Business management has always been considered a ‘hard’ discipline. The higher a manager rises, the greater his (or her) powers of command and the larger the number of people who jump to obey the orders. Hard actions, moreover, are required of the hard managers. They have the authority and the duty to discipline their subordinates, close redundant activities, dispose of whole businesses, move people from job to job, and soon. And the existence and exercise of all this authority can easily create an aura of fear and trembling.
But the true hardness, that of the unquestioned army-style commander, began to soften some time ago, and the change in management styles is accelerating. It’s quickened to the point where the Harvard Business Review, in one of its On Point collections, can declare that ‘It’s Hard Being Soft’. Rubbing in the point, the first article describes ‘the hard work of being a soft manager, and the second asks roundly, ‘Why should anyone be led by you?’
MAJOR SHIFT
Plainly a major shift in attitudes is taking place, and not just in the HBR editorial offices. How far have you succumbed to the soft infection? Do you agree or disagree with these propositions?
• 'Soft' leadership is more effective than armour-plated command-and-controlling
• The qualities needed to be a strong leader are led by
(a) sensitivity
(b) vulnerability
(c) honesty about your weaknesses
• People start wanting to work with you when you stop pretending to be perfect
• Employees will eventually respect and support you when you reveal that you’re flesh and blood
• When you’ve established empathy, you can give people what they need in order to excel - which may not be what they want
• You encourage others to share responsibility by relinquishing the idea that the fate of the firm rests entirely on you
If you do agree with all or any of these notions or nostrums, then you face a hard question: are you putting this preaching into practice? If not, the reason is probably very simple. You are unlikely to work for an organisation which lives by such ideas. The above propositions are a Feelgood Formula, enshrining the familiar belief that the better you treat people, the better they will work. The good means automatically justify and accomplish the ends.
The difficulty for most organisations is that the ends outrank the means. I was once called in, at desperately short notice, to rescue a floundering but vital project. I accepted the possibly poisoned chalice on one condition. My word had to be law. There was no time for argument. I found this brief spell of dictatorship distasteful, but it worked: the hard regime won the hard results on which we all depended. In the end, managers - like all workers - are paid for the hard outcomes that they deliver; and their jobs are lost when the delivery falls short.
The soft ways of the Feelgood Formula are just good behaviour: you manage in human and humane ways because that’s the right way to treat your people. The fact that it’s also more effective is a bonus, maybe a highly valuable one. But effectiveness results, not from the degree of loving-kindness brought to bear, but on the competitive quality of the decisions taken, the processes installed, the methods applied, the technologies developed -and so on.
THE HARDEST AREAS
These are the ‘hardest’ areas of business management - in both senses of the word. Take a false step in any of these matters today, and it may take years rather than months to recover. Recently even Intel, the microprocessor champion, has been leapfrogged technologically by the far smaller Advanced Micro Devices, and is now running behind in the highly sensitive market for top-end chips in PCs and servers.
Too many such missteps, and even giants can get humbled, even humiliated. That possibility is built into today’s topsy-turvy world, whose markets are fragmenting on top of seismic changes in trends. Geopolitical and economic relationships are being turned upside down.
Did you know, for example, that ‘the global economy couldn’t function’ without Taiwan (to quote Business Week), because that island has taken over from Silicon Valley in key electronic sectors, one after another?
The Taiwanese lead the world in eight out of 12 markets highlighted by BW - that’s from chip foundry services (with 70%) and notebook PCs (72%) to LCDs (68%) and PDAs (79%).
The manufacture is mostly in mainland China and the label may well bear a Western, mostly US name. But once tiny Taiwanese firms have become global masters by deploying frankly superior skills of the intellect.
The traditional R and D department was detached from the mainstream business, a ‘soft’ area separated from the hard men who made the money. Today’s scientists and engineers form the core of the business, which springs and grows from innovation. Do you want to generate the exact measurements of a clothing customer without their having to undress? Or watch your favourite sports team anywhere in the world on a portable? Or power a portable music player from a single integrated chip? Or use a pack for pills that reminds you electronically when to take them?
All these and 21 other wonders come from what BW calls ‘cool’ companies. They are among those setting the pace. And among those bringing up the rear are some gigantic conglomerates which, not so long ago, were the overlords of the world economy. These Goliaths have one thing in common with the scandalous fallen companies like Enron and WorldCom. The latter had top managements which distorted their reported results for one simple reason: the true results were terrible.
The underlying disease of underperformance has persisted - and spread. Consider the case of General Motors which, according to the front cover of BW, has a corporate plan that won’t work and an ‘ugly road lying ahead’ – so ugly that a smaller company would have been bought and cut up long ago. In an age of accelerating change, those who rely on even the greatest past strengths risk creating ineluctable present weaknesses and insoluble future crises.
Yet GM, more than any other company, once epitomized the triumph of the professionally managed corporation. Is it now the epitome of the stranded corporate whale?
