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net 012 347 0409 _________________________________________________________________ What the experts didnt tell us An article in the Sunday Business Times S. A. bosses must come up to speed made interesting reading, not so much for what it said, but for what it omitted to say. The heads of our leading Business schools were asked to comment on the changes needed to get South African business up to international levels. Regrettably, all used the opportunity as free advertising to extol the virtues of their particular establishments, and without exception, their comments that should have addressed the main point of the article were fluffed. Instead of suggesting sharp, direct, specific actions that S A bosses needed to take, they gave only generalizations of the motherhood and apple-pie variety. Did they not want to give away their trade secrets, or did they not have any trade secrets to give away? Stating that South African CEOs have to focus strongly on social and entrepreneurial issues, not only to protect their companies in the future, but also to help build the country was an example, and .understanding industrialized countries is no longer sufficient for understanding the requirements for global competitiveness was another example. One would not argue with the principles (they are not exactly new), but it was not the type of material that could be used for direct action. The contributions from our management experts could have been valuable had they said something directly to the point, that was actionable, and could have given those SA bosses who have yet to come up to speed, no excuses that they didnt understand how to do it, or exactly what it was that they need to do; but it was a missed opportunity.

Making direct, actionable suggestions is not difficult, because what we need to do in South Africa is little different from that which companies around the world have had to do, either to become more competitive in global business, or to better protect their local markets before global operators move in, so there is no escape! Where most SA bosses need to concentrate initially, is to change their attitude towards their people, their employees, very dramatically. If you run a business rigidly, where decisions have to be passed up the line for action, where your employees are not directly integrated into the strategies and action plans of your company, your response time is going to be too slow to allow you to survive in international competition. Concepts such as job evaluations, job descriptions and allied distractions are not only still used, but are still being taught in South Africa. Such concepts and the thinking associated with them were discredited more than fifteen years ago. Professor Peter Wickens commented The Job description is the managerial equivalent of the trade union restrictive practice They stifle flexibility, teamwork, continuous improvement and rapid response to changing circumstances. Given the attitude of many SA companies towards their employees, it is going to require a lot of serious effort to change the top down culture, linked to that of putting people into a box where their contribution is governed by the stifling job description, rather than being limited only by their own potential. It would seem that those CEOs who have failed to get up to speed didnt bother to read either Professor Robert Ozakis book Human Capitalism, or Professor Jeffrey Pfeffers People as the Competitive Advantage of the Enterprise. Neither are startlingly new, and their concepts have been incorporated into the operations of many successful international companies, including those listed in Fortune magazines 100 Best Companies to Work for. The right way to regard and manage people is no longer in doubt, that dispute was settled long ago, yet old concepts still persist. The advantages to the bottom line have been proven, sometimes in unusual places, such as the Economic Policy Institutes publication Manufacturing Advantage-Why high-performance work systems pay off.

People remain the number one area where we continue to lag behind and we will not become internationally competitive if we hang on to these ancient concepts. We have to stop regarding people as variable costs, and not only to regard them as assets but to go beyond that to see them as creators of value, and the only remaining area of competitive advantage that we have not yet developed. We have to break down the us and them divisions, where the centerpiece of change is to concentrate upon the many similarities of interest between management and their people, instead of continually concentrating on the differences. The similarities are profound and we can build on these concepts. Here are a few examples, Management want the company to survive, the employees want security. Management wants growth, employees want to grow with the company. Management want to achieve their strategies, employees want to understand their role in making this happen. Employees want higher pay, management want higher profits, We can continue to build upon these and many other, strong common areas of interest. If we can pursue this kind of thinking, management by necessity, develops a very different attitude to their people, as they operate the company on the everyone is manager principle meaning that people must think for themselves. Obviously this is not in the sense that everyone is giving instructions in an uncoordinated way, but that everyone feels responsible for their individual and group output, and they manage what they do. They must become integrated, and understand their role. This builds commitment as without commitment they will fail to achieve maximum performance, and will fail to achieve an improved bottom line. This is vital in a tough, fast moving competitive environment, it is just too slow to use the old system of passing everything upwards for a decision. Doing so will result only in losing customers! Managers need to become familiar with the whole gamut of international management practices, and start incorporating the best features into their companies. We can appreciate

that the commonality of problems and opportunities in meeting global competition created a commonality of response in many areas, resulting in a commonality of characteristics within successful companies. We can incorporate much of the knowledge that these companies have learned the hard way, provided we are sufficiently developed to do so. No motor company today uses the old concept of mass production techniques, all have adopted lean production systems developed by Toyota. We have to adopt both a new way of looking at business, and new ways of measuring our businesses. To be specific, it is essential today that we understand not only the conventional results oriented way of thinking, we have to understand the (global) process oriented way of thinking as well, as it often produces very much better results than results thinking! This is not the process as described by Hammer and Charpy in Business Process Reengineering, as their concept was very basic, using the term to mean a series of actions to achieve a result, but is a totally different way of thinking about business. As one example, if you still believe that the ultimate objective of marketing is simply to sell, then you will not succeed in global business. That is too basic, too simple and too narrow an objective, we have to use global process thinking instead! In an average company, twenty percent of the people create eighty percent of the income. We have to know exactly into which group each employee belongs, and we have to make sure that we reward them commensurately. We all know the vast difference between being alive, and being on a life support machine. We have to know which parts and which people in our company make it alive and which are simply life support. We also have to move away from relying solely on standard accounting practices and to appreciate that the balance sheet is simply an historical print-out from a life support machine. It tells us little about the company, nothing about its people, its prospects, or its markets. To fully understand the increasing complexity of companies, having a regular non-

