An Innovative View of Management Consultancy

Complemented by a comprehensive selection of tools

Dr Koenraad Tommissen

Introduction to the second edition

5

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

Foreword

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Foreword
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

Acknowledgments

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Acknowledgments
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

10

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

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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!

12

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

Once again this is an important lesson in humility: you should not give the impression of being TOO something. no. or words unnecessarily. in an unhurried fashion. you should try to be patient while helping others to bring you stones that can help you to create. the easier it should be for you to explain it. this is not enough because you cannot simply ‘dream’ – you have to find a realistic solution which can be adapted to the situation. of course. but often by omission or stupidity. phrasing. You should be able to forgive them. 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. And yet don’t look too good. In addition. But. the second part of the sentence is very basic for all consultants: do not use complicated sentences. One of the most important characteristics of good consultants is that they are able to think in an abstract way. The better you understand a problem. nor talk too wise. If you can think – and not make thoughts your aim. as well as helping them to find the truth. . If you can do this it will be easy for you to make realistic plans towards your ‘dream solution’. all of this should never be a reason for you. a wall of solutions. And never forget that many people will lie to you. They can ‘dream’ of a solution. Your clients do not expect university vocabulary from you: what they want from you is an understandable solution to their problem. as mentioned in the poem. to start lying yourself. 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.Rudyard Kipling 13 a solution comes to you. If you can meet with triumph and disaster And treat those two imposters just the same. because that never helps. The approach is exactly the same for ‘thoughts’. Of course. the consultant. not necessarily on purpose.

education. to study this success. But you should also be able to speak with the working class inside this company. That is the way you should treat those two ‘imposters’ just the same. You can and should learn a lot from your mistakes. and status in society. because they can very often explain why things go wrong. If this is the case you should not be discouraged. making no distinction between origin. Or walk with kings – nor lose the common touch. race. You should be able to speak with the management of the company. speak simply. follow you and help you to implement the solution you propose. Be humble. It is they who do the job.14 Rudyard Kipling Not every mission you will have in your consultancy career will be a successful one. You should be completely independent. Everybody should consider what you have told them. A consultant must try to speak with everybody (if necessary) in your client’s company. 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. sex. It is not always easy. but it is worth trying. If neither foes nor loving friends can hurt you. Once in a while it may happen that the solution you implemented was not the right one. 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. you should learn from this difficult experience and try to find out why you made this mistake. you should not stop working or studying. I know. but you should also give . experience. Nobody should be able to attack you morally or financially. create contacts with everybody. age. If you have had a huge success. If all men count with you. but none too much. and maybe your client’s company will be in an even worse situation following your intervention. If you can talk with crowds and keep your virtue. Trying what? Well. and try to find out if it was possible to do even better. By acting this way people will admire you. but rather you should try to stay humble. on the contrary. and try to get them to help you.

Things can evolve and you should be aware of that and accept that people can change their minds.Rudyard Kipling 15 them the opportunity to hold their own opinion. And then comes the final verse which we could easily adapt as follows: And – which is more – you can be a consultant now. .

.

Sun Tzu This chapter deals with the personal attributes. 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. It is always very useful to know your enemies and your friends. the greater will be your chance to succeed in your mission as a consultant. to try to find out why they react in a certain way in some circumstances. This section will be split into four parts: the first will cover the analysis made by the person himself. Who am I? What personal attributes do I need? • Fearlessness • Rapid framing • Humour and perspective • Confidence and self-esteem • Intellect • Active listening • Comprehensive questioning . It is not an exhaustive list. Personally. and finally there are some notes about time and how to use this ‘enemy of mankind’. I am convinced that the more topics you select.Chapter 1: Professionalism: what are the requirements for a good consultant? 17 Chapter 1: Professionalism: what are the requirements for a good consultant? Invincibility lies in oneself Vincibility lies in the enemy. the third will cover the necessary environment. simply a type of checklist from which you can pick what you want. As a ‘user’ of consultants it is interesting to feel the way they work. and undoubtedly being aware of these things can be very positive. where the ‘almost-consultant’ observes his own reactions in certain situations. the personal qualities and other ‘things’ required when preparing for a consultancy job. As will be shown later. the second will deal with a later stage.

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. The consultant has to be sure about his recommendations at the end of a mission. This. Another kind of fear. Even when you knew a lot about the topic.18 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. or at least give the impression that he is. and has to be able to control his apprehension or fear. or who think they are specialists in management. he does not know the people working there. But there is. never hired one. or the major cause of the company’s inefficiency. and the consultant is unable to convince them that they are wrong. 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. of course. you always wondered what his reaction would be. Most people have taken exams at least once in their life. of course. It is a strange situation. He has to live in a kind of fearlessness. He is starting a kind of long-term examination. I put this on top of the list as it is probably the one the outside world rarely thinks about. the other points are more positive. much more to the word ‘fear’. and he has to find all this out as objectively as possible. and he should not fear the reaction of the company management. is actually the management itself. even if he knows that what he is going to say will not be acceptable to them. is that of being in a state of permanent confrontation with people who dislike consultants in general. and we all remember the feeling when there was a teacher or professor with the reputation for finding it difficult to give good marks. or simply never thought about the feelings and capacities a counsellor needs. . Imagine a consultant telling the management that the only problem in the company. Fortunately.

and even to better understand what is actually meant. As in daily life. and the faster he will be accepted in what he does. what does this mean? When starting a new mission the consultant receives information from one or several people about the company. One way of detecting a good and efficient consultant is through his response to framing. So that if the frame he has made in his mind seems to be complete he can starting analysing immediately. if necessary. to make up his mind. the problem(s). Those who can put situations into perspective in the long term can explain better why current situations are wrong. In a similar way. the quicker people can feel that the consultant knows what he is working on.Chapter 1: Professionalism: what are the requirements for a good consultant? 19 Everybody has heard about a frame and knows what a framework is. People with a broad sense of humour tend to be intelligent because. to build a frame as rapidly as possible so that he can start working on this. A big drama in a specific place within a company may be almost ‘nothing’ compared to the real problem that lies therein. this . Putting things into a humorous context. The shorter the framing period. It is the role of the consultant to detect what has not been revealed. This is not easy for anyone to accept. if not. 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). and the personnel. Of course. everything turns on humour and perspective. a perspective ‘way of thinking’ is also necessary. and giving humorous examples can help both parties to relax. once in a while they manage to use it to diffuse a potentially dangerous situation. 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. he must work on it like a puzzle. it is important to be able to do ‘rapid framing’. So. It is also useful to use this ‘perspective view’ talent when explaining necessary changes the company must make. just because time is money. 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. Therefore. filling in the gaps.

One could compare this. without it. It is being positive in your questioning. and where to start. An intelligent person has a lot of knowledge. And you should have plenty of self-esteem because. Once he knows this it is clear that other people will respect him for what he is. is very close to ‘intelligent’ but is more than just that. but does not have the capacity to conceptualise it. but is probably unable to actually build the bridge because of a lack of experience in that field. the consultant should also introduce the possibility of those 20 unfortunate people finding a new job with financial assistance from the company. The first one knows precisely (according to his university studies) how to build a bridge on paper. But be careful – this has nothing to do with being pretentious. By so doing the discussion will become much easier. whereas a person with intellect knows how to use this knowledge. What is active listening about? Well. and for the way he behaves. If the consultant is not confident either in what he does or with the solutions he is defending. The consultant should have enough experience in the field. and how to calculate exactly the different elements of the bridge. which is extremely important. a workman knows how to build the bridge. as stated in the example above. The above brings us directly to the next point: confidence and selfesteem. of course. in the context of the perspective. it is . what he knows. and sufficient intellectual background so that he can help any company in his area of competence in a practical way. no one can expect the respect of others. In this context it simply means that a person has to know exactly what he is worth and nothing more. which would be a negative approach. On the contrary. It is asking the right questions at the right time without interrupting the speaker. it is not necessary to try to convince the management because they feel that the consultant himself is unsure. and has probably studied a lot. to a degree. with engineers and to those who build bridges. Intellect: this word. when you want to learn a lot about a person or a situation you have to listen – but active listening is more than that. Confidence is required to be able to act and react. simply because he knows how to apply what he has learned in the field.20 Chapter 1: Professionalism: what are the requirements for a good consultant? is not enough for the employees.

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. It is also showing the other person that you are interested. and it is the detective’s role to help the witness to mention everything he knows. Most people think they use straightforward language. but unfortunately this is not the case. There is a beautiful sentence in French that expresses exactly what is meant here: Ce qui ce conçoit bien s’énonce clairement. It is not because people speak the same language – for example Vietnamese – that they always understand each other. Both are necessary because a lot of people never talk. The contraction was derived from think globally. even if it only concerns minor details. act locally. Glocal thinking: this famous phrase was ‘invented’ during the time global thinking was necessary. Of course. It is not easy to ‘translate’ a theoretical approach learned at university into simple ‘human’ language. of course. . 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. One should speak at the level the other understands. This has a lot to do with good pronunciation but much more to do with the use of the correct vocabulary. This is. linked closely to comprehensive questioning. and only answers precise questions. This means simply that it is not practical to use academic vocabulary with less-well-educated workers. but when people forgot to do things locally. In a consultancy job. A person may be frightened when questioned by a consultant because he does not realise the importance of the mission. where they are working (locally). 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. 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. Active listening also means avoiding speaking too much about one thing which might be hiding others.Chapter 1: Professionalism: what are the requirements for a good consultant? 21 helping the other party in the discussion to reveal everything he knows about the problem.

sometimes there is no time left to analyse or reanalyse a problem. they simply act without fear in order to avoid the situation deteriorating further.22 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. and describes exactly what it means: instant action in a given situation. They do not waste time but rapidly find and make the right conclusion. and with the right understanding of the word . this is a sort of analysis one makes (or better still. but a decision has to be made – those who can take the right decisions at the right moment can help companies a lot. but it is a powerful word. mainly because most of them studied at university with the right intentions. to instant decision-taking without fear or apprehension. 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. being able to take the right decisions immediately at the right moment. It is one of the characteristics of born leaders. Indeed. has to make) of himself having experienced several difficult and complicated situations. Here we come back to the beginning. What are my qualities? As I have already mentioned at the beginning of this chapter. but equally should be one of good consultants. 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. It is a compilation of instant and situation.

different levels of communication. They understood from the very beginning of their studies that the more you know. total. of course. There are. Therefore. I am not saying that at this stage every consultant needs all these faculties at the same time – . In order to understand people it is necessary to talk and listen a lot. Finally. levels and different educational backgrounds – because this is exactly where you can learn a lot. there is a written communication in which the solutions are presented to the client. and be a leader by showing the others how to do things without imposing them. Never avoid contact with people from different origins – such as cultural. 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. hierarchical. However. but maintaining interests which covered all subjects. you must be able to communicate in the field. but it is a fundamental necessity for consultants. as we will see in Chapter 4 ‘The entry phase’. universe. and (luckily) not everybody needs the same skills. 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. world/university’. Most of them combined studies in completely different fields in order to broaden both their knowledge and their perspective. and not to be egocentric and blinkered. with a broad background. Communication is not only the basis for business in general. First of all it is necessary to be able to make contact easily with people in general. Secondly. the greater the possibilities for interesting developments. 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. If you are unable to communicate well would you be able to find out what the problem is? May be.Chapter 1: Professionalism: what are the requirements for a good consultant? 23 ‘university’ – from the Latin word universitas meaning ‘the whole. where people can observe from different points of view so that the global impression is closer to reality. why their opinions differ to yours. They studied at university without focusing on special topics all the time. Learn from the others and try to understand what they mean.

at the very least. the one who has given you the mission. stress is also due to ‘fear’ of those above them. Here is another situation: the mission you accomplish has one possible result: to close down the entire company so.24 Chapter 1: Professionalism: what are the requirements for a good consultant? for example. This is not a good situation. except that you always have to behave as an independent person without . Sometimes. the reasons for stress tend to be similar. and what experiences they have. 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. or to look for innovation or change. This is an emotional and complicated situation. In this case. and so they have to work above their normal capacity all the time. 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. create a new job and the stress would disappear. Emotional maturity has nothing to do with age. it is easier to understand by explaining with some examples. and you have to tell him that he is the real problem. Stress is also due to the complexity of the job. The person appearing in front of you is maybe the one who hired you. although maybe not for all of them. Many people work in jobs they are not qualified for. during the closing down period you can offer the employees the opportunity to find a new job. some consultants never have close contact with the client but are specialists in producing written documents. ‘fear’ about what people think of you. as such people have to put all their efforts into actually doing their daily job. ‘fear’ for the career. leaving them no time or energy to think about what they are doing. In the consultancy business. it is about how people react in given circumstances.

they take initiatives (even if they are not always the right or the best ones) they can do a good job. Of course. As a consultant. One of the characteristics I enjoy observing when young consultants start work in a company is their personal drive and initiative. and are not necessarily the best ones for the job. Middle French integrité. Everybody is the same at the analysis phase of a mission. if. when speaking to a company boss you should be respectful. from Latin integritat-. So if a person feels during this analysis phase that he does not need initiative. If not. linked to this is the integrity factor. in fact. from Middle French & Latin. but you should not give him any special treatment and you should not believe him more than you do the others. If you do not feel strong enough to resist that then it is better not to accept this kind of job. and each one of us must make his or her self-analysis to see if ethical correctness is present in their behaviour. you have to convince yourself that you are working objectively on a mission. and the ‘average’ ones. and that all the people involved in this can be changed. it might be better to forget the dream of working as a top-level consultant. then there is no possibility of working as a consultant. in addition. because it is in these two fields that the ‘real consultants’ can be detected.Chapter 1: Professionalism: what are the requirements for a good consultant? 25 any hierarchy. those who will make it. very close to ‘ethical behaviour’: “Main entry: in·teg·ri·ty Pronunciation: in-’te-gr&-tE Function: noun Etymology: Middle English integrite. integer entire 1. without having to take into consideration the position of the person facing you. The dictionary reveals that this is. from integr-. as you should with all the others. Those who are enthusiastic and bring a personal touch to the business are pleasant to work with. because by acting like that they can boost the mission. Of course. You have to act as if you were the only person responsible. integritas. I have already dedicated a whole chapter to ethics. which is very often the grounds for a stressful situation. An unimpaired condition: SOUNDNESS . Firm adherence to a code of especially moral or artistic values: INCORRUPTIBILITY 2.

. . 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. Physical health is also very important. I am thinking here. What more do I need? The question here is mainly relevant for people who want to start their own consultancy business.26 Chapter 1: Professionalism: what are the requirements for a good consultant? 3. you will have plenty of opportunities to convince them to stay. The answer to those two objections is quite simple: if they are expensive – and. but if from the very beginning you want to keep them on-board. because being on mission as a consultant can be tough. Once again. about contacts: most good consultants always know somebody who can help in any situation. Pay them enough so that they are not tempted to leave your company. they might leave your company quite quickly to start their own business. The second point is more difficult: if they want to leave they will. The problem about hiring professional people is twofold: one. 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. in particular.. 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. not knowing when the day will start. in fact. This is all very tiring so the consultant must be in good physical shape. or when it is going to end. 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. and two. make them junior partners if necessary. so check this out. they are more expensive than the others. give them enough free time to study. give them more responsibility. pay for their education. Very often there is a lot of travelling and living in hotels and restaurants on top of actually doing the job.

Commonly known as ‘open-door management’. in government. Of course. and those who are not willing to share their knowledge will lose contact with their daily business. is the accessibility of the managing partners. They will be grateful later. Those who forget that. Try to reduce the non-billable hours and to increase the billable ones (at least those of the most expensive collaborators). and consequently with the consultancy job. suppliers and customers there. So begin with those contacts: a lot of them will grow in importance in business. and teach your children how to do it. the less time you will spend on your own business.Chapter 1: Professionalism: what are the requirements for a good consultant? 27 Like every other business in the world. it is not enough to know where people sit and work. thereby keeping your address book updated at all times. How do you get them? Everybody in this business has studied and therefore has student colleagues. It is quite simple to learn this: start in another consultancy company and observe as much as you can – ‘steal’ with your eyes. for as long as you can manage. You will start to live in a business environment. and will have colleagues. and certainly at the beginning. The more you know about entrepreneurship. the more you can spend at your client’s place. . Perhaps by doing this you will realise that you prefer to work in a larger organisation. Inform those you consider to be good contacts about your career changes. and they will do the same. If your behaviour with them is correct you will be able to use these contacts for the rest of your life. and whom they know so that their address books can be added to yours. One important thing in the consultancy business. How? How long? How many addresses? These are the kind of questions I get asked all the time. or outside the country – keep in touch. it is important to know what they know. and the more you will be able to bill. there are several reasons why you will need some entrepreneurial experience to start up your own consultancy business. Start it as early as possible. and the answers are easy – as many as you can. 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. or to be a partner rather than to start up your own business. because their experience is important to the consultancy company. it is very important that the managing partners are available at all times. That is the way it goes. so keep their names.

or will.28 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. Normal professionals have normal lives. the beginner consultant needs good support resources. too – the time spent at home must be quality time. Nobody can do everything alone. but we will stay focused on the consultancy business. The atmosphere in the office has to be good. It is simply not necessary to be a workaholic. It maybe useful to repeat here that family life is important. of course. at the very least. as it should be at home. 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. Finally. which is a shame as it is not normal to work on Sundays (unless it is really necessary). slow down the working capacity of the people involved. and in different jobs. A lot of consultants do not dare to say to their clients that they never work on Sunday. 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. 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. Everybody needs a day of rest once in a while: explain to your client . be used in a variety of lifestyles.

Let us suppose. It is much better to rest regularly when you want to survive for a long time.Chapter 1: Professionalism: what are the requirements for a good consultant? 29 that you need a day off in order to be fully fit for the following day. by delegating you indicate your trust in others while. Such moments have to be created. that is if you really delegate and do not spend your time controlling the newly appointed general manager. that you are CEO of a company dealing a lot with daily business. So I recommend using lists in any shape or form: for some it is simply a piece of paper pushed into the pocket. I give the following advice to consultants: once they have analysed the entire problem they should just sit back and do nothing. for others it is part of the daily agenda. 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. What does this change? More than you can imagine. on the other hand. as you now know that you will have more free time for other tasks. By delegating you create a special atmosphere that is not always clearly understood by others. You also know that he will have a lot to do as regards his new . because that is just a waste of time. ‘The entry phase’ in Chapter 4 will reveal that there is an even more surprising thing that the clients will have to accept. Delegation is the masterpiece of the real organiser. you delegate everything concerning the daily business to a person you trust 100%. after the analysis phase just sit back and do nothing! I know a lot of people pretend that they never forget anything. or the ‘tasks’ function in Microsoft Outlook Express. because you regularly have to redefine the roles played by the different actors. by resting and apparently do nothing. of the excellent boss. of the remarkable consultant. It should be simple and easy to use. just as you tend to think up a lot of new ideas before falling asleep. you give yourself more free time for other (more important) tasks. in fact. a system not requiring you to copy one list to another. So. you give your brain the chance to define the approach better than ever. for instance. and not those things in which they themselves have no interest. So I repeat. But what is the reason for this? Well. It is a weapon with two strengths: on the one hand. and lists should be made to avoid this. I even tend to believe them because I know that they only promise big things.

Do not spend time on minor problems that can be solved by others. But do the people inside the company know what is happening? Do they understand why you made this strategic move. By waiting to implement an idea that you think is correct you give others the opportunity to do so. Do not repeat things unnecessarily. then do it and do not spend another week or even another day discussing it. Do not put energy into topics others can handle. or a situation where he can be on his own – where he can find some space to think. and that what you want to do is correct. 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. so that you can concentrate on the real problems. do what you have to do – work. you and your company will always be one step ahead of your competitors. Do not dally! Do not talk too much (see the Kipling poem at the beginning of the book). or do they think that you want to retire gradually? Did you explain to your people that you need more time for strategic business. Sanctum sanctorum: these Latin words mean a lot but are not easy to translate correctly. Do what you feel is right at the right time. If you handle this correctly. If you really think that you have to do something. 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. Do not waste time in conferences or meetings where everybody already knows what you are going to say. too. except that you will have lost a day or a week transforming your decision into reality. Everybody needs a place. what that actually means. I mentioned a little earlier that it is important to make decisions and to take initiative. That is what you know and see. and on your main business. This is . That is exactly what is meant here.30 Chapter 1: Professionalism: what are the requirements for a good consultant? responsibilities. One interpretation might be ‘the holy place of the holiest places’. The result will stay the same. and will be grateful to you because of this notable sign of trust (and probably a significant pay rise). So please.

Everyone should convince the other parties involved in business (clients. Strategy is perhaps a well-known word in military and business sectors. rest and concentrate without being disturbed. to think. places where they were able to concentrate on the job in hand. and with the continually increasing speed of innovation. time to find new resources. please invest money in efficiency. with goals to be achieved. Hardly quiet places but. It can be time to read. colleagues. That is exactly what is meant by the sanctum sanctorum. places where they felt comfortable. and it is important to make others realise this. customers) that time off is necessary. I often hear people say that a particular electronic gadget is not useful to them as it is simply a gadget like any other. People should know that you need this. to study. to discuss with others. If you want to gain time. and will appreciate you for it. but it is also useful to think a long way ahead in your private life. or to spend with the family. Do not be too hasty to say that. bearing in mind that sometimes goals are impossible to reach. To a degree this is linked to your mental state of health. All those little ‘breaks’ are restful. Make clear to others that you do not need a ‘vacation’ as such. 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. It has to be an environment where it is possible to think. Make this time part of your personality. Time is money! Think about those countries where internet access is still restricted: this slows down contact with the outside world. You should always think about investing correctly in efficiency. try to analyse whether or not it can be useful to you or your business and help you save time. both in your own career and in the evolution of your business. It is not egoistic to be selfish with your personal time. Make a life plan. nonetheless. Personal time does not necessarily mean time to do nothing. and if you do not want others to react faster than you in their communications. but simply some time for yourself. but other . Never invest in the short term alone – think far ahead and thus plan your investments in the long term. to do sports.Chapter 1: Professionalism: what are the requirements for a good consultant? 31 not necessarily a place where one is physically alone.

The right choice will impose itself. you will become isolated. after a while. and may need a consultant at any time. Unfortunately or. A doctor is a good example of keeping some time free: he must always allow for the unexpected. Conclusion The purpose of this chapter is not simply to make a checklist of the skills. the unexpected missions are often the most interesting ones because they are the result of sudden change.32 Chapter 1: Professionalism: what are the requirements for a good consultant? possibilities may occur. Not at all. making sure it is well balanced. and that the positive and the negative points are clearly defined. if you prefer. by the way. . So please do not fill up your agenda 100% for the coming weeks because you will be unable to find time for great opportunities. talents. requirements. fortunately. One should think about this once in a while. Long-term investments may include starting new studies at a certain age. If you rarely find free time to help or listen to others they will not come to you in the future and. which is why you should always make allowances for the unexpected. a person needs before he can imagine being a consultant. It is up to the consultant to envisage some free time for this. life is not always predictable. And. And then I would repeat the instruction I give later in the book: just do nothing. 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. It is the same in business. 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. etc.

clear information. John Locke Nothing is perfect! Everyone has heard about ethical problems in the consultancy area. They would inform their clients about the dramatic situation they live in. pp. everybody is horrified that this could ever happen in this business world we live in. meaning that they were really concerned about their clients. These things happen because some consultants do not respect the ethical rules they should respect. Philip Sadler. 33. the most important of which are still fresh in our minds. not all consultants are honest and some are easily influenced. But is it really that simple? If all consultants were real consultants. 1 Management Consultancy. A handbook for best practice. Unfortunately. 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.Chapter 2: Ethics in consultancy 33 Chapter 2: Ethics in consultancy Wherever Law ends. But. and because this is simply a question of respect for both the profession and the clients. as mentioned above. and would never hide anything or forget to mention irregularities. Tyranny begins. With the mere mention of the name ENRON or other big companies. nothing is perfect. 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. Kogan Page Limited. In June 1997. 34 . we would never have any problems because even in difficult situations they (the consultants) would give objective. 1998.

or further to give an undertaking to others”. just because the economical situation was very bad at that time. which means that they seem to feel that there are no rules to respect. or is an expert in his or her field that he or she can be a good consultant. and punishable as a crime. rules and constraints. Therefore. 1 http://www. 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. this is not the case all over the world. many top managers and middle-management workers were fired. it is normal that non-respect of the rules is seen as a violation of the law. 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. simply because it is a matter of respect for the profession and the clients. Unfortunately.co. but also respecting the moral contributions. The consultancy profession is protected in a few countries. it also takes on a social dimension. Professor Jack Mahoney stated: “the Latin word profiteri means literally to speak out. In the early eighties. That is what consultancy is all about. declaring themselves to be ‘consultants’ and. or to make a statement. Some of these people suddenly discovered a new vocation. Professionalism is not only having the professional skills. In 1989. and for society as a whole. If this is accepted. many consultants working who are not members of an association. 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.34 Chapter 2: Ethics in consultancy The real problem seems to be that there are still many. because they were unable to find a new job they started their own businesses.uk/ . thereby accepting a much broader role in society. the professional spirit of contributing to the community goes far beyond the idea of having a job or making a career.imc. which means consultants are given proper education. It is not because one has certain experience.

Client The person. the only way to make a distinction between real management consultants and other ‘practitioners’. firm or organisation with whom the member makes an agreement or contract for the provision of services. There are other institutes like this all over the world – some countries are setting up similar bodies while others are thinking about doing so. Declaration A written statement referring to and disclosing the facts relevant to the situations covered by particular rules of the code. This means that they have to invest time and money in their education so as to keep up to date at all times. objectivity • Responsibility to the profession and to the Institute. with examples of this code of conduct. it is necessary to explain exactly what the terminology used means: Member A fellow. full member. The rules under these three principles have to be respected. They do so in order to officially recognise their obligations to their clients. and without the need to consider the impact of such opinion on your own interests. in writing. Annually. A complete analysis. Institute The Institute of Management Consultants©. all members of the IMC© agree. As with every rule or law. to comply with the code of professional conduct. is given below. associate member or affiliate of the Institute. But they also have an other obligation: to undertake relevant and continual professional development. which is important not only for themselves but also for the people they hire. It is up to the clients to ask for proof of membership of the Institute. This is. . not only by the subscriber but also by his partners and everyone under his responsibility. of course. independence. It is based on three basic principles: • Meeting the client’s requirements • Integrity.Chapter 2: Ethics in consultancy 35 This Institute is the only professional and regulatory body for individual management consultants in the UK. Independent Always in a position to express your own opinion freely without any control or influence from others outside the (consulting) organisation.

it is difficult for the parties to reach a final figure. 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. It may be difficult to simply say ‘no’. In that case. any subsequent revisions will be subject to prior discussion and agreement with the client. a member will not make any misleading claims and will provide references from other clients if so requested. Here it is the consultant’s duty to decline the offer if he/she is not sufficiently qualified to do the job.36 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. it is sometimes difficult not to accept a mission. The consultant should analyse the problem in depth before submitting . because there are some unknown areas within the task. but will appreciate the honesty and the professionalism of a consultant who behaves in an ethically correct manner.1 A member will only accept work that the member is qualified to perform and in which the client can be served effectively. for several reasons. and asks the consultant in place to do the job. the client will be surprised. It is understandable that the client wants to know what the consultant will cost. Sometimes. before starting work. before starting the collaboration. they should give the different options equal status so that the client can stop when he decides to without being penalised.2 A member shall agree formally with the client the scope. The major word in this rule is ‘before’. nature and deliverables of the services to be provided and the basis of remuneration. Suppose you are starting up your own consultancy business and are asked to carry out a mission for which you are not a specialist. Nevertheless. This would seem obvious to all businessmen. Rules Competence 1. Agreement on deliverables and fees 1. Initially.

not even in your own staff. Obviously. unless otherwise agreed. will not be trusted in future. 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. The first one concerns security: imagine that you subcontract to a secured company and that you try to involve subcontractors who. with graphs. these elements make a big difference to the workload. such as when . there is the matter of honesty: everyone knows that not every consultant company works for the same fees: if you hire subcontractors. or the implementation documented with background research. This is a very simple sentence to explain but it will help avoid several problems. Like most of the points made in these rules. etc. this also seems obvious. too.Chapter 2: Ethics in consultancy 37 his financial proposal for agreement. the consultant. Confidentiality 1. and thus to the size of the final bill. sometimes clients agree to use a consultant’s name.3 A member shall subcontract work only with the prior agreement of the client and. Subcontracting 1. 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. On the other hand.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. will remain responsible for the performance of the work. Here. 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. In general. Secondly. open book accountancy would be preferable. for whatever reason. are not acceptable to your client: what will his/her reaction be? You. with special support. Nevertheless. it might be because you want to make money without investing anything. 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.

This means that it is easy to find the best people in different fields without having to pay for that service. practical and clearly understood by the client. and showed the client’s aggressiveness.5 A member will not invite or encourage any employee of a client for whom the member is working to consider alternative employment.38 Chapter 2: Ethics in consultancy the case the consultant worked on was important.6 A member will make certain that advice. unless it is proposed by the assignment. gave good results. This is precisely how to find those consultants who behave correctly – those who start from nothing each time they take on a mission. and are realistic. Due care 1. and may even be able to do it without . Transgression of this rule is severely punished in many countries. nothing is mentioned about the client’s behaviour or the time limit to be respected. Impartial must be mentioned here because it refers to the issue of independence. The other points are equally important: if the client understands the recommendations and solutions well. It seems normal to limit this rule during a period of six months (up to one year) after finishing the mission. Surprisingly. It is also prudent to mention in the agreements that the client should not poach either. solutions and recommendations are based on thorough. The consultant should clearly decide not to be influenced by the proposals and suggestions made either by the client himself. impartial consideration and analysis of all available pertinent facts and relevant experience. Once in a while a consultant may even discuss fees. and where both sides – the client as well as the consultant – can observe the behaviour of staff and appreciate their know-how. the desire to innovate. It is indeed in missions such as those involving a consultant that people have to show their capacities. Non-poaching 1. without any presumptions. he will be able to understand the way they should be implemented. and convince the client to give him the opportunity to use his name (for publicity reasons) and thus lower the fees. or by the customers among his own consultancy staff.

and the better they can collaborate. or rarely possible. . the better they will come to understand each other. Another advantage of these meetings is that the consultant can explain what is going to happen during the coming week. Communication takes a lot of time. the consultant should have his own communication strategy.Chapter 2: Ethics in consultancy 39 external help. The more they exchange information and remarks. It is reasonable to expect the consultant to provide regular information. thereby giving a good idea of both progress and any possible delays. By working in this way. the consultant should react immediately and either explain or change the way things are done. 1. Unfortunately. And there could be an even worse reason for such silence – that he does not trust the consultant or is afraid to question him. both parties will be able to progress rapidly and with mutual respect. The meaning of ‘take note’ is clear: if a client has problems with something. It is necessary that the consultant reacts positively to any problems expressed by the client. 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. when referring to the client the consultant must try to involve all those concerned in the mission. can afford. which should be considered in a consultant’s financial proposal. which means one that he understands. In this case. as this is not always. on his side as well as on the client’s side.7 A member will ensure that the client is kept fully informed about the progress of the assignment. and thus costs a lot of money.8 A member will encourage and take note of any feedback provided by the client on the performance of the member’s services. 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. so that the consultant can show the client the progress made during the week. giving the client an opportunity to prepare his staff accordingly. One very good communication strategy is to have weekly meetings with the client. for instance every Friday afternoon. and can implement without unacceptable risks. Communication 1.

the people you work with. In formulating advice and recommendations. and maybe they will demonstrate the reason why things should be changed. objectivity A member shall avoid any action or situation which is inconsistent with the member’s professional obligations or which might. . PRINCIPLE 2: Integrity.40 Chapter 2: Ethics in consultancy Respect 1. One can always learn from the other. and thus indicate to the consultant the reasons why some problems occur.1 A member will disclose at the earliest opportunity any special relationships. circumstances or business interests that might influence or impair. Rules Disclosure 2. The managers will show the evolution they have made within the company. On the other hand. the member’s judgment or objectivity on a particular assignment. or could be seen by the client or others to influence or impair. and your superiors.9 A member will act with courtesy and consideration towards the individuals contacted while undertaking assignments. or not. the member will be guided solely by his/her objective view of the client’s best interests. 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. independence. you should also be willing to share knowledge with others. in any way be seen to impair the member’s integrity. 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. In every collaboration it is important to respect colleagues.

2. indirectly or otherwise.1 requires the prior disclosure of all relevant personal. In particular. honestly and impartially. 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. such as bid defence. not exhaustive. work for the regulator and the regulated. and assessing the products of an existing client. financial or other business interests that could not be inferred from the description of the services offered. by acting the way you should.1. of course. and one should judge other cases on their individual merits. Conflict of interest 2. 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.2 A member shall not serve a client under circumstances that are inconsistent with the member’s professional obligations or that .1 Rule 2. Although this list may seem long it is. 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. For example. Nobody can pretend to be. personal interests. or stay objective if either personal interests or a particular mission concerns.Chapter 2: Ethics in consultancy 41 This is exactly the same rule as is applied to judges all over the world. you will lose money. to a business friend that you made wrong choices in the past. Can anyone accept that he or she has misjudged his or her own friends in a business problem? Can one say. it is impossible to stay impartial if. acquisitions.

