|
|
 |
 |
 |
| Tuesday, 17 August 2004 |
 |
|
 |
Business | |
| News Business Features Editorial Security Politics World Letters Sports Obituaries
|
Challenges to Contemporary Management by Prasanna Perera, Management and Marketing Consultant, Chartered Marketer CIM UK Management as a discipline has evolved through the years. From Frederick Taylor to Henry Fayol and to the contemporaries such as Peter Drucker, Tom Peters and Michael Hammer. This brief article will address the challenges faced by modern management, specially in a very uncertain and complex global environment. Challenge No. 1 - Customers In the last 30 years, the customer has been spoken about, more than any other aspect of Management. Management rightly located the heart of the customer at the heart of the business universe. Being customer focused in the right markets and with the right delivery system, lead to a virtuous circle that was hard to crack. Many businesses face the dilemma of whether to serve customers or investors. Naturally, investors are interested in short term financial returns, whilst customers are interested in businesses that can create and recreate value on a continuous basis. The pressure for investment performance should not take away the focus of serving customers, but should rather be considered as a complementary force, towards customer satisfaction. The question to be asked is whether the activities of the large corporations add value to customers. If they are not, the consequences can be dangerous in the medium-to-long term. Privatisation is a step taken to reduce non-customer value creating activities, by jettisoning large amounts of excess overhead and management, to the eventual benefit of customers. The need to be customer focused is understood by many corporations, but the practised reality leaves much to be desired. This comes from not defining the business, not identifying the right customers and the delivery mechanisms. Further burdens of traditional controls such as accounting and rigid hierarchies, coupled with vested management interest, have added to the problem. Make no mistake about it, the customer revolution is with us and there to stay. The trends are clear, as are the ultimate consequences. Challenge No. 2 - Information Many of us are familiar with the slogan "Information is power Information is wealth". This is indeed true given the information revolution and allied developments in the power of technology. Initially IT added to corporate costs, because management used it to replicate the bureaucracy. However management realised that well distributed information technology is capable of doing a major portion of what Managers performed and also could perform it much speedily and also effectively. The reengineering gurus namely, Hammer and Champy, provided numerous examples of the effective use of IT for superior business performances. In many instances IT has challenged the need for middle management by providing accurate information from operational levels. The need for the traditional management hierarchy can suddenly be destroyed by the enormous power of IT. Modern day technology, has resulted in physical decentralisation of business and even entire industries. The symbol of organisational power such as corporate headquarters, large board rooms and state-of-the-art reception areas have been weakened, since with advanced technology non of these are required in the same measures, as in the past. Technology has also enabled to create linkages between organisations. The best example would be outsourcing, where other organisations are used to perform certain functions, which were previously performed in-house. This outstanding trend has resulted in major cost efficiencies, specially in management resources. It is important to note that IT should be applied in a creative manner. Many large organisations have become more agile and smarter due to IT related initiatives. Further, these organisations have realised that the need for large numbers of Managers to exercise control is not required, since IT provides real-time control ability. The bottom line is that organisations can get rid of the excessive fat and thus become leaner, agile and effective. (Specially in delighting customers and retaining them). Challenge no 3. - Simplicity "Keep it simple" is a slogan that many large conglomerates would do well to remember and practise. Many organisations add to their own misery, by unnecessarily complicating everything. Simplicity results in a more focused business. Take for example Walt Disney. Disney's philosophy was based on an undivided focus of making people happy, through the magic world of Disneyland. Michael Dell's focus was on providing superior value to customers, by pioneering "Dell Direct". Rationalisation of products, markets and businesses, usually leads to higher profits through lower overheads. In order to rationalise, simplicity is important. "More the merrier" should be substituted with "simple the better" in all aspects of management. The greatest benefit of simplicity is the development of a homogeneous and powerful organisation culture. However, for simplicity to prevail, a corporate mindset supporting same is required. Management must encourage simplicity across the width and breath of the organisation. Challenge number 4 - Leadership Leaders of modern organisations are required to run same, without the excess baggage as enjoyed by their predecessors. Basically, minimum management infrastructure. The new generation of corporate chiefs, appreciate that bureaucratic practices are a real hindrance to their performance. Take for example persons like Jack Welsh of GE, or Bill Gates of Microsoft, Richard Branson of Virgin and Michael Dell. These personalities exert pressure on the destinies of their charges, without appearing to do so. These new corporate chiefs, utilise leadership techniques optimally without utilising the hierarchy in the traditional way. Most of them have charisma, industry and market knowledge and a firm belief in their personal abilities. The present crop of leaders are more than willing to challenge traditional management theories and practices. For example, in most instances they are natural troublemakers, and ruthless profit seekers. They exploit their position as the leader boss, to wake up and shake up their organisations. The stated challenges would potentially reinforce each other. If this is realised, major competitive advantages can be achieved. Corporate success, belongs to organisations that practise innovative management coupled with a clear strategic focus and dynamic leadership. The models for creating the organisations of the future are still being developed. Hopefully these models will free organisations from management excesses and typical bureaucracy. |
|
News | Business | Features
| Editorial | Security
Produced by Lake House |
