Business books – is their information innovative?
05 February 2016
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Welcome to this edition of Old Mutual Live Business, my name is Chris Gibbons. Walk into any bookstore, especially in a big city and you’ll see entire sections of the store, shelf after shelf after shelf, devoted to books about business. Everyone seems to promise a newer and better way, chasing blue oceans or using balanced scorecards.
Searching for the common denominator that runs through excellence, even teaching elephants to dance, but the question we’re going to ask in this podcast is, how much of this really is new? Has business really evolved, really changed since the days of the early 20th century when Henry Ford invented the production line? The first when motion experts started measuring how long it took to complete a specific task?
Somebody who has looked long and hard at this question and who has arrived at a set of answers that may be quite unpopular in certain quarters is one of South Africa’s foremost experts on strategy, consultant and author, Tony Manning. Tony, hello and welcome. You’ve taken a long, hard look at more than a hundred years of management history. You’ve pulled it altogether in your new booked called What’s Wrong With Management and How To Get It Right. First off, why did you even begin to approach this topic?
Tony Manning: Chris for the 30 odd years that I’ve been consulting and even before that, as an executive in various organisations, I was interested in, or am interested in management ideas. Whenever I’ve come across a new one, I’m a voracious reader, so I study very carefully what gets said and who is apparently presenting new stuff.
Whenever I’ve come across what looks like a new idea, I have dug into it very carefully and asked what really is this person saying and are they saying something fundamentally new and different, stuff that hasn’t been said before.
Time and again I’ve noticed that something gets punted on the market as a real breakthrough, it’s going to change your life etc. and when you go back into history and look at the roots of it, you’ll find that somebody said the same thing or was doing the same thing or was advocating the same thing 20-30-50 even a 100 years previous.
That’s how it started and about eight years ago I started work on this book with not really a clear idea of how it was going to come together and after about, I guess 3-4 years of working at it in drips and drabs, it occurred to me that in fact I was hearing a simple set of things over and over again and that maybe I should concentrate on those and that’s what I did.
So how many ideas are actually new?
CG: So, what is your conclusion then, how much of all of this thought, all these new books, how much is really new?
TM: Very little and you know, people who develop ideas, people like me, by the way, consultants and academics and so forth, won’t like to hear that because our stock in trade is so-called thought leadership. But the reality is that what we mostly are involved in is thought followership where we are taking an idea and we’re packaging it or we’re configuring it. Trying to present it as something different or we are finding new case studies which ostensibly suggest that this thing is new, when in fact it’s not.
CG: But aren’t you then in danger of becoming the child in the Hans Christian Anderson tale who points out that the Emperor is not wearing any clothes, let alone any new ones?
TM: You know, I thought long and hard about that and clearly that is a risk and I have no doubt that a lot of people will be very critical of what I have said. In fact, one professor, when he looked at an early draft of what I was doing said: This is absolute rubbish, these are just tickets to the game and they absolutely are tickets to the game, but the problem there is, if you don’t do them as an organisation, you can’t succeed, or you can’t be as successful as you might. It’s easy to dismiss them.
The other problem is that in perhaps overlooking them or dismissing them, managers tend to rush around because they are under huge pressure to produce results. They rush around looking for panaceas, for new ways of solving the problem and they are very susceptible to fads. This is a global problem, it’s not a local problem by any means, it’s a global problem.
They fill their companies with fads when in fact there’s a simple set of things, the core practices, the critical core that I call them, which they really need to focus on. But they become distracted and they layer these things one on top of the other into their organisations. They never take anything old away, they just keep on layering stuff in and they befuddle their people, they create complexity and they make the whole thing very sluggish.
Why you may not know the name Peter Drucker
CG: Tony, talk me through the basics of business, which have not changed, according to you, since Henry Ford and let me also ask you, were they not all codified by a man called Peter Drucker back in the 1950’s?
TM: Well, the answer is that a lot of them were codified by Drucker, in the 50’s, in fact even in the late 40’s. For many years after that he was a really prolific writer. The interesting thing is that even though Drucker was an academic for most of his life, working in universities, he gets very little academic credit.
If you look through the business literature, management literature, Drucker’s name appears relatively seldom in the footnotes. He’s not referred to that often and yet if you go back, you’ll find that somebody is saying something now which Drucker said many, many years ago. I’ve acknowledged that I’m a great fan of is.
I’ve acknowledged that, that he’s a source of much wisdom and has said things better than other people have said them, over a long period of time, but the problem is, he gets dismissed. He died 7-8 years ago, he’s forgotten, people don’t know about his work and so forth, because they’re reading the latest new thing.
