Cover Story: Deconstructing Management Fads

It is in the dock. Accused of being nothing more than a fad, the body and the soul of management science--represented by the theories and the principles that corporations around the world have adopted in the race for competitiveness--is charged with crimes of omission and commission. With mala fide intent.

From reengineering to core competence, from benchmarking to total quality management, from total delivery cost to team-based manufacturing, all of them, thunder disillusioned CEOs and managers, academics and analysts, are equally guilty. Of delivering poor results. Of being imported and imposed. Of fattening their inventors' pockets. Of offering a one-size-fits-all solution. Of having no relevance to corporate India.

Of being fads. Transient. Insubstantial. Baubles. Or, examples of what the Oxford English Dictionary terms, "A craze. A peculiar notion. Or idiosyncrasy."

DEFADDING REENGINEERING

Fad effect: Ever since Michael Hammer and James Champy warned that "the alternative" to reengineering "is to go out of business," the principle of redesigning business processes from scratch, instead of tinkering with existing ones, has been accused of achieving little but one-off downsizing and cost-cutting.

Defad effect: The real benefit of reengineering comes from eliminating all activities that add no value. While infotech is often the enabling tool, merely automating processes is not its goal. Used to systematically weed out inefficiencies and regroup people around processes, reengineering yields continuous jumps in performance and can move a company to the top of the operational efficiency curve. Importantly, reengineering does not involve a one-off journey which can be abandoned once a process has been reworked. For, shifts in technology or competitors' strategies may immediately need business processes to be changed in order to meet different strategic needs.

Stentorian is the voice of the prosecution. According to Lex Donaldson, a professor of organisational design at the Australian Graduate School of Management, 15 major "new" ways of looking at organisational structure have been introduced since 1967; in effect, there has been a radical new wave in management every two years. Richard Tanner Pascale, in Managing On The Edge, accounts for 18 business fads in the Eighties alone. In their best-selling tome, The Witch Doctors, John Micklethwait and Adrian Wooldridge argue that most of management science is fuzzy, self-contradictory, unrigorous, obfuscatory--and aimed mainly at making consultancies and gurus richer.

Indeed, the anti-management wave is sweeping over business globally, with its crest being ridden by the unlikeliest guru of 'em all: Scott Adams, the creator of Dilbert, and management-basher laureate. Even Michael Hammer, the guru of reengineering, himself recently acknowledged: "There's more truth in one volume of Dilbert than in 10 volumes of Harvard Business School case studies."

For, this is the (mis)trial of the century. On the eve of the management millennium.

Many corporations, most CEOs, are using management ideas for quick, visible effects; not deep, long-term gains. As with fads, they're taking up management tools to stay in tune with today's trends--by replicating the surface of the activities they entail. The result, not surprisingly, is failure. Unless viewed, adopted, and used as a powerful body of learning, with well-defined methods and maxims, management theories can achieve little beyond conferring upon your company the satisfaction of being hip. Posits Arvind Nair, 42, the CEO of the Rs 107-crore Amtrex Appliances: "No concept is a fad. It depends on where you apply it. If you approach anything without integrity, it becomes a fad."

Part of the blame for the faddification of management must, of course, be laid squarely at the doors of the overhyped marketing of management principles, which has not only raised expectations to unrealistic levels, but has also forced a dilution of their complexities for the sake of packaging and easy assimilation. As Sunil Handa, 48, the CEO of the Rs 2.50-crore Core Emballage, puts it: "The basic principles of management are as effective today as they were decades ago. Consultants are putting some of these concepts into new clothes."

In their bid for business, management consultancy companies are furiously branding their ideas and tools to differentiate themselves--in the process over-simplifying them, and forcing them towards fad-dom. Agrees Harsh Goenka, 39, the chairman of the Rs 5,686-crore RPG Enterprises: "A management idea becomes a management product when someone decides to rebrand it by standardising it, and giving it a name to make it readily useable." The casualty, naturally, is the unique core of every idea, which could have been improvised upon by companies in search of unique solutions. Instead, a common minimum programme has emerged as the bedrock of many a principle. Argues J. Rajgopal, 42, CEO, Coopers & Lybrand: "A fad is, often, an effective idea, or concept unfortunately packaged into a large-scale application regardless of the context."

Indeed, this has created a thriving market for management ideas, where customers are no less enthusiastic than sellers for new theories and practices. "There is a lot of shouting on both sides. A lot of selling goes on by management consultants while companies are seeking new tools constantly," points out K.R.S. Murthy, 58, professor, Indian Institute of Management, Bangalore. Adds Xerxes Desai, 60, the CEO of the Rs 415-crore Titan Industries: "There is wisdom in listening to what the gurus have to say. At the same time, they're businessmen, and they are not going to be able to sell a million copies unless they present these ideas with a fresh perspective." And, in this fast-growing market, inducing product obsolescence is a classic marketing device. Complains Satish Kaura, 47, the CEO of the Rs 561-crore Samtel Group: "In recent times, as management consultants have aggressively propagated their favourite management tools, some of these have developed the aura of fads."

