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- Herausgeber: Amsterdam Publishers
- Kategorie: Fachliteratur
- Sprache: Englisch
Our societies have come to the end of the road. We need a fundamental reconstruction of the
systems and institutions that now govern us and redefine the roles of all the players with a stronger focus on making things work by respecting the human dimension. This is not a choice between socialism, and capitalism or any other –ism. There is no future for any pure –ism. Life is too complex and interdependent for that. We need organic institutions with a clear view of purpose and values. We need governments that guide and inspire, rather than direct and control. We need corporations that pursue value creation for all stakeholders
and finally we need citizens that reassume their personal responsibility for the wellbeing of
society.
The world’s complexity grows exponentially in the 2010s and 2020s. And with it the challenge
to management at any level of any organization anywhere. The purpose of this book is to help
managers deal with this complexity by offering some simple concepts, models and ideas on topics varying from corporate strategy to organisation, leadership and operating performance. The working hypothesis in doing so is that there is only one way of dealing with complexity and that is by making things simple.
In this book Mickey Huibregtsen shares his vision and ideas with next generations of leaders. This book is relevant for managers at any level in any type of organization who aspire to “see the forest through the trees”.
Das E-Book können Sie in Legimi-Apps oder einer beliebigen App lesen, die das folgende Format unterstützen:
Seitenzahl: 184
Veröffentlichungsjahr: 2019
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MICKEYHUIBREGTSEN
MANAGEMENTMADESIMPLE
Ideas of a former McKinsey Partner
This book is dedicated to all my clients, who taught me so much and were such a joy to work with.
Copyright © 2018 Mickey Huibregtsen
Amsterdam Publishers, The Netherlands
amsterdampublishers.com
ISBN 13: 9789492371942 (hardback)
ISBN 13: 9789492371959 (ebook)
NUR: 780
All rights reserved. No parts of this book may be reproduced or transmitted in any form or by any other means, electronically or mechanically, including photocopying, recording or by any other information storage and retrieval system, without written permission from the publishers.
Editorial: Mickey Huibregtsen
Illustrations: Annushka Kamp, Kamp Quality Media
Cartoons: Marc Baaij
Design: Wentelwereld Grafische Vormgeving en Uitvoering
Ebook production: ePubStudio.nl
Contents
Preface
Simplification is one of the major challenges of the twenty first century. For many people the modern world has become too complicated to grasp. In a business environment that is changing faster than ever, the complexity of running an organization – business or otherwise - is overwhelming for many managers.
They feel that they are losing control over all that is going on and as a result do not know what to do when. Their leadership becomes ineffective and risk-avoidant. Visionary leadership coupled with fast and clear decision making has become a thing of the past in most organizations, apart from some start-ups. In this book, Mickey Huibregtsen passionately advocates for the simplification of companies and society. Obviously, he has thought about this a long time. His arguments are not only persuasive, they are based upon many years of experience within McKinsey & Company counseling a wide array of corporate, social and governmental clients. In addition he has founded and led several NGO’s in recent years.
I have come to know Mickey as a visionary man. He has a broad perspective on things that are going on in the business world and society at large, and couples his insights with a strong intuition that leads him to where he needs to be. He shares this broad perspective with the reader in this book. A wealth of insights is the result, and I recommend Management Made Simple to all the managers who seek to be truly effective in the leadership of their organization.
Intuition is something that cannot be taught, because it is given. But all those managers that lost their intuitive ability because the reality of their organization became too complex, can use this book to regain their perspective and control so they can bring out their leadership qualities again.
Adjiedj Bakas, author of Capitalism & Slowbalization
Introduction
The world is increasingly more complex and this makes management at any level of any organization more challenging. The purpose of this book is to help managers deal with this complexity by offering some simple concepts, models, and ideas on topics varying from corporate strategy to organization, leadership, and management tools. The underlying assumption for the book is that the only way of dealing with complexity is to make things simple, but in the right way.
To determine whether a particular simplification is justified and pertinent calls for personal judgement. Thus the following only offers tools. These do not replace the need for a craftsman to select and apply them.
Before diving into the various ideas, it is important to understand some of the fundamental trends, and the scope for improvement in many areas, that are at the heart of the unnerving and escalating complexity that every manager is facing today as well as the desired paradigm shift that logically flows from this.
