9 Contemporary Applied Perspectives in Management

Niti Goyal

1. Introduction:

The contemporary organization faces unprecedented environmental and technological changes. Thus, one of the biggest challenges for organizations is to continuously change the ways, the organisations are managed to meets the demands of this turbulent competitive environment.

The concept of management is not new. It has been practised for ages. There has been evidence of management as early as 3000 BC by the Sumerian civilization. They used written rules and regulations for governance. During that period, the mammoth structures in the form of pyramids were constructed by the Egyptians. A human effort of such a massive scale is not possible without applying the principles of management. During that time, there is lot of written evidence of sets of rules for governance and policies practiced by the Babylonians, Greeks, and also the Romans. In Asia, Chinese used extensive organizational structures for government agencies and arts. Early forms of organizational structures were seen in 500 AD when the Venetians used organizational design and planning concepts to control the seas. Hence, the principles of management have been used in one form or another by the civilizations from ancient times.

Time has changed today. Many relevant things of the past have become redundant for today. Present times, have characteristics, which were never present before. There has been a total transformation in the ways business used to be. The environment in which the business operates has undergone a sea change necessitating the change in the organisations as well. Coming from a closely held structure of an organization, today‟s organizations are borderless, spanning across nations. The goods, services, personnel, information, and above all the ideas move freely across the nations. The leaders of the yesteryears are no longer guiding the destiny of the nations and the mighty organizations of the last few decades are no longer seen. The ideas of doing business are undergoing a tremendous change.

The classical concepts of management were put forth by the early stalwarts – F.W Taylor and Henri Fayol in the early twentieth century. The behavioural school became popular in 1930s after the famous Howthrone experiments. Then came the quantitative schools & the systems approach & contingency approach . After that the modern concepts came to the preview.

The Industrial Revolution as well as the growth of factories and mass production created a need for strong management processes. Better and more efficient ways of manufacturing goods were needed in order to maximize productivity, bring down costs, and increase profitability. Since the late 1800‟s, theorists have developed a wide range of methods for improving management practices. First we will discuss the contingency approach developed during 1960‟s and then move to the contemporary applied perspectives in management:

Contingency Perspective: Contingency approach, also known as situational approach. Though it evolved during the 1960s but it has its roots embedded in the past. It was given by Lord Krishna thousands of years ago, when he said that the rightful dharma of an individual is decided by the need of the situation. According to contingency perspective, there is no single best way to manage. The management style is situational and depends on business situations such as the external environment, technology, organizational characteristics, characteristics of the manager, and characteristics of the subordinates. Since no two situations are alike, therefore there cannot be any best way to manage. Each event has its own problems, challenges, and environmental factors. So, management style should be flexible only then management can respond to different situations accordingly. In order to determine the most effective management approach, each situation should be evaluated separately to determine best way to apply any individual management theory.

Unprecedented changes in the global scenario were seen in 1980‟s such as emergence of free market regime, Globalization, Strengthening of the global bodies such as GATT and then WTO and Developments in information technology, which have rewritten the rules of management and organizational design completely. Accordingly several new schools of thought have emerged in the recent times. These are:

1. Theory Z by William Ouchi

2. Learning organization. by Peter F. Senge

3. Knowledge worker by Covey

4. Competitive strategy Micheal E Porter

5. John Kotter’s Change management

6. Core Competence by C.K. Prahlad & Gary Hamel

7. Strategic Intent by Gary Hamel

8. Management Innovation by Gary Hamel

These concepts have been discussed in detail one by one:

1. William Ouchi’s Theory Z :

Theory Z, a participative management style, was developed by Prof. William Ouchi after making a comparative study of Japanese and American management practices. Theory Z is an integrated model of motivation which combines the best features of Japanese and American management styles. Theory Z suggests a kind of give and take relationship between the organization and the employees. It suggests that an employee will feel motivated and give his best to the organisation if his human & social, personal & professional needs are realized and fulfilled by the organisation. For application of Theory Z, it is important that management must have a high degree of confidence in its workers.

The primary features of Theory Z are:

i. Mutual Trust

Theory Z presupposes trust, integrity and openness between the members of the organisation.

ii. Long-Term Employment

Theory Z emphasizes on long term employment. This promotes stability in the organization and job security among employees and thus promotes loyalty towards the enterprise and hence a stable and conducive work environment.

iii. Slow Evaluation and Promotion

Under Theory Z, potential of every person is recognized and attempts are made to develop and utilize it through job enlargement, career planning, training, job rotation etc. Promotions are slow under this management style. This develops competency to take decisions about the various issues of the company.

iv. Integrated Organisation

Theory Z organizations are integrated organizations which focus on sharing of information and resources rather than any formal structure. It stresses on job rotation.

