New Structural Paradigms for Business Management

How Can They Become Part of the Business Management Process?

Today, businesses (large, mid-sized, small and startups) and the business management experts that advise them are all focused on openness, transparency, brainstorming, support and innovation.  We, too, have acknowledged their potential positive impact on decisions, motivation and profitability.  Unfortunately, the reality is quite different, they are rarely happening nor are they truly supported.  This article highlights the constraints and barriers facing business management to executing needed business changess.  We have found that just as what’s so often similar to today’s conflicted political environment; what’s missing in business management is a realistic view of many issues and the changing environment we live in.

Society and business management fail to recognize old paradigms and structures are failing

New Structural Paradigms for Business Management

Many of our largest and seemingly most powerful corporations have experienced zero growth or failed over the last ten years.

• Large corporate structures ( the post office, newspapers, magazines, and brick and mortar retailers), are all gradual losers or worse.
• Companies and society continue to do what they have done in the past, often with poor results.  Despite massive investments, varying economic and political efforts, social problems like education, unemployment, and income inequality, are not being properly resolved.
• Ignoring and failing to adapt to societal/business trends is done at our peril.

Many political, religious, educational and other institutions are facing crises because they fail to adapt.  For example, it is generally accepted that pre-kindergarten programs dramatically impact education and long-term societal goals.  Yet, few school systems nationwide have adapted them.

• Closer to home we tend to ignore trends and deal realistically with issues. For example, U.S. manufacturing jobs aren’t coming back when countries such as China and India pay 10-20% of our rates.
• Demographics make matters even more complex:
  • Women are soon to represent over 50% of the labor force;
  • Workers over 45 have increased from 31% to 41 % of the population;
  • Over 50% of births in the country are non-white;
  • Large numbers of college educated students between 20 – 26 face extremely difficult odds in finding well-paid jobs and careers;
  • The list goes on.

With little real attention to these changing trends and other factors, poor performance of many organizations is virtually a given.  What is even more distressing is that it is the business management structure of these organizations that produces much of the results rather than the typical financial discussions.  For instance, the long held proposition that bigness which includes:

• economies of scale
• Spreading expertise
• marketing synergies

Other presumed advantages have simply shown little evidence of success in the last few years.

Why is this phenomenon so apparent and why have so many organizations shown so little progress and success?

1. First, many seemingly successful companies have tunnel vision, organizational constraints etc. and ignore emerging technologies and opportunities.
2. Second, they lack the flexibility to respond to the needs of the market and use outdated solutions to new problems.
3. Third, they fail to allow the vision, entrepreneurship and risk necessary to succeed.

The challenge facing today’s business management, organizations, and individuals

The business management challenge for organizations and individuals today is to create an environment where the structure and culture of the organizations encourages adaptation and change. I strenuously argue that if we do not learn to accept and accommodate deviant behavior within and outside organizations, we cannot achieve excellence or change.

While business schools, particularly top MBA programs, and organizations both preach openness, creative dialogue, and problem solving; they are seldom really practiced. In reality, support, listening, teamwork are frequently emphasized over fact finding, analysis, and arguing over alternatives.

This assessment was evident to me in my own consulting efforts over a number of years.  Many of my colleagues focus on being supportive of virtually everything a client proposes and avoid asking for difficult but necessary facts such as financial and sales records.  After years of my criticism, two of my colleagues have modified this strategy and adapted a simple good-guy bad-guy approach along with my collaboration.  They start meetings telling me in front of the client to be nice and if I am not, they will just tell the client to ignore me.  The strategy almost always works because we are surprised at our ability to get information and discuss what would be hidden or avoided in a normal session.

Improved communication, the internet and digital integration have profound effects on organizations we fail to fully comprehend.

Companies such as Nordstrom’s, Amazon, Zappos, Ebay, etc. thrive on opportunities from the internet and digital communication.  In contrast, companies such as HP, Sears, and Blockbuster continue to adhere to tradition bound business approaches and tend to change executives every few years or less.

Open systems and collaboration are like winning the trifecta at the horse track.

What is emerging today as a potential solution is the acceptance and reliance upon open systems and collaboration.  Open systems have been around for a long time but are becoming the norm for success.  They reject bureaucracy, authority, hierarchy, and closed decision making processes.  They encourage participation, diversity, new rules, and to some extent, chaos.

