‘There is
nothing so practical as a good theory.’ KURT LEWIN
A ‘model’ is a representation of certain elements
of a system, selected for experimenters to explore and/or describe specific
aspects of the system for a particular purpose. They are not built to represent
the complete system. Thus ‘symbolic models’ are constructed from mathematical
(symbols) equations, such as a macro-economic model. It can also be
diagrammatic, like office layout plans. Multidimensional matrix models can
represent the competing demands of customers, shareholders, employees and
society at large.
The only single total model of leadership is a good leader.
By testing and improving models to see if they
are both reliable and valid, we can try to build models that work in a wide
range of situations, over and above where they were first developed. Models of
motivation, for example, tell us that just paying people more money does not
necessarily increase performance or motivation, but praise given in front of
others and more responsibility generally do in a global context.
Modern society increasingly sets paradoxical
challenges: think globally and act locally, make a profit while being
sustainable, maintain a convincing grand strategy and yet be responsive and
agile, nurture innovation while maintaining tradition, encourage diversity as
well as a coherent culture. The challenge is to avoid a zero-sum game, where
one entity wins and one loses; to reconcile dilemmas through a creative and
intellectual dialogue, creating a win-win situation.
Evolution
of management theories and models
Theories are developed to understand the world.
Models are the testable summaries of theories, functioning in social science as
instruments to improve organizations.
1. The
genius of the Great Entrepreneurs (most prominent 1850–1940): American
economic giants. what made them successful seemed almost wholly mysterious and
it was hard to explain their brilliant business accomplishments.
2.
Measuring results through ‘scientific management’ (most prominent 1900–1930,
yet still with us): Frederick Winslow Taylor is often seen as the father of
this discipline, although he preferred to describe his approach as ‘managing
scientifically’. Different ways of producing goods were measured and compared
to one another in ‘time and motion studies’ in order to ‘scientifically’
measure the most efficient production processes.
3.
Acknowledging human potential and human relationships (since the 1920s): The
conclusion drawn was that the group of women had grown to like and trust each
other and the researchers, so that regardless of the variables, it was better
human relations that had transformed the situation. Mayo concluded that people
don’t behave like machines. Today, management theorists refer to this
phenomenon as the Hawthorne effect, named after the location where these
studies were first conducted. marking a swing in business management studies
from a science perspective to the humanities and arts.
4.
Strategic planning envisioned in terms of ‘the art of war’ (prominent
1960–1980): America needed to show its superiority to the Soviet Union and
prove that it could ‘deliver the goods’ better than its rival. The notion that
economic rivalry was in some respects a military-style engagement grew in
popularity.
5. Putting
the customer first (since the 1980s): ‘made in Japan’ By the late 1980s, it
had become a mark of high quality, not only in the final product, but also in
ways of working. Customers would be the first to warn you if things were not up
to standard. Six Sigma quality circles became the norm, with defects falling to
one in a million.
6.
Globalism and diversity (gained prominence from the late 1980s onwards): International
organizations like the IMF, the World Bank and the World Trade Organization
were safely in American hands, and bailed out nations on condition that they
cut back state expenditure on social projects and embrace free-market ideologies.
The best leader was an internationalist, part diplomat, part translator, part
intermediary, part negotiator. He or she needed cross-cultural competence,
thinking globally while acting locally.
7. “Greed
is good” (very prominent from the 1980s until 2007): The whole purpose of
business was to make money. The bottom line was the ultimate embodiment of all
other concerns. Financial performance is an important result, but by no means
the only one. Pragmatism is essential.
8. 3Ps:
People, Planet, Profit (since the 1970s, but dominating since the twenty-first
century): Increasingly, there is demand for a new kind of leadership that
can deal with a wide variety of stakeholders, managing the triple bottom line:
harmonizing the interests of people, the planet and corporate profit. In order
to do this, leaders must innovate – not just new products, but new industrial
processes; in new factories, with new machines, new business and production
models in which every material/component is utilized in an ever-functional
cycle, rather than using up finite resources, in order to be attentive to the
needs of all parties.
Crisis and failure are not yet eliminated in
modern society. Theories or models can give guidance, but they don’t give
guarantees. We have a persistent habit of reducing everything to its supposed
fundamentals.
MODEL 1: The Bottom of the Pyramid, C.K.
Prahalad (2002)
PROBLEM STATEMENT How can one
create wealth by doing business with the 4 billion people at the bottom of the
financial pyramid?