v. Moderately Specialized Career Path

Theory Z management style doesn‟t stress too much on extreme specialization rather it stresses the need for the workers to become generalists, rather than specialists, and to increase their knowledge of the company and its processes through job rotations and constant training.

vi. Employee Involvement

Theory Z emphasizes collective decision making rather than individualism. This motivates the employees and improves commitment and performance of employees.

vii. Individual Responsibility Within A Group Context

Type Z organizations emphasize on the individual performance but within the group. Thus, not only the group but also an employee individually is responsible for the achievement of goals.

viii. Informal Control With Formalized Measures

Theory Z emphasizes mutual trust and cooperation rather than on superior-subordinate relationships. Theory Z organizations donot have any formal structure but still authority responsibility relationships exits in some form so that the employee can be held accountable for performance.

ix. Holistic Concern

Theory Z organizations show holistic concern for the employee. Theory Z stresses on the overall development of the employee. Social needs, personal needs, professional needs and human needs of an employee are taken care of by the organisation. Social life and customs are given equal importance as work.

Theory Z is applicable to skilled workers who intend to remain with the company for long time. A worker who is hired for some time is not a theory Z worker. Unskilled workers also do not fall under Theory Z. Thus, Theory Z challenges the traditional theory of extreme specialisation and employment through demand and supply .

2. Learning Organization by Peter F. Senge

The concept of learning organisation was given by Peter F. Senge, a Professor of Management at MIT in his famous book – „The Fifth Discipline.” Peter Senge is one of the best-known experts on learning organizations.

The learning organization is an organisation which aims at using the knowledge and skills of all within the organization through facilitating learning of its members and thus continuously transforming itself. Senge identified that organizations need to maintain knowledge about new products and processes, understand what is happening in the outside environment and produce creative solutions using the knowledge and skills of all within the organization. It involves all employees in identifying and solving problems, which allows the organization to continually increase its ability to grow, learn, and achieve its purpose. Learning organisation remain competitive and proactive towards environmental changes and can facilitate change within the organization easily.

Learning Organizations increase the employee commitment to the organisation. It is knowledge, which enables an organisation to create a competitive advantage. This requires co-operation between individuals and groups, free and reliable communication, and a culture of trust.

According to  Senge, a learning organization has five main characteristics:

I. Systems Thinking. Learning organization view organisation as a system. The performance of learning organization is measured as a whole and as well as of its various sub systems.

II. Personal mastery. It relates to the commitment of workforce individually to the process of learning. If workforce is competitive, and is able to learn quickly not only through formal systems of learning but also through self improvement, it will provide advantage to the organsation.

III. Mental models. Mental models are the beliefs and assumptions held by the individuals and organisation. There is a difference between what an individual assumes in his mind and what he actually gets. And also organizations also demand certain behaviour and values from employees. Learning organizations promote open culture which promotes inquiry and trust which increase the employee commitment to the organisation.

IV. Shared vision. There should be a common vision in the organisation communicated to all which provides direction to learning.

V. Team learning.: Learning organizations promote open communication. When individual engaged in the process of learning interacts and engage into discussion with others, knowledge is shared and multipied and thus facilitates quick growth of individual and organization. It improves the problem solving capacity knowledge and expertise. This accumulation of individual learning constitutes Team learning.

Learning cannot be forced upon an individual who is not receptive to learning. So, It is important to develop a learning culture within an organisation. Thus, learning organisation manages the organization through increasing learning and knowledge.

Knowledge Worker by Covey

Covey, the famous Harvard Professor gave the concept of Knowledge Worker in his famous book – The Seven Habits of Highly Successful People. A knowledge worker is one who develops or use knowledge.

He advocated that knowledge workers should be identified and such a kind of environment should be created within an organisation that the efficiency of the knowledge workers could be explored to the maximum. Knowledge workers are the source of new ideas and help a firm to gain competitive advantage. New products, new designs, new models are the result of knowledge work. Success of an Organisation in this competitive era depends on the how their Knowledge is explored to the maximum. For this, it is important that an organisation should be able to identify them and such workers should be given such an environment where their productivity could be enhanced. Organisation should recognize the different needs and motivations of knowledge workers. A knowledge worker should be provided with all the organisational facilities and state of the art technology so that he need not wonder in search of facilities wasting his energy in search for them. A knowledge worker should be given autonomy to work. He should not be closely supervised which could hinder his creativity. If a knowledge worker is provided the job according to his interest, he only needs to be told „why‟ of the situation, and he can provide with the best solution to the problems. It is enough to tell a knowledge worker what is desired of him. eg. If the product design is not appropriate, a knowledge worker just needs to be told that the design is not good because it is too sleek to handle. They will themselves offer the best solution. Assign knowledge worker project according to his interest. Each knowledge worker is a unique asset to the organisation. To get the best performance it is important that their abilities are recognised and the ways in which those abilities could be explored to the maximum should be found out.

