Where are the BIG ideas?
Total Quality
Management, Core Competence and Bottom of the Pyramid: these big bang
management theories captured the imagination of managements globally in the
last three decades. They redefined how companies looked at markets and crafted
strategies.
Since then, management
thought has hit a dry spell. Have management Gurus stopped churning out
exciting ideas? Are Gurus losing their grasp on a fast changing business
landscape?
CD asked leading Gurus these questions. Here's what they had to say:
“Gurus are people with solutions looking for
problems“
Hayagreeva Rao Stanford Graduate School of
Business
“People proclaim the birth, and
write the obituary, of industries with alarming frequency and with actually
very little data. One could plausibly argue that the management pundit industry
is a creation of the business media. The real issue though is the rise and fall
of social problems. These problems don't pop out of nowhere; you have
operatives who advance a particular problem definition, popularise it and then
suddenly something becomes a problem. Though American car makers were making
poor quality cars for years, it was only when the Japanese came around did
people start talking about the poor quality of American cars.That was what
propelled Deming and the others to the forefront.
Gurus are people with solutions
looking for problems. Each one has a particular point of view and part of what
they do is purvey that set of solutions. Once a problem rises and gains
prominence, it gives the business media a chance to anoint someone as a guru.
Absent the problem definition, you don't have any space to devote attention to
a particular set of solutions.
Given this context, it would be
farfetched to say that we won't have any more big gurus. The kind of gurus will
vary as the kind of problems change.For instance the lack of women in senior
management and the C-suite is a serious problem, as is the fate of workers in
firms like Foxconn. Both are big issues and have a dedicated set of people
working to solve them. So we will have a group of people who will come up with
solutions for these, and these are the new kinds of gurus who will emerge.“
“Management theories will start to emerge from
India“
Jagdish Sheth Goizueta Business School at Emory
University
“In management, most knowledge is
contextual for the times, ecosystem and circumstances. As times change, we need
to discover, synthesize and create new theories which are relevant to the
changed circumstances. There have been three major changes in contexts in
recent times, for which we don't have any new theories yet. The first is the
digital revolution which has been very disruptive in the way we organise the
business. We have old theories on how to produce and market products, which the
online revolution has rendered topsyturvy. The traditional notion, that
developed countries would come up with the technologies, commercialise them
locally and then take them international has also changed. Digital technology
is all about emerging markets first.The second factor is globalisation.The
existing theories we have are no longer relevant with the rise of China and
India and the shifting of markets. The third is monetary policy. Large
economies haven't been able to create growth and quantitative easing (QE) isn't
helping the way it was expected to. The issue is that all the theories were
created with some amount of predictability about how policy changes can spur
growth, and this isn't happening. So leaders of corporations are saying that
management gurus aren't right anymore given that none of these theories apply
now.
The point is that our theories have
become obsolete because they were based on certain factors which have changed.
Unless there is a new perspective or a compelling logic that cannot be denied,
it will be dif ficult to come up with the next big idea. I think the management
guru world is in search of new theories.In his book, Paradigm Shift, the
philosopher Thomas Kuhn writes that every discipline goes through a cycle where
perspective becomes hard and there will be a revolt against prevailing wisdom,
and only then will we get something new. We are in that twilight zone, waiting
for someone to come up with a breakthrough idea to rally around.
The other thing that will change is
that the dominance and unilateralism of the management gurus from the US will
give way to multilateralism. Any time a new rising nation does well, people
expect them to have some knowledge, whether R&D or management practices, to
understand why they are doing well. Now the world is looking towards China and
Chinese scholars for ideas and insights. As Asia emerges as the future growth
engine, management theories will start to emerge from India. This has happened
historically with philosophy, science, literature and the arts and the same
thing will happen in management eventually.
Half-life of knowledge is getting
shorter and shorter with new breakthrough technologies and discoveries. In
software, half-life is three years and declining. In management, I believe, it
is 18 months and declining. Therefore, old perspectives and evidence are no
longer relevant.We need to develop or discover new perspectives which are
suitable for tomorrow's world.“
“IIMs have been around for more than 50 years but
are yet to produce a big idea“
Vijay Govindarajan Tuck School of Business,
Harvard Business School
“It's true we haven't seen any
really big ideas since CK Prahlad. CK was my mentor and he was an extraordinary
talent. He was a big ideas man all through his career, right from core
competence to the fortune at the bottom of the pyramid.
