In management circles, there is a story about two hikers in a forest who realised there was a tiger following them. One of them immediately put on his running shoes. His partner told him: "You think you can outrun a tiger?" "No," was his reply, "but all I have to do is outrun you!"
A witty solution, perhaps, but a bad strategy in the long run. With such a strategy, the long-term survival prospects of the hiker are poor, for eventually in a world of tigers and hikers, tigers will prevail. If that hiker survived the first encounter by outrunning his partner, he will eventually be defeated in some subsequent race. The mistake is that he chose to play the tiger's game by running instead of doing something a tiger cannot, such as climbing up a tree.
Most managers think of other companies as their competitors, when the 'tiger' for these companies is the market. One cannot, of course, not take into consideration the market rules for one's organisation. But adopting these rules as one's core management philosophy, in the long run would be making the same mistake like our hiker.
The alternative consists in value creation where companies become value creators. To create innovations and new value, a company needs to make short-term sacrifices of efficiency to invest in innovations. This might mean allocating resources to uses which do not yield the highest immediate returns.
Success today depends on the ability to constantly engage in the re-creation of customer value. That is why many Silicon Valley companies are telling their employees: "Obsolete your own products".
The new challenges
Organisational psychologist Michael West characterises these challenges as a shift from an old to a new paradigm: from an industrial to an information age, from stability to change, from control to empowerment, from competition to collaboration, from things to people and relationships, from uniformity to diversity, and from management to leadership.
Increasingly, most jobs today require primarily cerebral rather than manual skills. It is expected that in the future people's ultimate security will lie not in buildings and possessions but in their brains. The new source of wealth will be the skill in acquiring and applying knowledge and know-how, or even more in "learn-how".
Ultimately, there is a need for a radical change of mentality and of frame of mind. Professors Dainty and Anderson predict that for many companies the corporate battles of the millennium will be more about changing mindsets than about changing technology.
The emerging trends
How will these challenges in today's world have an impact on the future concept of management and leadership?
Authors Ghoshal, Bartlett and Moran view value creation as the new millennium management manifesto. They see a company's ability to create new value for society as a product of a management philosophy of viewing the company not just as an economic entity but also as a social institution which allows individuals to behave differently from how they would in a market.
Another managerial concept needing revisiting as a result of contemporary change is that of strategy and, more specifically, the strategy process itself. Those in top management and their strategic planners and consultants are realising that today markets are too dynamic for the top to figure it all out. And even if they could, by the time their excellent strategy reaches the front lines, often everything has changed. In the words of leading strategist Gary Hamel, "the bottleneck is at the top of the bottle."
Most managers have grown accustomed to changing only in reaction to outside forces. This pervasiveness of a reactive rather than a pro-active stance is evident in the obsession with solving problems. Many still believe that management is indeed about problem-solving. The typical manager is supposedly paid for looking and acting like a walking garbage can, matching problems with solutions.
Another implication for management emerging from current phenomena is the transition from the standardised to the customised workplace. This new management paradigm appears to be better suited to accommodating an individual who has radically changed. This very notion of the customised workplaces even rules out the possibility of a management model.
This whole concept challenges the adequacy of the managerial innovations of the Eighties and Nineties, such as participative management, empowerment, total quality management and pay for performance.
Strategist Prahalad insists that we need to re-examine the notion of 'managing' itself and that the concepts and tools which have dominated our thinking about managing - power, structure, hierarchy, control, co-ordination, ownership, and incentives - should give their place to newer ones. In this context, he states that seniority, authority, and power have to give way to talent management - its acquisition, retention and motivation.
Leadership
Besides the notion of management, the very ideas about leadership that we have are being questioned. First of all, the old and perpetuated myth that leaders are born, not made. This leadership myth has inflicted a great deal of harm to the development of people and to slow the growth of companies.
Leadership is not a gene whose code can only be deciphered by a few lucky people. Leadership, on the contrary, can be learned and developed. There exist many good leaders around us who have the potential to run companies, schools, communities, political parties, and government.
In General Electric's value statement, the traits of GE leaders are described as follows: "Have a passion for excellence and hate bureaucracy; are open to ideas from anywhere; live quality, and drive cost and speed for competitive advantage; have the self-confidence to involve everyone; create a clear, simple, reality-based vision, and communicate it to all constituencies; have enormous energy, and the ability to energise others."
Leaders are also guided by their "inner compass" or personal values, pointing towards the correct direction according to the vision and goals to be achieved. They need to have a clear vision of the future, a vision which can be realised and in which each one has a specific role to play.
It's like putting together a jigsaw puzzle - it's much easier when you see the picture of the completed puzzle on the box top before starting to put the pieces in place.
Serving and supporting, rather than commanding and controlling, are the watchwords for the 21st century leaders.
Organisational structures
An organigram or an organisational chart represents an organisation's authority structure, roles, communication networks and decision-making processes. It also reflects, therefore, an organisation's management style and culture. It is to be expected, then, that developments in management would have a direct impact on changes in organisational designs and that differences between current trends and the traditional ones would become more evident.
On the other hand, the idea of having an organisational chart may become a temptation to solve all problems by simply modifying the organigram. The tendency still exists that the preferred approach for handling increased organisational complexity or new organisational dimensions is to add yet another box to the chart.
A retailer company, for example, had experienced tremendous problems with shoplifting. So management decided to appoint a head of security to solve that problem. As a result, more things disappeared because by making this a big issue for a selected few, the others stopped caring or feeling responsible.