The concept of knowledge worker, challenges the traditional principal of equity in the sense that it advocates that each knowledge worker should be treated as unique asset and should be provided the best facilities and environment which he desires so that his potential could be utilised to the maximum for the benefit of the organisation.

Micheal E Porter’s Competitive Strategy:

Micheal E Porter‟s work on competitiveness and competitive strategy is one of the most famous work which has been successfully adopted by the firms.

Porter’s has given a simplified model to analyse the competitive position of a firm and also its future prospects. Porter’s Five Forces model can be used as good analytical model alongwith other models such as the SWOT and PEST analysis tools.

According to porter, the five forces that drive competition are:

1. Supplier Power: the power of supplier depends on the uniqueness of their product and the number of such suppliers. The more unique product they supply, the more powerful they become and less is the bargaining power of firm and thus less powerful.

2. Buyer Power: The power of buyers depends on the number of buyers and the availability of substitutes. The more unique your product is, the less is the power of the buyer and stronger is the firm .

3. Competitive Rivalry: The greater the number & strength of competitors, the less powerful firm becomes.

4. Threat of substitute products (including technology change): If there is a substitute to organisation‟s product, the less powerful it becomes.

5. Threat of New Entry: If the entry to the industry is difficult, the company enjoys more freedom and power. The difficulty to entry could be because of huge investment, barriers to entry, economies of scale, patents etc. which makes it difficult to the competitors to enter into the market.

Thus by analysing these forces, the firm can gain competitive advantage and can become proactive in its approach.

Kotter’s Change Management:

There is a true saying „Only change is static‟. However, Human minds always resist change. It is not easy to incorporate any minor change in any set pattern for which one has become habitual. However, change needs to happen. However, if it is managed properly, it can be inculcated easily. With proper foundation, implementing change can be much easier. It is a slow process and stepwise. John Kotter, a professor at Harvard Business School introduced eight-step change process in his 1995 book, “Leading Change.” The eight steps for leading change is as below:

1. Create Urgency: As a first step , Kotter advocated that managers should convince the employees in the organisation that change is required urgently. This helps in initial motivation. The employees should get to know that change is required to get and the reasons why it is required so that they can whole heartedly think and prepare themselves about it. If the mangers get successful at this the next steps gets easy.

2. Form a Powerful Coalition: Change is not one man‟s job. For this team building is required. As a next step, team should be formed of those people who can play an active role in facilitating change. Such team members can be identified randomly from the whole organisation. No line of hierarchy need to be followed to identify such managers. Rather all those influential people who can help manage such a change should come up work as team and further build the urgency for change .

3. Create a Vision for Change: Developing a vision is important as it provides common direction to the efforts. Vision tells where we want to go. It provides clarity of the objectives. Various ideas are given a concrete shape at this step. A clear vision can help everyone understand what is required. It helps in developing a clear strategy

4. Communicate the Vision : Communicating vision is as important as developing a vision. Vision should be communicated frequently and powerfully to everyone in the organisation. It should be kept fresh in everyone‟s mind.

5. Remove Obstacles: Change also brings fear in minds of people. Many questions crop up in minds regarding what change, the change is going to bring for them. So it is important to address the concern openly and honestly so that change can be implemented whole heartedly.

6. Create Short-Term Wins: For implementing change, motivation is required at every step. People feel motivated when some positive result emerges. Rather than a single long term goal, short term targets should be created. These short term targets when achieved motivate the staff and will further motivate to achieve the next goals .All the negativities attached will subside with the achievement of these targets.

7. Build on the Change: Change is not a short term goal to be achieved. Even if things go smooth after preliminary implementation of the change process, the system should keep on improving so that long-term change is achieved. Each success provides an opportunity to build on what went right and identify what you can improve.

8. Anchor the Changes in Corporate Culture: Change should become the part of the organisation. Change vision must show in day-to-day work. One should make continuous efforts to ensure that the change is seen in every aspect of your organization. This will help give that change a solid place in organization’s culture.

Management Innovation :

Gary Hamel, the faculty of the London Business School pioneered the concept of Management Innovation. Gary Hamel has been ranked as the world‟s most influential business thinker by The Wall Street Journal , and Fortune magazine has called him “the world‟s leading expert on business strategy.”

Hamel has worked as consultant for companies such as diverse as General Electric, Time Warner, Nestle, Shell, Best Buy, Procter & Gamble, 3M, IBM, and Microsoft. He has given concepts such as management innovation, strategic intent and core competence. His concepts “have changed the practice of management in companies around the world.

