August 29, 2011 6 Comments
I find it amazing that people in senior roles in business management are as susceptible to fads in the same way as are overweight teenagers hoping to shed some kilos before their graduation party.
The major difference is that business fads can have a significant affect on thousands of people over a prolonged period of time and thus waste thousands of employee days and millions of shareholder’s dollars. I have always believed that the blame often lies with the large global consulting organisations which need to keep generating these “fads” as a way of creating new solutions that only they can implement, to solving problems that only they have identified. All they need to do is to find the right senior executive in an organisation who is weak enough to be sold on an idea he doesn’t understand to solve a problem he didn’t know existed.
Here are three I have always disliked:
1. MATRIX MANAGEMENT
The theory is that you have functional reporting lines as well as say geographic reporting lines, so the country marketing manager would report to the global head of marketing as well as the country MD, or all engineers report to the engineering manager, but also report to the manager of the project that they are working on. The idea is that this enables specialisation which increases depth of knowledge and allows better professional development, as well as facilitating knowledge sharing across task boundaries.
The reality is that a complex multi-faceted matrix creates confusion in employees as to where their loyalties lie amidst on-going turf wars as to who has the strongest line to the employee. It generally also increases the number of managers, particularly when compared to a well-managed and flat line-organisation. This has the effect not only of driving up costs by increasing the number of expensive non-revenue generating heads, but also drives up the number of meetings to ensure alignment, and slows down the decision making processes. It also allows people to finger point and play the “blame-game” when things go wrong.
In the late 1970s and early 1980s Digital Equipment Corporation (DEC) where I worked for 8 years had an over-developed matrix organisation that I believe eventually helped lead to the company’s demise. People who failed in the field could find roles in the myriad of HQ-based product lines, meaning that some truly incompetent people now had a mandate to interfere in what was happening around the world, rather than just being limited to one country. As a country MD you had to negotiate separately with every one of the product lines that you had demand for in your country. For example, Laboratory Products (LDP) might offer to fund 4 salesmen in return for $6 million in revenue, whereas Education Products (EDP) could offer you just 3 salesmen for $8 million, and so it went on, making the yearly budgeting process take up an inordinate amount of management time that would have been better spent in running the business.
Sun Microsystems was in the process of heading down the same route of moving from line to matrix when I left in 1993, having created an organisation where the country MD had direct control only of the sales force and his PA, everyone else in the company reporting to someone sitting in California. They didn’t survive either.
2. MANAGEMENT BY CONSENSUS
The theory is that rather than have top down decision making you get “commitment through involvement” by having everyone in the group involved in the decision making process. Everything is developed through collaboration with unanimous decisions being the primary goal.
The reality is that as everyone involved has the right to be part of the decision made, it also means that everyone involved has the ability to kill an idea and a decision simply by not agreeing to it. This means that only innocuous and non-threatening decisions are ever made, being generally decisions that do not drive change and do not cause any ripples in the organisation. Tough decisions get shelved again and again as they are too hard to drive to a consensus. The idea that “no one of us is as smart as all of us” does notwork when it comes to management decisions. It may work (though rarely) when it comes to brainstorming (see “Innovation and brainstorming sessions” posted May 16, 2011), but ultimately it is just encouraging the herd instinct. The truth is that even when there is a consensus it can be a decision that no-one actually wants to own, and even one that no-one actually agrees with, but one that has been taken because it is just easier than having to keep sitting there until you actually get a decision that is workable and beneficial to the entire group.
3. SIX SIGMA
The theory is (thanks to Wikipedia) that Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization (“Black Belts”, “Green Belts”, etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase).
The reality is that it is a way for consulting firms to make large and embarrassing amounts of money by passing themselves off as six sigma “black belts” when they generally have just a basic understanding of the tools and techniques. It can also breed a cadre of internal certified black-belt smartasses who believe that they have a better understanding of how a job should be done than the people actually doing it. A Fortune magazine article pointed out that “… of 58 large companies that have announced Six Sigma programs, 91 percent have trailed the S&P 500 since …” making many people believe that the six sigma craze is just a massive con. I believe that it is a way to strangle a company as it focuses only on existing processes and does nothing to drive change or innovation, and that the only visible increases are in the number of meetings that generate no results, and in the number of irritating people who, because they have spent an incredible amount of company time and money getting their certification, now believe that they have the right to interfere in everyone else’s business areas.
As Albert Einstein said “Only two things are infinite, the universe and human stupidity, and I’m not sure about the first one”.