jump to navigation

Fundamental Flaws In Management Education September 6, 2009

Posted by Bruce Temkin in 6 New Management Imperatives, Executive leadership.
Tags:
2 comments

I recently read an OUTSTANDING article from 2005 called Bad Management Theories Are Destroying Good Management Practices that provides an excellent analysis about problems with management education. The article was written by Sumantra Ghoshal who was a leading business academic.

This excerpt highlights Ghoshal’s indictment of management education:

Since morality, or ethics, is inseparable from human intentionality, a precondition for making business studies a science has been the denial of any moral or ethical considerations in our theories … By propagating ideologically inspired amoral theories, business schools have actively freed their students from any sense of moral responsibility.

Given the academic nature of the paper, I’m afraid that most people won’t take the time to read through it. So I’m summarizing three underlying assumptions that Ghoshal argues (and I agree) are broken:

  • Management as a social science. Unlike theories in physical science, theories in social science tend to be self-fulfilling. A management theory that catches hold, therefore, can change the behavior of managers who act in accordance with that theory. As Ghoshal states, “the “scientific” approach of trying to discover patterns and laws have replaced all notion of human intentionality with a firm belief in causal determinism for explaining all aspects of corporate performance.” In other words, the belief that management is a social science has removed any humanistic traits (like corporate culture) from the equation about what drives corporate performance.
  • Agency theory. Mainstream economics works on the assumption of Homo Economicus, a model of people as rational self-interest maximizers. So “agency theory” informs management that employees can’t be trusted to act on behalf of the firm and, therefore, controls must be put in place to align their efforts. But this assumption doesn’t fully describe human motivation, especially when you look at things like mothers taking care of their children, people leaving a tip at a restaurant where they are unlikely to return, or Peace Corps volunteers. Even research like the ultimatum game (see below) shows that human beings are not driven by just maximizing their own self-interest.
    • “Ultimatum game” research: Two people are told that they can receive a sum of money if they agree on how to split it. One person makes a single proposal to the second person about how to split the money. If the second person accepts the offer, then they keep the money. If the second person rejects the offer, than neither of them gets any money. While the first person could expect about any offer to be accepted, most people offer close to 50% of the money.
  • Optimizing shareholder value. Management focus has been driven by economists like Milton Friedman who argued that corporate officials have only one social responsibility: making as much money as possible for their shareholders. But the value that a company creates comes from a combination of resources contributed by different constituencies. In most cases, the contribution of knowledge and skills of employees is more important to the success of the company than the contribution of capital by shareholders. And since most shareholders can sell their shares easier than employees can find new jobs, they are actually taking on less risk. So it does not make sense to maximize the returns on only one of those resources, especially the shareholders’ financial capital.

Even Jack Welch recently said: “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy.”

So it’s clearly time to reinvent management thinking. How? Take a look at my free eBook: The 6 New Management Imperatives: Leadership Skills For A Radically Changed Business Environment.

The bottom line: It’s time to purge practices built on bad theories

Execs Need To Focus More On Culture May 4, 2009

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Customer-centric DNA.
Tags: , , , ,
2 comments

Here’s an excerpt from Bruce Nussbaum’s recent blog post on BusinessWeek called Chrysler, Culture and Cerberus:

The Obama Administration’s lead car guy, Steven Rattner, is a Wall Street investment banker who lives by numbers and it makes sense to him to basically give Chrysler to Fiat to save American jobs. But neither he, nor Nardelli nor President Obama understand that cars and car organizations are all about culture, not numbers.

In the post, Bruce poses the question of whether it’s more important to manage a business by the numbers or to manage the culture. Great question!

My take: I wrote a post about Bob Nardelli’s reign at Home Depot called Home Depot Still Has A Spark Of Customer Centricity which was a follow-on to a post that looked at how Frank Blake (who replaced Nardelli) was trying to rebuild Home Depot’s customer-centric culture. These represent a case study about the potential downfall of  ”numbers-driven” management style.

Here’s the comment that I left on the BusinessWeek blog:

The problem is that you need to manage both; culture and numbers. Over the last few decades, however, executives have overdosed on the numbers. So it leads to situations where leaders like Nardelli sap the soul out of Home Depot because they don’t understand culture.

Times have changed, but management has not kept up. That’s why I wrote a mini book called “The 6 New Management Imperatives: Leadership Skills For A Radically Changed Business Environment.” The first imperative is: “Invest in culture as a corporate asset.”

