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An Innovation View of Management Consultancy

An Innovation View of Management Consultancy


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An Innovative View of Management Consultancy

Complemented by a comprehensive selection of tools

Dr Koenraad Tommissen

Introduction to the second edition


Introduction to the second edition
In retrospect, the first version of this book, which was a kind of ‘trial’ publication, proved to be incomplete. Consequently, thanks to some very constructuve input, this second edition offers a broader view of the topic. The chapter on ‘Fear of change’ (or perhaps it should be called ‘Resistance to change’) seemed essential, while another one on ‘Knowledge’ was unavoidable, since this is the basis of the consultancy business. Following a year of reflection, it became apparent that certain tools and gurus were missing, too. Although some have been added, it is virtually impossible to ensure the results are complete as they might be. For this reason, I would like to take this opportunity to invite readers, students, colleagues and anyone else interested in this field to provide the author with their suggestions and constructive remarks. Please send them to: k@opsisart.com and I will see just how much can be included in future editions. In the meantime, it is my duty and honour to thank my father, Professor emeritus Dr Piet Tommissen, my much-appreciated colleague Professor Dr Thiem Ton That Nguyen, the President of the IMC, Peter Sørensen, my former student Vicky Tzivelis, and many others for their significant contributions and suggestions. In the back of the book I have included an index nominum with the hope that this will make it easier to use and, more importantly, more useful. My thanks to everyone.

Koenraad Tommissen July 2007



It is always a pleasure to introduce a book on management consultancy. This book is special, since it has been written by an expert in the field, who is also a theoretician. It introduces the readers to the people factor in the domain of consulting, which is somewhat ambiguous for many people. Dr Tommissen wanted management consultants to appear more human and thus more accessible, and he has achieved this by focusing on such important points as how to choose the consultant you want to work with, and the ethical side of this business. Not only does the book serve as an introduction for those who know nothing about management consulting, but the content will also refresh the knowledge of the professionals working in this field. In addition, it gives a short but pertinent overview of the different steps involved in establishing and maintaining the client/consultant relationship. In the second part the author gives an overview (in his words, “non exhaustive”) according to various consultancy gurus, along with a list of valuable tools, each of which has been placed in its historical context. I mentioned the theoretician above, and among the tools I found the Thiem Tom 10.5 S Framework which Dr Tommissen has developed in collaboration with a Vietnamese professor. I particularly enjoyed reading about this innovation. I hope that this book will become a vade mecum for consultants who are already in the business, and for all those who are interested in management consultancy, especially students. I am now looking forward to the second edition in which Dr Tommissen has promised me he will introduce additional tools, new chapters, and other gurus. I intend to convince him to cover the values of international certification of management consultants, too. I greatly appreciate this kind of initiative and wish the book good luck and a long life. Peter Sørensen, CMC Management Consultant Chairman 2005-2007, International Council of Management Consulting Institutes



It is always a pleasure to write a second edition since it means the first one achieved a degree of success. I was lucky to receive some words of encouragement and enthusiasm regarding the unfortunately still relatively unknown domain of management consultancy. On the other hand, I also received numerous mails, letters and phone calls expressing regret. People regretted that I had not talked about this or that method, while others were a little disappointed that I had not mentioned one or another guru. My problem is, of course, one of choice: knowing what to put in the book and what to leave out. As you will see, I have added several new tools, some gurus and two chapters: one on change and one on knowledge – both basic elements for the management consultancy business. I hope you will appreciate them. Once again, I would like to thank my wife for all the time she allowed me to spend in my office rather than with the family. I am also grateful for input from some of my students, from Peter Sørensen, President of the ICMCI, and from Professor Dr Thiem Ton That Nguyen, my best Vietnamese friend. I was pleasantly surprised that my father, Professor Emeritus Dr Piet Tommissen gave his opinion on the book and suggested some adaptations. For the rest, I am indebted to all those who have been waiting for too many weeks and months for this new edition – in addition to the readers, this also includes those involved in editing, layout and printing who were mentioned in the first edition.

Koenraad Tommissen


Even consultancy has an origin

Even consultancy has an origin
It is very important to point out that in French the word conseil is used for the same purpose as ‘consultant’ in English/American. Personally, I prefer the French word because of its Latin origin. Indeed, consilium was first used in legal language to mean “a place where people deliberate”, or “a reunion of people deliberating”. The correct translation of this word into English is, of course, council, which we have used, for example, in the European Council since 1979. Perhaps the word counsellor would be more appropriate to use in this context? With reference to the English language, I have another problem: “to consult” means “to get information” and not “to give information”. So, is the consultant someone who seeks information but does not give any? Writing that feels a little like a Dilbert storyline, and, of course, we all know that such ‘consultants’ exist. The dictionary definition for the word counsellor (some who gives advice about problems) seems much more appropriate than that for the word ‘consultant’ (an expert who gives advice). It is obvious that everybody can give advice and therefore be a consultant, but who actually dares to give advice about problems? Only a real counsellor, of course. Consequently, the word ‘consultancy’ must also be banished, although I found the following definition in the same dictionary: “The practice of giving expert advice within a particular field”.

Rudyard Kipling


Rudyard Kipling If
If you can keep your head when all about you Are losing theirs and blaming it on you; If you can trust yourself when all men doubt you, But make allowance for their doubting too; If you can wait and not be tired by waiting, Or, being lied about, don’t deal in lies, Or, being hated, don’t give way to hating, And yet don’t look too good, nor talk too wise; If you can dream – and not make dreams your master; If you can think – and not make thoughts your aim; If you can meet with triumph and disaster And treat those two imposters just the same; If you can bear to hear the truth you’ve spoken Twisted by knaves to make a trap for fools, Or watch the things you gave your life to broken, And stoop and build ‘em up with wornout tools; If you can make one heap of all your winnings And risk it on one turn of pitch-and-toss, And lose, and start again at your beginnings And never breath a word about your loss; If you can force your heart and nerve and sinew To serve your turn long after they are gone, And so hold on when there is nothing in you Except the Will which says to them: “Hold on”; If you can talk with crowds and keep your virtue, Or walk with kings – nor lose the common touch; If neither foes nor loving friends can hurt you; If all men count with you, but none too much; If you can fill the unforgiving minute With sixty seconds’ worth of distance run – Yours is the Earth and everything that’s in it, And – which is more – you’ll be a Man my son!


Rudyard Kipling

You may find it very strange to start the chapter of a management book with a poem. The reason is very simple: in this poem, the famous author Rudyard Kipling addresses his thoughts to a (n imaginary) son. He teaches him all the things needed to be a man in the tough world in which we are living. In exactly the same way, I would like to analyse a large part of the poem and adapt the explanation to the needs of a consultant. Consultants must behave like normal people, with normal reactions and, above all, they should be prepared to their job, just as Kipling tells his son to be prepared for real life. If you can keep your head when all about you Are losing theirs and blaming it on you; This is a very surprising statement: try to be cool and to avoid panic when others are not capable of doing so. If, as a consultant, you can keep a cool head, with clear ideas in a stressful situation, your reactions will be better than those who cannot. It is up to you to calm the situation down, to look beyond it and to find the right reaction. If you can trust yourself when all men doubt you, But make allowance for their doubting too; Do not think that you are always right. Do not think that you are the only person in the world who knows everything. But feel comfortable with your feelings; do not hesitate if you think that you are right, but still try to acknowledge other people’s objections. This also means not going too fast, and not forgetting to listen to others. Nevertheless, this sentence seems quite correct as it gives you the power to react correctly if you are sure that the way you are thinking is the only way logically possible. If you can wait and not be tired by waiting, Or, being lied about, don’t deal in lies, Patience is one of the major strengths a consultant should have. This does not mean passively waiting. You cannot just sit and wait until

Rudyard Kipling


a solution comes to you; no, you should try to be patient while helping others to bring you stones that can help you to create, in an unhurried fashion, a wall of solutions. And never forget that many people will lie to you, not necessarily on purpose, but often by omission or stupidity. You should be able to forgive them, as well as helping them to find the truth. Of course, all of this should never be a reason for you, the consultant, to start lying yourself. And yet don’t look too good, nor talk too wise; Once again this is an important lesson in humility: you should not give the impression of being TOO something, because that never helps. In addition, the second part of the sentence is very basic for all consultants: do not use complicated sentences, phrasing, or words unnecessarily. The better you understand a problem, the easier it should be for you to explain it. Your clients do not expect university vocabulary from you: what they want from you is an understandable solution to their problem. It is up to you to find a simple way to explain what exactly the problem is and how you propose to help them to solve it. If you can dream – and not make dreams your master; If you can think – and not make thoughts your aim; One of the most important characteristics of good consultants is that they are able to think in an abstract way. They can ‘dream’ of a solution. But, as mentioned in the poem, this is not enough because you cannot simply ‘dream’ – you have to find a realistic solution which can be adapted to the situation. You need a lot of imagination because you have to be capable of seeing the solution in the future. You should be able to ‘see’ your client’s company after the changes you would like to carry out. If you can do this it will be easy for you to make realistic plans towards your ‘dream solution’. The approach is exactly the same for ‘thoughts’, of course. If you can meet with triumph and disaster And treat those two imposters just the same;


Rudyard Kipling

Not every mission you will have in your consultancy career will be a successful one. Once in a while it may happen that the solution you implemented was not the right one; and maybe your client’s company will be in an even worse situation following your intervention. If this is the case you should not be discouraged; on the contrary, you should learn from this difficult experience and try to find out why you made this mistake. You can and should learn a lot from your mistakes. If you have had a huge success, you should not stop working or studying, but rather you should try to stay humble, to study this success, and try to find out if it was possible to do even better. That is the way you should treat those two ‘imposters’ just the same. If you can talk with crowds and keep your virtue, Or walk with kings – nor lose the common touch; It is not always easy, I know, but it is worth trying. Trying what? Well, create contacts with everybody, making no distinction between origin, race, sex, age, experience, education, and status in society. A consultant must try to speak with everybody (if necessary) in your client’s company. You should be able to speak with the management of the company, keeping in mind that they are in charge of the staff and that you are responsible for finding a good solution for all the people working in this company. But you should also be able to speak with the working class inside this company, because they can very often explain why things go wrong. It is they who do the job. Be humble, speak simply, and try to get them to help you. By acting this way people will admire you, follow you and help you to implement the solution you propose. If neither foes nor loving friends can hurt you; If all men count with you, but none too much; You should be completely independent. Nobody should be able to attack you morally or financially. You should be able to work in a calm atmosphere where you can speak the truth and where you can act without having to take into account the opinions of others. Everybody should consider what you have told them, but you should also give

Rudyard Kipling


them the opportunity to hold their own opinion. Things can evolve and you should be aware of that and accept that people can change their minds. And then comes the final verse which we could easily adapt as follows: And – which is more – you can be a consultant now.

Chapter 1: Professionalism: what are the requirements for a good consultant?


Chapter 1: Professionalism: what are the requirements for a good consultant?
Invincibility lies in oneself Vincibility lies in the enemy. Sun Tzu

This chapter deals with the personal attributes, the personal qualities and other ‘things’ required when preparing for a consultancy job. It is not an exhaustive list; simply a type of checklist from which you can pick what you want. Personally, I am convinced that the more topics you select, the greater will be your chance to succeed in your mission as a consultant. It is always very useful to know your enemies and your friends, and undoubtedly being aware of these things can be very positive. As a ‘user’ of consultants it is interesting to feel the way they work, to try to find out why they react in a certain way in some circumstances. As will be shown later, a consultant is not always seen as a company’s friend (even if he considers himself as such) because he sometimes gives the managers of the company hiring his services a very negative impression. This section will be split into four parts: the first will cover the analysis made by the person himself, the second will deal with a later stage, where the ‘almost-consultant’ observes his own reactions in certain situations, the third will cover the necessary environment, and finally there are some notes about time and how to use this ‘enemy of mankind’.

Who am I?
What personal attributes do I need? • Fearlessness • Rapid framing • Humour and perspective • Confidence and self-esteem • Intellect • Active listening • Comprehensive questioning


Chapter 1: Professionalism: what are the requirements for a good consultant?

• Clear language • Glocal thinking • ‘Instantiation’ This list may seem very strange to those who have never approached consultants, never hired one, or simply never thought about the feelings and capacities a counsellor needs. Most people have taken exams at least once in their life, and we all remember the feeling when there was a teacher or professor with the reputation for finding it difficult to give good marks. Even when you knew a lot about the topic, you always wondered what his reaction would be. This, of course, is the feeling a consultant has when he starts a new mission: he does not know the company he is going to work with/in, he does not know the people working there, and he has to find all this out as objectively as possible. He is starting a kind of long-term examination, and has to be able to control his apprehension or fear. He has to live in a kind of fearlessness, or at least give the impression that he is. But there is, of course, much more to the word ‘fear’. The consultant has to be sure about his recommendations at the end of a mission, and he should not fear the reaction of the company management, even if he knows that what he is going to say will not be acceptable to them. Imagine a consultant telling the management that the only problem in the company, or the major cause of the company’s inefficiency, is actually the management itself. It is a strange situation, but the consultant has to tell the truth (see the chapter on ethics) even if he is apprehensive or fearful about the results of his analysis. Another kind of fear, is that of being in a state of permanent confrontation with people who dislike consultants in general, or who think they are specialists in management, and the consultant is unable to convince them that they are wrong. I put this on top of the list as it is probably the one the outside world rarely thinks about. Fortunately, the other points are more positive.

Chapter 1: Professionalism: what are the requirements for a good consultant?


Everybody has heard about a frame and knows what a framework is. One way of detecting a good and efficient consultant is through his response to framing. So, what does this mean? When starting a new mission the consultant receives information from one or several people about the company, the problem(s), and the personnel, if necessary. It is the role of the consultant to detect what has not been revealed, to make up his mind, to build a frame as rapidly as possible so that he can start working on this. So that if the frame he has made in his mind seems to be complete he can starting analysing immediately; if not, he must work on it like a puzzle, filling in the gaps. Therefore, it is important to be able to do ‘rapid framing’, just because time is money. The shorter the framing period, the quicker people can feel that the consultant knows what he is working on, and the faster he will be accepted in what he does. We will see later in Chapter 4 on ‘The entry phase’ that the first ones to approach the client are those who need this capacity most. As in daily life, everything turns on humour and perspective. People with a broad sense of humour tend to be intelligent because, once in a while they manage to use it to diffuse a potentially dangerous situation. Putting things into a humorous context, and giving humorous examples can help both parties to relax, and even to better understand what is actually meant. In a similar way, a perspective ‘way of thinking’ is also necessary. Those who can put situations into perspective in the long term can explain better why current situations are wrong. A big drama in a specific place within a company may be almost ‘nothing’ compared to the real problem that lies therein. It is also useful to use this ‘perspective view’ talent when explaining necessary changes the company must make. For example: imagine that you have to disclose why you must fire 20 people in a company employing 150 (which is an extreme situation for a consultant). This is not easy for anyone to accept. Therefore it is necessary to explain why this action is essential: if the company does not get rid of those 20 people its whole future is in jeopardy. Of course, this


Chapter 1: Professionalism: what are the requirements for a good consultant?

is not enough for the employees; in the context of the perspective, the consultant should also introduce the possibility of those 20 unfortunate people finding a new job with financial assistance from the company. By so doing the discussion will become much easier. The above brings us directly to the next point: confidence and selfesteem. Confidence is required to be able to act and react, as stated in the example above. If the consultant is not confident either in what he does or with the solutions he is defending, it is not necessary to try to convince the management because they feel that the consultant himself is unsure. And you should have plenty of self-esteem because, without it, no one can expect the respect of others. But be careful – this has nothing to do with being pretentious, which would be a negative approach. In this context it simply means that a person has to know exactly what he is worth and nothing more. Once he knows this it is clear that other people will respect him for what he is, what he knows, and for the way he behaves. Intellect: this word, of course, is very close to ‘intelligent’ but is more than just that. An intelligent person has a lot of knowledge, and has probably studied a lot, whereas a person with intellect knows how to use this knowledge, which is extremely important. One could compare this, to a degree, with engineers and to those who build bridges. The first one knows precisely (according to his university studies) how to build a bridge on paper, and how to calculate exactly the different elements of the bridge, but is probably unable to actually build the bridge because of a lack of experience in that field. On the contrary, a workman knows how to build the bridge, and where to start, but does not have the capacity to conceptualise it. The consultant should have enough experience in the field, and sufficient intellectual background so that he can help any company in his area of competence in a practical way, simply because he knows how to apply what he has learned in the field. What is active listening about? Well, when you want to learn a lot about a person or a situation you have to listen – but active listening is more than that. It is asking the right questions at the right time without interrupting the speaker. It is being positive in your questioning; it is

Chapter 1: Professionalism: what are the requirements for a good consultant?


helping the other party in the discussion to reveal everything he knows about the problem. It is also showing the other person that you are interested, even if it only concerns minor details. Active listening also means avoiding speaking too much about one thing which might be hiding others. In my eyes this can be compared to detective work where the officer wants to know everything about a crime – the smallest detail is important, and it is the detective’s role to help the witness to mention everything he knows. This is, of course, linked closely to comprehensive questioning. Both are necessary because a lot of people never talk. A person may be frightened when questioned by a consultant because he does not realise the importance of the mission, and only answers precise questions. If the consultant is a good questioner he will help the other person to overcome his fear and through this approach will obtain the necessary information. Most people think they use straightforward language, but unfortunately this is not the case. In a consultancy job, speaking plainly and clearly is very important because if people do not understand what a person is talking about they cannot be helpful by giving correct information. This has a lot to do with good pronunciation but much more to do with the use of the correct vocabulary. It is not because people speak the same language – for example Vietnamese – that they always understand each other. One should speak at the level the other understands. This means simply that it is not practical to use academic vocabulary with less-well-educated workers. It is not easy to ‘translate’ a theoretical approach learned at university into simple ‘human’ language. There is a beautiful sentence in French that expresses exactly what is meant here: Ce qui ce conçoit bien s’énonce clairement. Glocal thinking: this famous phrase was ‘invented’ during the time global thinking was necessary, but when people forgot to do things locally. The contraction was derived from think globally, act locally. Of course, this is applicable to everybody in charge of changes and analysis: they need to apply what they know in general (globally) and must apply it correctly in the field, where they are working (locally).


Chapter 1: Professionalism: what are the requirements for a good consultant?

Instantiation: this word does not exist in any dictionary as far as I know, but it is a powerful word. It is a compilation of instant and situation, and describes exactly what it means: instant action in a given situation. It is one of the characteristics of born leaders, but equally should be one of good consultants, being able to take the right decisions immediately at the right moment. Indeed, sometimes there is no time left to analyse or reanalyse a problem, but a decision has to be made – those who can take the right decisions at the right moment can help companies a lot. They do not waste time but rapidly find and make the right conclusion; they simply act without fear in order to avoid the situation deteriorating further. Here we come back to the beginning, to instant decision-taking without fear or apprehension.

What are my qualities?
As I have already mentioned at the beginning of this chapter, this is a sort of analysis one makes (or better still, has to make) of himself having experienced several difficult and complicated situations. The kind of questions people with certain responsibilities often ask include: did I take the right decision? Did I act correctly? Am I still able to work as hard? Is there any risk for other people? Would I accept others acting as I did, in the way that I behave? Is what I am doing sustainable? All these elements can be itemised in a structured list: • Intellectual abilities • Understanding people • Communication • Emotional maturity • Stress resistance • Personal drive and initiative • Ethics and integrity • Physical and mental health Do I have the right educational background to do this job? I know a lot of consultants and I must admit that they come from different fields of knowledge, mainly because most of them studied at university with the right intentions, and with the right understanding of the word

Chapter 1: Professionalism: what are the requirements for a good consultant?


‘university’ – from the Latin word universitas meaning ‘the whole, total, universe, world/university’. They studied at university without focusing on special topics all the time, but maintaining interests which covered all subjects. Most of them combined studies in completely different fields in order to broaden both their knowledge and their perspective. They understood from the very beginning of their studies that the more you know, the greater the possibilities for interesting developments. Therefore, the question ‘Did I study the right thing?’ is not the right one. The question should be: ‘Does my personal education allow me to work on this topic? Do I know what it is about?’ It is very important to have a global view on things, with a broad background, where people can observe from different points of view so that the global impression is closer to reality. In order to understand people it is necessary to talk and listen a lot. Never avoid contact with people from different origins – such as cultural, hierarchical, levels and different educational backgrounds – because this is exactly where you can learn a lot. Learn from the others and try to understand what they mean, why their opinions differ to yours. Surely it is worth trying to find out why somebody reacts differently to you? In so doing you have to analyse the behaviour of yourself and the other person. Communication is not only the basis for business in general, but it is a fundamental necessity for consultants. If you are unable to communicate well would you be able to find out what the problem is? May be, but how long would it take? Would you be able to implement your solution without correct communication about it? No way! Therefore it is necessary to analyse your communication capacities. There are, of course, different levels of communication, and (luckily) not everybody needs the same skills. First of all it is necessary to be able to make contact easily with people in general, and not to be egocentric and blinkered. Secondly, as we will see in Chapter 4 ‘The entry phase’, there is a written communication in which the solutions are presented to the client. Finally, you must be able to communicate in the field, and be a leader by showing the others how to do things without imposing them. However, I am not saying that at this stage every consultant needs all these faculties at the same time –


Chapter 1: Professionalism: what are the requirements for a good consultant?

for example, some consultants never have close contact with the client but are specialists in producing written documents. Emotional maturity has nothing to do with age; it is about how people react in given circumstances, and what experiences they have. In this case, it is easier to understand by explaining with some examples. Imagine that you have to explain to a boss that the way he manages a company is not the right one, and that the only way to ‘save’ the business is for him to leave the management. This is an emotional and complicated situation. The person appearing in front of you is maybe the one who hired you, the one who has given you the mission, and you have to tell him that he is the real problem. Here is another situation: the mission you accomplish has one possible result: to close down the entire company so, at the very least, during the closing down period you can offer the employees the opportunity to find a new job, although maybe not for all of them. Will you be psychologically strong enough to impose this solution? Is there anything more difficult than ‘stealing’ jobs? Is there anything more difficult for a consultant than putting people in challenging pecuniary and family situations by removing the possibility to earn money and to be the breadwinner? Stress is not only due to an exaggerated amount of work – in which case it would be easy to avoid it as it would be sensible to split the job into two parts, create a new job and the stress would disappear. Stress is also due to the complexity of the job. Many people work in jobs they are not qualified for, and so they have to work above their normal capacity all the time. This is not a good situation, as such people have to put all their efforts into actually doing their daily job, leaving them no time or energy to think about what they are doing, or to look for innovation or change. Sometimes, stress is also due to ‘fear’ of those above them, ‘fear’ for the career, ‘fear’ about what people think of you. In the consultancy business, the reasons for stress tend to be similar, except that you always have to behave as an independent person without

Chapter 1: Professionalism: what are the requirements for a good consultant?


any hierarchy. You have to act as if you were the only person responsible, without having to take into consideration the position of the person facing you. As a consultant, you have to convince yourself that you are working objectively on a mission, and that all the people involved in this can be changed, and are not necessarily the best ones for the job. Of course, when speaking to a company boss you should be respectful, as you should with all the others, but you should not give him any special treatment and you should not believe him more than you do the others. Everybody is the same at the analysis phase of a mission, which is very often the grounds for a stressful situation. If you do not feel strong enough to resist that then it is better not to accept this kind of job. One of the characteristics I enjoy observing when young consultants start work in a company is their personal drive and initiative, because it is in these two fields that the ‘real consultants’ can be detected, those who will make it, and the ‘average’ ones. Those who are enthusiastic and bring a personal touch to the business are pleasant to work with; if, in addition, they take initiatives (even if they are not always the right or the best ones) they can do a good job, because by acting like that they can boost the mission. So if a person feels during this analysis phase that he does not need initiative, it might be better to forget the dream of working as a top-level consultant. I have already dedicated a whole chapter to ethics, and each one of us must make his or her self-analysis to see if ethical correctness is present in their behaviour. If not, then there is no possibility of working as a consultant. Of course, linked to this is the integrity factor. The dictionary reveals that this is, in fact, very close to ‘ethical behaviour’: “Main entry: in·teg·ri·ty Pronunciation: in-’te-gr&-tE Function: noun Etymology: Middle English integrite, from Middle French & Latin; Middle French integrité, from Latin integritat-, integritas, from integr-, integer entire 1. Firm adherence to a code of especially moral or artistic values: INCORRUPTIBILITY 2. An unimpaired condition: SOUNDNESS


Chapter 1: Professionalism: what are the requirements for a good consultant?

3. The quality or state of being complete or undivided: COMPLETENESS synonym see HONESTY” Previously, I mentioned mental health in combination with stress resistance and psychological and emotional maturity. Physical health is also very important, because being on mission as a consultant can be tough, not knowing when the day will start, or when it is going to end. Very often there is a lot of travelling and living in hotels and restaurants on top of actually doing the job. This is all very tiring so the consultant must be in good physical shape.

What more do I need?
The question here is mainly relevant for people who want to start their own consultancy business. Once again, this is not necessarily of great interest for those who do not intend to be a consultant, but nevertheless it is worth looking at it so that they can see what they have to check or try to find out about a consultant they want to work with. I am thinking here, in particular, about contacts: most good consultants always know somebody who can help in any situation, so check this out. Never hire people who are not adequately qualified: it is better to wait for a professional collaborator than to hire someone who could damage your reputation. The problem about hiring professional people is twofold: one, they are more expensive than the others, and two, they might leave your company quite quickly to start their own business. The answer to those two objections is quite simple: if they are expensive – and, in fact, they should be – it is up to you to add their value to your mission so that it can be even more profitable than before. The second point is more difficult: if they want to leave they will, but if from the very beginning you want to keep them on-board, you will have plenty of opportunities to convince them to stay. Pay them enough so that they are not tempted to leave your company, give them enough free time to study, pay for their education, make them junior partners if necessary, give them more responsibility...

Chapter 1: Professionalism: what are the requirements for a good consultant?


Like every other business in the world, there are several reasons why you will need some entrepreneurial experience to start up your own consultancy business. The more you know about entrepreneurship, the less time you will spend on your own business, the more you can spend at your client’s place, and the more you will be able to bill. Try to reduce the non-billable hours and to increase the billable ones (at least those of the most expensive collaborators). It is quite simple to learn this: start in another consultancy company and observe as much as you can – ‘steal’ with your eyes. Perhaps by doing this you will realise that you prefer to work in a larger organisation, or to be a partner rather than to start up your own business. One important thing in the consultancy business, and certainly at the beginning, is the accessibility of the managing partners. Commonly known as ‘open-door management’, it is very important that the managing partners are available at all times, because their experience is important to the consultancy company. Those who forget that, and those who are not willing to share their knowledge will lose contact with their daily business, and consequently with the consultancy job. Here we come to a topic I like very much because it is very simple: make a lot of contacts and invest in a good address book. How? How long? How many addresses? These are the kind of questions I get asked all the time, and the answers are easy – as many as you can, for as long as you can manage. How do you get them? Everybody in this business has studied and therefore has student colleagues. So begin with those contacts: a lot of them will grow in importance in business, in government, or outside the country – keep in touch. You will start to live in a business environment, and will have colleagues, suppliers and customers there, so keep their names. If your behaviour with them is correct you will be able to use these contacts for the rest of your life. Inform those you consider to be good contacts about your career changes, and they will do the same, thereby keeping your address book updated at all times. Of course, it is not enough to know where people sit and work; it is important to know what they know, and whom they know so that their address books can be added to yours. That is the way it goes. Start it as early as possible, and teach your children how to do it. They will be grateful later.


Chapter 1: Professionalism: what are the requirements for a good consultant?

It is very important to work in a good atmosphere for the simple reason that a negative atmosphere will have an adverse effect on the results, or will, at the very least, slow down the working capacity of the people involved. The atmosphere in the office has to be good, as it should be at home. It maybe useful to repeat here that family life is important, too – the time spent at home must be quality time. Finally, the beginner consultant needs good support resources. Nobody can do everything alone, and it is undeniably important to consider all the resources required before starting your own business.

Know how to use time
This sub-chapter has nothing to do with the well-known ‘timemanagement systems’ which exist all over the world. It is simply a list of things to refer to constantly in order to maintain a correct business life: • Integrate your personal and professional life • Use lists • Delegate • Do not dally • Do what you feel is right at the right time • Sanctum sanctorum • Spend money on efficiency • Be selfish with your personal time • Plan long-term investments • Allow for the unexpected All these points can, of course, be used in a variety of lifestyles, and in different jobs, but we will stay focused on the consultancy business. It is simply not necessary to be a workaholic. Normal professionals have normal lives. What is meant by integration is simply making people aware of the need to set time aside for the private part as well as the professional part. A lot of consultants do not dare to say to their clients that they never work on Sunday, which is a shame as it is not normal to work on Sundays (unless it is really necessary). Everybody needs a day of rest once in a while: explain to your client

Chapter 1: Professionalism: what are the requirements for a good consultant?


that you need a day off in order to be fully fit for the following day. It is much better to rest regularly when you want to survive for a long time. ‘The entry phase’ in Chapter 4 will reveal that there is an even more surprising thing that the clients will have to accept. I give the following advice to consultants: once they have analysed the entire problem they should just sit back and do nothing. But what is the reason for this? Well, by resting and apparently do nothing, you give your brain the chance to define the approach better than ever, just as you tend to think up a lot of new ideas before falling asleep. Such moments have to be created. So I repeat, after the analysis phase just sit back and do nothing! I know a lot of people pretend that they never forget anything. I even tend to believe them because I know that they only promise big things, and not those things in which they themselves have no interest. So I recommend using lists in any shape or form: for some it is simply a piece of paper pushed into the pocket, for others it is part of the daily agenda, or the ‘tasks’ function in Microsoft Outlook Express. It should be simple and easy to use, a system not requiring you to copy one list to another, because that is just a waste of time, and lists should be made to avoid this. Delegation is the masterpiece of the real organiser, of the excellent boss, of the remarkable consultant. It is a weapon with two strengths: on the one hand, by delegating you indicate your trust in others while, on the other hand, you give yourself more free time for other (more important) tasks. By delegating you create a special atmosphere that is not always clearly understood by others, because you regularly have to redefine the roles played by the different actors. Let us suppose, for instance, that you are CEO of a company dealing a lot with daily business, and you suddenly realise that by delegating a large part (or even all) of the daily business to a general manager you will have more time for strategic management and other delicate tasks. So, you delegate everything concerning the daily business to a person you trust 100%. What does this change? More than you can imagine, in fact, as you now know that you will have more free time for other tasks, that is if you really delegate and do not spend your time controlling the newly appointed general manager. You also know that he will have a lot to do as regards his new


Chapter 1: Professionalism: what are the requirements for a good consultant?

responsibilities, and will be grateful to you because of this notable sign of trust (and probably a significant pay rise). That is what you know and see. But do the people inside the company know what is happening? Do they understand why you made this strategic move, or do they think that you want to retire gradually? Did you explain to your people that you need more time for strategic business, what that actually means, and that the person you made responsible for daily business has your full support? Did you tell them that it makes no sense to come to you with topics and questions concerning the daily life of the company? If you did not then the situation will be a dangerous one. Do not dally! Do not talk too much (see the Kipling poem at the beginning of the book). Do not waste time in conferences or meetings where everybody already knows what you are going to say. Do not repeat things unnecessarily. Do not spend time on minor problems that can be solved by others. Do not put energy into topics others can handle, so that you can concentrate on the real problems, and on your main business. I have known people who spent time organising meetings about decorating the building while the company was experiencing serious problems with both the customers and the competitors. So please, do what you have to do – work. Do what you feel is right at the right time. I mentioned a little earlier that it is important to make decisions and to take initiative. That is exactly what is meant here, too. If you really think that you have to do something, and that what you want to do is correct, then do it and do not spend another week or even another day discussing it. The result will stay the same, except that you will have lost a day or a week transforming your decision into reality. By waiting to implement an idea that you think is correct you give others the opportunity to do so. If you handle this correctly, you and your company will always be one step ahead of your competitors. Sanctum sanctorum: these Latin words mean a lot but are not easy to translate correctly. One interpretation might be ‘the holy place of the holiest places’. Everybody needs a place, or a situation where he can be on his own – where he can find some space to think. This is

Chapter 1: Professionalism: what are the requirements for a good consultant?


not necessarily a place where one is physically alone. It has to be an environment where it is possible to think, rest and concentrate without being disturbed. I can give the example of a somewhat surprising place: the well-known French writer and philosopher Jean-Paul Sartre and many others used to write large parts of their works in cafés in Paris. Hardly quiet places but, nonetheless, places where they were able to concentrate on the job in hand, places where they felt comfortable. That is exactly what is meant by the sanctum sanctorum. If you want to gain time, and if you do not want others to react faster than you in their communications, please invest money in efficiency. I often hear people say that a particular electronic gadget is not useful to them as it is simply a gadget like any other. Do not be too hasty to say that; try to analyse whether or not it can be useful to you or your business and help you save time. Time is money! Think about those countries where internet access is still restricted: this slows down contact with the outside world, and with the continually increasing speed of innovation. You should always think about investing correctly in efficiency. It is not egoistic to be selfish with your personal time. To a degree this is linked to your mental state of health. Everyone should convince the other parties involved in business (clients, colleagues, customers) that time off is necessary. Personal time does not necessarily mean time to do nothing. It can be time to read, to study, to think, to do sports, to discuss with others, or to spend with the family. All those little ‘breaks’ are restful, and it is important to make others realise this. Make this time part of your personality. People should know that you need this, and will appreciate you for it. Make clear to others that you do not need a ‘vacation’ as such, but simply some time for yourself, time to find new resources. Never invest in the short term alone – think far ahead and thus plan your investments in the long term, both in your own career and in the evolution of your business. Strategy is perhaps a well-known word in military and business sectors, but it is also useful to think a long way ahead in your private life. Make a life plan, with goals to be achieved, bearing in mind that sometimes goals are impossible to reach, but other


Chapter 1: Professionalism: what are the requirements for a good consultant?

possibilities may occur. Long-term investments may include starting new studies at a certain age. One should think about this once in a while. Unfortunately or, if you prefer, fortunately, life is not always predictable, which is why you should always make allowances for the unexpected. It is the same in business. So please do not fill up your agenda 100% for the coming weeks because you will be unable to find time for great opportunities. If you rarely find free time to help or listen to others they will not come to you in the future and, after a while, you will become isolated. A doctor is a good example of keeping some time free: he must always allow for the unexpected. Can he tell a sick person asking for help that he has no time for him on his agenda before the end of next month because the illness was not planned? Does that mean that you have to foresee when you are going to be sick by calling your doctor to see when you can arrange an appointment? The situation is similar for consultants: no company can foresee all the problems, and may need a consultant at any time. It is up to the consultant to envisage some free time for this. And, by the way, the unexpected missions are often the most interesting ones because they are the result of sudden change.

The purpose of this chapter is not simply to make a checklist of the skills, requirements, talents, etc. a person needs before he can imagine being a consultant. Not at all. This is just a summary of my own thoughts about possible ways of envisaging such a career in the demanding world of professional consultancy. Each person should make his or her own list, making sure it is well balanced, and that the positive and the negative points are clearly defined. And then I would repeat the instruction I give later in the book: just do nothing. The right choice will impose itself.

Chapter 2: Ethics in consultancy


Chapter 2: Ethics in consultancy
Wherever Law ends, Tyranny begins. John Locke

Nothing is perfect! Everyone has heard about ethical problems in the consultancy area, the most important of which are still fresh in our minds. With the mere mention of the name ENRON or other big companies, everybody is horrified that this could ever happen in this business world we live in. These things happen because some consultants do not respect the ethical rules they should respect. But, as mentioned above, nothing is perfect. The questions covered in this chapter will be the following: why is ethical behaviour important? Are there rules for consultants?

Why is ethical behaviour important?
The first response to that question is clear: because it is a matter of human reflex, and because this is simply a question of respect for both the profession and the clients. But is it really that simple? If all consultants were real consultants, meaning that they were really concerned about their clients, we would never have any problems because even in difficult situations they (the consultants) would give objective, clear information. They would inform their clients about the dramatic situation they live in, and would never hide anything or forget to mention irregularities. Unfortunately, not all consultants are honest and some are easily influenced. In June 1997, a TV news presenter asserted during a discussion that there are no qualifications or codes of ethics for management consultants – a mistake which could have been avoided by simply making a telephone call to either the Management Consultancies Association (MCA) or the Institute of Management Consultants (IMC)1.


Management Consultancy, A handbook for best practice, Philip Sadler, Kogan Page Limited, 1998, pp. 33, 34


Chapter 2: Ethics in consultancy

The real problem seems to be that there are still many, many consultants working who are not members of an association, which means that they seem to feel that there are no rules to respect. The consultancy profession is protected in a few countries, which means consultants are given proper education, rules and constraints. Unfortunately, this is not the case all over the world. In the early eighties, many top managers and middle-management workers were fired, just because the economical situation was very bad at that time. Some of these people suddenly discovered a new vocation, declaring themselves to be ‘consultants’ and, because they were unable to find a new job they started their own businesses. It is not because one has certain experience, or is an expert in his or her field that he or she can be a good consultant. Just because you have a business card with the word ‘consultant’ on it does not mean to say that you are one! The basic problem is to find out whether or not consultancy is a profession. In 1989, Professor Jack Mahoney stated: “the Latin word profiteri means literally to speak out, or to make a statement, or further to give an undertaking to others”. That is what consultancy is all about. Professionalism is not only having the professional skills, but also respecting the moral contributions. If this is accepted, the professional spirit of contributing to the community goes far beyond the idea of having a job or making a career; it also takes on a social dimension, thereby accepting a much broader role in society. If we focus again on the ethical behaviour regarding the new definition of professionalism it seems obvious that one has to respect the existing laws and rules, simply because it is a matter of respect for the profession and the clients, and for society as a whole. Therefore, it is normal that non-respect of the rules is seen as a violation of the law, and punishable as a crime, which brings us to the following:

Ethical rules
The easiest approach is simply to have a close look at the Code of professional conduct of the Institute of Management Consultants (IMC)©2.


Chapter 2: Ethics in consultancy


This Institute is the only professional and regulatory body for individual management consultants in the UK. There are other institutes like this all over the world – some countries are setting up similar bodies while others are thinking about doing so. Annually, all members of the IMC© agree, in writing, to comply with the code of professional conduct. They do so in order to officially recognise their obligations to their clients. But they also have an other obligation: to undertake relevant and continual professional development. This means that they have to invest time and money in their education so as to keep up to date at all times, which is important not only for themselves but also for the people they hire. This is, of course, the only way to make a distinction between real management consultants and other ‘practitioners’. It is up to the clients to ask for proof of membership of the Institute. A complete analysis, with examples of this code of conduct, is given below. It is based on three basic principles: • Meeting the client’s requirements • Integrity, independence, objectivity • Responsibility to the profession and to the Institute. The rules under these three principles have to be respected, not only by the subscriber but also by his partners and everyone under his responsibility. As with every rule or law, it is necessary to explain exactly what the terminology used means: Member A fellow, full member, associate member or affiliate of the Institute. Client The person, firm or organisation with whom the member makes an agreement or contract for the provision of services. Declaration A written statement referring to and disclosing the facts relevant to the situations covered by particular rules of the code. Independent Always in a position to express your own opinion freely without any control or influence from others outside the (consulting) organisation, and without the need to consider the impact of such opinion on your own interests. Institute The Institute of Management Consultants©.


Chapter 2: Ethics in consultancy

PRINCIPLE 1: Meeting client requirements
The requirements and interests of the client are the main drivers of the consultant’s behaviour during the entire mission.

Competence 1.1 A member will only accept work that the member is qualified to perform and in which the client can be served effectively; a member will not make any misleading claims and will provide references from other clients if so requested.

This would seem obvious to all businessmen. Nevertheless, it is sometimes difficult not to accept a mission, for several reasons. Suppose you are starting up your own consultancy business and are asked to carry out a mission for which you are not a specialist. It may be difficult to simply say ‘no’, especially if you badly need turnover or if you are actually looking for a new mission? It often happens that a client decides on a new mission when another one is finishing, and asks the consultant in place to do the job. Here it is the consultant’s duty to decline the offer if he/she is not sufficiently qualified to do the job. Initially, the client will be surprised, but will appreciate the honesty and the professionalism of a consultant who behaves in an ethically correct manner. Agreement on deliverables and fees 1.2 A member shall agree formally with the client the scope, nature and deliverables of the services to be provided and the basis of remuneration, before starting work; any subsequent revisions will be subject to prior discussion and agreement with the client.

The major word in this rule is ‘before’. It is understandable that the client wants to know what the consultant will cost, before starting the collaboration. Sometimes, it is difficult for the parties to reach a final figure, because there are some unknown areas within the task. In that case, they should give the different options equal status so that the client can stop when he decides to without being penalised. The consultant should analyse the problem in depth before submitting

Chapter 2: Ethics in consultancy


his financial proposal for agreement. Deliverables should also be discussed before the work is started because client needs are not always the same: sometimes the client wants much more than a final solution – maybe he/she requires all the different steps of the analysis, or the implementation documented with background research, with graphs, with special support, etc. Obviously, these elements make a big difference to the workload, and thus to the size of the final bill. Subcontracting 1.3 A member shall subcontract work only with the prior agreement of the client and, unless otherwise agreed, will remain responsible for the performance of the work.

This is a very simple sentence to explain but it will help avoid several problems. The first one concerns security: imagine that you subcontract to a secured company and that you try to involve subcontractors who, for whatever reason, are not acceptable to your client: what will his/her reaction be? You, the consultant, will not be trusted in future. Secondly, there is the matter of honesty: everyone knows that not every consultant company works for the same fees: if you hire subcontractors, it might be because you want to make money without investing anything, not even in your own staff. In general, it is always wise and correct to tell your client that you will not do the entire job alone – normally this will not be a problem if you explain your reasons. Here, too, open book accountancy would be preferable. Confidentiality 1.4 A member will keep all information concerning the client's affairs in the strictest confidence and will not disclose proprietary information obtained during the course of an assignment.

Like most of the points made in these rules, this also seems obvious. Nevertheless, it should be clear to the client (and the consultant) that NO information will be given to others – not before, during or after the mission. In many cases the client even asks that his name should not be mentioned in client lists because he does not want others to know that he has previously asked external consultants for help. On the other hand, sometimes clients agree to use a consultant’s name, such as when


Chapter 2: Ethics in consultancy

the case the consultant worked on was important, gave good results, and showed the client’s aggressiveness, the desire to innovate. Once in a while a consultant may even discuss fees, and convince the client to give him the opportunity to use his name (for publicity reasons) and thus lower the fees. Non-poaching 1.5 A member will not invite or encourage any employee of a client for whom the member is working to consider alternative employment, unless it is proposed by the assignment.

Surprisingly, nothing is mentioned about the client’s behaviour or the time limit to be respected. It seems normal to limit this rule during a period of six months (up to one year) after finishing the mission. It is also prudent to mention in the agreements that the client should not poach either. It is indeed in missions such as those involving a consultant that people have to show their capacities, and where both sides – the client as well as the consultant – can observe the behaviour of staff and appreciate their know-how. This means that it is easy to find the best people in different fields without having to pay for that service. Transgression of this rule is severely punished in many countries. Due care 1.6 A member will make certain that advice, solutions and recommendations are based on thorough, impartial consideration and analysis of all available pertinent facts and relevant experience, and are realistic, practical and clearly understood by the client.

Impartial must be mentioned here because it refers to the issue of independence. The consultant should clearly decide not to be influenced by the proposals and suggestions made either by the client himself, or by the customers among his own consultancy staff. This is precisely how to find those consultants who behave correctly – those who start from nothing each time they take on a mission, without any presumptions. The other points are equally important: if the client understands the recommendations and solutions well, he will be able to understand the way they should be implemented, and may even be able to do it without

Chapter 2: Ethics in consultancy


external help. If the solutions are neither practical nor realistic what can a client do with them? The only thing a client wants is a possible solution, which means one that he understands, can afford, and can implement without unacceptable risks. Communication 1.7 A member will ensure that the client is kept fully informed about the progress of the assignment.

It is reasonable to expect the consultant to provide regular information. Unfortunately, as this is not always, or rarely possible, the consultant should have his own communication strategy. Communication takes a lot of time, and thus costs a lot of money, which should be considered in a consultant’s financial proposal. One very good communication strategy is to have weekly meetings with the client, for instance every Friday afternoon, so that the consultant can show the client the progress made during the week, thereby giving a good idea of both progress and any possible delays. Another advantage of these meetings is that the consultant can explain what is going to happen during the coming week, giving the client an opportunity to prepare his staff accordingly. In this case, when referring to the client the consultant must try to involve all those concerned in the mission, on his side as well as on the client’s side. 1.8 A member will encourage and take note of any feedback provided by the client on the performance of the member’s services.

The meaning of ‘take note’ is clear: if a client has problems with something, the consultant should react immediately and either explain or change the way things are done. It is necessary that the consultant reacts positively to any problems expressed by the client. By working in this way, both parties will be able to progress rapidly and with mutual respect. The more they exchange information and remarks, the better they will come to understand each other, and the better they can collaborate. A client without problems may not be a good client because that can indicate that he is not interested in the mission or does not understand what the consultant is doing. And there could be an even worse reason for such silence – that he does not trust the consultant or is afraid to question him.


Chapter 2: Ethics in consultancy

Respect 1.9 A member will act with courtesy and consideration towards the individuals contacted while undertaking assignments.

In every collaboration it is important to respect colleagues, the people you work with, and your superiors. It is not important what level of education you have or the role you play in a company: the important thing is that all the individuals can work together respectfully because one can always learn from another. Can any consultant dare to say that he has nothing to learn from others? Does he know everything? Can he catch fish with their bare hands like certain primitive fishermen do? Can he build a house alone? Can he handle a boat in the middle of the ocean? It is exactly the same when you have a mission in a company: the older workmen will show how they used to do it, and maybe they will demonstrate the reason why things should be changed, or not. The managers will show the evolution they have made within the company, and thus indicate to the consultant the reasons why some problems occur. One can always learn from the other. On the other hand, you should also be willing to share knowledge with others.

PRINCIPLE 2: Integrity, independence, objectivity
A member shall avoid any action or situation which is inconsistent with the member’s professional obligations or which might, in any way be seen to impair the member’s integrity. In formulating advice and recommendations, the member will be guided solely by his/her objective view of the client’s best interests.

Disclosure 2.1 A member will disclose at the earliest opportunity any special relationships, circumstances or business interests that might influence or impair, or could be seen by the client or others to influence or impair, the member’s judgment or objectivity on a particular assignment.

Chapter 2: Ethics in consultancy


This is exactly the same rule as is applied to judges all over the world. Nobody can pretend to be, or stay objective if either personal interests or a particular mission concerns, indirectly or otherwise, personal interests. For example, it is impossible to stay impartial if, by acting the way you should, you will lose money. Can anyone accept that he or she has misjudged his or her own friends in a business problem? Can one say, honestly and impartially, to a business friend that you made wrong choices in the past, and that the consultant assignment is only necessary now because of your mistakes? There are thousands of examples of difficult situations so it is important for a consultant to say stop as soon as possible. 2.1.1 Rule 2.1 requires the prior disclosure of all relevant personal, financial or other business interests that could not be inferred from the description of the services offered. In particular, this relates to: • Any directorship or control in any business in competition with the client • Financial interests in goods or services recommended or supplied by the client • Any personal relationship with any individual in the client’s employ • Any personal investment in the client organisation or in its parent or any subsidiary company • Any recent or current engagements in sensitive areas of work with directly competitive clients • Any work for a third party on the opposing side of the transaction, such as bid defence, acquisitions, work for the regulator and the regulated, and assessing the products of an existing client. Although this list may seem long it is, of course, not exhaustive, and one should judge other cases on their individual merits. It is clear that it is not possible to work on a mission where you might feel uncomfortable because of the types of problems mentioned above. Conflict of interest 2.2 A member shall not serve a client under circumstances that are inconsistent with the member’s professional obligations or that


Chapter 2: Ethics in consultancy

might be seen to impair in any way the member’s integrity. Wherever a conflict or potential conflict of interest arises, the member shall, if the circumstances so require, either withdraw from the assignment or disclose to the parties concerned and obtain their agreement on the performance or continuation of the engagement. It is not always easy to see before an assignment starts that a conflict of interest could arise. So, it is the consultant’s duty to be attentive at all times, and to try to act as mentioned above in rule 2.2 as soon as the problem occurs, without any delay. A solution can usually be found, for instance, simply by changing one or more members of the staff involved in the mission. 2.2.1 It should be noted that, depending on the circumstances, the Institute may be one of the ‘parties concerned’. For example, if a member is under pressure to act in a way that would bring the member into non-compliance with the code of professional conduct, in addition to any other declaration that it might be appropriate to make, the facts should be declared to the Institute. Luckily, such circumstances rarely occur, and in the countries where no such Institute exists, the consultant should act as if he was a member of an Institute – that is, he should try to avoid all situations in which he contravenes the rules of professional conduct. Inducements 2.3 A member shall neither accept discounts, hospitality, commissions or gifts as an inducement to show favour to any person or body, nor attempt to obtain advantage by giving financial inducements to clients or their staff.

In a seminar given in HCMC in November 2002, I stated exactly that and it was even well understood by the journalist present at the time. He writes:“Consultants should not receive monies that are not stated in contracts; ‘We even do not go out for meals paid by our clients,’ he (Tommissen) said’. ” You should avoid being in any way dependent on the client. Of course, it is possible to go out to lunch with the client, but you yourself should pay for the client.

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2.3.1 Payment for legitimate marketing activities may be made, and national laws should be respected. This rule is clear and does not require much explanation. The only important thing to remember here is that external consultants have to adapt their systems to the laws of the countries they are working in. Therefore, it is sometimes very difficult to find acceptable, realistic and practical solutions in all countries where a multinational is installed. It is the role of the consultant and his staff to find a solution for his client in accordance with the different legislations encountered. Privacy of information 2.4 A member shall not use any confidential information about a client’s affairs, elicited during the course of an assignment, for personal benefit or for the benefit of others outside the client organisation; there shall be no insider dealing or trading as legally defined or understood.

Once again, this is the same problem that judges have: they cannot speak about a court case because they have taken a vow of silence. The client should be able to act in complete confidence with the consultant, knowing that he can explain his problems, and reveal all the relevant figures without any risk of having them repeated outside his company, even after the assignment has been completed. 2.5 When required or appropriate, a member will establish specific methods of working that preserve the privacy of the client’s information.

Of course, this comes at a cost. It is possible that a client has such a large amount of crucial, vital, secret information that he does not allow consultants to work with their own laptops, and that even faxes or mails are forbidden. In that case, the consultant must find a working arrangement and work according to the demands and rules of the client. Objectivity 2.6 A member will advise the client of any significant reservations the member may have about a client’s expectations as regards benefits from the engagement.


Chapter 2: Ethics in consultancy

When it comes to an agreement, and the client gives an assignment to the consultant, they will both have an idea about the benefits the client will probably receive from this. It is the consultant’s task to inform the client that he must limit them if they are significant. It is obvious that before a mission starts no one can tell exactly what the outcome will be. The figures given by the consultant will indicate the direction to be taken, which may sometimes change dramatically during the assignment, either because of hidden information or perhaps simply because outside influences have changed the whole mission. For example, suppose 90% of a company’s business is in the export field, and suddenly the currency of one of its main clients collapses. It is simply not possible for a consultant to foresee such an event. The only thing he can do when such a situation occurs is to contact the client immediately and, if possible, to adjust his strategy. 2.7 A member will not indicate any short-term benefits at the expense of the long-term welfare of the client without advising the client of the implications.

One of the basic economic laws is that it is easier to make short-term benefits than to do so in the long term. The client may not always understand that, and may even be under pressure from his shareholders to work in the short term. It is part of the consultant’s duties to show the client both the risks and the opportunities by investing in the long rather than in the short term. It is the client who decides, and personally I always advise writing such decisions made by the client in the contract. It is clear that the client will hesitate when you put such responsibilities before him.

PRINCIPLE 3: Responsibility to the profession and to the Institute.
A member’s conduct shall at all times endeavour to enhance the standing and public recognition of the profession and the Institute.

What follows next is not yet applicable in Vietnam, but it is my dream to see this country create an official Institute similar to the one on whose

Chapter 2: Ethics in consultancy


rules I am commenting. Vietnam needs such an Institute to help make the country more confident in consultants, to make it more independent and to make the consultants themselves more responsible. It is clear that currently there are still some people working as ‘consultants’ who do not respect any rules. Annual affirmation 3.1 A member will provide the Institute with annual affirmation of adherence to the code of professional conduct.

Obviously, it seems strange to affirm on a yearly basis that you are adhering to the code, but the reason behind this rule is twofold: on the one hand, it makes the consultant think about the code every year, and may actually remind him that once in a while he almost forgot to behave correctly; on the other hand, it reassures the Institute that the member is still willing to act according to the rules, as well as being willing to remain a professional in the consultancy business. Continuing professional development 3.2 A member will comply with the Institute’s requirements on continuing professional development in order to ensure that the knowledge and skills the member offers to the clients are kept up to date.

There is no concrete rule saying how much, how long, at what speed, where, etc. you should try to stay up to date, but a much ‘ruder law’ exists: the competitor. The consultant also has competitors, and the only way for a consultant to keep good staff on-board is to give them regular training and the opportunity to follow courses in the fields in which they specialise. There is no better way of linking young or even older intelligent people than by giving them the opportunity to train in high level courses. Every consultancy firm has its own rules, but all have specific budgets for such training. They develop plans to train their staff in the same way as they try to do for their clients. The level of knowledge or intelligence is the one thing which makes consultants really different from one another.


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A member will encourage management consultants for whom the member is responsible to maintain and advance their competence by participating in continuing professional development and to obtain membership of the Institute.

It is, of course, never enough to simply offer the opportunity to study; the members must also motivate people to do so. It can be done by example, and also by giving staff the opportunity to take business breaks to allow enough time to find the energy to study. If you want your staff to increase their knowledge, their time management should be flexible enough to allow for training. Professional obligations to others 3.4 A member shall have respect for the professional obligations and qualifications of all others with whom the member works.

This not only refers to rule 1.9, but also includes respect for the actual qualifications people inside and outside the consultancy business. 3.5 A member referring a client to another management consultant will neither misrepresent the qualifications of the other management consultant, nor make any commitments for the other management consultant.

This is one of the major rules in all business: never say anything which may misrepresent your competitors. Indeed, it makes no sense to try to blame your competitors – the only thing which counts is being better than the others. It is up to your client to form his own opinion about your ‘colleagues’. If your presentation, your quality, your pricing is better than that of your competitors, you will be awarded the assignment whatever happens. If not, it is a pity, but you can learn from it and be better next time. You can only show that you respect your profession by being honest, and working with dignity. That is all. 3.6 A member accepting an assignment for a client knowing that another management consultant is serving the client will ensure that any potential conflict between assignments is brought to the attention of the client.

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It very often happens that a client hires the services from different consultants at the same time, because his needs are in different fields. It is up to the consultants to create an atmosphere of mutual respect, and to avoid working on the same tasks. The client has to be informed continually about any potential conflict between them. The client can never be blamed if the consultants do not inform him about possible dangers. 3.7 When asked by a client to review the work of another professional, a member will exercise the objectivity, integrity and sensitivity required in all technical and advisory conclusions communicated to the client.

Once in a while a client may be surprised by the results obtained by a consultant, or may be uncertain about the conclusions given to him after an assignment, and consequently wants another professional to have a closer look at those results or conclusions. This is not a matter of distrust, but simply a matter of feeling more comfortable. The client often just wants the results to be confirmed by another consultant. The main problem here is that the premises are no longer the same as the first consultant found when he arrived. Therefore, it is very important to be objective and try to imagine what the situation was like before. Why not ask the other consultant (if the client agrees)? Fees 3.8 A member will negotiate agreements and charges for professional services only in a manner approved as being ethical and professional by the Institute.

3.8.1 Members are referred to the Institute’s ‘Guidelines on Charging for Management Consulting Services’. It is clear that in countries where such an Institute exists it is quite easy to make sensible proposals. In countries where they do not exist it is much more difficult – you can find extremely high rates as well as dumping prices. This is not the only purpose of this paragraph. You should not forget, for instance, to explain clearly to the client what exactly your working day is: 8, 9 or more hours a day? How many working days in a week? What is included in the proposal – just a document, or all the


Chapter 2: Ethics in consultancy

background information and assistance during a certain period, too? All this information must be written down in a clear comprehensive ‘trick-free’ document signed by both the parties. Publicity 3.9 A member, in publicising work making representations to a client, shall ensure that the information given is: • Factual and relevant • Neither misleading nor unfair to others • Not otherwise discreditable to the profession.

3.9.1 Accepted methods of making experience and/or availability known include: • Publication of work (with the consent of the client) • Direct approaches to potential clients via entries in any relevant directory advertisement (in printed publication or on radio or television), or public speaking engagements. Members are referred to the Institute’s ‘Guidelines on the Promotion of Management Consulting Services’. Once again this rules of the Institute are only ‘law’ in countries which have such an Institute. In the others, it is a matter of respect for the client. The easiest way is to ask him in writing to give you the possibility to speak about the assignment you have had in his company. If he does not agree to this you will never be able to use the information. A second possibility is to make an arrangement with the client where you promise not to use the name of his company, nor its location, even changing the figures where, and if, possible, so that you can use your experience for other means. Personal conduct 3.10 A member shall at all times be of good reputation and character. Particular matters for concern might include: • Conviction for a criminal offence or committal under bankruptcy proceedings • Censure or disciplining by a court or regulatory authority • Unethical or improper behaviour towards employees or the general public.

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3.11 A member shall not wilfully give the Institute false, inaccurate, misleading or incomplete information. Once again, this is a general rule. You should behave as a loyal, honest businessman or woman. By the way, I have never seen any managers or CEOs hire a consultant with a bad reputation. This rule is written down as, unfortunately, it gives the Institute the opportunity to fire any member not respecting it, who, by so doing, will be unable to exercise his profession any more. Summary: I believe it is more important to pursue ethical behaviour and once in a while to lose a client because he thinks you are too correct than to make a lot of money and have a bad reputation. Although it can be really difficult do try to convince your client to be honest, nothing pays greater dividends in the long term than honesty.

Chapter 3: The client/consultant relationship


Chapter 3: The client/consultant relationship
Careful and correct use of language is a powerful aid to straight thinking, for putting into words precisely what we mean necessitates getting our own minds quite clear on what we mean. William Ian Beardmore Beveridge

3.1 Why ask the assistance of a consultant?
As is often the case in (business) life, people have good and bad reasons for doing things. Collaboration between client and consultant is no exception to this rule. I will try to explain some of the main reasons why managers have to ask for help. Unfortunately, a lot of these reasons are ‘bad’, and those involved very often realise what they are doing – they are contacting consultants for unacceptable purposes. The lists (both bad and good) are not exhaustive, but the most common motives will find a place here. Let us start with the bad reasons. The one-man-show consultant Although this situation does not occur very frequently, the consultant has to play a very unproductive role here as he is being asked by the management to play a role comparable to that of the show-master. He will be playing the lead role in order to hide the real problems. For example, this may occur during a board meeting, or an assembly of a group’s international managers. Nobody cares about the cost, but this game of diversion is much appreciated by the participants who forget about all the rest or are not even informed about it. The protector This is a difficult role for the consultant to play. He is indeed the one who announces (or at least is the reason behind) why difficult measures have to be made. It is very often so in cases of significant restructuring, where the consultant will invent – based on unknown sciences – that the company has to get rid of a large number of collaborators, or even to close down a plant. The measures have already been decided and the consultant is often the only person the management can hide behind.


