Rip Up Everything You Know About Management

Peter Drucker once said that “so much of what we call management consists in making it difficult for people to work”. Any discussion about the future of management and leadership benefits from bearing this thought in mind at the outset. Indeed, some humility is due. Getting out of the way of capable people might be the best first step any boss could take.

Thankfully, another, less likely management guru is also worth remembering: Lance Corporal Jones from the BBC TV sitcom Dad’s Army. Although he did not always follow his own advice, running around in a state of some agitation, his familiar instruction of “Don’t panic!” is helpful. Just because the rest of the world is going crazy does not mean that you have to as well.

Of course, the context for leaders looking ahead is daunting. The world seems to be entering an economic slowdown, with the twin engines of China and the US both stuttering. Technological change simultaneously dazzles and terrifies. Are human beings the next commodity or product line to be rendered obsolete by the advance of automation and artificial intelligence? (Answer: no.) And then there is, you know, Brexit, about which more than enough has been said already.

It would be easy to succumb to the notion that, with so much apparently changing, and often not for the better, a clean sweep of both management practice and strategic outlook is necessary. Tired incumbents look vulnerable to new entrants with different (lower) cost structures. Legacy structures and systems drag unwieldy organisations down. Many big businesses are dying, first slowly and then suddenly, with Thomas Cook being just the latest example.

The paradox of management is that while situations, competitors and markets all change, some challenges remain constant. So while adaptability is undoubtedly required, so too is a steady nerve and an adherence to certain timeless qualities and values.

This is one of Tom Peters’ most powerful insights. The world’s most famous management guru remains sceptical about the bigger claims made for some supposedly new ideas about management. But he insists on the lasting importance of some apparently small but in practice crucial management interventions: paying attention, being civil, encouraging others and hiring well.

Peters has another pressing concern too: the denigration of business on account of the actions of a few big companies. “Most people in business are working for smaller or medium-sized organisations; these are your neighbours,” he says. While Peters understands (and indeed echoes) some of the criticisms frequently made about big business – and has long favoured SMEs as the place to look for genuine innovation and inspiration – the trashing of business as a whole is not healthy, he believes.

What, then, are the new ideas – or the new old ideas – that will equip managers to perform well in the future? On this, Charlie Dawson, co-founder of consultancy The Foundation, provides some much-needed fresh thinking.

“Clearly, it can be hard for big, established businesses to set up new ventures,” he says. “But even if you seem to be doing well, you know that changes will be needed.” Without the urgency of a crisis, however, it can be difficult to get people to focus on the need for change and to accept that something different has to be tried.

Dawson suggests one meaningful change that businesses can work towards: becoming truly ‘customer-led’. Many businesses claim to focus on the customer – but do they really? And will these efforts to create value for the customer actually create value for the business?

Consider the idea Tesco had a while back to try and make sure there’s never more than one customer ahead of you in the check-out queue. There was an investment cost of about £60m in making sure there were enough staff in place to live up to that ‘only one in front’ promise.

“Did customers really like this?” Dawson asks. “And did it make them spend more money at Tesco?” One problem with this sort of speculative investment is that while the costs are certain, the benefits are not. You can try and research these things ahead of launch but, as Dawson says, “customers may not know what they want”.

Being customer-led means knowing what customers really value, he adds. It’s the outcome that counts, not the product or service. Inventiveness is needed to find new and better ways of doing things that customers value.

For example, when he was a director at energy provider Centrica, David Alexander launched a service called Local Heroes, through which engineers were empowered to get on and fix problems for customers without recourse to head office. But as he explained at a recent seminar hosted by The Foundation, Centrica was initially resistant.

“Because it was something beyond its command and control, a fundamental challenge to the organisation, they tried to smother it with governance and all the rest of it,” he said. “It was really difficult, very energy-sapping. And while it was well-meaning, it almost proved terminal.”

Fear of losing control prevented Centrica from handing autonomy to its engineers, even though the engineers imposed tighter budgetary discipline on themselves than head office did. “The organisation couldn’t handle that free spirit,” Alexander said. “It worried about the few bad apples, so the whole thing was structured to manage that exception rather than the rule.”

Some bosses hope that by making a renewed commitment to ‘purpose’ they might also help reinvigorate the business and give colleagues a new ‘north star’ to steer by. The US Business Roundtable, a body representing almost 200 top US corporations, recently declared that “maximising shareholder value” had proved to be a false god, and that a more balanced corporate purpose is needed that gives equal regard to other stakeholders.

‘Purpose’ has done that dangerous thing: it has become fashionable. But seasoned observers of the management scene know only too well what can happen to half-decent ideas that become popular: the idea gets twisted, distorted and ultimately ruined.

The Foundation’s Dawson offers a useful health warning for the suddenly fashionable concept of ‘purpose’. “There is a real risk of misunderstanding here,” he argues. “You might just end up creating an industry which manufactures sentences.”

It’s the idea behind the purpose, not simply the words themselves, that really matters, he says. It’s no use just making everybody learn a paragraph by heart. It is more important to share the thinking that has helped produce the words used to describe it.

“The really scarce thing in business is belief,” Dawson says. And this is clearly true. How many statements of corporate purpose sound alike, and indeed, don’t even reveal what it is that the company in question does? If you’re going to make a statement of purpose, mean what you say and say what you mean.

A final element worth considering is the antidote – or perhaps rather the complement – to the threat of robots and artificial intelligence: the human factor. Companies are swimming, perhaps drowning, in data. While you may never have perfect information or all the data you may think you need, you probably do have enough to take decisions. What is often lacking, Dawson believes, is the more rounded, emotional, human experience – what customers are really feeling and why.

“When you have data, you think you will find all the answers in the numbers,” Dawson says. “It looks like it’s all there.” But as Japanese managers have known for decades, if you want to find the answer to a question or problem, you have to go and see it for yourself. Go to where the work is going on. Tom Peters tried to tell us this almost 40 years ago: he called it ‘management by walking around’ (pioneered by Hewlett Packard).

The world is changing, and reinvention is surely called for. This is not easy. As the late CK Prahalad used to say, the “forgetting curve” can be just as important for businesses as the learning curve. You have to know when to jettison activities that are a distraction or that have no future, even if they are currently generating decent revenues.

So yes, forgetting some of what you know will be necessary. But as Chrissie Hynde sings in The Pretenders’ hit song ‘Hymn to Her’, “some things change, some stay the same”.

Teams still need to be led and managed, attention must be paid to colleagues, and customers’ needs must be met. Algorithms and automation promise to make exciting things possible, and yet in many commercial contexts there is still no good technological alternative to human beings and the human touch.

This may all mean that managers and leaders have to continue to perform a tricky balancing act between keeping the current show on the road and helping to build a new one. But then again, if you didn’t know how to ride two horses at once, why did you join the circus in the first place?

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