How should you cope with the constant demand for change?

Michael Skapinker on the answers provided by leading management thinkers

How many management the­ories have altered the way we work? Our shelves sag under the weight of busi­ness books straining to make a novel point in an overcrowded market. But these works come and go without changing anything.

We could construct a short list of people who made a real difference. Frederick Winslow Taylor, inven­tor, tennis champion and all-round eccentric, made huge_, changes to the way people worked, breaking down their tasks and timing each component part with a stopwatch: By turning work into a measurable activity, he created the notion of management as a science. Henry Ford, who developed the assembly line, was another workplace revolutionary.

There are others too: Alfred Sloan, creator of the divisionalised corporation; Elton Mayo, for his experiments on employee motiva­tion; the "human relations school", including Douglas McGregor, Abra­ham Maslow and Frederick Herz­berg; and W. Edwards Deming, the American prophet of quality, much honoured in Japan but only belat­edly in his own country.

Everyone with an interest in the subject could nominate their own favourites, such as Peter Drucker, along with the failures, such as business process re-engineering. But while the influence of these management giants is still with us, they belong to the past. Living, as we believe, in an era of unprece­dented change, we should be able to come up with some management theories for our own time.

Which is why Michael Beer and Nitin Nohria, two Harvard Busi­ness School professors, gathered the brightest of their generation of academics, consultants and chief executives to a conference, to attempt to come up with some management theories for the new millennium.

The result of their conference is this long book, published two years later, in which the delegates debate what they see as the central man­agement question of our age: how to deal with the constant demand for change.

The book has all the merits and disadvantages of a conference. There are some prominent names from the academic world: Warren Bennis, Sumantra Ghoshal, Christopher Bartlett and Chris Argyris. Some of the presentations are stimulating; others are soporific. In the end, by Beer and Nohria's own account, they fail to achieve their objective. They give us much to think about but they admit that they still have not answered the question: how do successful companies change?

Beer and Nohria begin with their own two views of management: they call them Theory E and The­ory 0. Theory E companies believe their purpose is to create share­holder value. They believe that change should be driven from the top and chief executives should not worry too much about what the workers think. Theory 0 companies, on the other hand, believe in the development of the organisation's human potential. Rather than driving change from the top, Theory 0 companies believe in winning the involvement of all their employees.

Haven't we heard this before? Yes. Beer and Nohria admit that Theory E and Theory 0 bear a strong resemblance to Douglas McGregor's Theory X and Theory Y. The question of whether compa­nies should be run for the sake of profit and in the shareholders' interest alone, or whether other groups, such as employees, should be considered, is an old one. Today the debate is often cast as one of

shareholders versus stakeholders.

The arguments for each side have become familiar too. The advocates of shareholder value, or Theory E, say it has the virtue of being measurable: chief executives either have increased shareholder value or they have not. Theory 0 partisans say that companies that concentrate on shareholder value alone destroy the long-term future of their organisations. To succeed, companies need the support of all their constituencies: shareholders, employees, customers, suppliers and the local community. So which is best?

As the contributors acknowledge, it is seldom as clear-cut as that. Management is in practice a mixture. Bennis recalls an old New Yorker cartoon in which Charles Dickens is told by his stern editor: "Well, Mr Dickens, it's either the best of times or the worst of times. It can't be both."

. However, financial markets are increasingly driving managers towards Theory E. Shareholder value is king in the US and its influence is increasingly being felt in Asia and continental Europe.

Under pressure to cut costs, com­panies are moving their manufac­turing to countries where wages are lower and employee rights fewer. But they then find that The­ory 0 is not easily ignored. When it comes to knowing what the com­pany should be doing, it is those unregarded employees who deal directly with the customer who know where the company is falling down. The wider community can­not be easily brushed aside either; activists are quick to protest against companies' environmental damage or the use of sweatshop labour.

So what are companies to do? Sometimes, when the organisation is facing a financial crisis, there is no alternative to Theory E. Staff have to be made redundant and factories have to close. But if the organisation returns to financial health, the employees who remain behind, often resentful and fright­ened, have to be persuaded that it is worth giving their all more. Companies may need to change chief executives because the leader who wielded the axe may be too disliked to win any commitment.

Jack Welch of General Electric is, as so often, an exception. He was able to move from his "Neu­tron Jack" period of heavy lay-offs to building a committed organisation.

There is much thought-provoking material in this book, from whether and how to use management consultants to the psychological barriers to change. That it is largely familiar ground is not really a problem: we still do not have the answers. But this book is evidence that, while we may live in a new economy, we have no new grand theories to go with it.

 

Breaking the Code of Change, edited by Michael Beer and Nitin Nohria, Harvard Business School Press

Financial Times

Assignments

I. Sum up the contents of the above article in Russian paying special attention to the so-

Called Theory E and Theory O; speak on the interrelation between them.

II. Interpret the following article in English using your active vocabulary and suggestions

given below:

to part with; to dispose of; to sleep through; obsolete; precondition; the appeal; to turn a blind eye to; in one dimension; to stand the test; to run to any length; labour intensive; to outperform; to take the lead; one-size-fits-all management techniques; notorious.

 

Современные технологии управления:

Тенденции и перспективы

«Трудность управления царством не в том, чтобы

самому быть умным, а в том, чтобы находить умных

и опираться на них».

Ле Дзы, 200 лет до н. э.

Чему учит история?

Изучение истории развития рынка показывает, что очень часто будущее наступает раньше, чем менеджеры пожелают расстаться с настоящим. И тогда владельцам компаний приходится срочно расставаться со своими иллюзиями, а также с менеджерами, которые прозевали рыночные перемены.

Лозунг – «Наша цель – прибыль» давно устарел. Прибыль - не цель, а лишь одно из возможных условий существования фирмы на рынке (важна не столько прибыль, сколько методы её получения). Другое возможное условие – привлекательность того, что делает фирма, для инвесторов. Тогда можно, до поры до времени, не обращать внимания на прибыльность и «раскручиваться» за счёт внешних инвестиций.

Другой лозунг «Персонал – наша главная ценность» однобоко рассматривает рыночную ситуацию. Что толку от ваших прекрасных специалистов, если клиентов мало и доходы не растут? Такие лозунги как «Клиент – король», «Клиент всегда прав» и т. п. тоже не выдержали испытания рынком. «Расстилаясь» перед клиентом, мы повышаем трудоёмкость и снижаем темпы собственного развития. Конкуренты при этом просто обходят нас на повороте.