’ he (Tommissen) said’.2. commissions or gifts as an inducement to show favour to any person or body. He writes:“Consultants should not receive monies that are not stated in contracts. 2. the Institute may be one of the ‘parties concerned’. 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. simply by changing one or more members of the staff involved in the mission. . the consultant should act as if he was a member of an Institute – that is. I stated exactly that and it was even well understood by the journalist present at the time. without any delay. ‘We even do not go out for meals paid by our clients. the member shall. the facts should be declared to the Institute.42 Chapter 2: Ethics in consultancy might be seen to impair in any way the member’s integrity. for instance. but you yourself should pay for the client. and in the countries where no such Institute exists. if the circumstances so require. Of course. In a seminar given in HCMC in November 2002. such circumstances rarely occur. depending on the circumstances. Luckily. he should try to avoid all situations in which he contravenes the rules of professional conduct. Inducements 2. and to try to act as mentioned above in rule 2. ” You should avoid being in any way dependent on the client. either withdraw from the assignment or disclose to the parties concerned and obtain their agreement on the performance or continuation of the engagement.3 A member shall neither accept discounts. Wherever a conflict or potential conflict of interest arises. It is not always easy to see before an assignment starts that a conflict of interest could arise. it is possible to go out to lunch with the client. So.1 It should be noted that. nor attempt to obtain advantage by giving financial inducements to clients or their staff. hospitality. For example. in addition to any other declaration that it might be appropriate to make. it is the consultant’s duty to be attentive at all times. A solution can usually be found.2 as soon as the problem occurs.

and reveal all the relevant figures without any risk of having them repeated outside his company. knowing that he can explain his problems. Privacy of information 2. In that case.1 Payment for legitimate marketing activities may be made. It is possible that a client has such a large amount of crucial. It is the role of the consultant and his staff to find a solution for his client in accordance with the different legislations encountered. secret information that he does not allow consultants to work with their own laptops. vital. Once again. this comes at a cost. for personal benefit or for the benefit of others outside the client organisation. elicited during the course of an assignment. realistic and practical solutions in all countries where a multinational is installed. even after the assignment has been completed. Therefore.Chapter 2: Ethics in consultancy 43 2. This rule is clear and does not require much explanation.4 A member shall not use any confidential information about a client’s affairs. Of course.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. the consultant must find a working arrangement and work according to the demands and rules of the client. Objectivity 2. 2. and national laws should be respected. . a member will establish specific methods of working that preserve the privacy of the client’s information. The client should be able to act in complete confidence with the consultant. there shall be no insider dealing or trading as legally defined or understood. this is the same problem that judges have: they cannot speak about a court case because they have taken a vow of silence.5 When required or appropriate. it is sometimes very difficult to find acceptable. 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.3. and that even faxes or mails are forbidden.

to adjust his strategy. and the client gives an assignment to the consultant. and personally I always advise writing such decisions made by the client in the contract. suppose 90% of a company’s business is in the export field. The only thing he can do when such a situation occurs is to contact the client immediately and. It is simply not possible for a consultant to foresee such an event. It is clear that the client will hesitate when you put such responsibilities before him. One of the basic economic laws is that it is easier to make short-term benefits than to do so in the long term.44 Chapter 2: Ethics in consultancy When it comes to an agreement. A member’s conduct shall at all times endeavour to enhance the standing and public recognition of the profession and the Institute.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. 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. if possible. and suddenly the currency of one of its main clients collapses. It is obvious that before a mission starts no one can tell exactly what the outcome will be. For example. PRINCIPLE 3: Responsibility to the profession and to the Institute. Rules What follows next is not yet applicable in Vietnam. 2. The client may not always understand that. which may sometimes change dramatically during the assignment. either because of hidden information or perhaps simply because outside influences have changed the whole mission. It is the consultant’s task to inform the client that he must limit them if they are significant. It is the client who decides. The figures given by the consultant will indicate the direction to be taken. they will both have an idea about the benefits the client will probably receive from this. but it is my dream to see this country create an official Institute similar to the one on whose .

They develop plans to train their staff in the same way as they try to do for their clients. but the reason behind this rule is twofold: on the one hand. It is clear that currently there are still some people working as ‘consultants’ who do not respect any rules. Every consultancy firm has its own rules. Annual affirmation 3. 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. The consultant also has competitors. Continuing professional development 3. where. etc. at what speed. as well as being willing to remain a professional in the consultancy business. it reassures the Institute that the member is still willing to act according to the rules. 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. Obviously. but a much ‘ruder law’ exists: the competitor. how long.1 A member will provide the Institute with annual affirmation of adherence to the code of professional conduct. on the other hand.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. and may actually remind him that once in a while he almost forgot to behave correctly. to make it more independent and to make the consultants themselves more responsible. The level of knowledge or intelligence is the one thing which makes consultants really different from one another. There is no concrete rule saying how much. Vietnam needs such an Institute to help make the country more confident in consultants. you should try to stay up to date. it seems strange to affirm on a yearly basis that you are adhering to the code. it makes the consultant think about the code every year. but all have specific budgets for such training. .Chapter 2: Ethics in consultancy 45 rules I am commenting.

3 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 makes no sense to try to blame your competitors – the only thing which counts is being better than the others. Indeed. This not only refers to rule 1. It is. your pricing is better than that of your competitors. nor make any commitments for the other management consultant.5 A member referring a client to another management consultant will neither misrepresent the qualifications of the other management consultant. 3. never enough to simply offer the opportunity to study. If you want your staff to increase their knowledge.9. It can be done by example. and working with dignity. but also includes respect for the actual qualifications people inside and outside the consultancy business. it is a pity. you will be awarded the assignment whatever happens.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. of course. Professional obligations to others 3. their time management should be flexible enough to allow for training. and also by giving staff the opportunity to take business breaks to allow enough time to find the energy to study. your quality. This is one of the major rules in all business: never say anything which may misrepresent your competitors. the members must also motivate people to do so. You can only show that you respect your profession by being honest. If your presentation. .46 Chapter 2: Ethics in consultancy 3. 3. If not.4 A member shall have respect for the professional obligations and qualifications of all others with whom the member works. That is all. but you can learn from it and be better next time. It is up to your client to form his own opinion about your ‘colleagues’.

This is not a matter of distrust. a member will exercise the objectivity.7 When asked by a client to review the work of another professional. 3. Therefore.8 A member will negotiate agreements and charges for professional services only in a manner approved as being ethical and professional by the Institute. It is clear that in countries where such an Institute exists it is quite easy to make sensible proposals. Why not ask the other consultant (if the client agrees)? Fees 3. and to avoid working on the same tasks. The main problem here is that the premises are no longer the same as the first consultant found when he arrived. for instance. but simply a matter of feeling more comfortable. and consequently wants another professional to have a closer look at those results or conclusions. to explain clearly to the client what exactly your working day is: 8. or all the . because his needs are in different fields.1 Members are referred to the Institute’s ‘Guidelines on Charging for Management Consulting Services’. 9 or more hours a day? How many working days in a week? What is included in the proposal – just a document. integrity and sensitivity required in all technical and advisory conclusions communicated to the client. 3. The client can never be blamed if the consultants do not inform him about possible dangers. or may be uncertain about the conclusions given to him after an assignment. The client has to be informed continually about any potential conflict between them. it is very important to be objective and try to imagine what the situation was like before.Chapter 2: Ethics in consultancy 47 It very often happens that a client hires the services from different consultants at the same time. This is not the only purpose of this paragraph. You should not forget. It is up to the consultants to create an atmosphere of mutual respect. The client often just wants the results to be confirmed by another consultant. Once in a while a client may be surprised by the results obtained by a consultant. In countries where they do not exist it is much more difficult – you can find extremely high rates as well as dumping prices.8.

nor its location. A second possibility is to make an arrangement with the client where you promise not to use the name of his company. Once again this rules of the Institute are only ‘law’ in countries which have such an Institute. Publicity 3. 3.10 A member shall at all times be of good reputation and character.9. . in publicising work making representations to a client. or public speaking engagements. even changing the figures where. In the others. 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.9 A member. 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. Members are referred to the Institute’s ‘Guidelines on the Promotion of Management Consulting Services’. too? All this information must be written down in a clear comprehensive ‘trick-free’ document signed by both the parties. possible. and if. If he does not agree to this you will never be able to use the information. shall ensure that the information given is: • Factual and relevant • Neither misleading nor unfair to others • Not otherwise discreditable to the profession.48 Chapter 2: Ethics in consultancy background information and assistance during a certain period. it is a matter of respect for the client. so that you can use your experience for other means. Personal conduct 3.1 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).

who. it gives the Institute the opportunity to fire any member not respecting it. This rule is written down as. . unfortunately. 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. You should behave as a loyal. inaccurate. misleading or incomplete information. Although it can be really difficult do try to convince your client to be honest.Chapter 2: Ethics in consultancy 49 3. By the way. Once again. this is a general rule. honest businessman or woman.11 A member shall not wilfully give the Institute false. nothing pays greater dividends in the long term than honesty. I have never seen any managers or CEOs hire a consultant with a bad reputation.

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but this game of diversion is much appreciated by the participants who forget about all the rest or are not even informed about it. or an assembly of a group’s international managers. this may occur during a board meeting. It is very often so in cases of significant restructuring. Nobody cares about the cost. Unfortunately. or even to close down a plant. Collaboration between client and consultant is no exception to this rule.1 Why ask the assistance of a consultant? As is often the case in (business) life. For example. where the consultant will invent – based on unknown sciences – that the company has to get rid of a large number of collaborators. 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. Let us start with the bad reasons. The measures have already been decided and the consultant is often the only person the management can hide behind. people have good and bad reasons for doing things. William Ian Beardmore Beveridge 3. for putting into words precisely what we mean necessitates getting our own minds quite clear on what we mean. The protector This is a difficult role for the consultant to play. . The lists (both bad and good) are not exhaustive. a lot of these reasons are ‘bad’. but the most common motives will find a place here. He will be playing the lead role in order to hide the real problems. and those involved very often realise what they are doing – they are contacting consultants for unacceptable purposes.Chapter 3: The client/consultant relationship 51 Chapter 3: The client/consultant relationship Careful and correct use of language is a powerful aid to straight thinking. He is indeed the one who announces (or at least is the reason behind) why difficult measures have to be made. I will try to explain some of the main reasons why managers have to ask for help.

Le Conseil. the takeover by a competitor. many other bad reasons might be invoked. or the announcement of significant restrictions. 2003. Of course. Energy man The consultant is the one who will fight to obtain the results the management wants: he has to overcome every obstacle. The consultant is present to give collaborators the feeling that the management is aware of the problem and is willing to work on it.52 Chapter 3: The client/consultant relationship In case of failure. Ed. and will be alone surrounded by enemies. 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. such as transmission of power to new management (in this case the mission will be ordered by the shareholders). This is the most tiring job a consultant can imagine. 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. Paris. p. because they even hired a(n expensive) consultant. He is just there to show that the company knows about the problem and is working on it. de l’organisation.109 . this can never be an internal consultant. Naturally. 1 Jean Simonet. there is a remarkable list of ‘seven deadly sins’ which I came across in a book called Le conseil1. etc. Jean-Pierre Bouchez. In addition to the above-mentioned reasons. 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.

or investing time and energy in seeking solutions. They hire consultants because they feel that this gives them more power. by this person.Chapter 3: The client/consultant relationship 53 The deadly sins Greediness . money and energy for both parties. this kind of consultant knows exactly how to flatter the manager in charge. just because the manager wants a change. Fortunately. many consultants refuse to work on such missions. In addition. As in ‘normal’ human life. etc. strange behaviour. others ‘reinvent’ or adapt them to their own market strategies coming from other countries (very often the USA). Avarice Anger Jealousy Lust Pride Laziness .. 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’. A lot of consultancy companies know this and change the tools they use on a regular basis. They hire a consultant with the sole mission of finding mistakes. There are other types of managers with very strong egos. The manager keeps the results of the consultant’s mission to himself and develops them later as if they were his own ideas. the management decides to hire consultants to do the job in their place.. they are often dismissed without reason. It is a fact that sometimes big consultancy companies. poor results. when using consultants A lot of managers really want to sample the various new trends which arise in business development. and it is simply a waste of time. inadequacies. and will pay him for that without allowing him to carry out the most satisfying part of the job – the implementation of the plan. Very often the management would like to fire an expensive collaborator but they do not know how to do it. mimesis also exists in business: consultants are hired for the simple reason that the competitors have done the same. However. Instead of developing internal competencies or skills. Many managers hiring consultants have a strange idea or concept in mind: they want the consultant to develop an idea or a strategy. There is no real reason for people to do this. Once they have this information they fire the person based on these ‘facts’. or studying solutions internally.

which needs its own response.1. Franz Müller-Lyer (1857-1916).”2 3. the company is hiring someone able to implement the new ideas. Here the list will be even less exhaustive due to the fact that every mission is different. and those they live and work for. Every case is another case and has to be threatened as a new challenge. sometimes in the same organisation. at the same time. management consultants too should be aware of the hidden seduction to look at a new problem through the spectacles of previous experiences. Yes. www. helping and assisting people. On the other hand. As a matter of fact. but he will 2 From Booz. and that every company has its own needs. as they have a lot of different experience as regards the implementation. it is very useful to contact other consultants to help you to do the job you have to do. a German psychologist who’s international fame is based on his study of optical illusions. sometimes in different ones. the ones consultants like. and every consultant his own skills. It is very interesting to hire consultants in fields where the company has insufficient knowledge.3 Get the knowledge where it is Good consultants are well-organised people. Allen & Hamilton (BAH). and has to be repeated continually. will give the right direction for the action plans. capable of training. look around As benchmarking is very time-consuming. Not only will the consultant assist in implementing the new idea.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. At the same time.1 See where you stand. 3. a lot of companies use a consultant who will assess the use of the appropriate practices and. I warn against this comprehensible hazardous (dangerous?) reaction. Tim Laseter says: “Consultants fill important gaps for organisations that need unique levels of technical expertise for short periods of time.54 Chapter 3: The client/consultant relationship Now it is time to talk about the ‘good’ missions. this approach very often produces long-term results.com .1.boozallen. 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. 3.

without anybody even knowing why it suddenly appeared. The comment made by Stork3 is very interesting and true. all such efforts were in vain.pricewaterhousecoopers.Chapter 3: The client/consultant relationship 55 also train the people inside the company. This help from outside is certainly important when a company has many subsidiaries. incomplete information. The answer is simple: just because somebody (in this case the consultant) focused on the problem.co. 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. can provide tailor-made solutions and train their client’s staff. San Francisco Peter von Loesecke used to work for Arthur D. They can present the necessary data in a well-defined framework.1.com) 5 James Holec Jr. teachers and assistants have become involved in these humanitarian missions.uk) . and is now CEO and Managing Director at The MBA Tour (http://www.. so that the company can start the real job with fresh people. companies often ask their collaborators to gather the necessary data. on top of taking care of their daily tasks and responsibilities. or how to work the machinery. Logically this leads to delays. contribute more than they ever imagined towards finding a solution. as they do not necessarily have the same way of acting or understanding. It is acknowledged that when assistance was first given to developing countries. As long as no one provided the necessary training on how to use this money correctly. ready for action.5 Collecting data It is normal to collect a lot of information before implementing a change. 3. and thus transfer his knowledge. Since instructors. the level of progress has risen considerably. Implementation without training is complete nonsense. 3. of PricewaterhouseCoopers (http://www. 3 4 Stork & Associates. This applies equally to implementation without solid training. in so doing. the industrialised countries simply sent them money and/or machinery.4 Focus on problems Very often problems exist for which no solution can be found.. Consultants can help to transfer their knowledge to their clients. Therefore. Therefore. Little. It is therefore useful to hire consultants to gather the necessary information. uniformity is only possible with outside consultants.1. the solution comes without explanation. stressed people and.thembatour. Frequently.

as they see how other industries proceed they can copy-adapt to your company.1. “Consultants can help clients implement nontraditional roles for procurement organisations around product design. In so doing. the links with the past. Indeed. as assistants. The topics mentioned here are politically too sensitive for the people.”4 It is considered as a kind of investment in the future.6 Drive change across multiple functions. with the internal hierarchy. They do not invent (see point 3. 3.7 Political assistance Do you remember the ‘one-man-show-consultant’ and the ‘spokesman’ we talked about in the list of negative reasons? Well. product design and cost reduction.1. referee and player at the same time.1. business units and national borders When a company intends to make changes across the entire workforce – all divisions. material selection. It is therefore preferable to work with outside. 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. 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. when internal people have other things to look at. 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.56 Chapter 3: The client/consultant relationship 3. are all too great. objective experts. they can be judge.2) but they adapt and introduce into your company a method which they have seen succeed in another firm. 3. .8 Compare with the others As consultants normally work in different fields of industry and trade. etc. across all the different countries – it is always interesting to ask external consultants for help because they can assist in the process. External ‘experts’ can focus on the move. being the drivers of it. they can bring innovation through ‘simply’ copying from other industries. that is precisely their job. the mentality. supplier services. “We become involved in change management that transcends national boundaries.1. outsourcing.

9 Time is money Consultants may often be used as quick-start helpers – the quick solution to a problem. invites another one to help to solve a problem. . if possible train the company’s staff. Therefore. Large (and even some small) consultancy companies have the necessary tools and methods to implement solutions faster than ever. while the consultant offers the necessary help or advice in one form or another in order to help the client. It is necessary to have a closer look at all the actors in this business game. As is the case in every good relationship. and what is the other willing to do? Generally speaking. Like some experts. they arrive. On one side we have the client. but it is the only correct one. the two parties have to live together in mutual confidence throughout the assignment. It is mainly about the transfer of knowledge and/or expertise from one party to another. Consultants-experts are always a little further on in the evolution of the market because they are observers and they know the upcoming needs. or for a task he does not want to do himself. In addition.Chapter 3: The client/consultant relationship 57 3. One of the first obligations the client has is to give as much information as possible (even in strategic domains). 3. a challenge. We will speak about the contractual terms at a later stage.1. This contract must be fulfilled if both parties want to be satisfied at the end of the process. or a change. they both need a clear contract stating exactly what it is all about.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. The consultant has to keep secret all the information he has. on the other the consultant: what are the roles they are going to play. They train their own experts and sell this competence to the market. the client. it is better to live in complete harmony. the situation is quite simple: the client needs help in a domain in which he does not have the necessary experience. and leave as soon as the trained staff can take over the job. do what they have to do. what is one part going to ask from the other. We must not forget that one party.

When working for an ‘unknown boss’ it is difficult to give him exactly what he is looking for. Client-centred consulting. this is rather like that between friends. The first mission for the consultant is to find out who the real client is. It is very important to find this out in order to start the relationship on a solid base. before the work begins. 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. where true positions are taken and mutual confidence and esteem overrides everything else. although there is also the approach suggested by Cockman6: • Those who know • Those who care • Those who can. et al.. where one party tries to find out the wishes and needs of the other. Maidenhead. • The authentic relationship: this stands above the others. 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. 3. 1992 . McGraw-Hill. for instance. but it is not always that clear who the real client is – who gave the order to hire a consultant.58 Chapter 3: The client/consultant relationship Whatever the relationship.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. 6 Cockman P. • The idealised relationship: completely different to the one above.

general management. Finally. 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.4 Phases of the relationship Up to now. 3.Chapter 3: The client/consultant relationship 59 By taking a close look at the three possible types of clients mentioned above you will. clients or even customers. . either by giving the necessary funds. The best approach is to listen to all the participants and possibilities. 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. Preparing to make contact The first meeting between a consultant and his potential client can be for different purposes. let us have a look at the different stages of the client-consulting relationship. Those who have certain responsibilities inside the firm are often a part of such a group of people. 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. in fact? They can help solve the problem by doing something. So. nothing has happened. those who can – but can do what. or simply because they are the management and can help ‘impose’ the consultant and his solution. 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. which can be human resources management. of course. have to adapt the way you work and suggest your proposal for a solution. of course.

from the top to the bottom of the company. They have to learn a lot from each other.60 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. his weaknesses and strengths. . the chances of succeeding later will be adversely affected. but no more than that. From this point onwards. Once the early steps have been completed and the two sides get to know each other better they can start the negotiations. As we have already seen in the chapter on the requirements for the consultant.4. This could be a point on which the two parties are unable to agree. 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. For example. whereas the consultant prefers to work ‘openly’. the client can only ask for communication with the management. any possible differences in business approach. both parties will grow through different phases that will be briefly explained: • Orientation • Identification • Analysis • Resolution (solution proposal?) 3. It is necessary to understand this to avoid further problems. and establish the roles they will each play. and so on. which means giving information to everybody involved in the process. one important aspect will be to analyse their different communication styles. If this first contact is not positive.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. in which case the consultant has to withdraw from any possible collaboration. He can perhaps try to convince the management of the company to accept a slight change. Each has to find out how the other thinks.

If they do not succeed in this they should not look for any further collaboration. there is the consultant willing to take on the mission but also aware of the client’s reservations.e. you have the client who is looking for a solution to his problem.4. the tasks he can fulfil and how he will do it. as soon as the situation arises. nervous? Can you work with him? Do you feel an open-minded relationship would be possible or. in order to make the relationship closer and more effective.Chapter 3: The client/consultant relationship 61 It is at this stage that the identity of the client must be evident to the consultant. on the other hand. 3. and future plans (if any). On the one hand. Try to find out the client’s feelings – is he anxious. do you feel it would be impossible to work with that company (i. how it is organised. rather than later. and the problems he would like solved. the people working there)? This period of pre-introduction is crucial for both parties. at the end of the orientation phase. . on the contrary. The consultant must explain clearly what he can offer. The openness and willingness to collaborate must be verified here. that it is the client’s role to ask for more clarification when he does not understand the way the consultant is proceeding. The consultant must point out now. Remember that at this stage you still have not accepted any mission. that they can continue working together they will both have to concentrate on increasing the mutual confidence. And. It is only now that the client will explain to the consultant the way in which his company functions. and should leave the negotiating table. They now have to build an atmosphere of mutual respect and confidence. 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.2 Identification Once they have decided. but who is also a little worried about opening all his company’s files to ‘a stranger’. the history of the firm.

where the consultant decides and imposes the rules of the game? Is it one where there will be very close collaboration. Care is required here as it is easier for the consultant to give his instructions. If the client wants such a solution then this is OK. The consultant must be correct in his approach and accept that certain secrets are kept ‘closed’ even to him. Which one is the client going to choose (in the main. This would also help the client to introduce some new know-how in-house. to deliver the solution ‘on a plate’ rather than having to explain why he is suggesting his solution. • 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. and the second. 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.62 Chapter 3: The client/consultant relationship In simple terms. even if this does not help his own business. It is about how they can work together in mutual understanding. However. according to the culture existing within the company)? Is it an autocratic one. 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. which will make the client less dependent on the consultant. it should be acknowledged here that the consultant does not necessarily need access to all the files for every mission. Never forget that if your client is . they explain what can be expected of themselves and from one another. will be much longer if there is no collaboration foreseen from the client’s side. the time frame the consultant will need which. • Different styles of consultancy missions exist. 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. However. of course. A good consultant should always work in this direction.

guides the company. He summarises the situation regularly so that the client can see all the steps they have been through together. He gets this result by asking the client to express his feelings. this takes much more time but has the advantage that the client then understands. Supportive: the consultant shows the client his enthusiasm and his belief in the success of the mission by indicating his appreciation and affirmation. 3. According to the above-mentioned. He raises awareness. tries to transfer knowledge by explaining what he is doing. interprets the different reactions the client's staff may have. He helps the client to find out things for himself. The consultant plays the role of the ‘destresser’.Chapter 3: The client/consultant relationship 63 satisfied he will recommend you to others and come back to you if another problem occurs. by easing the tension. meaning cleansing): the consultant clears the way for changes without tension. Of course. is more important. and simply gives the necessary feedback. by using humour. in my eyes. Informative: the consultant explains the different steps. Cathartic (from the Greek καθαρσις. 3. meaning dissolution): here the consultant uses the client’s intelligence through provocation. Catalytic (from the Greek καταλυσις.4. 2. This. makes recommendations and requests help and assistance. . 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. 2.3 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. there are two types of intervention: • The one where the consultant leads the process in an authoritarian way: 1. 3. Prescriptive: the consultant decides how things are going to be developed. gives direction. • The type of intervention where the consultant helps the client to feel confident and assisted throughout the process: 1.

We should not forget that good consultants often play very different roles: they can be experts (on a very special topic). this is the role people appreciate the most as it is person-centred. 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. 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.64 Chapter 3: The client/consultant relationship As regards the various roles played by the two parties. Along with the majority of consultants. I prefer to refer to this in the chapter on Ethics in consultancy. The danger of this approach is that it can make people completely dependent. or he may forget his final goal – the solving of the problem. or trainers (if they have to coach the client). The role of expert is one where the consultant can demonstrate his knowledge and his expertise in a specific field. I would say in all honestly that. One role clients would like consultants to play is that of advocate. in my eyes he is not worthy of being a consultant. once again there are different possibilities. The consultant has to be adaptable as his role can change in the middle of the process. I think that this is impossible and not even interesting. Indeed. according to the role he is going to play. 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). . counsellors (if the client wants some intellectual assistance). in the case of a consultant playing the salesperson. The value added by the consultant differs. If the consultant does not dare to give his opinion. salespeople (which is what they must be in the initial stages if they want to secure a mission from a new customer). The role of ‘counsellor’ is the one most commonly known (see also the Introduction to the book). Consequently. 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. of course.

and tries to win the game (i. trainer/coach) he will be as happy as the players (i. you cannot learn anything from people you do not respect. and once he understands them it is. – adj. encourages them. even if the researchers worked abroad. even more fundamentally. Do not forget.Chapter 3: The client/consultant relationship 65 A more useful and interesting role for both parties is that of coach. The consultant educates people. If he is a good consultant (i.aspe . solve the problem). If he feels the client did not understand he will restart at the beginning and retrain.com/words/livingaparttogether. so that together they can afford the research. easier to understand how to find a solution and.wordspy. Financial incentives coming from the authorities would be welcome on this field.e. He transfers his knowledge and observes in order to see how well his client(s) understands his message. – live apart together v. Client-consultant collaboration is not very widespread in this domain of course. The consultant should have a lot of experience: he shows how to play the game. that a solution has to be found. He helps the client to understand his problems. His role is exactly the same as that of a football trainer – most trainers are ex-players. and plays the role for the others to follow. or in university centres which have a consultancy department. It would probably be a good idea to see smaller companies collaborate on larger study-objects. of course. client) if that is done. Unfortunately. In the large consultancy companies. A final role the consultant could play is that of a facilitator: (from the Latin facilitare: to make things easier). A situation in which an unmarried couple live in separate residences while maintaining an intimate relationship.e. a person in such a relationship. people with experience. arranges the different actors in the field. shows them how to do things. Perhaps one can imagine big companies (and they do exist) sponsoring their own consultancy departments for indepth research.in: http://www.e. The role of the consultant has to be played well because he has to show his interest in the people he is teaching. smaller companies do not have enough time or money to invest in pure research. the consultant can play the role of a researcher. Teaching means learning. 7 Living apart together n. Also: LAT.

The consultant will keep in regular touch and ask the client if everything is going well.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. both the client and the consultant should be satisfied with the result. They will live a sort of LAT-relation7. as soon as the client has new needs. counsellor. facilitator. and anyone concerned with this topic understands well that each situation demands a specific approach.4. advocate and. 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. The more the consultant is implicated in a complete process of change for instance. researcher. The main roles played by the consultant are those of technical expert and facilitator. 3. Therefore it seems interesting to me to focus on some major (that is. finally. . coach. and they will go their separate ways.4 Resolution Normally. 3. But for how long? If they have had a really good collaboration (read: relationship) they might get back together quite quickly. But first it is necessary to give a brief description of these two completely different approaches. the more roles he will play. often used) roles attributed to the consultant: technical expert.66 Chapter 3: The client/consultant relationship 3.5. but also for looking further into the future. together with his staff. at the end of the mission. The table below shows the different relationships/roles according to the result the two parties want to achieve.5 Interventions and roles It is obvious that the roles played by consultants are linked significantly to their interventions. A complete list of all the different types of interventions and roles does not exist. For obvious reasons I will treat them in pairs.

He brings his knowledge in a particular field of expertise. the consultant adds ‘value’ to the mission. The consultant’s actions will be authoritarian. If. it could make the client totally dependent. ed. the client will be confused and will not know how to proceed. The client will both facilitate and monitor the actions of the expert. Kogan Page Limited. the expert is not authoritarian enough. even worse. whereas the client will be the executor. on the contrary. training Subcontracting 8 In Management Consultancy. but not too much as this could lead to the demoralisation of the client’s staff or.Chapter 3: The client/consultant relationship 67 As an expert. He will only give advice and guidance. 83 . by Philip Sadler. the role played by the consultant will be very limited. p. London 1998. Diagnostic Search for solutions Client + consultant Client + consultant Implementation 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 Consultant Outsourcing the process Classical assistance model Audit/evaluation Client + consultant Consultant Client + consultant Consultant Assistance for future development Solution hunting Coaching. A handbook for best practice. If the client finds this input satisfactory and ‘enough’.

In recent decades.2 Researcher and counsellor The theoretical approach of many consultants has been frequently attacked as being useless. so some consultancy specialists refer to them simply as ‘process specialists’. the distance to the role of counsellor is short. The facilitator is the one who normally does not forget this approach. Nevertheless. based upon this abstract approach. together with the consultants they build a completely new view of business and business development. From this theoretical behaviour. Thanks to these rhetoricians. 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. the counsellor is person-centred. studies by many important consultants – even if they were only based on theories – are still very much used today. This is a kind of tailor-made assistance where the support given by the consultant is . This is certainly the case in the diagnostic approach. The relation is based entirely on collaboration. It is a fact that the role of implementing theoretical ‘ideal’ solutions is not realistic. large enterprises have asked consultants to construct new views for the future so.5. 3. the part of the input given by the client is very often simply initial information. Clients frequently forget that they can do the job on their own. they will create a climate of resistance to change. 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. understanding and a common will to succeed. 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”. Where ‘client + consultant’ is indicated in the table. Indeed.68 Chapter 3: The client/consultant relationship Serious problems often arise when ‘experts’ forget to take into account the human side of their task. It is therefore useful to go back to the table of ‘deadly sins’ above in this chapter. When they omit to focus on the problems those involved have.

based upon specific values. Unfortunately. The advocate is the one who is going to support certain people inside an organisation. ‘what’ and ‘why’ is even more important than the result itself. simply because they do not have the necessary skills or. but should also explain why a certain solution has been selected over another one. It is clear that a consultant should not just come up with solutions. People have to be educated and coached by experts in the field.5. are willing to defend a certain way of acting throughout with a mind to supporting the client’s staff. many consultants are not educators at all. 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. worse still. . The consultant wants the client to do the job knowing exactly what the consequences of his actions are. It is of the greatest importance to have consultants who. explaining as clearly as possible the fundamental reasons for his behaviour and actions. but to actually make the decision to work with a consultant. train them. In that case he has to develop. Conclusion The most important decision here is not necessarily to choose the right consultant. That is the reason why his possible role as advocate is also important.3 Advocate and coach A consultant cannot be completely neutral.Chapter 3: The client/consultant relationship 69 one where the explanation of the ‘how’. defend and protect his own theories. 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. Central to all interventions by consultants is the coach/educator role. because they are not willing to share their knowledge. 3.

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Below are some guidelines to help you make the right decision. • 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. The choice is large and the information available is poor. .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. The table below lists the advantages and the disadvantages of this approach: Advantages • The collaboration with the consultant will usually be easier since the staff know his way of working. since you have not compared prices on the market. but choices always involve consequences Kerry Fouché 4.1 Introduction There are no rules about how to choose a consultancy partner. • The input of new ideas will be limited as the consultants will remain the same. such an approach may carry some risks.Chapter 4: How to choose a consultancy partner 71 Chapter 4: How to choose a consultancy partner You have a choice. • 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. Disadvantages • The consultants might feel too comfortable with this and may consider the effort to produce results is minimal. • 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). 4. having been chosen by the client for a second time. so it is difficult for most enterprises to make the right choice.

and about the way in which they proceed. Many consultants also speak at lunch meetings. Chambers of commerce and other similar groups can be helpful too.2 The entry phase 4. During this phase the consultant has to convince the potential client of his aptitudes. It is in these same circles that they can collect information about consultants. they often have accurate information to hand on this topic.72 Chapter 4: How to choose a consultancy partner 4. It should be mentioned that the reputation of a consultancy company can be destroyed during such meetings! 4. Try and meet them afterwards as they will be happy to give you all the information you are looking for. 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 Consultants also inform you Most consultants produce publicity (mainly leaflets) in which you can find information about their clients (you can call them).1. the Ministry of Economic Affairs can help people looking for sound advice.1. 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. 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. and his uniqueness as this is the time when the . 4.1 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.3 Official help can be useful In many countries.2. his skills. Although it is not really its job. 4.2 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. Consultants also organise contact meetings where you can ask all the questions you might have without feeling obliged to hire them.1.

it is necessary for the client to put his demands and needs on paper. too. but may come back later for a further assignment if the impression given by the consultant was good. Here. but he will also be better prepared to analyse the proposal(s) made. As regards oral demands. Even if the consultant has been chosen before this stage. whereas a written demand is much better analysed and prepared. since it is he who has to formulate his needs as accurately as possible. Not only does this make him think about and rethink the situation his company is in. where human contact is impossible. 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.2. Such an approach very often does not exist in public affairs. Given this information. this official approach is much more complicated for the client. In fact.Chapter 4: How to choose a consultancy partner 73 collaboration becomes feasible. as public authorities have to be as objective as possible and therefore they mainly work with tendering procedures. The demands can be written or oral. but most likely it will be made to ensure a degree of competition between several selected consultancy companies. It often happens that the client chooses another consultant. 4.2 How to formulate the demand The demand can be for a unique consultant. four types of demand exist: Number of possible suppliers/ways of examination 1 WRITTEN ORAL 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) >1 . it is clear that there is a risk that the client may omit certain details.

of course. in addition. This means that the entry phase has to establish a climate of mutual trust. otherwise they would not be playing.2. the result can be a positive collaboration. This means that he has made it clear to the client why they were unable to agree on this assignment. but are playing the same game. the client has to be sure about two things: first. For his part. contractual clarity and the right decision. • Signing a binding contract: both parties should be able to sign a contract that is clear. as well as possible changes during the assignment. • Economic benefit: both the parties want to make money. The consultant has to be sure that he knows the real problem the client is facing and. • Finally. Their input will provoke a reaction. It is essential to keep these four steps in mind: added economic value.74 Chapter 4: How to choose a consultancy partner 4. explaining all that has to be done. The consultant should consider that he has done a good job. mutual trust. and that his reputation is still OK. • Listening: it is important that both the actors understand each other. The consultant wants to get the assignment whereas the potential client wants to see how he can profit from hiring the consultant. they should not feel they have failed.3 What do the parties expect from an entry phase? The two main players have different expectations. if at this stage they are unable to reach an agreement. and second that he is willing to explain everything about his company to the consultant. that he has explained his needs clearly and that they have been understood. the inputs from both parties. If the game is well played by both the actors. . The client has to be sure that he made the right decision by not choosing a particular consultant. that he has the skills and the competence to accept the mission.

and it includes asking the right questions. Once in a while he will also need the capacity to negotiate.2. On top of that.2.2 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. The consultant has to make it clear that he understands the business the client is in. being careful not to reveal all of his tools. As the famous French phrase states: “Ce qui se conçoit bien s’énonce clairement”. 4.Chapter 4: How to choose a consultancy partner 75 4.4.2.4 What are the different steps during the entry phase? 4. The consultant must have the capacity to clarify his own ideas and those of the client. as the client could be tempted to try to make the changes himself.1 Agreeing the brief and its scope In this phase. . He also has to explain the way he understands project management. more often than not the client reading the document is incapable of imagining the time and energy spent on this. The consultant has to show the client what resources he has at his disposal. both the parties have to listen carefully to what the other is saying. He now needs two main skills: one is as a solution-provider and the other is being creative.3 Preparing and presenting the proposal It seems easy enough to prepare a proposal. (This is usually when the client thinks that the solution is either too complicated or too expensive for his company.4. The consultant has to explain clearly to the client that he has understood the problem needing to be solved. and to put a price on this. The second stage is to estimate the time allocated to every step in implementing the solution.) 4.4. This is what is called ‘active listening’. 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. he has to show how he will proceed step by step while. at the same time. However.2. A clear structure of the mission should give the client a good feeling.

e. It makes no sense to write a proposal the client cannot understand as this will make him suspicious. 4. we will look at the various elements a proposal should contain. it can be very useful to have the proposal read by someone outside the business. You should subdivide the document into small chapters so that the client (i.4 The content of a good proposal As mentioned previously. In point 4. and repeat how you would like to proceed. his methods and his financial . The use of understandable words is law. as mentioned above. In the introduction it is necessary to specify the way the client explains his problem. Do not forget that the client will submit this document to his lawyer or to his legal department.5 below). the proposal must contain every element necessary to convince the client that the company submitting it has the best offer. I suggest the following sub-chapters: • Description of the problem (see above).4. the proposal should be written so that the same document can be used as a contract respecting the legal aspects.4.2.76 Chapter 4: How to choose a consultancy partner Finally. Consequently.2. Therefore. It is merely a ‘selling’ document.4. the reader) can submit different chapters to different people – not everyone is interested in the proposal in its entirety. The presentation of the proposal must also be unique and adapted to the client’s needs and expectations. the document has to be legally binding. you will help him to save time and money. By mentioning that this document will be used afterwards as the contract to be signed.2. The consultant should have the necessary presentation skills. At the same time. This document is not a scientific paper (even if the way you would like to explain some things to the client is). and be a specialist in oral and written (PowerPoint) presentations (see 4. and the way the consultant understands it.4. It is simply not good enough to show that you have understood the problem: you must focus on the client’s strategy. Explain to the client again that you understand the problem very well.

not only in the field of this mission (although this should. show him the advantages of working with you. etc. • An entire chapter should be written on the consultancy company’s experience. Examples can be given and. 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. . if possible. I have written “if possible” intentionally because many clients do not want their names to be mentioned. as well as indicating the value and experience of each person involved in the programme. where possible. This can give a positive. of course.Chapter 4: How to choose a consultancy partner 77 situation. special IT programs. personal touch. the CVs of the people the consultant wants to use in the mission should also be inserted. • You know that one of the major problems about securing an assignment (certainly the large. • Besides the experience of the consultancy company as a whole. a list of clients. staff training. medium. important. this should be in a separate chapter since not everybody will feel directly concerned by it. You have to show that you can behave as if you yourself were the client. such as travel fees. As mentioned.and longterm benefits of the assignment. a sub-chapter could focus on the direct results expected from your methodology. and should include all the standard terms and conditions. Write a chapter on this explaining exactly what it is all about in the client’s specific case. The well-known ‘win-win’ is also a kind of unwritten rule here. Therefore. but also in other fields so that the client can understand your broad field of experience.). • The final chapter concerns the legal and financial parts. Demonstrate the short-. expensive ones) is to be able to convince the client that what you propose is not expensive. hotel costs. be the main part of this chapter). • In another sub-chapter the consultant should explain clearly (with figures) what is expected from these approaches. This applies equally to speaking about methods and approaches. • Never use unfamiliar words and complicated sentences. • If possible at this stage of the approach.

