Here is an unusual blog – it is about something that is not happening; the absence of a phenomenon, rather than its presence. So please bear with me.
One of my pet fascinations is management fads – those ideas about how to rethink or improve companies that become brands and movements in their own right. Over the last 20 years, and probably longer, we have seen wave after wave of management fad. In the late 1980s we had Total Quality Management and Benchmarking; in the early 1990s it was Business Process Reengineering and the Balanced Scorecard; in the late 1990s fads included Six Sigma, Economic Value Added, Knowledge Management, and E-Business. These fads were accompanied by lots of buzz in the business press and specialist conferences, they often became branded practice areas for consultancies, and they became things for companies to invest in because everyone else was doing them. Needless to say, these fads also flamed out – some companies saw benefits from their efforts, many did not, and in some cases (Reengineering for example) the concept became almost entirely discredited.
Interestingly, this obsession with management fads also spawned a whole genre of business books – Beyond the Quick Fix, Fad Surfing in the Boardroom, What’s the Big Idea – to help managers keep track of all these fads and hopefully make better decisions about how and when to use them.
So what has happened over the last decade? Well, I have been watching out for the next big management fad for a while now, and I am baffled because it doesn’t seem to have come along. Of course there have been plenty of ideas and issues kicked around in the management press – I am not suggesting for an instant that we have reached “the end of history” when it comes to management thought. Trendy ideas today include Web 2.0/Management 2.0, Big Data, Corporate Sustainability, Authentic Leadership, and Crowdsourcing/Crowdfunding. But these don’t qualify as management fads in my book, at least not yet – they just haven’t attracted the same level of hype or mass-market adoption that we saw back in the 1990s with Six Sigma, EVA or BPR.
Not convinced? Well, here is some data collected by Daryl Rigby at Bain. He diligently surveys CEOs every year to ask them what management tools (aka fads) they are using. His 2013 data, which just came out, shows that companies are using fewer and fewer tools – in fact usage has been on a steady downward curve, from an average of 17 in 2006 to 9 in 2012 for large companies. And the most popular tools last year were Strategic Planning, Customer Relationship Management, Employee Engagement Surveys, Benchmarking and Balanced Scorecard – nothing remotely new, in other words. The new tools he added in –like Big Data Analytics and Open Innovation – were way down the list in terms of usage.
So there really is something happening here – management fads haven’t disappeared entirely, but they are on the wane, and they have been for a decade. So what’s going on?
Has the supply side dried up? Have we run out of ideas? This doesn’t seem very plausible. The management writing industry continues to grow, and there is no shortage of stuff happening that academics, gurus and consultancies can write about. And while many of these “new ideas” are recycled versions of older ideas, the same can be said about the “new ideas” in previous eras. BPR, EVA, the Balanced Scorecard and so forth – all of these were old wine in new bottles.
Perhaps the demand side has changed? This seems more likely. Some companies still have bad memories of previous fads that cost a lot of money and provided few tangible benefits. And it is possible, as a result, that companies have become more sophisticated in what they buy from consultants and gurus. This is certainly what executives tell me is going on – they say they bring in the consultants to solve a specific problem, rather than to roll out an off-the-shelf solution. Of course they would say that, but there actually seems to be some evidence –this time- that it is true.
But I think there is something else happening as well. I wonder if we should think of management fads as a luxury good. Since the new millennium, the economy has been mostly in pretty bad shape. In these austere times, companies have been focusing on what has to be done – sometimes its cost-cutting, sometimes it’s a focused growth effort around one technology or market region.
Compare this to what was happening the 1990s, an uninterrupted decade of growth. During that period, the “rising tide” of technological change and low interest rates was raising all the boats. Profits were plentiful, so there was plenty of scope for spending on luxury goods that weren’t really needed. And maybe there was a bit more insularity in executive thinking as well – a tendency to copy what the competitors were up to, rather than ploughing your own furrow.
But whatever exactly was going on then, it proved to be fertile ground for the gurus and consultants with their ready solutions. Management fads were a perfect way for executives to convey the impression that they were progressive and modern in their thinking, but with very little risk that the outcomes could be objectively assessed as successful or failed. For the people leading these projects, they were also highly engaging activities – an enjoyable distraction from the day-to-day realities of business.
Management fads, in other words, are a cyclical phenomenon – they rise and fall according to business confidence. This is weirder than it sounds, because many of these fads have historically been about cost-cutting and quality improvement, which should be more prevalent in a down-market, but turn out to be more popular when times are good.
If there is any truth to this hypothesis, it is actually good news – companies have become more focused on doing what’s necessary, and less susceptible to the crazy ideas hatched by academics, gurus and consultants.
But its not all good news. Companies may be relying less on consultants to tell them the solutions to their problems, but they aren’t showing many signs of original thinking of their own either. I believe there is enormous scope for innovation in how companies get their work done – how they make decisions, coordinate activities, motivate their people and so on. But if they aren’t going to ask the consultants to innovate the practice of management for them, companies need to take that task on themselves. That is where the real opportunity lies.