Most of us understand that we live in the times of rapid change. As I have mentioned in my previous articles, it is determined by many technological, social and environmental factors which all contribute towards a turbulence which affects the businesses today. World-class advisers and executives, when talking about change management, emphasize the importance of implementation of change-proof management style into the company’s culture and importance of hiring open-minded personnel. However, what actions need to be taken that this wasn’t only paper based talk? How to evaluate your company’s operations and team?
Differences between the old and new management models
The traditional management theory in general terms, indicates that it is very important for a company to have a vision, mission and goals to develop suitable strategies and detailed plans and to have a proper execution plan for it. Furthermore, there was a lot of attention payed to plans and they were divided into short-term, long-term and the current ones. This was logical for those times because success was often depending on the constant growth and, in order to grow, it was necessary to increase productivity, turnover and etc. Moreover, in most cases it was impossible to achieve growth without a plan, supported by the fact that the world was moving at a slower pace, technology did not change so rapidly, entry barriers to markets were high, for operational process more working hands were needed and the margins in most cases were huge. After summing all up, we can say for sure that in the earlier days when you entered the market and found the potential in it, the company’s success depended on the steady growth. This has impacted the growth of new structural units which were expanding in size and number, and afterwards it becomes difficult to manage and control those new structures so you need to pay even more attention to planning and to increased control. All this does negative impact on company`s culture, it becomes closed and cabinet-management based. Furthermore, the bureaucracy levels increase, the management becomes signature-based and etc. In this way, trust, quickness and creativity disappear, companies become clumsy and slow. I would call such companies – tied to control and plan. Please understand me correctly, planning and growth are important nowadays as well, but when the environment and technologies are changing rapidly, the significance of planning decreases because if you spend a lot of time for planning and tomorrow find out that situation has changed, it means that such type of planning has lost its meaning. Of course, the growth needs to be measurable and sustainable. That is why plans and growth need to be adapted to today’s situation, SCRUM, LEAN, AGILE methodologies and based on new technologies.
The realities of the new world are completely different. Technologies make it possible to complete tasks faster from anywhere around the world. This impacts growth of competition and shrinking of barriers to entry the market. As technologies are becoming cheaper and cheaper, they become available for everyone, and the changes are so fast, that it is difficult to predict what tomorrow will bring to us. All this forces organizations to review their business models. Growth is still important today but due to new challenges, it must be measured, achieved through process optimization, taking into account the strategy and the long-term goals of the company. Today success belongs to companies which are able to transform their businesses fast, which are proactive thinking and are fast to identify and change in accordance with the new situation. Creating a long-term strategy is as important as before but it cannot be angular and general. Todays’ vision could be renamed into the creation of a story about the company and furthermore, the story must be powerful, specific, formed in the light of today’s realities and measured. I would call such companies – tied to current trends.
Nowadays, we are living in the times when large companies are looking for possibilities how to make their business models simpler and not to lose economics of scale by doing this. Moreover, large companies are trying to transform their management style and organizational culture to be more similar to those which small or average companies have, in order to gain flexibility. Small and medium companies on the other hand, have good chances to win the competitive struggle between the big brothers due to flexibility and operational excellence. Today’s events have confirmed that small and effective structures and teams are winning the competitive battle. In my opinion, the best example of this tendency is SpaceX and its space haulage services. When SpaceX stated this idea, men from NASA, who have virtually unlimited human and financial resources, said that the thing which SpaceX are doing is not possible, and if this is possible at all, it will take decades until they are able to do this, but SpaceX success proved something different. So, we are living in between of an emerging New Era. History has a tendency to repeat itself and this is happening today, as we are observing the struggle between the Old World, and old thinking and the New World.
How to identify, if your management style and organization`s culture are based on thorough planning or on the new tendencies?
Firstly, we need to find out what is exactly a Company which is based on today’s tendencies and why do those companies reach the highest performance results. For every company, success begins from developing a story about themselves and the business which it is operating in. We can call this a mission or a vision but I prefer to call it – story telling. In most cases, success of a company is determined if its story is trustworthy and if employees and customers believe in it. In addition, to make it easier for customers and employees to believe in the story, it needs to be constructed in accordance to today’s tendencies. Furthermore, it needs to be powerful and specific and it must be able to withstand all possible difficulties of the future. The story needs to provoke promptness, effectiveness and to highlight the importance of constant change. In an ideal case, it is a company in which motivated and open-minded personnel, who are not afraid to express their opinion freely, work, all innovations and possible new situations are accepted easily and the personnel even are waiting for them. Every member of the team is result-oriented and is always trying to achieve their best. In such company every team member knows his responsibilities, each member is autonomous but at the same time knows the responsibilities of other team members and they’re always trying to help each other. They are all equally valuable to the company’s ecosystem. In such case, unnecessary bureaucracy is eliminated and the decisions are approved or declined in a fast way. Teams of such companies are not too big and not too small, they’re optimal. These teams are seeking to minimize the number of processes and the quality is the most important thing, not quantity or pompousness. Open mindedness related to each team member and to new ideas are deep-rooted in the organizations DNA. All members of the team believe in the company’s story, furthermore, they contribute a lot to the story`s development and improvement. Team members who do not comply with the fast, supportive and flexible organizational culture need to be quickly made redundant.