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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. 4.2.4.5 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

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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.

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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.

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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?

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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.

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• 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

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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.

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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.

Therefore. • You can collaborate and share the tasks with the client. And last but not least. This has several advantages. show him how to proceed. In that case. 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? . this is possible. You should explain to the client that several options exist. This will increase the trust he has in your company.e. The first is that you can see if everything goes as you have predicted. 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. although it is not very interesting for him since the experience you could transmit to his staff will be missing. you are just an external expert. 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. and the chances of success will be less if he is unwilling to collaborate. The second one is the transmission of knowledge to the client. if possible. Before explaining to the client what it is all about (i. it will indicate to the client that you are not afraid to implement your own solutions.Chapter 5: Working with consultants 87 If the client wants you to do the job alone. that each has its advantages and disadvantages. There are three options: • You give him the solution. This is never the best solution. and that each also has a different price and carries a different risk. and he does the job on his own. • You can do the job without his help.

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. 5. Please note: if the proposals made by the staff members are not used you should explain the reasons why. new ideas which. especially not the final one which will contain all your recommendations. It is much more than a brainstorming session because it is about real life. if interesting.2. Very often this report is not really necessary since the client usually prefers a face-to-face verbal account so that he can respond .3 The report and proposal presentation It is not easy to write a good. professional report. and to reread your draft. if not. please ask somebody else either to give you some training or at least some tips and advice. 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. The text you write has to be read by your client – do not forget that. The actors – the client’s staff – can give their opinions and perhaps come up with new input. It is very important to organise this kind of meeting when resistance to change seems to be an important issue. you can implement in your final proposal.88 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. If you feel uncomfortable with this.

You should also try to adapt your vocabulary to that used inside the organisation. Give a short overview of all the tasks already accomplished by you and your staff. 6. These provide the client with information and show. and are less likely to resist later. and this idea will guide you throughout: 1. or origin of. • You should use some (but not too much) graphic material. keep in mind all those who are supposed to read it. the tremendous amount of work you have done up to now. Indicate the problems you have identified. but also what the results of your actions will be. Include as many annexes as possible. the problem.4. Leave enough space for the readers to make notes. If you have to make an oral presentation then refer to 4. Show all the data you have been collecting and how they have been treated. as not everybody may know why you have been hired. 7. and follow some basic rules: • A logical structure for the client. But if you do have to write a report. You should be very careful here – some people might feel uncomfortable with this section as they could be the reason for. 8. . Think about what he expects from you. Explain (in brief ) the purpose of your mission. • 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.Chapter 5: Working with consultants 89 immediately with questions and receive answers. Give a detailed list of everything that is going to happen so that people can react at this stage. Keep in mind the culture of the people who are going to read this text.2.5. this is simply a reminder. once again. It is unnecessary to include complicated graphs that nobody can understand: keep it simple and useful. 5. 3. In fact. 2. The section on recommendations must be clear to everyone: not only do you have to show what you intend to do. A short introduction in which you should focus on the recommendations you are going to develop. 4.

the easiest of which are as follows: 1. 5.90 Chapter 5: Working with consultants 5. because that is what it has been until now. 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. After all the theory. 5. and where the consultant can show that his ideas were the right ones. set up a communication strategy inside the company. This is where the reality begins. This is not something you can simply invent: it has to be planned before the start. and where you can reinforce how and why you are proceeding in the way you are. Try to meet the people as much as is necessary by organising workshops where they can talk about the problems.4 Conclusion Do not forget that you are going to work with the client. Organise communication.3. 2.3.3 Implementation 5. You can do so in several ways. if a problem occurs you have to be there to help the staff to solve it.2. With the help of the top management. It is almost impossible to foresee all the problems before starting the implementation. And it is also where resistance to change occurs. the human part starts: the collaborators representing the client and the consultant will have to work together to make the mission a success.1 What exactly is implementation? This is the stage where the consultant installs his recommendations. Do not forget that at this stage you are the one who is leading the game.2 Help with implementation As stated above. Therefore. Where the human factor kicks in problems can occur. 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. problems often occur as a result of the human factor. You have to .

It is exactly the same in this implementation process: everybody should know just what they have to do. change the teams once in a while. you might need some help. That will give them confidence. where you have a project leader. things the staff have to do without prior preparation. If this is the case you should explain the values. increase competition. . If they do. Wherever possible (and sometimes the unforeseen does happen). respect the budgets. Very often many staff members are unaware of an organisation’s values. You must always be available and willing to listen. 3. and the roles. and thus makes things go faster. and certainly when they are being submitted to change as a consequence of your mission. 2. Here are some hints: 1. a person in charge of the project and responsible for it.Chapter 5: Working with consultants 91 be the facilitator. People only believe it if they have seen it. somewhere it will attract the attention of the staff. the timescale. and the so-called ‘just do it’. 3. • Every step should be measurable. You have got to focus on the values. Divide the different steps of your implementation into two: the so-called ‘projects’. too. 4. This can create fresh energy. and the quality of what you are doing. must be clearly defined. Make this measurement tool visible for everybody. Here. 5. An actor running around on stage without knowing what he is supposed to be doing is lost. the one who leads the others through the storm of change. Sometimes you can practise benchmarking by showing people similar projects. The processes. similar achievements in similar businesses. Be sure that quality and accountability are apparent so that everyone can follow what is going on step by step. Give everybody a role. Encourage this kind of initiative and people will feel free to act. This gives a feeling of security to those around you. 4. Do not let people organise the teams themselves. Show how you measure the different steps.

because going further would be a mistake at that moment. How? Once again. so that in the future people will avoid making the same mistake again. When a problem occurs it can be solved even before you have had time to concentrate on a solution. Accept some changes. there are various solutions. • All the required skills and competences will not necessarily be present in the client’s company. On the contrary. Accept failures. You could also train people for upcoming tasks. if a delay is unacceptable you can inject more money to make things go faster. change how you do it. However.” But what exactly does this mean? Do nothing: many problems have the strange habit of sorting themselves out. take this opportunity to explain what happened and why. Change how you do it: for example. Wait and see if you can come back with another solution later. Change what you want: sometimes it is clear at a certain stage that you will never obtain the desired results. 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. and learn from them: never blame anybody if he/she makes a mistake. Everyone knows that.92 Chapter 5: Working with consultants • You are working with people so try not to work too strictly. In that case. Therefore. you can lower your expectations. among which team learning is the most common. . it is up to you to encourage learning. It is here that people learn from one another. and grow together. exchange experiences. 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. be flexible. or change what you want.

the difficult situation in which the client finds himself. the fear of not being able to work on a par with the consultant. There is also this strange feeling of being unable to solve a problem without external help. on the other. and so on. First of all there is the fear. for various reasons. namely the consultant and the client. some of the tools. 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. the fear of a financial disaster. the fear of not getting positive results. . and should never conceal any information. From the consultant’s point of view it seems important to me that he can explain correctly to his clients just how things work. and to present a short overview of several commonly used tools. The solution for all this is quite simple: the two parties should really trust one another. They must both accept that without each other there is no relationship. should help one another whenever possible. on the one hand. The main purpose of this second part is twofold: to enable the reader to recognise the important names in this business. For this reason I felt it was a good idea to add a second part to this book presenting. will almost always create a tense atmosphere. which makes him feel ill at ease. the fear of giving access to a lot of confidential material.Chapter 5: Working with consultants 93 Conclusion The collaboration between the two parties involved. some gurus of management consultancy and. most of which have been placed in the historical context in which they were created. the fear of working with another unknown party.

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Chapter 6: Change 95 Chapter 6: Change But a man is not often found sufficiently circumspect to know how to accommodate himself to the change. The first one. but had he changed his conduct with the times fortune would not have changed. and also because. 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. ‘Fear of change’. when it is time to turn adventurous. 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. everybody wants a change to take place. therefore. does not know how to do it. the cautious man. and. but many people do not accept the change as such. both because he cannot deviate from what nature inclines him to. The Prince. he cannot be persuaded that it is well to leave it. 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. having always prospered by acting in one way. concerns the behaviour of those involved in change programmes. . Chapter 25 Change is one of the most interesting elements of consultancy: everybody knows that when consultants are hired a change will come. Niccolo Machiavelli. since consultants are usually only hired because the situation is serious or even critical. This chapter has been split into two sub-chapters. as regards management consultancy. hence he is ruined. Indeed.

and by showing the benefits they will get. often speak about resistance to change. When we look back at Chapter 1 we can understand why some bullet points under the heading ‘Who am I?’ are important. Good communication is vital here. what is going to be done. should be strong enough to explain to them in clear and simple words that there is no need to be scared. social climate. the resistance will rapidly change into acceptance during the first stage and. so it is important to give information about what is going to change. they will behave as enemies. The better the change process is explained. the higher the resistance will be. The lower the intellectual background of the people concerned. if the communication process goes on long enough. experience. By rapidly understanding their deeper concerns it will be much easier to convince them of their previous errors.1. People are always afraid of the unknown. It is important to understand immediately what exactly members of the staff are afraid of. and what exactly will happen to the positions and responsibilities of each staff member concerned by the envisaged process of change. some of which are based on tradition. Looking further down the list we see ‘rapid framing’. By using words people can understand. Fear of change As previously mentioned. The reference to ‘fearlessness’ is also applicable in of the situation where people are resisting change. Other important steps in this dialogue include the qualities of active listening and comprehensive questioning. the higher the chances of acceptance are. habit. However. as in many other situations. or the person taking the lead in the change process. too.96 Chapter 6: Change 6. . It is a well-known fact that when a group of people are afraid they become aggressive. The real reason for such resistance lies in fear. The consultant. managers and consultants. It is here that good consultants can show just how well they are able to convince people. by giving examples they know. Since they are afraid of what is going to happen. There are acceptable – or even better – ‘understandable’ reasons for this negative behaviour. the most important skill is the ability to use ‘clear language’. will become a kind of enthusiasm. expertise. and so on.

even more so if. and before the new situation will become part of the company culture. 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. up to the start of the change process. The commonly accepted idea that change has to be implemented under the direction of a ‘stranger’. As soon as staff are convinced that if they do not accept the change process the situation will soon become worse. is often a significant mistake. someone coming from outside the company. . will have a greater chance of succeeding if they have been loyal to the company. as such. It should not be forgotten that an important change is never made simply for fun: deep reasons move the management towards such decisions. it is he/she who will convince them of the importance of a common effort. certainly in the minds of the people. somebody working inside the company will have a deeper insight into the culture and habits within the company. he or she has maintained a loyal attitude towards both the company and the personnel. Normally.Chapter 6: Change 97 There are many techniques available to help people collaborate in the change process. they can be the best collaborators imaginable. It is the role of the leader to make them follow the same direction. He/She is a part of it and.

We will also refer to the ‘tools’ part of the book. Develop a coherent strategy and show it to those involved. Show immediate gains.98 Chapter 6: Change 6. 4. because there you will find useful indicators as to when it is time to think about introducing a major change in a company/organisation. Minzberg. It might be useful for those who are really interested in this topic to look at the section ‘Eight major steps to change’. etc. . Work on the basis. 3.2 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. SWOT analysis. 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. by John P. There are five steps in total: 1. Find the people who will support the change. the Thiem Tom 10. in particular PEST analysis. in the chapter on tools at the end of the book. Make the changes deeper and more productive by changing the culture.5 S framework. and 5. Kotter. 2.

Chapter 6: Change 99 = SUCCESS R E S P E C T F O R C U LT U R E A L L A L O N G + FIXED GAINS + SHORT-TERM GAINS BROADER SOLID BASIS COMMUNICATION VISION + STRATEGY SOLID GROUP (= HAPPY FEW) .

It is a question of collaboration. the vision. perhaps a separate department. they have the impression (which is correct) that all this has been taught over and over again. Develop a vision and a strategy A vision is nothing on its own. 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. If possible. They will act like a kind of concrete which solidifies the basements of the building you are going to change. As soon as the staff are informed about the reasons for change. and the different strategies. this group should comprise people coming from different levels and departments within the company. 2. and to move in the desired direction. people have the impression that all is simple improvisation. Leading people very often forget that they know what is happening (since it is their role to be involved). . Therefore it is necessary to develop a vision that will help the change process to follow the correct paths. In support of this vision.1 Communicate around this Without communication about these moves. These people will be the basis for the change programme. but that other coworkers may only be aware of what is happening in a small part of the company. of so-called ‘team-spirit’. it is absolutely essential to try to establish as broad a platform as possible of collaborators capable of building a solid group. the better the change will be explained and accepted. Therefore. which is the worst thing that could happen. It is not only important to give information about the change process. People need to be informed and to know what it is all about. since it is obvious that the broader the approach is. Without adequate communication. but also necessary to inform about the situation and the steps already carried out. all these things will fail. without exception. This new entity should be powerful enough to make things happen. and thus they need to be updated about everything that is happening. and what this involves. strategies should be developed that will help it to achieve its final goal. Build a solid group Good results can never be achieved in a change process alone.100 Chapter 6: Change 1.

Therefore. Innovation should not be instigated simply for the purpose of innovating. and hate to fail. and new actions must be tolerated. they will be even more enthusiastic and better adapted to the change process. The only danger in this ‘risk-acceptance situation’ is that failure may often occur. It will even be necessary to take some risks. It is absolutely essential to remove all possible obstacles as quickly as possible. not as a system. which could have a negative impact on the moral of those people involved in the change process. This will have two major effects: first. but as a tool for encouraging people to go beyond their own possibilities. 4. 3. of course: the fewer obstacles you have the faster the change will succeed. Broaden that solid basis One of the major problems in the change process is the lack of decisionmaking and authority. by succeeding in small intermediate wins. When change is necessary. the better they feel. it is essential to adapt the structures and systems that could undermine the change. . A close look reveals that systems and structures play an important role in how a company functions. people see that the leader of the project has enough power (read ‘authority’) to take immediate decisions. When a company has opted for a change-model. And secondly.Chapter 6: Change 101 The more people know. and the more likely they are to support the process of change. So if they can win very often. Short-term gains make you succeed People like to win. Once again. Here we can return to the Thiem-Tom 10. there is a similar approach to the so-called ‘superordinate goals’ in the above-mentioned Thiem-Tom10.5 S framework. 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.5 S framework (see tools). it is also normal to adapt habits and traditions.

All small issues which do not comply with the direction needed to realise the vision (be they parts of structures. etc. whether small or large. but it must be done with enthusiasm. So.) have to be changed. habits. and first and foremost the staff involved in the change process have to be convinced of the importance of so doing. to a certain extent. and by so doing can make alliances among the staff. and perhaps more interesting. and help them develop the necessary skills internally. it is important to enhance their importance.1 Deeper changes based on fixed gains can help you Having analysed the gains made by various small wins. Nevertheless. not only is it important to communicate all the small wins. it is possible to determine how many times a victory will be ‘celebrated’. 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. New faces give new power and new energy. by changing the people in charge of change. People must be trained in such skills. 5. support them. . by introducing new themes in the approach. so companies must hire them. By doing this. rapidly fixed affair. Consequently. it must never be forgotten that each minor victory is only a small step towards the final achievement. it will be possible to increase the visibility of what has been done. and what remains to be done. 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. referring back to point 2. But these revitalisation effects can be further improved by launching new projects on a regular basis. The process of change is not a short-term.2.102 Chapter 6: Change By dividing the process of change into different actions. by installing the short-term-wins programme. and by changing the systems and structures via various well-controlled steps. This has already been done. systems. once in a while it is necessary to revitalise the entire approach.

but several risks and challenges will subsist. which is not the same as having a quality control system to live by. It is not necessary to actually change the culture. The best that can be hoped for is a slight adaptation to new circumstances. What can be of assistance here. During a change programme it is important to make people responsible for that quality control – as soon as they are part of this control. is changing the behaviour towards the clients. 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. and to ask the question: does the company have born leaders? This all seems quite easy on paper. but it is imperative to change the habits of the people. for instance. .2 And the culture? It is virtually impossible to change the culture of a country. or a company. 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. And that is what it is all about.Chapter 6: Change 103 5. which is something completely different of course. It is extremely important to take a close look at the competences of the company’s management. a nation. I think this is the correct thing to do for change. they will recognise their responsibilities and produce a better final product for the customer. because it is precisely such persistent questioning which will help you to bring about successfully whatever changes you want to implement.

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there are numerous interesting quotations about knowledge. found on the web at http://www. This chapter is all about the ‘K’ in management consultancy. The person who keeps his/her wisdom for him.yourdictionary.or herself. It is quite difficult to find a correct definition of knowledge. Let us take a closer look at them. is simply an observation: . As I have already mentioned.” Socrates (469BC . erudition: teachers of great knowledge. 3. 4. and who does not share is an egoistic outdated type of business person. This kind of approach has the advantage of offering you a choice of entries. the only evil is ignorance. The state or fact of knowing. the one who shares and. 2.com/ ahd/k/k0094000. Learning.” Margaret Fuller (1810-1850) “Knowledge is power. Specific information about something. wants to share is the person who will need to improve his/her own knowledge all the time – in a lifelong learning cycle. The sum or range of what has been perceived. or understanding gained through experience or study. The first proposal. 5. above all. Familiarity. awareness.399BC) As you can see. let others light their candles at it. Here is just one of many. or learned.html 1. and the most common one.” Sir Francis Bacon (1561-1626) “The only good is knowledge. the transfer of knowledge and the ability to share that knowledge are the basic qualities of a good consultant. discovered.Chapter 7: K 105 Chapter 7: K “If you have knowledge.

on the other . the consultant tends to know more about specific cases. linked together. Experience is also based on ‘having done something’. The second suggestion brings us much closer to the work done by consultants. which is based on understanding gained through experience or study.106 Chapter 7: K the fact of knowing. In many cases. treat them as equals. 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. In order to be able to set up a system where. and is much more of an encyclopaedic approach. and thus able to give clear and comprehensible explanations designed to help solve a client’s problem. He or she should not think that they know more than their clients: they must respect them. in the same way as study implies intellectual involvement. on the one hand there are people who share their knowledge. The last definition is clear: mainly as a result of experience and study. and try to get to know more about the subject than the client himself. This assumes correctly that knowledge cannot be gained without effort. nor helps us to understand this difficult concept. I insist on two points: gain experience (and knowledge at the same time) and be willing to share this with others. I do not like it at all as the definition simply repeats what is in the basic approach of the word. This is an approach often found in dictionaries covering different languages. 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. the consultant should be ‘the expert’ in the field in which he or she is working. Chapter 1). for the most part. whereby things have been structured. their expertise and. The definition neither brings any new facts. From the above it should be clear that. and systemised. The fourth definition – teachers of great knowledge – is another approach the consultant should take into consideration.

we will have a problem either of inferiority or of superiority. Professional know-how High The professional The leader Low The clerical staff The manager Low High Managerial know-how Source of graph: K E Sveiby(1992). As long as we do not respect others as being equal to ourselves. the willingness to invest time and energy on behalf of all the staff. there are people who are curious to learn and happy to be taught. etc. If we translate this into a normally company organisation it is easy to understand that we cannot live in. On a larger scale.Chapter 7: K 107 hand. countries. “The know-how company: strategy formulation in knowledgeintensive industries” . or develop. the same reasoning applies to cities. a company on our own: we need the input. the effort. the basic principle of respect must be instigated.

unfortunately. 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. whereas the leader knows how and when to do the right things.108 Chapter 7: K By studying the balance of knowledge diagram. . comprehensible. sociable . they are not usually interested at all in playing the role of a leader. supportive. and secondly. and make company life more human. The reason why many people do not appreciated them. those who make the company they work for so exclusive. who make the business run without giving the impression to others that they are valuable. because most of the time they do not have the skills of all what preceded. make things operate faster.. The manager is the one who knows exactly what everything is about. But why are they not in the upper-right quadrant? There are two simple reasons for this: first. is simple: they studied less and are not billable. so exceptional. there are the ‘basic people’. where they have to be attentive. the real professionals.. even necessary – but can you imagine a company without those devoted collaborators? They make life inside the company easier to bear. In the lower left quadrant.. how to follow them. 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. who knows exactly how to do things right since he or she knows how the rules are made. it is possible to see the differences made by knowledge in the different categories of staff.

and it is that letter which you do not pronounce. because it is this which sets the tone of what it is all about.Chapter 7: K 109 The leader sets the example for the company – a visionary who can maintain calm among the staff. The manager takes care of daily business and daily problems. The manager adheres strictly to the rules he or she has been given or may even have made. It is precisely the presence of the unseen that is important in all kinds of knowledge. vital challenges facing the company. At the end of this short. The chapter is called ‘K’. . but important chapter I would like you to listen to the pronunciation of the word ‘knowledge’. the long-term development and the essential. even when a storm is raging outside. the leader is responsible for the strategy. as in knowledge.

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evolving all the time and thus continually creating new tools. and the second one is that management consultancy is in perpetual motion. As to the so-called ‘founding fathers’. Mr Nguyen Duc Thong. and has proved very useful in several cases which we have worked on together. The reason for this is simple: it was developed by Professor Dr Tôn That Nguyên Thiêm and myself in Vietnam. The first one is that it is impossible to be exhaustive.5 S framework©. I simply wanted to mention some of those who have had a significant influence on me in particular and on consultants in general. for two simple reasons.Gurus 111 Strategy formulation and consulting models and techniques plus some ‘founding fathers’ Gurus The purpose of this chapter is certainly not to be exhaustive. In addition. at the time we were grateful to the fruitful input of one of our students. One concept is analysed in greater depth: the Thiem-Tom 10. .

(a system) is not the sum of its parts. So. Doctor in Philosophy of Science from the same university in 1947. Operational research attempts to provide an objective role and quantitative basis for the solution of managerial and administrative problems. analysis cannot produce understanding of systems. One was radar.. Ackoff Professor Emeritus Dr Ackoff was born in 1919. In fact. which concerned ‘operations research’.. it’s a product of the interaction of the parts”. During his career. His academic life was really rather impressive: Bachelor of Architecture from the University of Pennsylvania 1941. he was one of the pioneers to define the field. It was one of the key tools used by allied forces in the war.. one was sonar and the other was operational research. In the first one.. The second domain was ‘systems thinking’. He is equally famous for advocating that managers need to rethink how they approach problem solving and innovative approaches in particular. there was a book written in which the success of the allies was attributed to three technological developments. at the end of the war for the first time it began to be employed outside the military. or operational research as it was called in England. Dr Ackoff worked mainly in two specific research domains. This is what he refers to precisely as ‘systemic’ thinking. was developed with efforts to manage WW2 more efficiently. Ackoff Russell L. an area where many people refer to him as “the dean”.” And he continues to explain: “ . 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 .. and Doctor of Science from the University of Lancaster in 1967. and that’s where we played a major role. he held various positions at many universities and institutions. He himself said the following: “The field of operations research.112 Gurus: Russell L.

it seems more useful to refer to the bibliography below. Now is the only time in which we can act.” “Development is a process. “I am a presentologist. who also developed a theory that takes the alternatives into consideration. People very often focus on problems. but they forget to look for all the other possibilities. strategies and options they already have in mind. his approach to business. and to life as a whole. deny these constraining assumptions.” “Forecasts are about probabilities. The recipients. . Then. since they are clearly explained in his books). When asked to give a conference presentation on the future. Ackoff 113 all the alternatives. A pool of resources – financial. assumptions are about possibilities. not the donors. human and equipment – should be made available to those who are less developed. the process of increasing one’s competence. we can act now so as constantly to reduce the gap between where we are and where we want to be.. Ackoff ’s response revealed a couple of interesting things about the man himself. not a futurologist. Knowing this. Organisations. Since his theories are very complex (please do not read ‘complicated’. the future is created by what we do now. an ability to satisfy one’s own needs and legitimate desires and those of others.” “My preoccupation is with where we would ideally like to be right now. The donors may express their opinions but should not impose them on the recipients of their efforts. Herbert Simon..Gurus: Russell L.” “I have learned the following from my efforts to facilitate the development of others: 1.of any size can serve as facilitators of development 2. should decide how. to a large extent. institutions. This brings us closer to the other guru presented in this book. explore the consequences of the denials”.

5. ISBN 0-19-508727-5. by identifying them. Ackoff 3.114 Gurus: Russell L. We can only learn from mistakes. John Wiley and Sons. Bibliography Re-Creating the Corporation. ISBN 0-471-04289-7. a Design of Organizations for the 21st Century. A Radical Prescription for Recreating Corporate America and Rediscovering Success. The less advantaged should be allowed to make non-selfdestructive mistakes (experience is the best teacher). New York. ISBN 0-471-09009-3. Corruption should not be tolerated. The Democratic Corporation. The effort should be monitored and evaluated objectively by a group whose members are acceptable to both the recipients and the donors of aid. Creating the Corporate Future. 1981. 1987. 4. . 1994. Oxford University Press. Decisions on how to use these resources should be made democratically. John Wiley and Sons. Its presence should be a sufficient reason for discontinuation of a development-support effort. The Art of Problem Solving Accompanied by Ackoff ’s Fables. 1999. 6. determining their source and correcting them.

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116 Gurus: 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. multidivisional (or “M-form”) corporation that made large investments in manufacturing and marketing and in management hierarchies to coordinate those functions. argued that managers should pay especially close attention to “strategic factors” which depend on “personal or organisational action”. first in the United States and then in Europe: the vertically integrated. firms had an incentive to remain small and to employ as little fixed capital as possible. a top executive with AT&T. ” . 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. By the late 19th century. every subunit organisation. in most lines of business. but individual firms apparently often lacked the potential to have much of an influence on competitive outcomes. 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. a new type of company began to emerge. Historical context in the business area Until the 19th 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. Chester Barnard. Kenneth Andrews expressed his perception on this by stating: “Every business organisation. Andrews Kenneth R. Instead. the scope for applying competitive thinking to business situations appeared to be limited: intense competition had emerged in many lines of business. In the academic area. In the 1930s. 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. Ford.

In the 1960s. customers. He discussed strategy in two key parts: formulation and implementation. purpose or goals. a concept that was widely diffused in a business policy conference held at Harvard in 1963. Andrews 117 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. Andrews saw corporate strategy as the interfunctional synthesis of business strategy and functional strategy. 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). which he published in 1971 under his most well-known title: “The Concept of the Corporate Strategy”. employees. Andrews put these elements together in a way that became known as the SWOT analysis. . produces the principle policies and plans for achieving those goals and defines the range of business the company is to pursue. 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. This can be defined as being “the pattern of decisions in a company that determines and reveals its objectives. To avoid students having to read hundreds of case studies to understand how policy decisions are made within companies. in which he developed a prescriptive corporate strategy model. Andrews made the relevant material (without the cases) directly available in textbooks. communities” . 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.Gurus: Kenneth R. the kind of economic and human organisation it is or intends to make to its shareholders.

etc. organisation leader and the personal leader. and at devising appropriate product-market strategies which create and sustain environment.118 Gurus: Kenneth R. the architect of purpose must be expert at anticipating what future business environments are to be like. he has to use his personal leadership skills such as communication. 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? . In terms of assessing the strategy’s effectiveness. Andrews The implementation focuses on three points: • Organisation structures and relationships that require work allocation. educating and motivating its people. and an effective information system • Organisational processes and behaviours that entail establishing standards and measures of performance. the use of motivation and incentive systems. persuasion and articulation to create the favourable moral and ethical climate in which this implementation will be maximised. • Top management versatility that needs the CEO to be an architect of strategy. coordination of responsibilities. recruitment and development of management. A man with a vision. Finally. etc. The organisational leader then uses administration techniques to plan its implementation by developing organisational capabilities. values and resources congruence by matching those environmental opportunities and threats facing the organisation with its resource strengths and weaknesses.

Andrews.att.hbs. Andrews.htm • Baker Library. Thompson.edu • “Three Forms of Strategy” by Fred Nikols. whilst the strategic frameworks and models being developed by academics and consultants in the 1960s focused mainly on strategic issues at business unit level. Publ: 1971. 1980 • “A Guided Tour Through Kenneth R. http://gemini.net/~nickols/three_forms_of_strategy. 1980)” by Dave Payne. Aug 1993. Dow Jones-Irwin. Publ: Homewood.edu/~rcp3228/mbpcorp. rather than trying to define an overall strategy for companies with many different businesses.hbs.Gurus: Kenneth R. 2000. http://hbswk. 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. inc.htm • “Concept of Corporate Strategy Outlines”. Bibliography and Web-o-graphy • “Management Consultancy” by Philip Sadler. Harvard Business School. Andrews 119 So. Andrews’ The Concept of Corporate Strategy (Revised Edition.uk/businessmanagement/thompson4/ I_01emergence. Irwin.co. Harvard Business School Working Knowledge.library.tntech.edu/phd/ story/andrews. The Academy of Management Executive.online-magazine. www-bus.html • “The Emergence of Strategic Management” by John L.. Publ: Kogan Page Ltd.edu/phd/payned/classes/ PRES-Andrews-CncptCrpStrt_files/outline_expanded. has provided a much more relevant tool for modern companies often involved in different businesses. Andrews.htm • “How Business Strategy Tamed the Invisible Hand” by Pankaj Ghemawat. 2002. Ada. Second Edition.edu/ • “The Concept of Corporate Strategy” by Kenneth R. Revised Edition. http://thomsonlearning. on-line catalogue: http://voyager. http://leeds.colorado.com/careertapes/audiobooks/ • “Why diversify? Four Decades of Management Thinking”. 2001 • “The Concept of the Corporate Strategy” by Kenneth R.doc. .colorado.. http://home. IL: Richard D. www.