PROACTIVE WINNERS
The future is already being won by proactive companies, which can include giants; their failure is not ordained. Merely compare GM’s losses with Toyota’s profits, which exceed those of all its global auto rivals put together. The challenges are certainly great, but so are the prizes. The pressures are so powerful that the experts polled in the latest survey under-taken by the Global Future Forum envisage some radical changes in management philosophy - and these tend towards a ‘soft-hard’ future.
Many larger companies will become networks of outsourced resources, partnerships, alliances and contractors in order to become (soft) more responsive to market demands. Understanding the customer (soft) and superior retailing skills will prevail over (hard) straight manufacturing capabilities as the main drivers of success. And organisational adaptability and flexibility (soft) are becoming more important to success than operational performance and other traditional (hard) metrics.
Note that these are not blue-sky forecasts. The respondents are telling it like it is. As with all good futurology, sound projections can only spring from a clear understanding of actual events in the real world. All the same, the corporate pacemakers are certainly not in the majority. If giants like GM are stumbling, worse must be happening to great numbers of the lesser companies whose managements often hesitate before desired, desirable but problematical change.
The new supremacy of the customer, for example, is easy to talk about, but desperately hard to build into the business model. To put it mildly, call centres established in Bangladesh are not a customer strategy for the new age. They are a valuable, relatively simple adjunct to the complex tasks of creating and delivering customer expectations on a global scale with enhanced speed all round, increased efficiency, higher quality and superior specifications.
Companies like Dell are establishing new and very hard paradigms. A fascinating passage by author Thomas Friedman (who calls himself a ‘presentist’, nota futurist) followed his new laptop from placing the order to receiving the machine, tailored to his personal specifications, 13 days later. Each major component, it turned out, was made by a different supplier located in a different country (but none in the US). The physical supply and assembly of Dell’s components are held together in the iron grip of some highly sophisticated worldwide logistics which operate to meet complex requirements with automatic infallibility.
PERFORMANCE GAP
The performance gap between Dell and its competitors looms as large as that between Toyota and its also-rans –and is just as threatening. The sale of IBM’s PC business to China is clear evidence of the inexorable pressure that the genuine 21st Century company is exerting on formerly dominant laggards. True, the pressures could lessen if flexible networked companies become the norm, as forecast. This will surely have major impact, but the here and now is where some key battles are already being won and lost.
The struggle for supremacy certainly embraces the impact of products that are both highly personalised and dynamically priced. Throw in the role of customer service as a key differentiator with great impact, and you can see that the ambitiously athletic management will have to raise its game simply to stay in the competition. Yet the traditional corporate structure is designed for stability rather than adventure – and there’s the real rub.
Will boards of directors be looking at the wrong things? At stability rather than agility? To judge by the GFF survey, this is a backward world whose organisations, according to 77% of the highly informed sample, will be unable to effectively manage and deploy new technology ‘due to rapid change and constant innovation’. That inability is really soft - soft in the head.
The impact of this current and future management incapability is indeed certain to be great. The new ‘hard soft’ technology of management is the decisive factor in mastering change and innovation.
The key battleground is the intellect. Companies depend more than ever before on the mental powers of their people, especially the innovators. These brains need the greatest possible space to deploy and share their thinking. Here soft management holds the reins. You want freedom of thought to flourish. You need self-managed bands of brothers and sisters who set their own targets. Your model is the university, not the military camp. But in this soft habitat, paradoxically, you require a focus of the hardest military intensity.
GE is celebrated for its hard bottom-line focus: Jack Welch used to insist on his people cutting costs and raising revenues simultaneously, a double whammy which works mathematical magic. No doubt this wisdom was imparted at GE’s celebrated business school at Crotonville. GE stands out among global leaders, in fact, for its emphasis on human resources management (soft) as a prime means of manufacturing the high-class leaders that GE requires for its own (very hard) purposes.
GREAT HR PEOPLE
Welch talked to Fortune magazine about his former business’s ‘absolute belief that great people build great companies’ and his insistence on ‘getting great human resources people and making them part of the game’: an approach obviously analogous to the treatment of Rand D people recommended earlier by Thinking Managers. As also stressed, the new soft technology of management, which centres round that of people, holds the key to the effective, brilliant exploitation of all the other hard technologies on which the future depends.
In some cases, this exploitation will require intellectual activity at the highest level. In many cases, however, winning brains do no more than recognise the obvious and act on that recognition. For example, Fortune says that ‘if Welch had one key device, it was giving GE a simple roadmap and repeating it incessantly’. Can you, like one ex-GE CEO, place the company’s goals on a single sheet of people, distribute that message all over the outfit, and ram it home at every opportunity? Try it - for that is the kind of soft approach that creates the hard mastery of the GEs, Toyotas and Dells, both in the winning present and the golden future.
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