Google, the Internet, Facebook, LinkedIn, smartphones, tablets, etc. are examples of enablers through open systems.  Facebook and iPads may seem like play toys to some, but their inherent potential is just in its infancy.  The ability to quickly find information, engage participants, communicate, and see spontaneous actions and decisions are all results of these new phenomena.

What must we do to adapt to the changing requirements of business?

What is frustrating is that there are realistic new models of success.  We simply need to follow them which is not something typically done.

1.  The simplest approach is more cooperation.  Bartering, measuring and communication are suggestions for improving cooperation:

• A highly skilled client of mine who had a costly technology needed to raise capital.  He had several investors who were willing to participate, if he could raise seed money from other investors.  He managed to get small investments from some clients and in return gave them dramatically reduced services as an offset.  He then got investment funds to jump start his business.  His clients got services they normally couldn’t afford, an investment opportunity and great value for the services.  The client also got initial success stories to help market to other customers.
• Organizations need to be open to measurement and feedback.  Looking, understanding and sharing financials, operations reports and sales reports are the first step.  Simple research studies, social media and other devices are additional tools.  Simple management involvement through tools which might include just walking around or “how am I doing“ also work.
• You need a commitment to open communication.  One of the investors on the “Shark Tank” TV program had simple advice for an entrepreneur who wouldn’t stop talking:  Stop talking and listen!

2.  The most difficult opportunities can be to pursue proven winners.

• Have you hugged your best customers today?  We frequently take our best customers for granted and don’t thank them enough, help them adapt to changes in their needs, or simply listen to their concerns.
• Similarly, where are we experiencing success and failure?  I can’t tell you how many clients don’t track sales by product or account, measure internet results or even monitor traffic and success.  In addition, when these efforts are executed they usually focus on the problems.  I would argue there is frequently more opportunity in expanding the successes than trying to fix the inevitable.

3.  The success of smaller, more innovative companies shows that many organizations should get smaller or act smaller in order to effectively deal with today’s environment.

• Reducing layers and creating professional cultures are a start.  Boards and management need to split up organizations, spin off or create more independent groups.  That may be what’s really necessary to maximize the potential of both individuals and organizations.
• Large organizations say they want excellence, entrepreneurship, innovation, risk takers, etc. but, really, they tend to encourage mediocrity.  For example, short term goals and reviews for both organizations and individuals actually inhibit the development of more positive cultural characteristics rather than spur them on.
• Testing and failure which are critical parts of innovation are punished more than rewarded.  Even sound risk taking is reduced because of the fear of repercussions within the organization.  In short, organizations frequently ignore the advice “you can’t score if you don’t take a shot.”

4.  Finally, organizations are surprised rather than managing their environment.

• On a number of different levels factors like global warming, aging of the population, product life cycles, technology changes, and the Internet are highly predictable.  What is frequently missing is recognizing and dealing with them.
• Aspects like culture, personalities, and social standards can have dramatic impacts.  In 2005 over 1000 patents each were issued to businesses and people in places like Santa Clara, California, Austin, Texas, San Jose, California, and Boise, Idaho.  In contrast, New York City, with all the population and wealth, had only slightly over 600, and Los Angeles and Chicago were not even in the top 20. (Wall Street Journal, July 22, 2006)

5.  The greatest need for change is a commitment to open systems and collaborative models.

• One of the most important outcomes from open systems is the collaborative decision making model.  As decisions become more complex, the need for diversity, internationalism, innovation, and expertise expand.
• For example, when discussing issues the nature and presumed cause of problems are typically explained and focused on.  There is, however, little talk of solutions.  As one sales consultant argues: “We all know the adage….features tell, benefits sell.”  If that is true, how come so many of us still speak in terms of features and not benefits?  The prospect doesn’t care what your product or service does, they only care about what it does for them.

New paradigms for business management success

These new paradigms:  cooperation, betting on success, smaller can be better, and open collaborative systems, offer great hope for organizations.  While they involve new approaches to problems, the solutions are readily available.  What’s needed is to allow our organizations to be effective.  To do so, involves providing opportunity and education.  As the great manufacturing consultant Edward Deming once said regarding leadership, “It is the ability to drive fear out of the organization so that employees will feel comfortable to make decisions on their own.”

In simple terms, the first step is to recognize:

• People want to do a good job and succeed
• Organizations inhibit many of these efforts
• The complexity of organizations and the environment add further complications to success
• Organizations and individuals need to find the opportunities to overcome these barriers.