Chapter 3: The client/consultant relationship

In case of failure, they (the management) can always say that it was the consultant’s decision they were following. The alibi Here the consultant is simply invited by the management as an alibi – to appear to have a mission to accomplish. He is just there to show that the company knows about the problem and is working on it. The consultant is present to give collaborators the feeling that the management is aware of the problem and is willing to work on it, because they even hired a(n expensive) consultant. Can you think of a more frustrating role than this? The spokesman The consultant explains the changes or the decision made by the management to the general assembly or to the staff without intervening himself. He is hired just to transmit a message to others because those who are really behind the decision have not got the (legal) authority to do so. Naturally, this can never be an internal consultant. Energy man The consultant is the one who will fight to obtain the results the management wants: he has to overcome every obstacle, and will be alone surrounded by enemies. This is the most tiring job a consultant can imagine. Of course, many other bad reasons might be invoked, such as transmission of power to new management (in this case the mission will be ordered by the shareholders), or the announcement of significant restrictions, the takeover by a competitor, etc. In addition to the above-mentioned reasons, there is a remarkable list of ‘seven deadly sins’ which I came across in a book called Le conseil1.


Jean Simonet, Jean-Pierre Bouchez, Le Conseil, Ed. de l’organisation, Paris, 2003, p.109

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The deadly sins

... when using consultants

A lot of managers really want to sample the various new trends which arise in business development. A lot of consultancy companies know this and change the tools they use on a regular basis; others ‘reinvent’ or adapt them to their own market strategies coming from other countries (very often the USA). Many managers hiring consultants have a strange idea or concept in mind: they want the consultant to develop an idea or a strategy, and will pay him for that without allowing him to carry out the most satisfying part of the job – the implementation of the plan. The manager keeps the results of the consultant’s mission to himself and develops them later as if they were his own ideas. Very often the management would like to fire an expensive collaborator but they do not know how to do it. They hire a consultant with the sole mission of finding mistakes, inadequacies, poor results, strange behaviour, etc. by this person. Once they have this information they fire the person based on these ‘facts’. Fortunately, many consultants refuse to work on such missions. As in ‘normal’ human life, mimesis also exists in business: consultants are hired for the simple reason that the competitors have done the same. There is no real reason for people to do this, and it is simply a waste of time, money and energy for both parties. There are other types of managers with very strong egos. They hire consultants because they feel that this gives them more power. In addition, this kind of consultant knows exactly how to flatter the manager in charge. However, they are often dismissed without reason, just because the manager wants a change. It is a fact that sometimes big consultancy companies, or consultants with a very good reputation (often based solely on the high level of fees) are hired because this could improve the reputation of those hiring ‘stars’. Instead of developing internal competencies or skills, or studying solutions internally, or investing time and energy in seeking solutions, the management decides to hire consultants to do the job in their place.








Chapter 3: The client/consultant relationship

Now it is time to talk about the ‘good’ missions, the ones consultants like, and those they live and work for. Here the list will be even less exhaustive due to the fact that every mission is different, and that every company has its own needs, and every consultant his own skills. 3.1.1 See where you stand; look around As benchmarking is very time-consuming, and has to be repeated continually, a lot of companies use a consultant who will assess the use of the appropriate practices and, at the same time, will give the right direction for the action plans. At the same time, the company is hiring someone able to implement the new ideas. As a matter of fact, this approach very often produces long-term results. 3.1.2 Do not try to do it on your own: do not reinvent the wheel Many consultants implement the same techniques and tools over and over again, sometimes in the same organisation, sometimes in different ones. Franz Müller-Lyer (1857-1916), a German psychologist who’s international fame is based on his study of optical illusions, also coined the neologism nynoscopy in order to underline the errors caused by the human tendency to judge the past and to ‘foresee’ the future through the eyes of today. Yes, management consultants too should be aware of the hidden seduction to look at a new problem through the spectacles of previous experiences. I warn against this comprehensible hazardous (dangerous?) reaction. Every case is another case and has to be threatened as a new challenge, which needs its own response. On the other hand, it is very useful to contact other consultants to help you to do the job you have to do, as they have a lot of different experience as regards the implementation. Tim Laseter says: “Consultants fill important gaps for organisations that need unique levels of technical expertise for short periods of time.”2 3.1.3 Get the knowledge where it is Good consultants are well-organised people, capable of training, helping and assisting people. It is very interesting to hire consultants in fields where the company has insufficient knowledge. Not only will the consultant assist in implementing the new idea, but he will

From Booz, Allen & Hamilton (BAH), www.boozallen.com

Chapter 3: The client/consultant relationship


also train the people inside the company, and thus transfer his knowledge. Implementation without training is complete nonsense. It is acknowledged that when assistance was first given to developing countries, the industrialised countries simply sent them money and/or machinery. As long as no one provided the necessary training on how to use this money correctly, or how to work the machinery, all such efforts were in vain. Since instructors, teachers and assistants have become involved in these humanitarian missions, the level of progress has risen considerably. This applies equally to implementation without solid training. Consultants can help to transfer their knowledge to their clients, can provide tailor-made solutions and train their client’s staff. The comment made by Stork3 is very interesting and true. 3.1.4 Focus on problems Very often problems exist for which no solution can be found. Frequently, the solution comes without explanation, without anybody even knowing why it suddenly appeared. The answer is simple: just because somebody (in this case the consultant) focused on the problem. As soon as people know that somebody is focusing on a problem (is aware of the problem and is taking care of it) they increase their own interest in it and, in so doing, contribute more than they ever imagined towards finding a solution. 3.1.5 Collecting data It is normal to collect a lot of information before implementing a change. Therefore, companies often ask their collaborators to gather the necessary data, on top of taking care of their daily tasks and responsibilities. Logically this leads to delays, stressed people and... incomplete information. It is therefore useful to hire consultants to gather the necessary information. They can present the necessary data in a well-defined framework, so that the company can start the real job with fresh people, ready for action. This help from outside is certainly important when a company has many subsidiaries, as they do not necessarily have the same way of acting or understanding. Therefore, uniformity is only possible with outside consultants.

3 4

Stork & Associates, San Francisco Peter von Loesecke used to work for Arthur D. Little, and is now CEO and Managing Director at The MBA Tour (http://www.thembatour.com) 5 James Holec Jr. of PricewaterhouseCoopers (http://www.pricewaterhousecoopers.co.uk)


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3.1.6 Drive change across multiple functions, business units and national borders When a company intends to make changes across the entire workforce – all divisions, across all the different countries – it is always interesting to ask external consultants for help because they can assist in the process, being the drivers of it. “Consultants can help clients implement nontraditional roles for procurement organisations around product design, material selection, supplier services, etc.”4 It is considered as a kind of investment in the future. “We become involved in change management that transcends national boundaries. We help companies transform themselves on a global scale by making processes consistent.”5 Often the problem is mainly to keep the process going. It is not at all easy to keep internal people both motivated and able to motivate others. External ‘experts’ can focus on the move, that is precisely their job, when internal people have other things to look at. 3.1.7 Political assistance Do you remember the ‘one-man-show-consultant’ and the ‘spokesman’ we talked about in the list of negative reasons? Well, such an approach could be turned exactly the other way round: it is commonly advised to hire external consultants when inside resources cannot make the thought decisions required for supplier consolidation, outsourcing, product design and cost reduction. The topics mentioned here are politically too sensitive for the people; the links with the past, with the internal hierarchy, the mentality, are all too great. It is therefore preferable to work with outside, objective experts, as assistants. 3.1.8 Compare with the others As consultants normally work in different fields of industry and trade, they can bring innovation through ‘simply’ copying from other industries. In so doing, they can be judge, referee and player at the same time. Indeed, as they see how other industries proceed they can copy-adapt to your company. They do not invent (see point 3.1.2) but they adapt and introduce into your company a method which they have seen succeed in another firm. We should not forget that a consultant is not stressed by the daily business and can invest time and effort to analyse and adapt things he thinks may be useful elsewhere.

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3.1.9 Time is money Consultants may often be used as quick-start helpers – the quick solution to a problem, a challenge, or a change. Like some experts, they arrive, do what they have to do, if possible train the company’s staff, and leave as soon as the trained staff can take over the job. Consultants-experts are always a little further on in the evolution of the market because they are observers and they know the upcoming needs. They train their own experts and sell this competence to the market. Large (and even some small) consultancy companies have the necessary tools and methods to implement solutions faster than ever.

3.2 The nature and the purpose of the consultancy relationship
The use of the word relationship might seem to be a little strange or exaggerated here, but it is the only correct one. We must not forget that one party, the client, invites another one to help to solve a problem. One of the first obligations the client has is to give as much information as possible (even in strategic domains). The consultant has to keep secret all the information he has. In addition, the two parties have to live together in mutual confidence throughout the assignment. As is the case in every good relationship, it is better to live in complete harmony. It is necessary to have a closer look at all the actors in this business game. On one side we have the client, on the other the consultant: what are the roles they are going to play, what is one part going to ask from the other, and what is the other willing to do? Generally speaking, the situation is quite simple: the client needs help in a domain in which he does not have the necessary experience, or for a task he does not want to do himself, while the consultant offers the necessary help or advice in one form or another in order to help the client. It is mainly about the transfer of knowledge and/or expertise from one party to another. Therefore, they both need a clear contract stating exactly what it is all about. This contract must be fulfilled if both parties want to be satisfied at the end of the process. We will speak about the contractual terms at a later stage.


Chapter 3: The client/consultant relationship

Whatever the relationship, it involves three different dimensions: • The contractual one: this is the legal part which contains the rules of engagement both parties are willing to adhere to. • The idealised relationship: completely different to the one above, this is rather like that between friends, where one party tries to find out the wishes and needs of the other. • The authentic relationship: this stands above the others, where true positions are taken and mutual confidence and esteem overrides everything else.

3.3 Who is the client?
One fundamental question to be answered is who is the client? The answer can seem very simple for those inexperienced in the field, but it is not always that clear who the real client is – who gave the order to hire a consultant, for instance. It is very important to find this out in order to start the relationship on a solid base. When working for an ‘unknown boss’ it is difficult to give him exactly what he is looking for. The first mission for the consultant is to find out who the real client is, before the work begins. There are several possibilities from the start: • Is it the person who contacted you in the first place? • Is it the stakeholders asking for a consultant to help solve a problem? • Is it those who are going to pay for the mission? • Is it the management who is going to work with you on the mission? Very often it is a mix of these options, although there is also the approach suggested by Cockman6: • Those who know • Those who care • Those who can.


Cockman P. et al., Client-centred consulting, McGraw-Hill, Maidenhead, 1992

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By taking a close look at the three possible types of clients mentioned above you will, of course, have to adapt the way you work and suggest your proposal for a solution. Those who know will indeed be very helpful to you as they hold all the means of finding the solution – they have access to all the sources, which can be human resources management, general management, clients or even customers. Those who care are those personally involved in the problem – those who would like a rapid solution because it would make their lives easier or just because they like the company they are working in a lot. Those who have certain responsibilities inside the firm are often a part of such a group of people. Finally, those who can – but can do what, in fact? They can help solve the problem by doing something, either by giving the necessary funds, or simply because they are the management and can help ‘impose’ the consultant and his solution. The best approach is to listen to all the participants and possibilities.

3.4 Phases of the relationship
Up to now, of course, nothing has happened. So, let us have a look at the different stages of the client-consulting relationship. Preparing to make contact The first meeting between a consultant and his potential client can be for different purposes. It can simply be an informal contact to see precisely what a consultant can offer, or it could also be a kind of launch meeting where the client states exactly what he is looking for and asks the consultant to make a proposal or to tender. The second case is less frequent but can happen if the client has already decided that he is going to work with a consultant and has chosen a list of consultants from which he will pick the one making the best proposal.


Chapter 3: The client/consultant relationship

This face-to-face contact is very important because even at this early stage a kind of trust-building is necessary. If this first contact is not positive, the chances of succeeding later will be adversely affected. From this point onwards, both parties will grow through different phases that will be briefly explained: • Orientation • Identification • Analysis • Resolution (solution proposal?) 3.4.1 Orientation Do not forget that if the company and the consultant have never worked together before they will be complete strangers at the first meeting. They have to learn a lot from each other. Each has to find out how the other thinks, his weaknesses and strengths, any possible differences in business approach, and so on. Once the early steps have been completed and the two sides get to know each other better they can start the negotiations, and establish the roles they will each play. As we have already seen in the chapter on the requirements for the consultant, one important aspect will be to analyse their different communication styles. It is necessary to understand this to avoid further problems. For example, the client can only ask for communication with the management, whereas the consultant prefers to work ‘openly’, which means giving information to everybody involved in the process, from the top to the bottom of the company. This could be a point on which the two parties are unable to agree, in which case the consultant has to withdraw from any possible collaboration. I think it is the consultant’s role to adapt his communication strategy to that of the client because he has to respect the culture which exists inside the company. He can perhaps try to convince the management of the company to accept a slight change, but no more than that.

Chapter 3: The client/consultant relationship


It is at this stage that the identity of the client must be evident to the consultant. The openness and willingness to collaborate must be verified here. The consultant must point out now, rather than later, that it is the client’s role to ask for more clarification when he does not understand the way the consultant is proceeding, as soon as the situation arises. Remember that at this stage you still have not accepted any mission. Try to find out the client’s feelings – is he anxious, nervous? Can you work with him? Do you feel an open-minded relationship would be possible or, on the contrary, do you feel it would be impossible to work with that company (i.e. the people working there)? This period of pre-introduction is crucial for both parties. On the one hand, you have the client who is looking for a solution to his problem, but who is also a little worried about opening all his company’s files to ‘a stranger’. And, on the other hand, there is the consultant willing to take on the mission but also aware of the client’s reservations. They now have to build an atmosphere of mutual respect and confidence. If they do not succeed in this they should not look for any further collaboration, and should leave the negotiating table. 3.4.2 Identification Once they have decided, at the end of the orientation phase, that they can continue working together they will both have to concentrate on increasing the mutual confidence, in order to make the relationship closer and more effective. But be careful: there is still no contract between the parties! They now have to identify the areas in which the client wants the consultant to work, and the problems he would like solved. It is only now that the client will explain to the consultant the way in which his company functions, how it is organised, the history of the firm, and future plans (if any). The consultant must explain clearly what he can offer, the tasks he can fulfil and how he will do it.


Chapter 3: The client/consultant relationship

In simple terms, they explain what can be expected of themselves and from one another. It is about how they can work together in mutual understanding. However, there are some crucial questions to be answered about how they are going to collaborate: • Who is going to do the job? Is it the client with the consultant or is it the consultant for the client? This is extremely important for two different reasons: the first explains the involvement the client wants to have in the process, and the second, the time frame the consultant will need which, of course, will be much longer if there is no collaboration foreseen from the client’s side. • Different styles of consultancy missions exist. Which one is the client going to choose (in the main, according to the culture existing within the company)? Is it an autocratic one, where the consultant decides and imposes the rules of the game? Is it one where there will be very close collaboration, or will we go even further with the consultant assisting and being ‘only’ the guide? • To what level will each party participate and what roles are they going to play? This is very closely linked to the previous question. • Who will delegate what and at what level? Is the management willing to delegate all the actions to the consultant or is the consultant ‘the person who observes’? • Will the consultant have access to all the company files (and secrets)? Will certain access be denied? This can also give a clear view of the trust the client has in the consultant. However, it should be acknowledged here that the consultant does not necessarily need access to all the files for every mission. The consultant must be correct in his approach and accept that certain secrets are kept ‘closed’ even to him. Care is required here as it is easier for the consultant to give his instructions, to deliver the solution ‘on a plate’ rather than having to explain why he is suggesting his solution. If the client wants such a solution then this is OK, although it is preferable to help the client understand both the problem and the solution so that there is a kind of knowledge transfer from the consultant to the client. This would also help the client to introduce some new know-how in-house, which will make the client less dependent on the consultant. A good consultant should always work in this direction, even if this does not help his own business. Never forget that if your client is

Chapter 3: The client/consultant relationship


satisfied he will recommend you to others and come back to you if another problem occurs. This, in my eyes, is more important. 3.4.3 Analysis Next step: how are the parties going to work together and what strategy are they going to follow? It is at this stage that the roles are assigned and the type of interventions defined. According to the above-mentioned, there are two types of intervention: • The one where the consultant leads the process in an authoritarian way: 1. Prescriptive: the consultant decides how things are going to be developed, gives direction, guides the company, makes recommendations and requests help and assistance. 2. Informative: the consultant explains the different steps, tries to transfer knowledge by explaining what he is doing, interprets the different reactions the client's staff may have, and simply gives the necessary feedback. 3. Confronting: he pushes the client and his staff to react; he asks challenging questions and may be contradictory so that he can assess what the client has actually understood. He raises awareness. • The type of intervention where the consultant helps the client to feel confident and assisted throughout the process: 1. Cathartic (from the Greek καθαρσις, meaning cleansing): the consultant clears the way for changes without tension. He gets this result by asking the client to express his feelings, by easing the tension, by using humour. The consultant plays the role of the ‘destresser’. 2. Catalytic (from the Greek καταλυσις, meaning dissolution): here the consultant uses the client’s intelligence through provocation. He helps the client to find out things for himself. Of course, this takes much more time but has the advantage that the client then understands. He summarises the situation regularly so that the client can see all the steps they have been through together. 3. Supportive: the consultant shows the client his enthusiasm and his belief in the success of the mission by indicating his appreciation and affirmation.


Chapter 3: The client/consultant relationship

As regards the various roles played by the two parties, once again there are different possibilities. The consultant has to be adaptable as his role can change in the middle of the process. We should not forget that good consultants often play very different roles: they can be experts (on a very special topic), counsellors (if the client wants some intellectual assistance), salespeople (which is what they must be in the initial stages if they want to secure a mission from a new customer), or trainers (if they have to coach the client). The value added by the consultant differs, of course, according to the role he is going to play. I would say in all honestly that, in the case of a consultant playing the salesperson, the added value is mainly for the consultant himself (not forgetting the possibility of a positive result of a mission he secures through his excellent sales capacities). The role of expert is one where the consultant can demonstrate his knowledge and his expertise in a specific field. This could be a very dangerous situation because the consultant might forget that his client does not understand the high level of technology he is using, or he may forget his final goal – the solving of the problem. It is a fact that specialists are so excited by good results that they continue working theoretically in a certain domain while forgetting what the client was actually looking for. The role of ‘counsellor’ is the one most commonly known (see also the Introduction to the book). Indeed, this is the role people appreciate the most as it is person-centred. The danger of this approach is that it can make people completely dependent. One role clients would like consultants to play is that of advocate. Along with the majority of consultants, I think that this is impossible and not even interesting. Why should a consultant remain on the sideline like a referee and simply observe? He has to show direction and to give his own opinion. If the consultant does not dare to give his opinion, in my eyes he is not worthy of being a consultant. Consequently, I prefer to refer to this in the chapter on Ethics in consultancy.

Chapter 3: The client/consultant relationship


A more useful and interesting role for both parties is that of coach. The consultant educates people, shows them how to do things, and plays the role for the others to follow. He transfers his knowledge and observes in order to see how well his client(s) understands his message. If he feels the client did not understand he will restart at the beginning and retrain. His role is exactly the same as that of a football trainer – most trainers are ex-players, people with experience. The consultant should have a lot of experience: he shows how to play the game, arranges the different actors in the field, encourages them, and tries to win the game (i.e. solve the problem). If he is a good consultant (i.e. trainer/coach) he will be as happy as the players (i.e. client) if that is done. Teaching means learning. The role of the consultant has to be played well because he has to show his interest in the people he is teaching. Do not forget, you cannot learn anything from people you do not respect. In the large consultancy companies, or in university centres which have a consultancy department, the consultant can play the role of a researcher. Unfortunately, smaller companies do not have enough time or money to invest in pure research. It would probably be a good idea to see smaller companies collaborate on larger study-objects, so that together they can afford the research. Financial incentives coming from the authorities would be welcome on this field, even if the researchers worked abroad. Client-consultant collaboration is not very widespread in this domain of course. Perhaps one can imagine big companies (and they do exist) sponsoring their own consultancy departments for indepth research. A final role the consultant could play is that of a facilitator: (from the Latin facilitare: to make things easier). He helps the client to understand his problems, and once he understands them it is, of course, easier to understand how to find a solution and, even more fundamentally, that a solution has to be found.


Living apart together n. A situation in which an unmarried couple live in separate residences while maintaining an intimate relationship; a person in such a relationship. – adj. Also: LAT. – live apart together v.in: http://www.wordspy.com/words/livingaparttogether.aspe


Chapter 3: The client/consultant relationship

3.4.4 Resolution Normally, at the end of the mission, both the client and the consultant should be satisfied with the result, and they will go their separate ways. But for how long? If they have had a really good collaboration (read: relationship) they might get back together quite quickly, as soon as the client has new needs. The consultant will keep in regular touch and ask the client if everything is going well. They will live a sort of LAT-relation7. Summary: it is important to spend a lot of time on building a solid relationship between the client and the customer, not only in order to know exactly what and how they are going to work together on this specific mission, but also for looking further into the future.

3.5 Interventions and roles
It is obvious that the roles played by consultants are linked significantly to their interventions. The more the consultant is implicated in a complete process of change for instance, the more roles he will play, together with his staff. A complete list of all the different types of interventions and roles does not exist, and anyone concerned with this topic understands well that each situation demands a specific approach. Therefore it seems interesting to me to focus on some major (that is, often used) roles attributed to the consultant: technical expert, counsellor, researcher, coach, advocate and, finally, facilitator. For obvious reasons I will treat them in pairs. 3.5.1 Technical expert and facilitator In order to prepare a particular project it is important to determine clearly the different tasks assigned to the consultant and his client. The main roles played by the consultant are those of technical expert and facilitator. The table below shows the different relationships/roles according to the result the two parties want to achieve. But first it is necessary to give a brief description of these two completely different approaches.

Chapter 3: The client/consultant relationship


As an expert, the consultant adds ‘value’ to the mission. He brings his knowledge in a particular field of expertise. If the client finds this input satisfactory and ‘enough’, the role played by the consultant will be very limited. He will only give advice and guidance, whereas the client will be the executor. The client will both facilitate and monitor the actions of the expert. The consultant’s actions will be authoritarian, but not too much as this could lead to the demoralisation of the client’s staff or, even worse, it could make the client totally dependent. If, on the contrary, the expert is not authoritarian enough, the client will be confused and will not know how to proceed.


Search for solutions Client + consultant Client + consultant


Kind of relationship client/consultant Assistance all along the change process Decision-making process Diagnostic assistance

Client + consultant Client + consultant Client + consultant Consultant Consultant Consultant

Client + consultant

Consultant Consultant


Outsourcing the process Classical assistance model Audit/evaluation

Client + consultant Consultant Client + consultant Consultant

Assistance for future development Solution hunting Coaching, training Subcontracting


In Management Consultancy, A handbook for best practice, ed. by Philip Sadler, Kogan Page Limited, London 1998, p. 83


Chapter 3: The client/consultant relationship

Serious problems often arise when ‘experts’ forget to take into account the human side of their task. When they omit to focus on the problems those involved have, they will create a climate of resistance to change. The facilitator is the one who normally does not forget this approach, so some consultancy specialists refer to them simply as ‘process specialists’. There is a very clear definition of this way of intervention given by John Milligan and Paul Barber8: “Here the consultant facilitates the client’s emerging understanding of their own problems and difficulties and strengthens their ability to respond creatively and effectively to them”. The relation is based entirely on collaboration, understanding and a common will to succeed. Where ‘client + consultant’ is indicated in the table, the part of the input given by the client is very often simply initial information. This is certainly the case in the diagnostic approach. Clients frequently forget that they can do the job on their own. It is therefore useful to go back to the table of ‘deadly sins’ above in this chapter. 3.5.2 Researcher and counsellor The theoretical approach of many consultants has been frequently attacked as being useless. It is a fact that the role of implementing theoretical ‘ideal’ solutions is not realistic. Nevertheless, studies by many important consultants – even if they were only based on theories – are still very much used today. In recent decades, large enterprises have asked consultants to construct new views for the future so, based upon this abstract approach, together with the consultants they build a completely new view of business and business development. Thanks to these rhetoricians, we are now able to work actively in SMEs. This author-approach is good for the long-term relationship with the business world as a whole. In the intial stages the consultants will then collaborate with their clients and take a closer look at the results of their theory rather than being involved in the process itself. From this theoretical behaviour, the distance to the role of counsellor is short. Indeed, the counsellor is person-centred. This is a kind of tailor-made assistance where the support given by the consultant is

Chapter 3: The client/consultant relationship


one where the explanation of the ‘how’, ‘what’ and ‘why’ is even more important than the result itself. The consultant wants the client to do the job knowing exactly what the consequences of his actions are. 3.5.3 Advocate and coach A consultant cannot be completely neutral. That is the reason why his possible role as advocate is also important. In that case he has to develop, defend and protect his own theories, explaining as clearly as possible the fundamental reasons for his behaviour and actions. The advocate is the one who is going to support certain people inside an organisation. It is of the greatest importance to have consultants who, based upon specific values, are willing to defend a certain way of acting throughout with a mind to supporting the client’s staff. Central to all interventions by consultants is the coach/educator role. It is clear that a consultant should not just come up with solutions, but should also explain why a certain solution has been selected over another one. People have to be educated and coached by experts in the field. Unfortunately, many consultants are not educators at all, simply because they do not have the necessary skills or, worse still, because they are not willing to share their knowledge.

The most important decision here is not necessarily to choose the right consultant, but to actually make the decision to work with a consultant. Is this kind of collaboration with a ‘stranger’ really necessary? Does the company already have the skills in-house? Where are the weaknesses in knowledge? Can the company find in-house people to do the job, train them, and hire new people? What is the advantage of getting temporary ‘intellectual’ assistance? The second element to be considered is how to ensure that the knowledge transferred from the consultant to the company will be guaranteed equally by the way of working and the amount of involvement on behalf of the company’s staff.

Chapter 4: How to choose a consultancy partner


Chapter 4: How to choose a consultancy partner
You have a choice, but choices always involve consequences Kerry Fouché

4.1 Introduction
There are no rules about how to choose a consultancy partner. The choice is large and the information available is poor, so it is difficult for most enterprises to make the right choice. Below are some guidelines to help you make the right decision. 4.1.1 We have already worked with them The easiest way is to re-contact a consultancy company you have already worked with. Although this would seem obvious and easy, such an approach may carry some risks. The table below lists the advantages and the disadvantages of this approach:
• The collaboration with the consultant will usually be easier since the staff know his way of working. • You have confidence in the consultant since the results of the previous mission were OK (otherwise you would not have chosen them a second time). • There will be a huge time saving as the consultant has already made an analysis of the company and learned a lot from his previous assignment there.

• The consultants might feel too comfortable with this and may consider the effort to produce results is minimal, having been chosen by the client for a second time. • Are you sure that this consultancy company has the necessary skills in-house for the new mission? • Will you be too dependent? • By doing this there may be a risk that the price you are going to pay is not competitive, since you have not compared prices on the market. • The input of new ideas will be limited as the consultants will remain the same.


Chapter 4: How to choose a consultancy partner

4.1.2 We have heard about them Most of the managing directors and/or heads of department have both informal and official contacts they can rely on. It is in these same circles that they can collect information about consultants. It is very true that in meetings with people who have similar interests and problems it is interesting to ask other companies about their experiences with consultants. It should be mentioned that the reputation of a consultancy company can be destroyed during such meetings! 4.1.3 Official help can be useful In many countries, the Ministry of Economic Affairs can help people looking for sound advice. Although it is not really its job, they often have accurate information to hand on this topic. Chambers of commerce and other similar groups can be helpful too. Lists which include companies able to deliver ISO certificates can also set you in the right direction in your search for the best choice. 4.1.4 Consultants also inform you Most consultants produce publicity (mainly leaflets) in which you can find information about their clients (you can call them), and about the way in which they proceed. Consultants also organise contact meetings where you can ask all the questions you might have without feeling obliged to hire them. Many consultants also speak at lunch meetings. Try and meet them afterwards as they will be happy to give you all the information you are looking for.

4.2 The entry phase
4.2.1 What is an entry phase? The entry phase is the very important stage between the moment a potential client invites a consultant to meet and the actual signing of the contract. It is very often an informal chat during which the client tries to find out if the consultant is really the one he wants to work with. During this phase the consultant has to convince the potential client of his aptitudes, his skills, and his uniqueness as this is the time when the

Chapter 4: How to choose a consultancy partner


collaboration becomes feasible. It often happens that the client chooses another consultant, but may come back later for a further assignment if the impression given by the consultant was good. Such an approach very often does not exist in public affairs, as public authorities have to be as objective as possible and therefore they mainly work with tendering procedures, where human contact is impossible. Here, the entire entry phase is ‘on paper’: the consultant has to convince the client by giving as much useful information as possible in the documents he transmits to the client. In fact, this official approach is much more complicated for the client, too, since it is he who has to formulate his needs as accurately as possible. 4.2.2 How to formulate the demand The demand can be for a unique consultant, but most likely it will be made to ensure a degree of competition between several selected consultancy companies. Even if the consultant has been chosen before this stage, it is necessary for the client to put his demands and needs on paper. Not only does this make him think about and rethink the situation his company is in, but he will also be better prepared to analyse the proposal(s) made. The demands can be written or oral. As regards oral demands, it is clear that there is a risk that the client may omit certain details, whereas a written demand is much better analysed and prepared. Given this information, four types of demand exist:
Number of possible suppliers/ways of examination



By mutual agreement with written specifications (safer) Tendering procedure (competition between different companies based on your specifications)

By mutual agreement without specifications (what is the real mission?) Competition without written specifications (this seems much too subjective)



Chapter 4: How to choose a consultancy partner

4.2.3 What do the parties expect from an entry phase? The two main players have different expectations, of course, but are playing the same game. Their input will provoke a reaction. If the game is well played by both the actors, the result can be a positive collaboration. • Economic benefit: both the parties want to make money, otherwise they would not be playing. The consultant wants to get the assignment whereas the potential client wants to see how he can profit from hiring the consultant. • Listening: it is important that both the actors understand each other. The consultant has to be sure that he knows the real problem the client is facing and, in addition, that he has the skills and the competence to accept the mission. For his part, the client has to be sure about two things: first, that he has explained his needs clearly and that they have been understood, and second that he is willing to explain everything about his company to the consultant. This means that the entry phase has to establish a climate of mutual trust. • Signing a binding contract: both parties should be able to sign a contract that is clear, explaining all that has to be done, the inputs from both parties, as well as possible changes during the assignment. • Finally, if at this stage they are unable to reach an agreement, they should not feel they have failed. The consultant should consider that he has done a good job, and that his reputation is still OK. This means that he has made it clear to the client why they were unable to agree on this assignment. The client has to be sure that he made the right decision by not choosing a particular consultant. It is essential to keep these four steps in mind: added economic value, mutual trust, contractual clarity and the right decision.

Chapter 4: How to choose a consultancy partner


4.2.4 What are the different steps during the entry phase? Agreeing the brief and its scope In this phase, both the parties have to listen carefully to what the other is saying. This is what is called ‘active listening’, and it includes asking the right questions. The consultant has to make it clear that he understands the business the client is in. The consultant must have the capacity to frame the context since the client very often has no more than a vague understanding of the real problem he is facing. The consultant must have the capacity to clarify his own ideas and those of the client. He now needs two main skills: one is as a solution-provider and the other is being creative. Once in a while he will also need the capacity to negotiate. (This is usually when the client thinks that the solution is either too complicated or too expensive for his company.) Mentioning a potential planning draft In order to indicate to the client how he is going to proceed the consultant has to conceptualise his intervention so that the client can understand the different steps envisaged. A clear structure of the mission should give the client a good feeling. As the famous French phrase states: “Ce qui se conçoit bien s’énonce clairement”. The consultant has to show the client what resources he has at his disposal. He also has to explain the way he understands project management. Preparing and presenting the proposal It seems easy enough to prepare a proposal. However, more often than not the client reading the document is incapable of imagining the time and energy spent on this. The consultant has to explain clearly to the client that he has understood the problem needing to be solved. On top of that, he has to show how he will proceed step by step while, at the same time, being careful not to reveal all of his tools, as the client could be tempted to try to make the changes himself. The second stage is to estimate the time allocated to every step in implementing the solution, and to put a price on this.


Chapter 4: How to choose a consultancy partner

Finally, the proposal should be written so that the same document can be used as a contract respecting the legal aspects. In point, we will look at the various elements a proposal should contain. The presentation of the proposal must also be unique and adapted to the client’s needs and expectations. The consultant should have the necessary presentation skills, and be a specialist in oral and written (PowerPoint) presentations (see below). The content of a good proposal As mentioned previously, the proposal must contain every element necessary to convince the client that the company submitting it has the best offer. In the introduction it is necessary to specify the way the client explains his problem, and the way the consultant understands it. The use of understandable words is law. It makes no sense to write a proposal the client cannot understand as this will make him suspicious. Consequently, it can be very useful to have the proposal read by someone outside the business. Explain to the client again that you understand the problem very well, and repeat how you would like to proceed. This document is not a scientific paper (even if the way you would like to explain some things to the client is). It is merely a ‘selling’ document. At the same time, as mentioned above, the document has to be legally binding. Do not forget that the client will submit this document to his lawyer or to his legal department. By mentioning that this document will be used afterwards as the contract to be signed, you will help him to save time and money. You should subdivide the document into small chapters so that the client (i.e. the reader) can submit different chapters to different people – not everyone is interested in the proposal in its entirety. Therefore, I suggest the following sub-chapters: • Description of the problem (see above). It is simply not good enough to show that you have understood the problem: you must focus on the client’s strategy, his methods and his financial

Chapter 4: How to choose a consultancy partner


situation. You have to show that you can behave as if you yourself were the client. • You know that one of the major problems about securing an assignment (certainly the large, important, expensive ones) is to be able to convince the client that what you propose is not expensive. Therefore, where possible, show him the advantages of working with you. Demonstrate the short-, medium- and longterm benefits of the assignment. The well-known ‘win-win’ is also a kind of unwritten rule here. • Never use unfamiliar words and complicated sentences. This applies equally to speaking about methods and approaches. Write a chapter on this explaining exactly what it is all about in the client’s specific case. • If possible at this stage of the approach, a sub-chapter could focus on the direct results expected from your methodology. As mentioned, this should be in a separate chapter since not everybody will feel directly concerned by it. • In another sub-chapter the consultant should explain clearly (with figures) what is expected from these approaches. • An entire chapter should be written on the consultancy company’s experience, not only in the field of this mission (although this should, of course, be the main part of this chapter), but also in other fields so that the client can understand your broad field of experience. Examples can be given and, if possible, a list of clients. I have written “if possible” intentionally because many clients do not want their names to be mentioned. • Besides the experience of the consultancy company as a whole, the CVs of the people the consultant wants to use in the mission should also be inserted. This can give a positive, personal touch, as well as indicating the value and experience of each person involved in the programme. • The final chapter concerns the legal and financial parts, and should include all the standard terms and conditions. It is not always clear in the client’s mind what the professional fees cover, and what exactly is meant by expenses to be supported separately by the client, such as travel fees, hotel costs, staff training, special IT programs, etc.).


Chapter 4: How to choose a consultancy partner

Billing arrangements are also part of this chapter: when and how much a client will have to pay. Will there be any advanced payments? Is the client supposed to pay in instalments according to the duration of the assignment? What happens if the client does not pay on time? The standard terms are, as the word indicates, ‘standard’. They do not change from one contract to another. What has to be taken into account when preparing the presentation? First of all, you should try to establish exactly what the client expects. Does he want to invite other members of the staff (how many, at what level)? Does he want you to make a formal presentation, or is he expecting a discussion on a paper sent to him before this decisive meeting? How much time does he want to spent on this? Is he himself interested, or is it more for middle management, or even the shareholders? If a lot of people attend the meeting it is always interesting and useful to know what they are really interested in so that you can focus your presentation accordingly. You should also try to find out how many competitors have been invited to do the same and, if possible, who they are. What is crucial to the client? Once all this has been established it is time to concentrate on the presentation. Try to keep your eye on the clock – never spend more time than has been allocated. Accept questions, and be aware that you may need the assistance of some of your in-house specialists. Make sure they are available at the appropriate time. The presentation must be client-centred: the time you need to present your own business is time wasted as far as they are concerned, so keep it short. After all, if they really want to they can read all about it in your written document. You should also give the person doing the presentation some flexibility so that he/she can adapt the presentation according to the client’s reactions to it. If several people are involved, make sure they all know exactly what to say and when to say it. It is important to have a discussion

Chapter 4: How to choose a consultancy partner


with the client. This shows several things: you are interested in what he is asking, you are able to answer without prior preparation, and you can demonstrate how you are going to work with him in the future. Use some humour as you do not know how many similar presentations he has already endured (perhaps on the same day). Be careful not to be boring. 4.3 Conclusion After all these phases it is up to the client to decide with whom he is going to work. It is clear that this procedure can take a long time, and very often this time is not available since the problem is an urgent one for the company. Nevertheless, it should be said that the client can only choose to collaborate with a consultant he trusts, with one he feels able to collaborate with. All the other arguments, whether financial or human, cannot be taken into account. Without trust it will be impossible to achieve good results since the client will have to give full (i.e. sometimes secret) information if the mission is to succeed.

Chapter 5: Working with consultants


Chapter 5: Working with consultants
Major transformations are often associated with one highly visible individual... This is a very dangerous belief. John P. Kotter

Once the mission has been clarified between the two parties the real work can start. In the beginning, the client may wonder why there are a lot of junior consultants working on the job. Not to worry, this is only a matter of collecting data. Once this has been done the seniors will start their work by analysing the facts gathered and making a diagnosis. Finally, the client will be invited to take part in the so-called ‘strategic meeting’ where the method of implementation will be decided. In some cases the client may prefer to assign the task of implementation to a second consultancy company. In my opinion this is a mistake because, if a problem occurs, the second firm does not know enough about the client’s company to react correctly, while the first one, which carried out the entire analysis, will probably know how best to act and thus to avoid further dramas. Another problem exists on the consultancy side: many companies do not implement their own solutions, which begs the question: do they mistrust their own plans?

5.1 Data collection and diagnosis
The name of this sub-chapter is self-explanatory. First of all, as much as possible information is gathered before an analysis of the problem(s) and the solutions can be done. 5.1.1 Data collection The data the juniors collect come from different sources can be split up into two parts: external and internal data. Most of the internal data are easy to collect as they are available in every well-managed company. The problems occur when the management style of the company is the main problem, and if a lot of this information is not available. But this is a very special case.


Chapter 5: Working with consultants

Internal data includes: • The company accounts. Together with the balance sheets of the two or three previous years, the accounts can quickly provide information on the company’s evolution. For example: shrinking turnover, gross margin changing every year, salary costs too high as a percentage of the TO, and so on. • Business plans and budgets. Many companies do not use these important tools, or simply draw them up but never compare them with the actual budgeted figures during the year. Worse still, some firms adapt plans in the middle of the year because the deviation from the original plans and budgets is too high. It is worthwhile trying to find out why people do this – is it because of the shareholders, is it a management tactic, etc.? • Technical and sales records. These two items can reveal a lot about the company. Many sales managers only look at the number of new clients, at the evolution of the general turnover, or at the figures from important established clients. They often forget that it is much more expensive (up to 15 times) to get a new client than to keep an old one. Take a close look at this and never forget that every client can become an advocate for the company. The advocates are those who will always buy into the company and defend and recommend it. Technical records usually exist, but are they updated regularly? Are they only used internally or also as a tool for innovation and marketing? • Personnel records. In many countries of the world it is a legal obligation to keep records on the staff. These files are often little more than a list of staff members with all their data. Indeed, it is important for the consultant to look at staff turnover. Do they change often? Do they stay in the company long? Are there more female workers than male? Why? What are the politics surrounding salaries? Does the human resources department use all possible tools for internal career opportunities? • Records on key suppliers. It is important to understand how a company behaves in the business world. Does the management know exactly where the suppliers stand as regards turnover, or how profitable they are? Does the company have back-ups for all the main suppliers? What do the suppliers think about the consultant’s client?

Chapter 5: Working with consultants


As regards the external data, the consultant will have more to do here since a lot of information has to be found in different fields around the client’s company. • Who are the major shareholders? Where do they come from? Are they active inside the company? Are they only interested in direct, short-term profits, or are they interested in long-term growth? • If it is a public company, what do the financial markets think about the results? • What do the company’s bankers think? Are they confident? Do they trust the management currently in place? How is the company’s financial position? • What is the financial status of the main suppliers and customers? What is their position on the market? Is any one of them interested in buying the company or, on the contrary, is the company interested in buying one or more of the suppliers, clients or even competitors? • How is the market in which the company is working defined? How is the market evolving, and how is the evolution of the company’s share here progressing? • How does pricing policy compare with others in the same market? How does the guarantee policy compare to others? How is the company’s geographical position? And how is its historical evolution? 5.1.2 How to collect data Currently, four ways of collecting data are in common use and well known to all consultants, but they all have their pros and cons: • Reading reports and documents: most of the documents and reports will give accurate information and therefore be very useful. The negative point here is the possible lack of objectivity since specific people have written all these documents for a certain audience. The target will find in the document what he/she wants to read, and the authors may overlook some facts, either because they do not seem important to the writers themselves, or because they want to hide certain mistakes which they or members of their department have made.


Chapter 5: Working with consultants

• Interviews: this approach is very time consuming and, of course, all but objective. Nevertheless, it is very interesting to proceed in this way since people will give their own opinions, their own viewpoint as a worker, as a manager, as a supplier, without thinking about the information they give. In large companies this task is almost impossible to manage effectively. • Questionnaires: where time matters, this method is more efficient. However, it carries a significant risk: who can guarantee that everyone interprets the questions in the same way? Who can phrase the questions in a simple, understandable, comprehensive way? Can the co-workers each have the same understanding of every word? Do they have the same knowledge, the same approach? • Observation: this very interesting technique has two negative factors. The first one is that the consultant (i.e. the observer) will only notice what he is looking for. On the other hand, it is almost certain that the people being observed will behave uncharacteristically. Do not forget that many people do not like to be watched while they are working. People often say “don’t look at my hands”. Once all this information has been collected the important task starts: what do we have and what is still missing? After a second round of collecting data it is the turn of the analysts to start working. It is clear at this stage that the problems facing the client are in the information. It should also be clear by now how far the client is willing to go: is he really ready to change anything in the company? Many new problems could appear during this phase: different divisions are working in opposite directions, the results the sales team is striving for are not in line with the management expectations due to incorrect or partial information, and so on. It is obvious that the client’s problem cannot be solved simply by giving one solution as there is usually more than one reason behind a problem. Therefore, a couple of precautions should be taken: • Never jump to conclusions. It is better to take time out to think, and to try to get a global view of the client’s company. Never feel

Chapter 5: Working with consultants


involved in the problem the client faces as, by so doing, your objectivity will disappear, too. • It is not what you actually see that is the reality: it is a collection of different elements that you have to analyse. Do not proceed too quickly, and look in all directions, or at least in as many as possible. • Note: it is not the client who will tell you what the real problem is since he could be part of it himself. If he knew what the problem was he would have found a solution, or at least asked for an immediate solution rather than giving you (i.e. paying you) the time to find this out. Several techniques of analysis and diagnosis exist. You can find many of them in the final chapter of the book. But before starting to work with those management tools, you should keep in mind the following: • Often, what you see is not the real cause of the problem – it is merely a symptom. You have to dig much deeper to find out the real reasons. Although this is much more difficult, it is exactly what the client is paying you for. • As already mentioned, it would be something of a miracle if there was only one reason for the problem you want to solve: so look carefully for all the reasons before you start trying to solve the problem. • Often the management is a major reason behind a problem: bad management is very difficult to change simply because such managers will not accept that they themselves are the real problem. • Do not forget that the various causes are often linked to each other. Think about it while you are analysing. 5.1.3 Conclusion From the above it may appear easy to work as a consultant, but this phase of analysis and data collection is essential. When this work has been done correctly and in depth, it will make things much easier later because it will provide a solid base on which to work.


Chapter 5: Working with consultants

5.2 Present the advice and the solutions
Once the first step, then the work done on the analysis has been completed, it is time to present your advice and solutions to the client. How to proceed here is explained in this sub-chapter. 5.2.1 Your own behaviour What have you got to do at this stage? Every job will be different, but you can take the same starting point each time by asking yourself the ‘whys and wherefores’. You have to refer back to your mission to make sure you are moving in the right direction. If you do not do this you will have problems later on. You will be surprised by the mass of information you and your staff have collected, and it will be difficult for you to focus on the task you have been hired for, so here is a shortlist of questions to ask yourself: • What is the client asking for? What can I do to help him with this? • What are the problems according to the client? Are they the same for me? • Has the situation changed since the assignment was signed? Are there any new situations for the company either internally or externally? For example: a change in oil prices, new management staff hired, etc. • Is it possible to make a list of the problems in order of importance? The most important one has to be treated as first. Can the client live with this approach? • Can I show the client exactly what profit he will make if he agrees to implement the changes I propose? • How much time will we need to make the changes under normal circumstances? Does the company have this time? 5.2.2 What about the client? Once this has been done you should see whether it is possible to involve the client – where, when, how long, and who. This will also explain the role you are going to play as a consultant.

Chapter 5: Working with consultants


If the client wants you to do the job alone, this is possible, although it is not very interesting for him since the experience you could transmit to his staff will be missing, and the chances of success will be less if he is unwilling to collaborate. There are three options: • You give him the solution, show him how to proceed, and he does the job on his own. In that case, you are just an external expert. • You can do the job without his help. This is never the best solution. • You can collaborate and share the tasks with the client. This has several advantages. The first is that you can see if everything goes as you have predicted. The second one is the transmission of knowledge to the client. And last but not least, it will indicate to the client that you are not afraid to implement your own solutions. This will increase the trust he has in your company. Before explaining to the client what it is all about (i.e. what problems he is actually facing and what options you can offer him as a solution) you should take into account the specifics of his organisation. You should explain to the client that several options exist, that each has its advantages and disadvantages, and that each also has a different price and carries a different risk. Therefore, if possible, together you should list the priorities: • What are the most urgent needs? • What would the client like to implement in the longer term? • What skills and competences are available in-house? What, who and how much can we train? • How many costs can the company afford (short and long term)? • Is any resistance to change apparent at this stage? • What financial results would the client expect after the implementation?


Chapter 5: Working with consultants

When you start writing the presentation of the proposal you are obliged to keep an eye on the following points: • Every proposal you make will involve several steps. Is there consistency in your approach? Can all these steps exist together? Is there a weak point in my approach? • Can the company afford the approach? This means several things: is there sufficient competence in-house and, if not, can people be trained up in time? Can the company afford the costs (effort and money)? Is there enough time left to implement the proposed solution? • Is the proposed solution a long-term one? Is the solution strategically OK? Is the solution a long-lasting one? It could also be useful to discuss the different options you propose with members of the client’s staff. If you decide to do this so you should provide every person at the meeting with as much information as possible so that they can give their opinion based upon facts. It is much more than a brainstorming session because it is about real life. The actors – the client’s staff – can give their opinions and perhaps come up with new input, new ideas which, if interesting, you can implement in your final proposal. It is very important to organise this kind of meeting when resistance to change seems to be an important issue. Please note: if the proposals made by the staff members are not used you should explain the reasons why. 5.2.3 The report and proposal presentation It is not easy to write a good, professional report, especially not the final one which will contain all your recommendations. If you feel uncomfortable with this, please ask somebody else either to give you some training or at least some tips and advice, and to reread your draft. The text you write has to be read by your client – do not forget that. Very often this report is not really necessary since the client usually prefers a face-to-face verbal account so that he can respond

Chapter 5: Working with consultants


immediately with questions and receive answers. But if you do have to write a report, keep in mind all those who are supposed to read it, and follow some basic rules: • A logical structure for the client. Think about what he expects from you, and this idea will guide you throughout: 1. A short introduction in which you should focus on the recommendations you are going to develop. 2. Explain (in brief ) the purpose of your mission. In fact, this is simply a reminder, as not everybody may know why you have been hired. 3. Give a short overview of all the tasks already accomplished by you and your staff. Show all the data you have been collecting and how they have been treated. 4. Indicate the problems you have identified. You should be very careful here – some people might feel uncomfortable with this section as they could be the reason for, or origin of, the problem. 5. The section on recommendations must be clear to everyone: not only do you have to show what you intend to do, but also what the results of your actions will be. 6. Give a detailed list of everything that is going to happen so that people can react at this stage, and are less likely to resist later. 7. Include as many annexes as possible. These provide the client with information and show, once again, the tremendous amount of work you have done up to now. 8. Leave enough space for the readers to make notes. • While writing you should take into account that you are not writing for experts or other consultants. You should use a language people can understand – be clear and concise and avoid complicated terminology. You should also try to adapt your vocabulary to that used inside the organisation. Keep in mind the culture of the people who are going to read this text. • You should use some (but not too much) graphic material. It is unnecessary to include complicated graphs that nobody can understand: keep it simple and useful. If you have to make an oral presentation then refer to


Chapter 5: Working with consultants

5.2.4 Conclusion Do not forget that you are going to work with the client, so please be correct and positive in all you write and say. Act as if you yourself were the client and you will handle things correctly.

5.3 Implementation
5.3.1 What exactly is implementation? This is the stage where the consultant installs his recommendations. This is where the reality begins, and where the consultant can show that his ideas were the right ones. And it is also where resistance to change occurs. After all the theory, because that is what it has been until now, the human part starts: the collaborators representing the client and the consultant will have to work together to make the mission a success. Where the human factor kicks in problems can occur. 5.3.2 Help with implementation As stated above, problems often occur as a result of the human factor. It is almost impossible to foresee all the problems before starting the implementation. Therefore, it is useful to keep in mind some ‘techniques’ that might help you: • Try to get the client on your side as soon as possible and get a commitment from him. You can do so in several ways, the easiest of which are as follows: 1. Organise communication. With the help of the top management, set up a communication strategy inside the company. This is not something you can simply invent: it has to be planned before the start. 2. Try to meet the people as much as is necessary by organising workshops where they can talk about the problems, and where you can reinforce how and why you are proceeding in the way you are. Do not forget that at this stage you are the one who is leading the game; if a problem occurs you have to be there to help the staff to solve it. You have to

Chapter 5: Working with consultants


be the facilitator, the one who leads the others through the storm of change. You must always be available and willing to listen. 3. Sometimes you can practise benchmarking by showing people similar projects, similar achievements in similar businesses. That will give them confidence. People only believe it if they have seen it. 4. You have got to focus on the values. Very often many staff members are unaware of an organisation’s values. If this is the case you should explain the values, and certainly when they are being submitted to change as a consequence of your mission. • Every step should be measurable. Be sure that quality and accountability are apparent so that everyone can follow what is going on step by step. Here, too, you might need some help. Here are some hints: 1. Divide the different steps of your implementation into two: the so-called ‘projects’, where you have a project leader, a person in charge of the project and responsible for it, and the so-called ‘just do it’, things the staff have to do without prior preparation. Encourage this kind of initiative and people will feel free to act. 2. Give everybody a role. An actor running around on stage without knowing what he is supposed to be doing is lost. It is exactly the same in this implementation process: everybody should know just what they have to do. The processes, and the roles, must be clearly defined. 3. Wherever possible (and sometimes the unforeseen does happen), respect the budgets, the timescale, and the quality of what you are doing. This gives a feeling of security to those around you. 4. Do not let people organise the teams themselves. If they do, change the teams once in a while. This can create fresh energy, increase competition, and thus makes things go faster. 5. Show how you measure the different steps. Make this measurement tool visible for everybody, somewhere it will attract the attention of the staff.


Chapter 5: Working with consultants

• You are working with people so try not to work too strictly. Accept some changes, be flexible. As Nick Obolensky states: “When implementation efforts do not go according to plan (although most will) you have three basic ways to keep things moving forward: do nothing; change how you do it; or change what you want.” But what exactly does this mean? Do nothing: many problems have the strange habit of sorting themselves out. Everyone knows that. When a problem occurs it can be solved even before you have had time to concentrate on a solution. Change how you do it: for example, if a delay is unacceptable you can inject more money to make things go faster. Change what you want: sometimes it is clear at a certain stage that you will never obtain the desired results. In that case, you can lower your expectations, because going further would be a mistake at that moment. Wait and see if you can come back with another solution later. • All the required skills and competences will not necessarily be present in the client’s company. Therefore, it is up to you to encourage learning. How? Once again, there are various solutions, among which team learning is the most common. It is here that people learn from one another, exchange experiences, and grow together. You could also train people for upcoming tasks. However, this so-called ‘just-in-time training’ is dangerous since you never know if the people you are going to train will make it in time. Accept failures, and learn from them: never blame anybody if he/she makes a mistake. On the contrary, take this opportunity to explain what happened and why, so that in the future people will avoid making the same mistake again.

Chapter 5: Working with consultants


The collaboration between the two parties involved, namely the consultant and the client, will almost always create a tense atmosphere, for various reasons. First of all there is the fear, the fear of working with another unknown party, the fear of giving access to a lot of confidential material, the fear of not being able to work on a par with the consultant, the fear of a financial disaster, the fear of not getting positive results, and so on. There is also this strange feeling of being unable to solve a problem without external help, the difficult situation in which the client finds himself, which makes him feel ill at ease. The solution for all this is quite simple: the two parties should really trust one another, should help one another whenever possible, and should never conceal any information. They must both accept that without each other there is no relationship. Whenever a situation occurs where one of these elements is under threat they should both promise to take the time required to talk it over. From the consultant’s point of view it seems important to me that he can explain correctly to his clients just how things work. For this reason I felt it was a good idea to add a second part to this book presenting, on the one hand, some gurus of management consultancy and, on the other, some of the tools. The main purpose of this second part is twofold: to enable the reader to recognise the important names in this business, and to present a short overview of several commonly used tools, most of which have been placed in the historical context in which they were created.

Chapter 6: Change


Chapter 6: Change
But a man is not often found sufficiently circumspect to know how to accommodate himself to the change, both because he cannot deviate from what nature inclines him to, and also because, having always prospered by acting in one way, he cannot be persuaded that it is well to leave it; and, therefore, the cautious man, when it is time to turn adventurous, does not know how to do it, hence he is ruined; but had he changed his conduct with the times fortune would not have changed. Niccolo Machiavelli, The Prince, Chapter 25

Change is one of the most interesting elements of consultancy: everybody knows that when consultants are hired a change will come; everybody wants a change to take place, since consultants are usually only hired because the situation is serious or even critical, but many people do not accept the change as such. This chapter has been split into two sub-chapters, as regards management consultancy. The first one, ‘Fear of change’, concerns the behaviour of those involved in change programmes. It attempts to give an overview of all different kinds of attitudes people have when change – mainly imposed by top management – is on the way. Indeed, the role of the consultant is often very important since he/she is considered to be – and usually is – the source of the change to be implemented. The second one analyses the different steps the consultant and/or manager should follow while implementing (you can also call it leading) a change process.


Chapter 6: Change

6.1. Fear of change
As previously mentioned, managers and consultants, too, often speak about resistance to change. The real reason for such resistance lies in fear. People are always afraid of the unknown, so it is important to give information about what is going to change, what is going to be done, and what exactly will happen to the positions and responsibilities of each staff member concerned by the envisaged process of change. There are acceptable – or even better – ‘understandable’ reasons for this negative behaviour, some of which are based on tradition, expertise, experience, habit, social climate, and so on. The lower the intellectual background of the people concerned, the higher the resistance will be. Good communication is vital here. The better the change process is explained, the higher the chances of acceptance are. When we look back at Chapter 1 we can understand why some bullet points under the heading ‘Who am I?’ are important. It is here that good consultants can show just how well they are able to convince people. The reference to ‘fearlessness’ is also applicable in of the situation where people are resisting change. Since they are afraid of what is going to happen, they will behave as enemies. It is a well-known fact that when a group of people are afraid they become aggressive. The consultant, or the person taking the lead in the change process, should be strong enough to explain to them in clear and simple words that there is no need to be scared. Looking further down the list we see ‘rapid framing’. It is important to understand immediately what exactly members of the staff are afraid of. By rapidly understanding their deeper concerns it will be much easier to convince them of their previous errors. Other important steps in this dialogue include the qualities of active listening and comprehensive questioning. However, as in many other situations, the most important skill is the ability to use ‘clear language’. By using words people can understand, by giving examples they know, and by showing the benefits they will get, the resistance will rapidly change into acceptance during the first stage and, if the communication process goes on long enough, will become a kind of enthusiasm.

Chapter 6: Change


There are many techniques available to help people collaborate in the change process. As soon as staff are convinced that if they do not accept the change process the situation will soon become worse, they can be the best collaborators imaginable. It is the role of the leader to make them follow the same direction; it is he/she who will convince them of the importance of a common effort. It should not be forgotten that an important change is never made simply for fun: deep reasons move the management towards such decisions. The commonly accepted idea that change has to be implemented under the direction of a ‘stranger’, someone coming from outside the company, is often a significant mistake. Normally, somebody working inside the company will have a deeper insight into the culture and habits within the company. He/She is a part of it and, as such, will have a greater chance of succeeding if they have been loyal to the company; even more so if, up to the start of the change process, he or she has maintained a loyal attitude towards both the company and the personnel. It is very important to know how to communicate throughout the process because it takes a very long time before a change can be implemented completely, certainly in the minds of the people, and before the new situation will become part of the company culture.


Chapter 6: Change

6.2 Different steps in an important change process
Before discussing this it is necessary to look at the possible driving forces behind potential major changes within an organisation. We will also refer to the ‘tools’ part of the book, in particular PEST analysis, SWOT analysis, the Thiem Tom 10.5 S framework, Minzberg, etc. because there you will find useful indicators as to when it is time to think about introducing a major change in a company/organisation. It might be useful for those who are really interested in this topic to look at the section ‘Eight major steps to change’, by John P. Kotter, in the chapter on tools at the end of the book. It is now time to look at the different steps involved in the change process itself. We do not need to reconsider the reasons for change as they are easy to identify in the graph above. There are five steps in total: 1. Find the people who will support the change; 2. Develop a coherent strategy and show it to those involved; 3. Work on the basis; 4. Show immediate gains; and 5. Make the changes deeper and more productive by changing the culture.