TRENDS
Many – generally very successful – books have been written about trends and the number of relevant trends is growing. To keep things simple, I will look only at those that seem most pervasive and relevant to both operational and strategic management. In my view these are:
The accelerating
pace of change
in virtually every dimension of management.
The increasing
globalisation
of business and politics.
The escalation of the role of
emotions
in all our actions.
The expanding
role
of
corporations
in society.
All of these have been occurring for a while but have shown some acceleration in recent decades so that their impact – once limited to incidental aspects of the business – now tends to be pervasive. These trends do not operate independently, but rather tend to feed on one another. And other factors, such as information technology, mobility, and liberalization of social and political values all interact with them.
Accelerating Pace of Change
Alvin Toffler in his 1970 book Future Shock, demonstrated exceptional visionary qualities by focussing on a topic that has since become a crucial element in everyday life: the ever-accelerating pace of change.
Change is a relative notion. What constitutes rapid change for one observer may seem like stasis to another. For managers, the pace of change in their lifetime as managers is the most relevant reference. In those terms, it can be argued that in the 1960s most factors that were critical to business managers – such as technology, market preferences, and currency rates – changed only relatively slowly. Many strategies in those days assumed a stable environment, a competitor that did not move, consumers who were constant in their preferences, and fixed logistical and financial boundary conditions.
A by-product of the accelerating pace of change we are now seeing is the greater possibility of fundamentally unpredictable outcomes, despite the most thorough investigation of facts and trends. In short: everything impacts on everything else. This is a phenomenon – just like the weather – in which science, in the form of chaos theory, has taught us to prepare ourselves in developing strategies and choosing courses of action for a wide range of possible outcomes.
A simple so-called “logistic” equation as shown in the following exhibit can result in a wide range of possible outcomes “Y” once the variable “X” surpasses a certain value. This “X” can be interpreted as a measure for the rate of change. All around us we see indications that we are far into this range of unpredictability.
Compared to yesterday’s walk through a desert, management today is a climb into the mountains. Managers can count on encountering ever-changing weather conditions and terrain. Changes can be both hard, such as currency swings, and soft, such as consumer preferences. And the continuous interaction of all these factors can make it hard to precisely identify cause and effect in particular situations.
It is this combination of rapid change in the competitive environment and fundamental unpredictability of future events that has totally changed the landscape of management. While Darwin’s theory of evolution allowed for hundreds, if not thousands, of generations of a species to adapt itself to a changing environment or become extinct, managers have had to adapt, in a single century, to a move from an inherently stable to an inherently unstable business environment. It is thus not surprising that both the average age of corporations and the average tenure of its leaders have tended to decline.
Royal Dutch/Shell was one of the first large multinationals to introduce the notion of scenarios – alternative external outcomes – into their planning cycle. Originally, in the 1950s, they worked with two scenarios. Now there are many with subsets. Strategic planning in general must deal with this escalating uncertainty that sometimes leads to total ambiguity.
This accelerating pace of change and increasing uncertainty of outcomes is visible in virtually all aspects of business and organization, including:
Consumer preferences
The practical ‘life’ of a technology
The business make-up of leading corporations
The political landscape
Currency fluctuations
Capital flows
The manager of today, whether in business or government or anywhere else, must deal with a factor that the human species by nature fears and tries to avoid: fundamental external change. And this in an environment in which making internal changes has become far more difficult because of ever more stringent government regulations and ever more demanding stakeholder consultation practices.
Increasing Globalization
Globalization is both a cause and a result of change. Developments in communication, transport technology, and corresponding adaptations of government regulations have opened up the world. At the same time, this more open world has contributed to a far-reaching redistribution of labour and competitive positions.
The reach and impact of globalization cannot be overestimated. Globalization, in combination with the emergence of new economies, will continue to reshape the economic landscape of our world for years to come. And here again, the accelerating pace of change will only add to the turbulent environment in which most managers will have to operate. Globalization of business is a staged process, starting with component supply and sometimes ending in complete relocation.
Globalization affects all parts of the business system:
Research and development
Sourcing of products and services
Sourcing of people
Manufacturing
Logistics and data management
Marketing, selling, customer support, and service
For the existing truly multinational corporation further globalization will mean ongoing reshuffling of both the make-up and the location of their activities. For most traditionally local companies, globalization will force movement beyond their traditional borders.
