Friday, 9 November 2001

Management Beyond Limits

Written: November 2001.

Is the management "game" changing along with the concept of competitiveness? Undoubtedly, more than ever before, the philosophies, theories and practices of management are useful tools for corporate survival. Yet, management is not done with golden rules. In an era when the power of global brands is growing fast and globalisation rules, many gurus of management stress the importance of building relationships with the target consumers rather than fighting battles with competitors. Does this mean that the game is changing?

Management decisions cannot be left to "automatic" pilots. Each method, each tool of management needs the human mind in order to be applied to each case, because each decision has different parameters. Undoubtedly, in daily corporate life, a manager cannot solve each management issue, with multiple variables and unknown, from scratch. This applies to all types of functional areas (Marketing, HR, Finance) as well as general management. The use of common logic, or of current practice of the corporation, the sector, the profession or the school of thought allows managers to save time when making their daily corporate decisions. In Operations Research terms, this means seeking and finding "local optima" rather than seeking time and mind consuming "global optima".

Yet a manager should be aware that, while this global common practice saves times, it carries associated opportunity costs. Corporations which offer their managers, at different levels, the "luxury" of studying each decision "globally", to search for solutions beyond traditional practices (or "local" searches), may actually gain a considerable competitive advantage. In other words, globalisation is the era for "global optima", irrespective of the corporation's geographical reach (local, regional or global), size, sector or "age" (new or "old" economy) For example: a traditional approach to competitiveness is via size or economies of scale or scope. a global company is normally associated with large companies (in terms of employees or revenue). Yet there is nothing that dictates that a company with e.g. 500 or even 250 employees cannot be "global", i.e. have a global presence.

For a company to be competitive,, it does not have to be global, multinational, or simply "big". Size is irrelevant. A small "boutique" can survive in its local market (and even grow beyond) in face to face competition against giants. It can even beat them. It should be noted that "survival" is a relatively objective criterion. But what does 'winning" mean in today's corporate battles? How is the score kept? What is the "game" and what are its rules? I propose that: In globalisation, the rule is that there are no rules. Each company can select and play the game it is best suited for. This is the era of the celebration of the "mind" (and the strategies the mind can plan and implement) for the creation of shareholder value beyond general rules, management recipes or golden rules (new or old), beyond the dicta of management fashions.

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