Managers charged with developing better organisations should worry less about structure and more about capabilities. An organisation is not judged as a success by the number of levels, people, or systems, but more by the extent to which the organisation demonstrates critical capabilities.
In creating new organisational structures, there is a shift from vertical to horizontal structures based on work processes rather than departmental functions. Boundaries between departments are thereby reduced or eliminated.
Certain organisational designs create too many boundaries in their system: vertical ones which separate lower from higher level employees; horizontal ones to separate functions or units from each other; and external boundaries that separate a company from suppliers and customers.
While removing boundaries can make an organisation more efficient and faster, that is not advocating firms to move from hierarchy to anarchy. One can at least maintain elements of traditional structure but increase horizontal communication and collaboration across departments.
This can be accomplished through the use of project managers or teams who co-ordinate the work of several departments in relation to specific projects or programmes.
Nowadays, companies are breaking down traditional boundaries to create lean, adaptive and flexible organisations. Horizontal networks and inter-functional teams which cut across boundaries are taking their place alongside, and sometimes even replacing, functional, hierarchical organisational structures.
The trend is therefore to break down the bureaucracy and the pyramidal levels in the organisation to allow the flatter, network-driven organisation to emerge.
In other words, companies are today changing from the simple traditional sequential chain structure to that of an interconnected web. A chain implies a unidirectional exchange along a distinct flow, whereas a web suggests the interconnectedness and multidirectional, multilevel relationships which can lead to better and quicker innovations.
Jack Welch at General Electric characterises the hierarchical company as an organisation with its face toward the CEO and its rear end toward the customer!
The people factor
Whichever changes or trends one may predict, the 'people' factor will increasingly become the biggest challenge managers will face in this new century. People have to deal with people, both inside and outside an organisation. People create organisations, and people can destroy them.
In the words of author Subir Chowdhury, "the most valuable commodity in business is not technology or capital but people. The driving force behind a 21st century organisation will be its people." And Bob Haas, Levi Strauss chairman, says: "There are two essential things: the first is the value of people, and the second is the importance of values".
We need to depart completely from the tradition that people are to be treated as just another factor of production, as a human resource. Few people enjoy being treated as human resources, they want to be treated as individuals. And individuals are whole persons, rational and emotional, head and heart.
Dealing with individuals - employees, colleagues or customers - means also integrating the person's feelings and affective dimension. In their book Encouraging the Heart, Kouzes and Posner consider that encouraging the heart is the most important leadership practice because it is the most personal. Harmonious people make harmonious organisations and happy people perform better.
Management's attitude towards employees has to reflect their personal concern for them. In the traditional psychological contract, employees had to show loyalty and obedience in return for job security. In the new contract, empowered employees are responsible for the company's success and for their own development.
Treating people as individuals also means accepting individual differences. And treating people fairly may mean at times treating them differently.
Revisiting communication
Much has been written on communication and, needless to say, its fundamental importance is here to stay. The issue now is how to make it more effective by choosing and improving the appropriate medium without compromising the value of personal communication.
Both research and experience are showing that the credibility of the communicator is crucial for effectiveness. If people don't believe in the messenger, they won't believe the message. And at the core of personal credibility are one's personal values and beliefs.
Leaders and managers who have clear personal values and beliefs, and practise them, are found to be the most committed to the organisation's goals.
The new leader or manager will be the person, driven by core values, who builds trusting relationships through effective communication. To bring this about requires a change of mentality in ways of communicating. Many managers do not differentiate between the art of communication and its medium.
The Internet, for example, is only a medium and does not by itself guarantee effective communication. It does not communicate with people; people communicate with people. And, unlike computers, which can be reprogrammed, human beings are not wired for change.
We all agree that the Internet makes communication faster, yet it is estimated that 70 per cent of e-mail receivers do not respond immediately. Not every piece of e-mail is something you have to deal with. Not everybody in the world has the right to assign you work by sending you an e-mail or a fax.
While appreciating and using modern technology, we should not undermine the importance of personal relationships. E-mail and voice-mails are efficient, but face-to-face interaction is still essential to genuine communication. The positive vibes produced by human contact promote trust and bonding.
When asked about the impact of technology on their working lives, a group of executives argued that "IT had produced more misunderstandings than real-time human conversation" and added that "IT had caused work relationships to deteriorate." Quite a few managers are becoming less effective as a result of the volume of information available which is not relevant to their needs.
Customer relations
Deming's slogan found in many Canadian companies states: "You don't have to please the boss; you have to please the customer". "Interact with your customer" will increasingly be the catchword in the years to come. 21st century organisations will strive for customer enthusiasm - and not merely customer satisfaction - by providing services exceeding customers' expectations.
In their relations with customers, there are times when managers have to distinguish between what their clients want and what they really need. One may have to educate their needs and propose ways to help them fulfil those needs. As Sony's leader Akio Morita claims: "Our plan is to lead the public with new products rather than ask them what kinds of products they want. The public does not know what is possible, but we do".
Often, managers end up dealing with the same customers. An application of Pareto's 80/20 rule would be that 20 per cent of customers account for 80 per cent of business performance. These target customers become critical for a company to succeed and hence companies are investing their time and energy in focusing on these customers.
More attention is therefore given to establishing good connections with them. Some restaurants, for example, when hiring a new chef, invite target customers to interview possible candidates and sample their cuisine. For the same purpose, other firms include customers in staffing, training, compensation and claims.
If our local companies want to keep abreast with the fast pace of change taking place, they need to become more innovative and entrepreneurial both in developing new systems and in updating their people skills.