Sunday, 15 May 2011

A Synoptic View of Business Classics since 1980:Munish Alagh

(Reference: Ultimate Business Library:The Greatest Books that made Management, Stuart Crainer, 2003.)

In this presentation we summarise the great management books of the last thirty years. While doing so we attempt to throw some light on the contemporary issues of management which can be further researched by our students. We divide the great management classics into subject themes and invite suggestions from the faculty regarding topics which can be further researched on those themes, besides we make some suggestions of our own for issues of study.

Book 1-
Ohmae, Kenichi, The Mind of the Strategist, McGraw Hill, New York, 1982.

Ohmae argues that Japanese strategic thinking, is ‘basically creative and intuitive’.According to Ohmae, unlike large US corporations, Japanese businesses tend not to have large strategic planning staffs like large US Corporations, Japanese companies often have a single, naturally talented strategist with ‘an idiosyncratic mode of thinking. Another area of fundamental difference explored by Ohmae is the role of the customer who is at the heart of the Japanese approach to strategy and key to corporate values. The central thrust of the book is that strategy as epitomized by the Japanese approach is irrational and non-linear. The mind of the strategist is not an unquestioning eulogy to the Japanese approach to strategy. Indeed, Ohmae notes the decline in naturally strategic thinkers in both Japan and the West. Both systems, he says, encourage orthodoxy to the extent that innovative strategic thinking is neither encouraged nor possible. The mind of the Strategist began the process of questioning the then pervasive Japanese mythology through providing interpretations of strategy which were not hidebound by habitual cultural or traditional behavior.

Book 2
Porter, Michael, Competitive Strategy, Free Press, New York, 1980.

Michael Porter’s Competitive Strategy:Techniques for analyzing industries and competitors involves a solution to a strategic dilemma. At one end are the pragmatists who contend that companies have to respond to their own specific situation. At the other end of the spectrum is the line taken that market knowledge is all-important. Porter proposes a logical compromise, arguing that there are three ‘generic strategies’, ‘viable approaches to dealing with…competitive forces’. Strategy in porter’s eyes, is distilled down to a choice on how to compete expressed in the three generic strategies; differentiation, competing on the basis of value added to customers so that customers will pay a premium to cover higher costs; cost based leadership, offering products or services at the lowest cost; and thirdly focus. Companies with a clear strategy outperform those whose strategy is unclear or those which attempt both differentiation and cost-leadership.

However less than a decade after Competitive Strategy was published in 1980, companies had to compete on all fronts. They had to be differentiated, through improved service or speedier development, and be cost leaders, cheaper than their competitors.

Porter’s other contribution in Competitive Strategy has proved more robust.
‘In any industry, whether it is domestic or international, or produces a product or a service, the rules of competition are embodied in five competitive forces, ‘he writes. These five competitive forces are:
The entry of new competitors.
The threat of substitutes.
The bargaining power of buyers.
The bargaining power of suppliers
The rivalry among existing competitors.

Book 3
Hamel, Gary and Prahalad, CK, Competing for the Future, Harvard University Press, Cambridge, MA, 1994.

C  K Prahlad and Gary Hamel’s work can be considered as a blue print for a new generation of strategic thinking.

As per them, the real barrier of strategy is at the top, not at the bottom and middle.
They believe the corporate world is following mechanistic view of the strategy. Rather, it should be analytical, concerned with meaning purpose and passion. As per them one should not rely on only core competencies, it can be a powerful weapon in some cases but should not be a sole basis.

They gave two extremes of it.
  1. arch-rationalist—i.e. insisting on a constant stream of data to support any strategy
thriving on chaos—a free-wheeling organizations where strategy is a movable feast.

Book 4

Packard, David;  HP Way, 1995

Fundamental Principles
No long term borrowing to secure expansion of the business
For growth—our products should be leaders in the market
People are assets---should trusted and treated with respect and dignity
Commitment to people fosters commitment to company

Book 5

Champy, James and Hammer, Michael, Reengineering the Corporation, Harper Business, New York, 1993.

Cutting away the hype and hyperbole, the basic idea behind re-engineering is that organizations need to identify their key processes and make them as lean as possible. Peripheral processes (and, therefore, peripheral people) need to be discarded. Champy and Hammer defined re-engineering as ‘the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance such as cost, quality, service and speed’.

Book 6

Kaplan, Robert S; Norton, David,   Balanced Scorecard, 1996

Harold Geneen took management by financial measurement, and the obvious conclusion drawn from it was that sole concentration on financial measures, can achieve only short-term or medium term success, but it is unlikely to link long term prosperity. While the other parameters like customer loyalty, employee satisfactions are difficult to measure. They gave four elements need to be balanced.
-Customer perspective- Companies must ask how they are perceived by customers
-Internal Perspective- Companies must ask what it is that they must excel at
-Innovation and learning perspective- companies must ask whether they can continue and improve
-Financial perspective-how does company looks at shareholders

Book 7

Semler, Ricardo, Maverick, 1993

Ricardo Semler was elected business leader of the year by a poll of 52000 Brazilian Executives. His book Maverick became an international best seller. For his family’s company Semco, he based revolution on three values: employee participation, profit sharing and open information system. As per Ricardo the leader should play his/her role as a catalyst. The book says about dramatic shift of Semco during the 1990s crisis time.

