management theories. Or so you might conclude from the output of academics, other management writers, seminar organisers, consultants and the rest of the managerial support industry.

Few of the supporting theorists, though, ever question how much impact their theory-peddling has on the great majority of practising managers – even on the minority who determine the fate of the major organisations.

How many managers, for example, have been directly influenced in their actions – day-to-day, month-to-month, even year-to-year – by the Six Forces theory on strategy formation? Or the 'core competencies' concept? Or the idea of disruptive technologies? Or the description of 'emotional intelligence'?

These ideas made the fame, respectively, of Michael Porter; C.K. Prahalad and Gary Hamel; Clayton Christensen; and Daniel Goleman. But have their ideas made anything else for anybody else?

The first point to stress is that all four theories are based on observations of purported fact. The resulting insights are not necessarily earth-shattering.

Porter specified familiar forces which appeared to be dominating strategic action. Prahalad and Hamel concluded that what you do particularly well is the determining basis of organisational success. Christensen noted that concentrating effectively on what you've done well in the past debars market leaders from competing successfully in new ways. And Goleman saw that how people feel has more influence on their actions than how they think.

Now, there's an important role in bringing people's attention to the obvious. All the same, stand up anyone who thought differently on any of these points. Also, stand up anyone who has knowingly applied any of the ideas in practice.

Yet all of them were identified in the Harvard Business Review as 'truly big, paradigm-shattering ideas' that 'don't just advance the conversation; they permanently alter it'.

Even if that's true of these supposedly big concepts, altering conversation and altering action are very different activities. Remember, too, that the 'paradigm-shatterers' begin with descriptions: if these are inaccurate, then what?

It's well-known that the companies which management writers (including the present one) select as wonderful examples often turn out to have feet of heavy clay. But generalised observations can equally unravel as real life unfolds.

The question is whether any theorist writing about 'what is', and getting that wrong, can be a useful guide to 'what should be'.

Business is not 'driven by smart ideas', as the HBR wrote, but by deeds – clever, foolish and neutral. The big books and interesting articles don't actually direct events, but flow from them.

Meanwhile, in the practical world of business, managers are coping with hard facts that result from changes outside their control – like these:

  • Business isn't as usual any more. Management needs to develop the company's direction and purpose anew on a continuous basis.
  • Fulfilling that purpose requires concentration on a well-defined market – and rules out diversified and uncoordinated interests.
  • Technologies and markets have become so volatile that innovative attack is the best, and maybe the only form of defence: and that means innovative corporate organisation.
  • People are asserting their individuality more throughout society: you need to use that individuality to innovate and to animate the new corporate forms.
  • Those forms are becoming much less rigid because of the need for broader inter-relationships, crossing boundaries inside and outside the firm.

So don't turn your back on the realities. Do suit your actions to the real requirements. That means starting with an intense examination of your business model (which exists whether you know it or not) and asking whether it still meets your objectives.

Stick with what works well. Before it doesn't work any more, change it, no matter how much change hurts, for something that will work even better.

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About The Author

Robert Heller
Robert Heller

Robert Heller, who died aged 80 in August 2012, was Britain's most renowned and best-selling author on business management. Author of more than 50 books, he was the founding editor of Management Today and the Global Future Forum. About his latest title, The Fusion Manager, Sir John Harvey-Jones wrote: "The future lies with the thinking manager, and the thinking manager must read this book".