by Rosabeth Moss Kanter, Bloomsbury Publishing, 2003.
This volume contains 160 essays by leading business writers and educators. It sets out to "equip managers for all aspects of their responsibilities". Some of the articles are summarised in this review to give a sense of the depth of coverage.
(Reviewed by Kevin Barham in December 2003)
(These book reviews offer a commentary on some aspects of the contribution the authors are making to management thinking. Neither Ashridge nor the reviewers necessarily agree with the authors’ views and the authors of the books are not responsible for any errors that may have crept in.
We aim to give enough information to enable readers to decide whether a book fits their particular concerns and, if so, to buy it. There is no substitute for reading the whole book and our reviews are no replacement for this. They can give only a broad indication of the value of a book and inevitably miss much of its richness and depth of argument. Nevertheless, we aim to open a window on to some of the benefits awaiting readers of management literature.)
This large tome is billed as ‘a practical and comprehensive guide to best management practice’ that sets out to ‘equip managers for all aspects of their responsibilities’. As such, it is an impressive compilation of some of the best thinking on business today. (One endorsement on the cover of this says it is ‘a cross between a Baedeker for business and Business for Dummies.) With over 160 essays by leading business writers and educators, it covers in detail most of the key management topics and strategies across a wide range of themes. These include: people and culture, marketing, strategy and competition, finance, IT and information management, systems, structure, leadership, corporate social responsibility and governance, and personal effectiveness. Each essay offers practical, expert advice for coping with challenges and difficulties in the workplace, along with real-life examples and thought-provoking learning points. All the top management writers make contributions, including Charles Handy, Warren Bennis, Christopher Bartlett, Sumantra Ghoshal, Manfred Kets de Vries, Robert Kaplan and David Norton, and many others.
In her introduction, Rosabeth Moss Kanter says that rapid adaptation is essential in a global information economy. She contends that the best innovators are borrowers. All visionary leaders know the best practice secret. Stretching to learn from the best of the best in any sector can make a big vision more likely to succeed. High performers open their minds to new ideas, challenge their assumptions and scrutinise their performance practice by practice. Behind best practice, according to Kanter, lies a simple concept: measurable standards against which we can benchmark ourselves. Businesses can measure themselves against three standards: past performance, peers’ performance, and potential performance. Most businesses are content to rate themselves against the first two. Leaders who want to achieve sustained success, however, must reach for a higher standard - they must use best practice to challenge themselves in a third way - to measure performance against potential, against all that could be achieved and all that’s possible. The goal is to find the best of the best and then use it as inspiration for reaching full potential.
The next challenge is to act on higher standards and translate high aspirations into high performance. Standard-setting leadership at the top must be reflected in ‘standard-actualising’ behaviour throughout the organisation. To make excellence a way of life embedded in the organisational culture, we need to create communities of best practice and to help everybody at every level become a professional. When we do this, people recognise that they must continue to learn about the newest and best or the respect that they have earned will erode. We have to empower them to manage themselves through benchmarks and standards based on best practice exchange. We also have to look for best practice everywhere in the world. Think of the whole world, even problem areas, as your laboratory for learning, says Kanter. (For example, she points out that Brazil is a centre of excellence in cash management techniques because high inflation made it necessary for financial firms to find ways to close transactions fast.) Use this book, she says, to get into the best practice habit.
Given the coverage of the book, it is not possible to give an indication of the full range of ideas covered but the following is an indicative selection of articles.
The corporate model is in rebirth. Traditionally, financial capital was the scarce resource and companies were organised around its effective use. Financial capital is no longer the constraining resource. The constraining - and hence strategic - resources are information, knowledge and expertise. These reside deep down in the organisation in the minds of individuals and in the relationships between people who are closest to the customers. The company of the future will have to learn how to manage this human capital. This shifts our mindset from one that is about appropriating value to creating value - generating ideas and innovation and capturing and leveraging knowledge, expertise and best practices inside the organisation. Managers will need different skills from those needed for measuring, allocating and controlling financial capital. They will have to create organisations that enable entrepreneurial innovations on the front line. They will have to be able to elicit and link knowledge and expertise in such a way as to diffuse them, and to develop people and relationships as a source of organisational capability. They will also need the ability to ‘self-obsolete’ and self-renew - to jump learning curves, rather than moving up them gradually - and to constantly redefine the business and its processes and products.
Successful firms will be highly adaptive and customer-centric - they will be ‘sense and pro-act’ organisations. They will recognise new patterns very quickly - especially where customer behaviour is concerned. This means they will need real-time information and the ability to act on the new trends more quickly than their competitors. Federated and networked companies will be the norm. Measuring profitability will switch from product P&Ls (profit and loss information) to customer P&Ls. The idea of the brand will shift from one that is evoked through advertising to one that sees the brand as a customer experience. This involves a shift to Quality of Customer Experience (QCE) management. It means being prepared to change processes in response to customer demands. The supply chain will need to be far more responsive and commitments with suppliers will have to be examined and renegotiated much more rapidly. The key resource will be knowledge about and relationships with customers. Companies will need new metrics for customer value, customer outcomes and the quality of customer experience.
Strategic planning by itself does not guarantee either competitive advantage or business success. Too often, companies’ strategies simply mimic each other or they are built on obsolete premises. Strategy is nonetheless important, and infusing a company with a clear, compelling, cutting-edge strategic direction is critical. Effective strategy creates value for shareholders and customers. Today, a company’s strategy should generate unique value (something special and different), breakthrough value (creating markets and leading customers), startling value (inspiring intrigue and excitement), personalised value (‘mass’ marketing is out), turbo-speed value (dramatically shrinking decision and cycle times), and employee-driven value (capitalising on the talents of people).
