UK: THE MANAGER'S DILEMMA. - Managers of the next decade will have to concentrate on unleashing potential all around them and all the way down, says Robert Heller. If they don't, they will find their companies drowning in the competitive tide.

Last Updated: 31 Aug 2010

Managers of the next decade will have to concentrate on unleashing potential all around them and all the way down, says Robert Heller. If they don't, they will find their companies drowning in the competitive tide.

Everybody knows about the manager of the future. Every guru has been painting much the same portrait for years. Whether the path to the vision leads through quality, or business process re-engineering, or modern manufacturing, or the search for competitive advantage, or leadership, or anything else, the final picture remains the same: an undeniable formula for 21st century success.

Manager 2000 will practise co-operation and collaboration with everybody, inside and outside the firm, from colleagues and subordinates to customers and suppliers. He/she will be a tolerant teamworker, tolerant of different and new ideas, forgiving of errors made in the cause of progress, putting the objects of the team above the ambitions of the person. The environment will encourage this by devolution of power and delegation of duties - right down to the empowered, self-managing worker near the top of the inverted pyramid.

The inversion of the traditional hierarchy places top management at the base, and the customer at the summit. For the management process will be geared to the non-stop search for competitive advantage, which in turn is dedicated to providing the customer with the best in quality and service. That's the vision. It's everybody's ideal, and eminently practicable: but hardly anybody is doing it - yet.

My argument is that, as the next decade develops, managements will either adopt their own versions of this mode, or their organisations will drown in the competitive tide. There's a powerful analogy. In 1990, I published a book called Culture Shock, which pointed out that developments in information technology, especially those revolving round the networked personal computer, were going to change management processes radically.

Like the tools and techniques of the management revolution described above, the IT revolution wasn't state-of-the-art: it was already off-the-shelf. I soon found that the reactionaries far outnumbered the revolutionaries. That may still be true: all the same, the networks are proliferating at an unstoppable pace. By early next century much better information will be available much faster - and shared much more widely.

IT is the enabling mechanism of the managerial vision. But plainly the doomed resistance, both to the computer and to the new management modes, has deep roots. Most managers have not yet come to terms with fundamental change in their worlds. The horizontal principle is displacing the vertical in everything, from organisation structure to markets themselves. The outcomes of business processes are becoming all-important, while procedures and rituals are receding into the past. Innovation, like quality, has moved from the realms of lip-service into those of necessity.

That must have profound effects on the allocation of the power and the glory. I once wrote that power, like hot air (and often accompanied by it), rises to the top. The general attitude of the powerful is to approve heartily: but that's lately been tempered by much talk of 'empowerment' of those lower down.That only perpetuates the fallacy. Empowered people aren't being 'given' power that doesn't belong to them: they're having less taken away.

Every piece of research confirms that what is more properly called 'enablement' produces much better results for the individual and the firm. The issue isn't giving people the ability to manage or work more effectively: it's about ceasing to stop them. But disempowerment has to start at the top. The roles of the chairman, the chief executive, the board, the executive management - all these have to change before any other changes are possible. And it's beginning to happen.

At Rank Xerox, for example, managing director Bernard Fournier, who is no shrinking violet, is subjected to twice-yearly feedback from his own 15 direct reports. The same goes for them. Like everybody else in the company, each of these top managers has a 'Blue Book' which sets out the company goals, objectives and strategy, and also lays down their 'vital few actions'. Everybody knows specifically what's expected of them, their departments and the whole company, and everybody is involved in deciding what they have to do.

This so-called 'policy deployment' is simply a different method of managing, mandated by the exigencies of competition. That's also why Compaq's non-executive chairman, Ben Rosen, went behind the founding (and now ousted) CEO's back, aided and abetted (note) by two juniors; he thus proved that a low-priced line of computers, vital to beat the clones, could be produced faster. That's why youthfully-led project teams in well-run car companies now have total responsibility for new models - and why even chief executive egos can't override them.

Managers 2000, at any level, will have to be concerned with unleashing potential all around them and all the way down. Leaders who don't hear the messages from below won't be listened to themselves. And that will be fatal to their only real authority, which is their flexible ability to enable organisational success. Old-style, fixed authority is a framework for establishing and keeping the rules. That framework must crumble in an age when progress depends on breaking the rules - if that's the way to optimise the outcomes (as it usually is).

The top-up principle is demonstrated in TQM and similar approaches. The wisest and best programmes start with analysing and improving the work of the board. Moreover, quality initiatives, customer service programmes and other efforts at improvement (which are compulsory) will fail unless they are comprehensive. Time and again, marvellous gains in productivity or customer satisfaction are reported in parts of companies whose overall results remain awful: the star players being locked into a team whose tactics vitiate their skills.

Of course, the Augean Stables Syndrome is universal: no company is ever perfect in every respect. But unless the organisation is seen as a system, in which every part relates to every other part, managers won't be able to manage effectively in the new century. One response to the syndrome is to cut down on the system's components - to farm out as much 'non-core' activity as possible. This produces simpler internal systems, and is, anyway, a trend enforced in many industries by the developing technology of both product and process.

