– and it’s wrong.
Elephants with many names
Let’s stipulate that most businesses aren’t charities. They exist to make money.
With that in mind, what do the following have in common?
Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Balanced Scorecard, Management by Objectives (MBO), Lean, Cloud Computing, Total Quality Management (TQM), Human Capital Management (HCM), One-Minute Management, Bring Your Own Device (BYOD), Management By Walking About (MBWA), Matrix Management, Activity-Based Costing (ABC), Core Competencies, The Learning Organisation (TLO), Competitive Advantage, Benchmarking, Social Media, Organisation Development (OD), Net Promoter Score (NPS), Scenario Planning, Corporate Social Responsibility (CSR), Web 2.0, Business Process Re-engineering (BPR), Situational Leadership, Management of Change (MoC), Theory of Constraints (ToC), Just-in-Time (JIT), Single Minute Exchange of Dies (SMED), Statistical Process Control (SPC), Data Warehousing, Projects in Controlled Environments (PRINCE), Big Data, Six Sigma, IT Infrastructure Library (ITIL), Myers-Briggs, Total Productive Maintenance (TPM) and – even – Customer Experience?
They are all management fads: labels for bundles of fashionable ideas, or processes, or technologies all sold on the promise that they will improve the business.
Most are based on some nuggets of common sense. Some can point to businesses that will testify that they adopted the idea / technology / process / philosophy and things got better.
And yet, and yet…
The money problem
If you remember, we stipulated that businesses exist to make money. If so, then the rationale for these silver bullets has to be that, in the end, the businesses which adopt them make more money.
In my experience, for most companies, these fads almost always end up being things which businesses do instead of making money.
If you add up the cost of the investment in technology, consultancy fees, corporate effort, time and disruption of attention associated with each fad listed above, across all the companies which have tried them, then I wouldn’t be surprised if the total spend per fad was some way north of billion dollars.
In some cases, much more.
I would be also be very surprised if the return per fad was anything like as big, even if we only look at those which have succeeded.
And this is before we take into account that most such management initiatives fail.
We need to do something different, to make things better. We adopt one of these labels, dress it up as an initiative and believe that it will give us a solid business return – but most of the time, it won’t.
This is the elephant in the meeting room. We think that doing these things will make our business better. It’s the other way round: if we need to make our business better we should do whatever helps us get there best, and not just assume that management fashion will be the simple silver bullet we need.
I’m not saying that any of these initiatives are bad things. They almost always are are based on some nuggets of common sense or insight and a few can point to some companies that will testify to the results they achieved.
A hidden law of business
So what is wrong? I think that what these good ideas into money pits, that they fall foul of one of the hidden laws of business. Managing a business of any size is so complex, demanding and fluid that success requires significant intellectual effort. But this is where the law comes in:
Most people will do anything – including sustained hard work – rather than think.
Thinking about something – trying to work out the right thing to do, or solving a persistent problem, or trying to determine the best way to proceed, or working out what needs to be done if we are to succeed – all of these are very difficult.
This thinking is just hard. So hard that most companies and most people find it easier to lose sight of the bottom-line returns they are seeking, and focus instead on successfully completing the big tangible milestones which each fad entails.
- CRM system installed? Check.
More sales as a result? …err…
- BYOD policy in place? Check.
Staff working more productively as a result? Whoops.
- Net promoter score programme installed? Check.
Customers staying with us longer and spending more as a result? Who knows?
It is just so much easier to focus on the deliverable, rather than the outcome.
How can we beat this problem?
Begin with the outcomes. Before committing to any of these things – or any other change, we need to list the three to ten things which fit under this heading:
By the end of this activity / initiative / project, we will have..
- By the end of this CRM implementation, we will be using it to increase sales revenues by 15%.
- By the end of this Lean project, we will have applied it to reduce unit costs by 20% .
- By the end of this customer experience programme, we will have increased customer lifetime revenue by 50%.
Not systems installed but systems used.
Not stakeholders trained, but stakeholders doing.
Not stuff delivered but value achieved.
Once our outcomes are clear, then we can by all means adopt the initiative we like; we just have to make sure that the focus is on the outcome, not the groovy new jargon / framework / system that the consultants are proposing or the technologists are selling. And if our focus is on the outcome, we can pay attention to other work we have to do if our project is give us the value we want.
Of course, I may barking up the wrong tree. So please: prove me wrong. Are you implementing one of these fads (or some other)? Do you recognise this problem? If so, how have you overcome it? If not, what are you doing to ensure that real value is delivered?
Please do let me know – and good luck.