UK: Managing revolution - Managers must abandon e-inertia - The technology that too many directors dodge can ...

UK: Managing revolution - Managers must abandon e-inertia - The technology that too many directors dodge can ... - Managing revolution - Managers must abandon e-inertia - The technology that too many directors dodge can open the door to new ways of manag

by ROBERT HELLER, who was founding editor of Management Today.
Last Updated: 31 Aug 2010

Managing revolution - Managers must abandon e-inertia - The technology that too many directors dodge can open the door to new ways of managing businesses and the business system itself.

First, the good news: most UK directors think that their businesses need to sell online. According to a recent Cisco/Oracle survey, this enlightened majority comes to 60% (which raises the interesting question of what the other third think, if anything). But hosannas must wait. Half the respondents have never been briefed on their company's information technology and, worse, most have no intention of ever being briefed.

Evidently, 'Management by inertia' still thrives. The syndrome follows an age-old pattern. Most managers are aware that change is afoot. But a great gulf exists between awareness and action. And those who don't act might as well be unaware.

Alas, the unaware also influence actions: a third of UK directors blithely participate in IT decisions without (literally) knowing what they are talking about.

Small wonder that the decisions are so often wrong. This managerial inertia is not confined to the directors in the survey. To judge by my own recent explorations, Britain's owner-managers usually share a general ignorance about the net. They are also averse to any planning that might project their businesses into a brighter - and richer - future.

The key word is 'richer'. Bizarrely, these people contradict the governing assumption of capitalist economics - that the lure of greater wealth will stimulate its owners and controllers into actions that will increase the lucre. Stock options embody this justification, although in practice, as Warren Buffett points out, they are generally issued on such favourable terms that managers need scarcely stir a mental muscle to cash in.

Rigorous and vigorous action is disturbing by its very nature. If inertia is more comfortable than action, managers will be inert. Directors of companies such as Marks & Spencer, all intelligent and experienced people, watch internal and external evidence signalling decline. Yet they abide by misplaced confidence that the old business model, oiled here and there, with the odd part replaced, will carry them on to renewed success.

When dreadful events make it clear that the old model needs a new engine, if not a total remake, the company flounders around, axing suppliers here, unveiling saucy underwear there, and flying kites about closing HQ etc. M&S actually appointed a 'director of change', Neil McCausland - although, unless all other executives are change-managers, that job is impossible.

McCausland has lived up to his title, moving to C&A where, as UK managing director, he has more hope of overcoming the 'forces of conservatism'.

His new employer, too, must face up to the challenge of the net. This challenge goes far beyond getting your fair share of web traffic - a figure that is expected to rise from a minuscule 3.46% of UK corporate sales to a minute 6.02% in two years.

The opportunities are far greater: they are global. The leaders of the internet revolution, such as America Online or Amazon, have created a worldwide presence in a ridiculously short time. Somebody, somewhere, will emerge as the Amazon of global clothes retailing. Will it be M&S? Even the question seems laughable.

But life is stirring in the British corporate undergrowth. In a more encouraging example, Halifax has not only set up its telephone and internet operation as Greenfield Co, but has poached a raft of outsiders from Standard Life Bank to lead this wholly owned start-up. Trying to start a major web operation within the existing organisation is probably doomed to failure.

In the conflict of interest between managers in the comfort zone of inertia and those seeking to disturb that comfort, the latter will lose. The former will fatally resist cannibalising their own products and services (anathema to old right-thinking managers). For new internet-age right-thinkers, though, cannibalisation is a virility symbol.

Halifax's core business in mortgages and savings will go, or rather grow, nowhere. At the price of some cannibalisation of the conventional business, the unconventional web can facilitate the resurgence of growth, by opening formerly inaccessible geographical markets and attracting new kinds of customer.

E-inertia is doubly or trebly senseless. The technology that too many directors dodge opens the door to whole new ways of managing businesses and the business system. Purchasing costs, for example, come tumbling down.

Group working is wondrously facilitated. Customer enquiries are more efficiently handled. Supplier and customer links are streamlined. Top management can achieve greater control with less interference, and so on - and that's by no means all.

Why do British managers continue to spurn these goodies? More encouragingly, the Oracle/ Cisco survey found French and German directors lagging even further behind their British counterparts: a quarter of them base their decisions on 'poor or bad-quality information' against Britain's 8%. This gives UK companies a window of competitive opportunity - if they abandon 'management by inertia'.

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