After addressing sore points in middle management, leadership and governance, Freek Vermeulen now turns to issues in strategic planning and sloppy management practices. Constructive criticism for managers and company watchers.
Title: Business Exposed
Author: Freek Vermeulen
Pages: 238 pages
Publisher FT Prentice Hall
This last part of our series on Freek* Vermeulen’s book “Business Exposed” (click here for bio) examines two final areas that have attracted the author’s ire. The first are bad management practices and their unintended consequences. The second is the field of strategic vision, and how non-strategic it may sometimes appear.
There is no lack of management myths and bad practices – in fact Freek’s list includes as many guests as the last supper. This is Freek’s grab bag of issues that certainly have rubbed him the wrong way over his years of reading, teaching and studying how companies are managed. Indeed, how can one not cringe at the ceaseless repetition of management pleonasms (e.g. markets are efficient or the fast-changing business environment)?
As he has done throughout the book, the author relies on published research to refute or reduce the impact of such statements.
Martyrdom of management myths
But perhaps the most intriguing of his management myth supper guests are the following four: the effect of downsizing, the impact of management ‘fads’, the role of consultants and the positive impact of R&D departments that invent little or nothing. Let us examine these in some further detail.
Blame it on his Dutch upbringing. Freek does not like downsizing. He also provides proof that it can do far more harm (in the long run) than it alleviates in the short term. The research he relies on comes from the Universities of Kansas and Texas, and shows that company profitability did not improve after the trimming.
Management innovations (or fads) pop up with the regularity of (find analogy). Yet here again, what little statistical analysis of their impact has been done provides little substantiation of their benefit. Total Quality Management, Theory Z, quality circles, six sigma and others have come and gone. According to the author, ISO9000 has even had a negative impact on innovation, by making corporate thinking more homogenous, less chaotic, and therefore less prone for the fertile serendipity that can lead to the development of a Post-It note or a revolutionary blue pill.
Should one nonetheless argue that management fads had at least two benefits: making some authors (including some business school professors!) wealthy, and making some managers think beyond their usual corporate realm, into the sphere of management as an art?
We suspect that if Freek had instead been born Joseph ___ (middle name), then the first invitations to the gulag would have gone to management consultants, or what he calls pin-striped pigeons. (And he reminds us of a former London mayor’s description of pigeons as rats with wings.) Foremost among the crimes of these Savile row-clad animals is the virus-like spread of management fads, without real substantiation of their benefits.
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To end on a lighter note, the author does condone the existence of lab-rat researchers in corporate R&D departments. Even if these denizens never file any patents or discover the product that will develop into the next big business unit, they do provide business intelligence. Their ability to recognize smart innovations elsewhere, and perhaps copy or reverse engineer these into their products can still make them productive.
Strategy – an imperfect art
So much for management myths. The author – a professor of strategy at LBS – now devolves his acid to strategic vision. The reader’s main impression after finishing the penultimate chapter of Business Exposed, is that strategy is an imperfect art – albeit one that companies do need to practice despite known limitations.
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Why even bother? Because despite all its shortcomings, strategic thinking does enable a company to remain fitter than a slobbish non-thinking company. For the author, it is best to approach strategy as a moving target, as driving in the fog: avoiding obstacles as they pop up, yet careful not to follow the tail lights of the vehicle ahead all too closely.
In this chapter, Freek provides loose guidelines on what to do and on what to avoid.
The author suggests that corporate strategic planners loosen their workloads by avoiding the following pitfalls. First, forget about the customer (sometimes) because customers cannot direct your innovation; they can however provide feedback on specific options. Second, please please please avoid that trite statement about ever-faster changing business environments. Third, simply don’t develop strategies when not necessary. The author points to examples from the television and high-tech areas to illustrate how one can either delegate strategy to operational managers (Fremantle Media on choosing programs for international roll-out), or procrastinate on deciding altogether (Intel on microprocessors vs. DRAM).
On the other hand the well-tempered strategist will do some things that can make her life easier and the strategic plan better market-suited. Among these recommendations: prepare for luck, handle acquisitions as individual events, re-organize regularly, and use innovation networks.
As the author quotes Richard Dawkins (page 148): “It is good to be open-minded. But no so open that your brain falls out.” With this in mind, we anxiously await Freek Vermeulen’s next work, which may prove to be 70% constructivist and 30% critical – the flip image of this book.
* Does not rhyme with chic; difficult Dutch pronunciation, somewhat akin to “frake”.
By Chris Fodor, published February 2011.
Our next installment will appear on March __.