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 / Winter 2010 / Issue 61(originally published by Booz & Company)


Best Business Books 2010: Management

The Chorus Takes a Bow

Julian Birkinshaw
Reinventing Management: Smarter Choices for Getting Work Done (Jossey-Bass, 2010)

Jon R. Katzenbach and Zia Khan
Leading Outside the Lines: How to Mobilize the (In)Formal Organization, Energize Your Team, and Get Better Results
(Jossey-Bass, 2010)

Richard T. Pascale, Jerry Sternin, and Monique Sternin
The Power of Positive Deviance: How Unlikely Innovators Solve the World’s Toughest Problems
(Harvard Business Press, 2010)

Srikant M. Datar, David A. Garvin, and Patrick G. Cullen
Rethinking the MBA: Business Education at a Crossroads
(Harvard Business Press, 2010)

The profit-maximizing management framework that arose from the widespread adoption of the shareholder value model of corporate governance may end up as a notable intellectual casualty of the Crash of 2008. After 30 years of leveraging, downsizing, and outsourcing, this predominantly Western global economic system appears to be in decline. This could be a sign of a hemispheric financial cooling in counterpoint to the warming of the economies of the Far East.

The challenge this creates for management thought and education is as simple as it is stark. The prevailing business management framework, a set of practices and operating principles that was designed to produce stability and order in large, complex companies, and that has been successful enough in treating growth as “more of the same,” no longer appears to work. How can it be modified — nay, rejuvenated — to accommodate innovation and invention, the new rallying cries for firms in the Western world?

Although there has long been a Greek chorus of critics prophesying the doom of the current framework, a wide range of opinion exists on what is now required. Some say that the basic principles of management are still relevant and valuable, but they are poorly taught and applied. Others call for an entirely new paradigm. Nobody is satisfied with the status quo, nor should they be. In this year’s best management books, some of the members of the chorus step into the footlights.

The Middle Way

In Reinventing Management: Smarter Choices for Getting Work Done, Julian Birkinshaw, professor of strategic and international management at the London School of Business and cofounder of the Management Lab, contends that management has to change — but not radically. He charts what he claims is a middle way. According to Birkinshaw, companies need a management model that enables them to define objectives and motivate effort (the ends), as well as coordinate activities and allocate resources (the means).

Each of these four activities offers a spectrum of managerial options that range from tight to loose, writes Birkinshaw. For instance, activities can be coordinated tightly in a traditional bureaucracy, as they often are by firms in established markets, or loosely through an organizational plan that emerges naturally as a response to market opportunities and technical possibilities, such as Google uses. Resource decisions can be made hierarchically or by deferring to collective wisdom. In stable environments, objectives can be aligned tightly with corporate strategy; in turbulent situations, objectives can be pursued indirectly through the principle of “obliquity.” Under this latter principle, to quote British military strategist Basil Liddell Hart, “The longest way round may often be the shortest way home.” When it comes to motivation, employees can be attracted by a variety of material, social, and personal rewards.

Birkinshaw uses a two-by-two matrix to summarize four distinctive management models that represent combinations of these options: the planning model (tight ends, tight means), the science model (loose ends, tight means), the quest model (tight ends, loose means), and the discovery model (loose ends, loose means). Companies often begin their lives using a discovery model, but if they are successful, the majority of them gravitate to either a planning model or a science model. McDonald’s, with its highly standardized delivery system, is an example of the planning model; consulting engineering firm Arup (the designer of such avant-garde buildings as Beijing’s Bird’s Nest Olympic stadium), with its holistic model of “total architecture” that embraces sustainability, humanitarianism, and quality, illustrates the science model. Some firms may try to hang on to the discovery model, as Google has, thanks to its phenomenal profitability. The least common model, that of the quest, is used by many investment banks.

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