As the name implies, management innovation is the innovation in mamanegemt.ie, something different and new from the old traditional management process and practices. Organizational innovation, Intangibles management etc. can be cited as management innovation.It is different from operational innovation as operational innovation is concerned with the innovation in the way the business operations are carried out. For example, customer support, logistics, marketing etc but management innovation is the innovation in management principles, practices and processes.

Put simply, management innovation changes how managers do what they do. Broadly managers are involved in:

• Planning

• Motivating, Coordinating and controlling activities

• Accumulating and allocating resources

• Knowledge management

• Relationship management etc.

A management innovation should satisfy one or more of three conditions:

• The innovation should be new and should challenge  orthodox management practices.

• It should affect the entire system

• Innovation should be continuous and progress in innovation should compound over time.

Thus management innovation is about innovating the management practices which can do wonders in improving the performance of the organisation.

Core Competency by C.K. Prahlad & Gary Hamel

The concept of Core Competency was introduced by celebrated management guru of India origin – Prof. C.K. Prahlad, and world‟s most influential business thinker Gary Hamel. Core Competence is one of the most important business ideas currently being used all over the world. Core competency means identifying and concentrating on areas in which the firm is unique and outsourcing other activities as much as possible. It basically aims at realizing own strengths and to build it up continuously. Building upon its strengths will enable a firm to develop a unique level of expertise which will distinguish it from other firms and thus helps the firm to gain competitive advantage where it cannot be challenged by its competitors easily. It helps a firm in commanding a premium price as well. Thus Core competency is about focussing on the strengths and develop them as much as possible and to switch away from the area of weakness and out sourcing the other activities. But what is most important here is to identify the areas of the core competence out of the areas where company can do reasonable well. Hamel and Prahalad give three tests to see whether they are true core competences:

1. Significantly Relevant to the customer – Core Competence is the unique feature on the basis of which a customer chooses the product or service. It is the USP (unique selling proposition) of the product. If a customer do not buy a product on its USP, it is not core competence. e.g take the example of juicers mixers of company XYZ. They are bought because of their longer life.

2. Difficult to imitate –The areas of Core competence of a firm should be difficult to be imitated by the competitors so that competitive position could be sustained. Continuing with the above example, the technology which gives longer life to the juicers of XYZ company should be difficult to be imitated by other companies.

3. Provides potential access to a wide variety of markets –core competency should provide access to a large number of potential markets. Opening of few small markets is not a core competencey outcome. e.g If because of it‟s the long life feature of the juicer a firm is able increase its sale to a some extent it will not be considered as the area of core competence.

Thus the presence of all the three characteristics together is necessary to identify a core competence area. If any of the above characteristics is missing, it is not core competence area. So most important in this concept is recognising what is your core competence. Thus, concept of core competence is about developing a concrete position in the areas of your unique strength that it becomes very difficult for the competitors to challenge you .

Strategic Intent:

The concept of strategic intent was developed by Gary Hamel .Strategic intent aims at developing the desire to succeed among their employees. Usually what firms do is that they make a SWOT analysis and try to do the best with the available resources within the business environment. But strategic intent work opposite. Rather than focusing on the resources, it aims at motivating the employees. It aims at enhancing their capabilities to exploit the opportunities and thus aims to achieve tremendous results. This has been practiced by the Japanese firms and as impossible results have been achieved. Strategic intent aims at fostering the desire to succeed among their employees and maintain it by spreading the vision of global leadership. Using this strategy, Canon lagged “Xerox” behind. There are many such other examples.

The Strategic Intent notion helps managers focus on creating new capabilities to exploit future opportunities. Strategic Intent is more internally focused.

What is usually practiced is that we try to achieve the maximum out of the available resources. But strategic intent is like leveraging the resources by leveraging the potential of the employees by motivating them & try to attain goals which seem to be impossible.

Summary:

We are on the verge of a rapidly changing economy and there is lot more beyond legacy. The present times are characterized by change. Today is different from yesterday and tomorrow will be different from today. This change is very fast and is all encompassing. Organizations and individuals of tomorrow have to function within this change. What was seen as wrong is no longer seen so. The workforce and the leaders of tomorrow will be very different and the rules of success are changing fast. The principles of management are changing fast. The earlier principle of division of work has been challenged in the present times by Theory Z as the manager is expected to know everything. While one has to be specialized in one job, people prefer a specialist with a generalist approach. There is no longer any centralization in the organizations and the span of control is also undergoing a change. IT enables networks and systems enable the seniors to monitor the activities of dozens of subordinates. The order of the yesterday is giving place to flexibility. The firms have flexi timings, flexi salaries, and flexible methods of performance. The earlier principles of remuneration, initiative and equity are giving way to performance linked awards. Thus, with changing environment management practices have also undergone sea change and the traditional concepts no longer are the rule of thumb governing management.

 

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