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. H. “Implanting strategic management” and “The new corporate strategy”) on planning. Following his studies at Stevens he received a doctorate in applied mathematics with a major in mathematical theory of elasticity and plasticity. He studied general engineering at the Stevens Institute of Technology and continued his education there. 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. at the Brown University. 1965 p ix http://www.120 Gurus: H. IBM. Worldwide. Igor Ansoff Igor Ansoff was an applied mathematician and business manager. Igor Ansoff H. Ansoff is known for his research in three specific areas: the concept of environmental turbulence. He is known as the ‘father of strategic management’.ansoff. “Corporate Strategy”. General Foods and Westinghouse. the contingent strategic success paradigm. bridging the gap between concepts and practice.com . Igor Ansoff was born in Russia in 1918 and immigrated to the United States with his family. 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. “Strategic Management”. strategy and management thinking lead the field in applying strategic thinking to businesses. Ansoff Associates. Through his private consulting firm. In 1956. he advised such major companies as General Electric. 4 5 Ansoff Igor. New York: McGraw Hill. receiving his Master of Science degree in the dynamics of rigid bodies. and real-time strategic management5. He was sought after by corporations around the world for his management theories. Gulf Oil. Philips. In 1965. More than 120 papers and articles were published and translated into eight languages. Dr Ansoff ’s books (“From strategic planning to strategic management”.

particularly Great Britain.nl/usa/H/1994/ch12_p15. in the Eastern Bloc. The sixties generation was a generation of experimental rebels. are just some of the characteristics that defined the 1960s. command. 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. in Western countries. California. movements were being made – inspired by the Hungarian Revolution (1968) – to reject Soviet domination. especially in the United States. the United States and West Germany. 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 rise in the social revolution. and the dissolution of European colonial empires. on 14 July 2002. This period also refers to the complex of inter-related cultural and political events which occurred in approximately the same period. the height of the Cold War. The decade was also labelled the ‘Swinging Sixties’ because of the libertine attitudes that emerged then. Social upheaval was not limited to these nations alone. and in the Middle East. Other events.htm . It was during this time that protectionist. The ‘60s revolution spread far beyond the borders of America and Western Europe. In South America. France. the ‘60s affected almost the entire globe.Gurus: H. and mixed economies all reached their peak. Many experts attribute the 1960s “counter culture revolution” to the major social and political factors that arose in the 1950s6.rug. attempts were being made to resist Soviet and American domination. revolutions were at a high. Overall. 6 http://www. Igor Ansoff 121 He died of complications from pneumonia in San Diego. such as the anti-war movements and the counter-culture movement. it became large scale in nations such as Japan. Mexico and Canada.let. the human rights movement and the civil rights movement. too.

scientific research. Real income rose 50% during the decade. 7 8 http://usinfo. institutions designed to ensure an open. and development of the nation’s highway system9.state. The development of capitalism and an internal market. in particular.edu/commentr. Firms merged to create huge.gov/products/pubs/oecon/chap7. On the other hand. constituted the economic ideal of these countries. 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. exciting. capitalist international economy. meanwhile.nationsencyclopedia. accompanied by rising productivity and low unemployment.htm 9 http://www. Igor Ansoff Some events actually happened outside of this period. 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. the question of economic development of lesswell-developed countries and newly independent colonies was widely taken up at an international level.htm http://fbc. radical. For example. Business. entered a period marked by consolidation. diversified conglomerates. the ‘sixties’ has become synonymous with all the new. The economic context From the late ‘50s.com/Americas/United-States-economy. up from $11. and the federal government expanded its role in such areas as social welfare. the rise of feminism and gay rights only began very late in the 1960s. when large industrial corporations accounted for vast portions of the national income. the United Stated enjoyed the most sustained period of economic expansion it had known.html . Nevertheless. space technology.binghamton.8 billion in 1950. In the sixties. Business and government were both powerful forces in the economy during this period. the movement had already begun in earnest during the 1950s. and US investment in foreign countries reached $49 billion in 1965. subversive events and trends of the period7.122 Gurus: H. although some of the most dramatic events of the American civil rights movement occurred in the early 1960s. and the objective of an independent national economic dynamism.

Igor Ansoff 123 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. diversification and technological changes increased the complexity of the strategic situations that many companies faced. 1990. first edition 1963 12 Mintzberg.com/strategy/135 Alfred Sloan. 1965 p 9 .1965 An overview In the 1960s. p 107-114 13 Ansoff Igor. a vision. Doubleday. “Corporate Strategy” . New York: McGraw Hill. and intensified their need for more sophisticated measures that could be used to evaluate and compare many different types of businesses.Gurus: H. My years with General Motors. Based on the ideas of strategic thinking and the competitive environment of this decade. He separated the decisions about a business into three areas13: 10 11 Kai John. Ansoff published his book “Corporate Strategy” based on strategic decisions within a firm. 1994. In the 1960s. “Corporate Strategy”. Henry. diversification and technological changes increased the complexity of the strategic situations that many companies faced. In Harvard Business Review. As defined by Mintzberg12. of where the organisation should be heading. 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. Many large multinational corporations were forced to consider global competition as a factor in planning10. New York.johnkay. “The fall and rise of strategic planning”. It devised a strategy that was explicitly based on the perceived strengths and weaknesses of its competitors. The need for a formal approach to corporate strategy was first articulated by top executives of General Motors from 1923 to 194611. and intensified their need for more sophisticated measures that could be used to evaluate and compare many different types of businesses. “Mastering Strategy Resource Based Strategy” see http://www. strategic thinking is about synthesis and using intuition and creativity to formulate an integrated perspective. which necessitated an integration of strategic and tactical planning. January-February .

and synergy: that is a measure of the firm’s ability to make good on a new product-market entry18. 49-100 Ansoff Igor. etc. the firm’s purpose should be to maximise long-term profitability (return on investment). setting production schedules. Ansoff argued that each firm should have economic and social objectives to optimise the efficiency of its total resource and social conversion process. New York: McGraw Hill. whether to acquire or go for organic growth. p 104 17 Ansoff Igor. New York: McGraw Hill. or how we support and organise what we do.124 Gurus: H. The objectives should be an analysis of the strengths and weakness of the firm14. the competitive advantage: which seeks to identify particular properties with individual productmarkets which will give the firm a strong competitive position. 1965. taking into account a large number of highlighted factors15. and how to weigh alternatives. the productmarket scope: which specifies the particular industries to which the firm confines its product-market position. 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. pp 37-42 Ansoff Igor. which are decisions concerned with structuring the firm resources in order to create a maximum performance potential. 14 15 16 Ansoff Igor. 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. 1965. how to diversify. how to assess. • The strategic problems such as the firm’s objectives and goals. New York: McGraw Hill. pp 105-109 . 105-111 18 Ansoff Igor. and how a company should develop and exploit its present product-market position. “Corporate Strategy”. “Corporate Strategy”. “Corporate Strategy”. “Corporate Strategy”. 1965. to assess synergy (the desired characteristics of appraising the firm’s competence profile) and to decide how to expand. Igor Ansoff • The operational decision which involves pricing. 1965. when establishing a marketing strategy. New York: McGraw Hill. • The administrative decision. whether entry to an industry is likely to give the desired ROI. the search for diversity. In order to define the common thread. In order to measure the resource conversion process. “Corporate Strategy”. New York: McGraw Hill. 1965.

htm . he proposed comparing the possible “growth vectors” of a firm. activity or resource and investment opportunity. and is an accepted way of identifying and categorising market and product developments and opportunities21.edu/bhr/PDF/760102. based on Ansoff ’s Matrix. repositioning the brand. Basically. In order to systematically explore the four categories stated above. promoting the product. and so on. It is used by marketers who have objectives for growth opportunity to make an acquisition.com/Lessons/lesson_ansoff.hbs. This means increasing its revenue by. outsourcing a service. 1965. New York: McGraw Hill. This tool offers strategic choices to achieve objectives. 19 19 Ansoff Igor. Market development: new missions are sought for the firm’s products. or from their own internal resources. changing a supplier.i-m-c. a potential partnership.org/imcass/VUs/IMC/content. competitor evaluation. strategy analysis business planning. It has become a standard tool kit of any marketing.Gurus: H. 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. Diversification: widening the mission and types of product in the portfolio. Igor Ansoff 125 Ansoff ’s Matrix Ansoff also focused his theory on translating the logic of the SWOT matrix.marketingteacher. for example. “Corporate Strategy”.pdf0 19 http://www. 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.asp?id=20996&parentKey=60372 19 http://www. p 110 Ghemawat Pankaj. product development and research reports. that help organisations to determine strategies from their environmental opportunities and pressures. Ansoff ’s Matrix today Many techniques have been developed. “Competition and Business Strategy in Historical Perspective”. Ansoff ’s Matrix is presently used as a form of product portfolio management20. Product development: creates new products to replace current ones. strategic planning. 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. see http://www.

126 Gurus: H. Bibliography and Web-o-graphy Publications by Igor Ansoff : • With Romain Lombriser: “How Successful Entrepreneurs Pilot Firms Through The Turbulence In The 1990’s”. or marketing it in a new region. 1979 • “Strategic Business Areas”. 1995. Diversification: In this phase. Product development: a new product is developed to be marketed to the existing customers. but it is marketed to a new audience – exporting the product. Prentice-Hall. Here the firm develops and innovates new products to replace existing ones. Igor Ansoff Market development: the existing product range will be marketed in a new market. Vol 4(2) • “Implanting Strategic Management”. New York. This often happens with the automotive markets where existing models are updated or replaced and then marketed to existing customers. For example. the food industry). New York. 1979 . 1988 • “Understanding and Managing Strategic Change”. There are two types of diversification. Amsterdam. Wiley. Johtaminstoimen. Elsevier/North Holland. London. 1982 • “Strategic Management”. Unrelated diversification means that the firm previously has neither industry nor market experience. This means that the product remains the same. Macmillan. a soup manufacturer diversifies into cake manufacture (i. namely related and unrelated diversification. Strategic Change. London. Tehokas Yrtys. Ammattilehti. Related diversification means that the company remains in a familiar market or industry. Such products are then marketed to its existing customers. 1984. Jan. 1990 • “New Corporate Strategy”.e. a firm markets completely new products to new customers. Wiley.

1976 • “Management on the Threshold of the Post-Industrial Era”.nationsencyclopedia.nl/usa/H/1994/ch12_p15. January-February http://www.binghamton. Harmondsworth.com http://www.Gurus: H.state.ansoff. McGraw-Hill.html http://www. 1969 • “Handbook of Business Administration.marketingteacher.let.htm http://fbc.com/Americas/ United-States-economy. a quasi-analytic method for long range planning”.gov/products/pubs/oecon/chap7.htm . New York. Englewood Cliffs.pdf • Kai John. The Conference Board. NJ. Competition and Business Strategy in Historical Perspective. see http://www.com/Lessons/lesson_ansoff. see http://www.edu/commentr. 1967 • “Organizational Decision Making.rug.org/imcass/VUs/IMC/ content. In Harvard Business Review.htm http://www. Igor Ansoff 127 • “From Strategic Planning to Strategic Management”. • Ghemawat Pankaj.johnkay.i-m-c.edu/bhr/PDF/760102.asp?id=20996&parentKey=60372 http://www. Free Press. New York. The fall and rise of strategic planning.hbs. Penguin Books.htm hhtp://usinfo. New York. 1973 • “Business Strategy”. 1994. McGraw-Hill.com/strategy/135 • Mintzberg Henry. Prentice Hall. Research and Development Planning”. 1967 • “Corporate Strategy”. Mastering Strategy Resource Based Strategy. 1965. London: Wiley.

while focusing on the key factors and challenging the constraints are to be encouraged. customer. and that this matches the strengths of the corporation. tunnel vision and the peril of perfectionism are to be avoided. the names of whom each begin with ‘C’. Having written this “bible of corporate strategy”. 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. For a strategy to be successful. The business implication of this invisible continent is both risk and opportunity. although he always related his thoughts back to the implications for the leaders of the corporations. he insists. 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. Inc. The book contains a list of things to avoid and things to concentrate on. corporation. it is time to enter before things become too fixed. “The Invisible Continent”. Ohmae moved on to the wider issues of the changing shape of the world of business. Strategy. The title of his recent book. while falling short of forecasting 9. On the other hand. He was a partner in McKinsey & Company. is a question of attitude more than numbers.11 which happened after the publication of the book. True. He suggested that any business strategy will need to take into account three main players. i. which he refers to as the “governance of the new continent”. we are at the beginning of the journey. called “The Mind of the Strategist”. and competitors.128 Gurus: Kenichi Ohmae Kenichi Ohmae Kenichi Ohmae is considered to be among the world’s all-time leading gurus of management. encapsulates his idea that the world today is so different from the past that it is like discovering a new continent. As he says in his conclusion. . the dynamics of the three Cs. Since this invisible continent is in the state of free entry and in the process of developing infrastructure. need to be borne in mind.e. both within and between each of them. there is a greater concern for this new continent.

Bibliography “The Next Global Stage .Challenges and Opportunities in our Borderless World”. HarperBusiness.. an author and a public speaker. Inc. Harvard Business School Press. His undisputed creativity and unequivocal appeal to intuition makes him a guru of the century. McMillan. October 1995 (English) “The End of the Nation State . an advisor to government. and some of his theses have been proven to be dubious.Four Strategic Imperatives of the New Economy”. Wharton School Publishing. However. as he emphasised in his early work. a public policy advocate and a business entrepreneur who founded and runs many businesses. successful business strategies do not come from rigorous analysis but from a thought process that is basically creative and intuitive rather than rational. May 1995 (English). Kodansha Publishing Company. March 1995 (Japanese) . Not only is he a much sought-after management consultant. US. Revised version by Nicholas Brealey. but he is also a founder of the socio-political reform movement.Making Sense of the New World Order” (edited with a preface). His economic logic may not always appear very sound. 14 March 2005 (English) “The Invisible Continent . June 2000. Free Press.How Region States Harness the Prosperity of the Global Economy”.Gurus: Kenichi Ohmae 129 Now he is respectfully described as a man of many parts with a finger in lots of different pies. 2001 (English) “The Evolving Global Economy . UK.

President Inc. May 1990 (English) “Beyond National Borders”.. Kodansha Publishing Company. Paperback. February 1987. Dow Jones Irwin. Paperback. November 1991. Shinchosha. US. Paperback. John Wiley and Sons. Japan. Paperback. 1984 (Japanese). February 1983 (English) “The Mind of Strategist: The Art of Japanese Business”. Paperback “The Borderless World”. 1994 (Japanese) “Fact and Friction”.130 Gurus: Kenichi Ohmae “The Ohmae Report . January 1984. President Inc. 1991 (English). 1988 (English) “Japan: Obstacles and Opportunities”. (English). US.. Kodansha Publishing Company. US. 1991 (English). November 1993 “Sekai no Mikata Kangaekata .. May 1982. US. Paperback. March 1991.Toward a Fundamental Restructuring of Japan”. Shinchosha.The Japanism”. President Inc. Kodansha International. June 1990. The Japan Times Ltd. Harper & Row. .. McGrawHill.

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multinational corporations. AT&T. to his numerous. He received awards for two further articles on core competencies. respectively. widely acknowledged literary contributions. C. and speculated that he “may well be the most influential thinker on corporate strategy today”. he received the American Society for Competitiveness Award for his outstanding academic work on competitiveness. Prahalad completed his DBA from Harvard University in 1975 and has since lectured at various renowned universities (such as the Indian Institute of Management. following the results of a nationwide poll among MBA alumni. His Harvard Business Review articles “Strategic Intent”. both in the US and Europe. Prahalad C. in a special report on executive education in September 1993.org/bios/c_k_prahalad. translated into 13 languages. Prahalad C. co-authored by Gary Hamel. K. K. Honeywell). and saw his book “Competing for the Future” (1994). “The Core Competence of the Corporation” and “The End of Corporate Imperialism” won the McKinsey Prize in 1989.htm). the European Institute of Business Administration and the University of Michigan Business School) and consulted with numerous well-known companies (for example. Business Week named him as one of the top ten business professors in the US. “Collaborate With Your Competitors – and Win” (1989).132 Gurus: C. K. In 1995. understanding and friendship. above all. and “Strategy as Stretch and Leverage” (1993) (www. 1990 and 1998.tlp. Prahalad’s fame is due. acquiring an excellent reputation as a professor and specialist in corporate strategy and the role and value it constitutes for top management in large. The Wall Street Journal even suggested he is one of the top teachers in the world. The Indo-American Society presented Professor Prahalad with their 1994 Annual Award for his exceptional contribution toward the promotion of Indo-American goodwill. Colgate Palmolive. K. Other well-appreciated articles include “Do You Really Have a Global Strategy?”(1985). . Apart from the professional achievements mentioned above.

involvement.” Staying with the Sony example. and marketers have a shared understanding of both customer needs and technological possibilities. which may intuitively be considered the most important components in bringing sustained competitive advantage to firms. especially how to coordinate diverse production skills and integrate multiple streams of technology”. He then maintains that. K. in order to be successful in the long run. and ultra-thin precision casing – the same skills it applies in its miniature card calculators. companies have to re-establish themselves in “core competencies” which he defines as “the collective learning of the organisation. . 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. By “competencies” Prahalad does not only refer to “knowledge assets”. Sony must make sure that technologists. he considers crucial for a company’s success. and a deep commitment to working across organisational boundaries. of course. Casio must harmonise know-how in miniaturisation. and corporate strategy – notions which he approaches in a different. Core competence is therefore a mixture of communication. innovative way. involving many levels of people and all functions. engineers. pocket TVs. Prahalad 133 As we can see from the titles cited. material science. Prahalad is primarily interested in the notions of core competence. to realise miniaturisation of its products. 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. and digital watches. To bring off this feat.Gurus: C. He mentions Sony’s capacity to miniaturise or Philips’ optical expertise. competition. microprocessor design. but also to physical assets. 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. Hamel) with the rather mysterious sentence: “The most powerful way to prevail in global competition is still invisible to many companies”.

etc. For example. Prahalad Prahalad adds that quite a few business failures result from management’s perception of the company as a “collection of discrete businesses”. This made Casio’s entry into the hand-held TV market predictable for Prahalad. companies have to identify and develop key areas of expertise which are distinctive to themsleves. Prahalad suggests three factors which help to identify core competencies in a company: 1. cultivate and exploit the core competencies that make growth possible. Apple has receded to only a few areas of application advantage while Microsoft continues its impressive growth. Establishing a portfolio of competencies rather than a portfolio of businesses means that. of its being trapped in the strategic business unit (Prahalad even speaks of the “tyranny of the SBU”). K. A rival may well be able to copy some of the technologies that comprise the core competence. 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. 2. critical to their long-term success. central areas of the company where the most value is added to its products.134 Gurus: C. In other words. Customer value: a core competence which makes a significant contribution to the perceived customer benefits of the end product. . finally. Extendibility: a core competence which provides potential access to a wide variety of markets. but it will be very difficult for him to duplicate a well-established and complex pattern of internal coordination and learning. competence in display enables a company to take part in such diverse businesses as calculators. Difficulty of duplication: a core competence is difficult for competitors to imitate. over time. Honda’s engine expertise clearly fulfils this criterion. it helps the company to expand into different markets and thus exploit new opportunities. enhanced as they are applied and shared and. 3. miniature TV sets. These areas of expertise may be in any area but are most likely to develop in the critical. and its inability to identify. monitors for laptop computers. This means that a core competence adds value for customers by increasing the benefits derived from a product.

and ideally chronologically preceding. “The Core Competence of the Corporation”.000 between 1985 and 1987. K. 79-91 C.. despite R&D budgets smaller than those of GM and Toyota1. companies that listen to customers and then respond to their articulated needs (needs that are probably already being satisfied by competitors with greater foresight).000 to 382. satisfy and keep customers. Prahalad and Gary Hamel. Harvard Business School Press. Prahalad and Gary Hamel. Any company that can do no more than respond to the articulated needs of existing customers will quickly become a laggard. is the question of what the customer wants. What range of benefits will customers value in tomorrow’s products? 2. . How might we. Chrysler has tended to view engines and power trains as simply one more component. It means “innovatively distilling customer knowledge and insight into loyaltyearning products”.Gurus: C. namely extendibility and customer value. in “The Future of Competition: Co-Creating Unique Value 1 2 C. 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). thus rendering itself increasingly dependent on Mitsubishi and Hyundai.. without realising it initially. Being customerfocused is therefore more than being customer-led. 90(3). Harvard Business Review. Customer-focused companies must be able to answer the following two critical questions: 1. but anticipate them. through innovation. expectations and complaints. much less design. “Competing for the Future”. It augmented the number of outsourced engines from 252. K. 107 . 1990. and companies that lead customers where they want to go. Honda has been able to pool its engine-related technologies. It is difficult for Prahalad to imagine “Honda yielding manufacturing responsibility. pp. according to Prahalad. preempt competitors in delivering those benefits to the market place2? In his more recent comments on how to gain. Such companies which are able to create the future do more than satisfy customers – they constantly amaze them.” Closely tied to the concept of core competence. K. of so critical a part of a car’s function to an outside company. in particular features 1 and 2 mentioned above. Prahalad 135 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. it has parlayed these into a corporate-wide competency from which it develops world-beating products. Prahalad (again together with Gary Hamel) states that the future belongs to companies which not only understand customer needs. 1994. In “Competing for the Future”. problems.

the experience is. shrinking profit margins. 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. Very likely. creating thematic communities. “When I visit the local rental store. If I want to watch both. K. .136 Gurus: C. 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. If I find two hot releases. I may not find my first. No longer seeing consumers as passive targets – as a matter of fact. such flexible. globalisation and ubiquitous connectivity constitute big advantages and big challenges at the same time. from passive to active – and competition will further intensify. from unaware to informed. an $8 billion business in the US in 2002. Once I do pick one or two videos. companies will need to build more flexible. To meet the challenge. I must watch them within the company-allowed time frame. Prahalad mentions the video rental business. He again underlines that delivering a superior customer experience will be the differentiator between successful companies and also-rans. and constituting an unspeakably precious source of up-to-date information about what people want. companies have to figure out ways to engage customers as equal problem-solvers in order to get value that is unique. then I must reorganise my life around the rentals or pay a late fee. enabling rapid word-of-mouth. 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. second or even third choices. 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. Thanks to wireless mobility and the internet. then I must return them together. As a practical example of how customer expectation and value today often diverges from the actual product or service provided. dynamic information platforms will be internet-based.

“The Core Competence of the Corporation”. K. and Hamel G. The first three DVDs arrive in my home mailbox. Harvard Business School Press. I can keep the movies as long as I want and when I’m done. not the company’s. K. “The Future of Competition: Co-Creating Unique Value with Customers”. and order films.000 DVD titles. (1990). Prahalad and Venkat Ramaswamy. Prahalad 137 By contrast.Gurus: C. As a Netflix customer. I pay a flat monthly fee of $20 to choose from the film’s inventory of more than 15. At the Netflix website.” Prahalad adds that such changes apply across industry and across companies and there are no exceptions. Netflix has developed a video rental system designed around consumer-think. The experience is mine. Bibliography C. top picks of critics and so on. actor. 2003 Prahalad C. Harvard Business Review. director. . K. I can explore all available titles by genre. 78–91. It’s up to me how quickly I watch the films. I simply seal them in the prepaid envelope provided by Netflix and pop it into the nearest mailbox. 68.

Wisconsin in 1916. led Simon to become interested in the computer simulation of human cognition. he started an in-depth study in economics in the institutional area. Artificial intelligence was just one – together with Allen Newell he created the General Problem Solver (GPS)1 in 1975. 1969. he was awarded the Nobel Prize in this field of competence. He was interested in so many fields of human behaviour that it is difficult to mention them all. which is a revolutionary step in the field of microeconomics. Herbert Simon was also interested in the role of knowledge in expertise. 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. Later. Newell & Simon. This. It was he who said that a minimum of ten years of experience is needed to build an expert. 1972). 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”. This programme and the associated theoretical framework made a significant impact on the subsequent direction of cognitive psychology. . 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. At a very young age he became convinced that it was possible to study human behaviour scientifically. In 1978. in turn. This tool was probably the very first method proposed to separate problem-solving strategy from information about specific problems. they estimated that expertise was the result of some 50. While studying at the public school in the town he developed a deep interest in sciences. He was also at the basis of the concept of organisational decisionmaking. Between 1950 and 1955. 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. It also introduced the use of productions as a method for specifying cognitive models.138 Gurus: Herbert Simon Herbert Simon Herbert Simon was born in Milwaukee. His doctoral dissertation dealt with the organisational decision-making process. Together with his colleagues. 1 The General Problem Solver (GPS) was a theory on human problem solving presented in the form of a simulation programme (Ernst & Newell.000 pieces of disparate information. In 1933.

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. This.”2 The next step in his analysis is obvious: which authority takes the decision? Using his own language. H. The Free Press. p. We can divide this task into three sub-tasks: 1. 82. The comparison of the accuracy and efficiency of each of these consequences. Any decision made involves a choice between a selected number of alternatives directed towards an organisational (sub) goal. and 3. commonly called ‘decisions’. 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. 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. is pure theory since no individual or organisation can ever know all the alternatives. the task of this rational decision-making process is to select the alternative that results in the preferred set of all possible consequences. or all the consequences of them. . his doctoral dissertation “Administrative Behaviour” formed the basis for the rest of his professional life. The determination of all the consequences resulting from each of the alternatives.Gurus: Herbert Simon 139 His main area of research has always been the industrial organisation. Administrative Behavior. 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. For him.. The identification and listing of all possible alternatives. 3rd ed.. In the middle of this book we find the behavioural and cognitive processes of making rational human choices. 2. 1976. By reading this carefully it can be deduced immediately that the authority has a huge influence on the formal 2 Simon. of course. New York. Herbert Simon’s first book.

goals – better known in business as budgets and strategy – and even the values). Stanford University Press. Each individual will behave differently when taking a decision on behalf of the group he belongs rather than for himself. race.or herself with a group while.140 Gurus: Herbert Simon structure of the organisation (sanctions. Bibliography Administrative Behavior: A study of Decision-Making Processes in Administrative Organizations. . ISBN 0-8047-1848-2. 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. The Free Press (1997). social. The ‘group’ is used on purpose because an individual belongs to different organisations in the course of his/her own normal social life (business. 3rd edition.. geographical. 1997. The pioneer Herbert Simon died in 2001. An Empirically Based Microeconomics.). Cambridge University Press. 1983. 4th edition. Although many members of any organisation will focus on the adequacy of the decision. rewards. 1977. ISBN 0-521-62412-6. sports. the overall administrative management must pay particular attention to the efficiency with which the goal was achieved. The Sciences of the Artificial. communication systems. gender etc. and other topics in the methods of science. 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. Stanford. Reidel Publ. the conclusion drawn from this approach is that an individual identifies him. in decisionmaking. 1996. ISBN 0-684-83582-7. Co. Models of Discovery. MIT Press. On the other hand. Boston. Reason in Human Affairs.

Gurus: Herbert Simon 141 .

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Tools 143 Tools As previously mentioned in the introduction to the gurus section. and sometimes because the tool was completely unknown. Sometimes this was because of the importance of the tool. . this part of the book is not intended to be exhaustive. so that my students (and others in the know). while others are still used on a daily basis by professionals in consultancy. 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. will have a more complete overview on what is available in the competitive world of consultancy. This section will again be completed in the next edition of this book. Some of the tools are outdated.

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). He became the world’s first professor of leadership studies at the University of Surrey (1979-83). England. Achieving the task Building and maintaining the team Developing the individual . Herzberg and Fayol. Adair wrote over 40 books on management and leadership and has his own publishing company in Surrey.144 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. London and Oxford universities. His theory adds a simple dimension to the works of Maslow. The People’s Republic of China awarded him the title of honorary professor for his work. John Adair had a colourful military career having studied at Cambridge.

allocate work and resources .direct the job to be done (task structuring) .define the task .support and review the individual people doing it .develop the group .appoint sub-leaders .build team spirit .check performance against plan . an action-centered leader must: .adjust the plan The responsibilities for the team are: .maintain discipline .make the plan . The Adair model indicates that the action-centered leader gets the job done through the work team and relationships with fellow managers and staff.control quality and rate of work .encourage.Tools: Action-Centered Leadership 145 II) What: the Action-Centered Leadership model The model – comprising three overlapping circles – distinguishes three groups of activities which are highly interrelated. According to Adair’s explanation.co-ordinate and foster the work team as a whole The responsibilities for the task are: .ensure communication within the group . 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. give a sense of purpose . motivate.

give status . Leadership consists of three mutually dependent circles: task. 3.attend to personal problems .146 Tools: Action-Centered Leadership The responsibilities for the individual are: . . It can be learned on the “field of action”. The model adds the element of leadership to the management skills. Leadership is a skill: it is no longer an inborn capability.develop the individual Conclusion 1. the size of which can change depending on the situation.recognise and use individual abilities . team and individual. 2.praise individuals .

Charismatic leadership (80s-90s): Weber and House: this type of leader can rebuild morale and offer a positive vision for the future. 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).Tools: Action-Centered Leadership 147 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. self-confidence. Traits theory (20s-50s): completing the task. Theory Y managers: participative management style because people will apply self control and they accept and seek responsibility.. 9. the emphasis is on the moral and ethical dimensions of leadership. and leaders into moral agents. 4.. 5. Leaders and followers lift one another to higher levels of motivation and morality.. . 3. 7. Classical school (1900): Fayol: task-oriented and authority 2. Servant and team leadership (90s): for a servant leader. Transformational leadership: James McGregor Burns (1978): followers are converted into leaders. b) John Adair: ACL – 1973. 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. 8. 6. Team leadership means that the leader chooses to delegate and share team roles. Distributed leadership (90s): this means that individuals at all levels in the organisation and in all roles can exert leadership influence over their colleagues. Future leadership: a leader will consider the changing nature of society. b) Blake and Mouton: this model focuses on the task and employee orientations of managers.

This will give them a useful management framework. Adair changed the perception of management to encompass leadership. it simplifies human interaction – it is its very simplicity which makes it so appealing. assessment centres). communication and time-management. In addition. This model adapts to the demands of modern business management extremely well. to include associated abilities of decision-making. . the manager has to think about the aspects of performance necessary for success in his own situation. The leader will place more or less emphasis on the functionally-oriented behaviours according to what is involved in the actual situation. The Adair model states that the action-centered leader gets the job done through the work team and relationships with fellow managers and staff. When applying it in a modern company. Good managers and leaders should have full command of the three main areas of the model. Overall the approach can be quickly adapted to a company’s specific situation. and to incorporate relevant local factors into the model to create his own interpretation. His model is used for training in the British armed services and has been taught to more than 1 million managers throughout the world. effectively and efficiently in order to complete the organisation’s objective.148 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. 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. It continues to be applied in organisations of all sizes (ICI. Situational and contingent elements call for different responses from the leader.

your-business-coach.html .floor.http://www.htm .co.uk/adviser.html .htm .http://www.com/find/printable.biography.uk/images.php .com/description_action_centered_ leadership.com/2005/08/ action-centered-leadership.thm .http://www.businessball.com/mission.nl/management/adair.http://www.leadership-studies.html .corporateteambuilding.http://www.telusplanet.http://www.http://www.what%20 is%20leadershipto20Paper_487.http://www.Tools: Action-Centered Leadership 149 V) Web-o-graphy .com/maslow.http://www.pdf_ .businessballs.http://www. johnadair.http://www.html .http://www.com/herzberg.info/fayol.windsorleadershiptrust.onepine.com .net/public/pdcoutts/leadership/ LdrVsMngt/htm .businessballs.htm .12manage.htm .businessballs.org.blogspot.com/action.jsp ?aid=9175373 .com/davidmcclelland.http://www.http://www.

co-author of the groundbreaking book Relevance Lost and. he had been asked by Kaplan. For example. the John Deere Company realised in the mid-80s that their traditional method for the distribution of overhead costs was causing problems. Kaplan. there was a real need for new methods of cost and price calculating in the 80s. Together with Thomas Johnson. the rapid development of information technology has also influenced the importance of activity-based costing. like Kaplan. as early as 1982. is regarded as the spiritual father of ABC. Instead. he thinks “that it frequently happens that new ideas and tendencies develop simultaneously in different places”. the Baker Foundation Professor at the Harvard Business School (and a member of the HBS faculty since 1984). In fact. According to Johnson.150 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. 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. It was also connected with increasingly tougher conditions in terms of competition. I) The historical context of Activity-Based Costing Although Robert S. Combined with a faster pace of production and technological change. On top of all this. a consultant and university professor (Portland State University). many entrepreneurs realised that traditional costing systems were inaccurate. he is the first to admit that this is not totally true. to “shift attention away from studying management .

or which are less significant as regards cost. or is often even attributed arbitrarily. are doomed to take incorrect decisions based on inaccurate data from traditional cost systems. which was regarded as “a matter of great national concern by the late 1970s”. . Some resources can be attributed directly to a particular product or service – the so-called ‘direct costs’. It is obvious that managers in modern organisations. This pool of costs is usually allocated on some kind of volume-based driver. Examples include marketing costs and property taxes.Tools: Activity-Based Costing 151 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”. are categorised as ‘overhead costs’. All other resources which contribute indirectly to the final product or service. This major deficiency results from the way in which resources and costs are applied to products or services. 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. like direct material and direct labour. such as direct labour hours or labour dollars. Examples include the semiconductors in a computer and the salaries of the assemblers. which are facing greater competition and increasing (technological) overhead costs. The higher risk is for companies with multiple products and services.

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. (Refer to Exhibit 1 below for a practical demonstration.) One of the basic issues surrounding ABC is the difficulty of implementation. to price their products and services competitively. The system must recognise that processes or products consume resources in different proportions for each activity. Identifying activities or processes to be allocated properly is cumbersome and takes a lot of effort. ABC must be tailored for each organisation in the light of its strategy and particular requirements.152 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. An equally important obstacle centres on the problem of collecting and processing the necessary data in the correct format at a reasonable cost. guidelines and books on implementing ABC have been written over the years. Many methodologies. but the simple truth is that there is no one way to proceed. and even to assess new technologies. It requires that processes are adequately mapped throughout the organisation. 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. However. Only then will it make sense for managers to determine the appropriate mix of their product lines. . using a degree of analysis that is affordable and realistic. to identify the real profits or losses.

It is an operational strategy that needs to be carefully reviewed for applicability.Tools: Activity-Based Costing 153 III) When it can be used As with any other management tool. but profits are declining • Some products that have reported high profit margins are not sold by competitors • Overhead rates are very high. The relative usage of direct labour by the two production orders does not reflect their relative usage of other manufacturing support services. ABC is not a miracle business cure. . 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. and increasing over time • Product lines are diverse • Stiff competition. nor should all organisations implement or embrace it as a religion. The following circumstances could be warning flags for hidden ABC needs: • Sales are increasing.