Senior managers have to balance long-term planning with ‘short-termist’ behaviour in the markets. It is therefore essential to have a good business model, a clear understanding of business risk, sustainable revenues, and proper communication. Failure to manage the financial information systems well can seriously damage your brand. If you get it right, you please both short and long-term investors. Value creation is the top priority. When investors are frightened or lose faith, they can destroy value much faster than you can create it. Relationship management is one of the most important new skills to acquire.
The Internet, telecommunications and computer technologies enable us to behave much more knowledgeably and almost instantaneously. Our organisations must therefore mirror this behaviour internally to remain effective and competitive. The Internet-era mindset involves the integration of learning, imagination and the capacity for radical innovation into the internal processes of the organisation and the behaviour of its partners. This means creating structures based on deliverables (rather than function) and self-managed teams that take responsibility for their output. Such organisations provide access to information, rewards based on team and individual performance, and education and development opportunities to encourage the necessary organisational and personal changes. They create stimulating development experiences for employees and give them offline time to think. They develop divergent thinking skills and help each employee to be come more curious, connected and communicative. At the same time, they convey a sense of shared meaning and encourage creativity and collaboration. Their people learn to communicate and lead in a virtual environment.
In the new wired world, technologies allow people to interact electronically instead of attempting to find a common time and place for a group meeting. Many companies, however, have found themselves ‘going virtual’ with no idea of how to maximise organisational performance. Virtual organisations have advantages but they also present problems. These arise because communication consists of four levels (spoken or written words, emotional pitch, non-verbals, and attitude) and three of the four are not discernible in an electronic message. The ‘significance principle’, which says that every person has a driving need to be recognised, valued and appreciated, is critical to organisational performance but the virtual world does not lend itself easily to such recognition. Managers must be acutely aware of the needs of others for recognition. They should, for instance, send notes recognising people’s accomplishments or put up a virtual wall with ‘electronic plaques’ to recognise team members’ contributions. Colleagues should also communicate appreciation and acknowledge the value of co-workers.
Massive changes are about to hit the technology arena that could radically change the way we work together, including FIDs (fully integrated devices) that will double as portable video-conferencing devices and will be about the same size as existing PDAs (personal digital assistants). To exploit the technology, whatever form it takes, it will be important to emphasise leadership, not management. Controlling approaches to creating a virtual organisation will stifle performance. We have to recreate the workplace in the virtual world. We might do this, for example, by creating a virtual brainstorming area on the network or an intelligence board where people can post information on products and competitors.
Companies continue to talk about teams, thinking out of the box, and empowerment, while in reality promoting management and leadership styles that are controlling, structured and hierarchical. Neither the ‘industrial age model’ nor the ‘web model’ is right or wrong, but to be successful in future we must think and act in ways that recognise the paradoxical nature of converging approaches. Leaders who manage this paradoxical world share certain mindsets and practices. They don’t take themselves too seriously. They sometimes manage grudgingly and are happy to move between management and non-management positions. They are good at making opportunities for casual conversations and nurturing relationships. They don’t get overly attached to their assumptions and beliefs and are politely tenacious and quietly upbeat. They tolerate ambiguity and are always learning. They talk like real people - in ‘plain speak’ - and have no need to impress others with insider words. They understand the power of context and invest time and effort in making the workplace more inviting. They are acutely self-aware and very present. Their leadership comes from who they are as much as what they know.
A company can have brilliant leadership and an effective strategy but these don’t guarantee success. A focus on process is needed - it is better for a company to develop a system that will produce an unending stream of results, rather than hope for brilliant ideas and individual heroics. Today most companies still try to be self-contained enterprises - to do everything inside the corporation. That point of view is evaporating faster and faster as we move into the new century. This trend will change people’s perspective of what a business is and what it should be doing. Businesses become parts of systems rather than whole systems in themselves. More importantly, the process by which you do business becomes the most important part of the business, ie your process is your business. Two management skills will jump to the top of the leadership agenda:
(1) designing and ‘instrumenting’ systems and processes
(2) teamwork and collaboration.
The first demands a holistic view of operational processes. The second requires managers to shake off once and for all the sense that they are independent actors responsible for a self-contained unit. Not only will the different parts of a company have to work together much more closely (no more fiefdoms), collaboration will have to cross company boundaries as companies integrate their processes with each other. Good management tomorrow will mean giving everybody in the company an understanding of the business and its customers and processes, and of where each employee and manager fits, plus a sense of connection and a real view of the opportunities to be seized for success.
Those who have power end up getting more privileges. But eventually people get fed up with those who get away with excesses for their own benefit (like the medieval clergy) and the result is restrictions, regulations or even revolutions. In business we are reaching such a turning point now. If we don’t find business leaders who realise that they must stop exploiting their privileges and impose some internal restrictions and regulations, the pressure will come from outside. The author of this piece says that the MBA students he used to teach a few years ago thought that if they didn’t make their first million by the time they were 25, they would be a failure. After Enron and September 11, he notes that students are now much more interested in ‘traditional’ business and not-for-profit interests. He urges you, if you want to be successful, to be true to yourself - when you have integrity people will respect you because you try to act in concert with your beliefs.
There is something in this book for every manager. At 728 pages, it is not particularly handy for train or plane. However, the quality and range of the contents make it an excellent reference book to keep on the office shelf. Each article is in itself a quick and succinct read with the main arguments and learning points clearly laid out. If you are looking for new and provoking ideas, you will find plenty here.