Over time and ever-changing business environment, the notions of management change. Management gurus have developed many useful management concepts for particular situations. However, the problem arises when these notions become universal truths and go on to become myths, which might lead us astray.
Here are five notions that commonly dip into myth, why they’re believable, and how to keep them in check.
- Successful companies establish lofty ambitions.
Built to Last is a 1994 best-seller on “the successful practices of creative firms.” Setting “Big Hairy Audacious Goals” was cited as a habit. In 2012, Sean Covey and others argued in another best-seller that organizations require “WIGs” These beliefs spread thanks to acronyms and exaggeration.
Visionary entrepreneurs perceive unfulfilled consumer requirements as opportunities. They take risks and achieve unachievable objectives. Visionary entrepreneurs who fail are seldom discussed. Visionary CEOs often understand their organizations need to modify their methods of functioning and set an unachievable target to boost innovation. They push their companies because doing nothing is the greatest danger. Both parties are realistic about innovation’s possibilities. Their situational awareness is keen, and their perspective is realistic.
The difficulty arises when the aim lacks rationale, the circumstance requires gradual adjustments, and the organization is stretched thin. Jo Whitehead, Felix Barber, and Julia Bistrova released Why Giants Stumble in October 2019. No fewer than 20% of the 100 top U.S. and European firms underperformed the market by 25% or more during a one to two-year period and lost their CEO. Each CEO opted to take significant risks to enhance growth rather than concentrate on being effective stewards of great firms and returning cash to shareholders. Their ambitious goals destroyed value. The more successful and larger a company grows, the more risk the management likes to bear to sustain the aim. The extended objective became gambling.
In uncertain times, betting on one hopeful outcome is risky. Minimizing regrets is smarter. That means optimizing choices for resilience so you’ll perform well in any foreseeable future — but don’t rely on chance. Businesses must continually monitor their success assumptions. Setting a seemingly unachievable objective might shake up their preconceptions, but it shouldn’t become a habit. Questioning assumptions should become habitual.
2. Set direction with performance goals
Robert Kaplan and David Norton released “The Balanced Scorecard” in 1992 and 1996, respectively. Both were best-sellers. They recommended including customer, business process, and learning measurements. The resultant “scorecard” was to be “an integrated strategic-management system” in which each metric is “one element in a chain of cause and effect that conveys a business unit’s strategy to an organization.” By 2000, over half of big U.S. and European firms used a balanced scorecard.
To execute a plan, you must determine whether your activities are pushing you on the proper path. This entails monitoring factors other than financial performance to produce a dashboard.
The measurements should form a decision-support framework that allows managers to adapt to changing circumstances. Most metrics must be watched to offer information. Several well-picked ones might be goals.
But don’t make the whole dashboard a scorecard of goals.
If a scorecard of objectives drives your approach, you may confuse the two. This pitfall is called surrogation, which Michael Harris and Bill Tayler describe as scorecard-driven tactics. Multiple targets complicate the trap.
Imagine driving. Establishing arrival objectives of 5:30 p.m., 45 mph, and 38 mpg is not the same as “get there on time, but don’t speed, and travel inexpensively.” You can’t merely use numbers. To decide what to do, you must know what’s happening. When driving, gaze out the window, not at the instrument panel. If you manage a company, do the equivalent sometimes.
We need several metrics to comprehend what’s happening. Businesses must measure ESG performance. Use the measurements’ data carefully. The measures aren’t wise. A plan sets the direction. A set of measurements is a control system that lets you know whether you’re on track. Kaplan and Norton created a visual tool for establishing strategy: the strategy map.
3. Win the talent battle
McKinsey released The War for Talent in 2001, based on 1997 research. Since then, authors have addressed women’s skills, Chinese talent, and digital talent. The discovery was that a company’s success depended disproportionately on a minority of bright, qualified, and dedicated individuals. As corporations emphasized employing these workers, competition grew fierce.
Every organization has a few high-performers who contribute disproportionately to its success. “Talent development” is a popular HR function, and most companies have “high potentials” programs. Given that most firms’ senior leadership will come from the pool of bright high achievers, this makes sense. That’s not everything.
But, the organization’s success relies equally on the average talented many and the talented few. It also relies on the organization’s performance. We must avoid concentrating on the gifted few and define “talent” carefully. Competence is domain-specific and requires experience, but talent’s nature is debatable. Geoff Colvin contends in Talent is Overrated that “deliberate practice” is the crucial variable.