000 € = 7 000 € 20 €/hr.496 € / 20.000 10 2 24 10.7910 € .000€/4... storage and material handling ..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 20.5355 € 21 hr.000 € 4 000 hr..910 € 154 7. = 2 €/hr. x 20 hr.000 Units Box C52 42 40. x 255 €/hr. = 60 € 2 €/hr. x 20 hr.000 25 4 20 1.. = 40 € 1.355 € 5. x 24 hr.710 € / 20.5355 € Based on each cost driver Purchasing. Overhead per order 20% x 40.4248 € 20% x 35.. = 10. Taxes. x 255 €/hr. = 1. 1. = 500 € 70 €/run x 4 runs = 280 € 3 €/hr..020.000 = 0. Factory Depreciation.000 = 0..5 €/hr.000hr.000 € 200 € 140 € 72 € 48 € 36 € 8. x 24 hr. Machine Depreciation and Maintenance .000 Units Box W29 21 35.355 € / 10. = 8. = 5..910 € / 10. Insurance .000 = 255 €/hr.496 € Overhead per box 8. = 70 €/run x 2 runs = 3 €/hr.000 € = 20 €/hr..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. x 25 hr. x 24 hr.710 € 0. Other Manufactoring Overhead Costs .020..000 = 0. Engineering and Product Design .. 10.5 €/hr. = 42 hr. x 10 hr. x 20 hr. = 30 € 7. Machine Setup .

10-15) . “Relevance Lost: The Rise and Fall of Management Accounting”. “Does Your Company Need a New Cost System?”.findarticles. pp 187-188 Cooper Robin.8.jhtml?facInfo=bio&facEmId=rkaplan http://www. Thomas. 1987. 2002 (found on www.77-82 Paduano Rocco and Cutcher-Gershenfeld Joel.hu/terms_e. and Johnson H.nl/plot-Persoonlijk/uvt-kaplan1. Thomas. “Accounting History”..hbs. New York. McGraw-Hill Corporation. “Boeing Commercial Airplane Group Wichita Division (Boeing Co. “Managerial Accounting Creating: Value in a Dynamic Business”. Cambridge MA. no. Boston: Harvard Business School Press.htm) http://dor.1.com) Kaplan Robert S.24 (2). 2005. no. Labor Aerospace Research Agenda.htm (Interview in December 1990 with Professor Kaplan for Controllers Magazine. Special Interest Group of Accounting Association of Australia and New Zealand School of Accounting and Finance. 1989.edu/fi_redirect. Web-o-graphy http://www. 2001 Johnson H. p.): Employing Activity-Based Costing and Management Practices Within the Aerospace Industry: Sustaining the Drive for Lean”.applause. pp. Massachusetts Institute of Technology.onderwijsportaal. p.Tools: Activity-Based Costing 155 IV) Bibliography Hilton Ronald W. Harvard Business Review 67.

or in conjunction with other improvement tools (e. whilst more recently still. benchmarking has been used to improve processes and systems.156 Tools: Benchmarking 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. was quoted in Financial World as saying: “Benchmarking is nothing more than admitting that someone else is capable of doing something better than you. all benchmarking uses a comparative approach to solve common organisational problems. Although it is a very versatile tool that can be applied either alone.” Benchmarking. hospitals and universities. Originally. as it is known today. . VP of Xerox. benchmarking means “Improving ourselves by learning from others”1. However. The benchmarking process is tailored by each organisation to suit its own strategies and objectives but. was developed in the USA in the 1970s where its origin is often attributed to the Xerox Corporation. the underlying concept has been in existence for considerably longer. although in recent years it has been successfully applied within government agencies. or as Bob Camp.g. as suggested by the Japanese word dantotsu which means striving to be ‘the best of the best’. 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. In these institutions. in essence. 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. Therefore. at its most basic.

regularly comparing aspects of performance (functions or processes) with best practitioners. following up by monitoring progress and reviewing the benefits. identifying gaps in performance. stages and steps. first and foremost benchmarking endeavours to compare an organisation’s processes. operations. services or systems or are direct competitors of the organisation being benchmarked. in practice the benchmarking process usually includes: 1.Tools: Benchmarking 157 the balanced score card). Although at present there is no standardisation of the phases. so it helps to first focus on the process of benchmarking before considering its application. following through with implementing improvements. The comparator organisations are termed ‘benchmarking partners’ and they either run similar processes. 3. and 5. operations or services with others that are recognised to be the ‘best in class’. seeking fresh approaches to bring about improvements in performance. A plethora of different definitions are used to distinguish the various ways of applying benchmarking. . 4. 2.

By contrast. . 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.158 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. External Benchmarking – compares an organisation with outside organisations that are known to be best in class and are currently at the ‘leading edge’. Process Benchmarking – compares specific critical processes and operations with benchmarking partners from best-practice organisations that perform similar work or deliver similar services. 7. 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. 5. e. 3. Strategic Benchmarking – examines the long-term strategies and general approaches that have enabled high performers to succeed. International Benchmarking – is used where ‘best practice’ partners are located in other countries.g. A few of the most used approaches are listed below: 1. 2. comparing business units located in different regions. larger organisations often progress through the various types of benchmarking over time in order to gain the maximum positive impact on overall performance. Performance Benchmarking or Competitive Benchmarking – compares an organisation with the best of their direct competitors. 6. drawn from the same sector. 4. Internal Benchmarking – compares similar operations within one’s own organisation.

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 159 When used appropriately. . However. It has led to significant improvements in quality and cost of services. benchmarking has proven itself to be one of the most effective tools for bringing about quantum leaps in organisational performance.

we monitor our progress using the Employee Retention Index (ERI) internally to see how our people think we are progressing.160 Tools: Benchmarking III) Example: UPS and benchmarking “At UPS. both for our internal and external customers. monthly or annual basis depending on the task. and Minimum Acceptable Requirements (MARs). technology and our company goals to analyse best practices. and to continuously develop our service performance.” “We set Key Process Indicators (KPIs).” “Finally.” . performance measurement tools. and most importantly. We also motivate our below-par performers to improve to reach the MARs. all of which are reported on a daily.” “We reward our people for good performance with incentives and further development opportunities within the organisation. we are major disciples of the benchmarking process as we continually strive to maintain our position as a ‘world-class service provider’. These are reviewed across all areas of the business. competition. 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. ” “We utilise people.

and then aspiring to beat them is the best way to achieve competitive advantage. ” Bill Cockburn – BT Group MD . identifying the toughest competitors and world-class performers.Tools: Benchmarking 161 “In my experience.

Web-o-graphy http://www.162 Tools: Benchmarking IV) Sources The European Benchmarking Code of Conduct Xerox Corporation © Crown Copyright 2006 The Public Sector Benchmarking Service (PSBS) UPS Ltd.eng.longbeachworkforce.php http://66.asp http://www.uk/about_bench/whatisit.benchmarking.investorwords.md/B/dic/benchmarking.businessweek.com/library/ archive_material/articles_publications/archive_psi_articles/ explained.books.com/457/benchmark.pdf http://www-mmd.htm http://www.org/SCRPEF/PDFS/ Benchmarking_Overview.au/benchmarking.asp?DEFCode=B18 http://www.htm http://www.245.130/wib.gov.124.com.uk/people/ahr/dstools/proces/ benchm.com/Glossary/ definition.productivesolutions.htm http://bwnt.cam.ac.benchmarking-in-europe.html http://www.htm .

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Although two-thirds of workers told CareerBuilder that they were satisfied with the person they report to. Chances are that you have encountered a supervisor who has made your life miserable or made work days unbearable. Twenty-four percent say their supervisor does not take the time to review job concerns. For example. as well as to their perceptions of character. 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. and then turned around and reported her for doing it on company time. Just as there is a myriad of nightmare bosses. there are many ways to deal with their workplace terrors. I would not wish either on anyone except maybe my worst enemy. and 22% feel their supervisor is not trustworthy. In The Worst Case Scenario Survival Handbook: Work (Chronicle Books).164 Tools: Boss styles Boss styles Whenever I think of bad bosses. there was a supervisor who made an employee write her papers for her MBA classes. Today’s workers are voicing concerns about their supervisor’s ability to lead. with 42% claiming they can do their supervisor’s job better. the remainder were dissatisfied with their bosses. or the executive vice-president who addressed an employee’s weight rather than performance in an annual review. Joshua Piven and David Borgenicht describe some of these bosses and how to deal with them: . Part of their criticism is attributed to the amount of individual attention given to employees.

advise on all key decisions and plans. How to deal with it: bombard this person with emails. The Teller of Bad Jokes always has one just for you and it is always bad. give it orally. How to deal with it: in writing. friends and hobbies at every opportunity.» How to deal with it: present summaries with several alternatives for action. The Workaholic has sacrificed his life for his job and expects the same from you. Invent a fictional hobby. which might overwhelm him and throw him off his controlling behaviour. How to deal with it: include this person but keep your distance. then change the subject. . but be prepared for a denial of knowledge if anything goes wrong. Discuss family. The Yes/No Manager could not care less about useful information or discussions and simply wants every decision boiled down to «yes» or «no.Tools: Boss styles 165 The Control Freak micromanages every move you make. extend invitations you know he or she cannot accept. The Supreme Delegator takes all of the credit and none of the blame and essentially is setting up others to take the fall. The Buddy tries to solicit personal information and seeks inclusion as though you are best of friends. How to deal with it: be prepared for the painful punchline. and avoid hugs. reports and meetings. feign amusement. How to deal with it: let this person know there is life outside of work. If asked for a recommendation.

. In the long run.166 Tools: Boss styles The Passive-Aggressive Boss procrastinates. though. The Indecision Maker needs information from many different sources before making any sort of ‘independent’ decision. How to deal with it: involve others in projects as often as is necessary so that you have witnesses. 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. complains about not enough time. How to deal with it: make your work time enjoyable – one bad incident could ruin your work relationship. and then blames others for a bad job. 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.

ISBN 978-0-7494-4799-1 Blanchard. The Manager’s Style Book: Communication Skills to Improve Your Performance. Kogan Page.Tools: Boss styles 167 Bibliography Adair. ISBN: 0135491967 Straw. Morris R (1979)-. John. William Morrow. San Francisco. New York.and Zigarmi Patricia.(1985) Leadership and the One Minute Manager . ISBN 1-57675-135-x . The Art of Creative Thinking. Berret Koehler Publishers. Prentice Hall. London and Philadelphia. Kenneth H. Julie and Brown Celier. Aliston (2002). (2007). ISBN 0-688-03969-3 Bogard. ‚The 4-Dimensional Manager: Disc Strategies for Managing Different People in the Best Ways’.

suggesting strategies adjusted to each situation. The matrix identifies four types or families of products: stars.168 Tools: The Boston Matrix The Boston Matrix I) What The Boston Matrix (BCG Matrix). taking into account variables such as sector development. and question marks. and the relative participation in the market. remains to this very day one of the most used tools in the strategic analysis of product portfolios. which was developed in the 70s by the Boston Consulting Group. cash cows. Their characteristics are as follows1: The Boston Matrix HIGH M a r k e t G r o w t h Star Cash Cow LOW HIGH Market Share 1 Illustration taken from the “Tutor2u – on-line Learning Resource of the Year” ➡ ➡ Question Marks ➡ Dog LOW . dogs. It is a graphical representation of the positioning of each company’s products in the market.

nevertheless they consume great amounts of cash to finance the product’s growth. Dogs: low participation in the market (low market share) and low market growth. In these cases. 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. its marketing strategy might be inferior or the market might be growing too fast demanding large amounts of money to finance its growth. Cash Cows: high participation in the market (high market share) and slow market growth.uk . Stars products are in leading market positions generating high incomes for the company.Tools: The Boston Matrix 169 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. These products are usually linked to low profits. Such a product might be inferior to those of its competitors. Cash cows are very profitable products contributing to the company cash flow. the company needs to analyse its failure to gain market share and to develop strategies to overcome the problem. Sales of cash cow products reach a stable maximum level of growth. 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. The company must evaluate whether or not to continue investing in this product.co. therefore they must either be ‘reconstructed’ or eliminated. 2 www. 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.market-modelling. the company is not one of the leaders in the ‘area’ and the market is not growing.

In the case where a product ages and loses market share we face the ‘dog’ position – that is. Then. the production will move into a ‘star’ position as sales and market share increase. The following illustrates the relationship between the product life cycle and the Boston Matrix: 1. growth. A new product is commonly launched as a ‘question mark’ into a high-growth market as it will eventually create greater returns. Firms must then choose on the basis of the closely linked combination of sustainable competitive advantage and potential financial contribution to the company. . 2. 3. 4. it gives low or no profits and is not able to compete with other products in the market. 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. At this stage. Nevertheless. if sales develop at a faster rate than that of the other competing products. contributing significantly to the company’s cash flow. sales have grown to a stable maximum level and the product has become very profitable. In case the market growth slows down but market leadership is reached. maturity and decline. it will enter the ‘cash cow’ position. These products have reached their maturity and entail a significant cash flow for the company. Underlying this theory is the product life-cycle concept which states that business opportunities move through life-cycle phases of introduction. so that the largest objective (maximisation of the profits) is reached.170 Tools: The Boston Matrix III) Example The above-mentioned classification is useful to identify the most efficient portfolio composition of a company. the product is no longer contributing to the company portfolio.

Ideally. maximise the cash returns. see Experience curve below. In conclusion. A portfolio in equilibrium will then include a number of question mark and star products. to be successful. a company should have a portfolio of products with different growth rates and different market shares. 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. at cash cow stage the options are either to invest to maintain market share or to minimise investment in the product. there should be relatively few or no dog products. For more information on the Boston Consultancy Group. . for example.Tools: The Boston Matrix 171 At each position within the matrix there are a number of opportunities open to the company. and grow market dominance with other products. although the former should be greater in number to allow for market failures. Moreover.

cws_home/677106/description#description http://www.se/boston_e.com/boston_matrix.dpu.com/models/model14.elsevier.html http://www.marketingteacher.brs-inc. Stephen. Sage Publications. “Writing Marketing – Literary Lessons for Academic Authorities”.com/Lessons/ exercise_boston%20matrix.asp http://www.172 Tools: The Boston Matrix IV) Bibliography Brown. 2004 Web-o-graphy http://www.uk/MATRIX/ MATRIX_Step08_1.htm .co.htm http://www. Neil Reaich: Business Studies As OCR Specifications.htm http://www. 2005 Wales Jerry Reaich.atwebo.market-modelling.com/wps/find/ bookdescription.

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perceiving. preferences. Each of the 16 factors of personality traits is manifested in a set of attitudes.174 Tools: The Catell 16 PF Personality Profile The Cattell 16 PF Personality Profile I) What In 1949. The 16PF scales that he derived measure temperament – a person’s characteristic style of thinking. and acting over a relatively long period of time and in a wide range of different situations. The table below provides the main factors and indicates the extremes of each scale. Dr Raymond B. social and emotional reactions. Cattell published one of the first measures of personality by proposing the Sixteen Factor Questionnaire (16PF). 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 . and habits.

socially inhibited Low anxiety. It is taught in psychology. the Cattell 16PF may be applied to characterising problem-solving style. planning work and career performance objectives or directions. basic traits that underlie human behaviour. the Cattell 16PF aims to uncover the deep. Thus. A variation of the Cattell 16PF – the five factors – has recently become more common. receptive to ideas Accommodating and selfless Free-thinking and impulsive Extroverted. and to providing effective training for career development. unperturbed Open-minded. interpersonal or management style. 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. without regard to how individuals apply it to the environment in which it is applied. Factor Extraversion Anxiety Will Independence Self-control Descriptors (range to – from) Introverted. socially participative Easily worried and generally tense Resolute and determined Independent and persuasive Structured and inhibited . the Cattell 16PF model is the world’s most-widely used (administered worldwide in 40 languages) system for assessing.Tools: The Catell 16 PF Personality Profile 175 Nowadays. Unlike other common personal profiling. resulting in a sharper picture of the underlying personality. categorising and defining personality characteristics.

Executive coaching and management development – assess management potential/style. Counselling – identify factors that may contribute to emotional and social problems. . Research – identify factors most likely to support.176 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. theories on performance in various domains of life. 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. check match with candidate profile. by positive correlations. Career guidance – evaluate career expectations against personality profile and also provide reorientation and improvement directions. raise subject self-awareness and build him/her a development plan.

to understand differences in learning styles. to study equivalence of cross-cultural test translations. They also identified that low scores on dominance and self-control. self-control and tough-mindedness among all students. Companies like OPP in Europe or Pearson Assessments in the US have. counselling and orientation. organisations like IBM. Bank of America. Finally.Tools: The Catell 16 PF Personality Profile 177 III) Example in an SME and/or other organisation The complexity of the test and its administration makes it less attractive to SMEs. Virginia Military Institute is using PF16. Their experience shows that successful cadets score high on dominance and reasoning and low on extraversion. throughout the school years. for dominance. along with MBTI. there is constant growth. The internet has brought PF closer to clients as many small counselling and evaluation companies have sprung up on the web (see below). MMPI-II or CPI. and to understand issues of sexual orientation. selection. correlate with a higher drop-out rate. to investigate the effects of social desirability on tests. while service companies oriented to assessment. to improve selection and training of military pilots. among their clients. together with high scores on anxiety. . Toyota or US Transportation Security Administration. thrive on it and use it alongside other personality tests like MBTI. for cadets’ follow-ups. PF16 has a good grip in the research environment where it has been used to study the effects of ageing.

Cattell pushed the model further and by 1957 had released the 16PF5. In the same period. 1951). Personnel Research Division. and Cattell continued his research from his position in the US Adjutant General’s Office. Eysenck published his threepersonality-factor theory. H. Wells and Bertrand Russell. Myers and Briggs were releasing the MBTI which was to become heavily used by US forces. While his PF16 model came under heavy criticism from Fiske (1949). In 1963. the imminence of World War II put pressure on improving screening and selection methods. In 1939. the field of psychology flourished. .178 Tools: The Catell 16 PF Personality Profile IV) Historical context In the aftermath of World War I. Warren Norman confirms the existence of five major personality factors. and had the chance to work with Charles Spearman who revealed to him the power of factor analysis. He was strongly motivated by the work of Freud and Jung. was raising hopes for a better and more accurate factor analysis deployment for proving the theory. In 1968. Walter Mischel – a behaviourist – overtook the traits movement up until 1981 when H. The end of the war found Cattell at the University of Illinois where Illiac I. at a time of social unrest.J. 1946) and the discovery of nucleic acids (Franklin. and developed his conviction that a solution to the problems of humanity lay in a better understanding of human temperament and motivation. Cattell was influenced in his early academic years by the ideas of George Bernard Shaw. the Big Bang theory (Gamow. the first electronic computer. G. intense scientific progress and reassessment of Western values. Aldous Huxley. The post-war period has been full of other major leaps forward such as the transistor (1947).

wiley..utsc. Rieke. 2004. & Campbell. “Psychology: An International Perspective”.com/tests/sixtpf_5. S. B.htm http://www.Tools: The Catell 16 PF Personality Profile 179 V) Bibliography Eysenck.net/devon/rbcbio. Lindzey.centacs. C.htm http://www. Steven R.ou. IPAT Hall. 1994. Wiley Web-o-graphy http://www. p 984.org/papers/fehringer. “Theories of personality” (4th ed. Psychology Press.pdf http://www.cattell..pdf ..pearsonassessments.. (1998).com/pip/resources/slp_demo/c13-4. New York.psypress.html http://www.personalityresearch.htm http://www.utoronto. G. “16PF Fifth Edition Technical Manual”. Michael W. Mark.com/product_data/excerpt/49/04712342/ 0471234249.com/quickstart. J.ppt http://media.ca/~psyb30/PSYB30LEC04.asp http://www. ISBN: 1841693618 Conn.edu/russell/pdf/ATC’00.).

. Case Western Reserve University David Kolb is the founder and chairman of EBLSI (Experience Based Learning Systems. He is the author of Experiential Learning: Experience as the source of learning and development. Weatherhead School of Management. and I may remember. Show me.» I) Who: biography David A. Case Western Reserve University. Involve me. Other works include: Conversational Learning: An experiential approach to knowledge creation. Kolb Professor of Organisational Behaviour. and creator of the Kolb Learning Style Inventory.) and professor of organisational behaviour at the Weatherhead School of Management. He has received four honorary degrees recognising his contribution to experiential learning in higher education. and numerous journal articles on experiential learning.180 Tools: Cycle of learning/Cycle of training Cycle of learning/Cycle of training Confucius around 450 BC: «Tell me. Organizational Behavior: An experiential approach. and I will forget. Innovation in professional education: Steps on a journey from teaching to learning. and I will understand. Inc.

weeks or months. or over days. and hence to the construction of ways of modifying the next occurrence of the experience (Active Experimentation). and there may be a «wheels within wheels» process at the same time.Tools: Cycle of learning/Cycle of training 181 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. depending on the topic. . This may then be followed by the derivation of general rules describing the experience. or the application of known theories to it (Abstract Conceptualisation). leading in turn to the next Concrete Experience. All this may happen in a flash.

Kolb also has a test instrument (the Learning Style Inventory) but has carried it further by also relating the process to forms of knowledge. .182 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. identifying individual preferences for each stage (Activist. Pragmatist. 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. Reflector. respectively). Theorist.

but perhaps more comprehensive (or “Comprehension” in Kolb’s terms). direct practical experience (or “Apprehension” in Kolb’s terms). Concrete Experience by direct experience "apprehension" by "comprehension" or knowing about Abstract Conceptualisation Active Experimentation Reflective Observation . Abstract Conceptualisation corresponds to «knowledge about» something. which is theoretical.Tools: Cycle of learning/Cycle of training 183 Two ways of “knowing” Concrete Experience corresponds to “knowledge by acquaintance”.

Each of these forms is paired with its diagonal opposite. Concrete Experience Accommodative Divergent Active Experimentation Convergent Assimilative Reflective Observation Abstract Conceptualisation .184 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. 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. (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. in Kolb’s view.

Tools: Cycle of learning/Cycle of training 185 Convergent thinking .science and technology (?) Facts Answer Divergent thinking -arts and humanities (?) Idea Stimulus .

186 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 Outside Inside your head Outside 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

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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
Feeling

Accommodating
how we think about things

Diverging Perception Continuum
(feel and watch) CE/RO

(feel and do) CE/AE

Active Experimentation
Doing

Processing
how we

Continuum
do things

Reflective Observation
Watching

Converging
(think and do) AC/AE

Assimilating
(think and watch) AC/RO

Abstract Conceptualisation
Thinking

©

Kolb learning styles, definitions and descriptions

188

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

189

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

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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."

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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

192

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.

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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.

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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.

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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

Through this counterculture. a whole generation of young people spoke out for peace and challenged the structure of US society. music genres such as rock and folk music were established as a way of expressing radical ideas and of rebelling in a peaceful maner. It is noteworthy that during the period of the Cold War the counterculture movement was started by the American youth. and was a generation’s outcry for peace. . By means of protests and anti-war demonstrations.196 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. The counterculture was triggered in particular by the horrors of the Vietnam War.

marquette. Lausanne. “Introducing a First AIDS Vaccination in Switzerland: A Delphi Policy Analysis”.com/SPECIALS/cold.nsf/homepage http://www.org/delphi_technique. Jessica Kingsley Publishers Fowles Jib (1978).bbc.htm http://www.edu/coa/team-creativity. London. Institut de médecine sociale et préventive.cnn.html http://www. World Future Society Zuber Patrick (1994).com/articles/detail.theworkingmanager.uk/delphi.edu/ejournals/JVTE/v15n2/custer.cyberlearning-world.html http://www.org.sncpr.vt.ac.war/ http://www.Tools: Delphi Method 197 V) Bibliography Adler Michael.lib. Web-o-graphy http://www. Washington.uk/history/war/wwtwo/ http://www.html .12manage. Connecticut.html http://www.propertyrightsresearch.com/methods_dialectical_inquiry.htm http://scholar. “Handbook of Futures Research”. Westport.com/methods_helmer_delphi_method. DC. “The Study of the Future”.uk/general/delphi. Greenwood Press Cornish Edward (1977).henleymc.html http://www.com/nhhs/html3/culture.asp?ArticleNo=164 http://www. “Gazing into the Oracle: The Delphi Method and its Application to Social Policy and Public Health”.co.12manage. and Ziglio Erio (1996).

not only for competitive advantage but for mere survival. Niccolo Machiavelli. A Harvard Business School professor and world authority in the field of leadership and change. .198 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. than to take the lead in the introduction of a new order of things”. declared in The Prince that: “there is nothing more difficult to take in hand. Risk. when put into practice there are few who exploit change to the maximum and secure a successful outcome. he has more than 20 years of experience in the area and has written 15 books since 1970s. Kotter has developed eight steps for major change. or more uncertain in its success. John P. Although this seems to be common knowledge in the business world. During the 16th century. uncertainty and resistance are always present when managing change but. The complexity of change is nothing new. he describes the obstacles organisations face when attempting to conduct major modifications. 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. nevertheless. This is crucial. more perilous to conduct. In his book Leading Change (1996).

He also identifies eight common critical errors when transforming a business: 1. as even if you end up dealing with more than one phase at the same time. change has to be dealt with properly. Before defining the process. Failing to properly communicate the vision 5. a completely linear approach is likely to fail. Kotter describes an eight-step process for managing effective major change in an organisation. 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. Failing to create short-term wins 7. Proclaiming victory too soon 8. Underestimating the power of vision 4. the appropriate multi-step process to achieve successful change. Such factors can both create vulnerabilities and opportunities. The key lies in understanding why organisations resist the need for change. John P. 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. Management deals with the responsibility . Allowing obstacles to block the new vision 6. but in order to ensure it is the latter. Failing to create a powerful guiding coalition 3. and understanding how leadership over management is critical to drive the process. Allowing too much complacency 2. they are distinct in both their nature and purpose. In Leading Change.Tools: Eight steps for major change 199 II) What is the eight-steps process? There are many factors to be addressed when dealing with organisational change.

Creating a guiding coalition 3. Establishing a sense of urgency 2. Diagram 1 shows the process Kotter proposes for successful change management. Developing the vision and the strategy 4. Generating short-term wins 7. Communicating the changed vision 5. and aligns the members of the group with the vision by inspiring them to take action to make change happen despite the obstacles. Consolidating gains and producing more change 8. which comprises the following: 1. Anchoring the new approaches to corporate culture .200 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. Empowering broad-base action 6.

another may be struggling for many reasons. Lack of visible crisis When companies lack visible crisis within certain departments. The stage of establishing a sense of urgency requires a great deal of cooperation. Leaders must eliminate this false sense of security if they want their employees to be willing and ready to react. 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. and may occur in spite of the presence of highly intelligent and well-intentioned employers and employees. Therefore. If this crisis is not visible to everyone in the organisation. change and make sacrifices for the future success of the organisation. They feel comfortable with the idea that no matter what happens the company will be able to survive due to its affluence. willingness and initiative. the other departments will do little to confront the problem. 2. as falling into complacency is very easy and common. it is normally due to a high level of complacency. a leader must make everyone in the company aware of any crisis that may affect the company in order to provoke a reaction. Kotter highlights some reasons for these obstacles and explains how to avoid them: 1. they fail to feel bound to address them. While one department may be doing exceptionally well.Tools: Eight steps for major change 201 III) Establishing a sense of urgency When companies experience a low sense of urgency. .

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. and establishing a sense of contribution to the company’s overall performance. employees will never appreciate the reality of their performance.202 Tools: Eight steps for major change 3. In this way. 4. Without feedback from external stakeholders. 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. progress is unlikely to be made. . 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. Inappropriate management performance-measurement methods Management will fall into the trap of measuring performance against low standards. and will therefore fall behind. A high performance standard has to be set in order to achieve top-level 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. 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. 5. which are more comfortable to attain. and comparing it to what the competition is doing. and little effort will be put into meeting high standards.

Senior management should facilitate and encourage honest discussions on accomplishments without going over the top with praise and avoiding ‘happy talk’ whenever possible. Here. in which case. They will provide unbiased feedback and will not (or should not) avoid making ‘uncomfortable’ criticisms. 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. those employees who do seek feedback from external stakeholders and engage in honest discussions about organisational performance are often reprimanded for inappropriate behaviour. or by holding controlled discussions or seminars about “what is going on out there”. We often tend to leave these problems aside subconsciously. ‘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. the organisation has to make sure that employees have the appropriate amount of feedback from external stakeholders either by promoting their interaction with customers.Tools: Eight steps for major change 203 6. 7. the degree of celebration is critical to avoid any risk. due to the risk of disseminating confidential information. 8. Whilst it is important to praise small-scale success. . 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. Reprimands for external discussions about company performance On the other hand. the use of consultants is important to overcome this.

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. This group must be made up of leaders who do not necessarily come from top management. credibility and leadership. expertise. . 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. These are fundamental for a shared commitment to a common goal.or herself a series of questions when brainstorming about the possible team members.204 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. four critical attributes of a good team can be established: power. One leader is not enough to motivate and lead change throughout an organisation. 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. Two of the most critical characteristics for success demanded of the team are trust and sincerity. A leader should ask him. opportunities and commitment to change. All team members must share the same strong desire for excellence and success.

. and handle internal struggles and doubts about change that the team members themselves have to overcome. as it is not something which is going to change over night since it will have to meet high standards. There are many internal questions the team has to address before they can effectively implement change.Tools: Eight steps for major change 205 V) Develop a vision and strategy A coherent and realistic vision is one of the most important aspects of change. then more time must be spent dispelling such doubts. as it provides the explanation for why the change is needed. and not everyone agrees on the direction. 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 this will take time. what the change is leading to. If the vision is not clear to everyone in the team. The group has to bear in mind that it will take time to implement a new vision. This is why it is important to have a realistic vision which can be implemented in practice. and how it will develop.

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. The more employees hear and see something. 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. An ineffective communication strategy and an inconsistent message can result in total failure. the more likely they are to remember it.206 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. • Multiple forums and repetition: all possible appropriate communication channels have to be exploited to deliver the new vision. . The guiding team has to make sure that they are delivering a consistent message. 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. • 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. • Metaphors: it is important to deliver visible examples of best practice to the employees. A constant flow of information is more likely to lead to success. Leaders have to avoid falling into the trap of feeling that no more communication is needed.

as these may help direct the vision in a better way.Tools: Eight steps for major change 207 • Explanation of apparent inconsistencies: employees may detect inconsistencies in the new vision. 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. . Information must flow both ways to acquire constant feedback and appreciate how employees are ‘digesting’ the new approach. which will often be because the new vision might differ significantly from the previous one.

If you nurture your workforce properly. they must be educated and given training on new concepts and skills which they will need for the new culture. managers and leaders can improve efficiency and develop a less timely process. empowerment is a concept which cannot be overlooked. By eliminating decision barriers. and leaders must bear in mind that they have to allow employees this time. In order to give employees more power in the process. change takes time. This also enables lower-level management to participate in the change process and feel part of ‘the team’. thereby creating the opportunity to delegate tasks. As mentioned before.208 Tools: Eight steps for major change VII) Empowering broad-based action In the change process. . once they have understood and embraced the new vision. you will give them enough confidence to take decisions on their own. Barriers to action have to be removed to allow employees to implement change on their own.

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. Kotter argues that the best way to achieve these short-term wins is to plan ahead. . 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. He emphasises the difference between real short-term gains and “gimmick wins”. to make them aware of the progress being achieved and to motivate them to keep going. in fact.Tools: Eight steps for major change 209 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. there are no real reasons to celebrate an achievement which has not really been achieved. Change will not be successful in the long run if top management celebrates too many gimmick wins.

As these situations may arise unexpectedly. 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. going through the steps as before. these should be planned and implemented. 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. so extra expertise may be needed from consultants. 1. subgroups can be created. or the leaders have realised over time that extra or harder changes are needed. 4. by decentralising projects. without looking at the bigger picture and at the necessary victories ahead. Management should continue to focus strongly on purpose: with time. Introduce more and harder changes: if the effort towards making changes seems to be decreasing. to remind employees day after day that this is an ongoing thing. the company may not have the resources at its disposal to confront them. Instead of branching out to every element of the organisation. even after 12 or 24 months. Kotter argues that at this point there are five steps which are required to keep change going. eagerness and motivation may slip away unconsciously. 3. starting at step 3. Top-level management can disrupt successful change by celebrating small victories too much. 2.210 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. managers and leaders in particular should be the ones to keep a strong focus on the purpose of the change process. Therefore.

interdependencies within a company should be kept at a minimum. . employees should have received the necessary training and empowerment to make this step more practical. so as long as it remains feasible. At this stage. Eliminate unnecessary interdependencies: these simply slow down some processes. allowing departments to operate faster and more efficiently.Tools: Eight steps for major change 211 5.

mission statements and developing training manuals. Kotter asserts instead that it is better to find and express what needs to be changed. the organisation has to change the systems. as part of a natural process which develops subconsciously.212 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. all the efforts will have been wasted. not first. One important aspect to remember is that culture change comes last. The essential key for long-term change is not merely about changing the vision. the organisation reverts back to its old ways. implement these changes. and then change the culture around that. . Before changing the culture. 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. but it does not stop there – it is important to anchor the new ways to the corporate culture if they are to stay. after several years. Change may have been accomplished but if. It is about getting people to follow this new culture without even thinking about it. failure to do so can put the company at great risk as too many negatives may develop with it. Leaders must show employees how the new changes have helped the organisation. but changing the actual corporate culture and making this culture last.

Nevertheless. it is a good guideline to appreciating what obstacles may arise when dealing with major change. 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. This procedure. it is difficult to predict what our companies will be subjected to in the future and where we will be headed. and the possible ways to overcome them. One very important aspect of this is the need for teamwork among top management. . Steering a course along the bumpy road to success is never easy. but procedures like those mentioned above will certainly help smooth the way. and if this direction is driven from the top the chances of achieving success are greater. When essential members of an organisation work together as a team it is easier to move in the right direction. like many others. Consequently.Tools: Eight steps for major change 213 XI) Conclusion In a fast changing world such as the one we live in today. A united effective direction is necessary. is a theory that may not apply (completely) to every organisation needing change as not all theories apply to all kinds of situations.

com/management/ change-management/388052-1.214 Tools: Eight steps for major change XII) Bibliography John P. Leading Change (1996).com http://www.edu/hfrp/eval/issue32/spotlight1.html http://www.theheartofchange.allbusiness.gse.johnkotter.com http://www.html . Kotter. Web-o-graphy http://www.harvard. Harvard Business School Press.