In economics, the Bottom of the Pyramid (BoP) is
the largest but poorest socio-economic group, comprising around four billion
people who live on less than a few dollars per day. To enable poor people to
use their buying power, Prahalad suggests making use of the following twelve
building blocks. Solutions must:
Be low-priced; Merge old and new
technology; Be scalable and transportable across countries, cultures and
languages;
Be eco-friendly; Put functionality
above form; Be based on innovative processes; Use deskilled work;
Educate customers; Work in hostile
environments; Be flexible with interfaces;
Be available for the highly dispersed rural market as well as
highly dense urban markets; Be fit for rapid evolution.
MODEL 2: Multiple Stakeholder
Sustainability, Fons Trompenaars and Peter Woolliams (2010)
PROBLEM STATEMENT How can I assess
the most significant organizational dilemmas resulting from conflicting
stakeholder demands and also assess organizational priorities to create
sustainable performance?
The future strength of an organization depends on
the way leadership and management deal with the tensions between the five major
entities facing any organization: efficiency of business processes, people,
clients, shareholders and society. The authors have developed a sustainability
scan to use when making a diagnosis. This scan reveals:
The major dilemmas and how people perceive the
organization’s position in relation to these dilemmas; The corporate culture of
an organization and their openness to the reconciliation of the major dilemmas;
The competence of its leadership to reconcile these dilemmas. After the
diagnosis, the organization can move on to reconciling the major dilemmas that
lead to sustainable performance. To this end, the authors developed a dilemma
reconciliation process.
MODEL 3: Reverse Innovation, Vijay
Govindarajan (2009)
PROBLEM STATEMENT How can reverse
innovation create growth?
Govindarajan observes the following evolution:
from globalization (richer countries that export what they use themselves) came
glocalization (adaption to local needs on a global scale), followed by local
innovation (emerging markets increasingly innovate themselves), which is making
way for reverse innovation (emerging markets dominate innovation). Govindarajan
and Trimble (2012) cover nine rules ‘that will guide your innovation efforts’,
in three categories, that can be summarized as follows:
Strategy: To grow in emerging markets,
innovate, not simply export; grow from innovations in emerging market to other
emerging markets; beware of small but fast-growing companies in emerging
markets;
Global organization: Move resources to
where growth is; create a reverse innovation mindset; focus in these markets on
growth metrics;
Project organization: Stimulate an entrepreneurial ‘start-up’
spirit; leverage resources through partnerships; resolve critical unknowns
quickly and inexpensively.
MODEL 4: Blue Ocean Strategy, W. Chan Kim
and Renée Mauborgne (2005)
PROBLEM STATEMENT How can we
create a long-term plan for sustained competitive advantage by focusing on new
markets, without focusing on competition?
In blue oceans, organizations invent and capture
new demand, and offer customers a leap in value while also streamlining costs.
The central idea is to stop competing in overcrowded industries, so-called ‘red
oceans’, where companies try to outperform rivals to grab bigger slices of
existing demand. Blue Ocean Strategies result in better profits, speedier
growth and brand equity that lasts for decades while rivals scramble to catch
up. Eliminate factors in your industry that no longer have value; Reduce
factors that over-serve customers and increase cost structure for no gain;
Raise factors that remove compromises buyers must make; Create factors that add
new sources of value. importance of alignment across the value, profit and
people propositions, regardless of whether one takes the structuralist
(traditional competitive, Porter-like) or the reconstructionist (blue ocean)
approach to strategy. make the competition irrelevant by creating a leap in
value for both your organization and your customers.
The logic behind Blue Ocean Strategy is
counter-intuitive, since blue oceans seldom result from technological
innovation. Often, the underlying technology already exists and blue ocean
creators link it to what buyers value. Most blue oceans are created from
within, not beyond, the red oceans of existing industries. Blue Ocean Strategy
is an inspiring way to look afresh at familiar environments with a view to
finding a competitive edge.
MODEL 5: Six Stages of Social Business
Transformation, Charlene Li and Brian Solis (2013)
PROBLEM STATEMENT How can
organizations optimize engagement with their target audience through social media?
Planning – ‘Listen and learn’: Ensure
commitment to get the business social. Presence – ‘Stake our claim’: Evolution
from planning to action, establishing a formal and informed presence in social
media;
Engagement – ‘Dialogue deepens
relationships’: Commitment where social media is seen as a critical element
in relationship-building; Formalized – ‘Organize for scale’: A formalized
approach focuses on three key activities: establishing an executive sponsor,
creating a centre of excellence and establishing organization-wide governance;
Strategic – ‘Become a social business’:
Social media initiatives gain visibility and real business impact.
