Three Surprising Strategic Predictions
We are at a peculiar time: forward strides in technology coexist with backward moves in international cooperation and programmed policy … all while fundamental shifts in power relations are taking place.
In this sometimes surreal context, trends have been forming which, as the year draws to a close, I would like to share with you to help you gain your bearings.
1. The study of what organisational culture is – and how to mould it – is at an early stage and likely to develop into a full-blown area of management over the next 20 to 30 years
It seems hard to imagine, but 50 years ago companies had no clear idea of their costs. Accounting was driven by meeting standards for financial reporting, rather than the needs of management in understanding and driving down the costs of a product or plant. Those same companies thought their costs were a given: your costs were your costs … and they were the same for any firm in the industry.
All that changed when management consulting firms started analysing business costs, and identifying ways in which those costs could be influenced (eg. the greater the experience and market share of a firm, the smaller the per-unit costs).
I maintain that the study of organisational culture – what it is and how it can be influenced – is at the same point now that the study of costs was in the 1960s. It is a topic currently in which some interest has been piqued, with sporadic attempts at measurement, even fewer at analysis … and fewer still at change. But it is on the agenda. And it will grow in size, recognition and sway.
In the decades to come, what my brethren in the big consulting houses typify as the 3Cs (costs, customers and competitors) will be augmented with the fourth C: culture.
You read it here first.
2. As digital technology becomes more pervasive, direct experience will gain in importance
Your correspondent was stunned, on a weekend away to a coastal town in September, to see what appeared to be a family of around eight local folk, all walking as a group by the water, with every person gazing at their respective smart phone screens as they walked along. Not one of them was looking up, none were watching where they were going, and no one was speaking. It was bizarre and dystopian, like something out of The Handmaids Tale.
Digital technology is a double-edged sword with sharp blades. We can be connected in real-time with like-minded folk at the other side of the globe at the same time as we are oblivious to those nearest to us in a digital bubble sealed with noise-cancelling headphones. Twitter can be a means to rapidly share succinct bites of insight, or a dumping ground for mindless tribalisms.
The trend to vinyl records and craft beer is more than a retro hipster fad: it reflects the need for individual, direct experience. So too does the increasing profile of mindfulness. As our lives become progressively more digitised and abstracted (Toynbee uses the term ‘etherealised’) experience will increase in importance.
3. Operations will remain the poor cousin … and pressure will intensify to further marginalise it
If there was one event which exemplified the surreal state of management at the moment it was the news that Westpac, in the same week as it faced charges relating to 23 million (yes, 23 million) breaches of anti-money laundering (including tragically, facilitating payments related to exploitation of children in the Philippines) picked up three sought-after marketing awards, including “marketer of the year.”
Seriously, you couldn’t write this stuff.
Long-time readers of this newsletter will be familiar with the emphasis placed on identifying and managing stakeholders. In our shared-power world this is vital, and the pressure is all the more acute for large, publicly listed companies who face pressure from institutional investors (notably superannuation funds) to incorporate environmental and social considerations into their business functioning. Credibility is key, and reputations hard fought-for in an environment of multiple stakeholders with competing agendas in a real-time news cycle fuelled by social media.
Yet none of this is meant to detract from the importance of other aspects of management such as ensuring operations are tight, or lines of accountability are clear. You don’t get to pick and choose which aspects of management you want to ‘do’: management is such that it is a ‘package’ of responsibilities and disciplines which must be accounted for and made to work.
Operations has long had it tough. Implementation and execution simply don’t have the same sex appeal as strategy, or digital innovation, or restructures. Or marketing campaigns and the curating of public perception. There is nothing glamorous about ensuring seamless ops, and there is no ribbon-cutting or VIP ceremony because organisational procedures have been tightened.
The pressure to focus on public image and reputational aspects of management at the expense of implementation and execution will intensify as stakeholder demands and social media scrutiny increase. The implications of that are not hard to see: second-rate execution and poor governance will lead to operational mess-ups which in turn rebound on, you guessed it, reputation and credibility. So you might as well tighten up implementation and prevent the operational stuff-ups in the first place.
And if you don’t believe me, just ask Brian Hartzer, former CEO of Westpac.
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This is the final newsletter for 2019, so let me thank you for your continued interest, and give you my wishes for a holiday season that brings renewal and replenishment, and a new year that brings success and fulfillment … see you in 2020!
Warm regards,
Michael
References:
Natasha Gillezeau (2019) ‘Westpac cleans up at the B&T ad awards the very week AUSTRAC hit’ Australian Financial Review 2 December.
Walter Kiechel (2010) The Lords of Strategy Harvard Business Press, pp.186-7.
© Michael Carman 2019