From the May 2002 issue of Entrepreneur

In 1977, there was no such thing as a management trend-not, at least, as we know them today. Back then, almost nobody had heard of Tom Peters' search for excellence or total quality management, much less learning organizations, business process reengineering and the rest of the more recent additions to the management lexicon. The few trends that were around-hoary ideas like management by objective-had for the most part been in place for decades.

How times change. A list of current management tools maintained by Boston-based consulting firm Bain & Co. Inc. contains 66 entries, from visioning and corporate venturing to competitive gaming and data mining. Many more have come and gone unmarked by the Bain counters, including adventure learning, co-opetition, Tao-based management and attempts to translate concepts from theoretical quantum physics to the operation of a business.

Management trends are indeed getting more numerous and fleeting, according to Paula Phillips Carson, a management professor at the University of Louisiana in Lafayette. "There are many more fads on the scene," says Carson, who has studied trends back to the 1950s.

"At the same time, we are finding that the life cycle is getting dramatically shorter," she adds. The average life cycle from introduction to decline for management fashions from the '50s to the '70s was 15 years, Carson found. In the 1980s, the cycle was about seven and a half years. "Fashions introduced in the 1990s," she says, "have an average life cycle of two and half years."

Technology: First it leveled the playing field. Where's it headed now?
Money: Capital was scarce 25 years ago. Here's its state today.
Management:Trends are multiplying fast. What will stand the test of time?
Marketing: Technology and personalization will rule this arena.
Franchising: Get ready . . . the golden age of franchising is upon us.

Styles of the Times

In addition to being shorter-lived and more numerous, many of today's management trends revolve around three overriding themes: reengineering business processes, managing knowledge and learning, and facing the changing dynamic between management and employees.

Starting in 1993, thousands of firms experienced massive change as processes from purchasing to customer service were reengineered and made more efficient. Knowledge management and the learning organization, concepts championed by General Electric CEO Jack Welch and others, encouraged companies to ensure they were open to new ideas and to put systems in place to capture and share valuable knowledge with everyone who could use it. The manager-employer relationship was affected by several phenomena: reengineering-inspired downsizing, worker empowerment and a historically tight labor market. Perhaps most important was a growing sense among employees that their own skills and employability were more important than loyalty to an organization.

To Jack Duncan, a management professor at the University of Alabama in Tuscaloosa and author of Management: Ideas and Actions (Oxford University Press), the change in employee relations is perhaps most significant. "The whole idea of the employee has been radically altered in the last five years," Duncan says. Concurrent rises in free agency, telecommuting and collaboration among employees have drastically changed the way people have to be managed, Duncan says. "It's more of a networked or virtual organization than a hierarchical organization."

WHO YOU CALLING A TREND?

10 MOVEMENTS WITHSTANDING THE TEST OF TIME

1. Balanced scorecard: As the Enron fiasco has proved, it's good to grade your company on more than financial success.
2. Benchmarking: Keep up with the best in your field, or get left behind.
3. Continuous improvement: Almost nothing is more powerful than steadily getting a little bit better over a long period of time.
4. Core competencies: For small companies especially, the importance of knowing what you're good at, and focusing on it, is paramount.
5. Customer relationship management: Customers, and your relationships with them, are what it's all about.
6. Learning organizations: Knowledge is increasingly the most important asset, and it's hard to overestimate the value in constantly gaining more of it.
7. Mass customization: Information and manufacturing technology meet here in an effort to give every customer exactly what he or she wants.
8. Mission and vision statements: Some may sneer, but they're among the most popular and long-lived management tools around.
9. Reengineering: The 1990s were the reengineering decade, but we'll benefit from improving business processes for years to come.
10. Total quality management: Over two decades, TQM has led to a turnaround in the way businesses regard quality and the attempt to achieve it.

Management Outlook

Don't look for the growth of management fashions to abate soon. The forces of rapid change, competition and ambition that have increased the number and reduced the life spans of management fads for decades are still in place. However, the nature of this moment, emerging from a downturn following a historic expansion, suggests that the next set of management trends will conform to a certain shape.

Management of innovation will be one major trend, according to Steve Ellis, a director of Bain & Co. and head of the consulting company's San Francisco office. With capital tighter and tougher standards for justifying growth forecasts, entrepreneurs need better, fresher ideas for products and services than ever. That's a challenge. "A lot of companies are going through a crisis of confidence in their ability to be innovative," Ellis says. "That's going to be a focus going forward."

After many years of increasing investment in technology for managing businesses, Ellis now sees a trend toward management investing in people to enable and encourage them to use all those billions of dollars' worth of computers, broadband data connections and software. "People haven't moved nearly as fast as the technology," he says. "Management is now wrestling with the reality of what information technology can really do to increase organization effectiveness. In conversations with CEOs, this is a major topic."

A third emphasis, Ellis says, will be on interacting with customers. Much technology has been introduced recently-Web-based ordering, for example, where a customer never talks to a person. Customer relationship management systems, online auctions, Internet comparison shopping and electronic procurement also serve to erode loyalty and separate sellers from buyers by a wall of electronics. Now companies are threatened with losing human touch with their customers. Says Ellis, "All the change that's going on is as much a threat as an opportunity."

Management Muster

There may be good reason for some management trends-but why must we have so many? Carson says some companies seek out current fashions as a way to disguise past mistakes and dodge responsibility. Carson characterizes this attitude as, "If we adopt this and it doesn't work, it's not our fault."

Another source is undoubtedly an increase in the number and energy of people working to come up with new management ideas. "There are definitely more consultancies marketing these innovations," Carson says. However, she isn't sure why. It could be because more people want to cash in on the recognition and fat fees that come with being seen as a management trend originator � la Tom Peters or W. Edwards Deming. Or it could be because companies themselves are demanding ever-newer answers to what are, after all, ever-newer problems.

IT'S ACADEMIC

Rita Gunther McGrath started two companies before joining the faculty of the Columbia Business School in 1993. Now an associate professor of management and co-author of The Entrepreneurial Mindset (Harvard Business School Press), McGrath talked to Entrepreneur about how management of entrepreneurial companies, in particular, has changed over the past few years--and how it's changing now.

"In the past 25 years," McGrath says. "the major difference in how entrepreneurial companies are managed has to do with the sophistication with which business processes are approached by young, new companies. Many entrepreneurs today take advantage of knowledge, tools and techniques they could not have dreamed of years back. The effects of this have been to level the playing field on many dimensions with larger organizations.

"I also see the use of new technologies making it easier than ever for entrepreneurs to leverage their contacts with established organizations by providing them with outsourced services, by linking with their ongoing processes, and by making the kinds of commitments that would have been inconceivable years ago.

"Young companies today are also far more open to opportunities than they were in the past. I think the advent of global trade and advances in information and communications technologies have helped this. Another big plus is that people today [are] far more open to attracting and utilizing diverse talent; that's been a wonderful development in the world of entrepreneurship.

"On the less positive side, I see a tendency for entrepreneurs to get so carried away by opportunities that they forget some of the entrepreneurial basics: Know your customers better than a big company can, keep it simple, keep it cheap, stay focused. Too many entrepreneurs spend their time processing e-mail, futzing around with advanced technology that hasn't been debugged yet and flirting with too many ideas. The new technologies are thus a boon and a bane."


Contact Sources