The bottom line: Culture is an undermanaged asset.

Free Book: The 6 New Management Imperatives February 20, 2009

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership.
Tags:
14 comments

Download this free book- The 6 New Management Imperatives

A few months ago I introduced the 6 New Management Imperatives. Since then, I’ve written posts for each of the six imperatives.

As with my 6 Laws Of Customer Experience, I decided to pull the content together in a mini book. It’s called “The 6 New Management Imperatives: Leadership Skills For A Radically Changed Business Environment (.pdf).”

Since it’s not a novel (only 16 pages), I’m giving it away for free. Just click on the cover and print it out or save it to your computer.

Go ahead and share this book(let) with as many people as you’d like!

The bottom line: Hopefully this book is worth more than it’s price.

Management Imperative #6: Practice Good Social Citizenship February 10, 2009

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership.
Tags: , ,
7 comments

Management Imperative #6

In a world where companies can control information leaks and quickly hide their mistakes, there’s little need to worry about public relations gaffs like exploiting underage workers in developing nations, dumping pollutants in remote settings, or overselling mortgages to needy home buyers. But we don’t live in that world anymore.

The Internet has created an enormous spotlight that quickly shines on any corporate malfeasance. Whether it’s the uproar of a community of bloggers or an embarrassing video posted on YouTube, corporate executives can expect large numbers of people to learn about their mistakes.

In this environment, where the cost of problems has dramatically increased, companies need to step up their commitment to corporate social responsibility, which is nicely described in Wikipedia:

Organizations consider the interests of society by taking responsibility for the impact of their activities on customers, suppliers, employees, shareholders, communities and other stakeholders, as well as the environment.

Here are some areas in which executives can practice good social citizenship:

  • Have a clear social mission. The commitment to good social citizenship needs to be integrated in the firm’s overall mission. Tesco, for instance, incorporates it’s commitment to the community as a core component of its overall strategy steering wheel. Here’s an excerpt from it’s Website: Our commitments under the Community segment of the Steering Wheel are to be fair, responsible and honest in everything we do and to be a good neighbour.
  • Engage employees in community efforts. Don’t view social citizenship as just another top-down executive mandate. Instead, it should be used to engage employees. UMPQUA bank in Oregon, for instance, provides full-time employees with up to 40 hours per year –paid — to volunteer with youth and community development organizations and schools. The result: Employees feel good about working at UMPQUA. And engaging employees like this is a pre-requisite for engaging customers.
  • Be as green as you can be. When it comes to protecting our environment, we all can do a better job. But most shareholders look for companies to deliver ROI, not go green. So executives need to find investments that are both good for the environment and good for their bottom lines. To balance these elements, execs can adjust their funding requirements for “environmentally friendly” projects by factoring in the cost of good/bad press and allowing a longer payback period.
  • Make socially-conscious decisions. How can executives incorporate the right concern for social citizenship in their decision making? Assume there aren’t any secrets. Don’t make any decision that would hurt the company (or your career) if the press, employees, partners, or shareholders happened to find out about it. They will.

The bottom line: Make your organization socially proud; it’s good business.

P.S. Here’s a link to all 6 New Management Imperatives

Management Imperative #5: Extend And Enhance The Digital Fabric January 14, 2009

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership.
3 comments

 Management Imperative #5- Extend and enhance the digital fabric

According to Forrester’s Technographics® survey, 76% of US adults have access to the Internet and the number of US households with Broadband access has grown from 21 million in 2003 to 72 million in 2008.

Over the last 10 years, there’s been enormous advances in information technology (IT). Yet, most organizations are not taking full advantage of their IT opportunities. Why not? Because it’s difficult to change old processes, break through outdated thinking, and overcome parochialism.

But it’s time for executives to commit to digitizing their businesses. The advancements in IT, both in improved capabilities and lowered costs, makes a compelling argument for significant investment. What other investments do firms have that can offload customer service to self-service, automate people-intensive processes, enable faster shifts to market changes, and allow the creation of more valuable offerings for customers?

