Inside Business: Plus ca change ... management take note

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The Independent Online
It has long been fashionable to criticise British management as dominated by the finance people at the expense of engineers and more creative types. But evidence from strategic management consultants PIMS Associates suggests that, for all the talk of focusing on people, executives are not being hard-headed enough.

The firm claims that a study of more than 3,000 different businesses shows that about a dozen key elements of strategy covering such areas as market share, productivity, capital mix and marketing intensity determine how well a business performs. With just a few alterations they are the same as those identified 20 years ago, yet few businesses seem inclined to take note of them in formulating today's strategies.

It adds that its study proves that business situations can be understood by a scientific approach that can be used to shape strategic decisions for any business in any market.

John Hillier, a PIMS consultant, says: "What's interesting is that management fads and fashions come and go, but the underlying characteristics of what drives business performance seem to be time-independent."

He feels that: "People don't like it because they think they can break the mould," and because they "believe in the mystique of business".

However, he stresses that PIMS is not seeking to replace management decision- making. "It's about structuring management decision-making, in particular where there are large portfolios." For example, if a company had divisions doing different things it could use the analysis to decide which areas to concentrate on.

Moreover, although the factors are not counter-intuitive, they are possibly overlooked by managers because they require them to call on a wide variety of skills that still tend to be stuck in functional fiefdoms.

There is also the opportunity for management input in that, for the system to work, the analysis must be applied differently to different sectors. For instance, in the steel industry allowance must be made for the fact that there will be a high proportion of capital tied up in fixed assets and a few large customers, while in retail the opposite is probably the case.

In a way, the consultancy came up with the idea of a balanced scorecard before the notion became as popular as it is now, Mr Hillier says ruefully.