Since the 1890s there have arguably been only a few major management breakthroughs with several minor ones. What will be the next big tsunami in management that can differentiate leading organizations from also-rans lagging behind them? I suggest one possibility at the conclusion of this blog.
• Frederick Winslow Taylor’s Scientific Management
The History of Management Breakthroughs
Where does one draw the line between major and minor management breakthroughs of innovative methodologies that can provide an organization with a competitive edge? I’m not sure so my list likely describes a blend. To read a full description of the breakthroughs listed below, please read my complete article I have written for Business Finance magazine’s website with the same title, What Will be the Next New Management Breakthrough?
Will Business Analytics be the Next Breakthrough?
Performance Management, by applying its broad definition as the integration of multiple managerial customer, operational, and financial methodologies, embraces all of the above advances. Performance Management integrates methodologies and their supporting systems to produce synergy not present when they are implemented in isolation of each other.
Professor Tom Davenport of Babson College and Accenture’s Jeanne Harris have authored two books, Competing on Analytics and Analytics at Work. Their books propose that the next differentiator for competitive advantage will be business analytics. Their premises are that organizations need much deeper insights and that change at all levels has accelerated so much that reacting after-the-fact is too late and risky. They assert that organizations must anticipate change to be pro-active, and the primary way is through robust quantitative analysis. This is now feasible due to the combination of massive amounts of economically stored business intelligence and powerful statistical software that can provide previously undetected patterns and reliable forecasts.
For example, customers can be finely micro-segmented in multiple combinations – such as age, income level, residence location, and purchase history – and patterns can be recognized that can predict which customers may defect to a competitor providing time to attend to such customers with a deal, offer or higher service level to increase retention levels. As an additional example, minute shifts in customer demands for products or services can be real-time monitored and projected to speed or slow actions and spending to induce customer behavior.
Performance management is not just better managing performance but improving performance. Integrating systems and information is a prerequisite step, but applying business analytics, especially predictive analytics, may be the critical element to achieve the full vision of enterprise performance management.
This might well be true especially if we consider the recent fallout in the US economy and the resulting stress-testing of banks. Additionally, the same appears to apply to Education – there is now definitely the need for frequent measurement and evaluation; and the measurement of the students’ reaction to the teachers’ intervention. Waiting for the end of the term or academic year to find out what is really happening with the student, is definitely too late and risky ..
“Aim for smaller victories than just winning the overall competition” (Stacey Barr, 2010)
What about the Toyota Production System, Six Sigma, or Integrated Enterprise Excellence?
As an alternative Lean Office development practices show that leaders must shift from managing lagging indicators coming from business and supporting processes to manage performance indicators of organizational members. This means, that leaders measure leading indicators (drivers) coming from professional standard task execution and coincident indicators (triggers) coming from problem solving. Jobs are understood by their business impact (drivers), people performance as personal impact (triggers). Management task is impact mapping through leading and coincident indicators of performance. Reference work at Alcoa Wheel Products Europe, publication in HBR Hungarian edition, 2010. April.