Chapter 6: Change














Chapter 6: Change

1. Build a solid group Good results can never be achieved in a change process alone. It is a question of collaboration, of so-called ‘team-spirit’. Therefore, it is absolutely essential to try to establish as broad a platform as possible of collaborators capable of building a solid group. These people will be the basis for the change programme. They will act like a kind of concrete which solidifies the basements of the building you are going to change. If possible, this group should comprise people coming from different levels and departments within the company, since it is obvious that the broader the approach is, the better the change will be explained and accepted. This new entity should be powerful enough to make things happen. 2. Develop a vision and a strategy A vision is nothing on its own. Therefore it is necessary to develop a vision that will help the change process to follow the correct paths, and to move in the desired direction. In support of this vision, strategies should be developed that will help it to achieve its final goal. These strategies should be accepted by as many people as possible so that the efforts required to reach this ‘intermediate’ objective are acceptable by those involved in the change process. 2.1 Communicate around this Without communication about these moves, the vision, and the different strategies, all these things will fail, without exception. People need to be informed and to know what it is all about. As soon as the staff are informed about the reasons for change, and what this involves, they have the impression (which is correct) that all this has been taught over and over again. Without adequate communication, people have the impression that all is simple improvisation, which is the worst thing that could happen. It is not only important to give information about the change process, but also necessary to inform about the situation and the steps already carried out. Leading people very often forget that they know what is happening (since it is their role to be involved), but that other coworkers may only be aware of what is happening in a small part of the company, perhaps a separate department, and thus they need to be updated about everything that is happening.

Chapter 6: Change


The more people know, the better they feel, and the more likely they are to support the process of change. 3. Broaden that solid basis One of the major problems in the change process is the lack of decisionmaking and authority. It is absolutely essential to remove all possible obstacles as quickly as possible. This will have two major effects: first, people see that the leader of the project has enough power (read ‘authority’) to take immediate decisions. And secondly, of course: the fewer obstacles you have the faster the change will succeed. Here we can return to the Thiem-Tom 10.5 S framework (see tools). A close look reveals that systems and structures play an important role in how a company functions. Therefore, it is essential to adapt the structures and systems that could undermine the change. When change is necessary, it is also normal to adapt habits and traditions. Innovation should not be instigated simply for the purpose of innovating. When a company has opted for a change-model, that same company (in particular the older staff members) should also accept that non-traditional ideas will arise, new kinds of activities will be created, and new actions must be tolerated. It will even be necessary to take some risks, not as a system, but as a tool for encouraging people to go beyond their own possibilities. The only danger in this ‘risk-acceptance situation’ is that failure may often occur, which could have a negative impact on the moral of those people involved in the change process. 4. Short-term gains make you succeed People like to win, and hate to fail. So if they can win very often, by succeeding in small intermediate wins, they will be even more enthusiastic and better adapted to the change process. Once again, there is a similar approach to the so-called ‘superordinate goals’ in the above-mentioned Thiem-Tom10.5 S framework.


Chapter 6: Change

By dividing the process of change into different actions, it is possible to determine how many times a victory will be ‘celebrated’. Nevertheless, it must never be forgotten that each minor victory is only a small step towards the final achievement. So, referring back to point 2.2, not only is it important to communicate all the small wins, but it must be done with enthusiasm. You also have another major trump card to play in this respect: you can identify the people involved in the process by putting names to all winning situations, whether small or large, and by so doing can make alliances among the staff. 5.1 Deeper changes based on fixed gains can help you Having analysed the gains made by various small wins, it is important to enhance their importance. By doing this, and by changing the systems and structures via various well-controlled steps, it will be possible to increase the visibility of what has been done, and what remains to be done. All small issues which do not comply with the direction needed to realise the vision (be they parts of structures, systems, habits, etc.) have to be changed, and first and foremost the staff involved in the change process have to be convinced of the importance of so doing. It is almost impossible to find personnel from inside the company who will have the necessary skills to fulfil this dramatic and complicated change programme. People must be trained in such skills, so companies must hire them, support them, and help them develop the necessary skills internally. The process of change is not a short-term, rapidly fixed affair. Consequently, once in a while it is necessary to revitalise the entire approach. This has already been done, to a certain extent, by installing the short-term-wins programme. But these revitalisation effects can be further improved by launching new projects on a regular basis, by introducing new themes in the approach, and perhaps more interesting, by changing the people in charge of change. New faces give new power and new energy.

Chapter 6: Change


5.2 And the culture? It is virtually impossible to change the culture of a country, a nation, or a company. The best that can be hoped for is a slight adaptation to new circumstances. It is not necessary to actually change the culture, but it is imperative to change the habits of the people, which is something completely different of course. What can be of assistance here, for instance, is changing the behaviour towards the clients, which is not the same as having a quality control system to live by. During a change programme it is important to make people responsible for that quality control – as soon as they are part of this control, they will recognise their responsibilities and produce a better final product for the customer. And that is what it is all about. And it is not only the workers who are responsible for the so-called culture – the leaders and managers are also partly in charge of this. It is extremely important to take a close look at the competences of the company’s management, and to ask the question: does the company have born leaders? This all seems quite easy on paper, but several risks and challenges will subsist. The following interesting questions should also be taken into consideration: How can you ensure the succession of the company’s current leader? How can new leaders be ‘grown’ within the existing organisation? How can the competencies of young potentials be nurtured? How can an interesting link be made between organisational change and new attitudes? Although it is somewhat unusual to end a chapter with a question mark, I think this is the correct thing to do for change, because it is precisely such persistent questioning which will help you to bring about successfully whatever changes you want to implement.

Chapter 7: K


Chapter 7: K
“If you have knowledge, let others light their candles at it.” Margaret Fuller (1810-1850) “Knowledge is power.” Sir Francis Bacon (1561-1626) “The only good is knowledge, the only evil is ignorance.” Socrates (469BC - 399BC)

As you can see, there are numerous interesting quotations about knowledge. This chapter is all about the ‘K’ in management consultancy. As I have already mentioned, the transfer of knowledge and the ability to share that knowledge are the basic qualities of a good consultant. The person who keeps his/her wisdom for him- or herself, and who does not share is an egoistic outdated type of business person; the one who shares and, above all, wants to share is the person who will need to improve his/her own knowledge all the time – in a lifelong learning cycle. It is quite difficult to find a correct definition of knowledge. Here is just one of many, found on the web at http://www.yourdictionary.com/ ahd/k/k0094000.html 1. The state or fact of knowing; 2. Familiarity, awareness, or understanding gained through experience or study; 3. The sum or range of what has been perceived, discovered, or learned; 4. Learning; erudition: teachers of great knowledge; 5. Specific information about something. This kind of approach has the advantage of offering you a choice of entries. Let us take a closer look at them. The first proposal, and the most common one, is simply an observation:


Chapter 7: K

the fact of knowing. This is an approach often found in dictionaries covering different languages; I do not like it at all as the definition simply repeats what is in the basic approach of the word. The definition neither brings any new facts, nor helps us to understand this difficult concept. The second suggestion brings us much closer to the work done by consultants, which is based on understanding gained through experience or study. This assumes correctly that knowledge cannot be gained without effort. Experience is also based on ‘having done something’, in the same way as study implies intellectual involvement. From the third definition we can see that this is about much more than simple familiarity – it is about the sum of everything gained in the past, and is much more of an encyclopaedic approach, whereby things have been structured, linked together, and systemised. And this is precisely what the consult should be able to do: revisit all his or her previous experiences and be able to carry out a rapid framing procedure (see page 1, Chapter 1). The fourth definition – teachers of great knowledge – is another approach the consultant should take into consideration. He or she should not think that they know more than their clients: they must respect them, treat them as equals, and try to get to know more about the subject than the client himself. The last definition is clear: mainly as a result of experience and study, the consultant tends to know more about specific cases. In many cases, the consultant should be ‘the expert’ in the field in which he or she is working, and thus able to give clear and comprehensible explanations designed to help solve a client’s problem. From the above it should be clear that, for the most part, I insist on two points: gain experience (and knowledge at the same time) and be willing to share this with others. In order to be able to set up a system where, on the one hand there are people who share their knowledge, their expertise and, on the other

Chapter 7: K


hand, there are people who are curious to learn and happy to be taught, the basic principle of respect must be instigated. As long as we do not respect others as being equal to ourselves, we will have a problem either of inferiority or of superiority. If we translate this into a normally company organisation it is easy to understand that we cannot live in, or develop, a company on our own: we need the input, the effort, the willingness to invest time and energy on behalf of all the staff. On a larger scale, the same reasoning applies to cities, countries, etc.

Professional know-how


The professional

The leader


The clerical staff

The manager



Managerial know-how
Source of graph: K E Sveiby(1992), “The know-how company: strategy formulation in knowledgeintensive industries”


Chapter 7: K

By studying the balance of knowledge diagram, it is possible to see the differences made by knowledge in the different categories of staff. In the lower left quadrant, there are the ‘basic people’, who make the business run without giving the impression to others that they are valuable, even necessary – but can you imagine a company without those devoted collaborators? They make life inside the company easier to bear, make things operate faster, and make company life more human. The reason why many people do not appreciated them, unfortunately, is simple: they studied less and are not billable. In this diagram there may be a new way of looking at those organisations that we see around us without understanding their hierarchical structure: just above the clerical staff we see the experts, the real professionals, those who make the company they work for so exclusive, so exceptional. But why are they not in the upper-right quadrant? There are two simple reasons for this: first, they are not usually interested at all in playing the role of a leader, where they have to be attentive, supportive, comprehensible, sociable ...; and secondly, because most of the time they do not have the skills of all what preceded. On the right side of the graph we also find two parts which appear to confuse certain staff members: what is the difference between a manager and a leader? I say that the difference can be seen and understood by observing people playing those roles. The manager is the one who knows exactly what everything is about, who knows exactly how to do things right since he or she knows how the rules are made, how to follow them; whereas the leader knows how and when to do the right things.

Chapter 7: K


The leader sets the example for the company – a visionary who can maintain calm among the staff, even when a storm is raging outside. The manager adheres strictly to the rules he or she has been given or may even have made. The manager takes care of daily business and daily problems; the leader is responsible for the strategy, the long-term development and the essential, vital challenges facing the company. At the end of this short, but important chapter I would like you to listen to the pronunciation of the word ‘knowledge’, because it is this which sets the tone of what it is all about. The chapter is called ‘K’, as in knowledge, and it is that letter which you do not pronounce. It is precisely the presence of the unseen that is important in all kinds of knowledge.



Strategy formulation and consulting models and techniques plus some ‘founding fathers’
The purpose of this chapter is certainly not to be exhaustive, for two simple reasons. The first one is that it is impossible to be exhaustive, and the second one is that management consultancy is in perpetual motion, evolving all the time and thus continually creating new tools. As to the so-called ‘founding fathers’, I simply wanted to mention some of those who have had a significant influence on me in particular and on consultants in general. One concept is analysed in greater depth: the Thiem-Tom 10.5 S framework©. The reason for this is simple: it was developed by Professor Dr Tôn That Nguyên Thiêm and myself in Vietnam, and has proved very useful in several cases which we have worked on together. In addition, at the time we were grateful to the fruitful input of one of our students, Mr Nguyen Duc Thong.


Gurus: Russell L. Ackoff

Russell L. Ackoff
Professor Emeritus Dr Ackoff was born in 1919. His academic life was really rather impressive: Bachelor of Architecture from the University of Pennsylvania 1941, Doctor in Philosophy of Science from the same university in 1947, and Doctor of Science from the University of Lancaster in 1967. During his career, he held various positions at many universities and institutions. Dr Ackoff worked mainly in two specific research domains. In the first one, which concerned ‘operations research’, he was one of the pioneers to define the field. The second domain was ‘systems thinking’, an area where many people refer to him as “the dean”. He himself said the following: “The field of operations research, or operational research as it was called in England, was developed with efforts to manage WW2 more efficiently. In fact, there was a book written in which the success of the allies was attributed to three technological developments. One was radar, one was sonar and the other was operational research. So, at the end of the war for the first time it began to be employed outside the military, and that’s where we played a major role. Operational research attempts to provide an objective role and quantitative basis for the solution of managerial and administrative problems. It was one of the key tools used by allied forces in the war.” And he continues to explain: “ ... analysis cannot produce understanding of systems.... (a system) is not the sum of its parts, it’s a product of the interaction of the parts”. He is equally famous for advocating that managers need to rethink how they approach problem solving and innovative approaches in particular. This is what he refers to precisely as ‘systemic’ thinking. Since he gave an impressive number of interviews and wrote hundreds of articles it is very easy to let him explain in his own words just what his aims were: “Creativity involves a three-step process: identify assumptions that you make which prevent you from seeing

Gurus: Russell L. Ackoff


all the alternatives; deny these constraining assumptions; explore the consequences of the denials”. This brings us closer to the other guru presented in this book, Herbert Simon, who also developed a theory that takes the alternatives into consideration. People very often focus on problems, strategies and options they already have in mind, but they forget to look for all the other possibilities. Since his theories are very complex (please do not read ‘complicated’, since they are clearly explained in his books), it seems more useful to refer to the bibliography below. When asked to give a conference presentation on the future, Ackoff ’s response revealed a couple of interesting things about the man himself, his approach to business, and to life as a whole. “I am a presentologist, not a futurologist.” “My preoccupation is with where we would ideally like to be right now. Knowing this, we can act now so as constantly to reduce the gap between where we are and where we want to be. Then, to a large extent, the future is created by what we do now. Now is the only time in which we can act.” “Forecasts are about probabilities; assumptions are about possibilities.” “Development is a process, the process of increasing one’s competence, an ability to satisfy one’s own needs and legitimate desires and those of others.” “I have learned the following from my efforts to facilitate the development of others: 1. Organisations, institutions...of any size can serve as facilitators of development 2. A pool of resources – financial, human and equipment – should be made available to those who are less developed. The recipients, not the donors, should decide how. The donors may express their opinions but should not impose them on the recipients of their efforts.


Gurus: Russell L. Ackoff

3. The less advantaged should be allowed to make non-selfdestructive mistakes (experience is the best teacher). We can only learn from mistakes, by identifying them, determining their source and correcting them. 4. Decisions on how to use these resources should be made democratically. 5. Corruption should not be tolerated. Its presence should be a sufficient reason for discontinuation of a development-support effort. 6. The effort should be monitored and evaluated objectively by a group whose members are acceptable to both the recipients and the donors of aid.

Re-Creating the Corporation, a Design of Organizations for the 21st Century, 1999. The Democratic Corporation, A Radical Prescription for Recreating Corporate America and Rediscovering Success, Oxford University Press, New York, 1994, ISBN 0-19-508727-5. Creating the Corporate Future, John Wiley and Sons, 1981, ISBN 0-471-09009-3. The Art of Problem Solving Accompanied by Ackoff ’s Fables, John Wiley and Sons, 1987, ISBN 0-471-04289-7.


Gurus: Kenneth R. Andrews

Kenneth R. Andrews
Kenneth R. Andrews was born in New London (Connecticut) in 1916 and became a professor at the Harvard Business School in 1946.

Historical context in the business area
Until the 19th century, the scope for applying competitive thinking to business situations appeared to be limited: intense competition had emerged in many lines of business, but individual firms apparently often lacked the potential to have much of an influence on competitive outcomes. Instead, in most lines of business, firms had an incentive to remain small and to employ as little fixed capital as possible. By the late 19th century, a new type of company began to emerge, first in the United States and then in Europe: the vertically integrated, multidivisional (or “M-form”) corporation that made large investments in manufacturing and marketing and in management hierarchies to coordinate those functions. The scope for strategy as a way to control market forces and shape the competitive environment started to become clearer by the end of this century. Emergence of the corporate strategy Alfred Sloan (chief executive of General Motors from 1923 to 1946) devised a strategy that was explicitly based on the perceived strengths and weaknesses of its competitor, Ford. In the 1930s, Chester Barnard, a top executive with AT&T, argued that managers should pay especially close attention to “strategic factors” which depend on “personal or organisational action”. In the academic area, Harvard Business School was one of the first to promote the idea that managers should be trained to think strategically and not just to act as functional administrators. Kenneth Andrews expressed his perception on this by stating: “Every business organisation, every subunit organisation, and even every individual [ought to] have a clearly defined set of purposes or goals which keeps it moving in a deliberately chosen direction and prevents its drifting in undesired directions. ”

Gurus: Kenneth R. Andrews


As the Harvard Business School was one of the first to promote the idea that managers should be trained to think strategically and not just to act as functional administrators, students in the early 1950s were already being taught through the case-study approach to question whether a firm’s strategy matches its competitive environment. In the 1960s, classroom discussions during business policy courses focused on matching a company’s “strengths” and “weaknesses” with the “opportunities” and “threats” faced by it in the market place. Andrews put these elements together in a way that became known as the SWOT analysis, a concept that was widely diffused in a business policy conference held at Harvard in 1963. To avoid students having to read hundreds of case studies to understand how policy decisions are made within companies, Andrews made the relevant material (without the cases) directly available in textbooks, which he published in 1971 under his most well-known title: “The Concept of the Corporate Strategy”, in which he developed a prescriptive corporate strategy model. This can be defined as being “the pattern of decisions in a company that determines and reveals its objectives, purpose or goals, produces the principle policies and plans for achieving those goals and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to make to its shareholders, employees, customers, communities” . Andrews saw corporate strategy as the interfunctional synthesis of business strategy and functional strategy. He discussed strategy in two key parts: formulation and implementation. The formulation comprises four analyses based on four practical statements: • What we might do (identifying market and economic opportunities and risks) • What we can do (determining competence and firm resources) • What we want to do (examining personal values and aspirations) • What we should do (considering obligations to society/social responsibility).


Gurus: Kenneth R. Andrews

The implementation focuses on three points: • Organisation structures and relationships that require work allocation, coordination of responsibilities, and an effective information system • Organisational processes and behaviours that entail establishing standards and measures of performance, the use of motivation and incentive systems, recruitment and development of management, etc. • Top management versatility that needs the CEO to be an architect of strategy, organisation leader and the personal leader. A man with a vision, the architect of purpose must be expert at anticipating what future business environments are to be like, and at devising appropriate product-market strategies which create and sustain environment, values and resources congruence by matching those environmental opportunities and threats facing the organisation with its resource strengths and weaknesses. The organisational leader then uses administration techniques to plan its implementation by developing organisational capabilities, educating and motivating its people, etc. Finally, he has to use his personal leadership skills such as communication, persuasion and articulation to create the favourable moral and ethical climate in which this implementation will be maximised. In terms of assessing the strategy’s effectiveness, Andrews listed several criteria summarised in ten questions: • Is the strategy identifiable and clear? • Does it identify all opportunities specific to the company businesses? • Does it fully exploit opportunities? • Is the strategy consistent with the company’s corporate resources? • Is it consistent internally? • Is the level of risk acceptable in economic and personal terms? • Is it consistent with the values and aspirations of key managers? • Does the strategy contribute to society to a reasonable extent? • Does it generate organisational commitment? • Is the strategy designed so that its success or failure can be evaluated fairly early in the process?

Gurus: Kenneth R. Andrews


So, whilst the strategic frameworks and models being developed by academics and consultants in the 1960s focused mainly on strategic issues at business unit level, rather than trying to define an overall strategy for companies with many different businesses, Andrews, in defining – with a forerunner holistic stakeholder approach – the main task of corporate-level strategy as identifying the businessess in which the firm would compete, has provided a much more relevant tool for modern companies often involved in different businesses.

Bibliography and Web-o-graphy
• “Management Consultancy” by Philip Sadler, Second Edition, Publ: Kogan Page Ltd., 2001 • “The Concept of the Corporate Strategy” by Kenneth R. Andrews, Revised Edition, Publ: Homewood, IL: Richard D. Irwin, inc., 1980 • “A Guided Tour Through Kenneth R. Andrews’ The Concept of Corporate Strategy (Revised Edition, 1980)” by Dave Payne; http://leeds.colorado.edu/phd/payned/classes/ PRES-Andrews-CncptCrpStrt_files/outline_expanded.htm • “How Business Strategy Tamed the Invisible Hand” by Pankaj Ghemawat, 2002, Harvard Business School Working Knowledge, http://hbswk.hbs.edu • “Three Forms of Strategy” by Fred Nikols, 2000; http://home.att.net/~nickols/three_forms_of_strategy.htm • “Concept of Corporate Strategy Outlines”; www.online-magazine.com/careertapes/audiobooks/ • “Why diversify? Four Decades of Management Thinking”, The Academy of Management Executive; Ada; Aug 1993; http://gemini.tntech.edu/~rcp3228/mbpcorp.html • “The Emergence of Strategic Management” by John L. Thompson; http://thomsonlearning.co.uk/businessmanagement/thompson4/ I_01emergence.htm • Baker Library, Harvard Business School, on-line catalogue: http://voyager.library.hbs.edu/ • “The Concept of Corporate Strategy” by Kenneth R. Andrews, Publ: 1971, Dow Jones-Irwin; www-bus.colorado.edu/phd/ story/andrews.doc.


Gurus: H. Igor Ansoff

H. Igor Ansoff
Igor Ansoff was an applied mathematician and business manager. He is known as the ‘father of strategic management’. H. Igor Ansoff was born in Russia in 1918 and immigrated to the United States with his family. He studied general engineering at the Stevens Institute of Technology and continued his education there, receiving his Master of Science degree in the dynamics of rigid bodies. Following his studies at Stevens he received a doctorate in applied mathematics with a major in mathematical theory of elasticity and plasticity, at the Brown University. During World War II he was a member of the US Naval Reserve and served as a liaison officer with the Russian Navy and as an instructor in physics at the US Naval Academy. In 1956, he was employed as a planning specialist for the Lockheed Aircraft Corporation where he gained practical experience in analysing the complexities of a business environment. In 1965, during his work as Professor of Industrial Administration at the Carnegie-Mellon University (1963-1968) he published his first book entitled “Corporate Strategy” which provides a practical method for strategic decision within a business focused on the social-economic environment and a practical system of objectives4. More than 120 papers and articles were published and translated into eight languages. Dr Ansoff ’s books (“From strategic planning to strategic management”, “Strategic Management”, “Implanting strategic management” and “The new corporate strategy”) on planning, strategy and management thinking lead the field in applying strategic thinking to businesses, bridging the gap between concepts and practice. Worldwide, Ansoff is known for his research in three specific areas: the concept of environmental turbulence, the contingent strategic success paradigm, and real-time strategic management5. He was sought after by corporations around the world for his management theories. Through his private consulting firm, Ansoff Associates, he advised such major companies as General Electric, Philips, IBM, Gulf Oil, General Foods and Westinghouse.
4 5

Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965 p ix http://www.ansoff.com

Gurus: H. Igor Ansoff


He died of complications from pneumonia in San Diego, California, on 14 July 2002.

Historical context of the ‘60s
General context Many of the trends during the 1960s were due to the demographic changes brought about by the ‘baby boom’ generation, the height of the Cold War, and the dissolution of European colonial empires. The rise in the social revolution, the human rights movement and the civil rights movement, especially in the United States, lasted from 1954 to 1965 and is also known as the Black Revolution. The period marks the transition from the liberal consensus of the fifties to the rebellious tendencies that came with the sixties. Other events, such as the anti-war movements and the counter-culture movement, are just some of the characteristics that defined the 1960s. Many experts attribute the 1960s “counter culture revolution” to the major social and political factors that arose in the 1950s6. The ‘60s revolution spread far beyond the borders of America and Western Europe. In South America, revolutions were at a high, in the Eastern Bloc, movements were being made – inspired by the Hungarian Revolution (1968) – to reject Soviet domination, and in the Middle East, attempts were being made to resist Soviet and American domination. Overall, the ‘60s affected almost the entire globe. It was during this time that protectionist, command, and mixed economies all reached their peak. The sixties generation was a generation of experimental rebels. This period also refers to the complex of inter-related cultural and political events which occurred in approximately the same period, in Western countries, particularly Great Britain, France, the United States and West Germany. Social upheaval was not limited to these nations alone, it became large scale in nations such as Japan, Mexico and Canada, too. The decade was also labelled the ‘Swinging Sixties’ because of the libertine attitudes that emerged then.



Gurus: H. Igor Ansoff

Some events actually happened outside of this period. For example, although some of the most dramatic events of the American civil rights movement occurred in the early 1960s, the movement had already begun in earnest during the 1950s. On the other hand, the rise of feminism and gay rights only began very late in the 1960s. Nevertheless, the ‘sixties’ has become synonymous with all the new, exciting, radical, subversive events and trends of the period7. The economic context From the late ‘50s, the question of economic development of lesswell-developed countries and newly independent colonies was widely taken up at an international level. The development of capitalism and an internal market, and the objective of an independent national economic dynamism, constituted the economic ideal of these countries. Established countries in Western Europe grew to become economic powerhouses that rivalled the United States, and economic relationships came to predominate in a world that increasingly recognised military might could not be the only means of growth and expansion8. In the sixties, in particular, the United Stated enjoyed the most sustained period of economic expansion it had known, accompanied by rising productivity and low unemployment. Real income rose 50% during the decade, and US investment in foreign countries reached $49 billion in 1965, up from $11.8 billion in 1950. Business and government were both powerful forces in the economy during this period, when large industrial corporations accounted for vast portions of the national income, and the federal government expanded its role in such areas as social welfare, scientific research, space technology, and development of the nation’s highway system9. Because of this economic development it became necessary to restructure international monetary arrangements with the creation of the International Monetary Fund and the World Bank, institutions designed to ensure an open, capitalist international economy. Business, meanwhile, entered a period marked by consolidation. Firms merged to create huge, diversified conglomerates.
7 8

http://usinfo.state.gov/products/pubs/oecon/chap7.htm http://fbc.binghamton.edu/commentr.htm 9 http://www.nationsencyclopedia.com/Americas/United-States-economy.html

Gurus: H. Igor Ansoff


Strategic thinking The organisational challenges involved in World War II were an important factor to strategic thinking because wartime destruction led to excess demand which limited competition as firms rushed to expand their capacity. In the 1960s, diversification and technological changes increased the complexity of the strategic situations that many companies faced, and intensified their need for more sophisticated measures that could be used to evaluate and compare many different types of businesses. Many large multinational corporations were forced to consider global competition as a factor in planning10. The need for a formal approach to corporate strategy was first articulated by top executives of General Motors from 1923 to 194611. It devised a strategy that was explicitly based on the perceived strengths and weaknesses of its competitors. A more direct bridge to the development of strategic concepts for business applications was provided by interservice competition in the US military after World War II, which necessitated an integration of strategic and tactical planning. As defined by Mintzberg12, strategic thinking is about synthesis and using intuition and creativity to formulate an integrated perspective, a vision, of where the organisation should be heading.

“Corporate Strategy” - 1965
An overview In the 1960s, diversification and technological changes increased the complexity of the strategic situations that many companies faced, and intensified their need for more sophisticated measures that could be used to evaluate and compare many different types of businesses. Based on the ideas of strategic thinking and the competitive environment of this decade, Ansoff published his book “Corporate Strategy” based on strategic decisions within a firm. He separated the decisions about a business into three areas13:
10 11

Kai John, “Mastering Strategy Resource Based Strategy” see http://www.johnkay.com/strategy/135 Alfred Sloan, My years with General Motors, Doubleday, New York, 1990, first edition 1963 12 Mintzberg, Henry. “The fall and rise of strategic planning”; In Harvard Business Review, 1994, January-February , p 107-114 13 Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965 p 9


Gurus: H. Igor Ansoff

• The operational decision which involves pricing, setting production schedules, etc. when establishing a marketing strategy. • The administrative decision, or how we support and organise what we do, which are decisions concerned with structuring the firm resources in order to create a maximum performance potential. • The strategic problems such as the firm’s objectives and goals, the search for diversity, and how a company should develop and exploit its present product-market position. Ansoff argued that each firm should have economic and social objectives to optimise the efficiency of its total resource and social conversion process. The objectives should be an analysis of the strengths and weakness of the firm14. In order to measure the resource conversion process, the firm’s purpose should be to maximise long-term profitability (return on investment), to assess synergy (the desired characteristics of appraising the firm’s competence profile) and to decide how to expand, how to diversify, how to assess, whether entry to an industry is likely to give the desired ROI, whether to acquire or go for organic growth, and how to weigh alternatives, taking into account a large number of highlighted factors15. He stresses the need for a ‘common thread’ (the firm’s mission) for all of a company’s business if it is to add value16. In order to define the common thread, Ansoff developed four categories17: the growth vector: which indicates the direction in which the firm is moving with respect to its current product-market posture; the productmarket scope: which specifies the particular industries to which the firm confines its product-market position; the competitive advantage: which seeks to identify particular properties with individual productmarkets which will give the firm a strong competitive position; and synergy: that is a measure of the firm’s ability to make good on a new product-market entry18.

14 15 16

Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, pp 37-42 Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, 49-100 Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, p 104 17 Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, 105-111 18 Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, pp 105-109

Gurus: H. Igor Ansoff


Ansoff ’s Matrix
Ansoff also focused his theory on translating the logic of the SWOT matrix. In order to systematically explore the four categories stated above, he proposed comparing the possible “growth vectors” of a firm. Basically, he started from the company’s present situation with its present products serving present customer segments or market needs and then introduced the options of developing new products and serving new markets. With the following four product-market strategies he describes strategic alternatives which often fit with different stages of a company’s ‘life cycle’19: Market penetration: denotes a growth direction through the increase of market share for the present product markets. Market development: new missions are sought for the firm’s products. Product development: creates new products to replace current ones. Diversification: widening the mission and types of product in the portfolio. Ansoff ’s Matrix today Many techniques have been developed, based on Ansoff ’s Matrix, that help organisations to determine strategies from their environmental opportunities and pressures, or from their own internal resources. Ansoff ’s Matrix is presently used as a form of product portfolio management20. It has become a standard tool kit of any marketing, strategy analysis business planning, strategic planning, competitor evaluation, product development and research reports. This tool offers strategic choices to achieve objectives. It is used by marketers who have objectives for growth opportunity to make an acquisition, a potential partnership, changing a supplier, outsourcing a service, activity or resource and investment opportunity, and is an accepted way of identifying and categorising market and product developments and opportunities21. The following shows the use of this matrix for the development of a marketing strategy22: Market penetration: here the firm increases the market share on existing products. This means increasing its revenue by, for example, promoting the product, repositioning the brand, and so on.
19 19

Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, p 110 Ghemawat Pankaj, “Competition and Business Strategy in Historical Perspective”, see http://www.hbs.edu/bhr/PDF/760102.pdf0 19 http://www.i-m-c.org/imcass/VUs/IMC/content.asp?id=20996&parentKey=60372 19 http://www.marketingteacher.com/Lessons/lesson_ansoff.htm


Gurus: H. Igor Ansoff

Market development: the existing product range will be marketed in a new market. This means that the product remains the same, but it is marketed to a new audience – exporting the product, or marketing it in a new region. Product development: a new product is developed to be marketed to the existing customers. Here the firm develops and innovates new products to replace existing ones. Such products are then marketed to its existing customers. This often happens with the automotive markets where existing models are updated or replaced and then marketed to existing customers. Diversification: In this phase, a firm markets completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that the company remains in a familiar market or industry. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification means that the firm previously has neither industry nor market experience.

Bibliography and Web-o-graphy
Publications by Igor Ansoff : • With Romain Lombriser: “How Successful Entrepreneurs Pilot Firms Through The Turbulence In The 1990’s”, Strategic Change, 1995, Vol 4(2) • “Implanting Strategic Management”, London, Prentice-Hall, 1984, 1990 • “New Corporate Strategy”, New York, Wiley, 1988 • “Understanding and Managing Strategic Change”, Amsterdam, Elsevier/North Holland, 1982 • “Strategic Management”, London, Macmillan, New York, Wiley, 1979 • “Strategic Business Areas”, Tehokas Yrtys, Johtaminstoimen, Ammattilehti. Jan, 1979

Gurus: H. Igor Ansoff


• “From Strategic Planning to Strategic Management”, London: Wiley, 1976 • “Management on the Threshold of the Post-Industrial Era”, The Conference Board, New York, Free Press, 1973 • “Business Strategy”, Penguin Books, Harmondsworth, 1969 • “Handbook of Business Administration, Research and Development Planning”, New York, McGraw-Hill, 1967 • “Organizational Decision Making, a quasi-analytic method for long range planning”, Englewood Cliffs, NJ, Prentice Hall, 1967 • “Corporate Strategy”, McGraw-Hill, New York, 1965. • Ghemawat Pankaj, Competition and Business Strategy in Historical Perspective, see http://www.hbs.edu/bhr/PDF/760102.pdf • Kai John, Mastering Strategy Resource Based Strategy, see http://www.johnkay.com/strategy/135 • Mintzberg Henry. The fall and rise of strategic planning. In Harvard Business Review, 1994, January-February http://www.ansoff.com http://www.let.rug.nl/usa/H/1994/ch12_p15.htm hhtp://usinfo.state.gov/products/pubs/oecon/chap7.htm http://fbc.binghamton.edu/commentr.htm http://www.nationsencyclopedia.com/Americas/ United-States-economy.html http://www.i-m-c.org/imcass/VUs/IMC/ content.asp?id=20996&parentKey=60372 http://www.marketingteacher.com/Lessons/lesson_ansoff.htm


Gurus: Kenichi Ohmae

Kenichi Ohmae
Kenichi Ohmae is considered to be among the world’s all-time leading gurus of management. He was a partner in McKinsey & Company, Inc. for 23 years and co-founded its strategic management practice. He made a name for himself with his book on corporate strategy that was published 20 years ago, called “The Mind of the Strategist”. He suggested that any business strategy will need to take into account three main players, the names of whom each begin with ‘C’, i.e. customer, corporation, and competitors. The job of a strategist is that of ensuring that superior performance can be achieved relative to the competition in the eyes of the customer, and that this matches the strengths of the corporation. For a strategy to be successful, the dynamics of the three Cs, both within and between each of them, need to be borne in mind. The book contains a list of things to avoid and things to concentrate on; tunnel vision and the peril of perfectionism are to be avoided, while focusing on the key factors and challenging the constraints are to be encouraged. Strategy, he insists, is a question of attitude more than numbers. Having written this “bible of corporate strategy”, Ohmae moved on to the wider issues of the changing shape of the world of business, although he always related his thoughts back to the implications for the leaders of the corporations. The title of his recent book, “The Invisible Continent”, encapsulates his idea that the world today is so different from the past that it is like discovering a new continent. The business implication of this invisible continent is both risk and opportunity. Since this invisible continent is in the state of free entry and in the process of developing infrastructure, it is time to enter before things become too fixed. On the other hand, there is a greater concern for this new continent, which he refers to as the “governance of the new continent”. As he says in his conclusion, we are at the beginning of the journey. True, while falling short of forecasting 9.11 which happened after the publication of the book.

Gurus: Kenichi Ohmae


Now he is respectfully described as a man of many parts with a finger in lots of different pies. Not only is he a much sought-after management consultant, an author and a public speaker, but he is also a founder of the socio-political reform movement, an advisor to government, a public policy advocate and a business entrepreneur who founded and runs many businesses. His economic logic may not always appear very sound, and some of his theses have been proven to be dubious. However, as he emphasised in his early work, successful business strategies do not come from rigorous analysis but from a thought process that is basically creative and intuitive rather than rational. His undisputed creativity and unequivocal appeal to intuition makes him a guru of the century.

“The Next Global Stage - Challenges and Opportunities in our Borderless World”, Wharton School Publishing, 14 March 2005 (English) “The Invisible Continent - Four Strategic Imperatives of the New Economy”, HarperBusiness, US, June 2000; Revised version by Nicholas Brealey, UK, 2001 (English) “The Evolving Global Economy - Making Sense of the New World Order” (edited with a preface), Harvard Business School Press, October 1995 (English) “The End of the Nation State - How Region States Harness the Prosperity of the Global Economy”, Free Press, McMillan, Inc., May 1995 (English); Kodansha Publishing Company, March 1995 (Japanese)


Gurus: Kenichi Ohmae

“The Ohmae Report - Toward a Fundamental Restructuring of Japan”, Kodansha Publishing Company, November 1993 “Sekai no Mikata Kangaekata - The Japanism”, Kodansha Publishing Company, March 1991, Paperback “The Borderless World”, Harper & Row, US, June 1990, Paperback, 1991 (English); President Inc., November 1991, Paperback; Shinchosha, 1994 (Japanese) “Fact and Friction”, The Japan Times Ltd., Japan, May 1990 (English) “Beyond National Borders”, Dow Jones Irwin, US, February 1987, Paperback; Kodansha International, 1988 (English) “Japan: Obstacles and Opportunities”, John Wiley and Sons, US, (English); President Inc., February 1983 (English) “The Mind of Strategist: The Art of Japanese Business”, McGrawHill, US, May 1982, Paperback, 1991 (English); President Inc., January 1984, Paperback; Shinchosha, 1984 (Japanese).


Gurus: C. K. Prahalad

C. K. Prahalad
C. K. Prahalad completed his DBA from Harvard University in 1975 and has since lectured at various renowned universities (such as the Indian Institute of Management, the European Institute of Business Administration and the University of Michigan Business School) and consulted with numerous well-known companies (for example, AT&T, Colgate Palmolive, Honeywell), acquiring an excellent reputation as a professor and specialist in corporate strategy and the role and value it constitutes for top management in large, multinational corporations. Business Week named him as one of the top ten business professors in the US, following the results of a nationwide poll among MBA alumni, and speculated that he “may well be the most influential thinker on corporate strategy today”. The Wall Street Journal even suggested he is one of the top teachers in the world, in a special report on executive education in September 1993. The Indo-American Society presented Professor Prahalad with their 1994 Annual Award for his exceptional contribution toward the promotion of Indo-American goodwill, understanding and friendship. In 1995, he received the American Society for Competitiveness Award for his outstanding academic work on competitiveness. Apart from the professional achievements mentioned above, C. K. Prahalad’s fame is due, above all, to his numerous, widely acknowledged literary contributions. His Harvard Business Review articles “Strategic Intent”, “The Core Competence of the Corporation” and “The End of Corporate Imperialism” won the McKinsey Prize in 1989, 1990 and 1998, respectively. He received awards for two further articles on core competencies, both in the US and Europe, and saw his book “Competing for the Future” (1994), co-authored by Gary Hamel, translated into 13 languages. Other well-appreciated articles include “Do You Really Have a Global Strategy?”(1985), “Collaborate With Your Competitors – and Win” (1989), and “Strategy as Stretch and Leverage” (1993) (www.tlp.org/bios/c_k_prahalad.htm).

Gurus: C. K. Prahalad


As we can see from the titles cited, Prahalad is primarily interested in the notions of core competence, competition, and corporate strategy – notions which he approaches in a different, innovative way, he considers crucial for a company’s success, and which can probably be summarised best as the necessity for corporate strategy to be based on and nurtured by the clear definition of core competences, as well as a constant search for new sources of competitive advantage. Prahalad begins his enormously successful Harvard Business Review article “The Core Competence of the Corporation” (which he wrote together with G. Hamel) with the rather mysterious sentence: “The most powerful way to prevail in global competition is still invisible to many companies”. He then maintains that, in order to be successful in the long run, companies have to re-establish themselves in “core competencies” which he defines as “the collective learning of the organisation, especially how to coordinate diverse production skills and integrate multiple streams of technology”. By “competencies” Prahalad does not only refer to “knowledge assets”, which may intuitively be considered the most important components in bringing sustained competitive advantage to firms, but also to physical assets. He mentions Sony’s capacity to miniaturise or Philips’ optical expertise, and explains that “the theoretical knowledge to put a radio on a chip does not in itself assure a company the skill to produce a miniature radio no bigger than a business card. To bring off this feat, Casio must harmonise know-how in miniaturisation, microprocessor design, material science, and ultra-thin precision casing – the same skills it applies in its miniature card calculators, pocket TVs, and digital watches.” Staying with the Sony example, to realise miniaturisation of its products, of course, Sony must make sure that technologists, engineers, and marketers have a shared understanding of both customer needs and technological possibilities. Core competence is therefore a mixture of communication, involvement, and a deep commitment to working across organisational boundaries, involving many levels of people and all functions.


Gurus: C. K. Prahalad

Prahalad adds that quite a few business failures result from management’s perception of the company as a “collection of discrete businesses”, of its being trapped in the strategic business unit (Prahalad even speaks of the “tyranny of the SBU”), and its inability to identify, cultivate and exploit the core competencies that make growth possible. Establishing a portfolio of competencies rather than a portfolio of businesses means that, over time, companies have to identify and develop key areas of expertise which are distinctive to themsleves, enhanced as they are applied and shared and, finally, critical to their long-term success. These areas of expertise may be in any area but are most likely to develop in the critical, central areas of the company where the most value is added to its products. A competence which is central to the company’s operations but which is not exceptional in some way should not be considered a core competence as it will not differentiate the company from similar firms. Prahalad suggests three factors which help to identify core competencies in a company: 1. Extendibility: a core competence which provides potential access to a wide variety of markets. In other words, it helps the company to expand into different markets and thus exploit new opportunities. For example, competence in display enables a company to take part in such diverse businesses as calculators, miniature TV sets, monitors for laptop computers, etc. This made Casio’s entry into the hand-held TV market predictable for Prahalad. Apple has receded to only a few areas of application advantage while Microsoft continues its impressive growth. 2. Customer value: a core competence which makes a significant contribution to the perceived customer benefits of the end product. This means that a core competence adds value for customers by increasing the benefits derived from a product. Honda’s engine expertise clearly fulfils this criterion. 3. Difficulty of duplication: a core competence is difficult for competitors to imitate. A rival may well be able to copy some of the technologies that comprise the core competence, but it will be very difficult for him to duplicate a well-established and complex pattern of internal coordination and learning.

Gurus: C. K. Prahalad


As Prahalad’s idea of core competence is not too easy to envisage, his comparison between Chrysler and Honda may bring more clarity: unlike Honda, Chrysler has tended to view engines and power trains as simply one more component. It augmented the number of outsourced engines from 252,000 to 382,000 between 1985 and 1987, thus rendering itself increasingly dependent on Mitsubishi and Hyundai. It is difficult for Prahalad to imagine “Honda yielding manufacturing responsibility, much less design, of so critical a part of a car’s function to an outside company. ... Honda has been able to pool its engine-related technologies; it has parlayed these into a corporate-wide competency from which it develops world-beating products, despite R&D budgets smaller than those of GM and Toyota1.” Closely tied to the concept of core competence, in particular features 1 and 2 mentioned above, namely extendibility and customer value, and ideally chronologically preceding, is the question of what the customer wants. In “Competing for the Future”, Prahalad (again together with Gary Hamel) states that the future belongs to companies which not only understand customer needs, problems, expectations and complaints, but anticipate them. He distinguishes three kinds of firms: companies that try to lead customers where they do not want to go (these are the companies which find the idea of being customer-led an insight); companies that listen to customers and then respond to their articulated needs (needs that are probably already being satisfied by competitors with greater foresight); and companies that lead customers where they want to go, without realising it initially. Such companies which are able to create the future do more than satisfy customers – they constantly amaze them. Any company that can do no more than respond to the articulated needs of existing customers will quickly become a laggard. Being customerfocused is therefore more than being customer-led, according to Prahalad. It means “innovatively distilling customer knowledge and insight into loyaltyearning products”. Customer-focused companies must be able to answer the following two critical questions: 1. What range of benefits will customers value in tomorrow’s products? 2. How might we, through innovation, preempt competitors in delivering those benefits to the market place2? In his more recent comments on how to gain, satisfy and keep customers, in “The Future of Competition: Co-Creating Unique Value


C. K. Prahalad and Gary Hamel, “The Core Competence of the Corporation”, Harvard Business Review, 90(3), 1990, pp. 79-91 C. K. Prahalad and Gary Hamel, “Competing for the Future”, Harvard Business School Press, 1994, 107


Gurus: C. K. Prahalad

with Customers” (co-authored by Venkat Ramaswamy), Prahalad states that in the 21st century, customer relationships based on traditional products will increasingly be substituted by relationships based on experiences – the product is thus no longer the basis of value, the experience is. He again underlines that delivering a superior customer experience will be the differentiator between successful companies and also-rans. He claims more emphatically than ever before that the definition and creation of value cannot be unilateral anymore as there will be a dramatic shift in the role of the customer – from isolated to connected, from unaware to informed, from passive to active – and competition will further intensify, shrinking profit margins. The decision how to define and create value for customers must therefore be taken collaboratively – consumers have to be engaged and challenged to inject their personal views of value on to the menu of what companies have to offer rather than accept the company’s menu. No longer seeing consumers as passive targets – as a matter of fact, companies have to figure out ways to engage customers as equal problem-solvers in order to get value that is unique. Thanks to wireless mobility and the internet, globalisation and ubiquitous connectivity constitute big advantages and big challenges at the same time. To meet the challenge, companies will need to build more flexible, dynamic information backbones to capture and deliver the real-time insights required to deliver on-demand customer value and service that is meaningful to individuals within the context of their day and location. Very likely, such flexible, dynamic information platforms will be internet-based, creating thematic communities, enabling rapid word-of-mouth, and constituting an unspeakably precious source of up-to-date information about what people want. As a practical example of how customer expectation and value today often diverges from the actual product or service provided, Prahalad mentions the video rental business, an $8 billion business in the US in 2002. “When I visit the local rental store, I may not find my first, second or even third choices. Once I do pick one or two videos, I must watch them within the company-allowed time frame. If I find two hot releases, then I must return them together. If I want to watch both, then I must reorganise my life around the rentals or pay a late fee.

Gurus: C. K. Prahalad


By contrast, Netflix has developed a video rental system designed around consumer-think. As a Netflix customer, I pay a flat monthly fee of $20 to choose from the film’s inventory of more than 15,000 DVD titles. At the Netflix website, I can explore all available titles by genre, director, actor, top picks of critics and so on, and order films. The first three DVDs arrive in my home mailbox; I can keep the movies as long as I want and when I’m done, I simply seal them in the prepaid envelope provided by Netflix and pop it into the nearest mailbox. It’s up to me how quickly I watch the films. The experience is mine, not the company’s.” Prahalad adds that such changes apply across industry and across companies and there are no exceptions.

C. K. Prahalad and Venkat Ramaswamy, “The Future of Competition: Co-Creating Unique Value with Customers”, Harvard Business School Press, 2003 Prahalad C. K. and Hamel G. (1990), “The Core Competence of the Corporation”, Harvard Business Review, 68, 78–91.


Gurus: Herbert Simon

Herbert Simon
Herbert Simon was born in Milwaukee, Wisconsin in 1916. While studying at the public school in the town he developed a deep interest in sciences. At a very young age he became convinced that it was possible to study human behaviour scientifically. In 1933, he went to a university in nearby Chicago where he studied social sciences and mathematics as a result of the early influences in his life. His doctoral dissertation dealt with the organisational decision-making process. Later, he started an in-depth study in economics in the institutional area. Between 1950 and 1955, together with David Hawkins he developed and proved the so-called Hawkins-Simons theorem on the “conditions for the existence of positive solution vectors for input-output matrices”. They started to apply this theorem to organisations and rapidly realised (in 1954) that the best way to study this field was by using computer programs. This, in turn, led Simon to become interested in the computer simulation of human cognition. He was interested in so many fields of human behaviour that it is difficult to mention them all. Artificial intelligence was just one – together with Allen Newell he created the General Problem Solver (GPS)1 in 1975. This tool was probably the very first method proposed to separate problem-solving strategy from information about specific problems. Herbert Simon was also interested in the role of knowledge in expertise. It was he who said that a minimum of ten years of experience is needed to build an expert. Together with his colleagues, they estimated that expertise was the result of some 50,000 pieces of disparate information. He was also at the basis of the concept of organisational decisionmaking, which is a revolutionary step in the field of microeconomics. He was the first person ever to point out what seems obvious nowadays: it is impossible to have perfect and complete information at any given time to make a decision. In 1978, he was awarded the Nobel Prize in this field of competence.

The General Problem Solver (GPS) was a theory on human problem solving presented in the form of a simulation programme (Ernst & Newell, 1969; Newell & Simon, 1972). This programme and the associated theoretical framework made a significant impact on the subsequent direction of cognitive psychology. It also introduced the use of productions as a method for specifying cognitive models.

Gurus: Herbert Simon


His main area of research has always been the industrial organisation. Herbert Simon’s first book, his doctoral dissertation “Administrative Behaviour” formed the basis for the rest of his professional life. In the middle of this book we find the behavioural and cognitive processes of making rational human choices, commonly called ‘decisions’. Any decision made involves a choice between a selected number of alternatives directed towards an organisational (sub) goal. For him, the task of this rational decision-making process is to select the alternative that results in the preferred set of all possible consequences. We can divide this task into three sub-tasks: 1. The identification and listing of all possible alternatives; 2. The determination of all the consequences resulting from each of the alternatives; and 3. The comparison of the accuracy and efficiency of each of these consequences. This, of course, is pure theory since no individual or organisation can ever know all the alternatives, or all the consequences of them. So the question is a simple one: what techniques are available to direct an organisation to a choice that is the closest possible to the best result. Herbert Simon writes: “The human being striving for rationality and restricted within the limits of his knowledge has developed some working procedures that partially overcome these difficulties. The procedures consist in assuming that he can isolate from the rest of the world a closed system containing a limited number of variables and a limited range of consequences.”2 The next step in his analysis is obvious: which authority takes the decision? Using his own language, we could easily say that the authority is well defined in the organisational context as the ability and the right (= duty?) of an individual of higher rank to determine the decision of an individual of lower rank. By reading this carefully it can be deduced immediately that the authority has a huge influence on the formal

Simon, H., Administrative Behavior, The Free Press, New York, 1976, 3rd ed., p. 82.


Gurus: Herbert Simon

structure of the organisation (sanctions, rewards, communication systems, goals – better known in business as budgets and strategy – and even the values). Each individual will behave differently when taking a decision on behalf of the group he belongs rather than for himself. The ‘group’ is used on purpose because an individual belongs to different organisations in the course of his/her own normal social life (business, geographical, social, sports, race, gender etc.). On the other hand, the conclusion drawn from this approach is that an individual identifies him- or herself with a group while, in decisionmaking, that individual evaluates the different choices available in terms of the consequences for that group. Once a decision has been made the correctness of it should be assessed. This can be done using two major criteria: to what extent the goal has been achieved and the efficiency with which this result has been obtained. Although many members of any organisation will focus on the adequacy of the decision, the overall administrative management must pay particular attention to the efficiency with which the goal was achieved. The pioneer Herbert Simon died in 2001.

Administrative Behavior: A study of Decision-Making Processes in Administrative Organizations, 4th edition, The Free Press (1997), ISBN 0-684-83582-7. Models of Discovery, and other topics in the methods of science, Reidel Publ. Co., Boston, 1977. Reason in Human Affairs, Stanford University Press, Stanford, 1983, ISBN 0-8047-1848-2. The Sciences of the Artificial, 3rd edition, MIT Press, 1996. An Empirically Based Microeconomics, Cambridge University Press, 1997, ISBN 0-521-62412-6.

Gurus: Herbert Simon




As previously mentioned in the introduction to the gurus section, this part of the book is not intended to be exhaustive. The length of the different parts has nothing to do with my view on the tools, but is simply determined by the length of the discussions I have had with my students in class. Sometimes this was because of the importance of the tool, and sometimes because the tool was completely unknown. Some of the tools are outdated, while others are still used on a daily basis by professionals in consultancy. This section will again be completed in the next edition of this book, so that my students (and others in the know), will have a more complete overview on what is available in the competitive world of consultancy.


Tools: Action-Centered Leadership

Action-Centered Leadership
Action-Centered Leadership (ACL) and John Adair
I) Who: biography British leadership-development consultant and writer, born in 1934. John Adair had a colourful military career having studied at Cambridge, London and Oxford universities. He developed his Action-Centered Leadership model while involved with leadership training at Sandhurst Military Academy (1963-1969) and as an associate director and head of the leadership department at the Industrial Society (1969-1973). His theory adds a simple dimension to the works of Maslow, Herzberg and Fayol. Adair wrote over 40 books on management and leadership and has his own publishing company in Surrey, England. He became the world’s first professor of leadership studies at the University of Surrey (1979-83). The People’s Republic of China awarded him the title of honorary professor for his work.

Achieving the task

Building and maintaining the team

Developing the individual

Tools: Action-Centered Leadership


II) What: the Action-Centered Leadership model The model – comprising three overlapping circles – distinguishes three groups of activities which are highly interrelated. None can be viewed in isolation and all must receive leadership attention in order for any to work effectively and for organisational goals to be met. The Adair model indicates that the action-centered leader gets the job done through the work team and relationships with fellow managers and staff. According to Adair’s explanation, an action-centered leader must: - direct the job to be done (task structuring) - support and review the individual people doing it - co-ordinate and foster the work team as a whole The responsibilities for the task are: - define the task - make the plan - allocate work and resources - control quality and rate of work - check performance against plan - adjust the plan The responsibilities for the team are: - maintain discipline - build team spirit - encourage, motivate, give a sense of purpose - appoint sub-leaders - ensure communication within the group - develop the group


Tools: Action-Centered Leadership

The responsibilities for the individual are: - attend to personal problems - praise individuals - give status - recognise and use individual abilities - develop the individual Conclusion 1. Leadership consists of three mutually dependent circles: task, team and individual, the size of which can change depending on the situation. 2. Leadership is a skill: it is no longer an inborn capability. It can be learned on the “field of action”. 3. The model adds the element of leadership to the management skills.

Tools: Action-Centered Leadership


III) Historical context Theories of leadership: many of these ideas remain popular today and there is no agreement as to which is preferable or the most effective: 1. Classical school (1900): Fayol: task-oriented and authority 2. Traits theory (20s-50s): completing the task, self-confidence.... 3. Leadership styles and behaviours (60s): a) Douglas McGregor: Theory X managers take a fairly negative view of human nature (authoritarian management style because the average person dislikes work). Theory Y managers: participative management style because people will apply self control and they accept and seek responsibility. b) Blake and Mouton: this model focuses on the task and employee orientations of managers. 4. Situational leadership (end 60s-70s-80s): a) Hersey and Blanchard: it is possible for a leader to adapt his or her style to the situation according to the skill and maturity level of the followers. b) John Adair: ACL – 1973. 5. Transformational leadership: James McGregor Burns (1978): followers are converted into leaders, and leaders into moral agents. Leaders and followers lift one another to higher levels of motivation and morality. 6. Charismatic leadership (80s-90s): Weber and House: this type of leader can rebuild morale and offer a positive vision for the future. 7. Servant and team leadership (90s): for a servant leader, the emphasis is on the moral and ethical dimensions of leadership. Team leadership means that the leader chooses to delegate and share team roles. 8. Distributed leadership (90s): this means that individuals at all levels in the organisation and in all roles can exert leadership influence over their colleagues. 9. Future leadership: a leader will consider the changing nature of society.


Tools: Action-Centered Leadership

IV) Importance in actual business and in other fields of life No empirical studies have been done to prove the usefulness of the Action-Centered Leadership model. In addition, it simplifies human interaction – it is its very simplicity which makes it so appealing. Overall the approach can be quickly adapted to a company’s specific situation. His model is used for training in the British armed services and has been taught to more than 1 million managers throughout the world. It continues to be applied in organisations of all sizes (ICI, assessment centres). The Adair model states that the action-centered leader gets the job done through the work team and relationships with fellow managers and staff. Adair changed the perception of management to encompass leadership, to include associated abilities of decision-making, communication and time-management. The challenge for the leader is to manage all sectors of the diagram. Action-Centered Leadership is something in which a leader is required to perform actions promptly, effectively and efficiently in order to complete the organisation’s objective. This model adapts to the demands of modern business management extremely well. When applying it in a modern company, the manager has to think about the aspects of performance necessary for success in his own situation, and to incorporate relevant local factors into the model to create his own interpretation. Good managers and leaders should have full command of the three main areas of the model. This will give them a useful management framework. The leader will place more or less emphasis on the functionally-oriented behaviours according to what is involved in the actual situation. Situational and contingent elements call for different responses from the leader.

Tools: Action-Centered Leadership


V) Web-o-graphy - http://www. johnadair.co.uk/adviser.html - http://www.businessballs.com/action.htm - http://www.biography.com/find/printable.jsp ?aid=9175373 - http://www.businessballs.com/herzberg.htm - http://www.onepine.info/fayol.htm - http://www.businessballs.com/maslow.htm - http://www.telusplanet.net/public/pdcoutts/leadership/ LdrVsMngt/htm - http://www.12manage.com/description_action_centered_ leadership.html - http://www.floor.nl/management/adair.html - http://www.corporateteambuilding.com/mission.php - http://www.leadership-studies.com - http://www.windsorleadershiptrust.org.uk/images.what%20 is%20leadershipto20Paper_487.pdf_ - http://www.your-business-coach.blogspot.com/2005/08/ action-centered-leadership.html - http://www.businessball.com/davidmcclelland.thm


Tools: Activity-Based Costing

Activity-Based Costing
Activity-Based Costing (ABC) is an accounting technique and management decision tool that allows an organisation to determine the actual costs associated with each product or service produced.

I) The historical context of Activity-Based Costing
Although Robert S. Kaplan, the Baker Foundation Professor at the Harvard Business School (and a member of the HBS faculty since 1984), is regarded as the spiritual father of ABC, he is the first to admit that this is not totally true. Instead, he thinks “that it frequently happens that new ideas and tendencies develop simultaneously in different places”. Together with Thomas Johnson, co-author of the groundbreaking book Relevance Lost and, like Kaplan, a consultant and university professor (Portland State University), he was able to be in contact at an early stage with different organisations and people who had encountered problems using traditional cost-accounting methods. For example, the John Deere Company realised in the mid-80s that their traditional method for the distribution of overhead costs was causing problems. In fact, there was a real need for new methods of cost and price calculating in the 80s. It was also connected with increasingly tougher conditions in terms of competition. Combined with a faster pace of production and technological change, many entrepreneurs realised that traditional costing systems were inaccurate. On top of all this, the rapid development of information technology has also influenced the importance of activity-based costing. According to Johnson, he had been asked by Kaplan, as early as 1982, to “shift attention away from studying management

Tools: Activity-Based Costing


accounting’s role in the growth of American business before 1930” and rather “join him in studying the changes in management accounting after 1930 that caused it to be implicated in the decline of American manufacturing”, which was regarded as “a matter of great national concern by the late 1970s”. This cost-management system emerged in the late eighties (1988) and was designed to deal with the inadequacies of traditional costing methods which tend to be unable to determine accurately real product or service costs. This major deficiency results from the way in which resources and costs are applied to products or services. Some resources can be attributed directly to a particular product or service – the so-called ‘direct costs’, like direct material and direct labour. Examples include the semiconductors in a computer and the salaries of the assemblers. All other resources which contribute indirectly to the final product or service, or which are less significant as regards cost, are categorised as ‘overhead costs’. Examples include marketing costs and property taxes. This pool of costs is usually allocated on some kind of volume-based driver, such as direct labour hours or labour dollars, or is often even attributed arbitrarily. It is obvious that managers in modern organisations, which are facing greater competition and increasing (technological) overhead costs, are doomed to take incorrect decisions based on inaccurate data from traditional cost systems. The higher risk is for companies with multiple products and services.


Tools: Activity-Based Costing

II) What Activity-Based Costing does not change the way direct material and direct labour are attributed to manufactured products or delivered services. However, it does radically change the way overhead costs are allocated. The primary task of ABC is to break up these indirect activities and costs into meaningful pools which can then be assigned to processes and products in a manner that better reflects the way costs are actually incurred. The system must recognise that processes or products consume resources in different proportions for each activity. Only then will it make sense for managers to determine the appropriate mix of their product lines, to price their products and services competitively, to identify the real profits or losses, and even to assess new technologies. (Refer to Exhibit 1 below for a practical demonstration.) One of the basic issues surrounding ABC is the difficulty of implementation. Identifying activities or processes to be allocated properly is cumbersome and takes a lot of effort. It requires that processes are adequately mapped throughout the organisation. An equally important obstacle centres on the problem of collecting and processing the necessary data in the correct format at a reasonable cost. Many methodologies, guidelines and books on implementing ABC have been written over the years, but the simple truth is that there is no one way to proceed. ABC must be tailored for each organisation in the light of its strategy and particular requirements, using a degree of analysis that is affordable and realistic. Perhaps the best way to a successful implementation is to approach ABC as a continuous improvement project with the model being developed until the resulting incremental improvements no longer justify the additional development or data collection expense.