financial assessment is vital, linked to analysis and action plan. Avoid those who would benchmark your company or use balanced (or unbalanced) scorecards, all are too simplistic, too arbitrary, too much one size fits all to be adequate for the needs of aspiring international competitors. All of that brings us back to where we came in, to culture. Business schools and organizers of business conferences are inordinately fond of the case study. Certainly case studies can be of value as examples, but in most cases they are valueless in terms of transferability. Unless the company from which the case study was taken is at the same level of development as your own, and has a similar level of competition to your own; and unless, in addition, you have a culture in your company that responds to and can assimilate new concepts and ideas, then no matter how good the idea may be it will be of no use to you, because you will not be able to absorb it. You also have to ensure that the structures that allowed the idea to be created and to flourish in the case study example, are in place in your company, before you can implant the idea successfully. This highlights the importance of creating a culture that can absorb new ideas, or better still, that constantly seeks out new and better ways of doing things. It means having a culture where change is the norm. We read a lot today about change (coming up to speed implies change), and we see situation vacant advertisements for people with experience of change management. This implies that change is a special event, and that we need special managers to handle it. This is nonsense ! Change is a process not an event, and if we are to survive, then change must be ongoing. We must always be re-inventing ourselves, what we do, and how we do it, improving our products and services, looking for new market segments, maybe we need to integrate forwards to secure our position. All imply change, so a manager who cannot handle change as routine, is not a manager. Therefore the term change management is meaningless, it is an oxymoron, and is the result of confused thinking.

In considering change we naturally have to guard against simply using change for the sake of change, or using a concept because it is new instead of using only those that are better. Business today requires a difficult balancing act between retaining the tenets of good management that have been around for many years, combined with new concepts that can add value. This leaves us with perhaps the most important aspect of culture that we have to ensure exists within our company, and that is a culture of growth. We need a growth-oriented culture that constantly seeks to grow the company, and by implication those within it. It combines the thinking of a learning company, superimposed upon which is an ongoing drive to grow the company, its business, its products or its services. We have seen the failures of so many mergers, and we know that acquisitions are almost entirely an accountancy-led activity, and that no matter what company we take over, growth and creativity are rarely transferable. Organic growth is the only true entrepreneurial activity, and is the only sure way of getting where we want to go, even if it appears to be a slower route than a merger or acquisition. Most companies want to grow, but wanting to grow is a very different situation to understanding how to grow, and understanding how to create the mechanisms of growth in your company. We have long delayed abandoning failed management systems and practices, and the need to move beyond the Taylor model, and beyond the control thinking linked to organizational development and the behavioural sciences. We have retained these practices whilst seeking to make improvements using add-on components. Not only are add-on components ineffectual when dealing with people, but, far more seriously, our failure to remove the old models completely will prevent us from implementing new systems because the cultural differences are to great to allow the new to co-exist with the old. It means having to make a clean sweep-half measures will not do ! We need to think long and hard about our failure to adopt Evidence-based management and to ask over and over again why we continue to use and to teach thirty year old failed systems that do not lack for evidence of their failure. Implementing new systems is not as difficult to achieve as it may seem, the main ingredients needed are a determination to use the very best systems because they improve the bottom line, achieve integration, and create a more dynamic, flexible organization. We

will have to keep them updated, and we will need an abundance of dedication to make it all happen. Changes can usually be made as we move towards our current objectives, we do not need to stand still whilst we effect planned, meaningful change, linked to education and training programmes. This is high value long-lasting development that can keep you ahead of your competitors, unlike your newly acquired IT system that your competitors can install tomorrow. Every day, every month, every year, that you spend implementing and developing these new systems, and your competitors are not, is a day, a month, or a year you can stay ahead of your competition. Quite obviously there is a lot more to getting up to speed than the basics given in this article, but these basics contain the essence of what we need to do. If you are asking the question, if these systems are so good why isnt everyone using them, remember Toyota. They are about to become the worlds largest auto manufacturer, yet there is almost nothing about how they operate that is secret. You can read about lean production, TQM, kanban just in time systems, you can even go on a tour of their main plant in Nagoya, yet few competitors have done much more than, at best, copy bits and pieces, at worst, have learned nothing at all. Why ? Because they are stuck in the past and are too damned scared to get out of it. Dr Malcolm A Birkin has many years of business experience in South Africa, where he started two successful manufacturing operations, both from grass roots levels and both were the first to make their products in South Africa. He has worked with two large groups, and has ten years experience at director level. Should you wish to learn more about him, please visit www.malcolmbirkin.com