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Psst ... need another business strategy?

Ideas change rapidly in the world of the guru

Roger Trapp
Saturday 18 May 1996 23:02 BST
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Gary Hamel probably has a wry smile on his face. For some time, the visiting professor at London Business School has been a loud but fairly lonely voice railing against downsizing, an approach to business that he dismisses as so easy "even accountants can do it".

In the months ahead he is likely to be less lonely, for a trickle of other management writers are questioning the dominance of the downsizing message, just as the Wall Street economist Stephen Roach has now done. Management consultants Dwight Gertz and Joao Baptista, for instance, recently published a book called Grow to be Great that carried the slogan: "No company ever shrank to greatness."

The chances are that there will soon be many such works to jostle on the management bookshelves with Prof Hamel's best-selling Competing for the Future (co-written with CK Prahalad), all explaining the apparently novel message that merely making companies thinner does not necessarily make them fitter. After so many years of relentless cost-cutting, it seems a breathtaking reversal of thinking, but we should not be surprised; in modern management theory, changes of heart of this kind are the rule rather than the exception.

Remember diversification? Spread the risk, they said, and you can spread the gain; diversify or die. Now, of course, it's divest or die; stick to your "core competencies". Corporate strategy can be fickle indeed.

Tom Peters, probably the best-known business guru, is perhaps the most supple, too. In Search of Excellence, the book he wrote with Robert Waterman, is still revered - even though many of the companies lauded in it have fallen on hard times and Mr Peters himself announced in his next volume that there were no "excellent" companies.

Now Mr Peters is at the forefront of a movement convincing business people they live in the era of greatest change ever known. This has spawned a whole new discipline called "change management", and we now have centres of change management and consultancies in change management. But likely as not they will eventually give way to some other enthusiasm now taking root in somebody's head; in the supposedly hard-headed world of making money what is a completely logical strategy one year is thoroughly mistaken the next.

It does not take too much cynicism to see why. Britons buy more than pounds 25m worth of management books a year, while in the United States the figure is 20 times that. Consultancies, moreover, are paid billions of pounds a year in fees. Where, after all, is the profit in setting a company's managers on the right track and leaving them to it?

But if the exploitation is so obvious, surely it is seen through? Yes, it is - up to a point. Everybody accepts there are management fads. One guru, Richard Pascale, has even gone so far as to plot their shelf-lives on a graph. The problem appears to be finding other ways of getting executives to listen to what academics and others feel they need to know. Only the bluntest messages are heard.

The reasons for this may, in Britain at least, have something to do with the education system. Bright pupils are encouraged into the professions and the media rather than business, with the result that - with few exceptions - those who do rise to the top lack confidence when confronted with the thoughts of the wise men. Trained to be doers rather than thinkers, they want quick fixes. They also prefer the positive to be accentuated: hence the recently published Upsizing the Individual in the Downsized Organisation.

But not all companies follow the herd. A few have the self-belief to go their own way. Yes, they listen to the gurus and use consultants, but they are not in their thrall. Instead, they combine an adherence to certain core values with a readiness to reinvent themselves as required to stay ahead of the competition. They do not generally make sudden splashes, but year-in, year-out, they achieve the shareholder value that others find so elusive except in the very short term.

Such success stories are, inevitably, the objects of much attention from gurus, and they have, equally inevitably, been given a catchy name. They are called "visionary companies".

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