Tools: Activity-Based Costing


III) When it can be used As with any other management tool, ABC is not a miracle business cure, nor should all organisations implement or embrace it as a religion. It is an operational strategy that needs to be carefully reviewed for applicability. The following circumstances could be warning flags for hidden ABC needs: • Sales are increasing, but profits are declining • Some products that have reported high profit margins are not sold by competitors • Overhead rates are very high, and increasing over time • Product lines are diverse • Stiff competition, high cost of errors • Product-line profit margins are difficult to explain • Line managers suggest that apparently profitable products be dropped • Direct labour is a small percentage of total costs • The results of bids are difficult to explain Exhibit 1: Traditional costing versus Activity-Based Costing The widely differing overhead costs are a result of the inherent inaccuracy of the single volume-based overhead rate. The relative usage of direct labour by the two production orders does not reflect their relative usage of other manufacturing support services.

Two recent production orders had the following requirements Direct labour hours Raw material cost Hours in design department Production runs Machine hours Traditional Costing Method Based on direct labour hours The direct labour budget calls for 4,000 hours Total budgeted overheads Total budgeted direct-labour hours Predetermined overhead rate Overhead per order Overhead per box Activity-Based Costing Method
Tools: Activity-Based Costing

20.000 Units Box C52 42 40,000 10 2 24

10.000 Units Box W29






1,020.000 € 4 000 hr. 1,020.000€/4,000hr. = 42 hr. x 255 €/hr. = 10,710 € / 20,000 = 255 €/hr. 10,710 € 0.5355 €

21 hr. x 255 €/hr. =

5,355 €

5,355 € / 10,000 =

0.5355 €

Based on each cost driver Purchasing, storage and material handling ... Engineering and Product Design ... Machine Setup ... Machine Depreciation and Maintenance ... Factory Depreciation, Taxes, Insurance ... Other Manufactoring Overhead Costs ... Overhead per order 20% x 40,000 € = 20 €/hr. x 10 hr. = 70 €/run x 2 runs = 3 €/hr. x 24 hr. = 2 €/hr. x 24 hr. = 1.5 €/hr. x 24 hr. = 8,000 € 200 € 140 € 72 € 48 € 36 € 8,496 € Overhead per box 8,496 € / 20,000 = 0.4248 €

20% x 35,000 € =

7 000 €

20 €/hr. x 25 hr. =

500 €

70 €/run x 4 runs =

280 €

3 €/hr. x 20 hr. =

60 €

2 €/hr. x 20 hr. =

40 €

1.5 €/hr. x 20 hr. =

30 €

7,910 €


7,910 € / 10,000 =

0.7910 €

Tools: Activity-Based Costing


IV) Bibliography
Hilton Ronald W., “Managerial Accounting Creating: Value in a Dynamic Business”, McGraw-Hill Corporation, New York, 2005, p.24 (2), pp 187-188 Cooper Robin, “Does Your Company Need a New Cost System?”, Harvard Business Review 67, no.1, 1989, pp.77-82 Paduano Rocco and Cutcher-Gershenfeld Joel, “Boeing Commercial Airplane Group Wichita Division (Boeing Co.): Employing Activity-Based Costing and Management Practices Within the Aerospace Industry: Sustaining the Drive for Lean”, Labor Aerospace Research Agenda, Massachusetts Institute of Technology, Cambridge MA, 2001 Johnson H. Thomas, “Accounting History”, Special Interest Group of Accounting Association of Australia and New Zealand School of Accounting and Finance, 2002 (found on www.findarticles.com) Kaplan Robert S. and Johnson H. Thomas, “Relevance Lost: The Rise and Fall of Management Accounting”, Boston: Harvard Business School Press, 1987.

http://www.applause.hu/terms_e.htm) http://dor.hbs.edu/fi_redirect.jhtml?facInfo=bio&facEmId=rkaplan http://www.onderwijsportaal.nl/plot-Persoonlijk/uvt-kaplan1.htm (Interview in December 1990 with Professor Kaplan for Controllers Magazine, no.8, p.10-15)


Tools: Benchmarking

I) What
Benchmarking is a practical tool or method which forms part of an integrated approach used by an organisation to improve its organisational performance. The benchmarking process is tailored by each organisation to suit its own strategies and objectives but, in essence, all benchmarking uses a comparative approach to solve common organisational problems. Therefore, at its most basic, benchmarking means “Improving ourselves by learning from others”1, or as Bob Camp, VP of Xerox, was quoted in Financial World as saying: “Benchmarking is nothing more than admitting that someone else is capable of doing something better than you.” Benchmarking, as it is known today, was developed in the USA in the 1970s where its origin is often attributed to the Xerox Corporation. However, the underlying concept has been in existence for considerably longer, as suggested by the Japanese word dantotsu which means striving to be ‘the best of the best’. Originally, benchmarking was developed and utilised by companies operating in an industrial environment where it permitted them to gain and maintain a competitive edge over their rivals, although in recent years it has been successfully applied within government agencies, hospitals and universities. In these institutions, benchmarking has been used to improve processes and systems, whilst more recently still, public authorities have begun to explore the use of benchmarking to improve policy implementation processes and thereby bring about the delivery of effective and efficient modern public services. Although it is a very versatile tool that can be applied either alone, or in conjunction with other improvement tools (e.g.

Tools: Benchmarking


the balanced score card), first and foremost benchmarking endeavours to compare an organisation’s processes, operations or services with others that are recognised to be the ‘best in class’. The comparator organisations are termed ‘benchmarking partners’ and they either run similar processes, operations, services or systems or are direct competitors of the organisation being benchmarked. A plethora of different definitions are used to distinguish the various ways of applying benchmarking, so it helps to first focus on the process of benchmarking before considering its application. Although at present there is no standardisation of the phases, stages and steps, in practice the benchmarking process usually includes: 1. regularly comparing aspects of performance (functions or processes) with best practitioners; 2. identifying gaps in performance; 3. seeking fresh approaches to bring about improvements in performance; 4. following through with implementing improvements; and 5. following up by monitoring progress and reviewing the benefits.


Tools: Benchmarking

II) When it can be used
Specific aspects of an organisation’s operations can be targeted for improvement through the selection and application of a suitable benchmarking process. A few of the most used approaches are listed below: 1. Strategic Benchmarking – examines the long-term strategies and general approaches that have enabled high performers to succeed. 2. Performance Benchmarking or Competitive Benchmarking – compares an organisation with the best of their direct competitors, drawn from the same sector. 3. Process Benchmarking – compares specific critical processes and operations with benchmarking partners from best-practice organisations that perform similar work or deliver similar services. 4. Functional Benchmarking or Generic Benchmarking – uses benchmark partners drawn from different business sectors or areas of activity in order to find ways of improving similar functions or work processes. 5. Internal Benchmarking – compares similar operations within one’s own organisation, e.g. comparing business units located in different regions. 6. External Benchmarking – compares an organisation with outside organisations that are known to be best in class and are currently at the ‘leading edge’. 7. International Benchmarking – is used where ‘best practice’ partners are located in other countries. Organisations undertaking benchmarking for the first time often opt to use internal benchmarking to build up experience of the benchmarking process before attempting either external or functional benchmarking. By contrast, larger organisations often progress through the various types of benchmarking over time in order to gain the maximum positive impact on overall performance.

Tools: Benchmarking


When used appropriately, benchmarking has proven itself to be one of the most effective tools for bringing about quantum leaps in organisational performance. It has led to significant improvements in quality and cost of services. However, the biggest challenge for benchmarking will continue to be to demonstrate the benefits of change to those who are fiercely protective of the status quo.


Tools: Benchmarking

III) Example: UPS and benchmarking
“At UPS, we are major disciples of the benchmarking process as we continually strive to maintain our position as a ‘world-class service provider’. ” “We utilise people, competition, technology and our company goals to analyse best practices, and to continuously develop our service performance, both for our internal and external customers.” “We set Key Process Indicators (KPIs), performance measurement tools, and Minimum Acceptable Requirements (MARs), all of which are reported on a daily, monthly or annual basis depending on the task. These are reviewed across all areas of the business.” “We reward our people for good performance with incentives and further development opportunities within the organisation. We also motivate our below-par performers to improve to reach the MARs.” “Finally, and most importantly, we monitor our progress using the Employee Retention Index (ERI) internally to see how our people think we are progressing, and with the Customer Satisfaction Index (CSI) externally to review our external customer feedback.” “We are continually ranked in industry and business as a ‘worldclass performer’ with a ‘world-class brand’ and we will continue to use benchmarking as an essential means to maintain this position.”

Tools: Benchmarking


“In my experience, identifying the toughest competitors and world-class performers, and then aspiring to beat them is the best way to achieve competitive advantage. ” Bill Cockburn – BT Group MD


Tools: Benchmarking

IV) Sources
The European Benchmarking Code of Conduct Xerox Corporation © Crown Copyright 2006 The Public Sector Benchmarking Service (PSBS) UPS Ltd.

http://www.benchmarking.gov.uk/about_bench/whatisit.asp http://www.investorwords.com/457/benchmark.html http://www.books.md/B/dic/benchmarking.php http://www.longbeachworkforce.org/SCRPEF/PDFS/ Benchmarking_Overview.pdf http://www-mmd.eng.cam.ac.uk/people/ahr/dstools/proces/ benchm.htm http://bwnt.businessweek.com/Glossary/ definition.asp?DEFCode=B18 http://www.productivesolutions.com.au/benchmarking.htm http://www.benchmarking-in-europe.com/library/ archive_material/articles_publications/archive_psi_articles/ explained.htm


Tools: Boss styles

Boss styles
Whenever I think of bad bosses, two people come to mind: the callous and insensitive PR director who made my life hell for a year and the birdbrained supervisor in the movie Office Space. I would not wish either on anyone except maybe my worst enemy. Although two-thirds of workers told CareerBuilder that they were satisfied with the person they report to, the remainder were dissatisfied with their bosses. Today’s workers are voicing concerns about their supervisor’s ability to lead, with 42% claiming they can do their supervisor’s job better. Part of their criticism is attributed to the amount of individual attention given to employees, as well as to their perceptions of character. Twenty-four percent say their supervisor does not take the time to review job concerns, and 22% feel their supervisor is not trustworthy. Chances are that you have encountered a supervisor who has made your life miserable or made work days unbearable. For example, there was a supervisor who made an employee write her papers for her MBA classes, and then turned around and reported her for doing it on company time; or the executive vice-president who addressed an employee’s weight rather than performance in an annual review. Just as there is a myriad of nightmare bosses, there are many ways to deal with their workplace terrors. In The Worst Case Scenario Survival Handbook: Work (Chronicle Books), Joshua Piven and David Borgenicht describe some of these bosses and how to deal with them:

Tools: Boss styles


The Control Freak micromanages every move you make. How to deal with it: bombard this person with emails, reports and meetings, which might overwhelm him and throw him off his controlling behaviour. The Buddy tries to solicit personal information and seeks inclusion as though you are best of friends. How to deal with it: include this person but keep your distance. Invent a fictional hobby, extend invitations you know he or she cannot accept, and avoid hugs. The Workaholic has sacrificed his life for his job and expects the same from you. How to deal with it: let this person know there is life outside of work. Discuss family, friends and hobbies at every opportunity. The Teller of Bad Jokes always has one just for you and it is always bad. How to deal with it: be prepared for the painful punchline, feign amusement, then change the subject. The Supreme Delegator takes all of the credit and none of the blame and essentially is setting up others to take the fall. How to deal with it: in writing, advise on all key decisions and plans, but be prepared for a denial of knowledge if anything goes wrong. The Yes/No Manager could not care less about useful information or discussions and simply wants every decision boiled down to «yes» or «no.» How to deal with it: present summaries with several alternatives for action. If asked for a recommendation, give it orally.


Tools: Boss styles

The Passive-Aggressive Boss procrastinates, complains about not enough time, and then blames others for a bad job. How to deal with it: involve others in projects as often as is necessary so that you have witnesses. The Indecision Maker needs information from many different sources before making any sort of ‘independent’ decision. How to deal with it: present any question as if you have made a survey of information from any key employees who might have a stake in the problem. The All-Business-is-Personal Manager cannot separate business and personal life. How to deal with it: make your work time enjoyable – one bad incident could ruin your work relationship. In the long run, though, your nightmare could turn into a sweet dream. That toxic supervisor could be the factor which motivates you to make a change for the better.

Tools: Boss styles


Adair, John, (2007), The Art of Creative Thinking, Kogan Page, London and Philadelphia, ISBN 978-0-7494-4799-1 Blanchard, Kenneth H.and Zigarmi Patricia,(1985) Leadership and the One Minute Manager , William Morrow, New York, ISBN 0-688-03969-3 Bogard, Morris R (1979)-. The Manager’s Style Book: Communication Skills to Improve Your Performance, Prentice Hall, ISBN: 0135491967 Straw, Julie and Brown Celier, Aliston (2002), ‚The 4-Dimensional Manager: Disc Strategies for Managing Different People in the Best Ways’, Berret Koehler Publishers, San Francisco, ISBN 1-57675-135-x


Tools: The Boston Matrix

The Boston Matrix
I) What
The Boston Matrix (BCG Matrix), which was developed in the 70s by the Boston Consulting Group, remains to this very day one of the most used tools in the strategic analysis of product portfolios. It is a graphical representation of the positioning of each company’s products in the market, taking into account variables such as sector development, and the relative participation in the market. The matrix identifies four types or families of products: stars, cash cows, dogs, and question marks, suggesting strategies adjusted to each situation. Their characteristics are as follows1:

The Boston Matrix HIGH
M a r k e t G r o w t h Star

Cash Cow

Market Share


Illustration taken from the “Tutor2u – on-line Learning Resource of the Year”

➡ ➡

Question Marks



Tools: The Boston Matrix


II) How it should be used
Stars: high relative participation in the market (high market share) and high market growth – “stars are successful products for which there is significant market demand”2. Stars products are in leading market positions generating high incomes for the company; nevertheless they consume great amounts of cash to finance the product’s growth. Cash Cows: high participation in the market (high market share) and slow market growth. Sales of cash cow products reach a stable maximum level of growth. Cash cows are very profitable products contributing to the company cash flow. They generate more cash than the amount they need to grow in the market and those ‘extra amounts’ of cash can be used to create or to develop other businesses. Question Marks (also called ‘wild cats’ or ‘problem child’): products with a high market growth but which have failed to establish a significant market share. Such a product might be inferior to those of its competitors; its marketing strategy might be inferior or the market might be growing too fast demanding large amounts of money to finance its growth. In these cases, the company needs to analyse its failure to gain market share and to develop strategies to overcome the problem. The company must evaluate whether or not to continue investing in this product. Dogs: low participation in the market (low market share) and low market growth. These products are usually linked to low profits, the company is not one of the leaders in the ‘area’ and the market is not growing. Dog products will not be able to compete with other products and will not attract the resources needed to improve their position in the market, therefore they must either be ‘reconstructed’ or eliminated.




Tools: The Boston Matrix

III) Example
The above-mentioned classification is useful to identify the most efficient portfolio composition of a company, so that the largest objective (maximisation of the profits) is reached. Firms must then choose on the basis of the closely linked combination of sustainable competitive advantage and potential financial contribution to the company. Underlying this theory is the product life-cycle concept which states that business opportunities move through life-cycle phases of introduction, growth, maturity and decline. The following illustrates the relationship between the product life cycle and the Boston Matrix: 1. A new product is commonly launched as a ‘question mark’ into a high-growth market as it will eventually create greater returns. Nevertheless, at this stage it suffers from a low market share and more investment has to be made in terms of market awareness and to stimulate the sales volume. 2. Then, if sales develop at a faster rate than that of the other competing products, the production will move into a ‘star’ position as sales and market share increase. These products have reached their maturity and entail a significant cash flow for the company. 3. In case the market growth slows down but market leadership is reached, it will enter the ‘cash cow’ position. At this stage, sales have grown to a stable maximum level and the product has become very profitable, contributing significantly to the company’s cash flow. 4. In the case where a product ages and loses market share we face the ‘dog’ position – that is, the product is no longer contributing to the company portfolio, it gives low or no profits and is not able to compete with other products in the market.

Tools: The Boston Matrix


At each position within the matrix there are a number of opportunities open to the company; for example, at cash cow stage the options are either to invest to maintain market share or to minimise investment in the product, maximise the cash returns, and grow market dominance with other products. In conclusion, to be successful, a company should have a portfolio of products with different growth rates and different market shares. A portfolio in equilibrium will then include a number of question mark and star products, although the former should be greater in number to allow for market failures. Moreover, a healthy portfolio will also have a number of cash cow products to reduce the risks associated with the business being dependent upon the sales of a single product. Ideally, there should be relatively few or no dog products. For more information on the Boston Consultancy Group, see Experience curve below.


Tools: The Boston Matrix

IV) Bibliography
Brown, Stephen, “Writing Marketing – Literary Lessons for Academic Authorities”, Sage Publications, 2005 Wales Jerry Reaich, Neil Reaich: Business Studies As OCR Specifications, 2004

http://www.marketingteacher.com/Lessons/ exercise_boston%20matrix.htm http://www.market-modelling.co.uk/MATRIX/ MATRIX_Step08_1.htm http://www.dpu.se/boston_e.html http://www.elsevier.com/wps/find/ bookdescription.cws_home/677106/description#description http://www.brs-inc.com/models/model14.asp http://www.atwebo.com/boston_matrix.htm


Tools: The Catell 16 PF Personality Profile

The Cattell 16 PF Personality Profile
I) What
In 1949, Dr Raymond B. Cattell published one of the first measures of personality by proposing the Sixteen Factor Questionnaire (16PF). The 16PF scales that he derived measure temperament – a person’s characteristic style of thinking, perceiving, and acting over a relatively long period of time and in a wide range of different situations. Each of the 16 factors of personality traits is manifested in a set of attitudes, preferences, social and emotional reactions, and habits. The table below provides the main factors and indicates the extremes of each scale.
Factor A B C E F G H I L M N O Q1 Q2 Q3 Q4 Warmth Reasoning Emotional stability Dominance Liveliness Rule consciousness Social boldness Sensitivity Vigilance Abstractedness Privateness Apprehension Openness to change Self-reliance Perfectionism Tension Descriptors (range to – from) Reserved Less intelligent Outgoing More intelligent

Affected by feelings Emotionally stable Humble Sober Expedient Shy Tough-minded Trusting Practical Straightforward Self-assured Conservative Group-dependent Self-conflict Relaxed Assertive Happy-go-lucky Conscientious Venturesome Tender-minded Suspicious Imaginative Shrewd Apprehensive Experimenting Self-sufficient Self-control Tense

Tools: The Catell 16 PF Personality Profile


Nowadays, the Cattell 16PF model is the world’s most-widely used (administered worldwide in 40 languages) system for assessing, categorising and defining personality characteristics. Unlike other common personal profiling, the Cattell 16PF aims to uncover the deep, basic traits that underlie human behaviour, without regard to how individuals apply it to the environment in which it is applied. It is taught in psychology, widely applied by HR consultancies and can help in personnel selection and development by identifying the nature of personal qualities that influence behaviour in work settings. Thus, the Cattell 16PF may be applied to characterising problem-solving style, interpersonal or management style, planning work and career performance objectives or directions, and to providing effective training for career development. A variation of the Cattell 16PF – the five factors – has recently become more common, resulting in a sharper picture of the underlying personality.

Factor Extraversion Anxiety Will Independence Self-control

Descriptors (range to – from) Introverted, socially inhibited Low anxiety, unperturbed Open-minded, receptive to ideas Accommodating and selfless Free-thinking and impulsive Extroverted, socially participative Easily worried and generally tense Resolute and determined Independent and persuasive Structured and inhibited


Tools: The Catell 16 PF Personality Profile

II) When it can be used
Selection – for roles where correlations have been found between primary traits and criteria for success, check match with candidate profile. Executive coaching and management development – assess management potential/style, raise subject self-awareness and build him/her a development plan. Team building – assess personalities in the dynamic of the group to create a better match in team building and for drafting a team-improvement plan. Career guidance – evaluate career expectations against personality profile and also provide reorientation and improvement directions. Counselling – identify factors that may contribute to emotional and social problems. Research – identify factors most likely to support, by positive correlations, theories on performance in various domains of life.

Tools: The Catell 16 PF Personality Profile


III) Example in an SME and/or other organisation
The complexity of the test and its administration makes it less attractive to SMEs, while service companies oriented to assessment, selection, counselling and orientation, thrive on it and use it alongside other personality tests like MBTI, MMPI-II or CPI. Companies like OPP in Europe or Pearson Assessments in the US have, among their clients, organisations like IBM, Bank of America, Toyota or US Transportation Security Administration. The internet has brought PF closer to clients as many small counselling and evaluation companies have sprung up on the web (see below). Virginia Military Institute is using PF16, along with MBTI, for cadets’ follow-ups. Their experience shows that successful cadets score high on dominance and reasoning and low on extraversion. They also identified that low scores on dominance and self-control, together with high scores on anxiety, correlate with a higher drop-out rate. Finally, there is constant growth, throughout the school years, for dominance, self-control and tough-mindedness among all students. PF16 has a good grip in the research environment where it has been used to study the effects of ageing, to understand differences in learning styles, to improve selection and training of military pilots, to study equivalence of cross-cultural test translations, to investigate the effects of social desirability on tests, and to understand issues of sexual orientation.


Tools: The Catell 16 PF Personality Profile

IV) Historical context
In the aftermath of World War I, at a time of social unrest, intense scientific progress and reassessment of Western values, the field of psychology flourished. Cattell was influenced in his early academic years by the ideas of George Bernard Shaw, Aldous Huxley, H. G. Wells and Bertrand Russell, and developed his conviction that a solution to the problems of humanity lay in a better understanding of human temperament and motivation. He was strongly motivated by the work of Freud and Jung, and had the chance to work with Charles Spearman who revealed to him the power of factor analysis. In 1939, the imminence of World War II put pressure on improving screening and selection methods, and Cattell continued his research from his position in the US Adjutant General’s Office, Personnel Research Division. In the same period, Myers and Briggs were releasing the MBTI which was to become heavily used by US forces. The end of the war found Cattell at the University of Illinois where Illiac I, the first electronic computer, was raising hopes for a better and more accurate factor analysis deployment for proving the theory. The post-war period has been full of other major leaps forward such as the transistor (1947), the Big Bang theory (Gamow, 1946) and the discovery of nucleic acids (Franklin, 1951). While his PF16 model came under heavy criticism from Fiske (1949), Cattell pushed the model further and by 1957 had released the 16PF5. In 1963, Warren Norman confirms the existence of five major personality factors. In 1968, Walter Mischel – a behaviourist – overtook the traits movement up until 1981 when H.J. Eysenck published his threepersonality-factor theory.

Tools: The Catell 16 PF Personality Profile


V) Bibliography
Eysenck, Michael W., “Psychology: An International Perspective”, Psychology Press, 2004, p 984, ISBN: 1841693618 Conn, Steven R., Rieke, Mark, “16PF Fifth Edition Technical Manual”, 1994, IPAT Hall, C. S., Lindzey, G., & Campbell, J. B. (1998), “Theories of personality” (4th ed.). New York, Wiley

http://www.personalityresearch.org/papers/fehringer.html http://www.psypress.com/pip/resources/slp_demo/c13-4.asp http://www.pearsonassessments.com/tests/sixtpf_5.htm http://www.cattell.net/devon/rbcbio.htm http://www.centacs.com/quickstart.htm http://www.ou.edu/russell/pdf/ATC’00.pdf http://www.utsc.utoronto.ca/~psyb30/PSYB30LEC04.ppt http://media.wiley.com/product_data/excerpt/49/04712342/ 0471234249.pdf


Tools: Cycle of learning/Cycle of training

Cycle of learning/Cycle of training
Confucius around 450 BC: «Tell me, and I will forget. Show me, and I may remember. Involve me, and I will understand.»

I) Who: biography
David A. Kolb

Professor of Organisational Behaviour, Weatherhead School of Management, Case Western Reserve University David Kolb is the founder and chairman of EBLSI (Experience Based Learning Systems, Inc.) and professor of organisational behaviour at the Weatherhead School of Management, Case Western Reserve University. He is the author of Experiential Learning: Experience as the source of learning and development, and creator of the Kolb Learning Style Inventory. Other works include: Conversational Learning: An experiential approach to knowledge creation, Innovation in professional education: Steps on a journey from teaching to learning, Organizational Behavior: An experiential approach, and numerous journal articles on experiential learning. He has received four honorary degrees recognising his contribution to experiential learning in higher education.

Tools: Cycle of learning/Cycle of training


II) What: Cycle of learning/Cycle of training

Concrete Experience

Active Experimentation

Reflective Observation

Abstract Conceptualisation

This suggests that there are four stages which follow from each other: Concrete Experience is followed by Reflection on that experience on a personal basis. This may then be followed by the derivation of general rules describing the experience, or the application of known theories to it (Abstract Conceptualisation), and hence to the construction of ways of modifying the next occurrence of the experience (Active Experimentation), leading in turn to the next Concrete Experience. All this may happen in a flash, or over days, weeks or months, depending on the topic, and there may be a «wheels within wheels» process at the same time.


Tools: Cycle of learning/Cycle of training

Experiential Learning Styles

Honey & Mumford: Typology of Learners

Concrete Experience

Activist: prefers doing and experiencing Reflector: observes and reflects

Active Experimentation

Reflective Observation

Theorist: wants to understand underlying reasons, concepts, relationships Pragmatist: likes to "have a go" try things to see if they work

Abstract Conceptualisation

Honey and Mumford (1982) have built a typology of Learning Styles around this sequence, identifying individual preferences for each stage (Activist, Reflector, Theorist, Pragmatist, respectively). Kolb also has a test instrument (the Learning Style Inventory) but has carried it further by also relating the process to forms of knowledge.

Tools: Cycle of learning/Cycle of training


Two ways of “knowing”
Concrete Experience corresponds to “knowledge by acquaintance”, direct practical experience (or “Apprehension” in Kolb’s terms). Abstract Conceptualisation corresponds to «knowledge about» something, which is theoretical, but perhaps more comprehensive (or “Comprehension” in Kolb’s terms).

Concrete Experience by direct experience "apprehension" by "comprehension" or knowing about Abstract Conceptualisation

Active Experimentation

Reflective Observation


Tools: Cycle of learning/Cycle of training

Two ways of understanding
Reflective Observation concentrates on what the experience means to the person who experiences it, (it is transformed by «Intension») or its connotations Active Experimentation transforms the theory of Abstract Conceptualisation by testing it in practice (by «Extension») and relates to its denotations.
Concrete Experience

by using "denotation" Active Experimentation by thinking "connotation"

Reflective Observation

Abstract Conceptualisation

Forms of Knowledge and the Learning Cycle
The four quadrants of the cycle are associated with four different forms of knowledge, in Kolb’s view. Each of these forms is paired with its diagonal opposite.
Concrete Experience
Accommodative Divergent

Active Experimentation
Convergent Assimilative

Reflective Observation

Abstract Conceptualisation

Tools: Cycle of learning/Cycle of training


Convergent thinking
- science and technology (?)



Divergent thinking
-arts and humanities (?)




Tools: Cycle of learning/Cycle of training

Assimilation: fit to practice to theory
Complex but familiar external objects are simplified to fit pre-existent categories in your head


Inside your head


Accommodation: fit theory to practice
You have to change the ideas in your head to fit the realities of external objects
Outside Inside your head Outside

Tools: Cycle of learning/Cycle of training


Learning styles mean that: At a minor level there is a need for adjustment between learner and teacher: sometimes their preferences are complementary, sometimes antagonistic, and of course sometimes collusive if they both tend to go for the same stages in the cycle; At a major level, neglect of some stages can prove to be a major obstacle to learning.
Kolb's learning styles

Concrete Experience

how we think about things

Diverging Perception Continuum
(feel and watch) CE/RO

(feel and do) CE/AE

Active Experimentation

how we

do things

Reflective Observation

(think and do) AC/AE

(think and watch) AC/RO

Abstract Conceptualisation


Kolb learning styles, definitions and descriptions


Tools: Cycle of learning/Cycle of training

Knowing a person's (and your own) learning style enables learning to be orientated according to the preferred method. That having been said, everyone responds to and needs the stimulus of all types of learning styles to one extent or another – it is a matter of using emphasis that fits best with the given situation and a person's learning style preferences. Here are brief of the four Kolb learning styles: • Diverging (feeling and watching - CE/RO): These people are able to look at things from different perspectives. They are sensitive. They prefer to watch rather than do, tending to gather information and use imagination to solve problems. They are best at viewing concrete situations from several different viewpoints. Kolb called this style “Diverging” because these people perform better in situations that require ideas-generation, for example, brainstorming. People with a Diverging learning style have broad cultural interests and like to gather information. They are interested in people, tend to be imaginative and emotional, and tend to be strong in the arts. People with the Diverging style prefer to work in groups, to listen with an open mind and to receive personal feedback. • Assimilating (watching and thinking - AC/RO): The Assimilating learning preference is for a concise, logical approach. Ideas and concepts are more important than people. These people require a good clear explanation rather than practical opportunity. They excel at understanding wide-ranging information and organising it in a clear logical format. People with an Assimilating learning style are less focused on people and more interested in ideas and abstract concepts. People with this style are more attracted to logically sound theories than approaches based on practical value. These learning style people are important for effectiveness in information and science careers. In formal learning situations, people with this style prefer

Tools: Cycle of learning/Cycle of training


readings, lectures, exploring analytical models, and having time to think things through. • Converging (doing and thinking - AC/AE): People with a Converging learning style can solve problems and will use their learning to find solutions to practical issues. They prefer technical tasks, and are less concerned with people and interpersonal aspects. People with a Converging learning style are best at finding practical uses for ideas and theories. They can solve problems and make decisions by finding solutions to questions and problems. People with this style are more attracted to technical tasks and problems than social or interpersonal issues. A Converging learning style enables specialist and technology abilities. People with this style like to experiment with new ideas, to simulate, and to work with practical applications. • Accommodating (doing and feeling - CE/AE): The Accommodating learning style is 'hands-on', and relies on intuition rather than logic. These people use other people's analysis, and prefer to take a practical, experiential approach. They are attracted to new challenges and experiences, and to carrying out plans. They commonly act on gut instinct rather than logical analysis. People with an Accommodating learning style tend to rely on others for information than carry out their own analysis. This learning style is prevalent and useful in roles requiring action and initiative. People with an Accommodating learning style prefer to work in teams to complete tasks. They set targets and actively work in the field trying different ways to achieve an objective. Examples and practical use: • practitioners of creative disciplines, such as the arts, are found in the Divergent quadrant • Pure scientists and mathematicians are in the Assimilative quadrant


Tools: Cycle of learning/Cycle of training

• Applied scientists and lawyers are in the Convergent quadrant • Professionals who have to operate more intuitively, such as teachers, are in the Accommodative quadrant A number of criticisms can be made of the Kolb model. “It pays insufficient attention to the process of reflection” (see Boud et al., 1983); “The claims made for the four different learning styles are extravagant” (Jarvis 1987; Tennant 1997); “The model takes very little account of different cultural experiences/conditions; the idea of stages or steps does not sit well with the reality of thinking” (Dewey 1933); “The empirical support for the model is weak” (Jarvis 1987; Tennant 1997).

Critiques of David Kolb's theory from a training perspective by Claire Forrest in Train the Trainer Issue 12 (2004): • "The idea of a nice set of neat learning stages does not equate to most people's reality. The problem is that a number of processes can occur at once and stages can be jumped or missed out completely." • "The experimental research base for the model was small, and there have been only a few further studies." • "Several commentators suggest that the learning styles are too simplistic and, whilst they fit neatly into Kolb's cycle, they fail to take account of ways of learning other than experiential." • "The inventory has been used within a fairly limited range of (mainly Western) cultures and thus the assumptions that underpin the Kolb and Fry model are Western. There is a need to consider the different cultural models of selfhood."

Tools: Cycle of learning/Cycle of training


III) Web-o-graphy
David Kolb’s website: http://www.learningfromexperience.com/ Claire Forrest's website: http://www.structuredlearning.com James Atherton: http://www.learningandteaching.info/learning/experience.htm Tim Pickles: http://reviewing.co.uk/research/experiential.learning.htm http://www.businessballs.com/kolblearningstyles.htm


Tools: Delphi Method

Delphi Method
I) What is the Delphi Method?
The Delphi Method (DM) is a technique used to structure a group communication process to deal with a specific issue. More specifically, the DM provides a structured process for collecting and distilling knowledge from a group of experts. The knowledge is gathered using questionnaires and the participating experts will never meet in person. The group communication process and its final outcome will thus not suffer from ‘follow the leader’ tendencies, which often hamper the quality of group opinion in conventional face-to-face group discussion processes. The DM is based on the ‘Dialectic Inquiry’ philosophy, meaning that it uses the group communication process to move from thesis (establishing an opinion) over antithesis (conflicting opinion) to synthesis (a new consensus). In other words, the DM uses the conflicts which arise between contrary propositions in a group communication process, centred around a specific issue, to find a new proposition. The practical application of the DM can be summarised in ten steps. First, it is necessary to build a Delphi team to set up and monitor the project. Second, the Delphi team must find a panel of experts to participate in the forecast. Third, a questionnaire needs to be developed by the Delphi team. Fourth, the Delphi team must thoroughly test the wording of the questionnaire to make sure it avoids ambiguity. Fifth, the questionnaire is distributed to the panel of experts. Sixth, the responses to the questionnaires are analysed. Seventh, a new questionnaire is developed by the Delphi team, the aim of which is to move the panel of experts closer towards consensus. Eighth, the new questionnaire is transmitted to the experts. Ninth, the new answers are analysed and the process of developing new questionnaires will continue until stable results are obtained. The tenth and final step would be for the Delphi team to prepare a report which summarises the findings of the process.

Tools: Delphi Method


II) When can the Delphi Method be used?
The DM is particularly useful for forecasting a specific, singledimension future issue. In recent years, the DM has been particularly popular in research studies concerning the areas of public health issues and education. Thus, in theory the DM could be used by UBI if the business school wanted to forecast whether or not a specific new management trend should be incorporated into the curricula of its BA and MBA programmes. Examples of other applications of the DM include facilitating group consensus building and helping to generate creative ideas.

III) Example: Case study of Delphi Method application
In 1994, the DM was applied by the Institut de médecine sociale et préventive (IDMSEP), Lausanne, Switzerland. Using the DM framework, IDMSEP explored and identified the potential implications associated with introducing Switzerland’s first AIDS vaccination. The IDMSEP Delphi team selected a panel of experts comprising 30 participants with a good knowledge of and interest in the area. The participants’ contributions to the study were anonymous, so they never met one another in person. The study used an existing scenario as its focal point, which modelled the traits of the first preventive, partially effective, AIDS vaccination. The IDMSEP Delphi team created three rounds of questionnaires before developing its final report on the issue. Those filling in the questionnaires were asked the following three qualitative questions. First, they were asked to list which objectives they thought needed to be achieved during the first five years of the AIDS vaccinations in Switzerland. Secondly, they were asked to evaluate whether certain forwarded proposals, focusing on the development of a public health strategy and the AIDS vaccination, were acceptable and feasible. Thirdly, they were asked to estimate how different groups of users could potentially use the AIDS vaccination.


Tools: Delphi Method

The Delphi procedure performed by the IDMSEP produced two main outcomes. A number of strategies and recommendations were proposed for the creation of an AIDS-prevention campaign. Secondly, an institutional framework was proposed to support the setting up of a future AIDS vaccination strategy.

Tools: Delphi Method


IV) History: Who invented the Delphi Method?
The DM was created by the US Army in the 1950s. However, several personalities can be mentioned in the chain of events which led to its creation. The American General, Henry Harley Arnold, saw the need for the US Army to develop a technique for forecasting future technological capabilities that might serve American interests. With this perceived need as his major motivator, General Arnold helped establish the RAND (Research and Development) project in 1946. Throughout the 1950s and 60s, several RAND researchers contributed to the creation of the DM, three of whom are recognised as the ‘founding fathers’: Olaf Helmer, T.J. Gordon and Norman Dalkey.

Historical context of the DM
The US had been deeply involved in World War II until it ended in 1945. This was followed by its deep involvement in the Cold War throughout the 1950s and 60s. So, the US was a nation facing significant military threat during the DM’s early years. The scope of the security threat posed by the Cold War is well illustrated by the following incidents: the Vietnam War (1945-1975), the Korean War (1950-1953) and the Cuba Crisis (1962). The Cold War was characterised further by the competitive arms race between the US and the Soviet Union. Thus, both superpowers were pushed to seek innovation, which resulted in many significant technology innovations, such as NASA’s Echo 1, the world’s first communications satellite (1960). From an analytical point of view it is no wonder that the US Army finally developed a method aimed at improving technology forecasting. In short, the US was under pressure to be constantly ahead of the game when it came to the procurement and development of cutting-edge defence technologies. This was not


Tools: Delphi Method

just because of major military threats but also due to the political pressures which arose from competing with the Soviet Union to be the world’s largest superpower. It is noteworthy that during the period of the Cold War the counterculture movement was started by the American youth. The counterculture was triggered in particular by the horrors of the Vietnam War, and was a generation’s outcry for peace. By means of protests and anti-war demonstrations, a whole generation of young people spoke out for peace and challenged the structure of US society. Through this counterculture, music genres such as rock and folk music were established as a way of expressing radical ideas and of rebelling in a peaceful maner.

Tools: Delphi Method


V) Bibliography
Adler Michael, and Ziglio Erio (1996), “Gazing into the Oracle: The Delphi Method and its Application to Social Policy and Public Health”, London, Jessica Kingsley Publishers Fowles Jib (1978), “Handbook of Futures Research”, Westport, Connecticut, Greenwood Press Cornish Edward (1977), “The Study of the Future”, Washington, DC, World Future Society Zuber Patrick (1994), “Introducing a First AIDS Vaccination in Switzerland: A Delphi Policy Analysis”, Lausanne, Institut de médecine sociale et préventive.

http://www.12manage.com/methods_helmer_delphi_method.html http://www.12manage.com/methods_dialectical_inquiry.html http://www.bbc.co.uk/history/war/wwtwo/ http://www.cnn.com/SPECIALS/cold.war/ http://www.cyberlearning-world.com/nhhs/html3/culture.html http://www.henleymc.ac.uk/general/delphi.nsf/homepage http://www.theworkingmanager.com/articles/detail.asp?ArticleNo=164 http://www.sncpr.org.uk/delphi.htm http://www.propertyrightsresearch.org/delphi_technique.htm http://scholar.lib.vt.edu/ejournals/JVTE/v15n2/custer.html http://www.marquette.edu/coa/team-creativity.html


Tools: Eight steps for major change

Leading successful organisational change: Eight steps for major change
I) History
All organisations have to undergo periods of change in order to adapt to the fast-changing environment in which they exist. This is crucial, not only for competitive advantage but for mere survival. Although this seems to be common knowledge in the business world, when put into practice there are few who exploit change to the maximum and secure a successful outcome. The complexity of change is nothing new. During the 16th century, Niccolo Machiavelli, declared in The Prince that: “there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things”. Risk, uncertainty and resistance are always present when managing change but, nevertheless, through the passage of time we have developed certain techniques and processes to overcome these obstacles so as to adapt to the changing world or organisations in which we live. John P. Kotter has developed eight steps for major change. A Harvard Business School professor and world authority in the field of leadership and change, he has more than 20 years of experience in the area and has written 15 books since 1970s. In his book Leading Change (1996), he describes the obstacles organisations face when attempting to conduct major modifications.

Tools: Eight steps for major change


II) What is the eight-steps process?
There are many factors to be addressed when dealing with organisational change. Such factors can both create vulnerabilities and opportunities, but in order to ensure it is the latter, change has to be dealt with properly. The key lies in understanding why organisations resist the need for change, the appropriate multi-step process to achieve successful change, and understanding how leadership over management is critical to drive the process. In Leading Change, John P. Kotter describes an eight-step process for managing effective major change in an organisation. He also identifies eight common critical errors when transforming a business: 1. Allowing too much complacency 2. Failing to create a powerful guiding coalition 3. Underestimating the power of vision 4. Failing to properly communicate the vision 5. Allowing obstacles to block the new vision 6. Failing to create short-term wins 7. Proclaiming victory too soon 8. Neglecting to anchor changes firmly to the corporate culture From these common mistakes he develops a process in which it is important to go through every step in sequence, as even if you end up dealing with more than one phase at the same time, a completely linear approach is likely to fail. Before defining the process, it is important to appreciate the importance of making a clear distinction between management and leadership. While one cannot operate at its best without the other in a changing process, they are distinct in both their nature and purpose. Management deals with the responsibility


Tools: Eight steps for major change

of making sure that the processes and systems used in an organisation run smoothly by supervising the functions of such. For its part, leadership adapts organisations to the changing world by motivating and directing its members towards a common purpose. It defines a future, and aligns the members of the group with the vision by inspiring them to take action to make change happen despite the obstacles. Diagram 1 shows the process Kotter proposes for successful change management, which comprises the following: 1. Establishing a sense of urgency 2. Creating a guiding coalition 3. Developing the vision and the strategy 4. Communicating the changed vision 5. Empowering broad-base action 6. Generating short-term wins 7. Consolidating gains and producing more change 8. Anchoring the new approaches to corporate culture

Tools: Eight steps for major change


III) Establishing a sense of urgency
When companies experience a low sense of urgency, it is normally due to a high level of complacency. The stage of establishing a sense of urgency requires a great deal of cooperation, willingness and initiative, as falling into complacency is very easy and common, and may occur in spite of the presence of highly intelligent and well-intentioned employers and employees. Kotter highlights some reasons for these obstacles and explains how to avoid them: 1. Lack of visible crisis When companies lack visible crisis within certain departments, they fail to feel bound to address them. While one department may be doing exceptionally well, another may be struggling for many reasons. If this crisis is not visible to everyone in the organisation, the other departments will do little to confront the problem. Therefore, a leader must make everyone in the company aware of any crisis that may affect the company in order to provoke a reaction. 2. False sense of security This occurs when employees succumb to the feeling that because they are working for a wealthy corporation they no longer require the state of awareness needed to react to a crisis. They feel comfortable with the idea that no matter what happens the company will be able to survive due to its affluence. Leaders must eliminate this false sense of security if they want their employees to be willing and ready to react, change and make sacrifices for the future success of the organisation.


Tools: Eight steps for major change

3. Inappropriate management performance-measurement methods Management will fall into the trap of measuring performance against low standards, which are more comfortable to attain. In this way, progress is unlikely to be made, and little effort will be put into meeting high standards. A high performance standard has to be set in order to achieve top-level performance. Comparison to competitors within or outside the company is crucial to maintain the highest possible standard of performance. Business as usual is not enough as it creates the risk of falling behind and not appreciating what the real situation is. 4. Rigged internal planning and control systems Business structures may cause members of the company to focus on narrow functional goals within their specific departments without paying attention to the bigger picture, and establishing a sense of contribution to the company’s overall performance. Therefore, functional goals and their measurement need to be broadened to encompass the overall goals and functioning of the organisation as a whole rather than as individual departments. 5. Lack of external feedback Organisations often fall into the trap of acquiring 100% of their performance feedback from internal sources by comparing departments among the company. Without feedback from external stakeholders, employees will never appreciate the reality of their performance, and will therefore fall behind. Employees have to be made aware not only of what they are producing but also about the impact this is having on overall business performance, and comparing it to what the competition is doing.

Tools: Eight steps for major change


6. Reprimands for external discussions about company performance On the other hand, those employees who do seek feedback from external stakeholders and engage in honest discussions about organisational performance are often reprimanded for inappropriate behaviour, due to the risk of disseminating confidential information. Here, the organisation has to make sure that employees have the appropriate amount of feedback from external stakeholders either by promoting their interaction with customers, or by holding controlled discussions or seminars about “what is going on out there”. 7. Denial of “what we do not want” People have a tendency to deny certain problems that may disrupt their ‘comfort zone’ and thus avoid doing the work necessary to address them. It is generally easier to ignore dilemmas that do not have an immediate impact on your performance although they can lead to bigger problems in the future. We often tend to leave these problems aside subconsciously; in which case, the use of consultants is important to overcome this. They will provide unbiased feedback and will not (or should not) avoid making ‘uncomfortable’ criticisms. 8. ‘Happy talk’ from senior management Senior management often tends to cultivate a false sense of complacency by playing up small successes and fostering a false sense of security and achievement. Whilst it is important to praise small-scale success, the degree of celebration is critical to avoid any risk. Senior management should facilitate and encourage honest discussions on accomplishments without going over the top with praise and avoiding ‘happy talk’ whenever possible.


Tools: Eight steps for major change

IV) Creating a guiding coalition
It is crucial to create an effective guiding coalition to lead the process of change. This group must be made up of leaders who do not necessarily come from top management. One leader is not enough to motivate and lead change throughout an organisation. The right team must be assembled to include the correct balance of people displaying a high level of trust, and having the same awareness of problems, opportunities and commitment to change. A leader should ask him- or herself a series of questions when brainstorming about the possible team members. These questions such include: does the team posses enough individuals with the right skills and influence to lead change? Do they have the right level of diverse expertise to produce intelligent, informed decisions? Do they possess the right level of credibility amongst the rest of employees? Does the group have enough legitimate and respected leaders? From these questions, four critical attributes of a good team can be established: power, expertise, credibility and leadership. Two of the most critical characteristics for success demanded of the team are trust and sincerity. These are fundamental for a shared commitment to a common goal. All team members must share the same strong desire for excellence and success.

Tools: Eight steps for major change


V) Develop a vision and strategy
A coherent and realistic vision is one of the most important aspects of change, as it provides the explanation for why the change is needed, what the change is leading to, and how it will develop. This is why it is important to have a realistic vision which can be implemented in practice. The group has to bear in mind that it will take time to implement a new vision, as it is not something which is going to change over night since it will have to meet high standards. Kotter claims it is the key component to all great leadership and is crucial for leading and breaking through the forces that support the status quo. The guiding coalition has to deal with certain obstacles when developing the new vision, and handle internal struggles and doubts about change that the team members themselves have to overcome. There are many internal questions the team has to address before they can effectively implement change, and this will take time. If the vision is not clear to everyone in the team, and not everyone agrees on the direction, then more time must be spent dispelling such doubts.


Tools: Eight steps for major change

VI) Communicate the vision for change
There are two obstacles at this stage which have to be dealt with carefully in order to succeed. An ineffective communication strategy and an inconsistent message can result in total failure. The guiding team has to make sure that they are delivering a consistent message. Merely communicating this is not enough – efforts have to be made to ensure that the team itself and the rest of the employees understand the message correctly, as people from different levels and backgrounds tend to interpret messages in various ways. Key factors for delivering a vision successfully: • Simplicity: the message has to be simple and leaders have to be able to deliver it in no more than five minutes in simple language that will be understood by everyone in the company. • Metaphors: it is important to deliver visible examples of best practice to the employees. Analytical data and theories are often hard to understand and apply in practice without a clear and simple example of how these things function in reality. • Multiple forums and repetition: all possible appropriate communication channels have to be exploited to deliver the new vision. The more employees hear and see something, the more likely they are to remember it. Leaders have to avoid falling into the trap of feeling that no more communication is needed. A constant flow of information is more likely to lead to success. • Leadership by example: top management and leaders have to act in accordance with the new vision and reflect the new practices in everything they do.

Tools: Eight steps for major change


• Explanation of apparent inconsistencies: employees may detect inconsistencies in the new vision, which will often be because the new vision might differ significantly from the previous one. All inconsistencies have to be explained since it is only by understanding why certain things are the way they are that employees will be able to adjust to them. • Give and take: discussions have to be encouraged, and attention paid to possible proposals or observations made by employees, as these may help direct the vision in a better way. Information must flow both ways to acquire constant feedback and appreciate how employees are ‘digesting’ the new approach.


Tools: Eight steps for major change

VII) Empowering broad-based action
In the change process, empowerment is a concept which cannot be overlooked. Barriers to action have to be removed to allow employees to implement change on their own, once they have understood and embraced the new vision. This also enables lower-level management to participate in the change process and feel part of ‘the team’. As mentioned before, change takes time, and leaders must bear in mind that they have to allow employees this time. In order to give employees more power in the process, they must be educated and given training on new concepts and skills which they will need for the new culture. If you nurture your workforce properly, you will give them enough confidence to take decisions on their own, thereby creating the opportunity to delegate tasks. By eliminating decision barriers, managers and leaders can improve efficiency and develop a less timely process.

Tools: Eight steps for major change


VIII) Generating short-term gains
Short-term gains offer a better chance of leading change effectively over time, although if they are to be effective they must be visible to everyone in the company, to make them aware of the progress being achieved and to motivate them to keep going. They are also a good way of quietening critics of the change process, as employees will be aware of the achievements which can be made with change. Kotter argues that the best way to achieve these short-term wins is to plan ahead. He emphasises the difference between real short-term gains and “gimmick wins”. Change will not be successful in the long run if top management celebrates too many gimmick wins. This could work in the short run but in the end it would simply feed that false sense of security by making employees believe that everything is going extremely well while, in fact, there are no real reasons to celebrate an achievement which has not really been achieved.


Tools: Eight steps for major change

IX) Consolidating gains and producing more change
Claiming victory too soon is a common mistake when leading a change process. Top-level management can disrupt successful change by celebrating small victories too much, without looking at the bigger picture and at the necessary victories ahead. Kotter argues that at this point there are five steps which are required to keep change going. 1. Introduce more and harder changes: if the effort towards making changes seems to be decreasing, or the leaders have realised over time that extra or harder changes are needed, these should be planned and implemented, going through the steps as before, starting at step 3. 2. Bring in more help to ensure the programme’s success: as issues arise, more help may be needed to confront new challenges or to deal with new changes which are to be implemented. As these situations may arise unexpectedly, the company may not have the resources at its disposal to confront them, so extra expertise may be needed from consultants. 3. Management should continue to focus strongly on purpose: with time, eagerness and motivation may slip away unconsciously. Therefore, managers and leaders in particular should be the ones to keep a strong focus on the purpose of the change process, to remind employees day after day that this is an ongoing thing, even after 12 or 24 months. 4. Decentralisation of projects is imperative: this will allow leaders to focus on more specific tasks within their expertise to give them a better chance of succeeding. Instead of branching out to every element of the organisation, by decentralising projects, subgroups can be created.

Tools: Eight steps for major change


5. Eliminate unnecessary interdependencies: these simply slow down some processes, so as long as it remains feasible, interdependencies within a company should be kept at a minimum, allowing departments to operate faster and more efficiently. At this stage, employees should have received the necessary training and empowerment to make this step more practical.


Tools: Eight steps for major change

X) Anchor new approaches to culture
Attaining the objective of transmitting the new vision and adapting the organisation to it is in itself a great achievement, but it does not stop there – it is important to anchor the new ways to the corporate culture if they are to stay. Change may have been accomplished but if, after several years, the organisation reverts back to its old ways, all the efforts will have been wasted. The essential key for long-term change is not merely about changing the vision, mission statements and developing training manuals, but changing the actual corporate culture and making this culture last. It is about getting people to follow this new culture without even thinking about it, as part of a natural process which develops subconsciously. Leaders must show employees how the new changes have helped the organisation. Comparisons must be made in order to communicate the feeling of positive change among employees, to let them see that all their sacrifices were for a good cause and that they have achieved something valuable which will benefit the company as a whole. One important aspect to remember is that culture change comes last, not first. Before changing the culture, the organisation has to change the systems; failure to do so can put the company at great risk as too many negatives may develop with it. Kotter asserts instead that it is better to find and express what needs to be changed, implement these changes, and then change the culture around that.

Tools: Eight steps for major change


XI) Conclusion
In a fast changing world such as the one we live in today, it is difficult to predict what our companies will be subjected to in the future and where we will be headed. Consequently, such a process stresses the importance of having the strong sense of urgency necessary to be able to react when required to do so without falling into the complacency trap. Changes are ever present in the business world, and companies will be obliged to follow them regularly. One very important aspect of this is the need for teamwork among top management. When essential members of an organisation work together as a team it is easier to move in the right direction. A united effective direction is necessary, and if this direction is driven from the top the chances of achieving success are greater. This procedure, like many others, is a theory that may not apply (completely) to every organisation needing change as not all theories apply to all kinds of situations. Nevertheless, it is a good guideline to appreciating what obstacles may arise when dealing with major change, and the possible ways to overcome them. Steering a course along the bumpy road to success is never easy, but procedures like those mentioned above will certainly help smooth the way.


Tools: Eight steps for major change

XII) Bibliography
John P. Kotter, Leading Change (1996), Harvard Business School Press.

http://www.johnkotter.com http://www.theheartofchange.com http://www.allbusiness.com/management/ change-management/388052-1.html http://www.gse.harvard.edu/hfrp/eval/issue32/spotlight1.html


Tools: The Experience Curve

The Experience Curve
I) History
The Boston Consulting Group (BCG) is an international strategy and general management consulting firm whose mission is to help leading corporations create and sustain competitive advantage. Today, BCG is among the largest and most profitable management consulting companies in the world. It has 60 offices in 37 countries and in 2004 had a revenue of US$1.3 billion. BCG was founded in 1963, in Boston, by Bruce D. Henderson. It was initially called the Management and Consulting Division of the Boston Safe Deposit and Trust Company, which was a subsidiary of The Boston Company. Henderson completed a degree in engineering before attending Harvard Business School. He left HBS 90 days before graduation to work for Westinghouse Corporation, where he became one of the youngest vice-presidents in the company’s history, and worked for Arthur D. Little’s management services unit before accepting a job offer from the Boston Safe Deposit and Trust Company to start a consulting arm for the bank. In his efforts to differentiate this new consultancy from the many competing consultancies of the time, he decided to assign it a distinctive mission. As the historical analysis of the time will show, the 1960s were characterised by a trend, in companies as much as in arts, culture and politics, to look towards the future by acquiring a more global and long-term perspective of issues and goals. It was in this context that Henderson proposed creating a consultancy that would challenge companies “to look beyond their immediate horizons to future developments, to position themselves for tomorrow by acting today”.

Tools: The Experience Curve


One of the first breakthrough concepts developed by BCG consultants was the Experience Curve. The insightful discovery that unit costs decrease over time as “experience” (or cumulated volume) grows, resulting from BCG’s work for a leading semiconductor manufacturer, became a “conceptual cornerstone in the understanding of both the role market share plays in establishing competitive advantage, and the importance of asset allocation in portfolio management”. This paper will begin with an analysis of the historical context within which this concept was developed, and then describe the Experience Curve in more detail. It will also look at similar theories developed at the time, and finally explore the implications of the theory with a view to understanding its pitfalls and its usefulness in the field of management. The 21st century saw dramatic changes in the way companies were structured and run. The small, family-owned firms started growing into larger and more complex companies, thanks to the development of several means of transportation and the growth of the targetable markets. “Vertically integrated, multi-divisional (or “M-form”) corporations” began to take shape and influence the competitive environment. Adam Chandler, a great thinker of the time, argues that this fundamental and universal change in the structure of American companies was aimed at helping corporations grow and diversify. In fact, it was in the 1950s and 60s that the discipline of “specifying an organisation’s objectives, developing policies and plans to achieve these objectives and allocating resources so as to implement the plans,” namely, strategic management, was developed.


Tools: The Experience Curve

Among the elements that created the need for such strategic thinking in the management of resources was World War II whose challenges involved “allocating scarce resources across the entire economy”. The destruction which resulted from this war also led to an excess in demand, which pushed companies in the 1950s and 1960s to look at a new global market. Strategies were geared toward growth and diversification. Several thinkers contributed to the development of this more pragmatic and growth-oriented view of management. In 1962, Alfred Chandler narrated the developments of the managerial revolution, analysing the shift in focus from Adam Smith’s “invisible hand” of market forces to the “visible hand” of managers who started influencing the size and concentration of American industry. Managers were no longer co-ordinators of small units, but rather, they were strategists who needed to ensure that “every subunit of organisation, and even every individual have a clearly defined set of purposes or goals which keeps [the organisation] moving in a deliberately chosen direction”. At the same time, as a result of Philip Selznick’s revolutionary idea of matching the internal factors of the organisation with external environmental circumstances (1957), the Harvard Business School General Management Group developed the well-known SWOT analysis. Once again, the focus was on a “large picture” of the company. Focusing on the long term, in 1965, Igor Asnoff (see chapter on gurus) developed a strategy grid that aimed to prepare companies for future challenges and opportunities. In 1954, Peter Drucker developed the theory of management objectives focusing on monitoring the progress of a company towards its objectives. Drucker also contributed to the field of strategic management by introducing the idea of the worker as an intellectual resource.

Tools: The Experience Curve


It was clearly a period of strategic thinking; a period where a company and the role of management were being studied through a broad outlook while, at the same time, paying close attention to pragmatic and practical solutions to enable growth in the future. Management needed to focus on several levels, on processes, on the external environment and on the long term. These trends were not unique either to the field of management or to the economic sector. The 1960s saw the first men stepping on the moon, the creation of the first satellites, as well as the development of the precursor to the internet. These technological innovations reflected the need to look at the world from a new standpoint. In this context, 2001: A Space Odyssey hit the movie screens, and Star Trek made its debut in 1966. Politically, the 1960s were a time of revolution, not only in the United States but worldwide, too: the Cultural Revolution in China, the Stonewall Riots in New York City, the Vietnam War and protests, the Nigerian Civil War, etc. People were becoming involved in and opinionated about political issues: the American Civil Rights movement, the rise of radical feminism, and anti-war movements, were just some of the issues troubling young Americans. The US needed change, and a new view on societal issues. Even the music youngsters played was rebellious: the 60s were the time of rock’n’ roll, a type of music that was generally condemned by the older generations. The fine arts also moved away from the abstract and began incorporating elements from popular culture (pop art) employing images that would appeal to a broad audience, rather than the élite.


Tools: The Experience Curve

The America of the 1960s was looking for practical and concrete changes for the future growth of the economy and society. A generation of Americans who had lived through wars and revolutions was now searching, in all fields, for solutions that would boost the healthy growth of American society. It was during this period that BCG’s first consultant discovered a concept that would enable companies to shape strategies for achieving a considerable market share in their industry. The Experience Curve would become a great tool for those managers looking for a quick-and-easy solution to achieve growth.

