Business strategy: the lessons of the 'big ideas'

Jun 30 2009 by Robert Heller Print This Article

The current decade's big strategic idea is 'open innovation'. Enlightened companies are actively seeking innovatory ideas wherever they can be found.

There are good and bad ways of acquiring, developing and exploiting new thinking, but results are dependent on chance encounters of individual people, alone or grouped, and on individual opportunities, internal and external.

Back in 1965 when I launched the magazine Management Today, managers generally regarded their prime task as that of writing the correct rules, proclaiming them, and ensuring that they were obeyed.

Then, innovation was generally entrusted to Research and Development units, whose ultimate bosses were mostly concerned with keeping down the R&D costs and looking for ways of increasing the innovatory yield at the same time. Rule books and regimentation turned out not to be the answer. Successful innovation has consistently proved to be fluid and flexible, fast and furious - that is, passionate.

What's needed is not least cost but the combination of Least Cost with Maximum Output - LIMO. Lockheed in 1943 gave the name 'skunk works' to quasi-independent small groups given the task of taking new ideas to completion. In the 1950s Toyota's 'lean manufacturing took a giant step forward from Fordism and gave power to the people, having workers cooperate in original schemes to raise quality and productivity in a powerful new blend.

Managers turned their attention to planning in the late Sixties. Planners plotted business strategy by exploring several 'what if' scenarios at the same time and creating contingency plans for them. This played well with monoliths like Shell, but major bureaucratic tendencies were inevitable - as they were with DuPont's response to inadequate performance circa 1973, turning appraisals into all-round surveys of a manager from whom (you hoped) better LIMO would be achieved.

But what was possibly good for the manager was certainly not the answer for the managed. Total Quality Management won devoted proponents all over Japan, but was too radical for Westerners. Six Sigma, a 1987 derivative, was closer to traditional shop floor management and won plenty of good publicity for Motorola and General Electric.

But by 2008, both were fallen stars, as was Ford, despite its brave efforts in the 1990s - again widely imitated - to 'reengineer' its processes by applying heavy remedial treatment in the manner long beloved by management consultants.

In the 1990s, the most visionary of the latter backed the 'virtual corporation', by which activities were hived off, allowing management to concentrate on its core business. Economic pressures pushed strategies in this direction, but 'outsourcing' is not a solution to basic management problems.

Licking the near-mortal wounds of the years since 2000 will not create big-idea business strategies worthy of the digital revolution unless managers can master the basic four Ps: Purpose, Priorities, Performance, People.

There's also a negative P that is most important: Panaceas. Universal cure-all business strategies for management maladies and shortfalls are as flawed as ways of turning worthless mortgages into gold mines, or preposterous debt into solid financing.

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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".