On Management Fads

No doubt, anyone who has or is studying for an MBA wonders at the many management trends that come along and keep coming along. These trends are touted almost as a silver bullet to management problems or needs. It is even more amazing how consultants swear by the trends and so do some university professors. Because there are so many trends and with a high rapidity of introduction, some people call these trends fads. Many an MBA will remember the countless books, not to mention the articles and models that promote some form of trend (fad if you prefer) or the other.

So what is the anatomy of a management fad? The article “When You Shouldn’t Go Global” in the Harvard Business Review of December 2008 explains it in an interesting way. Here is how they explained it (please note this article leaves out some sentences completely for purposes of relevance):

Company X, with talented people at the helm, pioneers a new management approach. The firm does well, and others take notice. One or two firms might experiment with similar innovations. Then stock market analysts and journalists spot the new approach. They view it as part of a broader pattern, and someone comes up with a clever sounding label. The word “paradigm” may even be tossed around. As the phenomenon gains visibility – often in publications like this one – academics develop “frameworks” to help companies understand it.

Their codification, intended to simply to explain the phenomenon further validates it. (Consultants also develop frameworks, though usually with the aim of selling the trend as a product.) Over time, people use the now-familiar label more and more loosely. They group all manner of activities under the heading. Despite its ambiguity, there is a growing sense that activities under the rubric are worthwhile.

Investment bankers cite the concept as a reason for companies to make acquisitions or other moves, and in the enthusiasm of deal making, everyone glosses over the difficulties of integration and implementation. Financial markets sometimes reward companies just for announcing that they have adopted the new approach.

Many of us remember how the financial press especially will “wax lyrical” on a strategy of some company, that is making money. We also note how pundits will speak of the CEO in terms of genius. The Harvard Business Review goes on to explain the problems that stem from the fad. Here is their explanation:

Sadly, the original insight, not to mention an appreciation of the context that gave rise to it, soon gets lost as companies scramble to become part of the trend. Before long, they are copying all sorts of elements and manifestations that are at best tangential and often irrelevant to the sought-after benefit. By the time a few books have come out on the topic, managers are embarrassed if they can’t point to examples within their own organizations.

Most MBAs can think of tons of books published over the years regarding this. Examples such as “Leading Change”, “Enterprise Wide Change Management”, “Practical Guide to Business Process Reengineering” come to mind (we are not saying that there is anything wrong with these books).

As the herd piles in, smart managers are already scanning the horizon for a new idea that will give them a competitive advantage. But others continue to give little thought to whether the trend has played out – or was never likely to benefit a company in their situation. There is always a lag before misapplications of the concept start to affect companies’ numbers. Even when they do, many corporate managers, with stacks of statements and presentations extolling the virtues of the approach, are reluctant to abandon it. The stubborn ones carry on regardless of mounting costs – thereby setting the stage for activist shareowners to step in and force a change.

This discouraging scenario doesn’t unfold because the original concept was wrong. It plays out because embracing a trend often precludes careful examination of the pros and cons of the specific choices made by a single company in a particular context.

What is the conclusion? We should learn from the different trends but we should use common sense in judging what works for the organisation. As we all know, there are different solutions for different situations. We need to find the appropriate solution for the problem. This means that we need to come up with a strategy or business model or whatever it maybe to suit the situation that the organisation finds itself in. Hopefully, management across the board will heed this warning and stop looking for that “silver bullet”.