When I was a doctoral student at
Harvard Business School in the 70s, there were so many faculty with big ideas.
But somewhere along the way, the big idea machine slowed down. When Harvard
Business Review listed the big ideas of the last century, you could see the big
gap between the number of ideas that came out in the 70s and 80s and the number
that came out in the 90s and 00s (the last entry to make it to the list was my
concept of Reverse Innovation).
Why has this happened?
For one thing, something has changed in the B-school's reward systems. Promotion and tenure are focused on publishing in A-level academic journals. These journals favour theoretical work with high levels of mathematical analysis. You have to be extremely narrow in your focus and sophisticated in your methodology to be published in journals like Marketing Science or Journal of Marketing Research. Even if the research is empirical, you have to satisfy the reviewers of the rigour of your methodology.
For one thing, something has changed in the B-school's reward systems. Promotion and tenure are focused on publishing in A-level academic journals. These journals favour theoretical work with high levels of mathematical analysis. You have to be extremely narrow in your focus and sophisticated in your methodology to be published in journals like Marketing Science or Journal of Marketing Research. Even if the research is empirical, you have to satisfy the reviewers of the rigour of your methodology.
Add to this the fact that PhD
students in B-schools no longer come from an MBA background. They more commonly
have degrees in mathematics and economics. When you do an MBA, you understand
the issues faced by managers. You understand how the various disciplines are
intertwined, how finance relates to operations or marketing. Indeed, most PhD
students today don't even have any industry work experience. This is very
different from my time, when most academicians had MBAs with work experience. Publishing
research wasn't as rigorous a process then as it is now.
Business schools today need to step
back and ask themselves why we exist. I think we exist to impact the world. Our
intellectual pursuits need to have some daring. We need both A-level journal
research and big ideas. Today, there are people like Marshall Goldsmith and Ram
Charan who are not in academics but they interact with industry and they have
great ideas. Corporates don't see any big ideas coming from academics, so they
are happy to embrace ideas from elsewhere.
Lastly, it is time for academicians
from the emerging markets to come up with big ideas. The Indian Institutes of
Management have been around for more than 50 years, the Indian School of
Business has been around for a decade, but they have yet to produce a big
idea.“
“Real theories come from looking at what's going
on“
Vijay Mahajan Mccombs School of Business,
University of Texas
“There are only two ways in which
new theories come forth either you have a genius who thinks of something
nobody has thought of, or people observe the marketplace and figure out what's
going on. This is how Clayton Christensen came up with the theory of disruptive
innovation, and CK Prahalad, the bottom of the pyramid.While there will always
be brilliant people, the real theories come from looking at what's going on,
and most of the things are happening in the emerging markets. In my book, The
86% Solution, I wrote about how most business are focused on selling to the
wealthiest 14% of the world's population, but going ahead the real opportunity
lay with the remaining 86%.
A lot of the thinking and big ideas
going ahead will have to address the problems of 86% of the world's population,
whether it is electricity, or how to run organisations and sell in developing
markets. Also, a majority of these are rural consumers, very young and often
illiterate, so addressing these issues will be key to coming up with the next
big idea. There is plenty of scope here and whatever has been written so far
has been fairly random. Also most of us who have written these books are part
of the 14%, and that is unfortunate. The markets have shifted and all the
action is going on in 86% of the world.
Among emerging economies, a large part
of what is happening is in China, with the focus on manufacturing. But unlike
Japan in the 80s where we could come up with theories like Just in Time or TQM,
we are having a difficult time figuring out what it is about China apart from
labour and the government leasing land that makes them money.
When you look at developing
economies, the story is also about entrepreneurship. Take the prepaid cards
business model which is driving mobile usage in India -that's totally alien to
us.Similarly, Uber has resorted to taking cash payments in India which goes
completely against its core business model. It's time for the Indian gurus to
wake up. IIM-Ahmedabad has a rural innovation centre but I haven't seen a
single article or paper written by them on the work they are doing. Another
possible factor why academicians in the US publish more papers could be our
incentive structure. Here our salary structure is such that we have to write.