Few economic activities are truly isolated from globalization, and in those instances where providers are not yet reaching out to consumers – such as in top quality health care – consumers will soon reach out by going internationally for the best care. And some have already been doing so for quite some time.
While in 2000 only between 10 and 15 per cent of the world’s gross national product was exposed to international – frequently global – competition, in 2020 this will increase to more than 40 per cent and the corresponding increase in global trade will be very significant, unless the recent nationalist movements interrupt this inevitable process.
While in the 1950s a new start-up could grow and flourish for decades in its home country before having to consider international expansion, these days, start-ups – at least those outside the super economies – must incorporate an international strategy, if not a global perspective, from almost day one in their business plan. These are the so-called ‘born-globals’ like Google, Nextdoor, Uber and Zalando.
The combined impact of these developments will be that managers will have to continually rearrange their positions and priorities while operating in a highly uncertain environment.
Exploding Emotional Revolution
In addition to all the above we will see a dramatic shift towards emotions as a critical factor in almost all aspects of our economic world, as it has been in our social world. The fashion consumer does not go out to buy a particular product anymore but to have a ‘buying experience’. The average employee is not only looking for a pay check but for ‘fulfilment and self-development’ as well.
The natural tendency of managers to ‘go by the numbers’ has evolved over the last decade, inspired by numerous management books referring to Emotional Quotient (EQ) rather than Intelligence Quotient (IQ) as a key factor for success. Managers are increasingly trying to deal with the ‘soft’, emotional, dimensions of employee relationships.
Two complementary developments seem to be at the heart of this evolution, if not revolution. First, products under the pressure of increasingly effective competition are approaching commodity status in objective terms. There are no really bad cars anymore, just as there is no bad gasoline. And differences in total production costs, and therefore in most instances price, have narrowed simultaneously. So, there is less room or reason for a rational selection process.
Second, people – at least in the developed economies – have generally climbed Maslow’s pyramid to a level where they can afford to let their emotions flow and dictate their decision making. As a result, the feel-good aspect of a purchasing decision plays a far more important role than the objective fact based comparison.
Here again the real impact of change is far more extensive than most are willing to accept. There is virtually no dimension in business life in which emotions do not play a significant role. Employees need to be inspired, advisors to be trusted, suppliers to be relied upon, customers to be touched, and bosses to be admired.
The evolution of business – and any other type of organization for that matter – can be described in three phases, the focal points of which are to be found in the late nineteenth and early twentieth century, the second half of the twentieth century, and the early years of the twenty-first century.
The Industrial Revolution:
In this phase the primary focus of management was on achieving productivity through artificial power and economies of scale by standardization and mass production. Emotions were completely disregarded and even actively discouraged. Charlie Chaplin’s Modern Times offers a wonderful picture of the mindset behind the Industrial Revolution.
The Information Revolution:
The opening of the world to information without boundaries triggered a totally new perspective in business focus and the role of, and interaction with, the key stakeholders around the corporation, including, in particular, employees, customers, and suppliers. Modern technology, culminating in the internet, PCs, iPads, and iPhones helped to regain the freedom that the Industrial Revolution had tended to constrain.
The Emotional Revolution:
While the impact of the Industrial Revolution and the Information Revolution is still expanding in certain areas of the world, the Emotional Revolution increasingly dominates the management landscape, permeating virtually every aspect of business, ranging from R&D to after sales service and everything in between.
These three revolutions appear to represent our collective climbing of Maslow’s pyramid.
For the consumer and customer, the Emotional Revolution is most visible in the enormous increase in the importance of brands and reputations. For many consumer-oriented corporations the value of the brand as estimated by retail experts represents a very significant portion of the total value of the corporation.
Even at the business-to-business level, the importance of emotions should not be underestimated. With products and services nearing commodity status the emotional profile of a buyer-supplier relationship tends to become the deciding factor in any agreement. Trust and empathy are increasingly valuable for all companies.
For employees, the Emotional Revolution may ultimately determine the difference between a successful and a mediocre company. Not only is the competition for talent heating up, but so too is the fight for inspiration of employees. Maslow’s theory about consecutive levels of aspiration is easily translated onto the level of the average employee. The organizational implications of moving out of the Industrial Revolution phase into today’s world of emotions are far-reaching.