Here are some things for executives to keep in mind as they extend their firms’ digital fabric:

  • Understand digital economics. The only way to justify the right level of investment in IT is to understand its ROI. So execs should get their finance teams to create models that quantify the value to the firm for lowered costs, increased flexibility, and enhanced customer satisfaction from IT investments. This insight will help justify potentially dramatic increases in firms’ digital capabilities.
  • Assume increasing adoption. Whatever level of comfort with technology you see in your customers and employees today, expect it to increase radically in the future. Why? Digital technologies are becoming a more integral component in everyone’s lives AND the newer entrants into the customer and employee pool tend to be Gen Yers, who are adept at using (and expect to use) all sorts of technology.
  • Improve usability, a lot. The increase in technology, particularly the Internet, will lead to many more digital interfaces. But companies will not get the benefit from these online activities if customers and employees can’t use the technology. When I examined results from Forrester’s usability testing of more than 1,000 Web sites, only 3% passed. So usability is a problem. As a result, executives should plan to increase their focus on, and investment in, usability.
  • Connect online with offline. The economics of online activities are compelling, but not everything can be (or should be) done online. That’s why companies will need to design experiences that tie together online and offline activities. This might mean collaborative browsing with call center agents for service or creating products that integrate online features like Webkinz, Kindle, and T-Mobile’s Family Allowances.

The bottom line: IT is not a function, it’s an enabler for the entire business.

P.S. Here’s a link to all 6 New Management Imperatives

Management Imperative #4: Provide A Clear And Compelling Purpose December 9, 2008

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience.
Tags:
3 comments

Managamet Imperative #4- Provide a clear and compelling purpose

Just about every large organization has vision and mission statements floating around their hallways. But when it comes to making decisions on a day-to-day basis, these documents are nowhere to be found. They play NO ROLE in how the company is actually run.

Instead, firms make decisions based on individual goals and objectives, a handful of hard metrics, and by finding compromises across conflicting executive agendas. And that’s the best case. Often times decisions aren’t coordinated at all.

That’s why organizations need to (re)introduce a clear purpose for their organization that is more compelling than just more profits; a raison d’être that aligns the myriad of day-to-day decisions of all employees. According to Herb Kelleher, founder of Southwest Airlines:

If you create an environment where the people truly participate, you don’t need control. They know what needs to be done and they do it. And the more that people will devote themselves to your cause on a voluntary basis, a willing basis, the fewer hierarchies and control mechanisms you need.

Here are some ways for executives to provide a clear and compelling purpose:

  • Rediscover your brand. At some point in time in a company’s history, its brand was likely synonymous with its core mission. Over time, though, brands are delegated to corporate marketing departments where they get translated into color palettes and advertising campaigns. Executive teams need to redefine the meaning of their company’s brands; reconnecting it with the overall mission of the company.
  • Look for alignment. While shareholders want growth and profits, these objectives aren’t compelling enough to align decisions. So executives must clearly define what makes their company special from the standpoint of customers and employees. Ask yourself: What criteria do we want employees using when they make decisions?
  • Market to employees. Firms shouldn’t just assume that employees understand what’s important to the company. They need to maintain internal marketing campaigns to get the message out. Execs should develop plans for touching all employees, from recruiting materials to new hire training to ongoing communications.
  • Make decisions purposefully. Employees can tell what’s really important by looking at what executives say and the decisions they make. So execs need to make sure that they act consistently with what they say is important. Remember, you can’t fake it.

The bottom line: Without a compelling purpose, employees make a myriad of unaligned decisions.

P.S. Here’s a link to all 6 New Management Imperatives

Management Imperative #3: Turn Innovation Into A Continuous Process November 14, 2008

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership, Innovation.
4 comments

As described in management imperative #2, companies operate in an increasingly dynamic environment driven by shifting consumer needs, intense competition, and new enabling capabilities. The result: faster obsolescence of offerings, processes, and business models. To maintain value in these fast-pace conditions, firms needs to accelerate their pace of innovation. Why is innovation so important?

Innovation distinguishes between a leader and a follower. 
     – Steve Jobs

Never before in history has innovation offered promise of so much to so many in so short a time.
     – Bill Gates

But isolated innovation projects aren’t good enough. Large initiatives take too long, can’t respond to market shifts, and don’t provide enough options for an unknown future. Instead of thinking about innovation as a function of an R&D department, companies need to cultivate innovation as an underlying activity across their entire organization.