It would be difficult for me to hold on to my job unless I can convince my
colleagues that I'm still relevant.There's probably no such incentive for
professors in India to go and write.“
“The struggle to survive left no time to explore
new business ideas“
Niraj Dawar Ivey Business School
“The 80s and 90s produced big ideas
like the innovator's dilemma, re-engineering and Deming's quality principles
because there was a thirst for such ideas in those decades. Since then, we
haven't seen such gigantic ideas emerging because companies are busy defending
capitalism itself.Post-financial crisis, companies have been busy surviving or,
as in the case of banks, fighting for legitimacy. The struggle to survive left
no time to explore new business ideas.
Post 90s, corporates have been
driven by arbitrage strategies offshoring to low cost countries like China
and India. Over the past twenty years, the big money was made on a very
traditional arbitrage model: buy cheaply in China and sell expensively in
developed markets. This hardly requires genius. That phase is now drawing to a
close with China itself adopting the arbitrage model. Big ideas that
revolutionise the way companies work usually come from three sources. The first
source is new markets, which is what CK Prahlad's bottom of the pyramid was all
about.
It showed corporates a whole new way
to look at markets.Then there are ideas that show new ways of conceptualising
competitive advantage. Michael Porter's five forces, Clayton Christensen's
disruptive innovation fall in this category. The newest source is emerging
technology. Big data, robotics and 3D printing allow you to do things that you
just couldn't do before.They will change the economics of many industries but a
really big guru is yet to emerge in these fields.
There are many ideas that derive
from the big ideas. Jaideep Prabhu and Navi Rajdau's jugaad innovation idea has
emerged from CK's bottom of the pyramid, which itself emerged from the idea of
re-engineering. It was about re-engineering costs to address low price points.
Rita McGrath is looking at competitive advantage stability. It all comes from
Michael Porter, the guru of gurus, who laid out the basis of all our thinking
on com petitive advantage. Everyone else built on this.
Indian professors like CK, Sumantra
Ghoshal and Vijay Govindarajan were a part of a generation at Harvard Business
School that did fabulous work.Consulting firms like BCG and McKinsey packaged
their ideas and delivered them to companies. Individual gurus don't have the
reach which these consulting firms have. They can only write papers and books
and address the occasional seminar. It is up to the consulting companies to
take them to industry.“
“The impact of business analytics and social media
is big... the next big idea will be from here“
Bala Balachandran Kellogg School of Management,
Northwestern University
“There may be a lull right now, but
the time is ripe for the next big idea. The financial incentives are certainly
in place for those who want to work on a big idea.Today, if you are an academic
who has managed to communicate a great idea to the world, you will be rewarded
like never before, in terms of speaking engagements, consulting assignments,
book royalties and board memberships. The average fee you get for being on
Indian Boards is $20,000.CK Prahalad, on the other hand, used to charge
$100,000 for being on Reliance Innovation Council.I'm not saying academicians
are solely motivated by money that is not true but things are much more
commercialised today than they were in my time.
The impact of business analytics and
social media is big and the next big idea will most likely be from here. What
is happening here is a revolution bigger than the industrial revolution. You
need an individual who can communicate it to the whole world.He may be 19 years
old and he may be an Indian, because the best management professors even today
are Indian. Design thinking is another field ready for a big idea. To be a big
idea guru, you have to have a theory, a paper in Harvard Business Review and
then a best-selling book that gets everybody's attention. If you write the book
on the subject, you become the creator of the movement. Newspapers write about
you, people start discussing your ideas in their work places. Some ideas have a
single creator, but sometimes there's no single creator to take the credit.
Some big ideas came with a bang but didn't endure.Re-engineering and the
quality wave are examples of big ideas that have died out.
After 45 years in academics, I can
say there are two paths for an academic to take. Ram Charan and I were both in
Kellogg. He didn't believe in writing for academic journals. He quit and went
on to write some great books on subjects like strategy execution.I stayed on at
Kellogg and wrote papers for journals and got a full professorship in record
time.Now I wonder if it might have been better if I chose Ram's way.I'm now 78
years old and I have tried to make my impact on the world by setting up the
Great Lakes Institute of Management in Chennai. In the end, we all have our own
ways.“
Dibeyendu Ganguly & Priyanka
Sangani
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CDET3JUL15
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