Converged – ‘Business to social’: Having cross-functional and
executive support, social business strategies start to weave into the fabric of
an evolving organization.
A model to measure current engagement of an
organization with its target audience is Li’s Social Technographics Ladder (Li
and Bernoff, 2008). The ladder identifies people according to how they use
social technologies, classified as creators, critics, collectors, joiners,
spectators and inactives. Taken together, these groups make up the ecosystem
that forms the groundswell. Each step on the ladder represents a group of
consumers more involved in the groundswell than the previous steps. To join the
group on a step, a consumer need only participate in one of the listed
activities. Steven van Belleghem, from Vlerick Business School, has developed a
three-step approach to setting up and managing a conversation on any level of
the Technographics Ladder: observe the conversation you perceive as relevant as
an organization, facilitate the conversation you want to create and join the
conversation as a peer.
The authors of Groundswell suggest the POST
approach for change, working with people (assess social activities of
customers), objectives (decide what you want to accomplish), strategy (plan for
how relationships with customers will change) and technology (decide which
social technologies to use).
MODEL 6: Social Media ROI Pyramid, Jeremiah
Owyang (2010)
PROBLEM STATEMENT How can one
measure the return on investment (ROI) of social media?
Applying the model may result in developing an
overall dashboard for the organization to monitor progress of a company’s
conversation strategy, or it can be used to help define which metrics need
further refinement and how they connect with other metrics (as, for instance,
used in a balanced scorecard) that measure success in corporate communications.
MODEL 7: Situational Crisis Communication
Theory, Timothy Coombs (1995)
PROBLEM STATEMENT How should an
organization communicate during a crisis?
Coombs distinguishes three clusters of crises:
Victim: Where the organization is a
victim of the crisis (e.g. natural disasters, rumours) – minor reputational
threat;
Accident: Where the organizational
actions leading to the crisis were unintentional (e.g. equipment or product
failure, accusations from external stakeholders) – medium reputational threat;
Intentional: Where the organization knowingly took inappropriate
risk – major reputational threat.
identifying a limited set of primary crisis
response strategies: Denial (attacking the accuser, denial of the story,
scapegoating); Diminishment (offering excuses, justification of what happened);
Rebuilding (compensation of victims, offering apologies, taking full responsibility).
MODEL 8: Communication and Employee
Engagement, Mary Welch (2011)
PROBLEM STATEMENT How can employee
engagement be strengthened through communication?
MODEL 9: Balancing Transparency, Piet Hein
Coebergh and Edi Cohen (2009)
PROBLEM STATEMENT What is the
optimum level of transparency for an organization?
When there is little transparency in a given
environment, people find it difficult to trust each other and hesitate to
behave flexibly. Conversely, redundant transparency results in people feeling
over-monitored, making them feel mistrusted.
MODEL 10: The Blue Economy, Gunter Pauli
(2010)
PROBLEM STATEMENT How do we turn
poverty into development and scarcity into abundance with what we have?
This approach contrasts with the Red Economy
(socialist planning, which didn’t work) and the Green Economy (which tends to
require strong investments in unclear projects, benefiting only the happy few).
The Blue Economy business model wants society to shift from scarcity to
abundance ‘with what we have’, by tackling issues that cause environmental and
related problems in new ways. The theory highlights benefits in connecting and
combining seemingly disparate environmental problems with open-source
scientific solutions based upon physical processes common in the natural world,
to create solutions that are both environmentally beneficial and which have
financial and wider social benefits. The concept of the Blue Economy is
supported by the methodology of the Zero Emissions Research and Initiatives
network (ZERI), including the following sets of instruments:
Five kingdoms of nature: bacteria,
algae, fungi, animals, plants; a classification that is inspired by the work of
biologist Lynn Margulis;
Five design principles, to work with
these five kingdoms of nature (all following the key idea that there is no such
thing as waste);
Five intelligences: emotional,
academic, artistic, eco-literacy (systems thinking) and capacity to implement;
Twelve axioms of economics: principles of purpose, growth,
productivity, cashflow, price, quality, competitiveness, place, innovation,
diversification, management and thermodynamics.
More information can be found at
www.zeri.org The ZERI movement is engaged in a wide range
of projects that are recorded and shared online through
www.theblueeconomy.org.
