BOOK REVIEW: Make management simple, not simplistic | Fin24
 
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BOOK REVIEW: Make management simple, not simplistic

Oct 04 2018 05:45

Management Made Simple by Mickey Huibregtsen

If you are a senior manager or executive and you read only one book this year as part of your professional development, this should be the book.

The author was a senior partner of McKinsey & Company worldwide, for 28 years. He advised most of the top 50 companies in the Netherlands, as well as many clients elsewhere in Europe and the USA.

"The underlying assumption for the book is that the only way of dealing with complexity is to make things simple, but in the right way," Huibregtsen explains. The cause of this unnerving and escalating complexity are the profound and rapidly unfolding trends.

The trends Huibregtsen cites are: the increasing globalisation of business and politics; the escalation of the role of emotions in all our actions, and the expanding role of corporations in society.

Globalisation isn't going anywhere

Globalisation is, and will continue to, reshape the economic landscape of our world for years to come, and in my opinion, for the better, for all. Few economic activities are and can possibly be truly isolated from globalisation. In 2000 only between 10 and 15% of the world’s GNP was exposed to international competition. By 2020 this will increase to more than 40%.

The escalating role of emotions in business is easiest to see in the fashion arena where consumers no longer look for a product as they look for a ‘buying experience’. (See Almost is Not Good Enough, By Andrew Jennings reviewed in this column.)

While all trends feed on each other, I will focus primarily on the escalation of the role of emotions.

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In the past, most of the factors that were critical to business executives, changed relatively slowly. This allowed us to formulate five-year strategies. Today such a strategy would be absurd. With the rapidity of change and the continuous interaction of critical factors, the very act of identifying cause and effect is dizzying. The increasing uncertainty of outcomes is visible in virtually all aspects of business and organisations.

Products are under the pressure of increasingly effective competition and as a result are approaching ‘commodity status’.

The emotional revolution

Consider this example: there are no really bad cars anymore, just as there is no bad petrol. The difference in total production costs and price have narrowed. The result is that the emotional aspects of a purchasing decision play a far more important role than an objective fact-based comparison.

The role of emotions affects all aspects of business - employees need to be inspired, advisors to be trusted, suppliers to be relied upon, customers to be touched, and bosses need to be admired.

We have been through the ‘Industrial Revolution’. We have been through the ‘Information Revolution’. We are now experiencing the ‘Emotional Revolution.’

As was the case with the other revolutions, the Emotional Revolution is defining not only management, but virtually every aspect of business. It informs everything from our research and development efforts, to after-sales service, and everything in between.

In the past, we held the belief that an organisation of quality is one that executes perfectly and is totally under control. This expectation is both "impossible and counterproductive", Huibregtsen explains. Since the key elements in business involve managing the emotions, attitudes, and feelings of customers and employees, their expectations have to play an increasingly central role in executive practice. The emphasis is now on performance more than perfection; on caring for a customer more than merely producing a product. The intangibles require as much curating as the tangibles.

READ: BOOK REVIEW: Five ways to turn businesses around for good

The tangibles in a business – such as the fixed assets – will tend to become more of a burden than a source of competitive advantage. The intangibles, by contrast, will increasingly determine the value and potential of the organisation. This includes intangibles such as reputation and relationships – both internally and externally, to staff and customers.

Both products and services tend to become commodities as a result of increasingly perfect competition between the players in the industry. The value differentials are becoming ever more emotionally driven. Gone are the competitive advantages of the past that were sustainable, and the only cost advantage that is possibly sustainable comes from scale.

Today the competitive advantage is closeness to the customer, reputation and brand, and breakthrough ideas – until these are cloned by a competitor.

Value is in the eye of the beholder

With the value offering being in the eye of the beholder, it comes in widely different forms. Examples are the quality of personal interaction of South West Airlines; the brand reputation of Unilever; the product functionality and service of Apple; the form of acquisition of IKEA; the exclusivity of Rolex, and more.

As such, the traditional value chain or business model is inadequate. This is because it has always pointed in one direction: towards the customer who is ‘king’. However, since it is intangible requirements that satisfy the ‘king’, businesses require talented staff to deliver this expectation.

The success of the business depends on attracting, developing and retaining the customer or client, by talented staff. In turn, talented staff have to be successfully attracted, developed and retained by the business. "Competition for talent does not end with the acceptance of the offer, but begins there and will last throughout their career," Huibregtsen asserts.

A quantum leap

In physics, a quantum leap is effectively a discontinuous but relatively small jump from one state of energy to another. However, in business terminology the phrase means a monumental change in the business system, resulting in an equally impressive impact on overall performance.

The business system itself needs constant and ambitious change and Huibregtsen provides some essential tools for the process. These tools include the explanation of how to use the tool, and examples that will be readily recognised.

One of the tools is the elimination of elements of the business system so that it is significantly more effective. For example, the elimination of the need for storage by the adaptation to just-in-time production. Another is ‘product redesign’ as used in the replacement of the cork with the screw cap in the wine industry. And the adoption of new technologies such as those used in the car industry as it shifts away from carbon fuels.

With the growing complexity and rate of change in business, the challenge for executives in any organisation is enormous. But so too is the opportunity to make an impact.

There are few books aimed at senior executives that are as comprehensive, useful and readable as this one. Management Made Simple should not be overlooked.

Readability          Light --+-- Serious

Insights                High +---- Low

Practical               High +---- Low

 

*Ian Mann of Gateways consults internationally on strategy and implementation and is the author of ‘Strategy that Works’ and ‘The Executive Update.’ Views expressed are his own.

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