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Long Range Planning

41/5 October 2008

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Charles Baden-Fuller Editorial

We begin this issue with Robert Grant’s review of The Future of Management by Gary Hamel. Grant’s view is that Hamel’s claims that the existing paradigm is broken and that we need a revolution are over-simplistic, and that many of his claims as to the need for novelty are incorrect. As editor, I agree: there is already much creativity around, and the paradigm is not broken. But managers can always do better in making things happen, and Grant points to some directions. Good management is about balancing the new with the old; fostering creativity but ensuring faultless execution.
This journal is committed to unpacking that challenge for both the academic audience and the senior practising manager.
Sebastian Raisch’s article suggests we can learn much from how six large European firms have achieved sustainable balances between growth and profitability. He finds that they balance their structures in a dynamic manner, and explores how context influences their choice of structures and the optimal moment when structures should be evolved from one type to another. This is both practical stuff for managers and food for thought for academics and teachers.
James Ritchie-Dunham and Luz María Puente point out how the map of the world managers carry around inside their heads inevitably influences their strategizing. Using well established ideas, they construct an integrated framework to aid senior managers in identifying and correcting the gaps in the mental models of their organizations, be they public or private sector. While the ideas are not new, the value of this piece lies in the beguiling clarity and simple practicality of what the
authors offer.
Janez Prašnikar and co-authors examine how firms can identify and then exploit the synergies between technology and marketing. Breaking down cross-functional barriers is hard, and rarely achieved outside task-force situations. These authors elucidate an approach that has worked well in the mature domestic appliance industry, and their insights suggest that others could copy such best practice.
Finally, Jeffrey Funk offers a coherent explanation as to why incremental improvements in components can be a major source of technological discontinuities that affect whole systems. Using his deep experience of high technology industries and knowledge of the dynamics of innovation, he maps out clear pathways and models that can be used to aid our understanding and provide the bases for sound predictions of the future.
The pieces in this issue are designed to both intrigue and be useful to the practising manager, as well as providing material for the thinking academic (including those involved in their education). Our commitment to this dual audience is very special, and I am pleased to say that these efforts are rewarded with a high number of downloads among practice users - often many thousands for each piece - and a very high academic impact score (Thompson ISI score of 1.66) that puts us 17th in the world of business academic journals.

 

Robert M. Grant The Future of Management: Where is Gary Hamel Leading Us? rgrant2208@aol.com


Grant starts with a warning: Gary Hamel is on the warpath again, still ‘rattling executive cages and inciting managers to revolt’, his infectious enthusiasm undimmed after more than 25 years as a business school academic and consultant/management guru. His latest book, The Future of Management, makes two claims: that management systems and principles are founded on a hopelessly obsolete management paradigm; and that management innovation alone represents the ultimate source of future competitive advantage.
Hamel offers the Internet as the best guide to the future of management, amplifying human creativity, aggregating the efforts of the many and offering real-time, distributed networks as the modern alternative to markets and hierarchies for co-ordinating human effort. He sees its widely distributed tools, ease of experimentation, voluntary commitment, power from below, fluid authority, self-defining communities, pervasive decentralization, competition between ideas, and peer-based decision making as the likely characteristics of successful future management.
But Grant is by no means convinced: far-reaching changes in structures, systems and leadership styles for successful 21st century management – Yes. But a new management paradigm, based upon distributed innovation, participative decision making and market-based mechanisms – No. Rather he sees the extension of existing management principles and practices to embrace higher levels of complexity – particularly multidimensional integration – plus greater reliance on informal structures including self-organization as offering the more likely routes to future management success stories.

 

Sebastian Raisch Balanced Structures: Designing Organizations for Profitable Growth Sebastian.Raisch@unisg.ch

How do organisations grow both their sales and their profits? Can they pursue both exploitation and exploration at the same time. If so – how? Surveying ‘sustained profitable growers’ among European companies between 1995 and 2004, the author looks at the stories of six – including BMW Group, Nestlé and Deutsche Bank – that managed to defy the conventional wisdom to achieve balanced structures that can both exploit their current capabilities and explore new ground. He notes three ways in which these supposedly mutual exclusives can be followed up – temporal separation (where the objectives are pursued turn and turn about); structural separation (where they are pursued by establishing separate businesses) and parallel structures (where existing products are upgraded or recombined to target new customer groups, with employees moving between the different structures). He explores: why specific structural solutions were adopted, how they were executed, and what was learnt in the process. Among other lessons, he shows how the inherent costs of major structural change mean that it must not be undertaken too often, nor must it undermine the stability of customer-facing functions – but also that learning was strongest during radical change.

 

James L. Ritchie-Dunham and Luz María Puente Strategic Clarity: Actions for Identifying and Correcting Gaps in Mental Models jim@growingedgepartners.com

What managers see, what they advocate, and what they ultimately decide are influenced by the map of the world they carry around inside their heads. Having delivered this unarguable view, this article goes on to describe how consideration of 5 guiding GRASP questions can help ensure that the Goals of the organisation and of its stakeholders, its Resources (whether value-driving or enabling), its Actions, its Structures and its People (who ‘bring the organisation to life’) can be effectively linked and synergistically aligned. These five elements fit together to form a comprehensive, dynamic and easy-to-communicate GRASP map of the whole organization, offering leaders – and others – help in understanding it more clearly.
Referring to over a decade of field research and citing a wealth of case examples – large and small, European and American, for-profit, non-profit, and governmental – the authors show how to identify and correct managers' mental models to move their organizations in the desired direction, and achieve their goals. Full of exhibits offering tips on making best use of the questions, the article is aimed at giving professional managers of complex systems tools with which to achieve more effective leadership and improved performance.

 

Janez Prašnikar, Monika Lisjak, Adriana Rejc Buhovac and Mateja Štembergar Identifying and Exploiting the Inter-relationships between Technological and Marketing Capabilities janez.prasnikar@ef.uni-lj.si


Decision-makers in companies face a fundamental challenge – how to identify which capabilities to develop and which ones are no longer important in order to gain and sustain a competitive advantage. Two of these are technological and marketing capabilities. Until now research has neglected the synergies between these complementary capabilities, and this paper proposes a new approach that identifies the core capabilities, explores their interrelationships and provides guidance for a dynamic technological and marketing strategy. The methodology is explored for the case of Gorenje, a European manufacturer of household appliances where two strategically important “integrators” are industrial design as a technological capability and product development as a marketing capability. The analysis showed that firms in mature sectors can continue with niche marketing strategies if they are supported by continuous incremental innovations. Key to the successful implementation of this strategy is the development of complementary capabilities that enable management to recognise emerging customer desires and translate them quickly into product ideas.

 

Jeffrey L. Funk Components, Systems and Technological Discontinuities: Lessons from the IT Sector etmfjl@nus.edu.sg


The ever-evolving technology industry is shaped by the discontinuities that new research and new products cast up. Such discontinuities drive large changes in products and their architectures, and in some cases create entirely new categories of products. Based on research in the semiconductor, computer and IT industries, this paper describes how the mechanisms work that drive these changes. It traces 1) how incremental improvements in a system's components impact on the performance and design of systems; 2) how these incremental improvements in components can lead to discontinuities in system design through their impact on design trade-offs; and 3) how these incremental improvements in components can cause the components to become applicable to completely new systems. Simply stated, incremental improvements in components are a major source of technological discontinuities in whole systems. The paper also points out that all components are not undergoing the same rate of change with some undergoing much faster rates of change than others. The paper explains how the model can be used to understand and predict the future performance of systems and the possibilities of discontinuities occurring in them.

 

 

This issue is available in full on-line at www.sciencedirect.com

 
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