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It was initially called the Management and Consulting Division of the Boston Safe Deposit and Trust Company. by Bruce D. In his efforts to differentiate this new consultancy from the many competing consultancies of the time. It was in this context that Henderson proposed creating a consultancy that would challenge companies “to look beyond their immediate horizons to future developments. in Boston. Today. to position themselves for tomorrow by acting today”. As the historical analysis of the time will show.3 billion. He left HBS 90 days before graduation to work for Westinghouse Corporation.216 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. the 1960s were characterised by a trend. which was a subsidiary of The Boston Company. BCG was founded in 1963. 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. Henderson completed a degree in engineering before attending Harvard Business School. culture and politics. he decided to assign it a distinctive mission. BCG is among the largest and most profitable management consulting companies in the world. . Henderson. and worked for Arthur D. It has 60 offices in 37 countries and in 2004 had a revenue of US$1. in companies as much as in arts. where he became one of the youngest vice-presidents in the company’s history. to look towards the future by acquiring a more global and long-term perspective of issues and goals.

was developed. thanks to the development of several means of transportation and the growth of the targetable markets. “Vertically integrated. family-owned firms started growing into larger and more complex companies. argues that this fundamental and universal change in the structure of American companies was aimed at helping corporations grow and diversify. In fact. and then describe the Experience Curve in more detail. The small. Adam Chandler. and the importance of asset allocation in portfolio management”. The insightful discovery that unit costs decrease over time as “experience” (or cumulated volume) grows. strategic management. . it was in the 1950s and 60s that the discipline of “specifying an organisation’s objectives. became a “conceptual cornerstone in the understanding of both the role market share plays in establishing competitive advantage. a great thinker of the time.” namely. The 21st century saw dramatic changes in the way companies were structured and run. and finally explore the implications of the theory with a view to understanding its pitfalls and its usefulness in the field of management. multi-divisional (or “M-form”) corporations” began to take shape and influence the competitive environment. developing policies and plans to achieve these objectives and allocating resources so as to implement the plans. It will also look at similar theories developed at the time. This paper will begin with an analysis of the historical context within which this concept was developed. resulting from BCG’s work for a leading semiconductor manufacturer.Tools: The Experience Curve 217 One of the first breakthrough concepts developed by BCG consultants was the Experience Curve.

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. Once again. they were strategists who needed to ensure that “every subunit of organisation. Drucker also contributed to the field of strategic management by introducing the idea of the worker as an intellectual resource. but rather.218 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”. as a result of Philip Selznick’s revolutionary idea of matching the internal factors of the organisation with external environmental circumstances (1957). Managers were no longer co-ordinators of small units. in 1965. At the same time. Strategies were geared toward growth and diversification. Focusing on the long term. 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. and even every individual have a clearly defined set of purposes or goals which keeps [the organisation] moving in a deliberately chosen direction”. the Harvard Business School General Management Group developed the well-known SWOT analysis. In 1954. Peter Drucker developed the theory of management objectives focusing on monitoring the progress of a company towards its objectives. Igor Asnoff (see chapter on gurus) developed a strategy grid that aimed to prepare companies for future challenges and opportunities. In 1962. Alfred Chandler narrated the developments of the managerial revolution. Several thinkers contributed to the development of this more pragmatic and growth-oriented view of management. the focus was on a “large picture” of the company.

too: the Cultural Revolution in China. These technological innovations reflected the need to look at the world from a new standpoint. paying close attention to pragmatic and practical solutions to enable growth in the future. The 1960s saw the first men stepping on the moon. and Star Trek made its debut in 1966. These trends were not unique either to the field of management or to the economic sector. 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. The US needed change. as well as the development of the precursor to the internet. the 1960s were a time of revolution. . on processes. Politically. a type of music that was generally condemned by the older generations. at the same time. 2001: A Space Odyssey hit the movie screens. In this context. etc. not only in the United States but worldwide. the Nigerian Civil War. People were becoming involved in and opinionated about political issues: the American Civil Rights movement. the creation of the first satellites. Management needed to focus on several levels. a period where a company and the role of management were being studied through a broad outlook while. the Vietnam War and protests. and a new view on societal issues. on the external environment and on the long term. the Stonewall Riots in New York City. the rise of radical feminism. and anti-war movements. Even the music youngsters played was rebellious: the 60s were the time of rock’n’ roll. were just some of the issues troubling young Americans.Tools: The Experience Curve 219 It was clearly a period of strategic thinking.

A generation of Americans who had lived through wars and revolutions was now searching. for solutions that would boost the healthy growth of American society. in all fields.220 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. 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.

80 . Unit Cost 1. The development of the Experience Curve was to prove a great breakthrough as it applied to process-oriented situations. The BCG team observed that costs usually declined with cumulative production. not only labour-intensive ones. it was however.64 . 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. While this theory was innovative and useful for several industry sectors. it was observed that the amount of experience that workers’ acquired had an impact on the cost of production. the direct labour costs decreased by a constant percentage (about 10-15%) every time the cumulative quantity of aircraft produced doubled.50 10 20 40 60 Cumulative Output . limited in scope as it applied only to labour costs. The wide variety of semiconductors was a good opportunity to compare differing growth rates and pricedecline rates in a similar environment. During the construction of military aircraft. More specifically.Tools: The Experience Curve 221 II) What: Experience Curve and its origins The Experience Curve finds its origins in the related concept of the Learning Curve.00 . which was developed during World War II.

Graphically. while the unit cost (real unit cost of adding value) is represented on the y-axis. the lower will be the cost of doing it.222 Tools: The Experience Curve As opposed to a labour costs. the curve is plotted by representing the cumulative units produced on the x-axis. as the unit costs decrease to 75% of their original level. the more often a task is performed (production of any good or service). Unit Cost 100 90 81 70 90 % Experience Curve 49 70 % Experience Curve 1000 2000 4000 Cumulative Output . The implications of this theory are far-reaching. A curve which depicts a 25% reduction in cost for every doubling of output is a “75% experience curve”. In brief. 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. the Experience Curve explains a decrease in unit cost in terms of “experience”: producers become increasingly efficient as they gain experience in production.

in several different sectors and industries (aerospace. • Specialisation: when the scale of activity increases. However. • Scale: scale creates the potential for volume discounts.). more times. raw materials. Henderson said. shipbuilding. • Investment: investment is fundamental for capacity increase.Tools: The Experience Curve 223 The reasons behind the Experience Curve are secondary. smaller task. Experience is enhanced by specialisation. purchased parts. and Experience Curve effects ranged from 10-25%. 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. as compared to the single fact that it is a universally observable phenomenon. facilitates learning. The hypothesis developed by Henderson was tested in the 1970s. etc. it is more efficient to split tasks so that one person does the same. . vertical integration and the division of labour which. he listed several factors which can explain the Experience Curve. in turn.

. The Experience Curve provided the founding elements of strategic thinking as far as managing competitive advantage was concerned.. This conclusion contradicted some basic assumptions of classical economics which assume that there is “a finite minimum cost which is a function of scale [. 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. lower costs.224 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. BCG recommended that its clients capitalised on the experience effect resulting from increasing capacity. and increased market share. This was a practical and revolutionary insight that would have significant implications for companies. lower prices. 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 .] and all competitors can achieve comparable costs at volumes much less than pro rata shares of market”. If increased activity resulted in increased learning. A company working to accelerate its production experience by increasing its market share could gain a notable cost advantage in its industry.

It is also evident that in the case of a change in technology. Maintaining high prices would only create opportunities for new entrants in the market in the long run. . cost reductions should be translated into price decreases. it is best to concentrate resources elsewhere. the Experience Curve will only be relevant in explaining the decreasing costs. and even pricing below cost in the short run in order to achieve greater market share and further cost reductions in the future. If a company prefers to cover a strategic niche in the market. differentiating itself for “quality or prestige”. and it should be used in combination with a company’s overall strategy. the Experience Curve may be interrupted. Moreover. although the knowledge part may still be transferable. but price and market share may voluntarily be kept unchanged. if a competitive market share cannot be achieved. the Experience Curve will vary from one industry or product to another. according to this model. Competitive entry can be discouraged by decreasing prices as unit costs fall. Of course.Tools: The Experience Curve 225 Therefore.

and makeor-buy decisions”. and its implications. and high promotion costs should be accepted in the short term. budgeting. estimating new product start-up costs. This conclusion adds safety to the initial investments which managers are often reluctant to attribute to new products. As the chart above illustrates. production capacity. . for strategic use. scheduling. sales personnel. investment in advertising. The Experience Curve should be considered by companies seeking to achieve competitive advantage through growth. etc. It provides an explanation for cost reductions and opportunities for allocating those resources towards the company’s future growth. Finally. the Experience Curve may be used to determine “volume-cost changes. the Experience Curve may be used externally for “supplier scheduling. prices should be competitive and aggressive in the new product launch. James P. cash-flow budgeting. First of all. which may increase market share may ultimately lead to a gain in competitive advantage. and pricing of new products”. Gilbert defines three areas where Experience Curves may be applied. and estimating purchase costs”. The Curve may also be used by a company internally in order to develop “labour standards. penetration pricing strategies. According to the Curve.226 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.

Tools: The Experience Curve 227 IV) Criticisms of the Experience Curve and its assumptions The success of applying the Experience Curve. Marvin Lieberman noted that the Experience Curve may only apply to the initial stages of production. the amount of direct labour versus machine-paced output. and if costs are not well-managed. depends on several factors. . the Experience Curve may not lead to competitive advantage since competitors are acquiring experience at the same rate. If all industry participants are experiencing rapid growth and declining costs. including the “frequency of product innovation. since employee turnover is growing every year. they may even tend to rise. and the amount of advanced planning of methods and tooling”. Moreover. 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). Another pitfall associated with the Experience Curve is the assumption that knowledge gained is kept within the company. however. This holds true less and less nowadays. especially in industries where process technology is disseminated rapidly.

the rapid diffusion of technologies. This tool. It contributed great insight to the field of strategic management. the Experience Curve can be considered a very useful management tool. As American author Elbert Hubbard put it. need not be the unique strategy for a company to grow. or lower prices. training. Experience. its underlying meaning is quite simple in nature. Managers should use the lessons learnt from the Experience Curve by employing “effective human resource selection.228 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. and all its implications. and the high turnover of workers. Whether or not it is a universally observable phenomenon which characterises all industries is not crucial. 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. “Progress comes from the intelligent use of experience”. will aid a company’s competitive advantage. which is the main lesson to be learnt from this tool. whether employed in such a way so as to reduce costs. Nonetheless. especially in view of the recent changes in the economic environment. . 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. and deployment processes that facilitate learning by doing”.

“Leadership in administration. MIT Press Ltd. “The Visible Hand.bcg. Research Paper 641. 1993 Pankaj Ghemawat. “Corporate Strategy”.com/BCG. New York. Paperback edition. Vol.. “Strategy and Structure: Chapters in the History of the American Industrial Enterprise”. Drucker. January 1993 George S.com/home. III. New York.jsp – the official site http://www. Web-o-graphy http://www. HarperCollins Publisher Inc.com/this_is_bcg/news/BCG_web_layout. McGraw-Hill Book Company Inc. Chandler Jr. “The Practice of Management”. Ill. Spring 2002 Philip Selznick.com/strategy/matrix/bcg/ http://www.quickmba. “Diagnosing the Experience Curve”. “Competition and Business Strategy in Historical Perspective”. 76. 1. Evanston.. fifth edition 1971 Igor H. 1965 Alfred D.. Ansoff. Montgomery.consultant-news. Row.Tools: The Experience Curve 229 VI) Bibliography Kenneth R Andrews..bcg. 1957. Homewood. 1962 Alfred D.asp http://www. Chandler. Business History Review. The Managerial Revolution in American Business”. Peterson.pdf . April 1982 Peter F. Stanford University. “The Concept of Corporate Strategy”. No. a sociological interpretation”. Jr. and David B. Day.

Apathy.. they tend to initiate a change and keep it going. the driving forces must overcome the restraining forces. it can be tempting to try strengthening the driving forces instead. Restraining forces are those acting to restrain or decrease the driving forces. Usually. diminishing or removing restraining forces is the most effective way to do this. vested interests. Types of forces include: resources. desires . incentive earnings. present or past practices. and competition may be examples of driving forces. For changes to be possible. and poor maintenance of equipment may be examples of restraining forces. hostility. traditions. relationships.230 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. Driving forces are those forces affecting a situation that are pushing in a particular direction. He assumed that in every situation there are both driving and restraining forces that influence any change that may occur. costs. organisational structures.. regulations. pressure from a supervisor. In the context of process improvement. agencies. However. we use Force Field Analysis to evaluate these opposing forces and set the stage for enabling changes to be made. values. Lewin thought that any situation should not be considered as a consistent stable system but as a dynamic balance or temporary equilibrium. . Equilibrium is reached when the sum of the driving forces equals the sum of the restraining forces. but this tends to intensify the opposition at the same time. In terms of improving productivity in a work group.

or to anticipate and plan more effectively for implementing change. and it helps team members to view each case as two sets of offsetting factors. effectiveness. 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. such as morale. it is especially helpful in defining more subjective issues. When used in problem analysis. and work climate.Tools: Force Field Analysis 231 II) When can Force Field Analysis be used? Force Field Analysis makes people think about what works for and against the status quo. 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 cost maintenance costs increasing disruption Total: 10 Total: 11 . 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. management. It can be used to study existing problems.

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. +1) • Wages could be raised to reflect new productivity (cost +1. 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. In the example above. The first is often the most elegant solution: just trying to force change through may cause its own problems as. Here you have two choices: • To reduce the strength of the forces opposing a project • To increase the forces pushing a project. the Force Field Diagram can help you analyse how you can push through a project that may be in difficulty.232 Tools: Force Field Analysis Once you have decided to carry out a project. to 8:13 (in favour of it). 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. knowing all the factors facing the manager who was tasked with pushing through the project. for example. . 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). +2) • Staff could be shown that the new machines will introduce variety and interest to their jobs (new force.

The classic Gestalt example is a soap bubble. but rather it emerges spontaneously by the parallel action of surface tension acting at all points on the surface simultaneously. An act with no consequences is considered a weakened act. power-hungry and aggressive. It is a theory of mind and brain which proposes that the operational principle behind the brain is holistic. where every computation is broken down into a sequence of simple steps. then an inferiority complex would occur. whose spherical shape (its Gestalt) is not defined by a rigid template. The desires of the self ideal were countered by social and ethical demands. the individual becoming egocentric. Adler believed that personality could be distinguished into four types: getting. or a mathematical formula. each of which is computed independently of the problem as a whole. parallel. The individual psychology – Alfred Adler (1870-1937) – assumes that human personality could be explained teleologically. ruling and socially useful. The Gestalt effect refers to the form-forming capability of our senses. avoiding. and analogue. or worse. 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. This is in contrast to the “atomistic” principle of the digital computer’s operation. If the corrective factors were disregarded and the individual overcompensated. 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).Tools: Force Field Analysis 233 III) Historical context Field approach Kurt Lewin’s field theory has its roots in the Gestalt theory. particularly with respect to the visual recognition of figures and whole forms instead of just a collection of simple lines and curves. . with selforganising tendencies.

World War II (1939-1945) with the setting up of the nazi concentration camps which forced Lewin to fly to USA in 1937. .234 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.

muskingum.org/wiki/Alfred_Adler http://tip.Tools: Force Field Analysis 235 IV) Bibliography Clare Morell and Gill Harvey.edu/communities/tools/ forcefield. Web-o-graphy http://www.org/thinkers/et-lewin.com/~donclark/hrd/history/lewin.nwlink.com/techniques/force_field_analysis.html http://www.accel-team.html http://www.extension.1 MOR.html http://en.sytsma.htm http://www.html .wikipedia.psychology.com/tqmtools/force. 2000.iastate. “The Clinical Audit book”.html http://www.infed.edu/~psych/psycweb/history http://www. BCM 362.org/wertheim.

V. global warming. II) The Formula of Change The Formula of Change proposes that the product of organisational dissatisfaction. 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. the product will also be zero or near zero and therefore the resistance to change will dominate. falling levels of growth.236 Tools: Formula of change Formula of change I) Historical context Since 1970. . or increased competition from abroad frequently require organisation managers to redesign their organisation structures. since the cost of changing will be too high.F) is zero or near zero. must be greater than the resistance to change within the organisation in order for any change to be successful: DxVxF>R 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. such as ageing populations. Other trends. the vision of what is possible in the future and being aware of the first steps towards reaching this vision.

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”. That is why two more elements are necessary to overcome the resistance to change. an internal analysis of the organisation must be carried out in the present situation. a portfolio of initiatives. personnel policies. goals and objectives. It is a detailed picture of a desired state in the future.Tools: Formula of change 237 Dissatisfaction Some form of dissatisfaction in an organisation may occur as a result of internal or external forces. and a communication plan. . Therefore. The vision stimulates people to change and provides direction for that change. Vision A vision is a picture of the ideal organisation. A high-level project plan covering the major activities. 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. The first steps towards the transformation of an organisation might be: clear priorities. The board managers must be aware of the need for change and the consequences of their actions. supply chain. etc. information system. deliverables. and benefits can help increase the motivation to change. board managers have to be very clear about the first steps to be taken towards reaching the derived state. First steps Before taking the decision or carrying out the change.

resistance may also result from the fear of failing or of looking silly or incompetent. “wherever there is a change effort.238 Tools: Formula of change Beckhard calls this the “practicality of the change”. • Costs: Some changes imply such enormous investments in organisational structure that the company cannot afford them. • Client: Fear of losing customers. . Resistance As Beckhard says. On the other hand. whether the change is carried out in the business strategy or product. The resistance may be caused by: • Employees: People are comfortable with what they know. there will be resistance”. They do not like to move outside of their “comfort zone”. Beckhard calls this the “cost of change”.

• Creating a communications strategy to support the change objectives. At this moment. how it must be done and who should do it. • Developing structures appropriate for and dedicated to managing specific tasks and activities. there is no longer a desire to return to the old state. the role of the board managers is to manage the changes and lead the organisation from the current state to future state. Once the board managers have accepted the change. . Beckhard refers to this as the “transition state”. The Formula of Change can help board managers to face external and internal forces which affect the organisation.Tools: Formula of change 239 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. • Devising strategies and plans for ensuring the commitment of key players to the change objectives and their personal involvement in achieving them. 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.

which they referred to as organisation development. a pioneering consultant on issues of managing change. . Beckhard wrote eight books and numerous articles. For nearly 50 years. and adjunct professor at the Sloan School from 19631984. With Dewey Balch. he launched the Addison-Wesley Organisation Development Series. Professor Beckhard helped organisations to function in a more humane and high-performing manner. they initiated a project designed to facilitate the change process in organisations.240 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. My Practice. he set up the Organisation Development Network. and to empower people to become agents of change. In 1967. including Organization Development: Strategies and Models. In the late 1950s. In the late 1960s. the first training programme for specialists in organisation development. Changing the Essence. and Agent of Change: My Life. with colleagues Warren Bennis and Edgar Schein (the latter now a Sloan professor emeritus). he began collaborating with the late MIT Professor Douglas McGregor who created the Organisation Studies Department at the School School. Beckhard is considered the founder of the field of organisational development.

. In recent years. • Activity was valued much more than learning. competitors such as Kodac Company and Nec Corporation gained market share from Xerox. it revealed that: • Small innovations and ideas were not valued by the company. the CEO tried to analyse by means of the Formula of Change if they could accomplish the change. therefore it must be related to the conditions and environment in which people operated. First. the Xerox Corporation maintained a commanding position in the office machine business.Tools: Formula of change 241 Below is an example of change within an organisation: Situation For many years. 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. With the help of external consultants. The top management knew that this was not because of a lack of talent. A diagnostic process was carried out to find the answer. So Xerox’s CEO became concerned that the Xerox Corporation needed a change to recapture the market lead. the capacity to learn was critical in Xerox’s highly competitive environment. Xerox’s top management realised that they needed a rallying vision. Dissatisfaction A loss of market share and the new products being produced were no longer at the leading edge. They thought that the solution was to launch new successful products which were totally different from those of their competitors.

Xerox’s CEO links the change effort with significant improvements in new product innovations and a subsequent increase in market share. .242 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. in this case. Moreover. • To provide training and education programmes to help employees develop their careers. they brought rewards. these changes did not imply too many costs for Xerox. Resistance The changes the CEO carried out did not produce resistance from employees since. Steps • To change reward system in order to motivate employees to provide ideas. Today.

com/Beckhard. Organization Development: Strategies and Models. Richard Beckhard and Wendy Pritchard.12manage.org/wiki/Richard_Beckhard http://www. 1977.drjohnlatham. Harris.Tools: Formula of change 243 V) Bibliography Richard Beckhard. Richard Beckhard and Reuben T.wikipedia. Web-o-graphy http://www. Organizational Transitions: Managing complex change. Changing the Essence: The Art of Creating and Leading Fundamental Change in Organizations. (ISBN 0-20100335-X).html http://en. 1991 (ISBN 1-55542-412-0). 1969.com/ methods_beckhard_change_model.html .

• Market share is shown by using the circle as a pie chart. • Market size is represented by the size of the circle. • The expected future position of the circles is indicated by an arrow. COMPETITIVE STRENGTH LOW LOW MEDIUM HIGH MARKET ATTRACTIVENESS GE McKinsey Matrix HIGH MEDIUM . each strategic business unit is plotted in a nineblock matrix according to their market attractiveness and competitive strength (X and Y axes).244 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.

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.Tools: GE/McKinsey Portfolio Analysis Matrix 245 There are numerous factors that can play a role in the Y 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 .

it can suggest unique strategic directions for each business: • Increase market share • Hold • Harvest/divest • Divest • Invest in new business . Because of the distinct characteristics of the business units. 2. The graph provides a powerful and compact visualisation of the strengths of the company’s business portfolios. 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. 3.246 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.

step-by-step. Evaluate competitive position • This is an internal-to-company measure 4.Tools: GE/McKinsey Portfolio Analysis Matrix 247 III) How to use it Neubauer proposes the following steps for building up the matrix: 1. growth. For instance: • Let us say that you have selected the market growth share as a proxy to measuring market attractiveness. 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. Select a strategy for each SBU and reconcile this with corporate strategies 7. PIMS. Review existing management structures 8. Implement selected strategies . Because of the business life-cycle concept – which states that every business evolves according to the embryonic. Evaluate attractiveness of each SBU’s market • This is an external-to-company measure 3. Develop a portfolio (depict positions of each SBU in portfolio) 5. Identify natural strategies for each region of the matrix. Identify strategic business units (SBUs) (segment) • There are four main methodologies (the GE method. 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.

67 5.33 1.00 2.00 Business Strength .00 Value Professional Market Attractiveness 3.33 3.67 2.248 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 65% Limited Expansion or Harvest Low Build Selectively High Low Strategic Business Unit Strength Below is an example from Colgate-Palmolive for a toothbrush portfolio in 1992: Superpremium 5.00 1.

Tools: GE/McKinsey Portfolio Analysis Matrix 249 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. and defending the business’ strengths. concentrating on attractive segments. . 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.

The essence of BCG’s approach was to present the firm in terms of a portfolio of businesses. following some criticisms on the limitations of the BCG matrix. each one offering a unique contribution with regard to growth and profitability. Shell. 3M and others unified their efforts and built a new version of it. McKinsey.250 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. However. . General Electrics.

“Practical Business Re-engineering: Tools and Techniques for Achieving Effective Change”. M. New York: The Free Press • Sadler. M. London: Kogan Page • Porter. “Management Consultancy: A Handbook for Best Practice”. “Competitive Advantage: Creating and Sustaining Superior Performance”. N. (1994).mckinsey. “Competitive Strategy: Techniques for Analysing Industries and Competitors”. (1980).duke.edu/~dbanks/mktg468/ Marketing%20Strategy%20Calendar. (ed.com • http://www.fuqua.com/databank/strategy/ business_strategy.Tools: GE/McKinsey Portfolio Analysis Matrix 251 V) Bibliography • Obolensky.htm .asp • http://faculty. London: Kogan Page Web-o-graphy • http://www.zanthus. P. New York: The Free Press • Porter.) (2001). (1985).

JIT only applies to repetitive manufacturing processes in which the same products and components are produced over and over . JIT (also known as lean or stockless production) should improve profits. 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. which happens when the inventory is too high. Of course. Therefore. but also of financial investment. there is never a zero-stock situation. 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). results from any activity that adds cost without adding value. We can take as an example the unnecessary moving of materials. but the level of stock should be as near to that as possible. not only of effort. The JIT system tends to reduce variability and improve product quality. Waste. Of course.252 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”. the logical result is also a reduction in production and delivery lead times. such as those associated with machine set-up and equipment breakdown. subcontractors tend to build their own factories as close as they can to the client to avoid any problems of in-time delivery. as well as a lowering of other costs. due to traffic jams or any other transport delay. simply because if everything is delivered on time there is no need to start up the machines again. and the goods have to be moved several times from one place to another – the accumulation of excess inventory. ‘just in time’).

minimum transport costs. on the surface the advantages of the system seem quite obvious: minimum costs. However.Tools: Just-in-time management 253 again. balanced flow of materials throughout the entire production process. To accomplish this. today the concept of JIT has been slightly changed and made more realistic: once again. The general idea is to establish flow processes by linking work centres so that there is an even. Of course. Once again. similar to that found on an assembly line. the example of the car industry can be useful: tyres.). an attempt is made to reach the goal of driving all inventory buffers toward zero. etc. Consequently. small inventories exist and the fines imposed for non JIT delivery are extremely high. textiles. etc. Well-known examples of such include all chain-building activities (cars. electronic equipment. engine components. and dashboard parts are delivered JIT by different suppliers at different stages of the production process. minimum warehousing efforts. 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. This means that there will be different JITs at different stages of production. . top quality.

He was not only the Japanese master of kanban (a production method). They were slashed from a couple of hours to just a couple of minutes. the most popular of which is Toyota Production System: Beyond Large-Scale Production. he was denied the normal executive track and later in his career was sent instead to consult with suppliers . Initially. His system helped to reduce the machine stop times dramatically. and became known as the Toyota Production System (TPS). JIT was well established in many Japanese factories by the early 1970s. As mentioned above. he was an employee of the Toyota family's Toyota Spinning. In the USA. before moving to the motor company in 1943 where he gradually rose through the ranks to become an executive. The JIT/lean concepts are now widely accepted and used worldwide. it was the Ford Motor Company which first saw the real advantages of the Toyota Production System. but also of the SMED (Single Minute Exchange of Die) system at Toyota.254 Tools: Just-in-time management II) Who invented it? Taiichi Ohno. This invention helped Japanese companies to increase their competitiveness and made Japan into an industrial genius. Although not very well known. Shigeo Shingo (1909-1990) was Taiichi Ohno’s perfect contemporary. (1912-1990) is considered to be the father of the Toyota Production System – also known as JIT. and began to be adopted in the USA in the 1980s (General Electric was one of the first to adopt it). he is one of the most important Japanese engineers in the field of quality systems. In what is considered to be somewhat of a slight. . He wrote several books about this system. the basic elements of JIT were developed by Toyota in the 1950s.

personal.pepperdine. Advanced Topics in Just-in-Time Management. Chandos Publishing. Westport.edu/032/supplychain.com/showtop/just-in-time-management. Kanban. 1989. William A. Japanese Management Association.. ISBN 1-56720-155-5.ashland.edbatista. 1988.edu/~rjacobs/m503jit. Just in Time Management of Manufacturing.html www.html www.. Web-o-graphy www. Just-in-Time at Toyota.gbr. M. Schniedermans.html . John Wiley and Sons. Sandras.shareme.. ISBN 0-471-13266-7. 1999. ISBN 1-84334-100-X. 1989. Jr. Just in Time: Making things Happen: Unleashing the Power of Continuous Improvement. Quorum Books.html www.com/2005/11/justintime_mana.Tools: Just-in-time management 255 III) Bibliography Graham Jan R.

USA. the American oil corporation. before moving on to the University of Texas in Austin. where he took his MA in 1941. He stayed at the University of Texas as a professor until 1964. .D in 1992. 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. 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. University of Virginia.256 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. where he pursued his PhD in 1947. receiving an LL.

.Tools: The management styles grid (Blake and Mouton) 257 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.1 Task management 5.9 Team management Blake. • Concern for production: this is the degree to which a manager emphasises concrete objectives. 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. organisational efficiency and high productivity when deciding how best to accomplish a task.9 “Country Club” management 9.5 Middleof-the-road management 1. 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. and areas of personal development when deciding how best to accomplish a task.1 Impoverished management 9. their interests.

the 1. as a result.5 manager tries to maintain a balance between both methods. is put forward as the most effective approach. policies and procedures. They are very autocratic. and view punishment as the most effective means of motivating employees. .9 management style. which integrates maximum attention to both people and production. and has been called the “country club” style of management.9 position at the top left of the grid focuses on the needs and feelings of members of his/her team.1 management style – minimum concern for both production and people – is characterised by a desire to avoid responsibility. The 1. The 5. In contrast. high production. have strict work rules.1 style of management – maximum concern for the efficient accomplishment of tasks. People in this category believe that employees are simply a means to an end. 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 bottom right-hand corner of the grid represents a 9.258 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. and to exert the minimum effort. Five positions on the grid represent five different management styles. ranging from 1 indicating a low level of concern. but minimum concern for human relationships. This creates a team environment based on trust and respect which leads to high satisfaction and motivation and. nor for creating a work environment that is satisfying and motivating. to 9 indicating a high level. 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. He/she has neither a high regard for setting up systems to get the job done. The 9.

When is this style appropriate? .Why does the manager want to do that? (What is his/her motivation?) .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 . what will happen? 9.What is such a person’s typical behaviour? . or 5. 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 9.9.1.Tools: The management styles grid (Blake and Mouton) 259 II) Analysis We can analyse this model more clearly by finding answers to the following questions: .If the manager uses this style inappropriately.

260 Tools: The management styles grid (Blake and Mouton) 1.1. “Country club” management Motivation: • Really cares for well-being of practitioner • Wants to be loved and appreciated Behaviour: • Defends people’s interests. without necessarily doing it .9. 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. 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.

Being passive 2.Tools: The management styles grid (Blake and Mouton) 261 When is this style appropriate? • Sometimes. 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.5. dissatisfaction from practitioners and superiors . Taking over leadership 5. 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.

262 Tools: The management styles grid (Blake and Mouton) 9. • 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 .9. Team management Motivation: • Thinks that company objectives must be achieved and that this can only be done by practitioner competence.

you should focus on tasks which achieve high productivity and efficiency. . It is important to understand how you currently operate so that you can then identify ways of becoming competent in both areas. when faced with financial hardships or physical risk. if you feel you are too task-oriented. 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. If your company is in the midst of a merger or making some other significant changes. For each situation. place yourself in the grid where you think you best fit. This may include involving others in problem-solving or improving how you communicate with them. Or it may mean becoming clearer about scheduling or monitoring project progress if you tend to focus too much on people. 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. 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. you should place a greater emphasis on people rather than on production.Tools: The management styles grid (Blake and Mouton) 263 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. Step One: identify your management style Think of some recent situations in which you were the manager. See how you can improve it. Likewise.

The grid training approach has been used to train hundreds of thousands of people to develop the two key types of managerial behaviour. .264 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 Managerial Grid Web-o-graphy http://www.R. J.net/ http://poynteronline. and Mouton. R.com/~donclark/leader/leadcon.asp?id=34&aid=45239 .gridinternational.Tools: The management styles grid (Blake and Mouton) 265 V) Bibliography Blake..html http://www.org/column.com/ http://www.S.nwlink.valuebasedmanagement.

all in psychology.L. finding his refuge in books. Below is an illustration of this model and the driving forces that determine the needs according to Maslow’s research. A year after graduation. Food Shelter. His parents. Thorndike at Columbia. Security Order. To satisfy his parents. Consequently.266 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. MASLOW’S HIERARCHY OF HUMAN NEEDS Self-Actualization Self-Fulfillment Prestige Status Self-Respect Affection Friendship Belonging Safety. he first studied law at the City College of New York (CCNY). Water. Maslow became very lonely. He attained a BA in 1930. He married and moved to Wisconsin with his wife and two daughters to continue his studies at the University of Wisconsin. and died in 1971. where Maslow became interested in research on humans and developed a motivational analysis model which he called the Hierarchy of Needs. wanting the best for their children in their new world. and a PhD in 1934. Sex TENSION DRIVE LEARNING GOAL/NEED FULFILLMENT BEHAVIOR COGNITION TENSION RELIEF/ REDUCTION MOTIVATION PROCESS . he returned to New York to work with E. Stability Protection Air. pushed him hard for academic success. New York. an MA in 1931. He was the first of seven children born to Jewish immigrants from Russia.

In 1954. while the two upper levels are grouped as the being or growth needs. and in some cases. his theory states that within the deficiency needs. such as the need to help others. as revealed by Maslow’s research. the next need emerges. the four lower levels being grouped together as deficiency needs.Tools: Maslow’s five-stage Hierarchy of Needs 267 II) Historical context In 1943. to find self-fulfilment and to realise one’s potential. Maslow published his first conceptualisation of the Human Hierarchy of Needs theory. In 1971. Since then it has become one of the most popular and cited theories of human behaviour. Hierarchy of Needs structure Maslow’s Hierarchy of Needs is often depicted as a pyramid of five. Maslow differentiated growth needs of selfactualisation and beyond to include self-transcendence. which is connecting to something beyond ego. 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. Basically. namely deficiency needs and growth needs. six levels. which illustrates the developmental sequence of the human needs. ACTUALISTATION ESTEEM LOVE/BELONGING SAFETY PHYSIOLOGICAL . The following is one example of the Hierarchy of Needs pyramid. Once each of those needs has been satisfied. each lower need must be fulfilled before moving to the next higher level.

depressed. physiological needs include activity. Addressing physiological needs Maslow and other management scholars. in many countries social funds are set aside to address these needs as . work breaks.g. such as Herzberg. stimulation. an individual will re-prioritise needs. For example. sleep and exercise. If deprived of these needs. However. rebellious. Individuals at this level need to meet their basic requirements with food. suggested ways of responding to identified needs. rest periods. in the worst-case scenario. pain. can make people feel sick. All capacities are channelled into satisfying hunger. air and water. employees become demotivated. In view of this. and esteem would most likely hunger for food more than anything else. clothes. discomfort and. or worse. When fulfilled. Human physiological needs take the highest priority. physiological needs cease to exist as determinants of human behaviour or are simply pushed into the background. The first need for existence is for the body to achieve wholeness. all other desires and capacities. non-productive. From the business point of view. if deprived. some can only be satisfied following efforts either by the recipient or by the responsible people or authorities.268 Tools: Maslow’s five-stage Hierarchy of Needs III) Physiological needs Physiological needs are pre-portend needs in that a person who lacks food. health. 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. This is obtained from food. love. e. While some physiological needs can be provided for naturally. they re-emerge to dominate human behaviour in the manner described above. lunch breaks and wages. shelter. water and air. if thwarted. Physiological needs can control thoughts and behaviour and. can cause death. safety.

