Inside Business: Keep an eye on the ball
Robert Heller's new book examines how European firms can compete globally, reports Roger Trapp
Sunday 07 September 1997
But Mr Heller is too smart for that. He does not even go in for lengthy examinations of specific companies. Rather, different organisations are brought in and out of the picture to illustrate points good and bad.
Accordingly, Marks & Spencer is introduced for a brief section on the development of the concept of the "virtual organisation". Pointing out that "M&S has been a manufacturer without factories ever since the founder, Michael Marks, decided to sell all goods at the fixed price of a penny", he then explores the tensions created when a company seeks to hang on to its reputation as a benevolent employer while not maintaining total control over the people and operations working on its behalf.
Similarly, he looks at LucasVarity to examine the problems that are threatening to undermine the 1996 merger that soon ceased to be thought of as a genuine marriage. In particular, he pours doubt on the ability of the much-touted concept of re-engineering to bring about a substantial change in fortunes.
Emphasising the limitations of an approach that even its proponents accept has a high failure rate, he says that LucasVarity appears to be one of those companies where spectacular results have been achieved in parts of the organisation while overall performance continues to disappoint.
"The key lesson of the failed re-engineers is that initiatives to reshape businesses and their cultures often founder because top managements, while preaching revolution, in practice never go beyond narrow reform," he adds.
This sounds defeatist, but he is not totally without hope. Conscious that he is writing at a time when it is becoming widely perceived that Europe is falling behind the United States and Asia in the take-up of new technologies and approaches to business, he suggests that "a new breed of excellent managers" is emerging to take up the challenge of trying to catch up with the Americans and Japanese.
No doubt also conscious that business readers like action plans, he sets out 10 "vital renaissance strategies" that are adopted by leaders desperate not to take their charges into the footsteps of those who converted great companies into not-so-great ones.
These are: devolving leadership without losing control or direction; driving radical change in the entire corporate system, not just in its parts; reshaping culture to achieve long-term success; dividing to rule, winning the rewards of smallness while staying or growing large; exploiting the organisation by new approaches to central direction; keeping the competitive edge in a world where the old ways of winning no longer work; achieving constant renewal by stopping success from sowing the seeds of decay; managing the motivators so that people can motivate themselves; making team-working work, the new, indispensable skill; and achieving total management quality by managing everything much better.
Many of the still mainly American leaders that have gone down this route are heading young, high-tech companies. As Mr Heller points out in his book (published by HarperCollins at pounds 20) the "two streams" of new technology and new management ideas flow together. But executives such as Jack Welch at General Electric of the United States and Robert Goizueta of Coca-Cola are recognising that older organisations must face up to what management guru Peter Drucker refers to as "the new realities".
There does, however, appear to be one significant problem; another development of the modern world is the apparently endless desire to personalise everything, so that any kind of success or failure at an organisation is put down to the role of one person.
Accordingly, the apparently successful shift in focus from manufacturing to marketing at the sports goods company Adidas is, as Heller describes, attributed to the arrival of Robert Louis-Dreyfus, the former Saatchi chief, as chairman and chief executive, while everybody is familiar with how Liam Strong, the Sears boss, was blamed for everything that went wrong at the retailer when he could not possibly have been responsible for everything.
Nevertheless, as the likes of Bill Gates of Microsoft and Andy Grove of Intel are continually reminding us, the stakes are too high for European companies to shrink from such obstacles. Mr Heller's real theme is to be bold and to not be hemmed in by the old ways.
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