Tools: The Experience Curve


II) What: Experience Curve and its origins
The Experience Curve finds its origins in the related concept of the Learning Curve, which was developed during World War II. During the construction of military aircraft, it was observed that the amount of experience that workers’ acquired had an impact on the cost of production. More specifically, the direct labour costs decreased by a constant percentage (about 10-15%) every time the cumulative quantity of aircraft produced doubled. While this theory was innovative and useful for several industry sectors, it was however, limited in scope as it applied only to labour costs. The development of the Experience Curve was to prove a great breakthrough as it applied to process-oriented situations, not only labour-intensive ones. The Experience Curve was formulated as a result of BCG’s work for a semiconductor manufacturer who asked for BCG’s services in seeking to better understand the industry’s chaotic pricing behaviour. The wide variety of semiconductors was a good opportunity to compare differing growth rates and pricedecline rates in a similar environment. The BCG team observed that costs usually declined with cumulative production.
Unit Cost
1.00 .80 .64 .50





Cumulative Output


Tools: The Experience Curve

As opposed to a labour costs, the Experience Curve explains a decrease in unit cost in terms of “experience”: producers become increasingly efficient as they gain experience in production. The relationship between costs and cumulative production became known as the Experience Curve and was summarised as follows: production costs declined steadily at a constant rate of about 20-30% each time accumulated experience doubled. In brief, the more often a task is performed (production of any good or service), the lower will be the cost of doing it. The implications of this theory are far-reaching. Graphically, the curve is plotted by representing the cumulative units produced on the x-axis, while the unit cost (real unit cost of adding value) is represented on the y-axis. A curve which depicts a 25% reduction in cost for every doubling of output is a “75% experience curve”, as the unit costs decrease to 75% of their original level.

Unit Cost
100 90 81 70

90 % Experience Curve


70 % Experience Curve




Cumulative Output

Tools: The Experience Curve


The reasons behind the Experience Curve are secondary, Henderson said, as compared to the single fact that it is a universally observable phenomenon. However, he listed several factors which can explain the Experience Curve. These factors work in combination to create this effect: • Learning: workers who learn to do a task better can perform the task in less time. • Specialisation: when the scale of activity increases, it is more efficient to split tasks so that one person does the same, smaller task, more times. Experience is enhanced by specialisation. • Investment: investment is fundamental for capacity increase. • Scale: scale creates the potential for volume discounts, vertical integration and the division of labour which, in turn, facilitates learning. The hypothesis developed by Henderson was tested in the 1970s, in several different sectors and industries (aerospace, shipbuilding, raw materials, purchased parts, etc.), and Experience Curve effects ranged from 10-25%.


Tools: The Experience Curve

III a) Implications and limitations
The Experience Curve suggested that systematic cost differences among competitors could arise merely due to the fact that some have developed more production knowledge than others. This was a practical and revolutionary insight that would have significant implications for companies. A company working to accelerate its production experience by increasing its market share could gain a notable cost advantage in its industry. In other words, any effort and energy invested in pursuing market share in the short term could lead to great returns and cost-cutting in the long term. This conclusion contradicted some basic assumptions of classical economics which assume that there is “a finite minimum cost which is a function of scale [...] and all competitors can achieve comparable costs at volumes much less than pro rata shares of market”. The Experience Curve provided the founding elements of strategic thinking as far as managing competitive advantage was concerned. BCG recommended that its clients capitalised on the experience effect resulting from increasing capacity. If increased activity resulted in increased learning, lower costs, lower prices, and increased market share, then the most effective business strategy was to aim for market dominance:
Increased Learning Lower Costs

Increased activity

Lower Prices

Increased profitability & market dominance

Increased Market Share

Tools: The Experience Curve


Therefore, according to this model, if a competitive market share cannot be achieved, it is best to concentrate resources elsewhere. Moreover, cost reductions should be translated into price decreases. Maintaining high prices would only create opportunities for new entrants in the market in the long run. Competitive entry can be discouraged by decreasing prices as unit costs fall, and even pricing below cost in the short run in order to achieve greater market share and further cost reductions in the future. Of course, the Experience Curve will vary from one industry or product to another, and it should be used in combination with a company’s overall strategy. If a company prefers to cover a strategic niche in the market, differentiating itself for “quality or prestige”, the Experience Curve will only be relevant in explaining the decreasing costs, but price and market share may voluntarily be kept unchanged. It is also evident that in the case of a change in technology, the Experience Curve may be interrupted, although the knowledge part may still be transferable.


Tools: The Experience Curve

III b) Advantages and uses of the Experience Curve
The Experience Curve shows that any activities/investments which may lead to an increase in market share can be justified. As the chart above illustrates, penetration pricing strategies, investment in advertising, sales personnel, production capacity, etc. which may increase market share may ultimately lead to a gain in competitive advantage. This conclusion adds safety to the initial investments which managers are often reluctant to attribute to new products. James P. Gilbert defines three areas where Experience Curves may be applied. First of all, for strategic use, the Experience Curve may be used to determine “volume-cost changes, estimating new product start-up costs, and pricing of new products”. According to the Curve, and its implications, prices should be competitive and aggressive in the new product launch, and high promotion costs should be accepted in the short term. The Curve may also be used by a company internally in order to develop “labour standards, scheduling, budgeting, and makeor-buy decisions”. Finally, the Experience Curve may be used externally for “supplier scheduling, cash-flow budgeting, and estimating purchase costs”. The Experience Curve should be considered by companies seeking to achieve competitive advantage through growth. It provides an explanation for cost reductions and opportunities for allocating those resources towards the company’s future growth.

Tools: The Experience Curve


IV) Criticisms of the Experience Curve and its assumptions
The success of applying the Experience Curve, however, depends on several factors, including the “frequency of product innovation, the amount of direct labour versus machine-paced output, and the amount of advanced planning of methods and tooling”. Some authors have argued that the effects of the Experience Curve are hard to quantify as they are closely intertwined with economies of scale (the process of learning usually coincides with the expansion of scale), and if costs are not well-managed, they may even tend to rise. Another pitfall associated with the Experience Curve is the assumption that knowledge gained is kept within the company. This holds true less and less nowadays, since employee turnover is growing every year. Moreover, Marvin Lieberman noted that the Experience Curve may only apply to the initial stages of production, especially in industries where process technology is disseminated rapidly. If all industry participants are experiencing rapid growth and declining costs, the Experience Curve may not lead to competitive advantage since competitors are acquiring experience at the same rate.


Tools: The Experience Curve

V) Conclusion: “Progress comes from the intelligent use of experience”
The Experience Curve was the first and one of the most valuable discoveries made by the Boston Consulting Group. It contributed great insight to the field of strategic management, in particular to the development of techniques that would help managers to achieve competitive advantage and properly allocate portfolios in a period where companies were competing fiercely to gain a strong foothold in the newly developing global market. Whether or not it is a universally observable phenomenon which characterises all industries is not crucial, especially in view of the recent changes in the economic environment, the rapid diffusion of technologies, and the high turnover of workers. Nonetheless, the Experience Curve can be considered a very useful management tool. This tool, and all its implications, need not be the unique strategy for a company to grow. The concept of the Experience Curve may be most useful when considered in a broader sense: while the Curve is based on an economic finding, its underlying meaning is quite simple in nature. As American author Elbert Hubbard put it, “Progress comes from the intelligent use of experience”. Managers should use the lessons learnt from the Experience Curve by employing “effective human resource selection, training, and deployment processes that facilitate learning by doing”. Experience, whether employed in such a way so as to reduce costs, or lower prices, will aid a company’s competitive advantage, which is the main lesson to be learnt from this tool.

Tools: The Experience Curve


VI) Bibliography
Kenneth R Andrews, “The Concept of Corporate Strategy”, Homewood, Ill., fifth edition 1971 Igor H. Ansoff, “Corporate Strategy”, McGraw-Hill Book Company Inc., New York, 1965 Alfred D. Chandler, Jr. “Strategy and Structure: Chapters in the History of the American Industrial Enterprise”, MIT Press Ltd, 1962 Alfred D. Chandler Jr., “The Visible Hand, The Managerial Revolution in American Business”, Paperback edition, January 1993 George S. Day, and David B. Montgomery, “Diagnosing the Experience Curve”, Research Paper 641, Stanford University, April 1982 Peter F. Drucker, “The Practice of Management”, HarperCollins Publisher Inc., New York, 1993 Pankaj Ghemawat, “Competition and Business Strategy in Historical Perspective”, Business History Review, Vol. 76, No. 1, Spring 2002 Philip Selznick, “Leadership in administration; a sociological interpretation”, Evanston, III, Row, Peterson, 1957.

http://www.bcg.com/home.jsp – the official site http://www.quickmba.com/strategy/matrix/bcg/ http://www.consultant-news.com/BCG.asp http://www.bcg.com/this_is_bcg/news/BCG_web_layout.pdf


Tools: Force Field Analysis

Force Field Analysis
I) What is Force Field Analysis?
Force Field Analysis is a management technique developed by Kurt Lewin (1890-1947) – a pioneer in the field of social psychology sciences – for diagnosing situations. Lewin thought that any situation should not be considered as a consistent stable system but as a dynamic balance or temporary equilibrium. He assumed that in every situation there are both driving and restraining forces that influence any change that may occur. Driving forces are those forces affecting a situation that are pushing in a particular direction; they tend to initiate a change and keep it going. In terms of improving productivity in a work group, pressure from a supervisor, incentive earnings, and competition may be examples of driving forces. Restraining forces are those acting to restrain or decrease the driving forces. Apathy, hostility, and poor maintenance of equipment may be examples of restraining forces. Types of forces include: resources, traditions, vested interests, regulations, relationships, agencies, values, costs, present or past practices, organisational structures, desires ... Equilibrium is reached when the sum of the driving forces equals the sum of the restraining forces. In the context of process improvement, we use Force Field Analysis to evaluate these opposing forces and set the stage for enabling changes to be made. For changes to be possible, the driving forces must overcome the restraining forces. Usually, diminishing or removing restraining forces is the most effective way to do this. However, it can be tempting to try strengthening the driving forces instead, but this tends to intensify the opposition at the same time.

Tools: Force Field Analysis


II) When can Force Field Analysis be used?
Force Field Analysis makes people think about what works for and against the status quo, and it helps team members to view each case as two sets of offsetting factors. It can be used to study existing problems, or to anticipate and plan more effectively for implementing change. When used in problem analysis, it is especially helpful in defining more subjective issues, such as morale, management, effectiveness, and work climate. Force Field Analysis also helps keep team members grounded in reality when they start planning a change by making them anticipate systematically what kind of resistance they could meet. Conducting such an analysis can help build consensus by making it easy to discuss people’s objections and by examining how to address their concerns. Example:
Forces For Changes Forces Against Changes
loss of staff overtime customers want new products

4 3 2 1

3 3 1 3 1

staff frightened of new technology improve speed of production

Plan: Upgrade factory with new manufacturing machinery
environmental impact of new techniques

raise volumes of output


maintenance costs increasing disruption

Total: 10

Total: 11


Tools: Force Field Analysis

Once you have decided to carry out a project, the Force Field Diagram can help you analyse how you can push through a project that may be in difficulty. Here you have two choices: • To reduce the strength of the forces opposing a project • To increase the forces pushing a project. The first is often the most elegant solution: just trying to force change through may cause its own problems as, for example, the staff can be provoked into active opposition to a plan rather than simply not welcoming it. Take the example of a manager who wants to upgrade a factory with new manufacturing machinery. He has to list all the driving forces (forces for change) and the restraining forces (forces against change) and then quantify them on a scale from 1 to 5. The equilibrium is at the point where the restraining forces (against the plan) are more important than the driving forces in a ratio of 11:10. In the example above, knowing all the factors facing the manager who was tasked with pushing through the project, the analysis might suggest a number of points: • By training staff (increase cost by 1) fear of technology could be eliminated (reduce fear by 2) • It would be useful to show staff that change is necessary for business survival (new force in favour, +2) • Staff could be shown that the new machines will introduce variety and interest to their jobs (new force, +1) • Wages could be raised to reflect new productivity (cost +1, loss of overtime -2) • Slightly different machines with filters to eliminate pollution could be installed (environmental impact -1) These changes swing the balance from 11:10 (against the plan), to 8:13 (in favour of it).

Tools: Force Field Analysis


III) Historical context
Field approach Kurt Lewin’s field theory has its roots in the Gestalt theory. It is a theory of mind and brain which proposes that the operational principle behind the brain is holistic, parallel, and analogue, with selforganising tendencies. The classic Gestalt example is a soap bubble, whose spherical shape (its Gestalt) is not defined by a rigid template, or a mathematical formula, but rather it emerges spontaneously by the parallel action of surface tension acting at all points on the surface simultaneously. This is in contrast to the “atomistic” principle of the digital computer’s operation, where every computation is broken down into a sequence of simple steps, each of which is computed independently of the problem as a whole. The Gestalt effect refers to the form-forming capability of our senses, particularly with respect to the visual recognition of figures and whole forms instead of just a collection of simple lines and curves. Others concepts at that time: The Law of Effect – Edward Thorndike (1874-1949) – states that people tend not to engage in behaviour that does not result in consequences. An act with no consequences is considered a weakened act. The individual psychology – Alfred Adler (1870-1937) – assumes that human personality could be explained teleologically, as separate strands dominated by the guiding purpose of the individual’s unconscious self ideal to convert feelings of inferiority to superiority (or rather completeness). The desires of the self ideal were countered by social and ethical demands. If the corrective factors were disregarded and the individual overcompensated, then an inferiority complex would occur, the individual becoming egocentric, power-hungry and aggressive, or worse. Adler believed that personality could be distinguished into four types: getting, avoiding, ruling and socially useful.


Tools: Force Field Analysis

The international context: World War I (1914-1918) with the rise of nationalism and the emergence of communism in October 1917. World War II (1939-1945) with the setting up of the nazi concentration camps which forced Lewin to fly to USA in 1937.

Tools: Force Field Analysis


IV) Bibliography
Clare Morell and Gill Harvey, “The Clinical Audit book”, 2000, BCM 362.1 MOR.

http://www.accel-team.com/techniques/force_field_analysis.html http://www.extension.iastate.edu/communities/tools/ forcefield.html http://www.sytsma.com/tqmtools/force.html http://www.muskingum.edu/~psych/psycweb/history http://www.infed.org/thinkers/et-lewin.htm http://www.nwlink.com/~donclark/hrd/history/lewin.html http://en.wikipedia.org/wiki/Alfred_Adler http://tip.psychology.org/wertheim.html


Tools: Formula of change

Formula of change
I) Historical context
Since 1970, globalisation and modern technology have brought about new opportunities and new challenges to which board managers need to be able to apply new strategies and new thinking. Other trends, such as ageing populations, global warming, falling levels of growth, or increased competition from abroad frequently require organisation managers to redesign their organisation structures.

II) The Formula of Change
The Formula of Change proposes that the product of organisational dissatisfaction, the vision of what is possible in the future and being aware of the first steps towards reaching this vision, must be greater than the resistance to change within the organisation in order for any change to be successful:

Where D = Dissatisfaction with the present situation V = Vision of what is possible in the future F = First steps towards reaching this vision R = Resistance to change If any of the three (D,V,F) is zero or near zero, the product will also be zero or near zero and therefore the resistance to change will dominate, since the cost of changing will be too high.

Tools: Formula of change


Dissatisfaction Some form of dissatisfaction in an organisation may occur as a result of internal or external forces. The board managers must be aware of the need for change and the consequences of their actions. Therefore, an internal analysis of the organisation must be carried out in the present situation. The board managers must ask themselves: What is happening? Why are these outcomes occurring? Dissatisfaction is a key factor in motivating people to change but is limited in that it does not provide any direction. That is why two more elements are necessary to overcome the resistance to change. Vision A vision is a picture of the ideal organisation, information system, supply chain, personnel policies, etc. It is a detailed picture of a desired state in the future. The vision stimulates people to change and provides direction for that change. The board managers must ask themselves: Why don’t we like the current situation? What will the new situation do for us? Beckhard calls this the “desirability of the end state”. First steps Before taking the decision or carrying out the change, board managers have to be very clear about the first steps to be taken towards reaching the derived state. The first steps towards the transformation of an organisation might be: clear priorities, goals and objectives, a portfolio of initiatives, and a communication plan. A high-level project plan covering the major activities, deliverables, and benefits can help increase the motivation to change.


Tools: Formula of change

Beckhard calls this the “practicality of the change”. Resistance As Beckhard says, “wherever there is a change effort, there will be resistance”. The resistance may be caused by: • Employees: People are comfortable with what they know. They do not like to move outside of their “comfort zone”. On the other hand, resistance may also result from the fear of failing or of looking silly or incompetent. • Client: Fear of losing customers, whether the change is carried out in the business strategy or product. • Costs: Some changes imply such enormous investments in organisational structure that the company cannot afford them. Beckhard calls this the “cost of change”.

Tools: Formula of change


III) When can the Formula of Change be used?
The Formula of Change is an internal tool that provides a quick and first impression of the possibilities and conditions required to change an organisation successfully. The Formula of Change can help board managers to face external and internal forces which affect the organisation. Once the board managers have accepted the change, there is no longer a desire to return to the old state. At this moment, the role of the board managers is to manage the changes and lead the organisation from the current state to future state. Beckhard refers to this as the “transition state”. The board managers must be sensitive to several aspects during the transition state: • Managing the work: the managers need to define what has to be done, how it must be done and who should do it. • Developing structures appropriate for and dedicated to managing specific tasks and activities. • Devising strategies and plans for ensuring the commitment of key players to the change objectives and their personal involvement in achieving them. • Creating a communications strategy to support the change objectives.


Tools: Formula of change

IV) Who invented the Formula of Change?
The Formula of Change was developed in 1987 by Richard Beckhard and Reuben Harris but is attributed to David Gleicher. Beckhard is considered the founder of the field of organisational development, a pioneering consultant on issues of managing change, and adjunct professor at the Sloan School from 19631984. For nearly 50 years, Professor Beckhard helped organisations to function in a more humane and high-performing manner, and to empower people to become agents of change. In the late 1950s, he began collaborating with the late MIT Professor Douglas McGregor who created the Organisation Studies Department at the School School. With Dewey Balch, they initiated a project designed to facilitate the change process in organisations, which they referred to as organisation development. In the late 1960s, with colleagues Warren Bennis and Edgar Schein (the latter now a Sloan professor emeritus), he launched the Addison-Wesley Organisation Development Series. In 1967, he set up the Organisation Development Network, the first training programme for specialists in organisation development. Beckhard wrote eight books and numerous articles, including Organization Development: Strategies and Models; Changing the Essence; and Agent of Change: My Life, My Practice.

Tools: Formula of change


Below is an example of change within an organisation: Situation For many years, the Xerox Corporation maintained a commanding position in the office machine business. In recent years, competitors such as Kodac Company and Nec Corporation gained market share from Xerox. So Xerox’s CEO became concerned that the Xerox Corporation needed a change to recapture the market lead. First, Xerox’s top management realised that they needed a rallying vision. They thought that the solution was to launch new successful products which were totally different from those of their competitors. They also realised that the present culture in the company had not produced the level of creativity and innovation necessary to make it the leading competitor. The top management knew that this was not because of a lack of talent, therefore it must be related to the conditions and environment in which people operated. With the help of external consultants, the CEO tried to analyse by means of the Formula of Change if they could accomplish the change.

Dissatisfaction A loss of market share and the new products being produced were no longer at the leading edge. A diagnostic process was carried out to find the answer; it revealed that: • Small innovations and ideas were not valued by the company; • Activity was valued much more than learning; the capacity to learn was critical in Xerox’s highly competitive environment.


Tools: Formula of change

Vision The idea was to launch new innovators products in order to get a competitive advantage over the company’s competitors.

Steps • To change reward system in order to motivate employees to provide ideas; • To provide training and education programmes to help employees develop their careers.

Resistance The changes the CEO carried out did not produce resistance from employees since, in this case, they brought rewards. Moreover, these changes did not imply too many costs for Xerox. Today, Xerox’s CEO links the change effort with significant improvements in new product innovations and a subsequent increase in market share.

Tools: Formula of change


V) Bibliography
Richard Beckhard, Organization Development: Strategies and Models, 1969. Richard Beckhard and Reuben T. Harris, Organizational Transitions: Managing complex change, 1977. (ISBN 0-20100335-X). Richard Beckhard and Wendy Pritchard, Changing the Essence: The Art of Creating and Leading Fundamental Change in Organizations, 1991 (ISBN 1-55542-412-0).

http://www.12manage.com/ methods_beckhard_change_model.html http://en.wikipedia.org/wiki/Richard_Beckhard http://www.drjohnlatham.com/Beckhard.html


Tools: GE/McKinsey Portfolio Analysis Matrix

GE/McKinsey Portfolio Analysis Matrix
I) What is this?
In order to visualise the particular role to be played by each business unit, each strategic business unit is plotted in a nineblock matrix according to their market attractiveness and competitive strength (X and Y axes). • Market size is represented by the size of the circle. • Market share is shown by using the circle as a pie chart. • The expected future position of the circles is indicated by an arrow.



GE McKinsey Matrix



Tools: GE/McKinsey Portfolio Analysis Matrix


There are numerous factors that can play a role in the Y axis, such as: • Market size • Market growth • Industry profitability • Segmentation • Pricing trends • Competitive intensity • Demand variability • Supplier availability • Distribution structure • Environmental factors • Global opportunities And numerous factors that can play a role in the X axis, such as: • Relative market share • Market share growth • Strength of resources and competencies • Brand equity • Customer loyalty • Relative cost position • Relative price position • Relative profit margins • Service • Marketing trends • Distribution strength • Production capacity • Technology and innovation • Access to financial resources


Tools: GE/McKinsey Portfolio Analysis Matrix

II) When to use it?
There are three basic insights a manager can gain from the McKinsey Matrix: 1. The graph provides a powerful and compact visualisation of the strengths of the company’s business portfolios. 2. It is a mechanism to identify the potential for cash generation as well as the cash requirements of each business unit, and thus it helps in balancing the firm’s cash flow. 3. Because of the distinct characteristics of the business units, it can suggest unique strategic directions for each business: • Increase market share • Hold • Harvest/divest • Divest • Invest in new business

Tools: GE/McKinsey Portfolio Analysis Matrix


III) How to use it
Neubauer proposes the following steps for building up the matrix: 1. Identify strategic business units (SBUs) (segment) • There are four main methodologies (the GE method, step-by-step, PIMS, and multi-dimensional) but what is really important is that each SBU is autonomous and independent, otherwise this would lead to misrepresentation in the matrix 2. Evaluate attractiveness of each SBU’s market • This is an external-to-company measure 3. Evaluate competitive position • This is an internal-to-company measure 4. Develop a portfolio (depict positions of each SBU in portfolio) 5. Identify natural strategies for each region of the matrix. For instance: • Let us say that you have selected the market growth share as a proxy to measuring market attractiveness. Because of the business life-cycle concept – which states that every business evolves according to the embryonic, growth, maturity and ageing stages – you know that high attractiveness actually corresponds to an embryonic or growth state • Then you know you should penetrate the market 6. Select a strategy for each SBU and reconcile this with corporate strategies 7. Review existing management structures 8. Implement selected strategies


Tools: GE/McKinsey Portfolio Analysis Matrix

High Market Attractiveness Medium

Protect Position Build Selectively

Invest to Build Selectively/ Manage for Earnings Manage for Earnings Medium

Build Selectively

Limited Expansion or Harvest


Build Selectively High


Strategic Business Unit Strength

Below is an example from Colgate-Palmolive for a toothbrush portfolio in 1992:




Market Attractiveness



1.00 1.00




Business Strength

Tools: GE/McKinsey Portfolio Analysis Matrix


The recommendations are: • Superpremium: “protect position” by investing to grow at the maximum digestible rate and concentrating effort on maintaining strength • Professional: very strong business in a moderately attractive market. The generic recommendation is to “build selectively” by investing heavily in the most attractive market segments and building up the ability to counter competitors’ moves • Value: “protect and refocus” by maximising current earnings, concentrating on attractive segments, and defending the business’ strengths.


Tools: GE/McKinsey Portfolio Analysis Matrix

IV) Historical context
A decisive impulse for strategic planning activities came from the ideas promoted by the Boston Consulting Group (BCG) in the late 60s. The essence of BCG’s approach was to present the firm in terms of a portfolio of businesses, each one offering a unique contribution with regard to growth and profitability. However, following some criticisms on the limitations of the BCG matrix, General Electrics, McKinsey, Shell, 3M and others unified their efforts and built a new version of it.

Tools: GE/McKinsey Portfolio Analysis Matrix


V) Bibliography
• Obolensky, N. (1994), “Practical Business Re-engineering: Tools and Techniques for Achieving Effective Change”, London: Kogan Page • Porter, M. (1980), “Competitive Strategy: Techniques for Analysing Industries and Competitors”, New York: The Free Press • Porter, M. (1985), “Competitive Advantage: Creating and Sustaining Superior Performance”, New York: The Free Press • Sadler, P. (ed.) (2001), “Management Consultancy: A Handbook for Best Practice”, London: Kogan Page

• http://www.mckinsey.com • http://www.zanthus.com/databank/strategy/ business_strategy.asp • http://faculty.fuqua.duke.edu/~dbanks/mktg468/ Marketing%20Strategy%20Calendar.htm


Tools: Just-in-time management

Just-in-time management
I) What is it?
Just-in-time ( JIT) production Just-in-time (JIT) is defined in the APICS dictionary as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”. It has also been described as an approach with the objective of producing the right part in the right place at the right time (in other words, ‘just in time’). Waste, not only of effort, but also of financial investment, results from any activity that adds cost without adding value. We can take as an example the unnecessary moving of materials, which happens when the inventory is too high, and the goods have to be moved several times from one place to another – the accumulation of excess inventory. JIT (also known as lean or stockless production) should improve profits. Of course, there is never a zero-stock situation, but the level of stock should be as near to that as possible. Therefore, subcontractors tend to build their own factories as close as they can to the client to avoid any problems of in-time delivery, due to traffic jams or any other transport delay. The return on investment must also improve since the inventory levels are reduced to the minimum (this increases the inventory turnover rate but also reduces the costs of the inventory). The JIT system tends to reduce variability and improve product quality. Of course, the logical result is also a reduction in production and delivery lead times, as well as a lowering of other costs, such as those associated with machine set-up and equipment breakdown, simply because if everything is delivered on time there is no need to start up the machines again. JIT only applies to repetitive manufacturing processes in which the same products and components are produced over and over

Tools: Just-in-time management


again. Well-known examples of such include all chain-building activities (cars, electronic equipment, textiles, etc.). The general idea is to establish flow processes by linking work centres so that there is an even, balanced flow of materials throughout the entire production process, similar to that found on an assembly line. This means that there will be different JITs at different stages of production. Once again, the example of the car industry can be useful: tyres, engine components, and dashboard parts are delivered JIT by different suppliers at different stages of the production process. To accomplish this, an attempt is made to reach the goal of driving all inventory buffers toward zero. Of course, on the surface the advantages of the system seem quite obvious: minimum costs, minimum warehousing efforts, minimum transport costs, top quality, etc. However, when we take a closer look we can immediately that there is a weakness – what happens if there is a problem with the supplier’s production or delivery system: the entire production chain will be affected. Consequently, today the concept of JIT has been slightly changed and made more realistic: once again, small inventories exist and the fines imposed for non JIT delivery are extremely high.


Tools: Just-in-time management

II) Who invented it?
Taiichi Ohno, (1912-1990) is considered to be the father of the Toyota Production System – also known as JIT. He wrote several books about this system, the most popular of which is Toyota Production System: Beyond Large-Scale Production. Initially, he was an employee of the Toyota family's Toyota Spinning, before moving to the motor company in 1943 where he gradually rose through the ranks to become an executive. In what is considered to be somewhat of a slight, he was denied the normal executive track and later in his career was sent instead to consult with suppliers . Shigeo Shingo (1909-1990) was Taiichi Ohno’s perfect contemporary. Although not very well known, he is one of the most important Japanese engineers in the field of quality systems. He was not only the Japanese master of kanban (a production method), but also of the SMED (Single Minute Exchange of Die) system at Toyota. His system helped to reduce the machine stop times dramatically. They were slashed from a couple of hours to just a couple of minutes. This invention helped Japanese companies to increase their competitiveness and made Japan into an industrial genius. In the USA, it was the Ford Motor Company which first saw the real advantages of the Toyota Production System. As mentioned above, the basic elements of JIT were developed by Toyota in the 1950s, and became known as the Toyota Production System (TPS). JIT was well established in many Japanese factories by the early 1970s, and began to be adopted in the USA in the 1980s (General Electric was one of the first to adopt it). The JIT/lean concepts are now widely accepted and used worldwide.

Tools: Just-in-time management


III) Bibliography
Graham Jan R., Just in Time Management of Manufacturing, Chandos Publishing, 1988, ISBN 1-84334-100-X. Kanban, Just-in-Time at Toyota, Japanese Management Association, 1989. Sandras, William A. Jr., Just in Time: Making things Happen: Unleashing the Power of Continuous Improvement, John Wiley and Sons, 1989, ISBN 0-471-13266-7. Schniedermans, M., Advanced Topics in Just-in-Time Management, Quorum Books, 1999, Westport, ISBN 1-56720-155-5.

www.edbatista.com/2005/11/justintime_mana.html www.gbr.pepperdine.edu/032/supplychain.html www.personal.ashland.edu/~rjacobs/m503jit.html www.shareme.com/showtop/just-in-time-management.html


Tools: The management styles grid (Blake and Mouton)

The management styles grid (Blake and Mouton)
I) Introduction I a) About the authors
Blake was born in 1918 and studied psychology at Berea College, University of Virginia, USA, where he took his MA in 1941, before moving on to the University of Texas in Austin, where he pursued his PhD in 1947. He stayed at the University of Texas as a professor until 1964, receiving an LL.D in 1992. Jane Mouton studied pure mathematics and physics at the University of Texas and was awarded an MA in psychology from Florida State University in 1951 and a PhD from the University of Texas in 1957. Blake and Mouton developed the concept of the Managerial Grid while working together at the University of Texas, and their ideas were tested and developed through the implementation of an organisational development programme in Exxon, the American oil corporation.

Tools: The management styles grid (Blake and Mouton)


I b) About the grid
This managerial grid could be used to identify a manager’s existing style and thus provide a ‘path’ to the ideal management style.
MANAGERIAL GRID Concern for People 9 8 7 6 5 4 3 2 1 1 2 3 4 5 6 7 8 9 Concern for Production
1.1 Impoverished management 9.1 Task management 5.5 Middleof-the-road management 1.9 “Country Club” management

9.9 Team management

Blake, Mouton and McCanse Leadership Grid

The Managerial Grid is based on two behavioural dimensions: • Concern for people: this is the degree to which a manager considers the needs of the team members, their interests, and areas of personal development when deciding how best to accomplish a task; • Concern for production: this is the degree to which a manager emphasises concrete objectives, organisational efficiency and high productivity when deciding how best to accomplish a task.


Tools: The management styles grid (Blake and Mouton)

The two variables – ‘concern for production’ and ‘concern for people’ were plotted on a grid showing nine degrees of concern for each, ranging from 1 indicating a low level of concern, to 9 indicating a high level. Five positions on the grid represent five different management styles. The bottom right-hand corner of the grid represents a 9.1 style of management – maximum concern for the efficient accomplishment of tasks, but minimum concern for human relationships. People in this category believe that employees are simply a means to an end. They are very autocratic, have strict work rules, policies and procedures, and view punishment as the most effective means of motivating employees. In contrast, the 1.9 position at the top left of the grid focuses on the needs and feelings of members of his/her team, and has been called the “country club” style of management. This approach tends to produce a work environment that is very relaxed and enjoyable but where production suffers due to a lack of direction and control. The 1.1 management style – minimum concern for both production and people – is characterised by a desire to avoid responsibility, and to exert the minimum effort. He/she has neither a high regard for setting up systems to get the job done, nor for creating a work environment that is satisfying and motivating. The 5.5 manager tries to maintain a balance between both methods. The primary objective of the middle-of-the-road style is to maintain employee morale at a level sufficient to get the organisation’s work done. The 9.9 management style, which integrates maximum attention to both people and production, is put forward as the most effective approach. This creates a team environment based on trust and respect which leads to high satisfaction and motivation and, as a result, high production.

Tools: The management styles grid (Blake and Mouton)


II) Analysis
We can analyse this model more clearly by finding answers to the following questions: - Why does the manager want to do that? (What is his/her motivation?) - What is such a person’s typical behaviour? - When is this style appropriate? - If the manager uses this style inappropriately, what will happen? 9.1. Task management (authoritarian) Motivation: • Results at all cost • Considers people solely as a means to achieve the aim Behaviour: • No delegation or implication of others • Aggressive attitude • Makes little effort to listen to people • Use of authority and threat • Strong emphasis on planning • Aggressive and confrontational • Direct • Objectives are precise but come form only one person When is this style appropriate? • When 9.9. or 5.5 have failed • In case of emergency Results of inappropriate use: • Passive revolt of practitioners • Fear of the manager • Limited creativity • Practitioners do not assume responsibility


Tools: The management styles grid (Blake and Mouton)

1.9. “Country club” management Motivation: • Really cares for well-being of practitioner • Wants to be loved and appreciated Behaviour: • Defends people’s interests, even going against company’s interest • Makes a significant effort to listen to people • Avoids confrontation • Puts working atmosphere and good relations before results • Limited previsions • No planning When is this style appropriate? • When a practitioner has personal problems • To stimulate creativity Results of inappropriate use: • Loss of productivity • Loss of manager credibility • Loss of authority 1.1. Impoverished management Motivation: • Survival without risk-taking • Frightened to take a decision or to have a personal opinion Behaviour: • Abandoning of power • No decision-taking • Denial of problems • Says “yes” to everything, without necessarily doing it

Tools: The management styles grid (Blake and Mouton)


When is this style appropriate? • Sometimes, when honest answers would do more harm than good • With certain practitioners who tend never to take decisions alone (to force them to take themselves in hand) Results of inappropriate use: • Limited results • Frustration among practitioners and superiors • Manager becomes “dead meat” or will be avoided • Practitioners have the choice between two reactions: 1. Being passive 2. Taking over leadership 5.5. Middle-of-the-road management (compromise) Motivation: • Achieve objectives according to practitioner co-operation • Obtain “acceptable” results without too much effort Behaviour: • Listens • Negotiates in order to find ways to co-operate at all cost • Sometimes exaggerated delegation • Planning often changed • Tendency to slow down decision process When is this style appropriate? • When compromise is the only way to achieve results Results of inappropriate use: • Relatively agreeable atmosphere • “Bargaining” climate • In case of emergency, slow reaction • In the mid to long term, dissatisfaction from practitioners and superiors


Tools: The management styles grid (Blake and Mouton)

9.9. Team management Motivation: • Thinks that company objectives must be achieved and that this can only be done by practitioner competence. • Respects practitioners as «adults» Behaviour: • Treats others as adults • Proposes ambitious goals • Implicates practitioners when looking for a means to achieve these goals • Listens actively • Asks questions • Strong at delegating • Confrontations are assertive • Reacts rapidly to facts rather than people • Problem-solving attitude • Trusts his/her practitioners

Tools: The management styles grid (Blake and Mouton)


III) Applying the Blake and Mouton managerial grid
Being aware of the various approaches is the first step in understanding and improving how well you perform as a manager. It is important to understand how you currently operate so that you can then identify ways of becoming competent in both areas. Step One: identify your management style Think of some recent situations in which you were the manager. For each situation, place yourself in the grid where you think you best fit. Step Two: identify areas of improvement and develop your management skills Look at your current management style and analyse its effectiveness using a critical eye. See how you can improve it. Are you settling for ‘middle of the road’ because it is easier than trying to achieve more? Identify ways to acquire the skills you need to reach the team management position. This may include involving others in problem-solving or improving how you communicate with them, if you feel you are too task-oriented. Or it may mean becoming clearer about scheduling or monitoring project progress if you tend to focus too much on people. Step Three: put the grid in context It is important to recognise that the team leadership style is not always the most effective approach in every situation. If your company is in the midst of a merger or making some other significant changes, you should place a greater emphasis on people rather than on production. Likewise, when faced with financial hardships or physical risk, you should focus on tasks which achieve high productivity and efficiency.


Tools: The management styles grid (Blake and Mouton)

IV) Conclusion
The Blake and Mouton managerial grid is a practical and useful framework that can help you to think about your management style. The grid training approach has been used to train hundreds of thousands of people to develop the two key types of managerial behaviour.

Tools: The management styles grid (Blake and Mouton)


V) Bibliography
Blake, R.R. and Mouton, J.S., The Managerial Grid

http://www.nwlink.com/~donclark/leader/leadcon.html http://www.gridinternational.com/ http://www.valuebasedmanagement.net/ http://poynteronline.org/column.asp?id=34&aid=45239


Tools: Maslow’s five-stage Hierarchy of Needs

Maslow’s five-stage Hierarchy of Needs
I) Who was he?
Abraham Maslow was born in 1908 in Brooklyn, New York, and died in 1971. He was the first of seven children born to Jewish immigrants from Russia. His parents, wanting the best for their children in their new world, pushed him hard for academic success. Consequently, Maslow became very lonely, finding his refuge in books. To satisfy his parents, he first studied law at the City College of New York (CCNY). He married and moved to Wisconsin with his wife and two daughters to continue his studies at the University of Wisconsin. He attained a BA in 1930, an MA in 1931, and a PhD in 1934, all in psychology. A year after graduation, he returned to New York to work with E.L. Thorndike at Columbia, where Maslow became interested in research on humans and developed a motivational analysis model which he called the Hierarchy of Needs. Below is an illustration of this model and the driving forces that determine the needs according to Maslow’s research.
MASLOW’S HIERARCHY OF HUMAN NEEDS Self-Actualization Self-Fulfillment Prestige Status Self-Respect Affection Friendship Belonging Safety, Security Order, Stability Protection Air, Water, Food Shelter, Sex TENSION DRIVE



Tools: Maslow’s five-stage Hierarchy of Needs


II) Historical context
In 1943, Maslow published his first conceptualisation of the Human Hierarchy of Needs theory. Since then it has become one of the most popular and cited theories of human behaviour. In 1954, he tried to synthesise a large body of research related to human behaviour and motivation and posited the Hierarchy of Needs based on two groups, namely deficiency needs and growth needs. In 1971, Maslow differentiated growth needs of selfactualisation and beyond to include self-transcendence, which is connecting to something beyond ego, such as the need to help others, to find self-fulfilment and to realise one’s potential. Hierarchy of Needs structure Maslow’s Hierarchy of Needs is often depicted as a pyramid of five, and in some cases, six levels, the four lower levels being grouped together as deficiency needs, while the two upper levels are grouped as the being or growth needs. Basically, his theory states that within the deficiency needs, each lower need must be fulfilled before moving to the next higher level. Once each of those needs has been satisfied, the next need emerges. The following is one example of the Hierarchy of Needs pyramid, which illustrates the developmental sequence of the human needs, as revealed by Maslow’s research.


Tools: Maslow’s five-stage Hierarchy of Needs

III) Physiological needs
Physiological needs are pre-portend needs in that a person who lacks food, safety, love, and esteem would most likely hunger for food more than anything else. All capacities are channelled into satisfying hunger. The first need for existence is for the body to achieve wholeness. This is obtained from food, water and air. Human physiological needs take the highest priority. In view of this, an individual will re-prioritise needs, all other desires and capacities. Physiological needs can control thoughts and behaviour and, if deprived, can make people feel sick, pain, discomfort and, in the worst-case scenario, can cause death. Individuals at this level need to meet their basic requirements with food, health, shelter, clothes, sleep and exercise. From the business point of view, physiological needs include activity, stimulation, rest periods, work breaks, lunch breaks and wages. If deprived of these needs, employees become demotivated, depressed, non-productive, or worse, rebellious. When fulfilled, physiological needs cease to exist as determinants of human behaviour or are simply pushed into the background. However, if thwarted, they re-emerge to dominate human behaviour in the manner described above. Addressing physiological needs Maslow and other management scholars, such as Herzberg, suggested ways of responding to identified needs. While some physiological needs can be provided for naturally, e.g. air and water, some can only be satisfied following efforts either by the recipient or by the responsible people or authorities. Some governments and/or social authorities have put mechanisms in place to make sure that all their citizens have been provided for as regards their physiological needs. For example, in many countries social funds are set aside to address these needs as

Tools: Maslow’s five-stage Hierarchy of Needs


required, and many human rights organisations have undertaken to see that those responsible have met this requirement. If not, international laws are employed against those who default on human rights legislation. However, from a company or an organisation’s point of view, policies are drawn up to ensure that employees have been provided with the means to satisfy their physiological needs, such as: 1. Medical insurance 2. Adequate compensation 3. Health clubs 4. Rest periods 5. Labour safety devices 6. Efficient work scheduling 7. Canteens/vendor machines 8. Daycare centres 9. Comfortable working environment Companies such as SAS have put in place facilities which address the above.


Tools: Maslow’s five-stage Hierarchy of Needs

IV) Security needs
Once the physiological needs are answered, a new set of needs emerges, namely safety needs. This refers to the need for protection from any possible danger, for stability and freedom from fear and anxiety, and for a stable environment. Here, we can look at the following security categories: • Social security from violence and other aggression • Security of employment • Security of continuous revenues and resources • Moral and physiological security • Family security • Health security Social security This refers to situations of social unrest caused by lawlessness, and inadequate protection from social attacks such as riots, criminal behaviour, and political unrests leading to conflict. Security of employment This refers to the non-availability of employment opportunities. Most people living in the developing countries fall victim of such needs, while those in the developed world have been protected from this by their economies. Security of continuous revenues and resources People in this category require adequate and continuous supplies of funds to meet their basic living needs, such as food, shelter, clothes, health and the supply of other basic utilities. They seek adequate provision of resources to provide a comfortable standard of living, for example, homes, furniture, etc. Moral and physiological security In general, people want to live in an organised and decent society with high moral values that assures safety for all its members.

Tools: Maslow’s five-stage Hierarchy of Needs


Family security Most people are content if they feel assured about the safety of their families from all possible aggression and threats which may cause them harm or discomfort. Health security People find it easier to plan for the future if they can count on adequate health provisions both now and in the long term. We have seen from the hierarchy that the lowest unmet need determines motivation. Once we gratify a need, the next need dominates, and the search for its gratification organises our behaviour. It is in this context that Maslow’s model seeks to clarify that even as regards ourselves the hierarchy still prevails. Therefore, this means that people long for a safe, orderly, predictable and stable, lawful and organised environment which they can rely on. Depriving people of, or thwarting their safety needs may cause fear, anxiety, neurosis, crime waves, chronic social disorders and, in the worst-case scenario, war. Addressing security needs Generally speaking, government policies in most countries have addressed the possible security threats to their citizens in the form of regulations and legal protection. They have ministries and organisations such as the army, police and the courts to address such needs. Various societies have also put measures in place to maintain their acceptable norms, such as churches. Other companies and organisations have drawn up specific policies that provide employees with security of employment, revenue, family and health.


Tools: Maslow’s five-stage Hierarchy of Needs

Employment contracts with various conditions of service that specify progressive compensation structures, job security clauses as well as other benefits, such as health insurance and retirement benefits, go a long way to address employees’ relevant security needs. Some companies have other arrangements to meet special family needs, such as child daycare facilities, transport and work schedules, guidance and mentoring programmes, all of which can provide employees with some form of security. Trade unions have also been set up to address most of the employees’ safety needs discussed above.

Tools: Maslow’s five-stage Hierarchy of Needs


V ) The need to be loved and to belong
After fulfilling physiological and security needs, the need for love, acceptance and belonging emerges instinctively and demands attention. This involves the desire to fulfil emotionally based relationships in general, sexual relationships, and the need for companionship. People need to belong to a family, tribe or clan, or to groups such as religious bodies. They need to be loved by others and to be accepted by them. In the absence of such needs, people become increasingly susceptible to loneliness, anxiety and even depression. People abandoned emotionally or physically too often as infants subconsciously grow a personality sub-self who remains terrified of being abandoned throughout adulthood. Alternatively, their sub-self may try and protect them from further abandonment (subconsciously) by never bonding with anyone. Subconscious fear of rejection and abandonment is one root cause of relationship enmeshment, addiction and/or codependence. Addressing love needs Like the aforementioned, love needs are actionable, and satisfying them requires effort by the parties involved, with the exception of children who can only be loved to know and understand what love and acceptance is, and to be able to extend these gifts to other people in adulthood. However, most social policies have addressed this, for example, by setting up and organising social clubs, churches, sports facilities and homes for the abandoned.


Tools: Maslow’s five-stage Hierarchy of Needs

Companies and organisations as such have come up with numerous social activities, including clubs, team events, and social groups, which encourage employees to meet in a social context and bond with other employees. Some companies, like Virgin Airlines, even organise parties and holidays for groups of staff and their families.

Tools: Maslow’s five-stage Hierarchy of Needs


VI) Esteem needs
According to Maslow’s definition, there are two types of needs of this nature – the self-esteem resulting from competence or the mastery of tasks, and the attention or recognition gained from others. People at this level have a need for achievement, and to engage themselves so as to gain recognition and appreciation. They need to take part in activities that add value to themselves, they desire prestige and status, and need to feel adequate, to be respected, to gain self respect, and to respect others. Imbalances at this level can result in low self-esteem and inferiority complexes while, on the other hand, it can also result in an inflated sense of self and snobbishness. Addressing esteem needs Governments and local authorities worldwide have addressed this need through the provision of schools, universities and other technical colleges to provide skills to those aspiring to fulfil their need for esteem. However, organisations have also put in place incentives for career advancements and development, which entail additional responsibilities or, in some cases, financial compensation. Other organisations have reward and recognition arrangements such as awards, trophies, holiday vouchers, bonuses and gift vouchers for outstanding performance. In most companies, training and development is available to assist the promotion of ambitious people who aspire to achieve top-level posts. Self-actualisation Maslow defines self-actualisation as the desire to become everything one is capable of becoming. This implies that each


Tools: Maslow’s five-stage Hierarchy of Needs

person has unique talents and abilities which they long to develop and use to benefit the world if all their needs are fulfilled. At this level, people seek knowledge, peace, aesthetic experiences, etc. before becoming creative, energised, centred, focused and productive. They live up to their highest personal potential. Characteristics of self-actualising people Research has revealed that self-actualising people are those who: 1. Embrace the facts and realities of the world (including themselves) rather than denying or avoiding them 2. Are spontaneous in their ideas and actions 3. Have a system of morality that is fully internalised and independent of external authority 4. Judge others without prejudice, in a way that can be termed objective 5. Are realistically oriented 6. Are problem-centred rather than self-centred 7. Have an air of detachment and need privacy 8. Are autonomous and independent 9. Have a fresh appreciation of people and events rather than a stereotyped one 10. Have profound mystical or spiritual experiences (not necessarily religious) 11. Have intimate relationships with a few especially close people and tend to be profound. Most political and international organisations strive to win the attention of self-actualising people to improve their image and strengthen their position both locally and internationally. Within companies and organisations, people at this level are usually at the highest decision-making rank, and are involved in strategic planning, future expectations and board decisions, etc.

Tools: Maslow’s five-stage Hierarchy of Needs


VII) Transcendence needs
Maslow’s initial hierarchy ended at self-actualisation needs. However, with further research into the human forces behind motivation, he realised that people need to transcend and thus added it to the top of the hierarchy. He believed that people study and cultivate peak experiences as a way of providing a route to achieve personal growth, integration and fulfilment. Peak experiences are unifying and ego-transcending. Individuals most likely to have peak experiences are self-actualised, mature, healthy, and selffulfilled. He originally found the occurrence of peak experiences in individuals who had self-actualised, but later discovered that peak experiences also happened to non-actualisers, although not often.


Tools: Maslow’s five-stage Hierarchy of Needs

The following is an illustration which summarises Maslow’s model, as discussed above:
Self-actualization is not an endpoint, but a self-renewing need/drive

SelfActualization Needs Reaching your potential Independence Creativity Creativity Self-expression Esteem Needs Responsibility | Self-respect Recognition Sense of Accomplishment Sense of Competence Sense of Equity Social/Affiliation Needs Companionship | Acceptance Love and Affection | Group Membership Safety/Security Needs Security for Self and Possessions Avoidance of Risks | Avoidance of Harm Avoidance of Pain Physiological Needs Food | Clothing | Shelter Comfort | Self-preservation Needs that Herzberg theorized could be met by motivators

• Involvement in planning your work • Opportunity for growth and development • Creative work

• Freedom to make decisions • Status symbols • Recognition, awards • Challenging work • Opportunity for advancement • Sharing decision making • Opportunity to interact/network • Team-based work • Friendly co-workers • Fringe benefits • Job security • Sound policies and practices • Proper supervision • Safe working conditions • Adequate compensation • Rest periods • Labor-saving devices • Efficient work methods How the Workplace Can Meet These Needs

Needs that Herzberg theorized could be met by hygiene factors

From Verma, V.K., “Human Resource Skills for the Project Manager: The Human Aspects of Project Management”, Volume Two, Project Management Institute, 1995, p 61

Tools: Maslow’s five-stage Hierarchy of Needs


VIII) Linking Maslow’s theory to the consultant
What is the relevance of the above to the consultant? It indicates that the job of a consultant lies in the need to be fulfilled; therefore it is important to understand the needs of all clients before attempting to provide solutions to their problems. The consultant manager can use this to categorise clients/ customers according to their needs and their level in the hierarchy, and to provide solutions that will satisfy their needs accordingly. In this way the consultant will avoid providing the wrong solutions to the problems presented by his or her clients. Limitations of Maslow’s theory Marslow’s Hierarchy of Needs is an interesting theory, although its use in the organisation tends to work best at the individual level. Many factors vary greatly between individuals, especially when we move beyond the basic health and safety levels. What motivates one person can be very different from what motivates their peers or colleagues. It can therefore be very difficult to try and create a perfect motivator vehicle for an entire department or organisation, based solely on Maslow’s theory, as so many factors are involved. The theory generalises the motivational factors that influence the desire to fulfil the needs. It does not take account of the influence of an employee’s cultural and socio-economic level in various organisations.


Tools: Maslow’s five-stage Hierarchy of Needs

IX) Conclusion
In this era of accelerating change, the companies which are most likely to succeed are those that have developed the ability to anticipate and effectively manage the needs of a changing workforce. For this, companies such as SAS have put in place responsible policies regarding employee needs, such as health, maternity leave, child care, care of the elderly, social clubs and other work-based issues which are important to attract and retain the best employees on offer. Observing Marslow’s Hierarchy of Needs can be a useful way for an organisation to categorise and create for their employees an atmosphere that drives their performance towards selfactualisation, to serve customer needs appropriately, and to select the best suppliers at the right time.

Tools: Maslow’s five-stage Hierarchy of Needs


X) Bibliography
Buchanan, D. and Huczynski, A. (1997), “Organisational Behaviour: an Introductory Text”, 3rd edition, Prentice Hall Maslow, A. Harold (1943), “A Theory of Human Motivation”, in The Psychological Review, vol. 50 n° 4, pp 370-396 Maslow, A. Harold (1954), “Motivation and Personality”, New York, Harper & Row Mullins, L.J. (1996), “Management and Organisational Behaviour”, 4th edition, London, Pittman Publishing

http://www.xenodochy.org/ex/lists/maslow.html http://www.chiron.edu/whuitt/col/regsys/maslow.html http://www.tms.com.au/forum/DC Forum ID2/60.html http://www.chiron.valdosta.edu/whuitt/col/regeys/maslow.html http://www.deepermind.com/20maslow.html http://www.chacocanyon.com/essays/hierachyofneeds.html http://www.pateo.com?article6.html http://www.easytraining.com?motivation.htm http://www.change-management-toolbook.6m/too/satw.html


Tools: Maturity Matrix

Arthur D. Little Maturity Matrix

Competitive Position

Weak Embryonic







Industry Maturity

I) Introduction
It is not very clear whether the Hofer Schendel matrix or the A. D. Little matrix was developed and used first. Both of these approaches are said to have been published in 1978. Both are very similar to one another and could therefore be called variants of each other. They are both versions of the same theme. Very similar to the Hofer Schendel model, this one was developed by the consulting firm Arthur D. Little Inc. in the late 1970s:

Tools: Maturity Matrix


- The approach uses the dimensions of both environmental and business strength assessment. The environmental measure is an identification of the industry’s life cycle. The business strengths measure is a categorisation of the corporation’s strategic business units (SBUs) into one of six possible competitive positions. - One of the most important factors in this approach is to identify SBUs correctly. The natural business unit is made up of a product or product lines with identifiable independence from other products and product lines. - Arthur D. Little grouped the life cycle of an industry into four stages: embryonic, growth, mature and ageing. - The assessment of strategic competitive position is subjective and based on certain guidelines. There are five categories: dominant, strong, favourable, tenable and weak. - The assessment of industry maturity and competitive position is made on the basis of business market share, investment, and profitability or cash flow. - There are certain steps to follow when using the Arthur D. Little life-cycle approach: identifying the SBUs; classifying each SBU in terms of industry maturity; characterisation of each SBU’s competitive position; positioning the SBU on the Arthur D. Little matrix according to its classifications; selecting an appropriate strategic thrust; selecting an appropriate generic strategy; testing for financial and management feasibility; and analysing the risk involved. - Arthur D. Little described four types of natural thrusts from the positioning on the matrix. - Natural development: these strategies are appropriate when the SBU is in a mature industry and is competitive. The SBU positioned here deserves strong support. - Selective development: this refers to strategies that concentrate on industries that are attractive or on SBUs with competitive competencies.


Tools: Maturity Matrix

- Proved viability: refers to transitional strategy that cannot be sustained, so the situation must be changed. - Out: this is the strategy for withdrawal. The strategy for businesses lying here is to abandon or write off the business in such a way as to maximise the potential tax shelter. - Once the natural strategy and strategic thrust of the SBU has been determined, a generic strategy must be chosen. The generic strategies are stated in tactical terms and refer to operational planning. - Arthur D. Little Inc. incorporates some aspects of risk analysis to cross-check the suitability of the strategy that has been chosen. - Use of this matrix is claimed to help in reducing and balancing overall risk for the portfolio of SBUs. - The criticisms levelled at the Hofer Schendel market evolution matrix can be applied to the Arthur D. Little Inc. matrix as well. According to Michael Porter, such limitations are fourfold (see below). - A common analytical framework must be used for all the products or SBUs and the involvement of all principal functional managers is important.

Tools: Maturity Matrix


II) History
In the early 1970s, the Arab-Israeli conflict triggered an energy crisis. During the war, the Arab world imposed the 1973 oil embargo on the United States, Western Europe, and Japan. Suddenly, the great Western oil conglomerates faced a unified bloc of producers. The US economy remained stable until the 1970s, when the US suffered stagflation*. Richard Nixon took the United States out of the Bretton Woods system, and further government attempts to revive the economy failed. As the decade progressed, the situation worsened. During the oil crisis, companies had to revert to ways to make them more efficient, which is probably why the Arthur D. Little matrix was marketed at this time. *Stagflation, a portmanteau of the words stagnation and inflation, is a term in macroeconomics used to describe a period of high price inflation combined with slow output growth, high unemployment, or recession. «Stag» refers to a sluggish economy, while «flation» signifies rapidly rising consumer prices.


Tools: Maturity Matrix

III) What and how
The ADL Maturity Matrix or the Life Cycle Portfolio Matrix, commonly known as ADL, was developed by Arthur D. Little Inc., consultants in the late 1970s. It revolves around strategic business units (SBUs). The reason behind grouping similar businesses of a company into strategic business units is to reduce the complexity of the company being analysed. The ADL portfolio comprises four procedures: 1) Classification: classify all the businesses of a company into SBUs. In the ADL approach, the line of business or SBU is not specifically defined by a product or organisational unit. The strategist must identify discrete businesses by finding commonalties among products and business lines, using the following criteria as guidelines: common rivals, prices, customers, quality/style, substitutability and divestment or liquidation; 2) Positioning: position the SBUs in a matrix; 3) Evaluate: evaluate the conditions of the industries in which each SBU operates; 4) Decide: make a decision. ADL has 24 quadrants which will be explained in section 3. However, in some books they mention 20 quadrants while in ADL consultancy they use 32 quadrants. In the matrix below, only 24 quadrants are represented. The SBUs are classified in three different colours: green, yellow and red.

Tools: Maturity Matrix


Dominant Strong Favourable Tenable Weak Non-viable

G G G G Y R Embryonic

G G G Y R R Growth

G G Y R R R Maturity

G Y Y R R R Ageing

Figure 1: ADL Strategic Business Unit Model or Maturity Model

SBUs with high market share and an attractive market are classified as Green, and those in the middle are Yellow. Those in a less mature market, with low market share are classified as Red. Based on this classification, the strategist can move forward to propose appropriate plans, focus, penetration, divest, or diversification.


Tools: Maturity Matrix

IV) Competitive position of the ADL Maturity Matrix
4.1 Two main dimensions ADL has two main dimensions – competitive position and industry maturity. It is the combination of these two dimensions that will help in the decision-making process. 4.1.1 Competitive position Competitive position is driven by the sectors or segments in which a SBU operates. It depends on the product or service which the SBU markets and the market it accesses, i.e. product and place. 1. Dominant or Leading – this is the best position in the market, near monopoly or protected market. Examples of companies in this segment are Microsoft and Danone. 2. Strong – here companies have a lot of freedom since their position in an industry is comparatively powerful, e.g. Apple’s iPod products. A strong SBU can usually follow a strategy without consideration of rival counter moves. 3. Favourable – companies with a favourable position tend to have the competitive strengths of a fragmented market place. The industry is fragmented, so there is no clear leader among stronger rivals. 4. Tenable – here companies may face stronger competitors that have a favourable, strong or competitive position. Companies here do not have a sustainable competitive advantage. 5. Weak – this is an enviable position, but not many companies can move away from this position by implementing the right strategies. They are typically too small to be profitable or to survive over the long term. It could apply to a large firm which is suffering from previous mistakes or a critical weakness. 6. Non-viable – this position is not the best position to be in, so companies finding themselves here need to abandon this segment.

Tools: Maturity Matrix


4.1.2 Industry maturity The industry matrix is similar to product life cycle, but segments can also be considered. The AD Little company found that industry maturity is determined by and has an impact on observable business actions. Maturity of the industry can be tracked by assessing the level and rate of change in variables such as technology, breadth of product line, rate of growth compared to GNP growth, degree of market concentration and conditions for entry and exit. Business market share, investment and profitability or cash flow are also used as guidelines in assessing the industry maturity. AD Little grouped the life cycle of an industry into four stages: The Embryonic Stage – this is usually characterised by rapid growth, changes in technology, pursuit of new customers, and fragmented and changing shares of the market. The Growth Stage – is a still rapidly growing stage but customers, shares and technology are more stable and entry into this market is more difficult than at the earlier stage. The Mature Stage – is characterised by stability in known customers, technology and market share. The industry may still be competitive. The Ageing Stage – is characterised by a falling demand, a declining number of competitors and often a narrowing of the product line.