Health clubs 4. 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. Efficient work scheduling 7.Tools: Maslow’s five-stage Hierarchy of Needs 269 required. However. international laws are employed against those who default on human rights legislation. Daycare centres 9. from a company or an organisation’s point of view. Labour safety devices 6. and many human rights organisations have undertaken to see that those responsible have met this requirement. Adequate compensation 3. . If not. Comfortable working environment Companies such as SAS have put in place facilities which address the above. Rest periods 5. Canteens/vendor machines 8.

people want to live in an organised and decent society with high moral values that assures safety for all its members. and for a stable environment. criminal behaviour. Here. a new set of needs emerges. etc. homes. Security of continuous revenues and resources People in this category require adequate and continuous supplies of funds to meet their basic living needs. Security of employment This refers to the non-availability of employment opportunities. for example. namely safety needs. This refers to the need for protection from any possible danger. health and the supply of other basic utilities. 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. while those in the developed world have been protected from this by their economies. clothes. Moral and physiological security In general. such as food. Most people living in the developing countries fall victim of such needs. and political unrests leading to conflict. and inadequate protection from social attacks such as riots. for stability and freedom from fear and anxiety. furniture. shelter. .270 Tools: Maslow’s five-stage Hierarchy of Needs IV) Security needs Once the physiological needs are answered. They seek adequate provision of resources to provide a comfortable standard of living.

or thwarting their safety needs may cause fear. neurosis. the next need dominates. chronic social disorders and. this means that people long for a safe. such as churches. predictable and stable. anxiety. It is in this context that Maslow’s model seeks to clarify that even as regards ourselves the hierarchy still prevails. war. Therefore. . family and health. government policies in most countries have addressed the possible security threats to their citizens in the form of regulations and legal protection. police and the courts to address such needs. lawful and organised environment which they can rely on. Depriving people of.Tools: Maslow’s five-stage Hierarchy of Needs 271 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. Addressing security needs Generally speaking. orderly. in the worst-case scenario. Various societies have also put measures in place to maintain their acceptable norms. They have ministries and organisations such as the army. Other companies and organisations have drawn up specific policies that provide employees with security of employment. We have seen from the hierarchy that the lowest unmet need determines motivation. and the search for its gratification organises our behaviour. 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. Once we gratify a need. crime waves. revenue.

transport and work schedules.272 Tools: Maslow’s five-stage Hierarchy of Needs Employment contracts with various conditions of service that specify progressive compensation structures. Some companies have other arrangements to meet special family needs. job security clauses as well as other benefits. . go a long way to address employees’ relevant security needs. such as child daycare facilities. such as health insurance and retirement benefits. 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. guidance and mentoring programmes.

people become increasingly susceptible to loneliness. with the exception of children who can only be loved to know and understand what love and acceptance is. This involves the desire to fulfil emotionally based relationships in general. In the absence of such needs. addiction and/or codependence. sports facilities and homes for the abandoned. They need to be loved by others and to be accepted by them. by setting up and organising social clubs. However. for example.Tools: Maslow’s five-stage Hierarchy of Needs 273 V ) The need to be loved and to belong After fulfilling physiological and security needs. Alternatively. or to groups such as religious bodies. People need to belong to a family. tribe or clan. the need for love. love needs are actionable. Subconscious fear of rejection and abandonment is one root cause of relationship enmeshment. and to be able to extend these gifts to other people in adulthood. most social policies have addressed this. and satisfying them requires effort by the parties involved. Addressing love needs Like the aforementioned. churches. People abandoned emotionally or physically too often as infants subconsciously grow a personality sub-self who remains terrified of being abandoned throughout adulthood. sexual relationships. . anxiety and even depression. and the need for companionship. acceptance and belonging emerges instinctively and demands attention. their sub-self may try and protect them from further abandonment (subconsciously) by never bonding with anyone.

and social groups. team events. like Virgin Airlines. including clubs. . even organise parties and holidays for groups of staff and their families. which encourage employees to meet in a social context and bond with other employees. Some companies.274 Tools: Maslow’s five-stage Hierarchy of Needs Companies and organisations as such have come up with numerous social activities.

holiday vouchers. universities and other technical colleges to provide skills to those aspiring to fulfil their need for esteem. they desire prestige and status. Addressing esteem needs Governments and local authorities worldwide have addressed this need through the provision of schools. there are two types of needs of this nature – the self-esteem resulting from competence or the mastery of tasks. and to engage themselves so as to gain recognition and appreciation. in some cases. Other organisations have reward and recognition arrangements such as awards. Imbalances at this level can result in low self-esteem and inferiority complexes while. which entail additional responsibilities or. on the other hand. training and development is available to assist the promotion of ambitious people who aspire to achieve top-level posts. organisations have also put in place incentives for career advancements and development. trophies. In most companies. They need to take part in activities that add value to themselves. financial compensation. People at this level have a need for achievement. This implies that each . However.Tools: Maslow’s five-stage Hierarchy of Needs 275 VI) Esteem needs According to Maslow’s definition. to be respected. Self-actualisation Maslow defines self-actualisation as the desire to become everything one is capable of becoming. bonuses and gift vouchers for outstanding performance. and the attention or recognition gained from others. it can also result in an inflated sense of self and snobbishness. to gain self respect. and to respect others. and need to feel adequate.

Have profound mystical or spiritual experiences (not necessarily religious) 11. before becoming creative. Have an air of detachment and need privacy 8. people at this level are usually at the highest decision-making rank. Are realistically oriented 6. aesthetic experiences. Are autonomous and independent 9. centred. Judge others without prejudice. and are involved in strategic planning. peace. future expectations and board decisions. Have a system of morality that is fully internalised and independent of external authority 4. Are problem-centred rather than self-centred 7. Within companies and organisations. 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. in a way that can be termed objective 5. 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. etc. At this level. etc. Are spontaneous in their ideas and actions 3.276 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. people seek knowledge. They live up to their highest personal potential. Have intimate relationships with a few especially close people and tend to be profound. focused and productive. energised. Have a fresh appreciation of people and events rather than a stereotyped one 10.

He originally found the occurrence of peak experiences in individuals who had self-actualised. integration and fulfilment. He believed that people study and cultivate peak experiences as a way of providing a route to achieve personal growth. although not often. mature. Individuals most likely to have peak experiences are self-actualised. However.Tools: Maslow’s five-stage Hierarchy of Needs 277 VII) Transcendence needs Maslow’s initial hierarchy ended at self-actualisation needs. with further research into the human forces behind motivation. and selffulfilled. . but later discovered that peak experiences also happened to non-actualisers. healthy. he realised that people need to transcend and thus added it to the top of the hierarchy. Peak experiences are unifying and ego-transcending.

Volume Two. p 61 ..K. V. 1995. as discussed above: Self-actualization is not an endpoint. 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. 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. “Human Resource Skills for the Project Manager: The Human Aspects of Project Management”. Project Management Institute.278 Tools: Maslow’s five-stage Hierarchy of Needs The following is an illustration which summarises Maslow’s model.

It can therefore be very difficult to try and create a perfect motivator vehicle for an entire department or organisation. It does not take account of the influence of an employee’s cultural and socio-economic level in various organisations. as so many factors are involved. and to provide solutions that will satisfy their needs accordingly. The theory generalises the motivational factors that influence the desire to fulfil the needs. What motivates one person can be very different from what motivates their peers or colleagues. The consultant manager can use this to categorise clients/ customers according to their needs and their level in the hierarchy. . especially when we move beyond the basic health and safety levels. 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.Tools: Maslow’s five-stage Hierarchy of Needs 279 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. In this way the consultant will avoid providing the wrong solutions to the problems presented by his or her clients. based solely on Maslow’s theory. therefore it is important to understand the needs of all clients before attempting to provide solutions to their problems.

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. care of the elderly.280 Tools: Maslow’s five-stage Hierarchy of Needs IX) Conclusion In this era of accelerating change. For this. 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. child care. companies such as SAS have put in place responsible policies regarding employee needs. to serve customer needs appropriately. maternity leave. such as health. and to select the best suppliers at the right time. . social clubs and other work-based issues which are important to attract and retain the best employees on offer.

3rd edition.edu/whuitt/col/regeys/maslow. New York. vol. (1997).html http://www.html http://www. and Huczynski. Harold (1954). pp 370-396 Maslow. (1996). in The Psychological Review.com/20maslow.deepermind.edu/whuitt/col/regsys/maslow.Tools: Maslow’s five-stage Hierarchy of Needs 281 X) Bibliography Buchanan. Prentice Hall Maslow. Pittman Publishing Web-o-graphy http://www.html .pateo.com?motivation. L.com?article6.html http://www.com/essays/hierachyofneeds.change-management-toolbook. “Management and Organisational Behaviour”.org/ex/lists/maslow. “Organisational Behaviour: an Introductory Text”.html http://www.chiron.html http://www. 50 n° 4. “A Theory of Human Motivation”. Harold (1943). D.valdosta. “Motivation and Personality”.easytraining.6m/too/satw.xenodochy. London.com.html http://www. Harper & Row Mullins.J. A. A.chiron.au/forum/DC Forum ID2/60. 4th edition.html http://www.htm http://www.chacocanyon.tms. A.

Little Maturity Matrix Dominant Competitive Position Weak Embryonic Tenable Favourable Strong Growth Mature Ageing Industry Maturity I) Introduction It is not very clear whether the Hofer Schendel matrix or the A. Very similar to the Hofer Schendel model. Little Inc. in the late 1970s: . Both are very similar to one another and could therefore be called variants of each other. They are both versions of the same theme. Little matrix was developed and used first. this one was developed by the consulting firm Arthur D.282 Tools: Maturity Matrix Arthur D. D. Both of these approaches are said to have been published in 1978.

characterisation of each SBU’s competitive position. Little matrix according to its classifications. selecting an appropriate strategic thrust. There are five categories: dominant. mature and ageing. favourable. and analysing the risk involved. . .Tools: Maturity Matrix 283 .There are certain steps to follow when using the Arthur D. testing for financial and management feasibility.The assessment of strategic competitive position is subjective and based on certain guidelines. . Little life-cycle approach: identifying the SBUs. The SBU positioned here deserves strong support. . The environmental measure is an identification of the industry’s life cycle.Selective development: this refers to strategies that concentrate on industries that are attractive or on SBUs with competitive competencies. . . positioning the SBU on the 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. and profitability or cash flow. . The business strengths measure is a categorisation of the corporation’s strategic business units (SBUs) into one of six possible competitive positions. classifying each SBU in terms of industry maturity. tenable and weak. The natural business unit is made up of a product or product lines with identifiable independence from other products and product lines. investment. selecting an appropriate generic strategy. strong.Arthur D. Little grouped the life cycle of an industry into four stages: embryonic.One of the most important factors in this approach is to identify SBUs correctly.Arthur D.The assessment of industry maturity and competitive position is made on the basis of business market share.The approach uses the dimensions of both environmental and business strength assessment. . growth. .

matrix as well.Arthur D. Little Inc.Once the natural strategy and strategic thrust of the SBU has been determined. a generic strategy must be 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. . . 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. so the situation must be changed. 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. The generic strategies are stated in tactical terms and refer to operational planning. According to Michael Porter.284 Tools: Maturity Matrix . Little Inc. . .Proved viability: refers to transitional strategy that cannot be sustained. incorporates some aspects of risk analysis to cross-check the suitability of the strategy that has been chosen. . . .Out: this is the strategy for withdrawal.

the situation worsened. «Stag» refers to a sluggish economy. Little matrix was marketed at this time. while «flation» signifies rapidly rising consumer prices. and further government attempts to revive the economy failed. Richard Nixon took the United States out of the Bretton Woods system. the great Western oil conglomerates faced a unified bloc of producers. Western Europe. which is probably why the Arthur D. During the war. The US economy remained stable until the 1970s. companies had to revert to ways to make them more efficient. During the oil crisis. Suddenly. and Japan. high unemployment. or recession. the Arab world imposed the 1973 oil embargo on the United States. 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.Tools: Maturity Matrix 285 II) History In the early 1970s. As the decade progressed. the Arab-Israeli conflict triggered an energy crisis. when the US suffered stagflation*. . *Stagflation.

in some books they mention 20 quadrants while in ADL consultancy they use 32 quadrants. The reason behind grouping similar businesses of a company into strategic business units is to reduce the complexity of the company being analysed. Little Inc. yellow and red.286 Tools: Maturity Matrix III) What and how The ADL Maturity Matrix or the Life Cycle Portfolio Matrix. commonly known as ADL. In the matrix below. It revolves around strategic business units (SBUs). 2) Positioning: position the SBUs in a matrix. However.. The ADL portfolio comprises four procedures: 1) Classification: classify all the businesses of a company into SBUs. The SBUs are classified in three different colours: green. . substitutability and divestment or liquidation. 4) Decide: make a decision. prices. the line of business or SBU is not specifically defined by a product or organisational unit. using the following criteria as guidelines: common rivals. only 24 quadrants are represented. 3) Evaluate: evaluate the conditions of the industries in which each SBU operates. consultants in the late 1970s. The strategist must identify discrete businesses by finding commonalties among products and business lines. was developed by Arthur D. In the ADL approach. ADL has 24 quadrants which will be explained in section 3. quality/style. customers.

the strategist can move forward to propose appropriate plans. Based on this classification. with low market share are classified as Red. penetration. or diversification.Tools: Maturity Matrix 287 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. focus. and those in the middle are Yellow. . divest. Those in a less mature market.

4.1 Competitive position Competitive position is driven by the sectors or segments in which a SBU operates. They are typically too small to be profitable or to survive over the long term. Strong – here companies have a lot of freedom since their position in an industry is comparatively powerful.288 Tools: Maturity Matrix IV) Competitive position of the ADL Maturity Matrix 4.1.1 Two main dimensions ADL has two main dimensions – competitive position and industry maturity. 6. It could apply to a large firm which is suffering from previous mistakes or a critical weakness. . 5. e.e. The industry is fragmented. 4. It depends on the product or service which the SBU markets and the market it accesses. so companies finding themselves here need to abandon this segment. A strong SBU can usually follow a strategy without consideration of rival counter moves. 2.g. Favourable – companies with a favourable position tend to have the competitive strengths of a fragmented market place. Tenable – here companies may face stronger competitors that have a favourable. Apple’s iPod products. Examples of companies in this segment are Microsoft and Danone. strong or competitive position. Weak – this is an enviable position. Dominant or Leading – this is the best position in the market. 3. near monopoly or protected market. Non-viable – this position is not the best position to be in. so there is no clear leader among stronger rivals. Companies here do not have a sustainable competitive advantage. It is the combination of these two dimensions that will help in the decision-making process. i. but not many companies can move away from this position by implementing the right strategies. product and place. 1.

pursuit of new customers.2 Industry maturity The industry matrix is similar to product life cycle. technology and market share. changes in technology. investment and profitability or cash flow are also used as guidelines in assessing the industry maturity. The Mature Stage – is characterised by stability in known customers. . The AD Little company found that industry maturity is determined by and has an impact on observable business actions. Business market share. rate of growth compared to GNP growth. shares and technology are more stable and entry into this market is more difficult than at the earlier stage. breadth of product line.1. degree of market concentration and conditions for entry and exit. but segments can also be considered. AD Little grouped the life cycle of an industry into four stages: The Embryonic Stage – this is usually characterised by rapid growth. The Growth Stage – is a still rapidly growing stage but customers. The Ageing Stage – is characterised by a falling demand.Tools: Maturity Matrix 289 4. The industry may still be competitive. and fragmented and changing shares of the market. Maturity of the industry can be tracked by assessing the level and rate of change in variables such as technology. a declining number of competitors and often a narrowing of the product line.

Different strategies can be employed. only 20 quadrants will be used as most of the time the non-viable segment will be eliminated. In the table below. investment.2 Applying the Matrix By knowing the competitive position. net cash producer Find niche Hold niche Hang-in Grow with industry Harvest Profitable. net cash producer Strong Start-up Differentiate Fast grow Maybe unprofitable. probably not cash producer Fast grow Catch-up Attain cost leadership Differentiate Probably profitable Probably not cash producer Maturity Defend position Cost leadership Renew Fast grow Profitable. net cash borrower Harvest. This assessment is made on the basis of business market share. focus Grow with industry Profitable.290 Tools: Maturity Matrix 4. the strategic position of a company can be established. net cash producer . net cash producer Ageing Defend position Focus Renew Grow with industry Profitable. Competitive Position Dominant Embryonic Fast grow Start-up Probably profitable Growth Fast grow Cost leadership Renew Defend Position Profitable. The life-cycle stage will be assessed for each business. hand-in Find niche Hold niche Renew Differentiate. and profitability or cash flow.

net cash borrower Growth Differentiate. net cash borrower Withdraw Divest Unprofitable Possibly net cash borrower Withdraw Unprofitable Figure 2: Strategic positioning in terms of market share/investment and profitability . net cash producer Harvest Turnaround Find niche Retrench Minimally profitable cash balance Ageing Retrench Turnaround Moderately Profitable. catch-up hold niche Hang-in Find niche Turnaround Focus Grow with industry Unprofitable. cash flow balance Tenable Start-up Grow with industry Focus Unprofitable. hand-in Find niche Hold niche Renew Differentiate. focus Catch-up Grow with industry Marginally profitable.Tools: Maturity Matrix 291 Competitive Position Favourable Embryonic Start-up Differentiate Focus Fast grow Probably profitable. focus Grow with industry Moderately Profitable. cash balance Weak Find niche Catch-up Grow with industry Unprofitable. borrower or cash balance Turnaround Retrench Unprofitable. net cash borrower Maturity Harvest. net cash borrower Divest Retrench Phase-out Withdrawal Minimally profitable. net cash borrower Harvest.

. It is particularly useful for high-tech industries in which life cycles are relatively short and therefore if situational strategies are not employed. to formulate specific business strategies for each SBU. 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.292 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. a strategic business unit may fall short of its goals. This model may be usefully applied to assigning strategies to each SBU using the generic strategies. and close any gap existing between corporate and SBU level. Likewise. It can also be used to establish the desired corporate portfolio profile. for example. It can be used. the model can be used for competitor analysis at both the corporate and SBU level.

Some industries go straight from growth to decline and some industries revitalise themselves during a decline. 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. creative marketing and repositioning. If a company takes the life cycle as a given. 4. 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. Other industries do not have a slow introductory growth stage but enter directly into a sharp growth phase. raises the concern of the appropriateness of the generic strategies at each position of the matrix. . Porter argues that except for industry growth. Little and others. it can become a self fulfilling prophesy. in turn. Competition at each stage of the life cycle is different in different industries. these limitations are fourfold: 1. 3. Firms can alter the life-cycle shape themselves through product innovation. According to Michael Porter. Industry growth does not always go through the typical sshape described by Hofer and Schendel.Tools: Maturity Matrix 293 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. Arthur D.

assessment of the competitive position of the company in that technology (from weak to strong). . Similar type of matrices can be used for technology assessment: . 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. .a combination of those two dimensions enables identification of a technology to develop or acquire. This assessment needs to be supplemented by an assessment of the company’s competitive position in this industry or segment. and establish economies of scale. . An emerging technology is one in which it is unknown whether the technology will ever provide competitive advantage. the ADL matrix enables the definition of the industry or segment attractiveness. Combining these two assessments will allow development opportunities to be defined. the matrix helps to reduce complexity. enable the smooth sharing of resources across a company.assessment of competitive impact of the technology: from base technology(mature/ageing) to emergent technology (embryonic/emerging).294 Tools: Maturity Matrix VII) Conclusion The ADL matrix is synonymous with the product life cycle. In the complex environment in which companies are evolving these days. the ability to bend sheet metal is a base technology for a car company. Notes: A base technology is one that is a threshold to entering the particular market a company is in – for example. At its best. There is no competitive advantage to be derived from this type of technology.

com/Lessons/ lesson_a_d_little.cipher-sys.Tools: Maturity Matrix 295 VIII) Web-o-graphy http://www.com/hofhelp/ad%20little/ adlhelp.htm http://www.htm http://www.html .valuebasedmanagement.net/ methods_adl_matrix.marketingteacher.

the rational capacities. . However. . deductive cognition). According to Jung. . oriented towards their inner self and world of ideas (E/I type). people can be characterised depending on: . modelled on Carl Jung’s framework of type preferences. To call it a test is arguable as nobody can ever fail it as there is no right or wrong personality type. Form M of the MBTI questionnaire has 93 items and provides the basic type. one thing is certain: today. Sensation is the perception of facts. while intuition is the perception of the unseen (S/N type). aware of their environment. it has attracted both strong support and a lot of criticism. perceiving the external world (J/P type). and introverts. From the combination of mutually exclusive answers to the questionnaire. or in a flexible and spontaneous manner. seen in the way they perceive the world and gather information: using all their five senses or their intuition. while Form Q has 144 items and provides not only the type. and preference over other . attuned to the external world of people and facts. seen in the way they make decisions: thinking (analytical. but also results for 20 facets of that type. MBTI determines 16 personality types which have each been associated with characteristically common behaviours. orderly way. MBTI assesses four core dimensions of human personality. preferred career choices.the way they are energised: extroverts.the perceptive capacities. or feeling (synthetic. MBTI is the most widely used personality test.296 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. all-inclusive cognition) (T/F type).the way people live their lives: in a planned.

In spite of criticism about its lack of sound scientific grounding. tolerant. change. systems/ models E(S/N)FJ = Harmoniser: concerned by people needs. practical. seeking opportunities. energy I(S/N)FP = Poet: flexible.Tools: Myers Briggs Type Indicator 297 types. shared goals. goals I(S/N)TP = Inventor: analytical. the success of MBTI relies on the fact that it offers individuals a good glimpse of themselves. spontaneous. quick IS(T/F)P = Navigator: present observer/recorder. caring. values and ideas . improving communication. Eight major personality types can be defined. organising. nurturing. direction. being a valuable tool in team-building. objective. energy. detached. external patterns IN(T/F)J = Visionary: future-oriented. holistic insights E(S/N)TJ = Pilot: analytical. far-reaching visions. facts-pastoriented EN(T/F)P = Explorer: future-oriented. and resolving personality-based conflict. each with its own name: ES(T/F)P = Adventurer: present-oriented.

and its use in such circumstances is unethical (as there is no good or bad personality type). for individuals and for teams. from the point of view of skills. as reported by CPP Inc. its aim being to leverage better understanding and acceptance of oneself and others. with the purpose of ensuring higher rates of success on the job. Major success stories worldwide.The consulting company Ernst & Young used a series of leadership development seminars to help manage change . Three of these cases are summarised below: . . As the publishers of the test say. commitment.298 Tools: Myers Briggs Type Indicator II) When can it be used? Personality tests are increasingly popular tools in workforce management. Example in SMEs and/or other organisations Most Fortune 500 companies use MBTI for various purposes. Moreover. Pennsylvania. the MBTI is not a tool designed for hiring purposes. administration and clerical. Marriott. a subsidiary of the London-based financial giant AMVESCAP. where MBTI was a key part of an executive training programme between 1997 and 2000 and is still widely used today in workforce development. Major users of personality tests (as reported by product vendors) include government agencies. Texas Instruments and numerous others. it does not provide any indication of whether a candidate is fit for a job. personal goals and loyalty to the company. primarily for career development and teambuilding purposes. AIM Investment Services. the publisher of MBTI. include St Luke’s Hospital and Health Network.General Motors. sales. not for exclusion. Positions for which testing is used include management – in leadership and coaching programmes – customer service. schools. and vocational centres. MBTI is meant for inclusion. hospitals. However attractive it may be.

and to offer improved internet security to its customers. .Nokia.Tools: Myers Briggs Type Indicator 299 following restructuring. The result was that people understood themselves better and took ownership of their careers. a global leader in mobile telecommunications. Since wireless computing and internet access are at the cuttingedge for innovative Nokia. preferences and values using various tools. and coaching structure was established to that end. An assessment. The seminars concentrated on interpersonal qualities. and as the business unit’s global workforce was widely dispersed. with a workforce of approximately 1. and MBTI (both phases) played a key role. blending flexibility and convenience of on-line access with personal coaching at key points. Participants were helped to define individual needs. This new programme was also based on the MBTI framework and was deemed a success by participants. training. the company sought an approach to performance development for the new business unit. and to motivate and empower the wider employee base.200 and a leadership group (directors and partners) of around 100. in 2005 E&Y decided to run a communications-focused event for their Direction Setting Team. Following the success of these seminars in 2004. including MBTI. a group of eight senior partners comprising business and industry leaders. 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 encourage development of interpersonal skills. The restructuring brought together two considerable E&Y business units. established a new Enterprise Solutions business to serve mobile business users with wireless terminals. to align development to the Ernst & Young leadership values.

they are “pacesetters”.Also known as “system builders”. Those relations. sometimes mistaken for arrogant by lessdecisive people. to mask their inherent unconventionality. they know what they don’t know. .INTJs know what they know and. stability and good communication. .300 Tools: Myers Briggs Type Indicator In another example below. often disregarding authority. . more importantly.Personal relations. can be their Achilles heel.Typical career choices are the sciences and engineering. .They have an unusual independence of mind. .Some of them manage to simulate some degree of surface conformism. are characterised by their robustness. . and they are usually extremely private people. .Many of them do not readily grasp social rituals. They can rise to high management positions if they are prepared to invest time in marketing their abilities. they possess the unusual combination of imagination and reliability. Thinking.However. which frees them from the constraints of authority and convention.Professionally. . which the INTJ ultimately establishes. Intuitive. one personality type has been developed by showing its main characteristics: INTJ (Introverted. . . perfectionists. Judging): “The Visionary” The INTJ person: .Self-confident. especially romantic ones. their assets in the interpersonal area include their intuitive abilities and their willingness to ‘work at’ a relationship.

the INTJ is a “portrait of ideas”. the INTJ may quickly leave an organisation (physically or psychologically) if his talents are not fully used. . . . . but once the ‘castle’ is designed.Expecting a great deal of himself. . As his level of achievement is very high. mainly valuing rewards from other NT types who are either intellectual equals or superiors. this person will not value subordinates (or superiors!) who are not intellectually competent. he is more than willing to allow somebody else to take over.Tools: Myers Briggs Type Indicator 301 The INTJ manager: . intellectually oriented. tending to escalate standards for himself and others. . he has enormous drive.Architect of progress and ideas.Finally. he is interested in principles and meanings behind the events and elements. he always feels restless and unfulfilled.He may not be aware of the feelings of others.He is comfortable in a management system focused on results rather than on procedures.Involved in a creative process.An excellent decision-maker within the organisation. so is the need for rewards. .

of attempts to push aside current barriers of thought. mapping on to statistical methods and development for MBTI to become recognised as a major personality assessment tool. and were standardising everything from clothes sizes to industrial processes. The foundation of the tool was the idea that understanding oneself can help one appreciate his or her own strengths. That (1890 until after WWII) was a period of introspection. in response to a call by the government for “more effective ways of doing things”. European intellectuals were trying to explain what could possibly justify the horrors of war. gifts and potential developmental needs. . Characteristic of American society then was the desire for development and self-improvement. and measurable. However. The architects of the tool were Katharine Briggs and Isabel Myers. the model proposed by Myers and Briggs was not embraced with enthusiasm. Myers and Briggs wanted to help the American war effort. data gathering. but they all led to a better understanding of humanity. along with numerous other theories exploring the human psyche. mother and daughter. At that time. as the Americans were focusing then on the quantifiable. However. both with a profound interest in applied psychology. It took decades of experimental studies. behaviour and social order. as well as understand and appreciate differences among people. at both individual and social group level. Each of the theories revealed some aspects of human personality.302 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. none of them being 100% correct or complete. it is worth mentioning that Jung’s theory is a fruit of modernism in Europe. as Jung’s dimensions were difficult to measure.

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. and certainly did not help the understanding of the dark ages of humanity. but the results have to be considered with care. what a correct understanding of types – using MBTI – does successfully. in line with the purposes for which the tests have been designed. do not explain all the behaviour of healthy humans.Tools: Myers Briggs Type Indicator 303 Types. . However. therefore.

wikipedia.workforce.html http://www.php http://www.adventureassoc. Brussels – “Leadership training”.com/THRIVE/Fall/ corporatecasestudy.cpp.com/content/case_studies.com.304 Tools: Myers Briggs Type Indicator IV) Bibliography Mailleux and Associates. 2005.petergeyer.asp http://www. Web-o-graphy http://www.org/ http://www.com/section/06/feature/23/57/09 .au/library/thesis.org/wiki/Modernism http://www.en.myersbriggs.

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and even more so to see whether or not this is the one you thought you would be associated with.. observes the new economic models and trends. accepting to coexist with uncertainty and risk. who are not afraid of new possibilities.. The need for new competences. In the figure below you can observe the different angles and the different viewpoints on management styles. but every manager belongs. They are also capable of managing change.306 Tools: The need for new competences. more or less.. under the term INNOVATOR you will find the managers who love change. to all of these. Each of these styles is unique. This kind of manager looks around him. but hate people who resist it. above all. One thing is important for this type of management: stress-resistance and..or herself. . It is important to know which type you belong to. and who think in a creative way. and will thus be able to project the changes required. FLEXIBLE COLLABORATE MENTOR INNOVATOR CREATE FACILITATOR INTERNAL MONITOR BROKER EXTERNAL PRODUCER COORDINATOR DIRECTOR CONTROL CONTROLLING COMPETE At the top right.

This manager hates conflicts between staff members and tries to solve them. 307 In that same upper-right quadrant we find another type of ‘hyperactive’. and aspirations. and is persuasive. He/She meets people from outside in order to negotiate and convince them to work with him/her. never-standing-still manager: the BROKER. wishes.. considerate. He/She takes care of staff training by identifying training opportunities. Personnel perceive this type of manager as someone who is helpful. Contact with people is the most important driver for the mentor who takes care of them. builds career plans and so on. This manager has a solid basis of external legitimacy. He/She works as much as possible with external resources. plus an enormous address book. Everything he/she does is process-oriented. One of the best things that can happen to young graduates is to be the protégés of this type of manager.Tools: The need for new competences. 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.. whose work is built on collaboration. but this time on the left (collaborate) we find two complementary management styles: the MENTOR and the FACILITATOR. and very often achieves positive input and participation. thereby acting as the spokesperson for the unit and/or company. open and fair. The facilitator is the manager who builds teams. strong and influential. He/She loves giving people a boost and talking to them. Still on the flexible side of management (the upper part of the circle). sensitive. fights for cohesion. . because this will ensure they have a successful career in the future. they know their staff and understand their problems.

housekeeping and logistics.308 Tools: The need for new competences. . You have to choose what kind of manager you want to be. If not why not. Slowly but surely we move down in the circle into the controlling part in the bottom half. Are they less funny? The fact is that these managers are closer to the facts. organising and coordinating efforts. every department meeting its quotas.5 S framework. every unit. since everything has to be measurable for the MONITOR and COORDINATOR. It is easy to explain the roles played by the coordinator-manager to those among us who know the Thiem-Tom 10. Are the people working for him/her doing so according to the rules. and/or the McKinsey 7S framework.. The monitor is expected to know everything that is going on in his/her department. This question will also be essential if quotas are exceeded. This manager should be able to handle crises. Is everybody. the procedures (internal as well as external)? 2. This manager type is an expert in technology. and how can the gap be filled immediately. is completely reliable and ethically correct. As the name implies. there is no flexibility at all at this level. as such. This is the person who takes care of the structure and flow of the system(s) and. unit or whatever level he/she is responsible for.. He/She is an expert in scheduling. planning. although here he/she fails in the roles played by the mentors and facilitators. For this manager there are two important points: 1.

Of course. The director sets the goals and plans everything. an enormous amount of energy and who are super-motivated tend to be producers. but one thing is for sure – there are a lot of managers you can fit into each of the above-mentioned categories..Tools: The need for new competences. . although they do not accept that their own level of productivity may decline. sets out the politics to be followed and gives strict instructions. Maybe you have not been able to identify your exact type from the choice above. They drive themselves and their staffs unrelentingly towards a stated objective. since the mix you represent is too complicated at the moment. they accept responsibility and complete assignments. and should be the one who defines problems and brings various alternatives. 309 Finally. People with significant personal drive. which is least liked by the staff : the DIRECTOR and the PRODUCER. This is why they often try to motivate collaborators to increase productivity and to always try to attain higher goals. we come to the last quarter of the pie.. writes the internal rules. He/She is the one who assigns the roles different people have to play.

6. The group begins in a circle. post it on the blank wall and choose a time and a place for the discussion to begin on this topic. Participants come forward. 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. 4. 3. One wall of the room is left blank. the group reconvenes in a circle and shares their thoughts about the meeting. an American consultant. When there are no more topics. A report is generated and posted on a “news wall” in the room. 7. During the course of the meeting. pens and the facilitator. At the conclusion of the meeting. 5. the news wall fills with reports of completed sessions. An OST meeting generally unfolds as follows: 1. An OST meeting is unique as it lacks the fundamental requirement of the traditional meeting: a predetermined agenda. write it on a large piece of paper. discussed in self-organised and self-facilitated work groups and moved forward by participants taking personal responsibility. identify a topic.310 Tools: Open Space Technology Open Space Technology I) What is it? Open Space Technology (OST) is a meeting process developed by Harrison Owen. Groups are self-organised and meet at predetermined times and locations and self-facilitate. and in the centre of the circle is a pile of papers. In an OST meeting. 2. The facilitator “opens the space” by explaining the process. with no tables in the room. The reports are gathered up and copied for each participant. issues are identified by participants. In certain situations where concrete action plans are . 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.