None of this, however, implies that serious management thought has been entirely subverted by transient faddishness. And companies that can cut through the hype and the marketing will be able to pin down the truth underlying the talk. For instance, as quality guru Philip B. Crosby, 72, points out: "Quality in a real world management sense means doing what you have agreed to do." Behind every label is an essentially simple idea that is timeless.

The most common criticism of management theory focuses on...its faddishness. Management theorists have a passion for permanent revolution that would have made Trotsky or Mao Ze Dong green with envy. Theorists are forever unveiling ideas, christened with some acronym and tarted up in scientific language, which are supposed to `guarantee competitive success.' A few months later, with the ideas tired out and `competitive success' still as illusory as ever, the theorists unveil some new idea...
The Witch Doctors, J. Micklethwait & A. Wooldridge

Management theories were not invented by out-of-work consultants or academicians seeking to prove they were better than practising managers. On the contrary, every broad issue, and the principles they engendered, has sprung from the empirical needs of business organisations.

Strategic Planning, for instance, was born in the 1960s, when the acquisition binge forced conglomerates to draw up consolidated plans covering all businesses. Likewise, when the churning of the 1970s created unstable marketplaces and threw up new market segments, theoreticians abstracted principles, like that of the Product Life-Cycle, from corporate attempts to cope with these changes.

In the 1980s, marked by the flattening out of developed markets and the compulsion for globalisation, former McKinsey & Co. consultants, and now management gurus, Tom Peters and Robert Waterman codified the new rules of Customer Focus in their seminal In Search Of Excellence, which was based on an empirical study of 43 top-performing companies. This led, in the face of the declining competitiveness of the US and the rise of Japan, to the articulation and adoption of the principles of TQM, imported from Japan by W. Edwards Deming and Joseph M. Juran.

Finally, the 1990s gave rise to the need for inventing all-new, cost-efficient ways of doing the old things--a.k.a. Michael Hammer and James Champy's principles of Reengineering. Simultaneously, the impossibility of competing successfully on multiple fronts was expressed in C.K. Prahalad and Gary Hamel's Theory Of Core Competence. Thus, born as they were in the labs of corporate activity, in response to real, contemporary problems--and not in musty, book-lined, all-wood studies--today's hottest management ideas actually have empirical origins.

Of course, as needs change, so do the theories of the day--which they must in order to retain their link with reality. As Shiv Nadar, 52, CEO, HCL Group, asks: "Being in an unstable business environment, when the rate of change is high, what kind of management concepts can you continue to subscribe to, and which ones should you drop?" But that doesn't negate the importance of the older practices; it merely signals their widespread acceptance. Feels Kito De Boer, 40, senior consultant, McKinsey & Co.: "One does not hear of many concepts any more. This does not mean they were fads. It's just that they've been absorbed by companies, and become part of the norm."

Do consider, for a pleasing minute, a world of business devoid of management theories and applications. Here, every problem demands complete ab initio analysis, from first principles. Not for the CEO or his managers is the luxury of drawing on an established body of thought or ideas. Meticulously re-inventing the wheel each time, they painstakingly arrive at solutions--and then, apply them without knowing what to expect. The point hardly needs to be laboured: no organisation can be managed without principles abstracted from experience, without rules that enable managers to learn from a knowledge bank.

Conduct, therefore, a swift audit of just what it is that management theories and techniques enable you, and your managers, to achieve. First, and most important, they allow a learning process to be grafted onto the activities of doing business, so that the lessons from past successes and failures can be remembered, and applied when similar situations arise. The automatic corollary: they allow this learning to be shared. Thus, no manager is limited only by the extent of his or her own experience and knowledge, but can draw on the lessons that other companies around the world have extracted from their own and their competitors' business activities. In other words, it is management theory that deciphers patterns in the chaos and serves them up to the practitioner, protecting him or her from having to operate by the seat-of-their-pants every time.

Second, with the learning from the past comes a new way of looking at the future. Of not falling victim to the inertia of continuing with old practices, and acquiring a new filter, a new lens, through which to examine possibilities and chalk out strategies. Had it not been for the theory of core competence, for instance, would corporations have understood how to systematically search out the white spaces between existing customer needs to identify, and meet, needs not yet articulated? To be sure, a few companies, a few CEOs, may have done just that--but without the theory that understood and expressed the process, it would not have been available to others. If, nevertheless, this learning is not teaching everyone to be a better manager, or every organisation to be a better corporation, just where does the fault lie?

DEFADDING TQM

Fad effect: Precisely because it disturbs the status quo, total quality management--whose complexity often forces mid-course abandonment--has been reviled as an idiosyncrasy foisted on companies by managers desperately mining global practices for the latest tools and techniques.

Defad effect: Despite being replete with measurement systems and techniques that seem to complicate, rather than simplify, processes, TQM holds out major benefits in terms of lower costs, higher customer satisfaction, greater marketshares, and, ultimately, more profits. But its fundamental principle--that the company must give the customer what she wants, on a sustained basis--must be followed unwaveringly. Companies that believe in the quality movement do not use it to appease angry directors or boost their stock prices, which is the classic trap that many management ideas fall victim to. Instead, these companies leverage TQM to build processes and systems that eliminate the very possibility of mistakes and defects. That prevents the principle from degenerating into a here-today-gone-tomorrow fad.