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« Thinking, Fast & Slow | Main | Resilience: Why things bounce back »
Tuesday
Nov262013

I’m Sorry I Broke Your Company: why management consultants are the problem, not the solution


3.5 out of 5 stars.

by Karen Phelan
Berrett-Koehler, San Francisco, 2013, RRP $24.95

“Steve Jobs would have failed all my leadership competency assessments.” So much has now been written about Steve Jobs that possibly his greatest legacy is statements like this. It comes from an excellent book by former management consultant, Karen Phelan.

It has become a throwaway line that some of the most successful and innovative entrepreneurs don’t always fit the mould. What Steve Jobs did was drive that home emphatically by building what was, at the time of his death, the most valuable company in the world.

The point Phelan makes is that if you applied any of the current fads for talent management, performance assessment or leadership selection models, you would not have picked Steve Jobs as your next CEO.

His special skills don’t really show up on the radar. He didn’t build the first Apple; Steve Wozniak did. He didn’t invent the Graphical User Interface. Parc Xerox had done that. Pixar was a great success, but people forget it was created not by Jobs but by Alvy Rae Smith.

Nor was Jobs a designer. He just hired good ones. He even slipped off to India searching for enlightenment. You could be forgiven for thinking he was just smoking too much dope.

Despite his egotism and perfectionism, he was tolerated. Venerated almost. Why? He had a canny ability to recognise and exploit the potential of both ideas and people. That’s not necessarily the stuff that turns up on the structured leadership radar.

In many ways, he was the ultimate delegator. As Phelan says: “Trying to be good at everything is the way to achieve mediocrity.” Yet management assessments depend on ticking loads of boxes rather than focusing on a few key ones that matter most for that persons style. Mediocre was something Jobs was not.

It’s just one example the author employs as she makes her way through today’s management lexicon, dismantling along the way some of the cherished notions of management theory.

She is dismissive of strategic plans. Not because there is anything intrinsically wrong with creating one. If fact she is a fan of the planning process. That’s where you pick up on the lay of the land.

“Planning adds the value. Learning about trends, economic scenarios, competitor’s strengths and weaknesses, regulatory changes, and consumer feedback adds insight and wisdom to a company’s decision-making.”

The trouble is with the plan. It attempts to predict the future and put you on track for a static process when everything around you may be changing. While planning expands your thinking, following a plan limits your thinking.

For Phelan, planning is a process of self-discovery. It prepares you to distinguish between good and bad opportunities. You need the flexibility to respond to changes in the environment and the openness to spot the unplanned opportunities that turn up uninvited.

Slavish adherence to metrics is also a target. She takes aim at one cliché that is particularly irritating – the currently popular “You can’t manage what you can’t measure.”

It is not so much that metrics are useless. Rather they take our eye off less measurable management skills like communication and relationship building.

Metrics also introduce the same issues quantum physicists confronted at CERN when searching for the elusive Higgs Boson: the sheer act of measuring something affects what it measures.

There’s no shortage of examples.

When Sears instituted sales targets for certain car parts, it led to customers having unnecessary repairs carried out. That eventually led Sears to a costly court exercise when they were sued by the State of California.

There’s another the well-documented syndrome we have probably all witnessed. Set some quarterly sales targets and watch the surge in orders in the last week of the quarter, shortly followed by a massive slump in the first few weeks of the next one, and shortly after by a surge in product returns.

KPI’s often generate internal conflict and work against strategic aims. Marketing and sales want heavy stocking to ensure timely delivery, but down in stock control, their KPI is about minimising inventory costs.

The book quotes interesting research, which shows the share prices of companies that base their reward system on balanced scorecards underperform the S&P500 by 3.5%.

One reason given is that over-attention to metrics leaves little time for senior management to actually notice and respond to what’s going on. It’s neatly summed up: “a metric scorecard acts like a car’s dashboard. If you watch it instead of the road, you will crash.”

Despite the title, the tone of this book is not one of vilification. It is as much an observation of modern management practice as it is a crucifixion of business consultants – or management professors for that matter, who also must shoulder some responsibility for fads that make great theory but fail miserably at the coalface.

The conclusion, if there is one, is that there is no holy grail of management practice. Most of the models propounded by experts are useful, but only if the conditions suit them. There is no one-size-fits-all. Einstein suggested there was a unified field theory that explained everything, but he didn’t find one either. His other stuff, however, was pretty useful.

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