CG: The basics then of business, you have a list of seven basics, it starts with: identify the right customer and second, understand the customer’s needs. What are the others?
The seven basics of business
TM: The very first one, you know, Drucker would have said that. He had three basic questions which is, who is the customer, what is value to that customer and how are you going to deliver it? The practices that I identified, which are common across companies, across industries, so it doesn’t matter whether you’re in high tech or selling hotdogs, these things apply.
The first one is there has got to be growth leadership ethos and practices in the business. That sounds terribly obvious, but I’ve encountered many, many management groups and CEO’s over the years who aren’t convinced that they really have to be excessive about growth.
They don’t make the commitments and they don’t take the risks that they need to take or build the systems and the capabilities into their organisations that they need to do. So, that’s absolutely crucial but you need to recognise too that the only way to grow a business over time is through its people. If you don’t grow its people, you won’t achieve the profit, the marketshare etc, all those other good things that you want to achieve. That is the first one, is what I call growth leadership.
The second one is; you need to have a way of working in your business which is what I call ‘fast cycle strategy’. You need to be able to sense changes and opportunities very rapidly and do something about them. Make sense of them, turn them into action. Find a new way of doing things and then reflect on it so you learn from it and this applies to quality processes, it applies to innovation, it applies to productivity and it applies to the business as a whole. Many businesses are just too slow for the new world.
I, myself wrote a book maybe 20 years ago called The Race to Learn which was about exactly this. Yet here we are 20 years later when you see one company after another falling behind its competitors. Simply because it hasn’t created an organisation which can learn and change quickly.
Then there’s the issue of focus, value and cost, which is the basics of competition today. You’ve heard a lot about, for example, Michael Porter’s work where he says you must either become a differentiator or you must become a cost leader.
We’ve heard a lot about disruption where Clayton Christensen has advocated that you should consider the opportunity created by a market leader who innovates too fast for their customers. In a sense creates a price umbrella under which an invader can come in and eat their lunch. We hear about these things, but the reality is, in any industry today, you have got to have an intense focus on who your customer is.
You’ve got to be really clear about who you’re aiming at. Then you’ve got to drive value to that customer up and your costs of delivering it down, simultaneously. If you can’t do that, you cannot compete. You’ve then got to think about business model innovation because we’re in a race today to create new business models.
You’ve got to consider what kind of organisation you’re going to create altogether and that begins with your basic business purpose, with your philosophies with how you’re going to measure yourself, with your people, with your processes and so forth. There are seven different components that I’ve identified and I’ve worked with over a long period of time to kind of prove that they are essential.
You’ve got to put together the appropriate capabilities and resources for your business. You’ve got to have the raw material, the weaponry to fight the war. Some of these are hard, they’re buildings, they’re trucks, they’re machines. Some of them are soft, they’re ideas, they’re knowledge, they’re reputation, they’re brands and so forth. You’ve got to have a stakeholder management process because we live in a complex world with a multiplicity of stakeholders and I define a stakeholder as any organisation or individual who votes for or against your success.
You need to have a way of influencing those people so that they are more likely to vote for you than against you. Today, you know, over and over again we see the consequences of companies falling short in this area where they don’t pay enough attention to it. Their stakeholders become their enemies rather than their partners in growing the business.
You have to have a way of pacing yourself as an organisation. So you can’t do everything all at once, you need to be able to make decisions about what you’re going to do first, second and third and at what speed you’re going to do those things.
For example, it’s very popular to say that the first mover has the advantage, but the reality has been shown over and over again that the first mover might go into a market too early. Might go in with a lack of preparation, with a lack of knowledge, with not quite the right product or service and so forth and wind up getting murdered.
Very often it’s the fast follower who does better because they can learn from the mistakes of the first person into the situation. A business going into Africa, for example, might find it best to go in quite slowly because the pioneers go in; they lay the ground with government, they lay the ground with the workforces and so forth and you have a different, more amendable environment by the time you get there.
Finally, you need a disciplined process of execution. In too many of the businesses that I’ve worked with, I find that the execution process is very slap happy. There’s no discipline to it, it happens from time to time. People will say yes, we discussed these things in our exco meetings, but the discussion itself is quite flabby. It’s a soft discussion, people are not held to account for very specific activities and actions and results.
CG: Be highly effective at execution, the eight of the critical strategy practices. Tony Manning, we’re going to talk about that in more depth in a future edition of Old Mutual Live Business, thank you for being with us.
TM: Thanks Chris.