Here are some ways that execs can turn innovation into a continuous process:

  • Make obsolescence a goal. Don’t wait for other companies to displace your products and services; do it yourself. So establish clear goals for replacing existing revenue or profit; something like “30% of revenue needs to come from products introduced in the previous 2 years.” Don’t just have overall corporate goals, translate it into specific goals for each organization.
  • Reward some failures. One of the 6 laws of customer experience is that employees do what is measured, incented, and celebrated.  So companies need to measure, incent, and celebrate behaviors that lead to innovation. Since innovations require trial-and-error, people need to be rewarded taking chances, and in many cases, failing.
  • Allot time for innovation. You can’t just “expect” innovation to happen. Create specific processes for innovation, so that it doesn’t get buried in the day-to-day activities. Apple, for instance, holds 2 meetings each week throughout their development processes: one for unconstrained brainstorming and the other for production details.
  • Uncover customer needs. The best source for innovations often come from customers’ needs. But don’t expect customers to be able to clearly articulate their requirements, many great opportunities come from meeting customers’ latent needs. After ethnographers helped uncover unmet needs of men who view garages as their personal domain, Whirlpool developed its successful Gladiator Garageworks product line.
  • Integrate customer communities. Rather than just looking to customers for initial requirements, companies should create an ongoing dialogue with customers; getting feedback all along the way from concept to rollout. How? By using online communities. Mattel’s online community of moms with small kids, for instance, provides the toymaker with ongoing feedback from this key segment.
  • Seek out innovation partners. Many of the best innovations cut across the multiple organizations. So companies need to encourage cross-functional collaboration. But don’t stop there; engage your suppliers and partners into the innovation activities as well.
  • Manage an innovation pipeline. Innovation looks a bit different than other ongoing activities. The time to market can be longer and the success rates can be lower. That’s why companies need to track innovations across multiple stages of maturity. For example, P&G uses a 4 stage innovation process: 1) Search & Discover; 2) Select & Resource; 3) Design & Qualify; and 4) Launch & Leverage.

The bottom line: Innovation is too important to leave to chance.

P.S. Here’s a link to all 6 New Management Imperatives

6 Steps For The President To Revive “Brand USA” November 3, 2008

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership, Political inisghts.
Tags: , , ,
3 comments

I just read some comments from U2’s Bono about the importance of the upcoming US presidential election. Here’s the part that caught my eye:

The whole world has a stake in how things turn out. The way the U.S. is perceived — “Brand USA” — also means something. And it’s never been so closely watched… it’s a great chance to relaunch Brand USA

My take: Bono’s approach of framing the US challenges in terms of our “branding” makes a lot of sense. I like the idea of applying private sector thinking to the public sector. With that in mind, I’ve applied my 6 new management imperatives to the role of the US president. So here’s some advice for Barack Obama or John McCain in leading a revival of ”Brand USA:”

  1. Invest in culture as a corporate asset: The national debt, federal deficit, and stock market devaluation are indications of our country’s economic woes. But there’s a more fundamental indicator of the US situation: the deteriorating attitudes, values, and goals of the American people — our US culture. The new president needs to define and communicate a clear vision for America with the goal of instilling a sense of pride, hope, and optimism in the American people. An improved US culture will align the actions of US people with initiatives like cutting back on oil consumption and help propel a strong, vibrant recovery.
  2. Make listening an enterprisewide skill. The world is in flux. The economic downturn is not a US issue, it’s a global issue. Severe problems like AIDS, global warming, and Bird Flu transcend sovereign borders. One fact is clear, the US can not succeed by acting unilaterally. To flourish in this interlinked world, the president will need to establish better lines of communications with and facilitate better coordination across all of the key countries and regimes around the world. He’ll also need to look for ideas and insights across political lines.  The new president will need to embed listening throughout his administration as a foundation for formulating strategies and policies.
  3. Turn innovation into a continuous process. We can’t keep going down the same path on critical issues like health-care, national security, energy, and the environment and expect to wind up with different, better results. Let’s face it, no legislative bill can fix these problems. What’s the answer? As Michael Porter has said: “Innovation is the central issue in economic prosperity.” So instead of pinning his hopes on big-bang solutions, the new president needs to create an environment (legislation and persuasion) that actively fosters coordinated and ongoing innovations in the private sector to improve these mega-issues.
  4. Provide a clear and compelling purpose. People need to know that the US stands for good, positive virtues. Why? So Americans will feel more connected (and committed to actualizing those virtues) and people in other countries won’t continue to think of the US as a big bully. So the next president needs to clearly define and articulate an inspiring vision for the country. Think about how much clarity the Ritz-Carlton credo provides for its customers, partners, and employees:
    “The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission… The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.”
  5. Extend and enhance the digital fabric. Over the last 10 years, there’s been enormous advances in information technology (IT). Yet the US government, like many organizations, has not taken full advantage of IT opportunities. Why not? Because it’s difficult to change old processes, break through outdated thinking, and overcome parochialism. But the new president should aggressively take on these challenges and use IT to streamline governmental processes, coordinate information and analysis across departments, and dramatically increase Web self-service for citizens and government employees. The result: a lower-cost, more effective US government.
  6. Practice good social citizenship. As one of the most prosperous nations on earth, we need to make sure that we we take care of the needy in our country as well as helping those in less prosperous countries.  We also need to take a lead in fighting some of the world’s key problems like the global warming, world hunger, and AIDS. The new president should be a highly visible leader in attacking these problems. 