To move forward, it is necessary to understand the key points which show that your company is based on planning and not on the New World`s tendencies:
Closed management culture. The world is open and each day opens even more. Openness at the time of humanism is very important and it is the most important condition to achieve effectiveness and operational excellence. Without open management culture you will always be slower than your rival, this will constrain your company’s success.
Long working hours. I do not have in mind positions where long hours are a must due to task complexity or project deadliness, but there are lots of positions where 4 working hours are sufficient, but the necessity to stay in the workplace causes sitting at the desk for 8-10 hours surfing the Internet, drinking coffee and doing nothing. There are a number of studies which claim that a 4-hour working day is the most efficient one. Some Scandinavian companies are starting to apply the 4-hour working day, even Japan companies and Silicon Valley entrepreneurs are starting to decrease the working hours. What are the main advantages of short working hours? Employees start to feel important, as the company shows that they have confidence in them to arrange their work freely. Furthermore, employees start to take more ownership in their job, the productivity increases and the employee becomes more and more attached to the company.
Huge bureaucracy. Any good idea or decision can be destroyed when they are trapped in a labyrinth of bureaucracy. In most cases, employees decide not to say loud their ideas because they understand that they will be crushed by a mighty bureaucracy bulldozer.
Too little freedom to make decisions and increased control. Decisions in modern organizations are made quickly. If for every small piece of decision you need to talk with your manager, then the time spent for this process is of a zero value, this time instead could be put to a better use.
Decisions are made by a few chosen ones. The oldest ethos of business management says that employees are the most valuable asset of a company. That was true in the past as it is true today. It is important to forget the times when companies CEO and vice presidents were the only ones to make decisions and all other workers were only mere executors. Such management model for a today`s modern company serves as the main reason for decrease in overall performance and impacts company`s microclimate in a bad manner, furthermore, it encourages further closure. We need to have in mind that those few are not always the best specialists in their field and that is why their decisions may be wrong and the best decisions always come from the efficient team work.
Creativity and search for innovations are not encouraged. There are still lots of managers who do not pay attention to what other employees have to say, they do not want to change the steady status quo, maybe they are afraid that they will not be useful any more in case the company changes its direction. That is why they are trying to block all initiatives from the employees` side.
Too big teams. If company’s teams are too big, it shows that either the managers do not understand what they are doing and what human capital is needed for each task, or they lack competence in main fields and they’re hiring valuable specialists to clear this gap, or they lack competence in hiring and firing the personnel. Huge underestimated personnel is a thing of past. It is very important not to forget that it is always better to have one extraordinary employee than 4 average ones.
Company doesn’t have its own DNA. Times when most of the processes will be performed by algorithms and robots haven’t reached us yet. Furthermore, this environment needs to be designed with human hands. That is why foremost you need to strive for acquiring hardworking and purpose-devoted personnel. Organizations must have an original and to present times adapted organizational culture.
Copying and imitating rivals. This way leads to a disaster and this was proven by past years situations when huge companies without an exact vision were buying start-ups for huge sums of money and afterwards they weren’t able to monetize their purchases. In today’s world we have all needed tools to find and process information and that is why we need to develop new products. The time has shown that luck accompanies organizations which are different, which are able to make their processes in an efficient way, such companies are able to understand their weaknesses and their strength and are able to be faster than their rivals.
Setting unrealistic goals. Sometimes setting unrealistic goals is welcomed because time pressure affects employees in a positive way and they are able to achieve them faster. Nevertheless, goals need to be split in a smart manner to avoid personnel demoralization. It is important to avoid fanaticism and to implement buffers, preventing from behavioural heuristics to appear which would interfere with stopping project on time when you see that it is going the wrong way or to pivot in time.
Focusing on quantity not quality. We are all limited by time and that is why we need to be very precise with making decisions. It is not possible to be the first one in all areas. It is very important to identify strong sides and develop strategies to make them even stronger, arranging all tactical measures accordingly.
Arranging meetings without a clear point. Meetings in most cases are time consuming pitfalls. Meetings must be based on the accordance with the new management theories (SCRUM and etc.)
Narrow view at organization`s value chain. It is important to understand the value chain in which you are taking part in. You need to understand your position at it and other participants` positions as well. Openness, idea and information shearing are the main ethos here, the principle of power when one player is stronger by other players` account, must be abandoned. When competition is rising, the rivals first take over the value chains which are fragmented and unsustainable.
New management standards and technologies are seen as financial pitfalls. Investment doesn’t pay off only if new management standards aren’t used properly and technologies don’t pay off if they aren’t chosen well. In all other cases, you need to use every possible means to create a better customer service, a better supply chain, a more comfortable workplace for employees and etc.
So we have emphasised the main KPIS and cleared out why they are so important and why they prevent from becoming a company based on today’s tendencies. In conclusion, I would like to say that today’s organisations need to look at the world with an open eye, need to spend more time for reflection for better understanding their operations, process optimization, competitive advantage and for modelling company`s culture. Overall, efficiency of each operational process which is adding value to gaining competitive advantage is more important than mass process implementation.