Why management by fad fails. Millions of dollars squandered on ill-conceived projects; try common sense and hard work
Business executives are like everyone else. They get bored with the same old thing. They fall prey to fads. And more often than they should, they let ``management gurus'' and ``corporate messiahs'' think for them. Conglomeration is the answer, they are told. Specialization is the answer, they are told. Centralize. Be entrepreneurial. Go global. Downsize. Bet the company. Manage by objectives. Manage by walking around. Manage in a minute. Embrace synergy, PERT charts, Theory Z. Anything but boring, painstaking attention to quality and efficiency. Anything but common sense and hard work.
Managers - especially that most exalted manager of all, the CEO - can get so caught up in faddish theories and strategies that they jerk their company around, squander millions on ill-conceived projects, alienate employees, and injure their shareholders, creditors, customers, and the public at large.
So says Michael McGill, a professor of organization behavior at Southern Methodist University in Dallas. In his new book, ``American Business and the Quick Fix'' (Henry Holt & Co., Company, New York, $18.95), Dr. McGill gives a fascinating account of 40 years of management fads and how they are developed, packaged, and marketed as a kind of balm for bosses. This book is must reading for the wide-awake owner, manager, or employee.
Yes, McGill says, some management ideas have done good. But too often they are costly distractions from real work. The direct financial cost of consultants, seminars, and ill-conceived reorganizations can be high enough.
But there are indirect costs as well - among them, loss of credibility in the eyes of employees and lost opportunities for the kind of slow-going internal betterment of quality that has made the Japanese successful. Japanese companies call the latter kaizen - small, continuous improvements.
Faddishness is most apparent in the waves of mergers - followed by the waves of divestitures - that have pulsed through American business in the 20th century. One recent example of about-face faddishness: R.J. Reynolds bought Nabisco just three years ago, diversifying from a tobacco and alcohol company to a food-industry giant. Voil'a, synergy.
But RJR Nabisco was taken over last month in the biggest leveraged buyout in American history. To pay down the debt, its new owner, Kohlberg, Kravis, Roberts & Co. is considering - what? Selling off much of the food line.
So much for diversifying.
All this is such busy-ness, such a diversion from doing real business. Theodore Levitt, editor of the Harvard Business Review, made that point in a recent editorial. Improvement, Mr. Levitt notes, ``is not likely to come in any sustainable proportion at any level of an organization if unsustainable efforts are wrongly urged on the organization.''
And when employees lose faith in management, Professor McGill says, ``no fad or fix, regardless of how popular, can remedy the situation. The cost of a loss of credibility, which so often is a consequence of fad management, is a cost that cannot be easily recouped.''
Studying corporate mythology is especially important to anyone working in an organization suddenly seized by managers bent on radical restructuring. Here are a few of the major myths:
The Megafirm. Although most Americans work for small businesses, managers are overly impressed by ``strategic planning'' and other techniques employed by Fortune 500 companies.
``It is pure myth,'' McGill writes, ``to imagine that any but the largest, most secure of corporations can afford this luxury.'' Yet what the big boys do has a magical lure, he says, and ``advice to move with more deliberation gives way to demands for managerial magic now.''
The Entrepreneur. This is the hot myth of the '80s. It is the idea that start-up enterprises are exceptionally profitable because they are small, decentralized, and innovative (never mind their youthful growth from a zero base). Just look at Apple Computer, Lotus, People Express - well, maybe not People Express. To become entrepreneurial, to be ``lean and mean,'' larger companies simply eliminate people and positions.
But, McGill notes, ``Scores of companies, large and small, have eliminated apparently redundant managers, expendable staff, unnecessary para-professionals only to find after the fact either that too many people have been cut or that the wrong people have been cut.''
The Messianic Leader. They are the golden boys. From Steven Jobs to Lee Iacocca to Victor Kiam, there are thousands of self-promoting, image-conscious, one-man shows. The most dangerous moment for messianic leaders in business comes when they believe their own press releases and gamble millions on their own ``vision.'' Says McGill: ``The messianic conception of leadership tempts managers to wrap themselves in the mantle of greatness, to be seen as messiahs, with potentially damaging results for organizations.''
Technology. From spreadsheets to teleconferences to videotaped presentations, the idea that there is a technological fix is perhaps the most enduring fad of the late 20th century. Sure, technology is important, McGill says. But many managers and businesses ``become so enamored of what they can do with the new technology that they neglect to consider what they should do.''
He calls this ``technological drive-out,'' since the glitzy attraction and complexity of technological fixes push all other corporate considerations into the background.
How to manage without myths? McGill does his best to avoid handing over a simplistic five-point solution (that's how the mythmakers operate).
He does make recommendations, however. Drop quick fixes, he says. Go for small wins. Don't let technology dictate to you. Listen to your employees. Value your own company's unique experience and mission. And above all, think for yourself.