The bottom line: It’s up to the next president to make ”Brand USA” one of the most admired brands in the world.

Listen To The 6 New Management Imperatives November 3, 2008

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership.
Tags: ,
add a comment

As a follow-up to my posts about the 6 new management imperatives, I was interviewed by Jennifer Jones for her site Marketing Voices. I had laryngitis for three days before it was recorded. So if you don’t mind hearing my hoarse voice, here’s the podcast: 

The bottom line: It’s not quite Coldplay, but I hope that you enjoy it.

Management Imperative #2: Make Listening An Enterprisewide Skill October 27, 2008

Posted by Bruce Temkin in 6 New Management Imperatives, Customer experience, Executive leadership.
Tags: , ,
13 comments

Companies need to operate in environments that are more dynamic than ever before. What’s causing all of the changes?

  • Shifting consumer needs: Increasingly, Baby Boomers are getting closer to retirement while Gen Y are becoming a more important segment of customers and employees. The combination of these demographic shifts and the unique needs of both aging consumers and younger consumers creates a shifting set of demands on companies.
  • Increasing competition: Across most industries, competition is becoming brutal, thanks in part to the transparency and reach of the Internet which provides instant access to information and alternatives. Even historical monopolies and near monopolies like telephony, TV service providers, and banks are seeing more heated competition.
  • New capabilities: Technology is enabling new offerings and business models. For instance, Service-oriented architectures and business process management applications allow companies to make faster and broader changes to how they operate. At the same time, Web and mobile applications dramatically increase the opportunity for interacting with both larger and more targeted groups of people.

These changes generate an onslaught of new opportunities and threats that challenge firms’ drawn-out planning processes and hierarchical command-and-control structures. To succeed in this fast-paced environment, firms must master a new skill that I’m calling ”Enterprise Listening” which is defined as:

The continuous processing of feedback from key constituents

Here are some ways that executives can cultivate Enterprise Listening:

  • Listen in a variety of ways. Companies need to listen to customers in a lot of different ways. To start, execs should identify opportunities across these five areas: Relationship tracking, interaction monitoring, continuous listening, project infusion, and periodic immersion.
  • Listen by example. Senior executives can’t expect their organizations to care about listening if they don’t practice it on their own. That’s why senior execs need to actively listen themselves. The executive team at Alaska Airlines, for instance, takes turns calling back key customers who have had a service problem.
  • Listen to employees. In many cases, key insights about the market can come from front-line employees. So companies need to make it easy and rewarding for employees to share their insights. A key reason for Zara becoming the largest clothing retailer in the world is the insight that salespeople provide about shifting fashion demand. 
  • Listen for soft voices. Not all important insights come from volumes of customers or prospects. Sometimes, feedback from a few people represents an important emerging trend. So companies need to examine isolated responses with an open mind.
  • Listen to online communities. The Internet enables fast, dynamic interactions across groups of people. That’s why companies should develop online communities of their key constituents. Kraft, for instance, tapped into an online community to define and launch its successful South Beach Diet product line.
  • Actively encourage listening. To keep everyone across the company focused on listening to customers, get in the habit of talking about customer feedback. Execs should consider asking these three questions about any project: Who are the target customers? What are their goals? How are we helping them achieve those goals?

The bottom line: Enterprise Listening allows firms to embrace change.

P.S. Here’s a link to all 6 New Management Imperatives