Tools: Maturity Matrix

4.2 Applying the Matrix By knowing the competitive position, the strategic position of a company can be established. Different strategies can be employed. In the table below, only 20 quadrants will be used as most of the time the non-viable segment will be eliminated. The life-cycle stage will be assessed for each business. This assessment is made on the basis of business market share, investment, and profitability or cash flow.
Competitive Position Dominant

Fast grow Start-up Probably profitable

Fast grow Cost leadership Renew Defend Position Profitable, probably not cash producer Fast grow Catch-up Attain cost leadership Differentiate Probably profitable Probably not cash producer

Defend position Cost leadership Renew Fast grow Profitable, net cash producer

Defend position Focus Renew Grow with industry Profitable, net cash producer


Start-up Differentiate Fast grow Maybe unprofitable, net cash borrower

Harvest, hand-in Find niche Hold niche Renew Differentiate, focus Grow with industry Profitable, net cash producer

Find niche Hold niche Hang-in Grow with industry Harvest Profitable, net cash producer

Tools: Maturity Matrix


Competitive Position Favourable

Start-up Differentiate Focus Fast grow Probably profitable, net cash borrower

Differentiate, focus Catch-up Grow with industry Marginally profitable, net cash borrower

Harvest, hand-in Find niche Hold niche Renew Differentiate, focus Grow with industry Moderately Profitable, net cash producer Harvest Turnaround Find niche Retrench Minimally profitable cash balance

Retrench Turnaround Moderately Profitable, cash flow balance


Start-up Grow with industry Focus Unprofitable, net cash borrower

Harvest, catch-up hold niche Hang-in Find niche Turnaround Focus Grow with industry Unprofitable, borrower or cash balance Turnaround Retrench Unprofitable, net cash borrower

Divest Retrench Phase-out Withdrawal Minimally profitable, cash balance


Find niche Catch-up Grow with industry Unprofitable, net cash borrower

Withdraw Divest Unprofitable Possibly net cash borrower

Withdraw Unprofitable

Figure 2: Strategic positioning in terms of market share/investment and profitability


Tools: Maturity Matrix

V) Model use and applicability
ADL can be used in the reduction and balancing of overall risk for the portfolio of strategic business units. It can be used, for example, when a firm wants to know what the investment potential of the businesses is likely to be – the industry maturity gives a good indication of this. This model may be usefully applied to assigning strategies to each SBU using the generic strategies. It is particularly useful for high-tech industries in which life cycles are relatively short and therefore if situational strategies are not employed, a strategic business unit may fall short of its goals. It can also be used to establish the desired corporate portfolio profile, to formulate specific business strategies for each SBU, and close any gap existing between corporate and SBU level. Likewise, the model can be used for competitor analysis at both the corporate and SBU level.

Tools: Maturity Matrix


VI) What Is wrong with this model?
The criticisms levelled at the Hofer Schendel market evolution matrix can be applied to this matrix as well. According to Michael Porter, these limitations are fourfold: 1. The length of the stages in the cycle can vary enormously from industry to industry and it is often not very clear what stage the industry is in. 2. Industry growth does not always go through the typical sshape described by Hofer and Schendel, Arthur D. Little and others. Some industries go straight from growth to decline and some industries revitalise themselves during a decline. Other industries do not have a slow introductory growth stage but enter directly into a sharp growth phase. 3. Firms can alter the life-cycle shape themselves through product innovation, creative marketing and repositioning. If a company takes the life cycle as a given, it can become a self fulfilling prophesy. 4. Competition at each stage of the life cycle is different in different industries. Porter argues that except for industry growth, there is little or no rationale for the reason competitive changes associated with the life cycle will occur. Nothing in the life cycle concept allows us to predict when it will hold true and when it will not. This, in turn, raises the concern of the appropriateness of the generic strategies at each position of the matrix.


Tools: Maturity Matrix

VII) Conclusion
The ADL matrix is synonymous with the product life cycle. At its best, the matrix helps to reduce complexity, enable the smooth sharing of resources across a company, and establish economies of scale. In the complex environment in which companies are evolving these days, the ADL matrix enables the definition of the industry or segment attractiveness. This assessment needs to be supplemented by an assessment of the company’s competitive position in this industry or segment. Combining these two assessments will allow development opportunities to be defined. Similar type of matrices can be used for technology assessment: - assessment of competitive impact of the technology: from base technology(mature/ageing) to emergent technology (embryonic/emerging); - assessment of the competitive position of the company in that technology (from weak to strong); - a combination of those two dimensions enables identification of a technology to develop or acquire. Notes: A base technology is one that is a threshold to entering the particular market a company is in – for example, the ability to bend sheet metal is a base technology for a car company. There is no competitive advantage to be derived from this type of technology. A key technology is one that currently provides a competitive advantage A pacing technology is one that will provide competitive advantage in five to ten years. An emerging technology is one in which it is unknown whether the technology will ever provide competitive advantage.

Tools: Maturity Matrix


VIII) Web-o-graphy
http://www.cipher-sys.com/hofhelp/ad%20little/ adlhelp.htm http://www.marketingteacher.com/Lessons/ lesson_a_d_little.htm http://www.valuebasedmanagement.net/ methods_adl_matrix.html


Tools: Myers Briggs Type Indicator

Myers Briggs Type Indicator
I) What is it?
Much has been written about the Myers Briggs Type Indicator® (MBTI) in its lifetime which spans more than 60 years; it has attracted both strong support and a lot of criticism. However, one thing is certain: today, MBTI is the most widely used personality test. To call it a test is arguable as nobody can ever fail it as there is no right or wrong personality type. MBTI assesses four core dimensions of human personality, modelled on Carl Jung’s framework of type preferences. Form M of the MBTI questionnaire has 93 items and provides the basic type, while Form Q has 144 items and provides not only the type, but also results for 20 facets of that type. According to Jung, people can be characterised depending on: - the way they are energised: extroverts, attuned to the external world of people and facts, and introverts, oriented towards their inner self and world of ideas (E/I type). - the perceptive capacities, seen in the way they perceive the world and gather information: using all their five senses or their intuition. Sensation is the perception of facts, while intuition is the perception of the unseen (S/N type). - the rational capacities, seen in the way they make decisions: thinking (analytical, deductive cognition), or feeling (synthetic, all-inclusive cognition) (T/F type). - the way people live their lives: in a planned, orderly way, aware of their environment, or in a flexible and spontaneous manner, perceiving the external world (J/P type). From the combination of mutually exclusive answers to the questionnaire, MBTI determines 16 personality types which have each been associated with characteristically common behaviours, preferred career choices, and preference over other

Tools: Myers Briggs Type Indicator


types. In spite of criticism about its lack of sound scientific grounding, the success of MBTI relies on the fact that it offers individuals a good glimpse of themselves, being a valuable tool in team-building, improving communication, and resolving personality-based conflict. Eight major personality types can be defined, each with its own name: ES(T/F)P = Adventurer: present-oriented, practical, spontaneous, quick IS(T/F)P = Navigator: present observer/recorder, facts-pastoriented EN(T/F)P = Explorer: future-oriented, seeking opportunities, change, external patterns IN(T/F)J = Visionary: future-oriented, far-reaching visions, holistic insights E(S/N)TJ = Pilot: analytical, direction, energy, organising, goals I(S/N)TP = Inventor: analytical, objective, detached, systems/ models E(S/N)FJ = Harmoniser: concerned by people needs, shared goals, caring, energy I(S/N)FP = Poet: flexible, tolerant, nurturing, values and ideas


Tools: Myers Briggs Type Indicator

II) When can it be used?
Personality tests are increasingly popular tools in workforce management, primarily for career development and teambuilding purposes. Major users of personality tests (as reported by product vendors) include government agencies, hospitals, schools, and vocational centres. Positions for which testing is used include management – in leadership and coaching programmes – customer service, sales, administration and clerical, with the purpose of ensuring higher rates of success on the job, for individuals and for teams. However attractive it may be, the MBTI is not a tool designed for hiring purposes, and its use in such circumstances is unethical (as there is no good or bad personality type). Moreover, it does not provide any indication of whether a candidate is fit for a job, from the point of view of skills, commitment, personal goals and loyalty to the company. As the publishers of the test say, MBTI is meant for inclusion, not for exclusion, its aim being to leverage better understanding and acceptance of oneself and others. Example in SMEs and/or other organisations Most Fortune 500 companies use MBTI for various purposes. Major success stories worldwide, as reported by CPP Inc, the publisher of MBTI, include St Luke’s Hospital and Health Network, Pennsylvania, AIM Investment Services, a subsidiary of the London-based financial giant AMVESCAP, Marriott, Texas Instruments and numerous others. Three of these cases are summarised below: - General Motors, where MBTI was a key part of an executive training programme between 1997 and 2000 and is still widely used today in workforce development. - The consulting company Ernst & Young used a series of leadership development seminars to help manage change

Tools: Myers Briggs Type Indicator


following restructuring, to align development to the Ernst & Young leadership values, and to encourage development of interpersonal skills. The restructuring brought together two considerable E&Y business units, with a workforce of approximately 1,200 and a leadership group (directors and partners) of around 100. The seminars were aimed at ensuring that the new leadership had clarity and consistency around the direction of the new business and that they were able to share information, and to motivate and empower the wider employee base. The seminars concentrated on interpersonal qualities, and MBTI (both phases) played a key role. Following the success of these seminars in 2004, in 2005 E&Y decided to run a communications-focused event for their Direction Setting Team, a group of eight senior partners comprising business and industry leaders. This new programme was also based on the MBTI framework and was deemed a success by participants. - Nokia, a global leader in mobile telecommunications, established a new Enterprise Solutions business to serve mobile business users with wireless terminals, and to offer improved internet security to its customers. Since wireless computing and internet access are at the cuttingedge for innovative Nokia, and as the business unit’s global workforce was widely dispersed, the company sought an approach to performance development for the new business unit. An assessment, training, and coaching structure was established to that end, blending flexibility and convenience of on-line access with personal coaching at key points. Participants were helped to define individual needs, preferences and values using various tools, including MBTI. The result was that people understood themselves better and took ownership of their careers.


Tools: Myers Briggs Type Indicator

In another example below, one personality type has been developed by showing its main characteristics: INTJ (Introverted, Intuitive, Thinking, Judging): “The Visionary” The INTJ person: - Self-confident, sometimes mistaken for arrogant by lessdecisive people. - INTJs know what they know and, more importantly, they know what they don’t know. - Also known as “system builders”, they possess the unusual combination of imagination and reliability. - Professionally, they are “pacesetters”, perfectionists, often disregarding authority. - They have an unusual independence of mind, which frees them from the constraints of authority and convention. - Typical career choices are the sciences and engineering. They can rise to high management positions if they are prepared to invest time in marketing their abilities. - Some of them manage to simulate some degree of surface conformism, to mask their inherent unconventionality. - Personal relations, especially romantic ones, can be their Achilles heel. - Many of them do not readily grasp social rituals, and they are usually extremely private people. - However, their assets in the interpersonal area include their intuitive abilities and their willingness to ‘work at’ a relationship. Those relations, which the INTJ ultimately establishes, are characterised by their robustness, stability and good communication.

Tools: Myers Briggs Type Indicator


The INTJ manager: - Architect of progress and ideas, he is interested in principles and meanings behind the events and elements. - Expecting a great deal of himself, he always feels restless and unfulfilled, tending to escalate standards for himself and others. As his level of achievement is very high, so is the need for rewards, mainly valuing rewards from other NT types who are either intellectual equals or superiors. - Involved in a creative process, he has enormous drive; but once the ‘castle’ is designed, he is more than willing to allow somebody else to take over. - He may not be aware of the feelings of others; intellectually oriented, this person will not value subordinates (or superiors!) who are not intellectually competent. - An excellent decision-maker within the organisation, the INTJ is a “portrait of ideas”. - He is comfortable in a management system focused on results rather than on procedures. - Finally, the INTJ may quickly leave an organisation (physically or psychologically) if his talents are not fully used.


Tools: Myers Briggs Type Indicator

III) Historical context
The idea of developing a psychological instrument based on Carl Gustav Jung’s theory of types and preferences emerged in 1941 in the US. The architects of the tool were Katharine Briggs and Isabel Myers, mother and daughter, both with a profound interest in applied psychology. The foundation of the tool was the idea that understanding oneself can help one appreciate his or her own strengths, gifts and potential developmental needs, as well as understand and appreciate differences among people. At that time, Myers and Briggs wanted to help the American war effort, in response to a call by the government for “more effective ways of doing things”. Characteristic of American society then was the desire for development and self-improvement, at both individual and social group level. However, as the Americans were focusing then on the quantifiable, and measurable, and were standardising everything from clothes sizes to industrial processes, the model proposed by Myers and Briggs was not embraced with enthusiasm, as Jung’s dimensions were difficult to measure. It took decades of experimental studies, data gathering, mapping on to statistical methods and development for MBTI to become recognised as a major personality assessment tool. However, it is worth mentioning that Jung’s theory is a fruit of modernism in Europe, along with numerous other theories exploring the human psyche. That (1890 until after WWII) was a period of introspection, of attempts to push aside current barriers of thought, behaviour and social order. European intellectuals were trying to explain what could possibly justify the horrors of war. Each of the theories revealed some aspects of human personality, none of them being 100% correct or complete, but they all led to a better understanding of humanity.

Tools: Myers Briggs Type Indicator


Types, therefore, do not explain all the behaviour of healthy humans, and certainly did not help the understanding of the dark ages of humanity. However, what a correct understanding of types – using MBTI – does successfully, is to sort preferences and help build successful teams. Each tool that has been subsequently developed based on these theories not only has to be administered by certified professionals, but the results have to be considered with care, in line with the purposes for which the tests have been designed.


Tools: Myers Briggs Type Indicator

IV) Bibliography
Mailleux and Associates, Brussels – “Leadership training”, 2005.

http://www.cpp.com/content/case_studies.asp http://www.adventureassoc.com/THRIVE/Fall/ corporatecasestudy.html http://www.myersbriggs.org/ http://www.petergeyer.com.au/library/thesis.php http://www.en.wikipedia.org/wiki/Modernism http://www.workforce.com/section/06/feature/23/57/09


Tools: The need for new competences...

The need for new competences...
In the figure below you can observe the different angles and the different viewpoints on management styles. Each of these styles is unique, but every manager belongs, more or less, to all of these. It is important to know which type you belong to, and even more so to see whether or not this is the one you thought you would be associated with.









At the top right, under the term INNOVATOR you will find the managers who love change, who are not afraid of new possibilities, and who think in a creative way. They are also capable of managing change, but hate people who resist it. This kind of manager looks around him- or herself, observes the new economic models and trends, and will thus be able to project the changes required. One thing is important for this type of management: stress-resistance and, above all, accepting to coexist with uncertainty and risk.

Tools: The need for new competences...


In that same upper-right quadrant we find another type of ‘hyperactive’, never-standing-still manager: the BROKER. This manager has a solid basis of external legitimacy, plus an enormous address book. He/She works as much as possible with external resources, and is persuasive, strong and influential. He/She meets people from outside in order to negotiate and convince them to work with him/her, thereby acting as the spokesperson for the unit and/or company. Still on the flexible side of management (the upper part of the circle), but this time on the left (collaborate) we find two complementary management styles: the MENTOR and the FACILITATOR. The facilitator is the manager who builds teams, whose work is built on collaboration. He/She loves giving people a boost and talking to them; they know their staff and understand their problems, wishes, and aspirations. Everything he/she does is process-oriented. This manager hates conflicts between staff members and tries to solve them, fights for cohesion, and very often achieves positive input and participation. Contact with people is the most important driver for the mentor who takes care of them. Personnel perceive this type of manager as someone who is helpful, considerate, sensitive, open and fair. This is the manager who really listens – on receiving a positive and legitimate request he/she stands behind them and helps them to acquire what they want. He/She takes care of staff training by identifying training opportunities, builds career plans and so on. One of the best things that can happen to young graduates is to be the protégés of this type of manager, because this will ensure they have a successful career in the future.


Tools: The need for new competences...

Slowly but surely we move down in the circle into the controlling part in the bottom half. As the name implies, there is no flexibility at all at this level. You have to choose what kind of manager you want to be. Are they less funny? The fact is that these managers are closer to the facts, since everything has to be measurable for the MONITOR and COORDINATOR. The monitor is expected to know everything that is going on in his/her department, unit or whatever level he/she is responsible for. For this manager there are two important points: 1. Are the people working for him/her doing so according to the rules, the procedures (internal as well as external)? 2. Is everybody, every unit, every department meeting its quotas. If not why not, and how can the gap be filled immediately. This question will also be essential if quotas are exceeded. It is easy to explain the roles played by the coordinator-manager to those among us who know the Thiem-Tom 10.5 S framework, and/or the McKinsey 7S framework. This is the person who takes care of the structure and flow of the system(s) and, as such, is completely reliable and ethically correct. He/She is an expert in scheduling, planning, organising and coordinating efforts. This manager should be able to handle crises, although here he/she fails in the roles played by the mentors and facilitators. This manager type is an expert in technology, housekeeping and logistics.

Tools: The need for new competences...


Finally, we come to the last quarter of the pie, which is least liked by the staff : the DIRECTOR and the PRODUCER. The director sets the goals and plans everything, and should be the one who defines problems and brings various alternatives. He/She is the one who assigns the roles different people have to play, writes the internal rules, sets out the politics to be followed and gives strict instructions. People with significant personal drive, an enormous amount of energy and who are super-motivated tend to be producers. Of course, they accept responsibility and complete assignments, although they do not accept that their own level of productivity may decline. This is why they often try to motivate collaborators to increase productivity and to always try to attain higher goals. They drive themselves and their staffs unrelentingly towards a stated objective. Maybe you have not been able to identify your exact type from the choice above, since the mix you represent is too complicated at the moment, but one thing is for sure – there are a lot of managers you can fit into each of the above-mentioned categories.


Tools: Open Space Technology

Open Space Technology
I) What is it?
Open Space Technology (OST) is a meeting process developed by Harrison Owen, an American consultant. An OST meeting is unique as it lacks the fundamental requirement of the traditional meeting: a predetermined agenda. In an OST meeting, issues are identified by participants, discussed in self-organised and self-facilitated work groups and moved forward by participants taking personal responsibility. An OST meeting generally unfolds as follows: 1. The group begins in a circle, with no tables in the room. One wall of the room is left blank, and in the centre of the circle is a pile of papers, pens and the facilitator. 2. The facilitator “opens the space” by explaining the process, stating the theme of the event and inviting those with a passion for a particular topic to come forward and place that topic on the agenda. 3. Participants come forward, identify a topic, write it on a large piece of paper, post it on the blank wall and choose a time and a place for the discussion to begin on this topic. 4. When there are no more topics, the group moves to the wall to see what is on offer and each participant decides how they will spend their own time for the duration of the meeting. 5. Groups are self-organised and meet at predetermined times and locations and self-facilitate. A report is generated and posted on a “news wall” in the room. During the course of the meeting, the news wall fills with reports of completed sessions. 6. At the conclusion of the meeting, the group reconvenes in a circle and shares their thoughts about the meeting. The reports are gathered up and copied for each participant. 7. In certain situations where concrete action plans are

Tools: Open Space Technology


desired, a “convergence” and action planning activity takes place, whereby participants prioritise actions and take personal responsibility for seeing them through. At the heart of an OST meeting are four principles and one law. These are commonly articulated as follows: 1. Whoever comes is the right person: people who show up are those who care. 2. Whatever happens is the only thing that could have happened: people focus on the moment. 3. When it starts is the right time: people’s genuine performance and creativity happens at anytime. 4. When it is over it is over: when ideas are generated, participants move on to another topic. The ‘Law of Two Feet’ is known as follows: “If you find yourself in a group where you are neither learning nor contributing, use your two feet and move to another group or somewhere where you can.” These principles and the Law of Two Feet give participants power, freedom and responsibility. The facilitator’s role shifts from controlling the process to “holding the space”, which can loosely be defined as ensuring that the space is fully open for creativity and freedom to unfold. The Law of Two Feet and the process of self-organisation create a powerful space in which participants are free to choose where they will go, what they will work on and how that work will be carried out. Surprisingly enough, OST has been embraced by some large organisations and has proved to generate leadership, structure, efficiency and effectiveness in amounts not generally seen in other meeting processes and facilitation tools.


Tools: Open Space Technology

II) Bibliography
Owen, Harrison; “Open Space Technology User’s Guide”, second edition, Berrett-Koehler Publishers, San Fransisco.

http://www.openspaceworld.org/ http://www.chriscorrigan.com/openspace/ http://www.ourfuture.com/osover.htm http://www.openspacetechnology.com/articles/oscowhat.html http://www.seedstraining.com/openspace/


Tools: The Pareto Principle

The Pareto Principle
I) History
Vilfredo Pareto Born on 15 July 1848, the son of a Genoese father and a French mother, Vilfredo Pareto was educated in both France and Italy. He is known for being one of the theorists who developed the field of microeconomics using tools such as indifference curves.1 Joseph Juran Born on 24 December 1904, Joseph Juran was known as a business and industrial quality ‘guru’. Dr Joseph Moses Juran was an industrial engineer and philanthropist who made significant contributions to management theory, human resource management and consulting. He wrote several books, and is known worldwide as one of the most important 20th century thinkers in quality management. Contribution to microeconomics As an economist Pareto made several important contributions to economics and sociology, especially in the study of income distribution and in the analysis of individual choice. He created the Pareto index2 which is a measure of the inequality of income distribution. Pareto’s Principle The Pareto Principle is the main focus of this section. In a nutshell, the background of this principle is that in 1906 he made the famous observation that 20% of the population owned 80% of the property in Italy. This was later generalised by Joseph M. Juran and others into the so-called Pareto Principle (also called the 80-20 rule), and generalised further to the concept of the Pareto distribution3. In his “Trattato di Sociologia Generale”

Tools: The Pareto Principle


(“The Treatise on General Sociology”) first published in English under the title “Mind and Society”, he put forward the first social cycle theory in sociology. Contribution to quality and management After World War II, Japan experienced a crisis in product quality. Japanese goods were considered cheap, easily broken and generally of extremely poor quality. The Japanese Union of Scientists and Engineers (JUSE) recognised these issues and invited Juran to Japan in 1954. He worked independently of W. Edwards Deming who focused on the use of statistical quality control. Juran, who concentrated on managing for quality, went to Japan in 1954 and started courses in quality management – this was a part of his contribution to the theory of Total Quality Management. His trainings primarily targeted top and middle management. In the United States, the idea that top and middle management needed training found much resistance. It would take some 20 years for the training to pay off in Japan. In the 1970s, Japanese products began to be seen as the leaders in quality, which would lead to a quality crisis in the United States in the 1980s. When Juran began his career in the 1920s, the principle focus in quality management was on the evaluation of manufactured product quality. The tools used were from the Bell system of sampling inspection plans (tables), and the Shewhart control charts. Frederick Winslow Taylor’s ideas dominated. Juran is widely credited for adding the human dimension to quality, which is why he pushed for the education and training of managers. For Juran, human relations problems were the problems to be isolated. Resistance to change – or in Juran’s terms cultural resistance – was the root cause of quality issues.


Tools: The Pareto Principle

In 1966, Juran promoted the Japanese idea of Quality Circles, and developed the ‘Juran’s trilogy’ which is an approach to crossfunctional management that is composed of three managerial processes: planning, control, and improvement. In 1979, he founded the Juran Institute. ‘Discovering’ the Pareto Principle It was in 1941 that Juran discovered the work of Vilfredo Pareto. Juran would expand the Pareto principle to quality issues (e.g. 80% of a problem is caused by 20% of the causes). This is also known as the vital few and the useful many.

General historic events
Intellectual development This can be seen as a period of enlightenment when many great theorists introuced their extremely revolutionary theories which still influence our lives today. For example, Max Weber’s sociology theories are still considered and applied today. According to Wikipedia Encyclopaedia: “he is considered one of the founders of the modern, anti-positivistic study of sociology and public administration. His major works deal with rationalisation in sociology of religion and government, but he also wrote much in the field of economics.” Another great theorist of this generation was Albert Einstein. He was the author of the general theory of relativity and made important contributions to the special theory of relativity, quantum mechanics, statistical mechanics, and cosmology. Setbacks As shown on the timeline, there were two main periods of war during this time – World War I 1914-1918, and World War II, 1940-1945. Periods of war are periods in which intellectual

Tools: The Pareto Principle


growth is slowed down, as resources are used for pure survival rather than for human development, which could be considered an item of luxury at this point in time. Technological development During this period there were many inventions related to both human and technological development. In 1930, the planet Pluto was discovered – this was a time when mankind tried to look beyond the known planets to place us in the universe. In 1941, the digital computer was discovered, which was one of the great steps forward in technology, as a result of which we now rely heavily on robotics and other computers to enhance our quality of life. Results In general, we can say that all these developments were major steps towards what we are today. We can also say that we now have a greater acceptance of softer theories and their implementation in corporate strategy and international governance. Of course, during this period there was not the same amount of tolerance toward soft theories, which is why this paper looks at two men behind this theory – one who created it and the other who popularised the theory. Pareto timeline In 1870, Vilfredo Pareto received an engineering degree from what is now the Polytechnic University of Turin. He started life in the Italian state railways, but in 1873 switched over to the iron-industry of his country. In 1886, he became a lecturer in economics and management at the University of Florence. Later, in 1893, he was appointed as a lecturer in economics at the University of Lausanne in Switzerland where he remained for


Tools: The Pareto Principle

the rest of his life. In 1906, he came up with the Pareto Principle while working as a professor in Switzerland. Just 17 years later he died, in 1923. In 1924, Joseph Moses Juran graduated with a Bachelor’s degree in electrical engineering; later he was also awarded a degree in law. After graduating, Juran joined Western Electric at the Hawthorne manufacturing plant in the US. His first role was in the inspection branch. In 1928, he was promoted to a managerial position and the following year became division chief. He published his first quality related article on mechanical engineering in 1935. In 1937, he moved up to Western Electric/ AT&T’s headquarters in New York. In 1941, he discovered the Pareto Principle, putting it in a different guise as the theory of the vital few and the trivial many. In 1966, he wrote his book “The Quality Cycles”, and in 1979 he founded the Juran Institute which encouraged the research and development of intelligence. We can see from this timeline that the two may have had the chance to meet, but never actually managed to.

The Pareto Principle
Background The principle was suggested by management thinker Joseph M. Juran. It was named after the Italian economist Vilfredo Pareto. Vilfredo Pareto’s theory Pareto observed that 80% of property in Italy was owned by 20% of the Italian population. He states that for many phenomena 80% of consequences stem from 20% of the causes. The assumption is that most of the results in any situation are

Tools: The Pareto Principle


determined by a small number of causes. Such a statement is testable, is likely to be approximately correct, and may be helpful in decision-making. Joseph Juran’s interpretation Since Joseph Juran adopted the idea, it might be better referred to as ‘Juran’s assumption’. He states the theory of the vital few and trivial many. He claims that results in any situation are determined by a small number of causes. Examples of this are, for example, file size distribution of internet traffic which uses the TCP protocol. There are many smaller files, and few larger ones. Another example could be the oil reserves in oil fields – there are a few large fields, but many small ones.


Indifference curves: An indifference curve is a graph showing combinations of goods to which a consumer is indifferent, that is, he or she has no preference for one combination over another. Indifference curves are a device to represent preferences and are used in choice theory. Pareto Index: “In economics, the Pareto index, named after the Italian economist and sociologist Vilfredo Pareto, is a measure of the breadth of income distribution. It is one of the parameters specifying a Pareto distribution and embodies the Pareto principle, which was an observation that 20% of the members of Italian society owned 80% of the wealth. One of the simplest characterisations of the Pareto distribution, when used to model the distribution of wealth, says that the proportion of the population whose wealth exceeds any positive number x > xm is where xm is the wealth of the poorest people (the subscript m stands for minimum). The Pareto Index is the parameter α. The larger the Pareto Index, the smaller the proportion of very wealthy people. ” The Pareto Distribution: named after the Italian economist Vilfredo Pareto, is a power law probability distribution found in a large number of real-world situations. Outside the field of economics it is at times referred to as the Bradford distribution.




Tools: The Pareto Principle

II) What is it?
Pareto Distribution In this paragraph, we will discuss the Law of Probability Distribution. The Pareto Distribution is a power law probability distribution found in a large number of real-world situations. Outside the field of economics, at times it is referred to as the Bradford distribution. Pareto originally used this distribution to describe the allocation of wealth among individuals since it seemed to show rather well the way that a larger portion of the wealth of any society is owned by a smaller percentage of the people in that society. It can be seen in the probability density function (PDF) graph below. This graph shows that the “probability” or fraction of the population f(x) that owns a small amount of wealth per person (x) is rather high, and then decreases steadily as wealth increases. This distribution is not limited to describing wealth or income distribution, but to many situations in which an equilibrium is found in the distribution of the “small” to the “large”.


k=3 k=2 k=1












Tools: The Pareto Principle


The Pareto Chart This is a technique used to identify quality problems according to their degree of importance. This chart shows that only a few quality problems are important, whereas many others are not crucial. In quality management, the logic behind Pareto’s Principle is that most quality problems are the result of only a few causes. The trick with this chart is to identify these causes. One way to use the Pareto analysis is to develop a chart that ranks the causes of poor quality in decreasing order based on the percentage of defects each has caused. Conclusion To understand Pareto’s Principle we should see it in its entirety. Within this, it is crucial to identify that Pareto was a microeconomist and from this viewpoint he found this consistency as regards the 20-80 rule. A quality guru, he discovered this theory and translated it into his time to give us the theory of the vital few and the trivial many. To look at the theory with a critical eye we have to say that it can be easily misinterpreted as it is such a simple concept which people tend to lose focus of. This is where the Pareto Chart can be valuable as it help us as to concentrate on certain elements in order to see the picture as a whole. The challenge is to find the right processes. For example, we can develop a chart that ranks the causes of poor quality in decreasing order, based on the percentage of defects each has caused. In this case a tally can be made of the number of defects that result from different causes. From this, a percentage of defects is taken which can be computed from the tally and logged in a Pareto chart. In general, one tends to find a few causes which account for most of the defect.


Tools: The Pareto Principle

We cannot forget the advantages that this theory has as it allows us to set our priorities straight and is easily adaptable as it: 1.Prioritises tasks, 2. Reminds a manager to focus on 20% that really matters, and 3. Is an easily adaptable and simply theory of the vital few and trivial many.

Tools: The Pareto Principle


III) Bibliography
Dan Reid, “Operations Management”, University of New Hampshire, Wiley Publishers, Danvers, 2002 Larry Ritzman, “Operations Management”, Prentice Hall, New Jersey, 2005

Juran Institute, http://www.juran.com/, 03/02/2006 Adrian Savage, “How useful is the Pareto Principle?”, http://www.lifehack.org/articles/lifehack/ how-useful-is-the-pareto-principle.html, 31/10/2005


Tools: PEST Analysis

PEST Analysis
I) What is PEST Analysis?
It is very important that an organisation considers its environment before beginning the marketing process. In fact, analysis of the environment should be continuous and should feed all aspects of planning. An organisation’s marketing environment comprises: - The internal environment: staff, office technology, wage and finance structure, etc.; - The micro-environment: external customers, agents and distributors, suppliers, competitors, etc.; - The macro-environment: political (and legal) forces, economic forces, social forces, and technological forces. These are known as PEST factors. • Political factors • Economic factors • Social factors • Technological factors

Tools: PEST Analysis


II) How to use the tool II a) Political factors
The political arena has a huge influence upon business regulation and the spending power of consumers and other business. Issues to be considered here include: - How stable is the political environment? - Will government policy influence laws that regulate or tax your business? - What is the government position on marketing ethics? - What is government policy on the economy? - Does the government have a view on culture and religion? - Is the government involved in trading agreements such as WTO, ASEAN, etc.?

II b) Economic factors
Marketers need to consider the state of a trading economy in both the short and the long term. This is especially true when planning for international marketing, when you need to look at: - Interest rates - The level of inflation/employment per capita - Long-term prospects for the economy, Gross Domestic Product (GDP) per capita, etc.

II c) Social factors
The social and cultural influences on business vary from country to country. It is very important that factors such as the following are considered: - What is the dominant religion? - What is the local attitude to foreign products and services?


Tools: PEST Analysis

- Does language impact upon the introduction of products into the markets? - How much time do consumers have for leisure? - What are the respective roles of men and women in society? - Do the population have a strong or weak opinion on ‘green’ issues?

II d) Technological factors
Technology is vital for competitive advantage, and is a major driver of globalisation. The following points should be considered: - Does technology enable products and services to be made more cheaply and to a better standard of quality? - Do the technologies offer consumers and businesses more innovative product services, such as internet banking, new generation mobile telephones, etc.? - Has distribution been changed by new technologies such as books, via the internet, auctions, etc.? - Does technology offer companies a new way to communicate with consumers, e.g. banner, Customer Relationship Management (CRM), etc.?

Tools: PEST Analysis


III) Why is PEST Analysis important?
PEST Analysis is a simple but important and widely used tool that helps us understand the big picture regarding the Political, Economic, Socio-Cultural and Technological environment in which we are operating. PEST is used by business leaders worldwide to build their vision of the future. It is important for the following main reasons: - First, by making effective use of PEST Analysis, you ensure that what you are doing is positively aligned to the powerful forces of change that are affecting our world. By taking advantage of change, you are much more likely to be successful than if your activities oppose it; - Secondly, the appropriate use of PEST Analysis will help you to avoid taking action that is doomed to failure for reasons beyond your control; and - Thirdly, PEST is useful when you start operating in a new country or region. Its use helps you to free yourself from subconscious assumptions, and to adapt quickly to the realities of the new environment.


Tools: PEST Analysis

IV) Conclusion
PEST Analysis is a useful tool for understanding the ‘big picture’ of the environment in which you are operating, and the opportunities and threats that lie within it. By understanding this environment, you can take advantage of those opportunities and minimise the threats. This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves. Other forms of PEST: PESTLE, PESTLIED, STEEPLE and SLEPT Some people prefer to employ different ‘flavours’ of PEST Analysis, using other factors for different situations. The variants are: • PESTLE/PESTEL: Political, Economic, Sociological, Technological, Legal, Environmental; • PESTLIED: Political, Economic, Social, Technological, Legal, International, Environmental, Demographic; • STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical; and • SLEPT: Social, Legal, Economic, Political, Technological

Tools: PEST Analysis


V) Bibliography
Hone, Jim, “Analysis of Vertebrate Pest Control (Cambridge Studies in Applied Ecology and Resource Management)

http://www.quickmba.com/strategy/pest/ http://www.netmba.com/strategy/pest/ http://marketingteacher.com/Lessons/lesson_PEST.htm http://www.valuebasedmanagement.net/methods_PEST_ analysis.html


Tools: Porter’s Five Forces

Porter’s Five Forces
I a) Historical context
Looking back at the past, we could draw various conclusions when considering global economy and competition. The period from 1960 until 1980 was described as a two-decade period that highlighted policies for “governmental protection and intervention rather then competition in domestic markets”. The distortion of market functions created scarcity and empowered monopolistic as well as oligopolistic structures that created further narrow centralisation of economic power. By reinforcing these types of market structures, foreign competition at that time was strongly discouraged and disinterested. Another interesting historical fact relating to this period is the continuous inflation problem followed by the high unemployment rate in the 70s in the US. Some say that supplies in the US were prevented from performing at their best due to a high taxation rate in the 1970s and 80s (18.7% of GDP). In addition, shortfalls occurred in food supplies. For instance, the 3% shortfall in grain supply in the early 70s led the US market to a two-year food crisis (1972 to 1974) and to an increase in grain price of up to 250%. One other factor that discouraged foreign suppliers in the 80s was a significant rise in international shipping costs which affected the global supply chain.

Tools: Porter’s Five Forces


I b) Need for Porter’s Five Force Model
What can be derived from the historical context is the fact that past competitive strategies were completely uninspiring for domestic as well as for foreign markets. There was a great need for stabilisation and proper evaluation of potential opportunities and competitive markets. As a result, at the beginning of the 80s, Michael E. Porter created a Five Force Model that responded to the needs of the global market place, and established five competitive forces which identify potential threats and opportunities either for ‘newcomers’ or for firms already in existence within an industry. Also, in the 1980s, economics was characterised by cyclical growth with the primary objectives of profitability and survival. “A prerequisite for these objectives was optimisation of strategy in relation to the external environment.” Inspired by this economic situation, Porter developed the Five Competitive Force Model that would later become an important tool for analysing industry structure in strategic processes. Porter felt the need to respond to the economic world of the 80s and explain why some industries were more profitable then others. He implied that the answer to this question lies in understanding the dynamics of competitive structure within an industry.


Tools: Porter’s Five Forces

I c) The inventor of the Five Force Model
Michael E. Porter was born in Ann Arbor, Michigan, in 1947. Famous as a football and baseball player in high school, in 1969 he graduated from Princeton University with high honours in aerospace and mechanical engineering. As a man of various interests, Porter also worked on strategy problems in fields different from those in his educational background – music and art. Throughout life, Professor Porter has centralised his focus on how to build a competitive advantage in a region or a firm. As the Bishop William Lawrence University Professor based at Harvard University, Michael E. Porter is now a “leading authority on competitive strategy and the competitiveness of economic development of nation states and regions”, as well as the leading contributor to strategic management theory. His strategic system is based on six aspects: - Five Competitive Forces analysis - Strategic groups - Value chain - Generic strategies - Market positioning - Porter’s clusters for regional economic development Professor Porter is the author of over 125 articles and 17 books, including “Competitive Strategy: Techniques for Analyzing Industries and competitors” which explains Porter’s Five Competitive Forces in his first book on strategy. The book was published in the 1980s and was translated into 19 languages. It is currently in its 63rd reprint.

Tools: Porter’s Five Forces


II) What
Porter’s Five Force Model is based on understanding industry’s structure and the way it changes. It focuses on corporate strategy that meets various opportunities and threats in an organisation’s external environment. The model discovers sources of competition within the industry and describes external effects due to the same (competition). Moreover, it teaches industry how to obtain competitive advantage in a highly competitive market. In order to better explain his understanding of competitive strategies in an industry/region, Porter identifies five forces that shape every industry in every market. This Five Force Model consists of the following forces: 1. Threat of new entrants 2. Availability of substitutes 3. Bargaining power of suppliers 4. Bargaining power of customers 5. Competitive rivalry within the industry

Threat of new entrants

Bargaining power of suppliers

Competitive rivalry within the industry

Bargaining power of customers

Threat of substitutes


Tools: Porter’s Five Forces

- Threat of new entrants: the higher the competition within an industry, the easier it is for other companies to enter. The more companies enter the industry, the higher production capacity becomes, which leads to further reduction of the product price and an increase in buyers’ bargaining power. In this case, the new entrants could affect the entire market environment. Hence, the level of effect the new entrants can have on the market depends on the level of barriers to entry. These entry barriers depend on following issues: - Economies of scale - Product differentiation - Capital requirements - Switching costs - Access to distribution channels - Cost disadvantages independent of scale - Government policy - Availability of substitutes: “Substitute products are goods or services from outside a given industry that perform similar or the same functions as the product that the industry produces.” Hence, if there are many of these substitutes on the market for a lower price but with same or similar functions to the industry’s product, consumers will easily switch to the substitute. On the other hand, there are some factors that could prevent the customer from doing this: - Brand loyalty - Close customer relationships - High switching costs - Substitute’s performance in relation to its price - Current trends

Tools: Porter’s Five Forces


- Bargaining power of suppliers: means that the suppliers have the power to bargain with an industry/buyer to obtain higher prices, delivery of larger quantities, threaten with lower quality, etc. This could happen as a consequence of: - High switching costs to another supplier/product - Domination of a few suppliers for the specific product - Non-existence of substitutes for the product - Supplier’s customers are fragmented - High product importance to the buyer/industry - Bargaining power of customers: depends on the extent to which a buyer can impose pressure on a product’s volumes and margins. Buyers’ tendency to ask for higher product quality and lower prices is constant, and yet unstoppable. The higher the bargaining power of buyers, the lower industry’s average profit. Buyers’ bargaining power increases when: - They purchase large volumes of industry’s output - There are low switching costs to another product - The supplier has high fixed costs - The product in not a priority for the buyer - Competitive rivalry within the industry: refers to the intensity of competition between the existing players. High competition within an industry could lead to lower product prices, lower margins, and therefore lower revenues for each competitor. Potential reasons for high competition within an industry are: - Large number of equally-balanced competitors - Slow industry growth - High fixed and/or storage costs - Lack of differentiation and low switching costs - High exit barriers


Tools: Porter’s Five Forces

As an interesting remark, I would like to mention the ‘extensions’ to Porter’s Five Force Model that were developed in the 90s and were considered to be an expansion of the model itself. The first one of the two extensions was introduced by Professor Brandenburger then later mastered by Professor John Nash; and we were able to see it in the movie A Beautiful Mind a few years ago – the so-called “Game Theory”! The second ‘extension’ was presented by Professor Nalebuf in the mid 90s and was called “complementors” – the sixth force. “Complementors are companies that sell a product (or products) that complement the product of another company by adding value to them; for example, Intel and Microsoft (Pentium processors and Windows).

Tools: Porter’s Five Forces


III) Advantages and disadvantages of the model
The advantages of the Five Force Model can be seen through three major analysis: statical, dynamical, and option analysis. By using the statical analysis we can compare the effect this model has on our own firm/organisation with that on a competitor’s organisation. Through dynamical analysis, the model discloses inside information about the potential attractiveness of the industry in the future (due to predictions of economical, technological, and political changes). Last but not least, through option analysis, the knowledge about the power of the competitive forces can be used to manipulate them in a way that could create a competitive position for the one that is manipulating them. Furthermore, another advantage I find interesting is the fact that the model displays a structured and systematic analysis of competitive situation and market structure, and can be applied to specific market segments, regions, companies, or industries. On the other hand, the model has some major disadvantages that have been reinforced by a number of various critiques over time. The major weakness of the model lies in its historical context. When Porter’s Five Force Model was created the economy was based on a cyclical growth and two major focuses – profitability and survival. Nowadays, the economy is focusing on much more than that and yet it is more complex and much more intense then the model itself assumes. In the 80s, the development of most industries was more or less predictable and stable while today industry development is booming on an almost daily basis. In addition, the model refers to classic perfect markets as well as to simple and static market structures, which is rarely the case in today’s highly dynamic world. Lastly, by being alerted by competition, the model ignores other strategies such as strategic alliances, information systems, electronics, etc. that could certainly affect the potential market place just as much.


Tools: Porter’s Five Forces

IV) Conclusion
In conclusion, I would like to briefly highlight some important things about the Five Force Model, such as the fact that it has become an important tool for analysing industry structure in strategic processes, especially in the 80s and mid-90s. It has also become a very helpful instrument in entry/competitive strategies as a starting point for further analysis in industries today. That said, some of the industries that use the Five Force Model as the first step are: the car industry (BMW, Mercedes Benz, etc.), the wine industry (California), the strawberry industry (Australia), the healthcare industry, the clothing industry (Marks & Spencer - UK), the tourism and aircraft industries, and many others. The model is also highly favoured by management consultants looking at the current industry/ organisation’s situation and simplified way of understanding it. However, the actual implementation of the model in the present business world is neither completely accurate for every industry nor widely applicable due to its limitations as regards considering new models and the present dynamics of diverse markets. Finally, this model is one that best served its purpose in the 1980s and 90s yet, today, the model is still good to be used as the first step of a complex industry analysis which is followed by a number of other more compound steps.

Tools: Porter’s Five Forces


V) Bibliography
Thomson, “Strategic Management”, sixth edition, International Student Edition, Hitt-Ireland-Hoskisson, South-Western, 2004, p 55-59 Stead W. Edward, Stead Jean Garner, “Sustainable Strategic Management”, M.E. Sharpe Inc, 2004, p 72-77

http://www.oecd.org/dataoecd/0/3/2434995.pdf http://home.att.net/~Resurgence/6Economy.htm http://www.fao.org/DOCREP/003/X6930E/X6930E02.htm http://dor.hbs.edu/fi_redirect.jhtml?facInfo=bio&facEmld=mp orter&loc=extn http://themanager.org/pdf/p5f.pdf http://en.wikipedia.org/wiki/Complementors


Tools: Porter’s three generic strategies

Porter’s three generic strategies
I) What are they?
Competitive forces: It is generally accepted that in a market economy there are five competitive forces: • Threat of new entrants into one’s industry • Bargaining power of customers and buyers • Bargaining power of suppliers • Substitute products or services • Intensity of rivalry among competitors Porter’s strategies: Porter presents three strategies for dealing with these competitive forces. His first strategy is to differentiate products. By making products or services different (that is “better” in the eyes of the customers), a firm may be able to charge higher prices and perhaps deter customers from moving to competitive products or services, lower the bargaining power of buyers, and so on. This is probably the most popular of his three strategies. Porter’s second strategy is to become the low-cost producer. He also warns that simply being one of the low-cost producers is not enough. Not being the lowest-cost producer causes a company to be stuck in the middle with no real competitive edge. The third strategy is to focus on a segment of a product line or a geographical market, i.e. finding a niche. Companies that focus on a niche can often serve their target market effectively and efficiently – at times being both the low-cost producer and having a highly differentiated product, too.

Tools: Porter’s three generic strategies


II) Marketing and financial performance of Porter’s strategy types
In terms of financial and marketing performance, Porter did not say one strategy type would perform more successfully than the others. A lot of research has been done recently into the area of product differentiation and low-cost production. The research findings are mixed regarding the comparative return on investment performance of differentiators and cost leaders. A number of studies have found differentiators achieve a higher return on investment performance than cost leaders, while other studies have found cost leaders achieving a higher return on investment performance than differentiators.


Tools: Porter’s three generic strategies

III) Research findings
Porter concentrated on the relationships between marketing and financial performance for each strategy type. The differentiation strategy, with its emphasis on innovation, is expected to perform well in terms of new markets and new products. The combination strategy is said by Porter to be rare in practice yet the proposition is that it will perform equally with differentiation and cost leadership strategies. There are a number of reasons put forward to support the possibility of combining both differentiation and cost leadership which are both not mutually exclusive dimensions. Cost leadership and differentiation are not at opposite ends of a strategy continuum because both strategies are subject to the same underlying cost trade-offs. Research has shown that Japanese competitors often achieve both low cost and differentiation. Another perceived logical reason for the viability of the combination strategy is that differentiation can lead to the attainment of a low-cost position.

Tools: Porter’s three generic strategies


IV) Bibliography
Barbara C.McNurlin, Ralph H. Spargue JR., “Information Systems Management in Practice” (7th Edition), Prentice Hall 2006 Philip Kotler, “Marketing Management Analysis, Planning, Implementation and Control” 2002 (7th edition)

http://grahambarlow.com/Porter_Strategy.pdf http://www.marketingteacher.com/Lessons/ lesson_generic_strategies.htm http://www.quickmba.com/strategy/porter.shtml http://www.cba.uc.edu/faculty/matthewsc/sbp/bpchecksheet/ sld008.htm



SERVQUAL – a tool to measure quality of service
Managers in the service sector are under increasing pressure to demonstrate that their services are customer-focused and that continuous performance improvement is being delivered. Given the financial and resource constraints under which service organisations must manage, it is essential that customer expectations are properly understood and measured and that, from the customer’s perspective, any gaps in service quality are identified. This information helps a manager to identify costeffective ways of closing service quality gaps and to prioritise which gaps to focus on – a critical decision when resources are scarce. While there have been efforts to study service quality, there has been no general agreement on how to measure the concept. Most of the work to date has attempted to use the SERVQUAL methodology (Parasuraman et al., 1985; 1988) in an effort to measure service quality (e.g. Brooks et al., 1999; Chaston, 1994; Edvardsson et al., 1997; Lings and Brooks, 1998; Reynoso and Moore, 1995; Young and Varble, 1997; Sahney et al., 2004). One of the aims of this analysis involves the use of the SERVQUAL instrument to ascertain any perceived or actual gaps between customer expectations and perceptions of the service offered. Another aim is to point out how the management of service improvement can become more logical and integrated with respect to the prioritised service-quality dimensions and their effects on increasing/decreasing service-quality gaps.



I) Overview of service quality
In an effort to better understand what SERVQUAL is, it should be positioned in the time when it was created, in the eighties. In the UK in particular, this decade is often referred to as «the decade that taste (or style) forgot», referring to questionable fashions, hairstyles and music. Other nicknames include “the me decade” and “the greed decade”, reflecting the economic and social climate. In the US and UK alike, «yuppie» entered the lexicon for the 1980s, referring to the well-publicised rise of a new middle class within the upper economic strata. College graduates in their late 30s/40s were entering the workplace in prestigious office professions, holding more purchasing power in trendy, luxurious goods. Despite the political and economic conservatism displayed amongst yuppies, and much of the general public, the 1980s was a time of social and cultural liberalism, changing the American character in the process and making people more sensitive to quality and more willing to have more service in their lives.
What is service?

Service is the unique performance between the buyer (customer) and the seller (service or product provider). Companies who provide better quality can secure a competitive edge.
What is service quality?

Service quality is a concept that has aroused considerable interest and debate in research literature because of the difficulties in both defining it and measuring it, with no overall consensus emerging on either (Wisniewski, 2001). There are a number of different ‘definitions’ as to what is meant by service quality. A commonly used one defines service quality as the extent to which a service meets a customer’s needs or expectations (Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng



et al., 1996; Wisniewski and Donnelly, 1996). Service quality can thus be defined as the difference between customer expectations of service and the perceived service. If expectations are greater than performance, then perceived quality is less than satisfactory resulting in customer dissatisfaction (Parasuraman et al., 1985; Lewis and Mitchell, 1990). One important question persists: why should service quality be measured? Measurement allows for comparison before and after changes, to identify quality-related problems, and to establish clear standards for service delivery. Edvardsen et al., (1994) state that, in their experience, the starting point in developing quality in services is analysis and measurement. The SERVQUAL approach, which is studied here, is the most common method for measuring service quality.
What is the difference between service quality and manufacturing quality?

Does the way to manage service quality differ from the way to manage manufacturing quality? The answer is no. They all belong to TQM: Total Quality Management consists of three basic management components – foundation, infrastructure, and processes. These are essential both in managing service quality and in manufacturing quality. The major goals of TQM are to have lower costs, higher revenues, and satisfied customers. Thus, managing service quality is similar to managing manufacturing quality (Eberhard E. Scheuing, 1993). However, service quality is more difficult to manage than manufacturing quality because service quality performance is more difficult to define, measure, and execute consistently, for the following reasons: - Service quality involves human behaviour. Products do not exhibit personalities, expectations, or cultural values, but service must consider human behaviour. - Each service may be different because it is not to be repeated



exactly, but most manufactured products are identical; unlike manufactured products, it is more difficult for a customer to have a concrete expectation for a service. - Compared to a product, a service is more complicated to design, deliver, and manage. - It is more difficult to forecast human behaviour in a service setting than to forecast product demand in a manufacturing setting. - Standards of performance require more human and qualitative factors when performing a service than when producing a product. - Service has less error margin than manufactured products because there is no lead time between service production and delivery (David A. Collier. 1994) If the company can provide better service quality, it can develop a unique capability which is valuable, rare, and difficult to imitate. Therefore, this company can gain and maintain a competitive advantage. The best way to achieve comparative advantage in the market is to provide better service quality. Excellent service quality can help companies to differentiate their products from those of their competitors. “Excelling at service/quality is also the toughest competitive strategy to implement and the most difficult for your competitors to duplicate” (Eberhard E. Scheuing, 1993).
How can service quality be measured?

Service quality has three unique features: intangibility, heterogeneity and inseparability from production and consumption (Parasuraman, Zeithaml and Berry, 1986). Product quality seems to be different than service quality because products are tangible, homogenous and standardised. The need for services differs from customer to customer with no situations reoccurring. Certain standard procedures can be



established in order to achieve a more homogenous service, but individual needs have to be considered to adapt services to their requirements. The inseparability of production and consumption adds more pressures to services since a mistake cannot be prevented from reaching the customer if it is part of the process.



SERVQUAL comprises a model developed by Parasuraman, Zeithaml and Berry (1986) which helps measure service quality via a series of steps. It concentrates on the notion of perceived quality. “Perceived quality refers to a consumer’s judgment about a product’s overall excellence. Perceived quality is more subjective than other definitions of quality” (Zeithaml). By means of research conducted with focus groups, the researchers asked about the characteristics a service provider should have in order to attain high quality. They established that all of the members of the focus group consistently had similar criteria. Using these findings, they created ten quality dimensions. Later, the researchers found that these ten dimensions overlapped and that customers could only distinguish five dimensions (Parasuraman, Zeithaml and Berry 1986). This perception of service quality builds from attitudes developed by customers over time towards a product or service. The other element present concerns consumer satisfaction that has actually been achieved by using a product or service. The level of service quality is the difference between the perceived service and the customer’s expectation. Therefore, it is necessary to establish a good method for evaluating service quality and to know what kind of service customers want. We can measure service quality in five dimensions: - Tangibles - Reliability - Responsiveness - Assurance - Empathy To gather information on both the customer’s expectations and perception, the researchers developed a survey so that a more complete scaling system could be achieved. For example, the survey could ask for a customer’s expectation about a particular aspect, rating it on a scale of 1 to 10, 10 being agrees strongly



with the statement and 1 disagrees strongly. Then, using the same rating system, a question could be asked on the customer’s perception. Having obtained both ratings, the difference between expectation and perception could be calculated . This was repeated with 90 pairs of items. Nowadays, there are no longer five dimensions as they have been changed and applied to today’s market and customer’s expectations. We now have ten dimensions, as we can see in the table below which regroups these ten new dimensions with a small selection of sample questions that could be asked of customers.



Quality dimension
Tangibles: Appearance of physical facilities, equipment, personnel, printed and visual materials

Sample of questions that could be asked
• Are facilities attractive? • Are staff dressed appropriately? • Are written materials easy to understand? • Does the technology look modern? • If a response is promised in a certain time, does it happen? • Are the exact client specifications followed? • Are statements or reports free of error? • Is service performed correctly the first time? • Is level of service the same at all times of day and for all members of staff? • When there is a problem, does the organisation respond to it quickly? • Are staff willing to answer client questions? • Are specific times for service accomplishments given to client? • Are public situations treated seriously and with care? • Can staff provide service without fumbling around? • Are the materials provided appropriate and up to date? • Can staff use the technology quickly and skillfully? • Do the staff appear to know what they are doing?

Reliability: Ability to perform promised service dependably and accurately

Responsiveness: Willingness to help customers to provide prompt service

Competence: Possession of required skill and knowledge to perform service



Quality dimension
Courtesy: Politeness, respect, consideration and friendliness of contact personnel

Sample of questions that could be asked
• Does staff member have a pleasant demeanour? • Do staff refrain from acting busy or being rude when clients ask questions? • Is the telephone manner of the staff considerate and polite? • Are staff considerate regarding the property and values of clients? • Does service organisation have a good reputation? • Do staff members refrain from pressuring the client? • Are responses accurate and consistent with other reliable sources? • Does the organisation guarantee its services? • Is it safe to enter the premises and use the equipment? • Are documents and other information provided for the client held securely? • Are user records of clients safe from unauthorised use? • Can clients be confident that services are provided correctly?

Credibility: Trustworthiness, credibility, honesty of the service provider

Security: Freedom from danger, risk, or doubt



Quality dimension

Sample of questions that could be asked

Access: • How easy is it to talk to Approachability and ease of contact knowledgeable staff member when client has a problem? • Is it easy to reach the appropriate staff person - in person? - by telephone? - by email? • Are service access points conveniently located? Communication: Listening to customers and acknowledging their comments; Keeping customers informed using a language they can understand • When client contacts service point, will staff listen to their problem and demonstrate understanding and concern? • Can staff explain clearly the various options available to a particular query? • Do staff avoid using technical jargon when speaking to clients? • Does a staff member call if a scheduled appointment will be missed? • Does someone on staff recognise regular clients and address them by name? • Do staff try to determine what client’s specific objectives are? • Is level of service and cost of service consistent with client requirements and budget? • Are service providers flexible enough to accommodate client’s schedule?

Understanding the customer: Making an effort to know customers and their needs



III) How the scale was determined?
Statistical tools were applied in order to achieve the different quality dimensions and to group the survey items into the abovementioned dimensions. The first phase eliminated items that had a low alpha coefficient. This tool was used by the researchers because previous studies established that this was a good way to examine the quality of an instrument. Factorial analysis was then performed to group the survey items into common categories. These categories had a low correlation between them, thus confirming that the dimensions extracted were correct. These dimensions were later defined as the following: availability, responsiveness, timeliness, completeness and pleasantness of support. Once the dimensions have been determined, calculations can be performed for each of them, considering mean and distribution. An example of this type of calculation could be a survey carried out with a customer who expects timeliness as regards products ordered on the internet. The customer’s experience with the company reveals that the products are consistently arriving past their promised date. In this case, perception registers lower than expectation, which will result in a negative value for their difference. The company could put greater effort into achieving the customer’s expectation thereby improving its service quality. The aim of these measures is to reduce the gap between expectations and perception to 0 at least. Then it is up to the company strategy to define in which dimension they would be more performing the best.



Conceptual model of service quality
Word of mouth Communications Personal needs Past experience

Expected service
Gap 5

Gap 6

Perceived service

Service delivery (including pre-and post contracts)
Gap 1 Gap 3 Gap 4

External communications to customers

Employee perceptions of consumer expectation

Translation of perceptions into service quality specifications
Gap 2

Gap 7

Management perceptions of consumer expectations

Model of service quality gaps (Parasuraman et al., 1985; Curry, 1999; Luk and Layton, 2002)



This model is useful to perform a gap analysis between each of the individual elements. The ideal of every organisation is to meet the expected service in full so that there is no gap between management perceptions and expected service. Brief explanation of gaps: - Gap 1: Knowledge Gap: The company works on creating processes and services that appeal to customers’ expected service. Companies have to be careful here as not accomplishing an expected service will have a negative effect on their sales. Excess satisfaction may bring additional costs to the company which may reduce profitability and may not be fully appreciated by the customer. - Gap 2: Standards Gap: The company must fully understand customers’ expectations so that specifications can be created to ensure that the services provided meet customers’ needs. - Gap 3: Delivery Gap: Although specifications have been created to ensure services meet customers’ needs, there may be a difference between the planned service and the actual delivery. This might be caused by variations in worker performance, inadequate training, or lack of communication by clients. - Gap 4: Communication Gap: Companies must make an effort to communicate the purpose of their services and attributes to make them appealing to customers. Miscommunication by the company or word of mouth from other customers can cause significant damage to efforts to approach customers and achieve satisfaction. - Gap 5: Expectation and Perception Gap: This final gap measures the difference that occurs when the customer uses a service which either meet or do not meet his/her expectations. If gaps are present in the preceding items, than the difference here will be great. The customer will



probably not use the service again and word of mouth to other customers will damage the company’s reputation. - Gap 6: Discrepancy between customer expectations and employees’ perceptions: as a result of differences in understanding customer expectations by front-line service providers. - Gap 7: Discrepancy between employees’ perceptions and management perceptions: as a result of differences in understanding customer expectations between managers and service providers. According to Brown and Bond (1995), «the gap model is one of the best received and most heuristically valuable contributions to the services literature». The model identifies seven key discrepancies or gaps relating to managerial perceptions of service quality, and tasks associated with service delivery to customers. The first six gaps (1, 2, 3, 4, 6 and 7) are identified as functions of the way in which service is delivered, whereas Gap 5 pertains to the customer and, as such, is considered to be the true measure of service quality. The gap on which the SERVQUAL methodology has influence is number 5. In the following, the SERVQUAL approach is demonstrated.



