Management processes, such as product planning, are the levers by which large companies are run. To get the picture, imagine a giant Caterpillar loader with a bewildering array of levers. Yank on one lever and the behemoth turns left, pull another lever and a giant shovel swings up, grab another and the whole contraption rotates around its central axis.
If you missed the recent news about Best Buy, it’s probably because you were working. Time is money, isn’t it? Not always. Especially not at Best Buy. The December 11, 2006 cover story of BusinessWeekOnline reports that Best Buy has inaugurated a new management practice.
In 1998 Thomas W. Malone and Robert J. Laubacher of MIT looked at how a new kind of organisation could form the basis of an economy where the old rules of business are overturned and big companies are rendered obsolete.
To the outside world, HCL Technologies (38,000 employees, $1 billion plus in revenues) is just another big Indian IT services company, and on paper its structure and its processes look remarkably similar to everyone else’s.
At the beginning of the 1990s, IBM—once the biggest, most profitable, and most highly regarded technology company in the world—stared into the corporate abyss. Its travails were financially and commercially disastrous. More important for the company’s future was that what had made IBM great no longer worked: its culture and values had stagnated.
Design is the height of corporate chic. It is endorsed by management gurus as the new thing. Car advertisements feature designers rather than glamorous men and women. People know who Tom Ford is. Design superheroes, such as Alberto Alessi and Philippe Starck, glitter on the pages of magazines. Their Midas touch is applied to everything from kettles to hotels.
Oticon, the Danish hearing aid technology company, was a world leader in behind the ear hearing aids in the 1970s but by the 1980s its market share began to decline, as people moved to ‘in the ear’ models. By 1987, the company’s market share had dropped from 15 to seven percent and it was starting to lose money. Lars Kolind took over as CEO at Oticon in 1988 to turn its performance around.
In 2000 Procter & Gamble (P&G) was at a crucial point in its long history. One of the world’s best-known corporations and creator of some of the world’s most famous and successful brands was at a crossroads. Its CEO, Dirk Jager had left after a mere 18 months in the job.
Corporate history is littered with tales of complacency, companies locked in their comfort zones, blinkered and unable to see changes in the marketplace and emerging opportunities. Think back to buggy whip makers at the turn of the twentieth century who ignored the development of the automobile.
The World Bank, whose stated mission is to combat global poverty and foster development through long-term lending, is akin a to a giant cooperative, with more than 180 member countries acting as shareholders. It’s a by-the-book organisation that typically takes a cautious, often ponderous, approach to decision making.
UBS Global Wealth Management & Business Banking (UBS Global WM&BB) — the private banking, retail and corporate banking division of the giant Swiss bank — offers a fascinating insight into how change can be facilitated by getting rid of a redundant and value-destroying process: budgeting.