The Expanding Role of Corporations in Society
Corporations are passing through a trend reversal in terms of their active involvement in society. During the Industrial Revolution corporations grew rapidly and they became the centre of societal development in terms of local housing, care, and education. At that stage corporations, through their economic power and the strong social networks around their top management, also tended to be quite influential in shaping local and central government policies.
The advent of democratization and the strengthening of centrally organized social care systems in housing, healthcare, employment protection, and the like, reduced the role of large corporations back to a focus on their productivity and economic function. Governments around the world were more than eager to claim their primacy in establishing ‘proper’ levels of welfare and social care.
While expanding the reach of governmental influence in the daily life of the citizen, and establishing ever more detailed social practices, governments soon realized that they needed to rely heavily on corporations for implementing, financing, and operating their policies in real life. Issues like healthcare, continuity of employment, funding of pensions, and integration were back on the agendas of top management, but now under the tutelage and precise instructions of government.
At the same time, all stakeholders around the corporation – with employees in the forefront – have increasingly expected and demanded social and societal contributions from these organizations. Every self-respecting business organization now has a Corporate Social Responsibility (CSR) program and a separate department. So far, the nature of such programs has largely been reactive rather than proactive, forced upon corporations by governmental departments and many different pressure groups.
Increasingly, however, visionary corporate leaders recognize two strong arguments for becoming a Societally Active Corporation (SAC). First, they see the enormous value to their brand, reputation, and employee relationships of being recognized as an active player in the development and protection of the highest standards for business conduct vis-à-vis society.
And second, they realize that it is far more productive to actively apply and leverage their expertise, capacities, and market access into social and societal development than to respond passively to sometimes ill-conceived government measures and regulations for implementing chosen policies. Many corporations are now developing programs for neighbourhood development, schooling, retraining, and environmental protection far beyond the direct formal demands placed upon them by outside agencies.
The sheer size of some of the world’s largest corporations puts them, in economic terms, equal to or above more than half of the world’s economies. While a few of these corporations still try to disregard their societal responsibilities, most recognize their potential and their obligation to help make this world better.
Given the modest potential for top-down intervention by large government in an increasingly volatile world, corporations will emerge as one of the few practical sources of effective change to help society develop in new and constructive directions.
SCOPE FOR IMPROVEMENT
Why bother to take management seriously, rather than frown upon its suspect practices, as is common among some groups in society? In the eyes of some, management is evil. And indeed, it can be evil, but it also has the potential to guide the world to enormous opportunities in both economic and social terms.
Too many managers themselves believe they have only marginal impact and marginal opportunities, whereas the scope for improvement in quantitative and qualitative terms is dramatic. As I discuss later in the book, on average we use at best 30 per cent of our overall capacity and biological studies have shown that in crisis situations, muscle power can be dramatically enhanced. And most of us know that even without a crisis we could do much better.
To illustrate the scope for improvement I touch upon four dimensions of performance. While these dimensions are of a totally different nature, and certainly do not represent a comprehensive perspective on the world, they are critical determinants for the world’s overall economic success and wellbeing. They should provide enough appetite to the average manager to go for it and really challenge current practices.
Cost Effectiveness
The cost of generating a product and a service can, in very broad terms, be broken down into Core Costs, Slush Costs and Transaction Costs:
Core Costs
are those costs that are essential and unavoidable given the current state of technology
Slush Costs
are those costs that are incurred as a result of not using state of the art design, technology, and operating practices or of underdeveloped and/or underinspired employees.
Transaction Costs
are those costs that are currently incurred in introducing and delivering a product or a service to a customer that is either non-essential or adds no value in the eyes of the customer.
Core Costs can only be affected by developing and introducing new designs, new materials and new technologies, or by sourcing from less expensive – but equally competent – suppliers. This is an area that generally receives significant management attention. From year to year these costs, excluding raw materials, in absolute terms are dropping by between 3 and 15 per cent depending on the industry.
Slush Costs are a direct measure of management’s – and the workforce’s – inability to remain up to date and up to standard in available design, systems, and day to day execution practices. The key challenge here is enhancing individual and team performance. This shortfall in performance may account for anywhere between 5 and 50 per cent of total costs.
Transaction Costs are to be found in virtually every part of the business system, but particularly on the logistics side. These costs can be very significant. Take for example a fluorescent tube in your local store. These are usually manufactured six months or more before purchase, let alone installation. This is a waste in terms of carrying costs. Here again the opportunities are enormous, though highly dependent on the stage of development of the economy.