IV) Other tools and theories about service quality
Gronroos’ Dimensions

In 1990, Gronroos defined six criteria to measure service quality. He focused mainly on the functional rather than the technical issues (Gronroos, 1990), proposing dimensions which are close to those developed in the SERVQUAL model: - Professionalism and Skills - Attitudes and Behaviours - Accessibility and Flexibility - Reliability and Trustworthiness - Recovery - Reputation and Credibility Let us take a closer look at the dimensions that differ slightly or more from the SERVQUAL model. The first one is Accessibility and Flexibility. Gronroos also considered Recovery (how the company makes sure that the customer stays in control when something goes wrong, and how hard it works to find a new solution) as a full dimension when the SERVQUAL model only includes this idea in the Responsiveness dimension (Benjamin Schneider and Susan White, 2004). Some other authors gave credit to Gronroos’ Recovery dimension by estimating that when a complaining customer is persuaded to continue business with an organisation, he/she will become even more loyal than they were before the complaint (Fornell and Wernerfelt, 1987, 1988).
Gummesson’s Dimensions

In 1992, Gummesson revisited the SERVQUAL model by giving more credit to the tangible aspects of the service. He simply considered three dimensions for evaluating a service: - The service element - The tangibles element - The software or information technology elements



He then gives a list of criteria that the customers will use in order to estimate the quality of the service delivered. The criteria related to the service elements are very close to those in the SERVQUAL typology. The specificity of Gummesson’s research is the importance given to the tangibles elements. They can be estimated by three kinds of perspective: goods (reliability, performance, features, conformance, service ability, and aesthetics), psychological (visibility, mapping, affordability, constraints, customer control, knowledge needed, and feedback), and environmental (ambient factors, functionality, aesthetics, service personnel, other customers, other people). Finally, for software elements, the criteria focus on estimating how the IT elements help the customer (reliability, extendibility, integrity and user-friendliness). He gives us the example of an airline flight. The customers assess the quality by the service provided by the crew (service), the physical aircraft (tangibles), and the information technology (software), (Benjamin Schneider and Susan White, 2004). Gummesson’s views have been validated by other writers who also believe in the importance of tangible aspects of service. They definitely affect customer behaviour (White and Schneider, 2000), as well as their perceptions of the organisation (Zeithman and Bitner, 2000).
Content and form

Some researchers (Gumesson, 1992; Schneider and Bowen, 1995) tried to go further by proposing an adaptation of the SERVQUAL typology to each service industry. The SERVQUAL dimensions give a means of measuring the quality of the content of the service, which might not differ from one service to another. However, it does not make any difference in the form taken by this service. As an example, tangibles could refer to the facilities for a sport centre and to an aircraft for an airline company. Therefore, some



authors developed typologies similar to SERVQUAL in order to be closer to the reality of each industry. For example, instead of measuring the ability of the staff to answer questions, DineServ, the SERVQUAL adapted to the restaurant industry, measures the ability and willingness of the personnel to give information about the menu, the dishes, their ingredients, and methods of preparation (Stevens et al., 1995).



V) Conclusion
SERVQUAL is a useful tool to establish customers’ expectations and perceptions by grouping them into quality dimensions. Although SERVQUAL has a fixed structure, its development concept could be used to create scales adapted to particular service needs. This helps organisations focus on efforts to develop services that fit customers’ requirements. However, this is not the only tool available to assess the quality of a service. It has been proved that some other dimensions (such as recovery) or some other aspects (such as the tangibles) should also be taken into consideration. Knowing how customers perceive service quality and being able to measure service quality can benefit industry professionals in both quantitative and qualitative ways. The measurement of service quality can provide specific data that can be used in quality management; hence, service organisations would be able to monitor and maintain quality service. Assessing service quality and better understanding how various dimensions affect overall service quality would enable organisations to design the service delivery process efficiently. By identifying the strengths and weaknesses pertaining to the dimensions of service quality organisations can better allocate resources to provide better service and ultimately better service to external customers. Generally speaking, the study of service quality is both important and challenging. Future efforts should continue to advance the understanding of the concept and the means to measure and improve it.



VI) Bibliography
ASI Quality Systems (1992), Quality function deployment – Practitioner workshop, American Supplier Institute Inc., USA. Asubonteng, P., McCleary, K.J. and Swan, J.E. (1996), «SERVQUAL revisited: a critical review of service quality», Journal of Services Marketing, Vol. 10, No. 6, pp. 62-81. Brooks, R.F., Lings, I.N. and Botschen, M.A. (1999), «Internal marketing and customer drivenwavefronts», Service Industries Journal, Vol. 19, No. 4, pp. 49-67. Brown, S.W. and Bond, E.U. III (1995), «The internal/external framework and service quality: Toward theory in services marketing», Journal of Marketing Management, February, pp. 25-39. Eberhard E. Scheuing, and William F. Christopher, (1993), The Service Quality Handbook: pp. 3-16. David A. Collier, (1994), The Service/Quality Solution – Using Service Management to Gain Competitive Advantage: pp. 5-29. Eberhard E. Scheuing, and William F. Christopher, (1993), The Service Quality Handbook: p. 15. Parasuraman, Zeithaml and Berry, (1986), Servqual: A MultipleItem Scale for Measuring Customer Perceptions of Service Quality: p. 30. Gronroos (1990) Service Quality: Research Perspective Benjamin Schneider and Susan White (2004) Service Quality: Research Perspectives Michael D. Johnson, Anders Gustafsson, Tor Wallin Andreassen, Line Lervik, Jaesung Cha, The evolution and future of National Customer Satisfaction Index Models, July 2000.



Wisniewski, M., (2001), «Using SERVQUAL to assess customer satisfaction with public sector services», Managing Service Quality, Vol.11, No.6, pp. 380-388. Dotchin, J.A. and Oakland, J.S., (1994a), «Total quality management in services: Part 2 Service quality», International Journal of Quality & Reliability Management, Vol. 11, No. 3, pp. 27-42.

http://www.few.eur.nl/few/people/vaniwaarden/ publications/0009.pdf#search=’SERVQUAL’, http://www.12manage.com/methods_zeithaml_servqual_ fr.html http://www.nku.edu/~geigerr/Servqual/servqual.ppt


Tools: “The Seven Habits of Highly Effective People”

“The Seven Habits of Highly Effective People”
I) What is it? I a) The book
“The Seven Habits of Highly Effective People” was first published in 1989 by Simon & Schuster and has been a bestseller ever since, selling over 15 million copies in 38 languages. One of the reasons this book appeals to so many is that it is written in a very catching and non-academic but understandable form. In addition, it is de facto not a management book. It is a book that will be a ‘companion for life’ for anyone wanting to understand how to be an effective human being, and who enjoys living a very balanced and effective life. It should also be clear that “effective” is applicable to all possible walks of life, be it business, family, social, religion, etc. In 2002, Forbes named it as one of the ten most influential management books ever.

I b) The author
Stephen R. Covey (figure 1), born 24 October 1932 in Salt Lake City, Utah, is the author of the bestseller “The Seven Habits of Highly Effective People”. Covey is the founder of the Covey Leadership Center in Salt Lake City, Utah, and is a partner in the Franklin-Covey Corporation, which makes planners and organisers and, in addition, performs (time) management consulting focusing on a principle-centred approach to leadership and management. Covey has a BSc in Business Administration from University of Utah in Salt Lake City, an MBA in Business Administration from Harvard University, and a DRE in Church History and Doctorate from Brigham Young University. He has spent most of his career at Brigham University as professor of organisational behaviour and business management. Covey has

Tools: “The Seven Habits of Highly Effective People”


received the Thomas More College Medallion for continuing service to humanity and, in addition, has been awarded four honorary doctorate degrees. Covey published follow-up titles to The Seven Habits which are meant both to add to the book and to form a cohesive philosophy on personal, principle-based leadership. The author tries to help others bring proficiency into their lives, especially within the context of business and management. However, his books also emphasise family and personal leadership. He is read by a wide-ranging audience, from highpowered executives to ordinary people leading ordinary lives. According to Covey, The Seven Habits is not based on original thoughts. He does not claim to be the originator of the ideas but simply to have found a framework and a language for articulating the timeless principles embedded in the habits. He claims they are to be found in all the major world religions. He believes the principles themselves to be “self-evident”, that is, “you cannot really argue against them”. His view is that all highly effective people, and enduringly effective organisations, have utilised the seven habits, to a greater or lesser extent, to sustain their success. Covey says that the habits are “common knowledge”, but adds that they are not necessarily “common practice”. In fact, it could be argued that the habits actually run counter to basic human nature. By our very nature, we are reactive creatures and are inclined to act mainly out of self-interest. But also, as human beings, we are capable of much higher thoughts and actions and, by working hard to internalise these seven habits we are able to develop a proactive attitude. By so doing, we can take charge of our own destinies and are capable of exerting influence on other people for the collective good.


Tools: “The Seven Habits of Highly Effective People”

Critics say Covey’s methods offer a “quick fix” that dissipates when measured against the reality of day-to-day life. When confronted with situations that contain elements that are outside the sphere of their personal influence, people can become frustrated at the failure of the habits to place situations within their sphere of control or circle of influence, to use Covey’s words. In conclusion, Covey is sometimes said to preach impractical, idealistic methods. A summary of critical notes can be found in section 5.1 of this book. The late 1980s and management studies In management, the late 1980s was an era during which scientists and authors focused on so-called Quality Circles and Participatory Management techniques such as Total Quality Management, Continuous Quality Improvement (e.g. Kaizen) and Continuous Process Improvements.

Tools: “The Seven Habits of Highly Effective People”


II) The road to interdependence
Figure 1 illustrates the ultimate purpose of Covey’s framework. A dependent person can become an interdependent person by exercising and living according to the seven habits. Habits 1, 2 and 3 focus predominantly on the self. Exercising these habits will bring the user his or her “private victory”, having become liberated in a sense that he or she is independent rather than dependent. This level acts as the basis for the next ‘battle’ – the so-called “public victory” which puts emphasis on the self in relation to others. Exercising habits 4, 5 and 6 will ultimately bring a person his or her public victory. In order to remain at the highest level in Covey’s framework, a person needs to “sharpen the saw”, which is explained in habit 7 of the framework.
7 Sharpen saw

Understand Synergize 5 6 PUBLIC VICTORY Think win-win 4

3 1st things 1st PRIVATE VICTORY 1 2 Be Proactive End in mind Dependence

Figure 1: From dependence to interdependence


Tools: “The Seven Habits of Highly Effective People”

The P/PC balance The P/PC balance is a paradigm of effectiveness which Covey explains by telling us the fable of the ‘Goose and the Golden Egg’. This is the story of a poor farmer who one day finds a golden egg in his basket of goose eggs. During the following days, weeks and months this stroke of luck repeats itself again and again. The farmer becomes incredibly rich but with his wealth comes greed and one day he decides to kill the goose to get all the eggs at once. Of course, he finds there are no eggs, and thus no future wealth. In this story, the eggs are referred to as the Product (P). The goose, on the other hand, is the Production Capacity (PC). Covey explains that it is necessary to be good to the PC (the goose) in order to get the desired P (the golden eggs each morning). This can be extrapolated to our personal relationships and business lives. Effectiveness lies in the balance, which Covey calls the P/PC balance. Useful definitions To read and understand the book well, it is helpful to understand the following definitions: • hab-it (hab’it), n. [OFr. < L. habitus, pp. of habere, to have], ... 4. characteristic condition of mind or body; disposition. 5. a thing done often and, hence, easily; practice; custom. 6. a usual way of doing • ef-fec-tive (a-fek’tiv, i-), adj. 1. having an effect. 2. producing a desired result; efficient. 3. operative; in effect. 4. making a striking impression; impressive. 5. equipped and ready for combat, as a soldier or ship • syn-ergy (syn-er’gie) n. 1. The interaction of two or more agents or forces so that their combined effect is greater than the sum of their individual effects. 2. cooperative interaction among groups, especially among the acquired subsidiaries or merged parts of a corporation, that creates an enhanced combined effect

Tools: “The Seven Habits of Highly Effective People”


• par-a-digm (par’e-dim, -dim’), n. [<Fr. < LL. GR < para, beside + deigma example < deiknynai, to show], a pattern, example, or model • dependent (di-pen’dent), adj. 1. hanging down. 2. influenced, controlled, or determined by something else. 3. relying (on someone or something) for support or aid. 4. subordinate • independent (in’di-pen’dent), adj. 1. free from the influence or control of others; self-determined, self-reliant, etc. • interdependence (in’ter-di-pen’dens),n. dependence on each other; mutual dependence. Source: “Webster’s new world dictionary of the American language”


Tools: “The Seven Habits of Highly Effective People”

III) The Private Victory: from dependence towards independence
Habit 1: Be proactive

Proactivity and our social mirror Proactivity means that in normal life we, as human beings, are ultimately responsible for our own lives. Normal life is mentioned because of course there are situations where this responsibility is taken away from us and given to others. Covey differentiates between reactive, i.e. people driven by feelings, circumstances, conditions, the environment, and proactive people who are driven by carefully considered, selected and internalised values. In his book, Covey mentions the Austrian psychiatrist Viktor Emil Frankl (1905-1997), a follower of Sigmund Freud1 and a survivor of a World War II concentration camp, who recognised that “between stimulus and response, man has the freedom to choose”. Although Frankl’s outlook on life was so restricted during his time in the concentration camp, he realised that the Nazis could not take away his sense of imagination (the ability to create something in our minds beyond our present reality), conscience (an inner awareness of right and wrong), and independent will (the ability to act based on self-awareness). In addition, Covey mentions that a person has to overcome his or her sense of determinism, be it genetic determinism (you inherit your personal tendencies and character), psychic determinism (your upbringing and childhood experiences mould you) or environmental determinism (environmental factors are responsible). He labels this our “social mirror”. Being proactive means taking the initiative ourselves. Taking the initiative, however, does not mean being pushy, obnoxious, or aggressive. But it does mean recognising our responsibility to make things happen.


(1856-1939), the wellknown godfather of (the) psychoanalysis

Tools: “The Seven Habits of Highly Effective People”


Circle of Concern and Circle of Influence When a person has to answer the question “Where do you focus your time and energy?” that person will come up with an answer that satisfies his or her concern. Covey refers to the possible outcome as an individual’s Circle of Concern. A part of this circle is known as the Circle of Influence. Figure 2 illustrates this concept:
le of Concer


Circle of influence

Circ rn le of Conce

Figure 2: The Circle of Concern and the Circle of Influence

The distinction between the two circles is easy to see. If we can do something about it, it lies within our Circle of Influence. If we cannot then it lies within our Circle of Concern. For example, the current bird flu in Asia concerns people although we cannot do much about it. But, if our neighbour beats his wife up, we can do something about that. Proactive people focus their efforts in the Circle of Influence. Reactive people focus their efforts in the Circle of Concern. Changing our habits, changing our methods of influence and changing the way we see our no-control problems are all within our Circle of Influence. The ability to make and keep commitments and promises is at the heart of our Circle of Influence. Covey also mentions that by acting and behaving proactively we learn to expand our Circle of Influence.


Tools: “The Seven Habits of Highly Effective People”

Habit 2: Begin with the end in mind

All things are created twice All things created by human beings are created twice. First, there is the mental or first creation; then there is the physical or second creation. Covey mentions that by beginning with the end in mind is to begin with the image of the end of your life as the frame of reference by which everything else is measured. We may be busy, we may be efficient, but we will only be effective if we begin with the end in mind. There is a first creation to every part of our lives. We are either the second creation of our own proactive creation, or we are the second creation of other people’s agendas, of circumstances, or of past habits. This refers back to Habit 1, be proactive. Leadership and management Habit 2 is based on principles of personal leadership, which means that leadership is the first creation. Management is the second creation. Covey states that management is doing things right, while leadership is doing the right things. According to the second habit, people should not get straight into managing with efficiency but should start by setting and achieving goals before even clarifying the values. Covey labels this as “re-scripting”. A tool for habit 2: a personal mission statement The most effective way to begin with the end in mind is to develop a personal mission statement. The key to the ability to change is a changeless sense of who you are, what you are about, and what you value. Once you have a sense of mission, you have the essence of your own proactivity; the vision and values which direct your life, and the basic direction from which you set your goals.

Tools: “The Seven Habits of Highly Effective People”


At the centre of our lives Whatever is at the centre of our lives will be the source of our security, guidance, wisdom, and power. Covey mentions possible different centres which should all be partly at the centre of our lives but not the centre de facto. He mentions, for example: • Spouse centredness • Family centredness • Money centredness • Work centredness • Possession centredness • Pleasure centredness • Friend/enemy centredness • Church centredness • Self centredness The Principal Centre Covey calls the Principle Centre the right centre. Our lives need to be centred on correct principles – deep, fundamental truths, classic truths, and generic common denominators. As a principle-centred person, one tries to stand apart from the emotions of situations and from other factors to evaluate the options.


Tools: “The Seven Habits of Highly Effective People”

Habit 3: put first things first

Habit 3 is the second or physical creation mentioned in habit 2. It is the exercise of independent will towards becoming principle centred. Things that matter should never be at the mercy of things that do not matter. Effective management is putting first things first. Covey offers us the following tool in table 1 which will help us to put first things first.

Urgent Important Quadrant 1. Activities: crises, deadlines, pressing problems, deadline-driven projects

Not urgent Quadrant 2. Activities: prevention, PC activities, relationship building, recognising new opportunities, planning, recreation Quadrant 4. Activities: trivia, busy work, some mails, some calls, time-wasters, pleasant activities

Not important

Quadrant 3. Activities: interruptions, some calls – calls – reports – meetings. Proximate, pressing matters, popular activities

Table 1: Tool for understanding how to prioritise in life

Tools: “The Seven Habits of Highly Effective People”


Urgent matters are usually visible, and demand instant reaction. Important matters contribute to our mission. Covey gives the following guidelines with respect to the four quadrants defined in table 1: • Effective people limit the time spent in Quadrant 1 • Effective people stay out of Quadrants 3 and 4 • Quadrant 2 is the heart of effective personal management. Effective people invest more time in Quadrant 2 activities. The only way to get time for Quadrant 2 is to limit time spent in Quadrants 3 and 4. If this does not work, Covey says you are either: • Unable to prioritise • Unable to organise around those priorities, or • You suffer from a lack of discipline to execute Quadrant 2 activities. Time management Time management, according to Covey, comes in four stages: 1. Notes and checklists – earliest form, limited, no dates, priorities and no focus on Quadrant 2 activities 2. Calendars and appointment books – later form, limited, no priorities and no focus on Quadrant 2 activities 3. Prioritisation – clarifying values, comparing the relative worth of activities, later form, partially limited due to the lack of focus on Quadrant 2 activities 4. Preserving and enhancing relationships and accomplishing results – incorporates all of the above including Quadrant 2 activities.


Tools: “The Seven Habits of Highly Effective People”

How do Quadrant 2 managers manage?

First, it is necessary to identify the key roles it takes, then to select the goals to be pursued while acting in that role. Then an efficient Quadrant 2 manager schedules his tasks and during their execution adapts on a daily basis, i.e. reiterates this process whilst focusing at all times on the people, the PC one interacts with. In addition, Covey mentions that time management is still mainly practised on a daily basis, i.e. by making a plan for the day ahead. In this respect, he advises the reader to make a weekly plan, too, which is not the custom for most people. In addition, Covey refers to the importance of balancing one’s life, i.e. success should be achieved in all the various roles in life, e.g. as manager in the office, as husband, father and fellow Christian in one’s religious society. He argues that it is important to be constantly aware of one’s personal mission statement, and preferably to have it portable and always within reach. The accomplishment of tasks is done through delegation, either to time or to other people. Covey distinguishes between so-called gofer delegation and stewardship. Gofer delegation means: “Go for this, go for that, do this, do that, and tell me when it’s done”. Gofer delegation often results in one-on-one supervision of methods and is, in effect, ineffective. Stewardship delegation, on the other hand, is focused on results rather than methods. It gives people a choice of method and makes them responsible for the results. Stewardship delegation involves clear, upfront mutual understanding and commitment regarding expectations in five areas: 1. Desired results 2. Guidelines 3. Resources 4. Accountability 5. Consequences

Tools: “The Seven Habits of Highly Effective People”


In essence, stewardship means a job with trust; as a manager you say: “I trust you to do the job, to get it done”.
Habits 1, 2 , 3 and management consultancy Habit 1 (be proactive) and management consultancy

Being a management consultant often means that you are in the centre of a corporate force field. On the one hand, there is a request and desire for some form of change but, on the other hand there is resistance simply because change and resistance are implicit, they go hand in hand. Bearing this force field in mind, a consultant has to adopt the habit of being proactive simply because otherwise he or she would float somewhere in the middle of this force field, not being able to make an effective change irrespective of the direction he eventually chooses. The reactive consultant will not have an effect or will follow the path of least resistance. In Covey’s words, the consultant responds in a deterministic way, to the path of least effort. In my opinion, sound backing, training and corporate beliefs are vital in this respect for a management consultant. People who end up with the correct solutions are the proactive ones who, based on their personal and corporate baggage, provide solutions to problems, who take the initiative to do whatever lies in their reach to get the mission done. Sound corporate backing, training and corporate beliefs increase a consultant’s Circle of Influence, the consultant’s eventual objective.
Habit 2 (begin with the end in mind) and management consultancy

As a management consultant you need the ability to always see the end, the desired result. Beginning with the end in mind means a management consultant needs to focus on a solution, break it down into day-to-day tasks while always keeping the link with the goal. No task, no solution, no advice is of any effective


Tools: “The Seven Habits of Highly Effective People”

use if the link between the end, the mission’s goal and the task at hand is lost. In that respect, I personally believe in lots of early investment in clarifying goals and ultimately defining a scope, and creating boundaries so that you are able to clearly define the desired result. From personal experience I see this process as something that is usually experienced with a sense of reluctance. Stakeholders do not have the full picture and certainly think they have better ways of spending their time in the early stages of a change process or project. In my opinion, a strong consultant needs to break down this barrier of reluctance and make sure expectations are well synchronised.
Habit 3 (put first things first) and management consultancy

Time management is crucial to a consultant – rates are high and output is expected. This means there is pressure on management consultants to use their time very effectively. By identifying regularly where you as a consultant are spending time, you can learn to steer and correct ineffectiveness. In addition, using Covey’s time-management grid, a management consultant can avoid being trapped in time-wasting activities. Quadrant 2 activities are sometimes not easy to apply to junior management consultants since their mission is broken down and defined by others who expect instant high-frequency results. As a junior consultant, I would expect you to be spending a lot of time in Quadrant 1, simply because you have no choice. However, as you move towards a management role as a consultant, there should be a greater emphasis on Quadrant 2 activities. Keep the P/PC balance for your own staff and invest time in external relations with the customer to sustain a high level of commitment from both sides and simply to recognise new opportunities.

Tools: “The Seven Habits of Highly Effective People”


The Public Victory: from independence towards interdependence

The emotional bank account The emotional bank account is a metaphor which quantifies the amount of trust that has been built up during a relationship. One can make deposits in another person’s emotional bank account by courtesy, kindness, honesty and by keeping commitments. In this way a precious reserve can be built up in another person’s emotional bank account. But by being in the habit of showing discourtesy, disrespect, cutting the other person off, etc., you are actually making a withdrawal from someone else’s emotional bank account. This is the way to lose trust and flexibility with the other person. According to Covey, our most constant relationships, in particular, such as those with spouses or partners, require our most constant deposits. Covey mentions six major deposits which can help you to make deposits in another person’s emotional bank account: 1. Understanding the individual 2. Attending to little things 3. Keeping commitments 4. Clarifying expectations 5. Showing personal integrity 6. Apologising sincerely when you make a withdrawal
Habit 4: Think win-win

The six paradigms of human interaction 1. Win-win – A frame of mind and heart that constantly looks for agreements or solutions that are mutually beneficial. Covey calls this a belief in a third alternative – a better way. 2. Win-lose – It says “I win and you lose” or “I get my way and you don’t get yours”. Covey states that most of life is an interdependent, not an independent reality (in your marriage, who won today?). The most sought-after results depend on co-operation and a win-lose mentality is dysfunctional towards that co-operation.


Tools: “The Seven Habits of Highly Effective People”

3. Lose-win – This paradigm says “be a nice guy”, even if you have to finish last. According to Covey, win-lose people love lose-win people because they can feed on them. It complements their strengths. It is capitulation. Both win-lose and lose-win are weak positions because they are based on personal insecurities, Covey asserts. 4. Lose-lose – This results when two win-lose people meet – the interaction of two determined, stubborn, ego-invested individuals. Covey says they both become vindictive and want to “get back” or “get even”, blind to the fact that revenge is a double-edged sword. 5. Win – People inspired by the win paradigm find the other person’s result irrelevant, win or lose. He tries to secure his own ends and leave it to others to secure theirs. Win is the most common approach in every day negotiations. 6. Win-win or no deal – When no deal is an option, Covey says it liberates the mind because there is no need to manipulate, to push one’s own agenda and to drive for what one wants. A person can be open and in a better position to understand the deeper underlying issues. This option is most realistic at the beginning of a relationship or start up of an enterprise. Covey states that the principle of win-win embraces five main interdependent dimensions of life: 1. Character as the foundation of win-win. Integrity, maturity and abundance mentality (i.e. there is enough for everyone) are the three essential to the win-win paradigm 2. Relationships encompass courtesy, respect and appreciation 3. Agreements 4. Supportive systems 5. Processes.

Tools: “The Seven Habits of Highly Effective People”


Habit 5: Seek first to understand, then to be understood

From a young age we spend years learning how to read, write and to speak. However, apart from listening exercises to learn a foreign language, most people have never experienced learning classes. Covey states that although listening is a necessary skill to be able to communicate effectively with others, most people listen with the intention of replying rather than with the intention of understanding. Empathic listening When another person speaks, we usually ‘listen’ at one of four levels: • Ignoring • Pretending • Selective listening, or • Attentive listening. However, very few people ever practise the highest form of listening which, according to Covey, is empathic listening, which means getting inside another’s person’s frame of reference. One looks through it and sees the world the way they see the world and understand how they feel. It is important to understand that emphatic listening does not mean agreeing with the other person – it is understanding fully and deeply the other person both emotionally and intellectually. Empathic listening involves four developmental stages: • Mimic content • Rephrase the content • Reflect feeling • Rephrase the content and reflect the feeling The key to empathic listening is to genuinely seek the welfare of the individual to whom you are listening.


Tools: “The Seven Habits of Highly Effective People”

Diagnose before you prescribe Before a doctor prescribes a medicine he has to diagnose the patient’s symptoms. When a good lawyer describes a legal case, he starts writing the opposite attorney’s case. When an engine malfunctions on a jet, the pilots are expected to make a (snapshot) assessment before they handle the situation. Diagnosing before prescribing is a correct principle which manifests itself in many areas of life. In business, a good salesman sells solutions after a process of listening to his customer and understanding his or her needs. A bad salesman sells products and moves on after striking up his commission. The four autobiographical responses Because people tend to listen autobiographically, we tend to respond by evaluation, probing, advising and interpreting, i.e. you try to explain their motives, their behaviour based on your own motives and behaviour. Understanding and perception As you learn to listen deeply to other people, you will discover tremendous differences in perception. Habit 5 is the first step in the process of win-win. Knowing how to be understood is the other half of Habit 5 and is crucial in reaching win-win solutions. One on one Habit 5 is right in the middle of your Circle of Influence. You can always seek first to understand. Spend time with your partner and children, one on one.

Tools: “The Seven Habits of Highly Effective People”


Habit 6: Synergise

Synergy is a Greek word which explains that the whole is greater than the sum of its parts. Nature thrives on synergy. For example: it is well known that one horse can pull about 4 tonnes. However, two identical horses are able to pull 22 tonnes. This is nearly six times as much (or one horse in the team appears to be working nearly three times harder). Another example comes from chemistry. Both sodium (Na) and chloride (Cl) are poisonous for human beings. However, if put the two elements together you have a substance which is vital for any human being – table salt. This is called synergy. In teamwork, synergy results in a higher output than could be reached by the sum of the individual effort. According to Covey, few people experience synergy in their lives because most have been scripted into defensive or protective communications. Synergy can be unnerving unless a person has a high tolerance for ambiguity and gets security from integrity to principles and inner values. Synergy in business To achieve synergy in business requires people to be spontaneous, open and authentic. When a person opens himself up to the influence of other group members, he gains new insights and facilitates the generation of new options. High trust and high co-operation among people can really create wonderful things. Synergy and communication Low-trust situations result in low levels of effective communication. This is characterised by protectiveness, defensiveness and an attitude whereby people cover themselves in the event of things not working out the way they want them to. During my professional experience I have seen the destructive potential of this on projects put under high pressure because of overselling,


Tools: “The Seven Habits of Highly Effective People”

with teams created from large numbers of contractors from different agencies. Without proper leadership, hardly any synergy or even negative synergy will exist and the blame game will start early, resulting in a very unsatisfactory working atmosphere. The middle level of communication is respectful communication. Picture this as a situation where fairly mature people communicate on a mature level. This is a basis for synergy but it might go either way, synergy or no synergy. The highest level of communication is known as synergistic communication, where all participants have a win-win frame of mind. Valuing the differences According to Covey, this is the essence of synergy. A person should learn to recognise his own perceptual limitations and the availability of rich resources through interaction with others. In any situations where they interact, human beings are complementary. Not using each other’s complementary skills is to ignore the differences, which will not lead to synergy. Force field analysis Performance of an endeavour by human beings creates a certain equilibrium between driving forces that encourages upward movement and the restraining forces that restrain it – a force field. By looking at synergy through a force field analysis, the following distinction can be made between the different forces which affect synergy: • Driving forces are generally positive, reasonable, logical, conscious, and economic. • Restraining forces are often negative, emotional, illogical, unconscious, and social/psychological.

Tools: “The Seven Habits of Highly Effective People”


Habits 4, 5, 6 and management consultancy Habit 4 (think win-win) and management consultancy

Good management consultants implicitly think win-win. They want to leave the client ultimately with a feeling that he is happy and they themselves have learned valuable lessons from the job that has been done. On the other hand, I can imagine that a consultant often feels trapped in a lose-win situation. One example would be a consultant who has specific knowledge and is sent out to clients to implement the same thing over and over again. There is no doubt that the client wins. But does the consultant win? In this respect, it is very important that good consultants get the opportunity to diversify, i.e. will be able to work with a sustained level of win-win attitude. Another important aspect of win-win attitude towards human interaction is that a management consultancy company can only receive appreciation if their consultants have a win-win attitude, and definitely not a win-lose, lose-win, lose-lose or win attitude. Customer satisfaction is usually one of the highest goals of a company’s mission, so it is important that it is recognised that this is achieved mostly through their employees. It is corporate suicide to put individuals on missions who do not have a customer satisfaction attitude indelibly printed in their minds.
Habit 5 (seek first to understand, then to be understood) and management consultancy

Seek to understand then to be understood works in combination with habit 2 (begin with the end in mind), a habit which, on a strategic level, is of high importance to a management consultant. In order to assess a situation in which a management consultant finds himself, he needs to gain confidence to reassure himself that he is the right person for that particular job, while also giving his customer confidence that he is or knows the right person for this job. As Covey mentions, understanding the other by emphatic listening is extremely important


Tools: “The Seven Habits of Highly Effective People”

as regards earning credit, to make a deposit in a client’s emotional bank account. So the knife cuts both ways. If a consultant does not practise listening well enough he loses the objective from his viewpoint and, more importantly, he loses a customer’s loyalty, trust and cooperation. Covey mentions that good lawyers write the opposite side’s case so as to be fully prepared for any obstacle on the way to the end result. In this respect, management consultants could increase their efficiency by putting themselves in their customer’s situation and frame of mind. In this way the consultant learns to understand the customer’s demands, learns to ask the essential questions, and gains a deep insight into implementing the right strategy and the resulting tactics to address the particular problem in hand.
Habit 6 (synergise) and management consultancy

Creating synergy is not an easy task for a member of staff, a manager leading a team, a senior manager leading multiple teams and giving direction to a company but, on the other hand, it is absolutely vital there is a high level of synergy simply to gain momentum and to establish a high degree of satisfaction for all stakeholders. Having worked as a consultant in software solutions, and now working as a manager I have seen lots of culture builders and culture breakers, and one of the culture breakers, as far as many people on the work floor are concerned, are (management) consultants. Consultants are perceived as outsiders who are brought in by the management because the people on the work floor are either not good enough or because the project or change is under such pressure that there is no way round it. But irrespective of the real reason for bringing in a (management) consultant, he comes in with a disadvantage, i.e. the general opinion of the people on the work floor and sometimes even those in management. In this respect, a (management) consultant really needs to be a culture builder, someone who understands the principle of synergy and is perceived as a person making a change for the better for everyone. This is extremely hard and often comes with age, experience, character and time spent with the customer.

Tools: “The Seven Habits of Highly Effective People”


Staying interdependent Habit 7: Sharpen the saw

Habit 7 is about taking the necessary time to sharpen the saw. This is a Quadrant 2 activity and focuses on one’s own PC. It is preserving and enhancing the greatest asset a person has – himor herself. The four dimensions of renewal Covey advises the reader to renew the four dimensions of his or her nature – the universal four dimensions – which are: • Physical • Spiritual • Mental • Social The physical dimension is looked after well by eating the right kind of food at the right time, getting sufficient rest and relaxation, and exercising on a regular basis. The spiritual dimension provides leadership in a person’s life (think of habit 2). The spiritual dimension refers to one’s core, one’s centre and to the commitment to one’s values. You can sharpen the saw with respect to your spiritual dimension by meditating, practising a religion, listening to music or simply enjoying nature. Covey sees this as a Quadrant 2 investment which we cannot afford to neglect. He advises us to review our personal mission statement frequently so as to have a good understanding of our purpose. The mental dimension is neglected once we leave formal education, according to Covey. It is important to avoid mental atrophy. The mind should be challenged. In this respect he recommends avoiding TV, or limiting it to one hour per day, and reading a lot, preferably one book a fortnight but at least


Tools: “The Seven Habits of Highly Effective People”

one a month. In addition, he recommends writing, e.g. keeping a journal and writing down thoughts, experiences and insights. The social dimension is developed primarily through our relationship with other people. Covey recommends helping others by scripting them as principle-centred, value-based independent individuals. In this respect he quotes Goethe who said: “Treat a man as he is and he will remain as he is. Treat a man as he can and should be and he will become as he can and should be.” Balance in renewal Sharpen the saw or the renewal process must include a balanced renewal in all four above-mentioned dimensions of our lives. To neglect one area has a negative impact on the rest. Synergy in renewal By synergy in renewal Covey means that if you sharpen the saw in any one dimension it will have a positive impact on the other dimensions. The daily Private Victory is the key to the development of the seven habits and it is completely within everyone’s Circle of Influence.

Tools: “The Seven Habits of Highly Effective People”


Habit 7 and management consultancy Habit 7 (sharpen the saw) and management consultancy

It is important for a (management) consultant to develop his knowledge and skills continuously. This is sharpening the mental side of the saw. By so doing, the consultant stays attractive to the market. This practice also offers personal satisfaction as learning for most intelligent human beings means becoming a more complete and satisfied human being. Being a consultant means working with a wide variety of different people during your career. In order to feel comfortable with most people, it is important to sharpen the social saw. In particular, a management consultant needs to be able to communicate effectively on a social level with all people on the work floor, from worker to executive. With respect to this, the more effectively one engages with others the better the results and personal satisfaction will be. A very interesting aspect of this is Covey’s approach to scripting others. He gives the example of two school classes, mistakenly mixed up with respect to the good and bad performers. After a while the mistake was recognised but astonishingly the results showed that the real “dumb” group, who were mistakenly treated as the smart group, improved incredibly whilst the performance of the real “smart” group, mistakenly treated as the dumb group, had lowered significantly. It became a self-fulfilling prophecy of those scripting others. However, by effectively scripting others, by engaging others in the right way, a consultant will be able to improve overall performance, and gain respect and sympathy. As the job of a (management) consultant has the potential to be both satisfying and draining, mentally and physically, it is apparent that looking after your physical dimension is important. Lots of stress and fatigue require a counterbalance for a consultant to stay healthy both physically and mentally. With respect to this, in my opinion it is vital for any working person, not only a consultant, to sharpen his or her physical and spiritual saw regularly.


Tools: “The Seven Habits of Highly Effective People”

Critical notes and conclusions

Critical notes After reading the book and searching the internet for comments I have compiled the following critical notes on “The Seven Habits of Highly Effective People” by Stephen R. Covey: First of all, sometimes the book is too oriented towards an American public. Covey’s enthusiasm for his own framework can be overdone and one loses a sense of objectivity when reading certain parts of his book. For example, he writes the following about a personal mission statement: “In our home, we put our mission statement up on a wall in the family room so that we can look at it and monitor ourselves daily. When we read the phrases about the sounds of love in our home, order, responsible independence, cooperation, helpfulness, meeting needs, developing talents, showing interest in each other’s talents, and giving service to others it gives us some criteria to know how we’re doing in the things that matter most to us as a family.” Personally, I feel this comes across as slightly exaggerated, too driven and arguably slightly unbalanced. Throughout the book the reader becomes really convinced that Covey believes in general in the good of mankind. He gives the impression that each one of us can change by applying the right principles (living the seven habits). It is a sign of pessimism to argue against this, but I believe it is a sign of reality and awareness, too. Some people deliberately do not have the best intentions towards others, but are blatantly selfish, greedy, etc. It becomes even more obvious by simply looking at the vast amount of unethical business books currently on the market. (It is strange to read that most people buy these books on the

Tools: “The Seven Habits of Highly Effective People”


excuse of better understanding their rivals at work. It is very hard to co-operate with unethical, greedy and selfish people, let alone change them. Sometimes, Covey’s ignorance to address this in his book is frustrating. To live according to the seven habits framework, I think requires a mature and strong mind-set. If this was not the case, there would not have been such an enormous market for psychological self-help books, courses and TV shows. In fact, this book would not have sold over 15 million copies. TV airtime is saturated by the Dr Phills, Dr Lauras and Ophreys all trying to help others to live according to similar universal lessons associated with sane human beings. Covey makes it look too easy. In addition, I personally believe that lots of people experience major disadvantages in life, e.g. unstable childhood, unbalanced culture and upbringing, etc. Covey seems to ignore this and even brushes determinism aside, making it look insignificant. I find this unjust and possibly even offensive to certain people. Critics claim Covey over-intellectualises management philosophy. I do not understand this critical note I found on the internet. The seven habits book is non-academic and by no means can the habits be said to be situated on a high intellectual pedestal. Some groups accuse the author of covert promotion, which would seem both true and obvious when reading the book. The following passage is a good example: “I am always intrigued whenever I go to IBM and watch the training process there. Time and time again, I see the leadership of the organisation come into a group and say that IBM stands for three things: the dignity of the individual, excellence, and service. These things represent the belief system of IBM.” By displaying a covertly promotional stance in corporations like IBM, Covey loses objectivity.


Tools: “The Seven Habits of Highly Effective People”

Covey published a follow-up book on the eighth habit. Sean Covey, his son, wrote the “Seven Habits of Highly Effective Teens”. It appears to have become an effective family habit. One could argue that the Coveys are milking their cash cow. By publishing even more follow-ups, without a doubt Covey’s credibility will start to become eroded. Conclusions “The Seven Habits of Highly Effective People” is not, per se, a management book, although it is generally perceived as one. It provides a great framework for people in all walks of life looking for “answers” to some of life’s greatest challenges and battles to be fought in the inner self. The book is cleverly written – Covey adopts a non-academic approach which inspires and captures the reader’s interest right from the first page. In addition, it is a practical book with lots of examples that are applicable to everyday life. In my opinion, this is an ethical guideline which is has been (and continues to be) read by millions of people and managers. By placing emphasis on the good and ethical values in life, it has the power to change attitudes, irrespective of the fact that, to me, this is not an objective view. According to George A. Miller, seven is the magic number with respect to limits on our capacity for information processing. Any more laws or habits and it starts to lose its trustworthiness and, most likely, its applicability. For example, how inappropriate are “37 very effective ways to beat stress”, or “35 rules to becoming a perfect seducer”, or the “33 strategies of war”. Seven habits are manageable – they are easy to remember and to exercise.

Tools: “The Seven Habits of Highly Effective People”


As one person from Sri Lanka wrote in a blog (web-log), the book should be treated as a companion in the long run. The seven habits are not easily adopted and, even if they can all be mastered to an acceptable degree, it is very likely that the skills and habits will be eroded over time unless there are frequent reminders to read them again and again. In Covey’s own words, the reader will be making the mistake of not sharpening his saw. “I don’t have time to sharpen the saw,” said the person in the woods who had spent five hours trying to saw down a tree, “I am too busy sawing”.


Tools: “The Seven Habits of Highly Effective People”

IV) Bibliography
Stephen R. Covey: • “The Seven Habits of Highly Effective People”, 1989 (ISBN 0671708635) • “Principle Centered Leadership”, 1992 (ISBN 0671792806) • “First Things First”, co-authored by Roger and Rebecca Merrill, 1994 (ISBN 0684802031) • “Living the Seven Habits”, 2000 (ISBN 0684857162) • “The 8th Habit: From Effectiveness to Greatness”, 2004 (ISBN 0684846659) For more information on the author, refer to Covey’s website: http://www.stephencovey.com


Tools: Shareholder value approach

Shareholder value approach
I) What is it?
The concept of shareholder value is a recurrent theme in today’s business. Pressure from investors to deliver sustained superior returns has made shareholder value enhancement a principal issue facing the CEOs and CFOs of most publicly listed companies. The ultimate goal of the shareholder value approach is not market share, but rather to maximise discounted cash flow. For a typical business unit, maximising cash flow can be estimated by adding the discount value of projected cash flows (inflows and outflows) for the next ten years, the discounted value of the projected sale price of the business at the end of the tenth year. Shareholder value is created when a company generates free cash flows in excess of the shareholder’s investment in the business, and market capitalisation is a good and effective surrogate for the free cash flows. It is also more relevant in today’s world where ‘share price’ is the key, and perhaps the only, arbiter. The proof of its importance is every company’s mission statement that the responsibility of the management is to “maximise” a shareholder’s total returns via dividend and increase in market price of a company’s share. It is the difference between the market capitalisation (number of issued shares x share price) of the company and the net (net of debt) capital employed by the company. Thus, change in total assets over the base period is reduced by change in borrowings to give net equity funds invested in the company. These funds are either from retained earnings and/or from new equity issues. Shareholder value is the difference between this investment from equity funds and market capitalisation plus dividends.

Tools: Shareholder value approach


II) How does it work?
Shareholder value essentially looks at the value attributable to the company’s shareholders. The fundamental principle would be that a company only adds value for its shareholders when its returns on capital exceed its cost of capital. The shareholder value approach theory follows the strictly economical approach that managers act as fiduciaries for the owners of the company as principals, and the managers as agents acting on their behalf. This implies that every decision by management should be made with the intent of maximising the shareholder’s wealth, as long as these decisions and the resulting actions are within the bounds of law. To ensure that management acts in the owner’s interest, they should either be monitored or given financial incentives.


Tools: Shareholder value approach

III) When is it needed?
Why is there a need for the market to use a performance measure? Surely earnings measures, such as earnings per share (EPS), which have been used for years, are sufficient to analyse the company’s performance? The trouble is that they are not. Numerous studies carried out over time have shown that there is little empirical evidence of any correlation between earnings growth and share value. The principal requirement of shareholders, as rewards for their investment, was a regular stream of dividends. However, now investors are increasingly looking behind the traditional earnings model to measure more informatively a company’s long-term prospects to adequately understand the risk, growth and opportunity, and cost of capital which are key issues in any investment decision. Shareholder value approach analysis provides this type of assessment and comparison using both financial and non-financial information. Broadly, to create shareholder value approach is to embark on a journey to map day-to-day strategic actions for continuous value creation. Companies that are shareholder-value-oriented realise which activities contribute most to value.

Tools: Shareholder value approach


IV) Bibliography
Birchard, B., “How many masters can you serve?”, July 1995, CFO Dimma, W., “Putting Shareholders First”, Autumn 1997, Ivey Business Quarterly, Kay, H., “More Power to the Shareholders”, May 1991, Management Today, p 56-59 Smith, B., “Ethic of DU Pont’s CFC Strategy 1975-1995”, 1998, Journal of Business Ethics, Vol. 17, p 557-568 Roberts, D., “Cingular 41 Billion Bid snatches AT&TW”, 18 Feb 2004, Financial Times Magazine.

http://www.valuebasedmanagement.net/ faq_what_is_value_based_management.html http://www.juergendaum.com/news/12_28_2002.htm http://www.pdinstitute.com/shareholder_value/atom.xml http://www.investordictionary.com/definition/ shareholder+value.aspx


Tools: SIPOC diagram

SIPOC diagram
A SIPOC diagram is a tool used by a team to identify all relevant elements of a process-improvement project before work begins. The tool’s name is an acronym for: • Suppliers of the process • Inputs to the process • Process you want to improve • Outputs of the process • Customers who receive the process outputs The SIPOC tool is very useful when the following questions arise: • Who are the suppliers of inputs to the process? • What specifications are placed on the different inputs? • What kind of output is regularly needed? • Who are the true customers of the process? (internal and external) • What are the requirements of the customers we know of? (maybe an additional brainstorming session is necessary) SIPOC diagrams are easy to complete by following these steps: 1. Create an area that will allow the team to post additions to the SIPOC diagram. This could be a slide (to be projected by an overhead), flip charts with headings (S-I-P-O-C) written on each, or headings written on Post-it notes stuck on a wall (make it simple, clear and measurable). 2. Begin with the process; map it in four to five high-level steps (make it measurable). 3. Identify the inputs required for the process to function properly. 4. Identify the suppliers of the inputs that are required by the process.

Tools: SIPOC diagram


5. Identify the outputs of this process (internal and external). 6. Identify the customers who will receive the outputs of this process (do not forget the internal customers, too). 7. Verify with the project sponsor and the other stakeholders involved. Below is an example of a SIPOC diagram used in an electrical appliances shop process. Care must always be taken to involve as many players as possible in the process game, so that every step remains under control. Therefore it is useful to remember point 1 of the steps to follow, because new items can always be added in every category.

Example of a SIPOC diagram

Electro shop

• Manufacturer • Supplier • Electro supplier • Soap supplier • Insurer (warranty) • Printer • Dishwasher • Soap • Worksheet • Warranty sheet





Developed below

• New client account • Payment •Service/warranty contract • User manual • Paperwork to manufacturer

• Buyer • Electro department • Service department • Warranty department

Tools: SIPOC diagram

Meet the new client

Understand needs

Present different machines to the Client (+ options)

Agreement on price, delivery date and delivery mode

Sign contract and handover warranty papers


Tools: SIPOC diagram


http://www.isixsigma.com/library/content/c010429a.asp http://finance.isixsigma.com/library/content/c060322a.asp http://quality.dlsu.edu.ph/tools/SIPOC.html http://www.leansigmanetwork.co.uk/forum/ viewtopic.php?p=130 http://europe.isixsigma.com/library/content/c060906b.asp www.isixsigma.com/isixsigma/six_sigma.asp http://www.lindsaysherwin.co.uk/improvement_guide/ html_data_handling/data_gathering_concentration_charts.htm http://www.isixsigma.com/library/content/c010527c.asp http://www.hci.com.au/hcisite2/toolkit/causeand.htm http://www.sixsigmafirst.com/sstoclt.htm http://www.asq.org/chapters/H1245.pdf http://www.jozdev.com/SixSigSample/ SixS_TerminologyQuikSix-AC.htm


Tools: Situational leadership

Situational leadership
I) What is it?
Your leadership style is how you behave when you are trying to influence the performance of others. There are many theories about leadership that focus on the different types. The innovation of the Situational Leadership model, created in the 60s by Paul Hersey and Ken Blanchard, is that it is not only the leader’s style which is considered, but also the follower’s level of readiness. This model provides a framework for analysing a particular situation and determining which leadership approach will have the highest probability of success. Readiness is a function of a follower’s abilities – knowledge, experience and skills needed to accomplish a task – and his/her willingness – confidence, commitment and motivation for doing a task well. The model describes four levels of readiness: R1 Unable and unwilling The follower does not have the specific skills to perform a task and lacks the motivation and confidence to tackle it. R2 Unable but willing The follower lacks ability, but is motivated and confident as long as the leader provides support. R3 Able but unwilling The follower is experienced and capable, but is either apprehensive about doing it alone or not motivated to do it properly. R4 Able and willing The follower is experienced, and feels confident and motivated.

Tools: Situational leadership


II) How is it used?
Depending on the follower’s readiness, managers applying this model should adapt their leadership behaviour accordingly. Two types are defined: • Task behaviour (directive): the leader tells the followers specifically what to do, how and when to do it, and then controls and supervises their performance. • Relationship behaviour (supportive): the leader engages in two-way communication, listening and giving support to the followers, encouraging them and facilitating their involvement in problem-solving and decision-making. The leader should adapt to each particular situation, and not always use his or her preferred type of behaviour. The extent to which he or she uses either a more directive or a more supportive behaviour will depend on the follower’s readiness, therefore four leadership styles have been defined: S1 Telling This is a high-directive/low-supportive behaviour style, due to the follower’s lack of competence and motivation to perform. Therefore, the leader defines their role and tasks, and then supervises their execution. As the leader takes the decisions, communication is largely one way. It is often used when followers have little experience with a given task and need to be told how to perform it, or when an issue needs urgent action. S2 Selling This style is based on a high-directive/high-supportive behaviour, where the followers do not have the ability and knowledge, but are motivated. The leader still provides most of the direction, but he seeks ideas and suggestions from the followers in order to involve them. Through twoway communication and support, he gets the followers to “buy into” the decisions he makes. The leader provides coaching, for example suggesting several options for doing


Tools: Situational leadership



a task and encouraging the followers to use what works best for them. Participating It is a low-directive/high-supportive behaviour style, where the followers lack commitment, but where they do not need much direction or control because they have already demonstrated that they know how to accomplish their tasks. However, they need support and encouragement from the leader to build their confidence and motivation. Hence the leader has a supporting role and the decisionmaking process is shared. Delegating When the followers reach the highest level of readiness, the appropriate leadership style is one with low amounts of both directive and supportive behaviour. Followers need little guidance and supervision because they take responsibility for their own projects. The leader is still involved in decisions and problem-solving, but the followers have the control. Regularly, he or she also needs to provide feedback to let the followers know that their contribution has been noticed and appreciated.

Success in leadership is achieved when the leadership style matches the follower’s readiness. It may vary from one person to another, or the same person may be led in one way or another according to the situation. The situational leadership model also stresses the fact that the level of the follower’s readiness increases in terms of accomplishing a specific task. The leader should build up the follower’s development level, to be able to use less timeconsuming styles over time. As a follower’s level of readiness increases, the leader needs to adapt to suit the follower’s growth.

Tools: Situational leadership


In simple terms, a situational leader can adopt different leadership styles depending on the situation. He “assesses the performance of others and takes the responsibility for making things happen”. However, for this model to be really effective, the leader has to understand what motivates the followers and why a particular person may experience a change in his/her readiness level at some point. The reason may not always be related to work.

High Relationship and Low Task

High Relationship and High Task













Low Relationship and Low Task

Low Relationship and High Task



Able and willing or confident

Able but unwilling Unable but willing or insecure or confident

Unable, unwilling or insecure







Tools: Situational leadership

III) Bibliography
Paul Hersey, Kenneth H. Blanchard, Dewey E. Johnson, “Management of organizational behaviour – utilizing human resources”, Englewood, Cliffs, 1988 Doris ‘Katey’ Walker, “A project of the Developing Effective Leaders, Major Program Team”, by Kansas State University.

http://www.situational.com http://www.kenblanchard.com http://www.1000ventures.com http://www.od-centre.org


Tools: Six Thinking Hats

Six Thinking Hats®
“The quality of our thinking determines the quality of our future” – Dr Edward de Bono, creator of Six Thinking Hats®

I) What is it?
The Six Thinking Hats is a method developed by Edward de Bono, which seeks to facilitate decision-making processes in groups and to inspire creative thinking. As part of his concept of lateral thinking, de Bono has developed several tools and techniques that are supposed to help people to shift to different and more creative modes of thinking. Lateral thinking means exploring a subject from different angles. Compared to ‘vertical thinking’, which would mean “digging a hole more deeply” in the same place and within the same perceptual framework, lateral thinking means moving to a different position and a different perceptual framework. Litterally, it would be starting to “dig a fresh hole” which, nevertheless, can help to find solutions for the same subject or problem. The Six Thinking Hats method has to be seen as one of the techniques that de Bono developed in the frame of his concept of lateral thinking. However, this method – which he developed in just one afternoon – should, in particular, help to overcome negative attitudes during a phase of discussions. For example, de Bono observed that phrases like: “That won’t work” and “That’s wrong”, “That’s not going to happen” often ‘block’ thinking processes and destroy creativity. There are times when these rather sceptical modes of thinking are appropriate and such an approach really helps to define the overall problems that need to be tackled, but this way of “black thinking” should not dominate the thinking process. Therefore, primarily the six hats help to define several thinking phases and to ensure that each phase also receives a fair share of time.

Tools: Six Thinking Hats


The Six Thinking Hats is a fairly easy method that can be applied by almost everyone, everywhere. One precondition is that people are willing to use this method (which is a bit like a game and may appear not sophisticated enough for some) and that they are willing to (learn to) apply different modes of thinking. The idea is that in any creative thinking process, several different perspectives should be used in order to maximise the thinking output. By involving everyone in every phase of thinking (parallel thinking) the fullest potential of everyone may be used. At the same time, it creates a rather positive environment, because everyone is in the same boat or under the same hat and can focus on the issue coming from one perspective. That also means that it is easy to distinguish more easily between the argument and the person developing the argument. Very often in a debate that is seeking to find a solution to a problem, the arguments brought forward are linked to the person (or even its status or position). Such debates can thus often be characterised by socalled “power plays”, where one person argues against another person which can shift focus away from the issue or problem that needs to be solved. The often-observed “motivation to fuel one’s ego” was another frequent element in discussions that de Bono thought about overcoming with the Six Thinking Hats. These, along with the focus on “black thinking”, could lead to “an entrenched negative mode of thinking”. The Six Thinking Hats, however, can help to avoid such a blockage from the start.


Tools: Six Thinking Hats

II) How does it work?
The method can be applied relatively simply. There are six different perspectives or “hats”, each characterised by a different colour: blue, black, red, green, yellow and white. The black hat represents the sceptical perspective. While wearing the black hat we ask ourselves why something may not work and we analyse all related dangers and problems and faults. Logical reasons must be provided in the thinking phase. Only when we move on to the red hat phase are we allowed to use our feelings and intuition “at this point”. There is no need for reasons and justifications. This phase should, however, be rather short. The green or creative hat examines all existing possibilities and/ or looks for alternatives, new ideas and concepts. An important task for this hat is to overcome the problems that had been defined by the black hat (and also may, at a later stage, be used to reinforce the values that the yellow hat phase will define – or depending on the how often the perspective will be changed – has defined. Under the yellow hat logical reasoning is also important – it is the “positive head” and, in a way, an opponent of the black hat because it seeks to analyse why something may work, by stressing (both known and potential) values and benefits and by looking for the good in something. Moving on to the white hat means focusing on neutral and objective data and information. In this phase it is important to check the information that is available so far to see if there are certain facts missing and to define where it could be sourced. The blue hat perspective is the only one solely undertaken by one person, the coordinator or team leader. The blue hat faces the decisive and maybe also difficult task of coordinating the whole discussion and deciding how much time to attribute to each phase and when to go back to one perspective. The blue hat, the manager of the thinking modes, sets the focus, and makes

Tools: Six Thinking Hats


the overviews, summaries and conclusions. It also coordinates the development of an action plan. It can thus be helpful for the blue hat to have some proper training regarding the method. Arguably, the success of the whole exercise may also largely depend on the skills of the blue hat coordinator, who sets the time, provides the needed input, and decides when to switch to the thinking mode.


Tools: Six Thinking Hats

III) Further guidelines on how to use this method
Depending on the purpose for which the method is used (the type of meeting), a certain sequence can be applied for using the different colour perspectives. However, there is no formal rule as regards starting with the red or black hat. And it is all up to the experience of the participants, in particular the coordinator, to determine the right sequence at the beginning. For lessexperienced groups and coordinators, de Bono recommends determining the sequence at the beginning. More experienced groups under the leadership of a certified trainer could also use an “evolutionary method” where the group determines the switch to the next hat. In this respect it is also important to keep in mind that to a certain extent some of the hats do reflect opposing views or functions: the white versus the red hat (information versus emotions), the yellow versus the black hat (optimism versus dangers), and the blue versus the green hat (limiting, coordinating, summarising, implementing versus new ideas and alternatives). It is advisable that the blue hat starts and ends every session by defining the purpose and framework of the session, summarising the results, and coming up with an action plan after the session. The blue hat should thus raise the following questions at the beginning: • Why are we here? • What are we thinking about? • What is the definition of the situation or problem? • What are the alternative definitions? • What do we want to achieve? • Where do we want to end up? • What is the background to the thinking and is there a plan for the sequence of the hats to be used?

Tools: Six Thinking Hats


After the session, the blue hat indicates what we have achieved and summarises the outcome or conclusion, and/or the design or solution, and the next steps to be taken. De Bono recommends limiting the time for each session. Depending on the group size, a rough guideline could be one minute of speaking time per person per hat. In particular, the red hat time should be limited because here people should respond quickly and spontaneously without judging or analysing.


Tools: Six Thinking Hats

IV) Who can use it and when?
A distinguishing feature is that the method is very simple and can therefore be used by almost everyone, everywhere. The main purpose is certainly to facilitate decision-making processes, to ensure that different perspectives have been taken into account and to involve and use the potential of everyone in the group or team. The method can thus be used to facilitate very different kinds of meetings or group gatherings. It may, for example, be used for preparing for discussions, for improving processes in an organisation, or for developing new products or designs. It has also been used for conflict resolution and as part of leadership development trainings. And thus also has personal and group development potential. The method has been developed for groups. As we recall, one of the reasons for developing the method was to deprive people of “showing how clever they are” by “winning an argument” against someone else in the group. One main reason was thus to improve “group thinking” or group decision-making processes, and the six hats have thus been shown to be very effective as a team-building measure. Nevertheless, the method could also be used by an individual because it can help to structure the thinking process and to ensure that information linked to the six defined perspectives has been collected and evaluated. Since each person usually has a preference for one thinking mode, it can certainly also help the individual (and not only the groups) to further develop thinking capacities by developing an individual’s weaker hats. There are no prerequisites either regarding age, background and culture. The method is simple and can be easily explained that it may be used for pre-schoolchildren or top-level executives for a wide range of purposes. Theoretically, the method can be used

Tools: Six Thinking Hats


by everyone. It has not been specifically designed for businesses or management purposes. Nevertheless, throughout the last 20 years a large number of firms have successfully applied the method and achieved very good results regarding the improvement of their decision-making processes. For example, major corporations like IBM, Shell, DuPont, McKinsey, Ford or Ericsson have all applied the six thinking hats method. In addition, governments, administrations, schools or almost any other type of organisation can be cited as an example of a success story for Mr de Bono. He also claims that he himself has been very surprised by the success of the method, and wants to spread knowledge about its use worldwide. Within these organisations we find, for example, project managers, team leaders, trainers and consultants, meeting facilitators, managers or product developers who all thought it worthwhile to familiar themselves and their teams with the method and to use it wherever they regard it as added valued. Teams who are familiar with the six hats often refer to the “black hat thinking” or “red hat thinking”, in both formal and informal contexts, even when the method is not being applied.