Book 8

Peters, Tom, Liberation Management, 1992.

The central idea of Tom Peters’ research is Structure.  By structure, he does not mean traditional hierarchical and functional sense. Taking inspiration from success of CNN, ABB and Body Shop, he derived that these organizations could thrive because of their flexible structure and so was able to change to meet the business needs of the moment.  As per him, free-flowing, impossible to pin down, uncharitable, simple yet complex, these are paradoxical structures of the tomorrow. New corporate structures will be networks with suppliers, customers and with all those who can deliver the business. Again, the new model of organization should move fast and continually seek new areas so that it can be unique in its markets.

Book 9

 Ohno, Taiichi; Toyota Way, 1978

Taiichi Ohno worked as a consultant with the Toyota writes that the roots of the Toyota system lie in the immediate post war period. The Toyota production system is strikingly difference from the approaches used in a west when an average American worker produced around nine times as much as a Japanese worker. For Toyota the emphasis was on reducing costs rather than increasing the selling price.
There simple principles were put in practice by Toyota System. 1. Just-in –time production, 2. Everyone is responsible for quality and any defects of quality should be rectified as soon as they are identified. 3. Value System.

The MIT research for the Toyota concludes that while American car manufacturer focused on mass production techniques, Japanese system focused on a lean management and this resulted in to increased production, high quality, lower costs and happy customers.

Lean production is a superior way for humans to make things, but the trouble is to get it right.

Book 10

Goleman, Daniel;  Emotional Intelligence, 1995.

Emotional Intelligence is based on the notion that the ability of managers to understand and manage their own emotions and those of the people they work with is the key to better business performance. It is the ability to handle one’s emotions, deal with frustration, self-awareness, self-discipline, persistence, empathy and being able to get along with people. Goleman has gone on to explore the issue of personal and professional effectiveness. He argues in one of his book “Working with emotional Intelligence” that workplace competencies based on emotional intelligence play a far greater role in star performance than do intellect or technical skill, and that both individuals and companies will benefit from cultivating these capabilities.

Based on his survey, he identified six different types of leadership skills. These are Coercive, Authoritative, Affilitative, Democratic, Presenting and Coaching leaders.
According to him, EI can be learned by five dimensions. These are Self Awareness, Managing emotions, motivating others, Showing Empathy and staying connected.

Book 11

Collins, James; Porras, Jerry; Built to Last, 1994.

It tells about the values in the context of business and corporations. Core values are organization’s essential and enduring tenets-a small set of guiding principles; not to be confused with specific cultural or operating practices; not to be compromised for financial gain or short term expediency. As per Collins and Porras, companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.  Key factor in the success of companies like HP, Johnson & Johnson, P&G, Merck and Sony is their vision and it has two components-core ideology and envisioned future. Core ideology provides glue that holds an organization together through a time. Central to the book is the distinction between being good and great.

Book 12

Covey, Stephen, The Seven habits of highly effective people, 1989.

The book discusses three main techniques: one minute goal setting, one minute praising and one minute reprimands. Again, the advice is to develop trust, generate positive energy and avoid negative energy.

Book 13

Porter, Michael; The competitive Advantage of nations, 1990.

Based on his study of ten countries (UK, Denmark, Italy, Japan, Korea, Singapore, Sweden, Switzerland, Germany and US), he concluded that the intensity of domestic competition often fuels a success on a global stage. He found that the principle goal of such a nation is to produce a high and rising standard of living for its citizens. The ability to do so does not depend upon the competitiveness but on the productivity with which a nation’s resources are employed. Productivity is the prime determinant in the long run of a nation’s standard of living.

To make sense of the dynamics behind national strength in a particular industry, Porter develops a national diamond and is made up of four forces like factor conditions, demand conditions, related and supporting industries and firm strategy, structure and rivalry.

Book 14

Kotter, John; Leading Change, 1996.

John Koter has worked on leadership, change management, culture and then careers.
While writing down a book on the Leadership Factor-he found out majority of the people doing management stuff thought that it was leadership. As the system do not support leadership—he studied on culture, then he took at environmental and economical changes.
The central theme of Kotter’s work is change.
Successful change requires the effort of a critical mass of key individuals---a group of the two-fifty people depending upon the size of the organization-in order to move the organization in significantly different directions. Leadership is the critical ingredient for driving change.
For that he suggested following steps
-Establishing sense of urgency
-organizations need to create powerful coalition
-develop vision and strategy
-communicate the change vision
-empower broad-based action
-celebrate short-term wins
-anchor the change in the corporate culture

Book 15

Peters Tom, Waterman Robert; In search of excellence, 1982.

Even though the book published in the year 1982, its legacy has become clear after approximately 20 years of its publication. It has marked a fundamental change in management emphasis from rationalist and mechanistic style to a human and humane approach. It is resolutely people centric and looks beyond rational analysis to explore social complexity. The intellectual cornerstones are eight principles identified by Peter and Waterman as characteristics of excellent companies. These are: a bias of action, being close to the customer, autonomy and entrepreneurship, productivity through people, being values driven, networking, simple form, lean staff.

Based on these principles, they identified 62 companies and divided them in to three categories. 1. 18 companies were categories as excellent but did not meet all criteria, 2. 30 companies excellence and met the criteria, 3. 14 companies were the exemplars of excellence.

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