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The globalisation of business has resulted in new trends of thought on various aspects of business management. There are increasing signs that some of the intuition and insight developed earlier are at odds with the current global realities, requiring a re-examination of the many traditional management assumptions. Some areas of thought, and indeed practice, have become redundant or obsolete, while others have acquired refinement in their approach. In yet others, a completely new body of thought has had to be developed given the effects of globalisation and their impact on businesses and in turn, management. Some of these aspects are examined here. Looking Back … Thinking Ahead If we look back on the strategic mapping of the 1990s, we could say in retrospect, "The future was predictable, but hardly anyone predicted it." If we look at Europe for example, instead of "a new world order" the collapse of the Soviet Union and communism have created more political instability than there has ever been since the end of the Second World War. The important point is not why strategists erred, it is how their survival strategists now need to change to cope with the disorder they failed to predict. The answer will involve much more than the strategic fine-tuning that normally accompanies dips in the business cycle. A complete reassessment is needed, and where and how global firms operate, must be radically reorganised. There are few certainties in the coming century. The few that exist centre around the fact that the emerging world business environment will be a multi-cultural one, where information barriers will continue to fall, and where lessons from the past will be of limited used to those seeking to plot a strategy that will stand the test of time. The new reality is that the world economy, for at least the rest of this century, will be more, not less, complex and unstable. The process of creating strategies is therefore on-going and demanding, requiring still more attention from senior management and a better coordination of ideas by all parts of a global company. Gary Hamel, associate professor of strategic and international management at the London Business School, carries this trend of thinking further when he says, "The future is not unknowable … the companies that can see and understand it are not those that are better at predicting it, but those that are better at imagining it." Insight into the future does not come from merely looking at the existing trends, and then extrapolating them. The starting point, in Hamel's opinion, is to think deeply about the discontinuities that will affect a particular industry, the facts that may change an industry's structure to one's advantage. Reengineering Developing and maintaining a competitive edge in a global business scenario can draw deeply on an important new trend in management thinking, a radical set of ideas known as reengineering. Instead of blindly downsizing, which very often leaves a corporation as bureaucratic and as inefficient as it was before or restructuring by the selling of assets or making pure head-count reductions, two MIT-trained management experts, Michael Hammer and James Champy, are advocating reengineering. Reengineering redesigns work around a company's business processes, the end-to-end activities that create value for customers. As defined by Hammer and Champy in their book, Reengineering the Corporation, "reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, service and speed." He first step in reengineering is to identify the processes in a company. This is of course easier said than done, as most organisations tend to think in terms of function rather than processes. The traditional approach is vertical rather than horizontal, focussing more around departmental activities, ad not around the cross-functional collection of activities that create value. From identification, the least competitive processes are singled out (say a 30-day order-processing delay against a competitor's 10 days), as well as those that are the costliest or the most prone to customer complaint. The step-by-step manner in which this is done is as follows : Build
up a level of understanding of the current system by mapping out
the process flows and measuring process effectiveness What the engineering team should finally deliver is : An
assessment of customer needs by segment For example at IBM Credit, an IBM subsidiary that finances the parent company's computers, the credit approval process has been cut from six days to 90 minutes, by simply having a single employee handle each financing proposal in its entirely, rather than having the matter go from department to department. Several other companies such Hallmark Cards, Aetna Life and Casualty, Bell Atlanta and Texas Instruments have improved their performances in similar fashion, in processes that are as varied as new product development and customer service. As successful as it is, 70 per cent of all reengineering efforts fail, according to the concept's own investors. Yet some results have been spectacular: a cutting of headquarter's structure costs by 25 per cent, a reduction of pharmaceutical development time by a third and development staff number by half, as well as the halving of semiconductor development time. The radical character of reengineering is both the reason for the appeal and its frequent failure. What is needed therefore is a vision coupled with a practical guide map for organisations to plan and successfully implement change through reengineering. |