This appears to explain world-class athletes and musicians. The vast domain of management comprises several smaller fields that organizations require. Few individuals are both geeky and inspirational. We’ve all met inspirational leaders who wouldn’t know a plan if it bit them.
The high-performing minority succeeds because they work with others. They have unique ideas, establish fantastic teams, and work for the company. They assist elevate the average, which is most of us by definition. Not the gifted few, but the average many, define a great company.
4. Business needs leaders, not managers.
Throughout the 20th century, managers were primarily responsible for “administration.”
Abraham Zaleznik authored “Managers and Leaders: Are They Different?” in HBR in 1977. He said managers and leaders are distinct sorts of individuals. The McKinsey-winning piece was reissued in 1992 and 2004. John Kotter said in 2001 that U.S. organizations were over-managed and under-led (“What Leaders Really Do”). Even Harvard Business School’s “management” programs are for “leaders.”
Zaleznik’s work is still thought-provoking. Managers, he said, “stress reason and control,” adopt “impersonal if not passive attitudes toward objectives,” and “balance conflicting perspectives” Leaders “work from high-risk positions,” “shape ideas instead of reacting to them,” and “attract powerful sentiments of identification and difference or of love and hatred.” While managers want to order and control, leaders “tolerate chaos and lack of structure,” Zaleznik wrote in 1992.
Businesses require managers in a stable, predictable environment, but leaders are in a world of perpetual change. Today, they’re everywhere. Managers are chummy yet dull and old-fashioned.
But, as we’ve realized leadership’s importance, we’ve made leaders celebrity heroes. We credit a company’s success more to its executives, especially its CEO, and less to the organization.
As the press adulates them, many CEOs accept their own myths and lose judgment. Some become power-hungry egotists. Stewardship, humility, reality, and responsibility go. Chris Bones critiques the “L’Oréal generation” in The Cult of the Leader — A Manifesto for More Authentic Business. Their egotistical motto “Because you’re worth it” is reinforced by the assumption that success is about winning a “battle for talent.”
Leading and managing are separate responsibilities performed by the same persons. All CEOs must manage resources wisely and inspire employees. Every company requires both, but some are better than others. Highly driven persons who aren’t structured or equipped will fail.
Leadership may be used for good or evil, as Zaleznik knew. How we instill it should be carefully considered. In a fast-changing, unpredictable world, we shouldn’t belittle management’s concentration on order and control.
5. No rules
Bureaucracy is loathed. It wastes time, stifles innovation, and diverts attention from the consumer. Reed Hastings, Netflix’s founder, hates bureaucracy. They want independence, responsibility, and performance, not rules, structure, and procedures. Many companies emulate them.
Because many contemporary, fast-growing firms are founded on common values and ideas like “focus obsessively on customers,” “win and lose as a team,” “take risks and learn from failure,” and “spend money as if it were yours.” Their culture, not method, creates coherence. The consequence is empowered individuals and merit-based concept evaluation. Everyone shares a vision. Minimal structure, flat hierarchy, and whatever work to obtain results. There’s more.
Meetings start to proliferate. They seek “buy-in” from prominent stakeholders or explain accountability frameworks, decision-making authority, and competing team agendas. People spend more time negotiating the organization’s political complexities.
Startups are on the front line of the “battle for talent” and employ ambitious, competitive individuals. Without rules, everyone builds their own. Inconsistent interpretation of core values and operational principles leads to subcultures substantially affected by powerful people. Newcomers are tougher to interact with, turf disputes ensue, and the organization becomes less stable and predictable. When hierarchy isn’t defined, it arises based on power, not organizational requirements. Everyone wanted to avoid it.
The true option is between good and terrible rules, not having any. Good ones generate internal predictability and simplicity to handle outward unpredictability and complexity. Like music— music is noise without harmony, rhythm, and pace.
Structure rationalizes decision-making. A good structure represents the organization’s key functions and has clear decision-making responsibilities at each level. Good protocols help everyone understand how the company operates so they can focus on the outside turmoil. To cope with external unpredictability, build internal predictability.
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If you establish a stretch goal, strain the organization or it will break. If you regard performance indicators as strategic objectives, you will receive exactly what you ask for – and nothing else. Consider what ‘talent’ means to you when designing an employee value proposition. The true problem is constructing an organization where normal individuals can generate above-average results. Develop strong leaders, but don’t overlook management skills, since no one can function without the necessary resources. Reduce bureaucracy, but have enough structure to rationally allocate decision powers and procedures to let individuals know how the company works. Ambitions, goals, talent, leadership, and culture are crucial. Leaders should always utilize them instead of letting them use themselves.