MANAGEMENT SPECIAL......................... Where are the BIG ideas?

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.

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

CDET3JUL15