Taking care of now and then

Is biology the key to long-term business success? Roger Trapp looks at the `fluid network' concept

BUSINESS leaders the world over are increasingly finding themselves stuck on the horns of a dilemma. They know that success depends on doing such things as thinking long-term and innovating, and yet they also realise that they are under more pressure than ever before to perform in the short term and to be efficient.

So, what do they do? The traditional approach, of course, is to talk a lot about the long-range issues and get on with dealing with present concerns. According to Arun Maira, managing director of Innovation Associates, a subsidiary of the management consultancy Arthur D Little, this is an understandable attitude, but it stems from executives being locked into the notion that they must choose one strategy over another.

What is required, he says, is a new approach, and because it is linked with the structure of the organisation, he terms it the "fluid-network organisation".

Mr Maira, co-author of The Accelerating Organisation: Embracing the Human Face of Change, claims the initiative has been welcomed by companies in the United States, where a survey by Arthur D Little and the International Council of Executive Development Research found that the need to invest in innovation while increasing operational efficiency was high on the "conflict agenda". Last week he addressed an audience of senior European business leaders on the same issue.

Arthur D Little points out that, while such conflicts have always been a feature of business, the problem has become more acute. Mr Maira points with approval to comments made by Jack Welch, the chairman and chief executive of General Electric of the US, about how "you can't grow long-term if you can't eat short-term".

Mr Welch, who did not become America's most famous manager by beating about the bush, said: "Anybody can manage short. Anybody can manage long. Balancing those two things is what management is."

Mr Maira believes that what is making the concept appealing is that it helps to achieve that balance by addressing five variables of organisational design simultaneously. These variables are:

q The "glue" that binds organisations together to co-ordinate their activities;

q The approach to defining "boundaries";

q The choice of performance "measures";

q The means of "influencing behaviour"; and

q The new "competencies" required of potential leaders.

Most efforts to improve organisational performance yield disappointing results because they address only one or two of these variables. Accordingly, attempts to influence behaviour, for instance, by trying to make people more innovative, focus on redesigning the financial incentive structure and possibly the performance measures.

However, they are likely to pay only lip service to the glue, or how the organisation is held together, or to the competencies leaders need. As a result, they fail to achieve the right balance between the efficiency associated with command-and-control-type organisations and free-thinking innovation to make the desired substantial change in performance.

In other cases, says Mr Maira, a lot of work might go into enhancing the skills and attitudes of leaders so that they can foster an innovative culture, but this will not necessarily be accompanied by giving them the ability to overcome the conflicting pressures from performance measures and reward systems.

He claims that the fluid-network organisation can overcome such difficulties by providing comprehensive measures and methods for dealing with each of the five key variables of business and by enabling companies to integrate their efforts in each of the five areas.

Mr Maira found the thinking of Stephen Jay Gould, the Harvard scientist, especially helpful. If you take Mr Gould's notion of the "redundant gene" and how it exists to take on tasks that arise from time to time, you obtain a better understanding of why such process-driven approaches to management as business re-engineering have failed, says Mr Maira.

Allegiance to such attacks on efficiency has driven out of many organisations the very people, usually the middle managers, that organisations need to develop the businesses that will bring growth and profitability.

Consequently, organisations remain "frozen" in a state where they have made themselves highly efficient to deal with "a world that has passed".