Management Futures: But will it work in theory?

04 February 2014

At the end of the 1990s, the management thinker Jeffrey Pfeffer noted that ‘something strange’ was happening in management circles. Trends were moving in the opposite direction from what the evidence base suggested would pay off best. Many researchers and thinkers, such as Henry Mintzberg, Lynda Gratton, Daniel Goleman, Sumantra Ghoshal and Professor Pfeffer himself, were advocating a participative style. But the dominant approach was an aggressive short-termism, guided by the quarterly financial report. (See Pfeffer’s 1998 book The Human Equation.)

In the wake of the banking collapses and other corporate scandals, such thinkers have been largely vindicated. As Paul Polman, chief executive of Unilever, reflects in a recent blog on the ‘sustainable economy’, there’s now an even stronger case for a renewal of management practices.

Have things improved much? Professors Cary Cooper and Les Worrall showed in 2012 that in 82% of cases, change management programmes were driven by cost reduction. As they show, this often has a damaging impact on engagement and can harm service levels. CMI’s own Future Forecast report in December found managers rating cost control as their top challenge for 2014.

But at the very top, the mood seems to be changing. The CEO Challenge 2014 report (a global study by The Conference Board, on which CMI is the UK partner), shows ‘human capital’ is now CEOs’ top concern. There’s a particular commitment to engagement and management development is a rising priority too. What’s more, CMI’s own most recent survey findings in the UK revealed that ‘building partnerships & networking’ is the biggest priority, followed closely by ‘creating agile teams and tackling underperformance’. These priorities are surely to be welcomed.

So how do we bridge theory and practice? A huge amount of opinion, research and advice is published every year. But keeping up with it can be far from straightforward when the day job demands so much.

CMI’s own role as a professional body is to help managers find the best insights. That’s the reason why we established the CMI Management Book of the Year Award. Now in its fourth year, it helps identify the nuggets of ‘Management Gold’ in the best of management writing. And it’s the purpose at the heart of the Management Articles of the Year competition and our online book club too.

This winners of the book and article competitions definitely meet the ‘gold’ standard. The newly-announced CMI Management Book of the Year, Matt Watkinson's The Ten Principles Behind Great Customer Experiences, addresses exactly the sorts of thorny questions that managers face in 2014 – like how to address costs without sacrificing customer experience. He stresses the importance of engaging emotions, something that’s tough to put into a metric. It might mean an increase rather than a cut in costs.

As it happens, the theme of costs are also explored by Jules Goddard of London Business School, winner of the Article of the Year for The Fatal Bias. Goddard argues that the cultural preference for cost-cutting in business hasneverhad any basis in evidence. In most businesses, costs are as likely to be too low as too high. A Deloitte study of some 25,000 companies over a 40-year period identified 75 firms ‘with extraordinarily high sustainable levels of performance,’ he reported. They had three characteristics: ‘They went for better, rather than cheaper. Secondly, they went for revenue rather than cost reduction – increasing the top line. Thirdly: there are no other rules than these two.’

In the end, management is a craft in need of daily updating and renewal. That means listening to others, reading, and reflecting about how we can use the best and most powerful ideas.

There is an old tale, probably apocryphal, of a civil servant protesting that something ‘may be all very well in practice, but will it work in theory?’ Experience tells us that the most effective managers learn both from theory and from what works in practice. February just might be the perfect time to take in some new ideas and treat yourself to a little ‘Management Gold’.

Next month: what are your management role models?

In the meantime, why not find out more about this year’s winner of the CMI Management Book of the Year Prize.

Submitted by Philip Wood

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