Tools: Six Thinking Hats

V) Example in SMEs and/or other organisations
Due to its simplicity, the number of examples of Six Thinking Hats users is enormous. Official training is not necessary and may be replaced by experience. Yet many of the larger companies have opted for official training either by de Bono or another certified consultant, and many of their top-level executives have been officially trained in the different possibilities the method provides. In order to present just one example, let me tell you a success story regarding one group after the 2002 merger of Hewlett-Packard and Compaq Computer Corporation, which created a team of more than 140,000 employees in 160 countries – and not only new opportunities but chaos too. The challenge was not only for the corporations to deal with and overcome the cultural clash, but also for the (new) individual teams on each level to learn to work together. One Hewlett-Packard team leader, who headed the business development plan team, opted for the Six Thinking Hats method as the merger had created a strong culture clash and increased the power plays in his team, since everyone was now keen to present the best business plan. Meetings and discussions about the business plans were thus characterised by a very negative spirit because everyone wanted to win and outrun the other team members. Criticising the ideas of others very strongly seemed to increase one’s chances of being the winner with the best business plan. The team leader observed the negative impact of this behaviour on both the team spirit and on productivity and creativity as a whole. After a team leadership training, during which he had learned about the six hats method, he asked a consultant to help him implement it. The team leader then sent an email request to the team for an outline of a business plan for the next meeting. Each member was asked to prepare to present the neutral details, information and facts needed (the white hat perspective). At the meeting, each member made a brief presentation. The team leader then

Tools: Six Thinking Hats


explained the method and led the team through the various thinking modes according to the following scheme: White Hat: Any questions on the details presented? Has anyone any missing facts? Yellow Hat: What are the benefits of this initiative? Black Hat: What are the cautions, problems, challenges? Green Hat: What are ways to overcome the Black Hat concerns? What are some alternative solutions/ideas? Red Hat: What is your gut feeling about the plan? Blue Hat: Identify next steps. Are we ready to implement? The result was astonishing for both the team leader and the team members. The normal argument and debate and thus the whole meeting time were significantly reduced. Everyone seemed to accept the results. No one continued arguing after the meeting. For the first time the team felt it had accomplished something as a team. This team spirit now increased from meeting to meeting (when the Six Thinking Hats method was applied). All initiatives were now better prioritised and evaluated on a “do-ability vs. impact-basis”. Some of the advantages of the method are thus clear. It helps to: - find comprehensive solutions to complex problems - involve everyone in the group and use everyone’s (and the group’s) potential to its best, thereby maximising thinking output - create a positive team atmosphere (through parallel thinking which reduces the “ego-games”) - reduce meeting time significantly - foster creative thinking.


Tools: Six Thinking Hats

With the Six Thinking Hats a division of Siemens could, for example, reduce the product development time by 50%. Another major corporation was able to reduce a series of multinational project meetings from 30 days to two days. A human resource consultant, who has been working with this method for more than ten years, said that using the method may enable you to achieve up to 36% more output in 66% less time. The method can thus help groups or their leaders to realise their full potential by involving and training everyone. Thus both team skills and individual skills can be developed – in particular, if we regard the different preference for certain thinking modes that the individual has or the specific role the individual likes to play in a group (for example, brainstormer, shaper, developer, implementer, etc.). The method may also foster learning from one another, and provide enough time and space to cover all dimensions (without the ego arguments and without giving preference to dominant personalities). Some of the difficulties with the six hats method relate to the role of the blue hat, the coordinator. The blue hat can be quite influential in defining the framework and maybe leading towards an outcome that is rather in line with his or her own opinion or preferred solution. Therefore, a proper training may be advisable. The method may also not work in all groups. First of all, the participants need to be willing to learn and apply this method, which may be perceived by some as too simple and game-like.

Tools: Six Thinking Hats


VI) The author and the method in context
The author, Edward de Bono, was born 1933 in Malta. He studied in La Valetta, Oxford, London, Cambridge and Harvard, and acquired degrees in psychology, physiology and medicine. During the last decades he has not only been working as a psychologist and physician, but mainly as a consultant. He has devoted his time to his research and writing and to teaching his thinking methods to a wider audience. As to applying his methods, he has worked with governments, corporations, organisations and individuals. But as a well-known thinker and developer of creative thinking, in 1969 he founded the Cognitive Research Trust (CoRT) and the SITO – the ‘Supranational Independent Thinking Organisation’. He has written 65 books which have been translated into 37 languages. To see the method in a wider context it is necessary to focus on two developments that have affected de Bono’s research: first of all, the increased complexity and availability of information. De Bono aims to reduce the complexity by allowing everyone to focus on one dimension at a time. Secondly, we have to see the developments regarding the concept of empowerment that evolved in the mid-1980s. De Bono developed a method that would allow everyone to be involved. It has been used by children and top-level executives and has been very successfully applied by several large corporations. It creates possibilities for everyone to speak and, by allocating time per person, which de Bono suggests, it can help to put everyone independently on an equal level of status, position or personality. To conclude, one may find that by developing the Six Thinking Hats, de Bono can be said to have transformed theories about thinking into very practical and usable tools and thus contributed to advancing applied psychology.


Tools: Six Thinking Hats

VII) Bibliography
The development of this thinking method has to be seen in the frame of his concepts of creative and lateral thinking. Edward de Bono wrote the “Six Thinking Hats” in 1985 and published a revised and updated version in 1999. Prior to this he had already published several books regarding lateral and creative thinking. De Bono, Edward, “The Six Thinking Hats”, 1999, Penguin Books, England.

http://www.edwarddebono.com/ http://www.debonoforbusiness.com/asp/ case_studies.asp#Interview_with_Dr._Edward_de_Bono http://www.edwdebono.com/debono/biograph.htm http://www.jwelford.demon.co.uk/brainwaremap/debono.html http://www.innovationtraining.com http://www-mmd.eng.cam.ac.uk/people/ahr/dstools/proces/ benchm.htm http://www.debonoforbusiness.com/asp/ case_studies.asp#An_Interview_with_Edward_de_Bono


Tools: The spiral of knowledge

The spiral of knowledge
I) History
In the 90s, Ikujiro Nonaka and Hirotaka Takeuchi, two Japanese professors tried to find out why Japanese companies where performing better and were more competitive than Western ones. They discovered that the Japanese companies were more innovative, in their products as well as in their processes and services. The reason for this was that those companies managed knowledge, and specifically the creation of it, at organisational level. Japanese companies have experienced a very chaotic period since World War II (wars, economic crises, more competitors, bursting of the economic bubble) which explains why they felt they were continually on the losing side and always having to catch up in the market. They had to live through periods of constant change and had to be able anticipate that change. Innovation was one answer to this. They succeeded in finding knowledge in the overall business environment (so also outside the company), bringing and keeping it inside and embedding it in their products, processes and services. By definition, innovation leads to competitive advantage. Trying to explain the spiral of knowledge is, in fact, a way of trying to show how the knowledge-creation process takes place in such companies and how they can be an example to others.

Tools: The spiral of knowledge


II) What
The spiral of knowledge is a concept which tries to set up a knowledge culture in a company. To do this, therefore, we need to understand what knowledge is about. Two professors looked at all kinds of management theories (from Plato, Aristotle, Sartre, Porter, Peter Drucker, Senge, Prahalad and many more) and came to the conclusion that Japanese and Western companies either dealt with knowledge differently, or not at all. Knowledge can be looked at from two dimensions. The first one – the epistemological one – is the philosophical inquiry of knowledge. The second one is the ontological one – the structures through which knowledge is disseminated. They came up with two types of knowledge: tacit and explicit. Tacit knowledge is about values, perceptions, intuition, what you feel and what cannot be expressed easily in words. You try to explain either by using figurative language and symbolism, or by holding brainstorming sessions where everybody shares their knowledge (dialogues). Explicit knowledge, however, can be formal and expressed in a systematic language. It can be documented on paper or saved in databases. They found that explicit knowledge was dominant in Western companies and tacit knowledge in the Japanese companies. The most important event in the knowledge-creation process is how to convert tacit knowledge to explicit knowledge.
Four modes of knowledge conversion

With two dimensions and two types of knowledge, we can try to understand the conversion process: 1) Socialisation: conversion from tacit knowledge to tacit. Let people brainstorm and share knowledge. 2) Externalisation: conversion from tacit knowledge to explicit. For example, try to translate feelings, perceptions,


Tools: The spiral of knowledge

intuitions into product features. 3) Combination: conversion from explicit knowledge to explicit. When product features are known, call in the engineers with their explicit knowledge to create the product physically. 4) Internalisation: conversion from explicit knowledge to tacit. What you have learned and applied – try to disseminate that knowledge and to learn by doing. These conversions happen primarily at the individual level (knowledge creation) and are subsequently disseminated towards the group level, organisation level and inter-organisation level (the ontological dimension) which gives rise to the spiral of knowledge.

Espistemological dimension

Combination (explicit linking)

Externalisation (dialogue) Explicit knowledge

Internalisation (learning by doing) Tacit knowledge Socialisation (field building) Ontological dimension

Individual Group Organisation Inter-organisation Knowledge level

Tools: The spiral of knowledge


Implementation strategy

There are several steps to go through before setting up a knowledge culture in a company. It is not a process which can be achieved in one day. Step 1: Five conditions for knowledge creation 1) Organisational intention: defining a strategy for developing the organisational capability to acquire, create, accumulate and exploit knowledge. A vision of what knowledge should be developed, close to strategy, vision and mission definition. 2) Autonomy: give the individual enough autonomy to create innovative ideas. This provides for the possibility of increasing unexpected opportunities and is a great motivator. 3) Fluctuation and creative chaos: organisations should adopt an open attitude towards environmental signals and individuals should break out of their routines. Creativity can be stimulated from chaos, and chaos can occur when a certain event happens in the market, or can be created on purpose by top management. 4) Redundancy: refers here to the intentional overlapping of information. Sometimes more than one team is created in product development so that they can compete with one another to develop the best prototype. The sharing of information during this developing phase is an example of redundancy of information which can generate new knowledge. You must be aware of possible information overload. 5) Requisite variety: everyone (while respecting a certain level of security) should have access to all kinds of information within the company. Sometimes top management changes the organisational structure or moves people to other divisions to stimulate the acquisition of new knowledge.


Tools: The spiral of knowledge

Step 2: The knowledge creation process in five phases 1) Sharing tacit knowledge: bring together people from different backgrounds and with different perspectives and let them brainstorm (dialogue). 2) Creating concepts: once tacit knowledge is translated into explicit knowledge (verbalised) you come up with product features (or new process or service features). 3) Justifying concepts: if the concept is ready it has to be justified according to the organisation’s intentions (is the product in line with company strategy). Is it worth pursuing product development. 4) Building an archetype: try to build a prototype of the product using the explicit knowledge of engineers, for example. 5) Cross-levelling knowledge: disseminate knowledge horizontally and vertically across the organisation. Step 3: Changing the management style The professors suggest using a different management style, rather than the top-down or bottom-up approach. The first approach is the traditional hierarchy in which information is processed and passed to the top of the pyramid where top management create, then plans and give orders. They are the only ones allowed to create knowledge and the explicit knowledge of the lower part of the pyramid is not used. The second approach gives more autonomy to the basis of the pyramid where workers work on their own with little interaction. Those experts are very knowledgeable about what they are doing but have difficulties disseminating that knowledge to others. Top management serve only as sponsors and there is almost no hierarchy.

Tools: The spiral of knowledge


In this way they have come up with a management style which they call the middle-up-down management, which communicates best the continuous iterative process of knowledge creation. Top management provides a sense of direction (organisational intention), the frontline workers perform as experts, and the middle managers are at the centre of that process looking after the conversion of the types of knowledge, and trying to facilitate the process – acting as ‘agents of change’. Top management are called the knowledge officers, the middle management the knowledge engineers, and the frontline workers accumulate and generate tacit and explicit knowledge. Step 4: Organisational structure for the knowledge-creation process The classic structures are known as bureaucracy or the task force. They both apply, for example, to the US army. In peacetime, the army with its different divisions (navy, air force, marines) is a traditional hierarchy with different levels (grades) acting as a bureaucracy. But in time of war, a task force is formed with soldiers taken from those different divisions. Once the war or battle is over, they return to their own bases. The professors mention that both structures are good and should not be seen as independent from one another but rather as complementary. They call this new structure a hypertext organisation where bureaucracy deals with combination and internalization, and task force with socialisation and externalisation, thereby encompassing the four modes of knowledge conversion.


Tools: The spiral of knowledge

III) Summary
The spiral of knowledge deals with: 1) Two types of knowledge: tacit and explicit 2) Four modes of conversion: socialisation, externalisation, combination and internalisation 3) Two dimensions: epistemological and ontological 4) Five conditions: intention, autonomy, fluctuation and creative chaos, redundancy, and requisite variety 5) Five phases: sharing tacit knowledge, creating concepts, justifying concepts, building an archetype, and crosslevelling knowledge 6) Management style: middle-up-down management 7) Organsational structure: hypertext organisation.

IV) Conclusion
Setting up a knowledge culture demands a lot of effort and a change of mentality among everyone in the company. The spiral of knowledge is not a tool but rather a concept to be implemented. We must take into account the period during which this concept was created by the two professors, which was 1995. The hypertext organisation they refer to is known today as a matrix organisation (weak or strong) within the domain of project management. Bureaucracy can be seen as the structure of traditional divisions in a company, and the task force as a project team achieving their project within that company. Nevertheless, this remains a concept able to draw a company’s attention to the implementation of the knowledge-creation process, with innovation and thus competitive advantage as consequences.

Tools: The spiral of knowledge


V) Bibliography
Ikujiro Nonaka and Hirotaka Takeuchi, The Spiral of Knowledge, 1995 ISBN: 978-0-19-509269-1.

http://www.anderson.ucla.edu/faculty/jason.frand/researcher/ speeches/educom98pkm/sld033.htm http://www.nwlink.com/~donclark/history_knowledge/ nonaka.html http://www.psicopolis.com/fisikepsic/spiral.htm http://www.simulations.co.uk/KM.htm


Tools: Strategic intent

Strategic intent
Strategic intent is a high-level statement of the means by which an organisation will achieve its vision. It is a company’s vision of what it wants to achieve in the long term, but stated in present terms. It has to be formulated clearly so that employees can understand it, believe in it and perform it accordingly. Therefore, it must be logical and unique. The purpose of strategic intent is to help individuals and organisations share the common intention not only to survive but also to extend themselves through time and space. This, of course, will give rise to problems in its evolution, as the implementation of the strategy will be based upon experience. “Separating strategy creation from strategy implementation by using corporate planners or consultants for the former activity is thus a hindrance to the evolution of the successful strategy. Linking creation and implementation supports the overall process, and thus a strategy emerges and evolves.”1 The strategic intent should never focus on daily problems, as those are already part of the company’s visions and missions. It should try to show tomorrow’s opportunities, give direction, and provide an opportunity that can be conveyed as worthwhile to all employees. A statement of strategy must become a statement of design through which the principles and practices of the organisation are developed. These statements must represent the whole as seen from any location within the organisation.


Changing Strategic Direction, Peter Skat-Rordam, 2003

Tools: Strategic intent


One of the important parts of strategic intent is to specify the competitive factors – in other words, the factors critical to success in the future. The purpose of this exercise is to define an end result situated far beyond the present planning period. Intermediate goals should accompany strategic intent to make it possible to measure the achievements in the future. This is also one of the reasons why such a strategy cannot be set up in one session: it needs time to mature. It is a visionary approach of the future in which an effort is made to define the customer’s future needs, taking into account the changes in daily life. It sketches the company’s future in ten to 15 years and, with it, the success factors required to develop the company in this direction. “To achieve great things, you need ambitious visions. And it does not matter that a vision cannot be laid out in detail. It is the direction that counts.”2 The traditional view on strategy always referred to the Strategy Pyramid with the vision on the top, then the mission, goals, strategies, tactics and finally the action plans. This was built on existing competencies in an almost stable environment. Nowadays, we prefer to speak about strategy which stretches in a bidirectional way: top-down and bottom-up. Here the competencies are new, and the environment is unstable; it is a permanent exchange between challenges and opportunities. Hence, strategic intent cannot be planned completely in advance, which makes convincing people to work with this system even more difficult.




Tools: Strategic planning from Mintzberg

Strategic Planning from Mintzberg
I) What is it?
Strategic planning, as practised, has really been strategic programming, the articulation and elaboration of strategies, or visions, that already exist, from Henry Mintzberg’s definition in his summary of the book. When he wrote an outline for his book called “The Theory of Management Policy” circa 1973 (see figure 1), he stressed to his management school students that it is important for a manager to assess the relevance and weaknesses of each management science technique, especially strategic planning, in the light of his or her knowledge of the actual management process. During analysis of the strategic planning, he points out three steps: codification, elaboration, and conversion of strategies. Codification means clarifying and expressing the strategies in terms which are sufficiently clear to render them formally operational, so that their consequences can be worked out in detail. This approach can prevent rumours within an organisation, which are easy to fabricate in order to confuse employees and shatter their confidence in the organisation, ad hoc, when a company has notable events to publish, such as reorganisations, downsizing or layoffs, etc. In this way, the representative should be able to interpret and give his attention to finding out the nuance, subtlety and qualification. Elaboration means predigesting the strategy and giving details in brief. In particular, programmes and overall action plans must be specific, clear and specified in each strategy.

Tools: Strategic planning from Mintzberg


II) When is it used?
Organisations might encounter a wide variety of dramatic changes, so conversion means considering the effects of the changes on the organisation’s operations. That is to say, a planner should have foresight, which is the perception of the significance and nature of events before they have changed – for instance, who and what would be affected as regards budgets, performance controls, downsizing, and so on. Strategic planning has been applied to all kinds of activities, such as retreating to an informal place to talk about strategy – for example, mountaineering, hiking, or an unofficial party. But if you call that activity “planning”, then ask conventional planners to organise it, and you can see how quickly the event becomes formalised (mission statements in the morning, assessment of corporate strengths and weaknesses in the afternoon, strategies carefully articulated by 5pm, by Mintzberg’s experience). This way is more human and easier to accept although, due to the various cultures of different regions, it should remain flexible. There is confusion between strategic planning and strategic thinking (or so-called strategic creation) for some managers, which is one danger of mixing them. Mintzberg makes a very clear distinction between them. Planning is about analysis; in contrast, strategic thinking is about synthesis. It involves intuition and creativity. The outcome of strategic thinking is an integrated perspective, a not too precisely articulated vision of direction that must be free to appear at any time and at any place in the organisation. However, often strategies cannot be developed on schedule or ‘immaculately conceived’. They must be free to appear at any time and at any place in the organisation, like the strategic thinking described above, typically through messy procedures of informal learning that must by necessity be carried out by people at various levels who are deeply involved with the specific issues in hand.


Tools: Strategic planning from Mintzberg

In addition, organisations disenchanted with strategic planning should transform the planning job. Planners should supply the formal analyses that strategic thinking requires. They should support strategy making by helping managers to think strategically. And they can also be strategy programmers, helping to specify the steps needed to carry out the vision. In the past, planning systems were expected to produce the best strategies as well as step-by-step instructions for carrying out those strategies so that the managers could not get them wrong. In fact, as we now know, sometimes planning has not exactly worked out like that. In this way, analysing the fall and risk of strategic planning, Mintzberg emphasises that strategic programming is not “ the one best way” or even necessarily a good way. Managers do not always need to programme their strategies formally. Sometimes they must let their strategies remain flexible, as broad visions, to adapt to a changing environment. Only when an organisation is sure of the relative stability of its environment and is in need of the tight co-ordination of a myriad of intricate operations, does such strategic programming make sense. Hence, strategic planning is not only about the formal technique itself but also about how organisations function and how managers do or do not deal with functioning. Most significantly, it has indicated something about how we think as human beings as regards programming strategies.

Tools: Strategic planning from Mintzberg


Figure 1: Outline of “Theory Management Policy” by Henry Mintzberg, circa 1973

The Policy Elements The work of the Manager The structuring of Organisations The Goals of Organisations

The Policy Making Process The Making of Strategic Decisions

The Formulation of Strategies

Management Science at the Policy level Analytic Programmes Planning Programmes

The work of the Policy Analyst Management Policy Tomorrow


Tools: Strategic planning from Mintzberg

IV) Bibliography
“The Fall and Rise of Strategic Planning”, Harvard Business Review (January-February, 1994); summary of Henry Mintzberg’s planning book. HBR article, ISSN: 0017-8012 Henry Mintzberg, “The Illusive Strategy ... 25 Years Later”, 1993 in Arthur Bedeian Management Laureates.

http://www.kmgconsulting.com.au/bookroom/bookstrat.htm http://www.floor.nl/management/top100.htm http://www.goalsys.com/id88.htm


Tools: Supervisory and coaching skills

Supervisory and coaching skills
As a manager or leader of company, you must know how to supervise your employees properly in today’s working place. It is an important role as regards earning your co-employees’ respect, running day-to-day operations efficiently, and the overall success of your company. Remember, if you lead by example the others will follow. Supervisory and coaching skills can help your company to increase employees’ productivity and innovation in order to achieve the business targets. The topics focus on: 1. Communication 2. Motivation 3. Building trust 4. Coaching skills
What makes a successful leader in the business world?

Manager gurus and organisation development researchers have conducted extensive surveys and studies on this question and have narrowed their findings to three factors: - Knowledge - Communication skills - Positive attitude

I) Communication
Communication can be considered as a personal process that involves the transfer of information while also involving some behaviour input. It comprises moving information and understanding between parts of and people in an organisation and the various media involved in communication interchanges. Effective communication is critical to the success of any organisation.

Tools: Supervisory and coaching skills


There is a big difference between the myth and the reality in communication:
Myths 1. We communicate only when we choose to communicate. Realities 1. We communicate many things we are not even aware of. This is human nature. It is a natural response of people towards others. 2. Words depend on one another’s perception or experiences. 3. We communicate a lot through “non-verbal behaviour”. 4. Communication means two-way communication. 5. What we say may NOT be the same as what the listener hears. 6. The true test of how you communicate is the listener’s reaction.

2. Words mean the same to the listener as they do to us. 3. We only communicate through words. 4. Communication means ‘telling’ others what to do. 5. What we say is the same as what the listener hears. 6. If the listener misunderstands me then this is his/her problem.

What skills are necessary for effective communication?

Often, when a misunderstanding occurs in the workplace, it is attributed to a lack of communication which most of time implies that whoever was delivering the message did not do an effective job. But what about the other side – the listener? The contrast between hearing and really listening can be as different as night and day. And in a business environment, not listening effectively to customers, employees, and peers can mean the difference between success and failure. One of the best ways to begin to improve your listening skills is to get a better understanding of some of the most common behaviour


Tools: Supervisory and coaching skills

you and others demonstrate when not listening effectively. Keep in mind that the following listening blocks should not always be seen as bad. In certain situations, they can be effective in helping an individual to achieve a particular result. The key to their effectiveness is to be aware of when and why you are using them. A. Barriers to listening: - Physical: pertain to the physical distance, such as work and office noise, poor telephone lines, crashed computer or distracting wall. - Language - Emotional: the ability to listen to people’s egos B. Three levels of listening - Level 1: passive listening – the listener acts as the receiver of a message - Level 2: logical listening - Level 3: active listening – two important active listening skills are asking open-ended questions, and reflecting what the speaker is saying, thinking or feeling C. Listening skills include • Probing questions • Paraphrasing • Empathy • Summarising • Do not assume (retain your judgment) • Acknowledgement (verbal and non-verbal) D. Questioning skills Open questions: - Questions that stimulate discussion - Questions that ask for an opinion

Tools: Supervisory and coaching skills


Closed questions: - Questions that have a one word or yes/no answer Probing questions: - Questions to collect more information or to clarify: Who? What? When? Where? Why? How?

II) Motivation
The job of a manager in the workplace is to get things done by means of his/her employees. To do this, the manager must be able to motivate them. Human nature can be both very simple yet very complex. Understanding and appreciating this is a prerequisite to effective employee motivation in the workplace and, subsequently, effective management and leadership.

II a) There are two basic forms of motivation:
- Extrinsic motivation: refers to engaging in various behaviour as a means to an end but not for their own sake: high salary, working environment, travel opportunities, etc.; - Intrinsic motivation: refers to engaging in an activity purely for the pleasure and satisfaction derived from doing that activity: serving others, working with machines, creativity, etc. Intrinsic motivation is often considered more powerful, leading to more stable behaviour than extrinsic motivation.


Tools: Supervisory and coaching skills

II b) The dangers of demotivation:
Causes of low motivation - Lack of recognition - No sense of achievement - Conflict with other work, overload, burn out - Lack of co-operation from colleagues - Lack of support from the boss - Ideas not encouraged - Communication barriers - No involvement - Restricted environment - No clear direction - No freedom of speech - Verbal abuse - Lack of respect Signs and symptoms of demotivation - Lack of interest - Boredom - Clock watching - Indifference - Thoughts of resigning - No enthusiasm - Work not completed - Missed deadlines - No energy - Constant criticism - Low productivity - Frequent sick leave or absence - Change in basic personality - Mood swings - Etc.

Tools: Supervisory and coaching skills


III) Building trust
Building trust helps people to develop mutual respect, openness, understanding, and empathy, as well as assisting them to develop communication and teamwork skills. Behaviour that promotes trust: - Live the company values - Keep your promises - Walk the talk - Treat others the way you want to be treated - Be a person of principles

IV) Coaching for success
Nowadays, too many leaders cling to outdated ideals of what it takes to be a good coach. They cannot let go of the misguided concept that good coaches help their teams learn from mistakes, focusing on improvement and correcting performance after mistakes have happened. In today’s working environment, organisations cannot afford the concept of trial and error; things must be done correctly the first time. When do we need to coach an employee? In fact, most of the time a manager should not coach his/her employees. To understand that statement, it helps to know what employee coaching is and what it is not. Providing employees with the knowledge and skills they need to perform their job tasks is not employee coaching – it is employee training. On the other hand, employee coaching is an ongoing process of helping employees to identify and overcome the hurdles that prevent them from excelling in their jobs. Problems concern: - Performance - Poor working habits


Tools: Supervisory and coaching skills

IV a) Performance problems
These may occur at any time when there is a discrepancy between the sought-after results and the actual results, which can occur at various levels: • individual performance problems • team performance problems • unit (e.g. department or division) performance shortfalls • organisational performance problems When an employee’s work falls short of achieving results that are measured as follows: 1. Quantity; Quality 2. Timeliness 3. Cost-effectiveness There are many causes of performance problems, including: • interference • attitude • skills Of course, it is not enough simply to be aware of problem performance in an organisation; a manager or leader needs to know how to improve performance. Most managers will begin with relatively informal approaches to improving performance, such as a discussion between the manager and the problem performer during which the manager will advise the employee of the problem and then devise a plan for remedying the situation. There is an eight-step model for handling a performance problem discussion: 1. Chose an appropriate time and place for the discussion 2. Establish the purpose of your discussion 3. Describe the performance gap in specific terms 4. Listen to your employee’s explanation

Tools: Supervisory and coaching skills


5. Ask for his/her ideas for solving the problem 6. Discuss ideas and action plans 7. Agree on an appropriate follow-up to monitor progress 8. Set an appointment to review and thank the employee. Then the manager must introduce a system of monitoring performance to ensure that the planned improvement has actually taken place. But improving performance also requires that the employee be given support to develop his or her skills, knowledge or whatever has caused the performance problem. It is essential that the manager is then able to apply three techniques to support the under-achieving employee: - use a specific training programme to resolve the problem; - appoint a coach to support the employee; - apply rigorous supervision techniques to help the employee to improve. Sometimes, however, a manager should be aware that the system rather than an individual employee is causing the performance problem. This in turn means that the manager must know how to change the design of a task or alter the way a team operates in order to improve performance. An effective manager will recognise that different organisations require different measures to improve performance, and this course will indicate one way of identifying appropriate management practices to improve performance in different types of organisation.


Tools: Supervisory and coaching skills

IV b) The problem of poor working habits
Your success as a manager or leader depends on your ability to maintain teamwork within your work unit. Employees with poor working habits may create friction among their workmates and damage the entire group’s morale. There are different types of poor working habits which may affect your work unit: • Habits that affect the employee’s output (e.g. too many coffee breaks) • Habits that affect the output of other employees (e.g. too much chit-chat) • Habits that violate universal policies and procedures (abusing company email, telephone, etc.) • Habits that become too annoying or offensive to overlook (e.g. safety violation)
How to address this problem

As a supervisor you need to discuss the problem with your employee in a positive way, while maintaining the employee’s self-esteem. Solicit the employee’s feedback and co-operation in solving the problem. Try to make the employee understand that the problem belongs to him/her, as does the solution. Offer your help, and set timelines to correct the problem. You also need to check progress and, if necessary, propose further action. When a situation becomes chronic and/or more serious, the supervisor is expected to take more formal action. Such actions may include additional documented meetings with the employee addressing the performance inadequacies, the imposition of a probationary period, suspension with or without pay, or involuntary termination. Copies of all written materials relating to these more formal disciplinary steps must be given to the employee and retained in his/her personnel file.

Tools: Supervisory and coaching skills


The Human Resources Manager and the Ombudsman/EEO officer are assigned the responsibility for employee relations at the Institution, including adherence to state and federal regulations governing equal employment opportunity and non-discriminatory practices. Supervisors should contact the Human Resources Manager for assistance prior to proceeding with any disciplinary action.

V) Bibliography
Conlow, C. , Crisp: Excellence in Supervision: Essential Skills for the New Supervisor (Crisp 50-Minute Book) Zeus and Skiffington, Behaviour Coaching

http://www.plsweb.com/graduate_courses/full_course_listing/ on-site/coach/ http://www.bizhotline.com/html/business_management_ videos.html http://www.infopeople.org/training/past/2004/supervising/ coachingskills.pdf http://www.training-classes.com/course_hierarchy/ Business_and_Management_Skills/Managing_People/


Tools: Swot Analysis

SWOT Analysis
I) What is it?
SWOT Analysis is a tool for auditing an organisation and its environment. Situation factors internal to the company can usually be classified as Strengths and Weaknesses, and those external to the company can be classified as Opportunities and Threats. The following diagram shows how a SWOT Analysis fits into a strategic situation analysis:

II) Why use it?
A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. It helps organisations to evaluate the environmental factors and internal situations facing a project. The SWOT Analysis provides information that is helpful in matching a company’s resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. Carrying out a SWOT Analysis helps you to focus activities in areas where you are strong and where the greatest opportunities lie.

Tools: Swot Analysis


III) How to use SWOT
Before creating a SWOT Analysis it is advisable to answer the following questions: STRENGTHS A company’s strengths are its resources and capabilities that can be used as a basis for developing a competitive advantage. • What are your assets? • What experience do you have? • What advantages do you have? • What do you do well? • What are your important resources? • What are your core competences? • What do other people see as your strengths? • Where are you making money? Think about your strengths in relation to your competitors – for example, if all your competitors provide high-quality service, then a high-quality service procedure is not a strength in the market, it is a necessity. WEAKNESSES The absence of certain strengths may be viewed as a weakness. • What do you do badly? • What do you need? • What could you improve? • What should you avoid? • Where do you lack resources? • Where are you losing money? For example: are your competitors doing any better than you? Do people seem to perceive weaknesses that you do not see? Possible Strengths and Weaknesses: experience, resources, originality, customer service, efficiency, competitive advantages, etc.


Tools: Swot Analysis

OPPORTUNITIES The external analysis may reveal certain new Opportunities for profit and growth. • What new customer needs could you meet? • What are the technological breakthroughs? • Where do the best opportunities lie? • What are the economic trends that benefit you? • What are the emerging political and social opportunities? • What interesting trends are you aware of? • Where are the niches your competitors have missed? When analysing the Strengths ask yourself whether these open up any Opportunities. Or, analyse your Weaknesses and ask whether you could open up Opportunities by eliminating them. THREATS Changes in the external environmental may also present Threats to the company. • Which weaknesses seriously threaten your business? • What barriers do you face? • Which required specifications are changing as regards products or services? • What financial/cash-flow/debt problems do you have? • What are the negative economic trends? • What are the negative political and social trends? • What is your competition doing? Analysis Threats often reveal what needs to be done, and puts problems into perspective. Possible Opportunities and Threats: changes in technology and markets, changes in government policy related to your industry, events, change in lifestyle, business alliances, increasing market saturation, etc.

Tools: Swot Analysis


IV) Who uses SWOT?
It is being used by companies who want to understand critical issues facing their business, whether they are: • Just starting a business • Planning to roll-out a new service or product • Seeking financing, or just • Reviewing their business operations to make improvements. SWOT Analysis can be used for decision-making within departments and committees or even by individuals. The SWOT Analysis has been a strategic tool for different industries; it is a decision-making aid when new programmes are planned. It goes through all market segments, and all types (small to large co-operations) of companies, entrepreneurs and business managers. Roles for a successful SWOT • Be specific, avoid grey zones • Keep SWOT short and simple, avoid complexity • Be realistic about the Strengths and Weaknesses of your organisation • Analysis should distinguish between where your organisation is today, and where it could be in the future • Analyse in comparison to your competition (better or worse than your competition) • Be aware, SWOT Analysis is subjective.


Tools: Swot Analysis

V) Summary
SWOT Analysis can be a fast and excellent tool for exploring the possibilities for initiating new concepts. It looks at future possibilities, using a systematic approach, in both positive and negative concerns. It is a relatively simple way of communicating ideas, policies, and concerns to others. Probably the strongest message from a SWOT Analysis is that, whatever course of action is decided upon, decision-making should contain each of the following elements: • Building on Strengths • Minimising Weaknesses • Seizing Opportunities, and • Counteracting Threats. SWOT Analysis must also be flexible in order to be used most effectively. Situations change with time and an updated analysis should be carried out frequently. SWOT is effective because of its simplicity, and it is neither cumbersome nor time-consuming. Used creatively, SWOT Analysis can form a foundation upon which to construct numerous strategic plans.

Tools: Swot Analysis


VI) Bibliography
Edmund P. Learned, C. Roland Chistiansen, Kenneth Andrews, and William D. Guth in “Business Policy, Text and Cases”, Homewood, IL: Irwin, 1969.

http://www.netmba.com/strategy/swot/ http://www.quickmba.com/strategy/swot/ http://www.mindtools.com/pages/article/newTMC_05.htm http://www.marketingteacher.com/Lessons/lesson_swot.htm http://www.bplans.com/dp/article.cfm/148


Tools: Thiem-Tom 10.5 S framework©

Thiem-Tom 10.5 S framework©
I) What is it?

Tools: Thiem-Tom 10.5 S framework©


II) How can it be used?
As mentioned in the introduction to this chapter, this framework has been developed by Professor Dr Tôn That Nguyên Thiêm and myself, with some interesting input from one of our students Mr Nguyen Duc Thong. It all starts with the McKinsey 7S framework1 which is wellknown and has been adapted many times. As the name implies, this ‘first’ framework comprised seven Ss: structure, systems, style, staff, skills, strategy and shared values. The model’s first three Ss are described as “hard Ss”: • Strategy: the actions a company starts with which must be maintained. This is the global direction in which the company wants to evolve. • Structure: this is how the company is organised – the way people work together and how tasks are distributed. • Systems: is about the processes and global information linking each part of the organisation to the other parts. The four remaining Ss are less tangible, which is why McKinsey called them “soft Ss” – they are more cultural: • Style: is about the management style – how the management behaves. It is important to know this as this gives a clear indication of the way things could go in the future. • Staff : the way the company finds future managers – how it selects and educates the personnel. Is the company simply filling a gap in the personnel files, or is the management looking for the best person in the right place, giving him or her a career opportunity? • Skills: what capabilities and important attributes can be found in the organisation, and which ones does the company want to develop for and in the future? • Shared values: does the company have a set of values every


This was developed in the early 1980s and used as a basis for research for R. Waterman, in “In Search of Excellence. Lessons from America’s Best Run Companies”, paperback, 1988.


Tools: Thiem-Tom 10.5 S framework©

staff member can stand behind? Is this list imposed by the management, or is it a set of values shared with all the staff? Without a correct value-set it is impossible to build a strong company.

Tools: Thiem-Tom 10.5 S framework©


III) Innovation
A combination of all these topics provides a new effective framework for the analysis of an organisation and its activities. It is a kind of checklist intended to establish how good a management team is as regards harnessing every single part of its organisation for the business it is in. In his book on Strategic Management2, Professor Dr Tôn That Nguyên Thiêm developed an 8S framework, by adding Superordinate Goals. While working together we developed this new framework which we explain as follows: the explanation given above remains unchanged with the Superordinate Goals playing their role in the centre. However, as times change, and as the outside world continues to put new pressure on the business, the companies, and the organisations, several new items became important. The first one, resulting from the new trend towards environmentally correct behaviour and to social responsibility, is at the top of the outer circle, and is part of the hard Ss, as it is measurable. In the middle of the framework we introduce two important points: the first is Sustainability which, in times of difficult economic situations, is one many managers forget. It is their main task to try to make the organisation and its structure, style, etc. sustainable for the future. Therefore, the second element (which counts for a half and thus explains the 10.5) is the financial situation guaranteeing this: the Stability. In combination with the five competitive forces, this is a good start for a complete external and internal analysis for every organisation.


Thi Truong, Chiên Luoc, co câu, Vapec, Ho Chi Minh City 2003, p 392


Tools: Thiem-Tom 10.5 S framework©

IV) Superordinate Goals
These are goals that get people from opposing sides to come together and work towards a common end result. For example, if you have two groups of people who seriously dislike each other you might set up a situation in which they simply have to work together in order to be successful (e.g. maybe the two groups get lost in the jungle together and the only way they can survive is to work together – hey, it could happen). This breaks down barriers, encourages people to see one another simply as people rather than as part of “that other group that we dislike”, and can help overcome differences between the groups. Definition found at: ttp://www.alleydog.com/glossary/ definition.cfm?term=Superordinate%20Goals

Tools: Thiem-Tom 10.5 S framework©


V) Bibliography
Tommissen, Koenraad,( 2006) An Introduction to Management Consultancy, Apsis, La Hulpe Belgium, ISBN 2-9600590-0-X Thiem, Ton That Nguyen, ( 2003), Thi Truong, Chien Luoc, Co Cau, Vapec, HCMC Vietnam


Tools: Time management matrix

Time management matrix
I) Introduction
Stephan Covey designed a time-management matrix to help people manage themselves by prioritising their tasks. He categorised the tasks as: urgent, not urgent, important and not important. The judgment as to whether activities are urgent, important, both or neither, is crucial for good time management. The decision whether a task is urgent or not, important or not is subjective and will differ from one person to another.

Tools: Time management matrix


The time-management matrix

Urgent I (MANAGE) • Crisis

Not Urgent II (FOCUS) • Preparation/planning • Prevention • Values clarification • Exercise • Relationship building • True recreation/relaxation Quadrant of Quality and Personal Leadership IV (AVOID) • Trivia, busy-work • Junk mail • Some phone messages/ email • Time wasters • Escape activities • Viewing mindless TV shows


• Medical emergencies • Pressing problems • Deadline-driven projects • Last-minute preparations for scheduled activities

Quadrant of Necessity III (AVOID) • Interruptions, some calls

Not Important

• Some mail and reports • Some meetings • Many ‘pressing’ matters • Many popular activities

Quadrant of Deception

Quadrant of Waste


Tools: Time management matrix

Most inexperienced people, and people who are neither good at time management, nor at managing their own environment, tend to spend most of their time in boxes 1 and 3. Poor time managers tend to prioritise tasks (and thereby their time), according to who shouted the last and loudest (interestingly, loudness normally correlates to seniority, which discourages most people from questioning and probing the real importance and urgency of tasks received from bosses and senior managers). Any spare time is typically spent in box 4, which only comprises aimless and non-productive activities. Most people spend the least time of all in box 2, which is the most critical area for success, development and proactive self-determination.

II) What
Ideas for managing tasks First quadrant

The tasks in this quadrant are those which need to be performed right away. The manager should evaluate the importance and urgency of such tasks, and prioritise them according to their relative urgency. If two or more tasks appear equally urgent, discuss and probe the actual requirements and deadlines with the task originators or with the people dependent on their outcomes. A manager should help the originators of these demands to reassess the real urgency and priority of these tasks. They should include activities that you have previously planned in box 2, but which move into box 1 when the time slot arises. A manager will have to look for ways to break a task into two stages if it is an unplanned demand – often a suitable initial ‘holding’ response or acknowledgment, with a commitment to resolve or complete at a later date, will enable him/her to resume other planned tasks.

Tools: Time management matrix


Second quadrant

These tasks are most critical to success, and yet tend to be the most neglected. Activities here include planning, strategic thinking, deciding direction and aims, etc., which are all crucial for success and development. A manager must plan time slots for doing these tasks and, if necessary, plan where they can be carried out free from interruptions, or ‘urgent’ matters from quadrants 1 and 3 will take precedence. A manager should break big tasks down into separate logical stages and plan time slots for each stage, using project management tools and methods. Having a visible schedule is the key to being able to protect these vital time slots.
Third quadrant

A manager must scrutinise these demands ruthlessly, and help (even your boss and your senior managers) to reassess the real importance of these tasks. He/She should practise and develop the ability to explain and justify why it is not possible to carry them out. Where possible, he/she should reject and avoid these tasks immediately, informing and managing people’s expectations and sensitivities accordingly. The manager should explain why the tasks cannot be done and find another way of achieving what is required, which might involve delegation to another person, or reshaping the demand into something more strategic, with a more sustainable solution. A manager should look for reasons why demands in this area are repeated and try to prevent their reoccurrence. This can be done by educating and training others, including customers, suppliers, fellow staff and superiors, to identify long-term remedies, not just quick fixes. For significant repeated demands


Tools: Time management matrix

in this area, the manager can create a project to resolve the cause, which will be a quadrant 2 task. He/She should challenge habitual systems, processes, procedures and expectations – for example, «we’ve always done it this way». The manager should help others to manage their own time and priorities so that they do not ‘bounce’ their pressures on to someone else. Old policies and assumptions should be questioned to assess whether or not they are still appropriate.
Fourth quadrant

The activities in this quadrant are not tasks; they are habitual comforters which provide a refuge from the effort of discipline and proactivity. These activities affirm the same ‘comfort-seeking’ tendencies in other people; a group or entire department doing a lot of quadrant 4 activities will create a non-productive and ineffectual organisational culture. These activities have no positive outcomes, and are therefore demotivating. They are often stress related, so a manager must consider why he/she carries out these tasks and if there is a deeper root cause then it should be addressed. The best method for stopping these activities, and for removing the temptation to gravitate back to them, is to have a clear structure or schedule of tasks for each day, which the manager is able to create in quadrant 2.

Tools: Time management matrix


III) Summary
Whenever possible a manager can assign some of the tasks to a capable colleague or an employee as long as that person has the right skills and knowledge to perform it. Great time management is one of the most important skills a person can develop; it takes practice to manage your time effectively.

IV) Bibliography
Covey, Stephen R.,(1989), The Seven Habits of Highly Effective People, Simon and Schuster, ISBN 0-671-66398-4

http://www.srds.co.uk/cedtraining/handouts/hand09.htm http://www.smallfarmsuccess.info/management/print_671.cfm http://www.timethoughts.com/timemanagement/ importance-time-management.htm


Tools: Total Quality Management

Total Quality Management
I) What is it?
In society today quality plays an important role in customer satisfaction. Before understanding the concept of ‘total quality management’ (TQM) one must define quality. Quality is said to be “the ability to satisfy, or even exceed, the needs and expectations of the customer”1. Others define it as: “Quality is fitness for use”2, or “Quality is a conformance to requirements or specifications”3. Total Quality Management is an organisational management approach to long-term success through customer satisfaction. There are numerous definitions of TQM, but one recent definition says it is “A way of life for an organisation as a whole, committed to total customer satisfaction through continuous process of improvement, and the contribution and involvement of people”4. TQM principles are also known as total quality improvement, world-class quality, continuous quality improvement, total service quality, and total quality leadership. TQM is a quality-centred, customer-focused, fact-based, team-driven, senior-management-led process to achieve an organisation’s strategic imperative through continuous process improvement. The word “total“ in Total Quality Management means that everyone in the organisation must be involved in the continuous improvement effort; the word “quality“ shows a concern for customer satisfaction; and the word “management“ refers to the people and the processes needed to achieve the quality.


Mullins, Marketing Management: A Strategic Decision-Making Approach, International Edition, 1998 Juran, Juran’s Quality Handbook, Mc Graw Hill, New York, Crosby, Philip B., Quality Without Tears: The Art of Hassle-Free Management, Plume Books, New York, 1985 4 Mullins, Marketing Management: A Strategic Decision-Making Approach, International Edition, 1999
2 3

Tools: Total Quality Management


TQM is very different from other management styles in that it recognises that the quality as determined by the provider might be much different from the quality as perceived by the receiver. TQM focuses on process rather than outcome. The key principles of TQM include management commitment, employee empowerment, fact-based decision-making, continuous improvement and customer focus. An ISO implementation is the basis for a TQM implementation. ISO 9000 is a set of Quality System Management Standards. Where there is an ISO system, about 75 percent of the steps are in place for TQM. The requirements for TQM can be considered ISO plus. In short, implementing TQM is being proactive about quality rather than reactive.


Tools: Total Quality Management

II) When can it be used?
Total Quality Management requires an organisational transformation: a totally new and different way of thinking and behaving. This transformation is not easy to achieve. TQM it is not for the weak or the statistically untrained. At first glance, many TQM techniques may seem simple and based on common sense, but they must be understood and used correctly for TQM to function properly. Many companies have difficulties in implementing TQM. Surveys by consulting firms have found that only 20 to 36 percent of companies that have undertaken TQM have achieved either significant or even tangible improvements in quality, productivity, competitiveness or financial return. As a result, many people are sceptical about TQM. However, when you look at successful companies you find a much higher percentage of successful TQM implementation.

Tools: Total Quality Management


III) Example: “Quality and participation at Xerox©”
In many ways, Xerox is a microcosm of what has happened to much of American industry. Many of you will remember the first plain paper copier, the Xerox 914 which was introduced in 1959, which quickly created an entire new industry. Some people have called the 914 the single most successful product ever made. It launched Xerox into an era of feverish growth and success. But with two decades of success, Xerox became complacent and took its eyes off both the customer and the competition. The company saw the Japanese coming at the low end of the market, but it did not take the threat seriously. It went on believing that it would always be successful, even as its market share began to shrink. After all, Xerox people told themselves, this was their industry as they had created it. Fortunately, Xerox reacted in time. In the late 1970s, the company started to take a long, hard look at what Xerox was doing and how the business was being run. And it started to take an equally hard look at how its competitors were running their business. Xerox was startled by what it found. One of the first things it realised was that its costs were too high – and not just a little high. In fact, the Japanese were selling their small machines for what it cost Xerox to make their own. Xerox assumed that because the machines were low cost, they were of low quality – it was wrong! Then it tried to convince itself that the Japanese could not be making money. Wrong again! They were profitable. That woke Xerox up in a hurry and it went to work in earnest to begin closing the gaps. It realised that to be a world-class competitor in the 1980s and 1990s, it had to challenge everything it had done in the past.


Tools: Total Quality Management

It had to change dramatically – from the way it developed and manufactured its products to the way it marketed and serviced them. After about five years of being in the process of changing the corporation, and although there is still a long way to go, the results are gratifying: • Reduction of average manufacturing costs by over 20 percent, despite inflation • Reduction in the time it takes to bring a new product to market by up to 60 percent • Substantial improvement in the quality of products. Xerox is perhaps the first American company in an industry targeted by the Japanese to regain market share. And it has done so without the aid of tariffs or protection of any kind. Paul A. Allaire of Xerox says: “It’s not magic; it’s involvement. People sometimes ask how we are doing it at Xerox – how we have reversed our slide and begun the long, tough road back. There is no magic formula. We are doing it by involving all of our people in problem-solving and quality improvement. The entire management team has a deep and real commitment to employee involvement. Our incentive is a powerful one – survival as a successful business entity.”5


By Paul A. Allaire and Norman E. Rickard, “Xerox Corporation Copyright by the Association for Quality 1989”, editor at 513-381-1959

Tools: Total Quality Management


IV) Historical context
Total Quality Management was developed in the mid-1940s by Dr W. Edward Deming who at the time was an advisor in sampling at the Bureau of Census. He later became a professor of statistics at the New York University Graduate School of Business Administration. He had little success convincing American businesses to adapt to TQM but his management methods did gain success in Japan. After World War II, General MacArthur took 200 scientists and specialists, including Dr Deming, to Japan to help rebuild the country. While working on the Japanese census, Dr Deming was invited by the Japanese Union of Scientists and Engineers to give lectures on his statistical quality techniques. Eventually, many Japanese manufacturing companies adopted his theories and were able to produce quality products at reduced costs. While the Japanese business world was concentrating on producing quality products, businesses in the US were more concerned with producing large quantities of products. Their emphasis on quantity at the expense of quality let the Japanese, with their inexpensive, high-quality products, gain a substantial foothold in American markets. The success of TQM through Deming’s approach can be seen in Japanese industry (Honda, Toyota and Mazda are examples of this). Dr Deming’s universal 14 points for quality management are the foundation of Total Quality Management and guide the entire TQM process. In the 1970s and 1980s, many American companies, including Ford, IBM, and Xerox began adopting Deming’s principles of TQM. This gradually led to their regaining some of the markets previously lost to the Japanese.


Tools: Total Quality Management

Juran developed the idea of a quality trilogy: quality planning, quality improvement and quality control. These are three aspects of company-wide strategic quality planning. Ishikawa’s biggest contribution is in simplifying statistical techniques for quality control in industry. At the simplest technical level, his work has emphasised good data collection and presentation, the use of Pareto Diagrams to prioritise quality improvements, and Ishikawa Diagrams. He also introduced Quality Circles. In the 1970s, Crosby also did a considerable amount of work on TQM – he is best known for his work on the cost of quality. Although TQM gained its prominence in the private sector, in recent years it has also been adopted by some public organisations.

Tools: Total Quality Management


V) Bibliography
• Cartin, T. J., “Principles and Practices of TQM”, 1993, Milwaukee, Wisconsin, Quality Press • Garvin, D. A., “What does ‘product quality’ really mean?”, 1984, Sloan Management Review, 26(1), p 24-43 • Omachonu, V. K. and Ross, J. E., “Principles of Total Quality”, 1994, Delray Beach, Florida, St Lucie Press • Saylor, J. H., “TQM Simplified. A Practical Guide”, 1996, (2nd ed.), New York, McGraw-Hill.

http://jobfunctions.bnet.com/OPERATIONS/Quality/ Total+Quality+Management/ http://tkdtutor.com/05Instructors/TQM.htm http://www.managementhelp.org/quality/tqm/tqm.htm http://www.ischool.utexas.edu/~rpollock/tqm.html http://accurapid.com/journal/21quality.htm http://home.att.net/~iso9k1/tqm/tqm.html “Technology and Operations Management”, California Polytechnic and State University (http://www.csupomona.edu/~hco/301/08-TQM.ppt) “The Quality Tools Cookbook”, Prof. Sid Sytsma & Dr Katherine Manley, Ferris State University (http://www.sytsma.com/tqmtools/tqmtoolmenu.html) “Review of Japanese and Other Quality Tools”, Engineering Science 130, Vanderbilt University (http://www.vanderbilt.edu/ Engineering/CIS/Sloan/web/es130/quality/qtooltoc.htm) Deming website (http://deming.org/)


Tools: Total Quality Management

“Total Quality Practices of Award Winning Builders” (http://www.toolbase.org/Docs/ProgramsNav/ ForBuilders/3014_Total_Quality_Practices_of_Award_ Winning_Builders_2001_c.ppt?TrackID=&CategoryID=908&D ocumentID=3014)



Abraham Maslow Abstract Conceptualisation Accessibility Accommodation Action-Centered Leadership Active listening Activity-Based Costing Advocate Alfred Adler Alfred Chandler Alfred Sloan Alibi Analysis Anger Aristotle Arthur D. Little Arthur D. Little Maturity Matrix Assimilation Avarice 266 183 27 186 144 17, 20, 442 150 69 233 218 116, 123 52 60, 63 53 425 282 282 186 53

Baker Foundation Beckhard Benchmarking Big Bang theory Bill Cockburn Boston Consulting Group Bruce D. Henderson Budgets Building trust Business plans Business Week 150 238 156 178 161 168, 216 216 82 440 82 132



Carl Gustav Jung Carnegie-Mellon University Case Western Reserve University Cash Cow Casio Catalytic Cathartic Change Change process Charismatic leadership Chester Barnard C. K. Prahalad Claire Forrest Clear language Client Coach Coaching Coaching skills Cockman Codification Collecting data Communicate Communication Company accounts Compaq Computer Corporation Competence Comprehensive questioning Confidence and self-esteem Confidentiality Conflict of interest Conseil Consilium Contract Coordinator Core Competence Corporate culture 302 120 180 168 133 63 63 92, 95 97 147 116 132 190 18 35 69 67 440 58 434 55 99, 206 22, 23, 39, 440 82 418 36 17 17, 20 37 41 10 10 74 308 133 200



Corporate Strategy Counsellor Creativity Cycle of learning/Cycle of training

116 , 117, 120, 123 64, 68 112 180

Data collection David A. Kolb David Borgenicht David Hawkins Declaration Delegate Delegation Deliverables Delphi Method Dependence Diagnosis Disclosure Dissatisfaction Distributed leadership Diversification Dog Driving forces Due care 81 180 164 138 35 28 29 36 192 367 81 40 241 147 125 168 230 38

Economic benefit Edward de Bono Edward Thorndike Eight steps for major change Elaboration E.L. Thorndike Emotional maturity Empathic listening Energy man Entry phase 74 410 233 198 434 266 22, 24 381 52 72, 74



Ethical Ethics Ethics and integrity Expert

34 25, 33 22 64

Facilitator Fearlessness Fear of change Fees Force Field Analysis Ford Motor Company Formula of change Framework Future leadership Futurologist 65, 66, 307 17 95 36, 47 230 254 236 19 147 113

Gary Hamel GE/McKinsey Portfolio Analysis Matrix General MacArthur General Motors General Problem Solver (GPS) George A. Miller Ghemawat Pankaj Glocal thinking Greediness Gurus 132 244 473 123, 298 138 392 125 18, 21 53 111



Harvard Business School Harvard University Hawkins-Simons theorem Henry Harley Arnold Henry Mintzberg Herbert Simon Hersey and Blanchard Hewlett-Packard H. Igor Ansoff Hirotaka Takeuchi Hofer Schendel Honesty Honey & Mumford Humour Humour and perspective 116, 150, 198, 216 132 138 195 434 138 147 418 120 424 282 26 182 19 17

Identification Igor Asnoff Ikujiro Nonaka IMC Implementation Incorruptibility Indecision Maker Independence Independent Inducements Innovator Instantiation Institute in·teg·ri·ty Integrity, independence, objectivity Intellect Intellectual abilities Intelligent Interdependence 60, 61 218 424 33 90 25 166 367 14, 35 42 306 18 35, 44 25 35, 40 17, 20 22 20 367



International Monetary Fund Interviews ISO ISO certificates

122 84 469 72

Jack Mahoney James Holec Jr. James McGregor Burns Jealousy JIT John Adair John Deere Company John Locke John Milligan John P. Kotter Johnson Joseph Juran Joshua Piven Jung just do it Just-in-time management 34 55 147 53 252 144 150 33 68 81, 198 150 314 164 296 91 252

K Kai John Ken Blanchard Kenichi Ohmae Kenneth R. Andrews Kerry Fouché K E Sveiby Key Process Indicators (KPIs) key suppliers Kipling Knowledge 105 123 404 128 116 71 107 160 82 11 105



Laziness Leader behaviour Lose-lose Lust 53 407 380 53

Managerial grid Margaret Fuller Market development Market growth Market penetration Market share Marvin Lieberman Maslow’s five-stage Hierarchy of Needs McKinsey McKinsey 7S framework Member Mentor Michael E. Porter Michael Porter Milwaukee Mintzberg, Henry Mission Monitor Motivation Myers Briggs Type Indicator 257 105 125 169 125 169 227 266 128, 132 457 35 307 332 284 138 123 17 308 440 296

Netflix Nguyen Duc Thong Niccolo Machiavelli Nokia Non-poaching 137 457 95 299 38



Objectivity Observation one-man-show Open Space Technology Orientation 43 84 51 310 60

Parasuraman Patience Pareto Principle Paul A. Allaire Paul Barber Paul Hersey Personal conduct Personal drive and initiative Personnel records PEST Analysis Peter Drucker Peter von Loesecke Philip Sadler Philip Selznick Physical and mental health Physiological needs Plato Porter Porter’s Five Forces Porter’s three generic strategies Prahalad Presentation Presentologist Pride Privacy of information Product development Profession Professionalism Proposal presentation Protector Publicity 355 12 314 472 68 404 48 22 82 324 425 55 67 218 22 268 425 425 330 340 425 78 113 53 43 125 44 17 88 51 48



Qualities Question Marks Questionnaires Quick-start 22 168 84 57

Rapid framing Relationship Researcher Resolution Respect Restraining forces Reuben Harris Richard Beckhard Richard Nixon Robert S. Kaplan Russell L. Ackoff 17 58 68 60, 66 20 230 240 240 285 150 112

Sales records Sanctum sanctorum Sandhurst Sartre Senge SERVQUAL Shareholders Shareholder value approach Shigeo Shingo SIPOC diagram Sir Francis Bacon Situational leadership Six Thinking Hats Social responsibility Socrates Solutions Sony Spokesman Stakeholders 82 28 144 425 425 344 83 396 254 400 105 404 410 459 105 86 133 52 58



Star Stephen R. Covey Strategic intent Strategic management Strategic Planning from Mintzberg Strategic thinking Strategy Strategy Pyramid Stress Stress resistance Subcontracting Sun Tzu Superordinate Goals Supervisory and coaching skills Supportive Sustainability SWOT SWOT Analysis Synergise

168 364, 390, 462 432 217 434 123 99, 118 433 24 22 37, 67 17 459 440 63 459 117, 218 450 383

Taiichi Ohno Task Team Technical The Boston Matrix The Buddy The Cattell 16 PF Personality Profile The Control Freak The Experience Curve The management styles grid (Blake and Mouton) The Seven Habits of Highly Effective People The spiral of knowledge The Supreme Delegator The Wall Street Journal The Workaholic The Yes/No Manager 254 145 145 66 168 165 174 165 216 256 364 424 165 132 165 165



Thiem-Tom 10.5 S framework Time management matrix Tim Laseter Tôn That Nguyên Thiêm Total Quality Management Toyota Production System TQM Trainer Training Transformational leadership

456 462 54 457 468 254 468 65 67 147

Understanding people University of Illinois University of Surrey University of Texas UPS 22 178 144 256 160

Vilfredo Pareto Vision 314 99, 199 , 242

Walter Mischel W. Edward Deming William Ian Beardmore Beveridge Win-lose Win-win World Bank 178 473 51 379 379 122

Xerox Xerox Corporation 471 156

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