The business system as a whole, of course, will be unchanged in purpose by the subcontracting. But Manager 2000 will spend a lot more time working intimately with colleagues who are employees of other companies - or maybe not employees at all. Those who can achieve results will be hired for that ability, not for their willingness to occupy the same desk in the same building every day. The consultancy mode and the manager mode will eventually become interchangeable.

These developments should mean an end to one of the least sensible management features of the 1990s: the major 'restructurings' as crisis-torn corporations 'reinvented' themselves. The restructured business, shorn of key capacities and morale by the cost-cutting, goes on losing jobs without repairing the lost profits and stagnant growth that precipitated the crisis. A kind of corporate kaizen - continuous reinvention - is the only answer, and is evolving under various names - all meaning the same.

In its fullest sense 'business process re-engineering' means looking at customer requirements with totally fresh eyes, and reshaping the entire corporation in order to meet the redefined customer need. The 'virtual corporation' lives by the same credo, seeking to meet those needs in the shortest possible time by continual adaptation. As a virtual re-engineer, Manager 2000 won't expect his/her own job to be static: rather, the business process will determine what's expected at any given time.

Since horizontal business processes are all multi-functional and multi-disciplinary, the manager is being led in similar directions. Cross-functional, synergistic and interdepartmental working is unavoidable now: so are task-specific teams. That's all to the good, because the reduction of layers is cutting the number of possible promotions. Manager 2000 will advance in prestige and pay by moving from one successful assignment to the next, not by exchanging one title for another.

This kind of career progression will be a great deal more fun than playing corporate politics. The idea that work should be enjoyable (at all levels in the organisation) is inseparable from psychological theories about people's behaviour at work. Though old-established, these ideas are now coming into their own. Theory Y will dominate new century management as organisations seek to tap people's own motivation by involvement - by liberating their energies and rewarding their initiatives.

The 'soft' values, like the idea of shared corporate values itself, are far more commonly aired these days than the 'hard' disciplines. But Manager 2000 badly needs both. At companies in technological or market-driven transition, values do, however, provide a steady guide through upheaval. Here's a characteristic set: '(1) We put our customer first. (2) We are professional. (3) We respect each other. (4) We work as one team. (5) We are committed to continuous improvement.' It comes from British Telecom.

At AT and T, its increasingly close rival, the values are not much different: 'respect for individuals, dedication to helping customers, adhering to the highest standards of integrity, innovation and teamwork'. Managers in all businesses will have to come to terms with such value statements, and with 'living the vision' by demonstrably acting in accordance with the fine phrases. But at both BT and AT and T, for example, that in no way lessens the demand for hard performance. Nor can that demand dwindle anywhere else.

On the contrary, new understandings of performance measures, financial and non-financial, are toughening the targets. Traditional bottom-line measures simply tell too little about past performance - and nothing whatever about the future. Many managers already have their bonus payments linked to a shopping basket of factors, which include items like customer satisfaction, and can be more narrowly and effectively specific than that. Without question, some of these baskets will include appraisal from below as well as above.

That's perfectly logical. Ricardo Semler, the maverick boss of a small but revolutionary Brazilian engineering firm, Semco, has it right. Semco managers who are rated below 70% are in danger of dismissal because they can't achieve the necessary outcomes. They can't fulfil the new role foreseen by Jack Welch, the much-admired CEO at General Electric in the US. According to him, 'We've got to take out the boss element'. The 21st century commercial wars are going to be won 'on our ideas, not by whips and chains'. The ideas will flow through managers who no longer plan, organise, implement and measure, but instead advise groups, ensure that they have the necessary resources, and encourage effective, thinking self-management. It's no dream. Honeywell (UK) is only one of several companies where self-managed manufacturing cells have taken full responsibility for product lines under a completely changed style of supervision.

This company is an affiliate of a US multinational: its initiatives are its own. Its best managers, though, are winning top responsibilities in the US - where Europeans or managers with high-level European experience now occupy the top positions in a considerable assortment of companies, from General Motors to Compaq, from Apple to Salomon. Global markets mean global managers. Already, management teams are likely to include several nationalities, people to whom the boundaries between nations mean no more than those between departments.

The boundaries between firms will also have much less meaning - not only because of the change in supplier relationships from adversary to ally, but because of the fast-growing number of strategic alliances. In an age when no company is an island, no manager can be insular. The key to the more open organisation must be the more open manager, because new processes demand new know-how.

The portrait of Manager 2000 is thus clear and complete. What's more obscure is how companies close the gap familiar to strategists: between where they are now and where they want to/have to be. A good start would be to involve all managers in contributing towards forming the strategies they will have to implement: not least because that would force companies to develop and communicate sound strategies in the first place.

Only a few managers are currently leading the movement. But most of the others will be swept along by the tide, in any event. Those who resist will be swept aside, along with their organisations. That's a doubly sad outcome, because the changes under way bring a new vibrancy to the age-old task of mobilising collective human powers. That task has never offered more alternatives, more excitement, or more potential for brilliant success - for the organisation and, above all, for the individual, liberated, invigorated manager.

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