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COMMENTARY: MANAGEMENT THEORY--OR FAD OF THE MONTH?
Five years ago, Darrell Rigby was sitting at his breakfast table perusing Consumer Reports when he had a brainstorm. "In Consumer Reports, you could get a scientific rating on the best peanut butter, a $2 or $3 purchase," says the Bain & Co. consultant. "But there was no information at all on the success rate of management ideas. Yet companies were spending millions of dollars on them." The thought led the Bain director to poll managers and executives on the latest management theories.
Now four years old, his annual study on management tools and techniques has become the Billboard chart for theories. Drucker-wannabes lobby him relentlessly, hoping to get their newest incantations into his survey. Execs pore over the results to ensure they're not missing anything.
QUICK FIXES. Of course, a list of the most popular management ideas is all very nice. But managers need to be wary of jumping on a bandwagon that often leads nowhere. Many theories degenerate into little more than fads because they appear to be quick fixes for a topical problem. The boss hears a fast-talking guru or reads about the latest fashion, maybe even in this Bain report, and then orders his executives to look into it.
They do, and before you know it, the company sends hundreds of managers off to seminars and hires consultants to make it happen. Yet chasing the latest fads risks undermining the confidence of employees who begin to greet every new buzzword with increasing skepticism. "You need to be fairly selective and consistent over time with these things so you're not [upsetting] your organization over the tool of the month," cautions Daniel G. Simpson, director of strategy and planning at Clorox Co.
Moreover, when companies all start to follow the same theory, there's usually trouble ahead. In fact, the Bain survey shows that some of the most popular management remedies draw the highest rates of dissatisfaction. The least successful, according to the Bain survey, is reengineering. Some 17.3% of respondents say they have been dissatisfied with the results from the once wildly popular strategy.
The theories most in fashion today, such as "market migration" and "knowledge management," are also failing to score well in terms of effectiveness. Knowledge management--the idea of capturing knowledge gained by individuals and spreading it to others in the organization--is "one of the newest ideas, and a lot of people have just jumped on the bandwagon," says Alan Kantrow, chief knowledge officer at Monitor Co., a consulting firm. "They don't really understand what to do about it."
Besides knowledge management, what's as hot as Beanie Babies? From "agile strategies" and "competitive gaming" to "core competencies" and "market migration analysis," today's most popular ideas focus on good, old-fashioned strategic planning. Anything related to customer satisfaction is also hot, and benchmarking remains strong.
What's as dead as a pet rock? Little surprise here: It's total quality management. TQM, the approach of eliminating errors that increase costs and reduce customer satisfaction, promised more than it could deliver and spawned mini-bureaucracies charged with putting it into action.
So what's the harm in a little fad? Rigby says fads can waste energy and resources, create unrealistic expectations, and often prove divisive. Smart companies tend to customize ideas, win top-down support for them, and devote considerable effort to making them work. Limited attempts at using new techniques tend to produce poor results--regardless of the concept. All in all, rating management theories is a decidedly sticky business. Getting them to work, however, is even tougher.By John A. ByrneReturn to top
The Latest Models
AGILE STRATEGIES Encourages managers to wait for profitable courses to emerge and then outrun the competition
COMPETITIVE GAMING Uses game theory to play out the impact of different strategies
KNOWLEDGE MANAGEMENT A way to share what staffers know with others in the company
MARKET MIGRATION ANALYSIS Tracks which companies are winning and losing stock-market value in an industry and why
DATA: BUSINESS WEEK, BAIN & CO.Return to top