These are commonly articulated as follows: 1. 4. efficiency and effectiveness in amounts not generally seen in other meeting processes and facilitation tools. structure. When it starts is the right time: people’s genuine performance and creativity happens at anytime. participants move on to another topic. whereby participants prioritise actions and take personal responsibility for seeing them through. 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.Tools: Open Space Technology 311 desired. Whoever comes is the right person: people who show up are those who care. The ‘Law of Two Feet’ is known as follows: “If you find yourself in a group where you are neither learning nor contributing. When it is over it is over: when ideas are generated. The facilitator’s role shifts from controlling the process to “holding the space”. . what they will work on and how that work will be carried out. 3. use your two feet and move to another group or somewhere where you can. freedom and responsibility. a “convergence” and action planning activity takes place. At the heart of an OST meeting are four principles and one law. Whatever happens is the only thing that could have happened: people focus on the moment. 2. OST has been embraced by some large organisations and has proved to generate leadership. which can loosely be defined as ensuring that the space is fully open for creativity and freedom to unfold. Surprisingly enough.” These principles and the Law of Two Feet give participants power.

second edition.chriscorrigan. “Open Space Technology User’s Guide”. Web-o-graphy http://www. Berrett-Koehler Publishers.htm http://www.html http://www.org/ http://www.openspaceworld.ourfuture.seedstraining.com/openspace/ http://www. Harrison.312 Tools: Open Space Technology II) Bibliography Owen.com/openspace/ .openspacetechnology.com/osover. San Fransisco.com/articles/oscowhat.

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He wrote several books. In a nutshell. He is known for being one of the theorists who developed the field of microeconomics using tools such as indifference curves. Pareto’s Principle The Pareto Principle is the main focus of this section. Joseph Juran was known as a business and industrial quality ‘guru’. the son of a Genoese father and a French mother. In his “Trattato di Sociologia Generale” . This was later generalised by Joseph M. Juran and others into the so-called Pareto Principle (also called the 80-20 rule).1 Joseph Juran Born on 24 December 1904. He created the Pareto index2 which is a measure of the inequality of income distribution. especially in the study of income distribution and in the analysis of individual choice. and generalised further to the concept of the Pareto distribution3. human resource management and consulting.314 Tools: The Pareto Principle The Pareto Principle I) History Vilfredo Pareto Born on 15 July 1848. Vilfredo Pareto was educated in both France and Italy. 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. and is known worldwide as one of the most important 20th century thinkers in quality management. Dr Joseph Moses Juran was an industrial engineer and philanthropist who made significant contributions to management theory. Contribution to microeconomics As an economist Pareto made several important contributions to economics and sociology.

Juran is widely credited for adding the human dimension to quality. His trainings primarily targeted top and middle management. the principle focus in quality management was on the evaluation of manufactured product quality. Contribution to quality and management After World War II. In the 1970s. human relations problems were the problems to be isolated. . He worked independently of W. Japanese products began to be seen as the leaders in quality. Juran. easily broken and generally of extremely poor quality. In the United States. For Juran. When Juran began his career in the 1920s. Japan experienced a crisis in product quality. which is why he pushed for the education and training of managers. 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.Tools: The Pareto Principle 315 (“The Treatise on General Sociology”) first published in English under the title “Mind and Society”. Edwards Deming who focused on the use of statistical quality control. the idea that top and middle management needed training found much resistance. Frederick Winslow Taylor’s ideas dominated. It would take some 20 years for the training to pay off in Japan. which would lead to a quality crisis in the United States in the 1980s. and the Shewhart control charts. The tools used were from the Bell system of sampling inspection plans (tables). The Japanese Union of Scientists and Engineers (JUSE) recognised these issues and invited Juran to Japan in 1954. Japanese goods were considered cheap. Resistance to change – or in Juran’s terms cultural resistance – was the root cause of quality issues. he put forward the first social cycle theory in sociology.

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. According to Wikipedia Encyclopaedia: “he is considered one of the founders of the modern.316 Tools: The Pareto Principle In 1966. there were two main periods of war during this time – World War I 1914-1918. For example. Setbacks As shown on the timeline.” Another great theorist of this generation was Albert Einstein. and cosmology. quantum mechanics. In 1979. he founded the Juran Institute. ‘Discovering’ the Pareto Principle It was in 1941 that Juran discovered the work of Vilfredo Pareto. Max Weber’s sociology theories are still considered and applied today. He was the author of the general theory of relativity and made important contributions to the special theory of relativity. but he also wrote much in the field of economics. 80% of a problem is caused by 20% of the causes). and World War II. Periods of war are periods in which intellectual . and improvement.g. anti-positivistic study of sociology and public administration. Juran promoted the Japanese idea of Quality Circles. His major works deal with rationalisation in sociology of religion and government. Juran would expand the Pareto principle to quality issues (e. statistical mechanics. control. and developed the ‘Juran’s trilogy’ which is an approach to crossfunctional management that is composed of three managerial processes: planning. 1940-1945.

Results In general.Tools: The Pareto Principle 317 growth is slowed down. as a result of which we now rely heavily on robotics and other computers to enhance our quality of life. In 1930. In 1941. In 1886. the planet Pluto was discovered – this was a time when mankind tried to look beyond the known planets to place us in the universe. which could be considered an item of luxury at this point in time. during this period there was not the same amount of tolerance toward soft theories. He started life in the Italian state railways. Vilfredo Pareto received an engineering degree from what is now the Polytechnic University of Turin. Technological development During this period there were many inventions related to both human and technological development. which was one of the great steps forward in technology. We can also say that we now have a greater acceptance of softer theories and their implementation in corporate strategy and international governance. we can say that all these developments were major steps towards what we are today. in 1893. he became a lecturer in economics and management at the University of Florence. which is why this paper looks at two men behind this theory – one who created it and the other who popularised the theory. but in 1873 switched over to the iron-industry of his country. Pareto timeline In 1870. he was appointed as a lecturer in economics at the University of Lausanne in Switzerland where he remained for . Later. as resources are used for pure survival rather than for human development. Of course. the digital computer was discovered.

Just 17 years later he died. In 1937. he discovered the Pareto Principle. he came up with the Pareto Principle while working as a professor in Switzerland. His first role was in the inspection branch. In 1924. Joseph Moses Juran graduated with a Bachelor’s degree in electrical engineering. The Pareto Principle Background The principle was suggested by management thinker Joseph M. but never actually managed to. putting it in a different guise as the theory of the vital few and the trivial many. The assumption is that most of the results in any situation are . he moved up to Western Electric/ AT&T’s headquarters in New York. later he was also awarded a degree in law. Juran joined Western Electric at the Hawthorne manufacturing plant in the US. in 1923. In 1966. and in 1979 he founded the Juran Institute which encouraged the research and development of intelligence. It was named after the Italian economist Vilfredo Pareto. We can see from this timeline that the two may have had the chance to meet. he wrote his book “The Quality Cycles”. In 1906. Juran. He states that for many phenomena 80% of consequences stem from 20% of the causes. Vilfredo Pareto’s theory Pareto observed that 80% of property in Italy was owned by 20% of the Italian population. After graduating. He published his first quality related article on mechanical engineering in 1935. In 1941.318 Tools: The Pareto Principle the rest of his life. he was promoted to a managerial position and the following year became division chief. In 1928.

Such a statement is testable. when used to model the distribution of wealth. Examples of this are. is likely to be approximately correct. is a power law probability distribution found in a large number of real-world situations. ” The Pareto Distribution: named after the Italian economist Vilfredo Pareto. He claims that results in any situation are determined by a small number of causes. the Pareto index. it might be better referred to as ‘Juran’s assumption’. Joseph Juran’s interpretation Since Joseph Juran adopted the idea. and few larger ones. 2 3 . The Pareto Index is the parameter α. Another example could be the oil reserves in oil fields – there are a few large fields. One of the simplest characterisations of the Pareto distribution. he or she has no preference for one combination over another. It is one of the parameters specifying a Pareto distribution and embodies the Pareto principle. the smaller the proportion of very wealthy people. 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). for example. and may be helpful in decision-making. The larger the Pareto Index. Indifference curves are a device to represent preferences and are used in choice theory. that is. named after the Italian economist and sociologist Vilfredo Pareto. There are many smaller files. 1 Indifference curves: An indifference curve is a graph showing combinations of goods to which a consumer is indifferent. Pareto Index: “In economics. is a measure of the breadth of income distribution. He states the theory of the vital few and trivial many. which was an observation that 20% of the members of Italian society owned 80% of the wealth. but many small ones. file size distribution of internet traffic which uses the TCP protocol. Outside the field of economics it is at times referred to as the Bradford distribution.Tools: The Pareto Principle 319 determined by a small number of causes.

The Pareto Distribution is a power law probability distribution found in a large number of real-world situations.5 1. at times it is referred to as the Bradford distribution. but to many situations in which an equilibrium is found in the distribution of the “small” to the “large”.320 Tools: The Pareto Principle II) What is it? Pareto Distribution In this paragraph.0 1. 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. Outside the field of economics. 3. and then decreases steadily as wealth increases.5 k=3 k=2 k=1 2.0 2.0 0.0 0 1 2 3 4 5 . we will discuss the Law of Probability Distribution. 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. It can be seen in the probability density function (PDF) graph below.5 0. This distribution is not limited to describing wealth or income distribution.

the logic behind Pareto’s Principle is that most quality problems are the result of only a few causes. 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. This chart shows that only a few quality problems are important. For example. whereas many others are not crucial. we can develop a chart that ranks the causes of poor quality in decreasing order. From this. 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. one tends to find a few causes which account for most of the defect. The challenge is to find the right processes. The trick with this chart is to identify these causes. In this case a tally can be made of the number of defects that result from different causes. A quality guru. .Tools: The Pareto Principle 321 The Pareto Chart This is a technique used to identify quality problems according to their degree of importance. a percentage of defects is taken which can be computed from the tally and logged in a Pareto chart. he discovered this theory and translated it into his time to give us the theory of the vital few and the trivial many. 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. 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. In general. based on the percentage of defects each has caused. In quality management.

Is an easily adaptable and simply theory of the vital few and trivial many.Prioritises tasks.322 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. . and 3. Reminds a manager to focus on 20% that really matters. 2.

Prentice Hall. “Operations Management”. http://www. http://www. University of New Hampshire. Danvers. 31/10/2005 . New Jersey.com/. “How useful is the Pareto Principle?”. “Operations Management”.lifehack. 2002 Larry Ritzman. 2005 Web-o-graphy Juran Institute.html. 03/02/2006 Adrian Savage.juran.org/articles/lifehack/ how-useful-is-the-pareto-principle.Tools: The Pareto Principle 323 III) Bibliography Dan Reid. Wiley Publishers.

economic forces. agents and distributors.324 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. An organisation’s marketing environment comprises: .The micro-environment: external customers. . office technology. etc.. and technological forces.The internal environment: staff.. etc. . analysis of the environment should be continuous and should feed all aspects of planning. These are known as PEST factors. suppliers. wage and finance structure. • Political factors • Economic factors • Social factors • Technological factors . In fact. social forces.The macro-environment: political (and legal) forces. competitors.

ASEAN.Tools: PEST Analysis 325 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.The level of inflation/employment per capita .? II b) Economic factors Marketers need to consider the state of a trading economy in both the short and the long term. when you need to look at: . It is very important that factors such as the following are considered: . etc.What is government policy on the economy? .What is the dominant religion? .How stable is the political environment? . II c) Social factors The social and cultural influences on business vary from country to country.Is the government involved in trading agreements such as WTO.Will government policy influence laws that regulate or tax your business? .What is the local attitude to foreign products and services? .Does the government have a view on culture and religion? . Gross Domestic Product (GDP) per capita. Issues to be considered here include: .What is the government position on marketing ethics? . etc.Interest rates . This is especially true when planning for international marketing.Long-term prospects for the economy.

Customer Relationship Management (CRM). The following points should be considered: . and is a major driver of globalisation.What are the respective roles of men and women in society? .How much time do consumers have for leisure? . via the internet.? .? .Does technology offer companies a new way to communicate with consumers.Does technology enable products and services to be made more cheaply and to a better standard of quality? .? .Do the population have a strong or weak opinion on ‘green’ issues? II d) Technological factors Technology is vital for competitive advantage. banner. etc.Has distribution been changed by new technologies such as books.326 Tools: PEST Analysis . auctions. e. etc.g. such as internet banking. etc. new generation mobile telephones.Do the technologies offer consumers and businesses more innovative product services.Does language impact upon the introduction of products into the markets? .

Economic. and to adapt quickly to the realities of the new environment.Thirdly. It is important for the following main reasons: . PEST is useful when you start operating in a new country or region.Tools: PEST Analysis 327 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.Secondly. the appropriate use of PEST Analysis will help you to avoid taking action that is doomed to failure for reasons beyond your control. Socio-Cultural and Technological environment in which we are operating. By taking advantage of change. . you are much more likely to be successful than if your activities oppose it. . PEST is used by business leaders worldwide to build their vision of the future.First. you ensure that what you are doing is positively aligned to the powerful forces of change that are affecting our world. and . Its use helps you to free yourself from subconscious assumptions. by making effective use of PEST Analysis.

Economic. • PESTLIED: Political. Legal. and • SLEPT: Social. Environmental. Environmental. Economic. International. Technological. Demographic. Political. STEEPLE and SLEPT Some people prefer to employ different ‘flavours’ of PEST Analysis.328 Tools: PEST Analysis IV) Conclusion PEST Analysis is a useful tool for understanding the ‘big picture’ of the environment in which you are operating. Technological. This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves. Economic. Legal. you can take advantage of those opportunities and minimise the threats. Social. The variants are: • PESTLE/PESTEL: Political. Technological. Political. Sociological. Legal. PESTLIED. By understanding this environment. Technological . Economic. Legal. using other factors for different situations. Ethical. • STEEPLE: Social/Demographic. Other forms of PEST: PESTLE. Environmental. and the opportunities and threats that lie within it.

com/Lessons/lesson_PEST.htm http://www.com/strategy/pest/ http://marketingteacher.quickmba.html . Jim.net/methods_PEST_ analysis.com/strategy/pest/ http://www.valuebasedmanagement.Tools: PEST Analysis 329 V) Bibliography Hone. “Analysis of Vertebrate Pest Control (Cambridge Studies in Applied Ecology and Resource Management) Web-o-graphy http://www.netmba.

7% of GDP). By reinforcing these types of market structures. 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%. 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.330 Tools: Porter’s Five Forces Porter’s Five Forces I a) Historical context Looking back at the past. One other factor that discouraged foreign suppliers in the 80s was a significant rise in international shipping costs which affected the global supply chain. In addition. 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”. shortfalls occurred in food supplies. The distortion of market functions created scarcity and empowered monopolistic as well as oligopolistic structures that created further narrow centralisation of economic power. 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.

There was a great need for stabilisation and proper evaluation of potential opportunities and competitive markets. Also. Porter developed the Five Competitive Force Model that would later become an important tool for analysing industry structure in strategic processes. and established five competitive forces which identify potential threats and opportunities either for ‘newcomers’ or for firms already in existence within an industry. . at the beginning of the 80s. Michael E. in the 1980s.” Inspired by this economic situation. As a result.Tools: Porter’s Five Forces 331 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. He implied that the answer to this question lies in understanding the dynamics of competitive structure within an industry. economics was characterised by cyclical growth with the primary objectives of profitability and survival. Porter created a Five Force Model that responded to the needs of the global market place. “A prerequisite for these objectives was optimisation of strategy in relation to the external environment. Porter felt the need to respond to the economic world of the 80s and explain why some industries were more profitable then others.

As a man of various interests. Professor Porter has centralised his focus on how to build a competitive advantage in a region or a firm. Porter also worked on strategy problems in fields different from those in his educational background – music and art.Value chain . in 1969 he graduated from Princeton University with high honours in aerospace and mechanical engineering.Five Competitive Forces analysis . His strategic system is based on six aspects: . As the Bishop William Lawrence University Professor based at Harvard University. Porter is now a “leading authority on competitive strategy and the competitiveness of economic development of nation states and regions”. Michael E. .Market positioning . Throughout life. in 1947.332 Tools: Porter’s Five Forces I c) The inventor of the Five Force Model Michael E.Porter’s clusters for regional economic development Professor Porter is the author of over 125 articles and 17 books. Famous as a football and baseball player in high school. It is currently in its 63rd reprint.Strategic groups .Generic strategies . The book was published in the 1980s and was translated into 19 languages. as well as the leading contributor to strategic management theory. including “Competitive Strategy: Techniques for Analyzing Industries and competitors” which explains Porter’s Five Competitive Forces in his first book on strategy. Michigan. Porter was born in Ann Arbor.

It focuses on corporate strategy that meets various opportunities and threats in an organisation’s external environment. 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. Bargaining power of customers 5. Threat of new entrants 2. 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 . This Five Force Model consists of the following forces: 1. The model discovers sources of competition within the industry and describes external effects due to the same (competition).Tools: Porter’s Five Forces 333 II) What Porter’s Five Force Model is based on understanding industry’s structure and the way it changes. Bargaining power of suppliers 4. Availability of substitutes 3. Moreover. Porter identifies five forces that shape every industry in every market.

These entry barriers depend on following issues: . consumers will easily switch to the substitute. the new entrants could affect the entire market environment.Brand loyalty .Switching costs . The more companies enter the industry.Capital requirements .” Hence.High switching costs .Economies of scale .334 Tools: Porter’s Five Forces . the easier it is for other companies to enter. On the other hand.Current trends . which leads to further reduction of the product price and an increase in buyers’ bargaining power.Government policy .Cost disadvantages independent of scale .Access to distribution channels .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.Close customer relationships . the level of effect the new entrants can have on the market depends on the level of barriers to entry. the higher production capacity becomes.Threat of new entrants: the higher the competition within an industry. there are some factors that could prevent the customer from doing this: . Hence.Product differentiation .Substitute’s performance in relation to its price . 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. In this case.

Bargaining power of suppliers: means that the suppliers have the power to bargain with an industry/buyer to obtain higher prices. threaten with lower quality.High product importance to the buyer/industry .Tools: Porter’s Five Forces 335 . High competition within an industry could lead to lower product prices. and yet unstoppable. Buyers’ bargaining power increases when: .High exit barriers . and therefore lower revenues for each competitor.Lack of differentiation and low switching costs .There are low switching costs to another product .Competitive rivalry within the industry: refers to the intensity of competition between the existing players.Supplier’s customers are fragmented .Bargaining power of customers: depends on the extent to which a buyer can impose pressure on a product’s volumes and margins.The supplier has high fixed costs .Slow industry growth . delivery of larger quantities.High switching costs to another supplier/product . The higher the bargaining power of buyers. Buyers’ tendency to ask for higher product quality and lower prices is constant. etc.Non-existence of substitutes for the product . the lower industry’s average profit.They purchase large volumes of industry’s output . lower margins.The product in not a priority for the buyer .High fixed and/or storage costs . Potential reasons for high competition within an industry are: .Domination of a few suppliers for the specific product .Large number of equally-balanced competitors . This could happen as a consequence of: .

The first one of the two extensions was introduced by Professor Brandenburger then later mastered by Professor John Nash. . for example. “Complementors are companies that sell a product (or products) that complement the product of another company by adding value to them. Intel and Microsoft (Pentium processors and Windows). 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.336 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.

Last but not least. 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. 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. 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. dynamical. . which is rarely the case in today’s highly dynamic world. companies. When Porter’s Five Force Model was created the economy was based on a cyclical growth and two major focuses – profitability and survival. regions. through option analysis. another advantage I find interesting is the fact that the model displays a structured and systematic analysis of competitive situation and market structure. Furthermore. the economy is focusing on much more than that and yet it is more complex and much more intense then the model itself assumes. technological. the model discloses inside information about the potential attractiveness of the industry in the future (due to predictions of economical. electronics. the model ignores other strategies such as strategic alliances.Tools: Porter’s Five Forces 337 III) Advantages and disadvantages of the model The advantages of the Five Force Model can be seen through three major analysis: statical. that could certainly affect the potential market place just as much. Through dynamical analysis. On the other hand. and can be applied to specific market segments. information systems. the model has some major disadvantages that have been reinforced by a number of various critiques over time. by being alerted by competition. or industries. The major weakness of the model lies in its historical context. In the 80s. Nowadays. and political changes). etc. the model refers to classic perfect markets as well as to simple and static market structures. Lastly.

the healthcare industry. . 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.). today. the strawberry industry (Australia). etc. such as the fact that it has become an important tool for analysing industry structure in strategic processes. the wine industry (California). and many others. Mercedes Benz. this model is one that best served its purpose in the 1980s and 90s yet. It has also become a very helpful instrument in entry/competitive strategies as a starting point for further analysis in industries 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. the tourism and aircraft industries. especially in the 80s and mid-90s.338 Tools: Porter’s Five Forces IV) Conclusion In conclusion.UK). That said. However. the clothing industry (Marks & Spencer . The model is also highly favoured by management consultants looking at the current industry/ organisation’s situation and simplified way of understanding it. I would like to briefly highlight some important things about the Five Force Model. Finally. some of the industries that use the Five Force Model as the first step are: the car industry (BMW.

oecd.net/~Resurgence/6Economy. 2004.jhtml?facInfo=bio&facEmld=mp orter&loc=extn http://themanager.pdf http://home.htm http://dor.pdf http://en. International Student Edition. “Sustainable Strategic Management”.E. p 55-59 Stead W. “Strategic Management”.org/dataoecd/0/3/2434995.org/pdf/p5f.att. Stead Jean Garner.edu/fi_redirect.org/DOCREP/003/X6930E/X6930E02.htm http://www.hbs. South-Western. sixth edition.wikipedia.Tools: Porter’s Five Forces 339 V) Bibliography Thomson. Edward. Sharpe Inc. p 72-77 Web-o-graphy http://www. M.org/wiki/Complementors .fao. Hitt-Ireland-Hoskisson. 2004.

e. He also warns that simply being one of the low-cost producers is not enough. too.340 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. . This is probably the most popular of his three strategies. His first strategy is to differentiate products. By making products or services different (that is “better” in the eyes of the customers). 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. and so on. finding a niche. i. Porter’s second strategy is to become the low-cost producer. 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. lower the bargaining power of buyers. a firm may be able to charge higher prices and perhaps deter customers from moving to competitive products or services.

A lot of research has been done recently into the area of product differentiation and low-cost production.Tools: Porter’s three generic strategies 341 II) Marketing and financial performance of Porter’s strategy types In terms of financial and marketing performance. A number of studies have found differentiators achieve a higher return on investment performance than cost leaders. Porter did not say one strategy type would perform more successfully than the others. . The research findings are mixed regarding the comparative return on investment performance of differentiators and cost leaders. while other studies have found cost leaders achieving a higher return on investment performance than differentiators.

is expected to perform well in terms of new markets and new products.342 Tools: Porter’s three generic strategies III) Research findings Porter concentrated on the relationships between marketing and financial performance for each strategy type. Another perceived logical reason for the viability of the combination strategy is that differentiation can lead to the attainment of a low-cost position. Research has shown that Japanese competitors often achieve both low cost and differentiation. with its emphasis on innovation. The differentiation strategy. . 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. 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.

marketingteacher. “Information Systems Management in Practice” (7th Edition).edu/faculty/matthewsc/sbp/bpchecksheet/ sld008. “Marketing Management Analysis.com/strategy/porter.htm http://www.Tools: Porter’s three generic strategies 343 IV) Bibliography Barbara C. Prentice Hall 2006 Philip Kotler.cba. Implementation and Control” 2002 (7th edition) Web-o-graphy http://grahambarlow.pdf http://www. Planning..htm . Ralph H.shtml http://www.uc.McNurlin.quickmba. Spargue JR.com/Lessons/ lesson_generic_strategies.com/Porter_Strategy.

it is essential that customer expectations are properly understood and measured and that. Most of the work to date has attempted to use the SERVQUAL methodology (Parasuraman et al. Brooks et al. Sahney et al. 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. Reynoso and Moore.g.. Given the financial and resource constraints under which service organisations must manage. 1994... 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.. any gaps in service quality are identified. While there have been efforts to study service quality. 1999. . from the customer’s perspective. 1998.344 Tools: SERVQUAL SERVQUAL – a tool to measure quality of service Introduction 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. 1997. Young and Varble. 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. Chaston. 1995. Edvardsson et al. 2004). Lings and Brooks. 1985. 1988) in an effort to measure service quality (e. there has been no general agreement on how to measure the concept. 1997.

In the US and UK alike. 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. changing the American character in the process and making people more sensitive to quality and more willing to have more service in their lives. A commonly used one defines service quality as the extent to which a service meets a customer’s needs or expectations (Lewis and Mitchell. Dotchin and Oakland. College graduates in their late 30s/40s were entering the workplace in prestigious office professions. and much of the general public. Despite the political and economic conservatism displayed amongst yuppies. hairstyles and music. 1990. the 1980s was a time of social and cultural liberalism. luxurious goods. What is service? Service is the unique performance between the buyer (customer) and the seller (service or product provider). holding more purchasing power in trendy. Asubonteng . Other nicknames include “the me decade” and “the greed decade”. it should be positioned in the time when it was created. reflecting the economic and social climate. in the eighties. In the UK in particular.Tools: SERVQUAL 345 I) Overview of service quality In an effort to better understand what SERVQUAL is. Companies who provide better quality can secure a competitive edge. this decade is often referred to as «the decade that taste (or style) forgot». referring to the well-publicised rise of a new middle class within the upper economic strata. 2001). There are a number of different ‘definitions’ as to what is meant by service quality. referring to questionable fashions. «yuppie» entered the lexicon for the 1980s. with no overall consensus emerging on either (Wisniewski. 1994a.

and satisfied customers. If expectations are greater than performance. which is studied here.. expectations. Scheuing.Each service may be different because it is not to be repeated . Thus. higher revenues. is the most common method for measuring service quality. and to establish clear standards for service delivery. Products do not exhibit personalities. One important question persists: why should service quality be measured? Measurement allows for comparison before and after changes. infrastructure. However. but service must consider human behaviour. Wisniewski and Donnelly. and processes. to identify quality-related problems. 1990). managing service quality is similar to managing manufacturing quality (Eberhard E. or cultural values. in their experience.. 1996. They all belong to TQM: Total Quality Management consists of three basic management components – foundation. Service quality can thus be defined as the difference between customer expectations of service and the perceived service. 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. 1996). . These are essential both in managing service quality and in manufacturing quality. then perceived quality is less than satisfactory resulting in customer dissatisfaction (Parasuraman et al. for the following reasons: . the starting point in developing quality in services is analysis and measurement.Service quality involves human behaviour. (1994) state that. measure.346 Tools: SERVQUAL et al.. Edvardsen et al. The SERVQUAL approach. 1993). 1985. and execute consistently. service quality is more difficult to manage than manufacturing quality because service quality performance is more difficult to define. The major goals of TQM are to have lower costs. Lewis and Mitchell.

. Excellent service quality can help companies to differentiate their products from those of their competitors. heterogeneity and inseparability from production and consumption (Parasuraman. Collier. 1993). Zeithaml and Berry. a service is more complicated to design. rare. and manage. but most manufactured products are identical. . . “Excelling at service/quality is also the toughest competitive strategy to implement and the most difficult for your competitors to duplicate” (Eberhard E. Therefore. 1994) If the company can provide better service quality. The need for services differs from customer to customer with no situations reoccurring. it can develop a unique capability which is valuable. . and difficult to imitate. Product quality seems to be different than service quality because products are tangible. How can service quality be measured? Service quality has three unique features: intangibility. Scheuing. it is more difficult for a customer to have a concrete expectation for a service. unlike manufactured products.It is more difficult to forecast human behaviour in a service setting than to forecast product demand in a manufacturing setting.Compared to a product.Tools: SERVQUAL 347 exactly. deliver. homogenous and standardised. Certain standard procedures can be . The best way to achieve comparative advantage in the market is to provide better service quality. this company can gain and maintain a competitive advantage.Service has less error margin than manufactured products because there is no lead time between service production and delivery (David A.Standards of performance require more human and qualitative factors when performing a service than when producing a product. 1986).

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. but individual needs have to be considered to adapt services to their requirements. .348 Tools: SERVQUAL established in order to achieve a more homogenous service.

Zeithaml and Berry 1986).Tools: SERVQUAL 349 II) SERVQUAL SERVQUAL comprises a model developed by Parasuraman.Reliability . the researchers asked about the characteristics a service provider should have in order to attain high quality.Tangibles . 10 being agrees strongly . The level of service quality is the difference between the perceived service and the customer’s expectation. It concentrates on the notion of perceived quality. it is necessary to establish a good method for evaluating service quality and to know what kind of service customers want. the researchers developed a survey so that a more complete scaling system could be achieved.Responsiveness . Using these findings.Empathy To gather information on both the customer’s expectations and perception. the survey could ask for a customer’s expectation about a particular aspect. the researchers found that these ten dimensions overlapped and that customers could only distinguish five dimensions (Parasuraman.Assurance . they created ten quality dimensions. This perception of service quality builds from attitudes developed by customers over time towards a product or service. Zeithaml and Berry (1986) which helps measure service quality via a series of steps. By means of research conducted with focus groups. rating it on a scale of 1 to 10. The other element present concerns consumer satisfaction that has actually been achieved by using a product or service. They established that all of the members of the focus group consistently had similar criteria. Therefore. For example. “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). We can measure service quality in five dimensions: . Later.

. We now have ten dimensions. Then. 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. Nowadays. This was repeated with 90 pairs of items. the difference between expectation and perception could be calculated . using the same rating system. Having obtained both ratings. there are no longer five dimensions as they have been changed and applied to today’s market and customer’s expectations. a question could be asked on the customer’s perception.350 Tools: SERVQUAL with the statement and 1 disagrees strongly.

equipment. 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.Tools: SERVQUAL 351 Quality dimension Tangibles: Appearance of physical facilities. 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 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 .

or doubt .352 Tools: SERVQUAL Quality dimension Courtesy: Politeness. credibility. honesty of the service provider Security: Freedom from danger. respect. risk. 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.

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 .by telephone? . Keeping customers informed using a language they can understand • When client contacts service point.Tools: SERVQUAL 353 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 email? • Are service access points conveniently located? Communication: Listening to customers and acknowledging their comments.

Then it is up to the company strategy to define in which dimension they would be more performing the best. The first phase eliminated items that had a low alpha coefficient. The customer’s experience with the company reveals that the products are consistently arriving past their promised date. considering mean and distribution. responsiveness. timeliness. thus confirming that the dimensions extracted were correct.354 Tools: SERVQUAL 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. These categories had a low correlation between them. In this case. The company could put greater effort into achieving the customer’s expectation thereby improving its service quality. Once the dimensions have been determined. perception registers lower than expectation. These dimensions were later defined as the following: availability. The aim of these measures is to reduce the gap between expectations and perception to 0 at least. completeness and pleasantness of support. This tool was used by the researchers because previous studies established that this was a good way to examine the quality of an instrument. 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. calculations can be performed for each of them. Factorial analysis was then performed to group the survey items into common categories. which will result in a negative value for their difference. .

2002) . Curry. Luk and Layton. 1985..Tools: SERVQUAL 355 Conceptual model of service quality Word of mouth Communications Personal needs Past experience Consumer Expected service Gap 5 Gap 6 Perceived service Provider 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. 1999.

. If gaps are present in the preceding items. 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. 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 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. there may be a difference between the planned service and the actual delivery.Gap 3: Delivery Gap: Although specifications have been created to ensure services meet customers’ needs.Gap 4: Communication Gap: Companies must make an effort to communicate the purpose of their services and attributes to make them appealing to customers. than the difference here will be great.Gap 1: Knowledge Gap: The company works on creating processes and services that appeal to customers’ expected service. Brief explanation of gaps: . Miscommunication by the company or word of mouth from other customers can cause significant damage to efforts to approach customers and achieve satisfaction. or lack of communication by clients.356 Tools: SERVQUAL This model is useful to perform a gap analysis between each of the individual elements. inadequate training. . The customer will . . This might be caused by variations in worker performance. .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.

3.Gap 7: Discrepancy between employees’ perceptions and management perceptions: as a result of differences in understanding customer expectations between managers and service providers. In the following. According to Brown and Bond (1995). 6 and 7) are identified as functions of the way in which service is delivered.Tools: SERVQUAL 357 probably not use the service again and word of mouth to other customers will damage the company’s reputation. 4. the SERVQUAL approach is demonstrated. The first six gaps (1. . as such. whereas Gap 5 pertains to the customer and. The gap on which the SERVQUAL methodology has influence is number 5. is considered to be the true measure of service quality.Gap 6: Discrepancy between customer expectations and employees’ perceptions: as a result of differences in understanding customer expectations by front-line service providers. 2. and tasks associated with service delivery to customers. The model identifies seven key discrepancies or gaps relating to managerial perceptions of service quality. «the gap model is one of the best received and most heuristically valuable contributions to the services literature». . .

Professionalism and Skills . 1987. He focused mainly on the functional rather than the technical issues (Gronroos. proposing dimensions which are close to those developed in the SERVQUAL model: .358 Tools: SERVQUAL IV) Other tools and theories about service quality Gronroos’ Dimensions In 1990.The service element .Reputation and Credibility Let us take a closer look at the dimensions that differ slightly or more from the SERVQUAL model. Gronroos defined six criteria to measure service quality. Gummesson revisited the SERVQUAL model by giving more credit to the tangible aspects of the service.Reliability and Trustworthiness . 1990). he/she will become even more loyal than they were before the complaint (Fornell and Wernerfelt.Accessibility and Flexibility . 2004). Gummesson’s Dimensions In 1992.Attitudes and Behaviours .The tangibles element . Gronroos also considered Recovery (how the company makes sure that the customer stays in control when something goes wrong. Some other authors gave credit to Gronroos’ Recovery dimension by estimating that when a complaining customer is persuaded to continue business with an organisation.The software or information technology elements . He simply considered three dimensions for evaluating a service: . 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.Recovery . The first one is Accessibility and Flexibility. 1988).

functionality. 1995) tried to go further by proposing an adaptation of the SERVQUAL typology to each service industry. 2000). and feedback). As an example. service personnel. The specificity of Gummesson’s research is the importance given to the tangibles elements. other people). performance. some . They can be estimated by three kinds of perspective: goods (reliability. integrity and user-friendliness). The SERVQUAL dimensions give a means of measuring the quality of the content of the service. constraints. Gummesson’s views have been validated by other writers who also believe in the importance of tangible aspects of service. mapping. 2000). customer control. Schneider and Bowen. aesthetics. the physical aircraft (tangibles). for software elements. Therefore. and the information technology (software). affordability. it does not make any difference in the form taken by this service. features. and environmental (ambient factors. However.Tools: SERVQUAL 359 He then gives a list of criteria that the customers will use in order to estimate the quality of the service delivered. 2004). The criteria related to the service elements are very close to those in the SERVQUAL typology. knowledge needed. He gives us the example of an airline flight. conformance. and aesthetics). Finally. (Benjamin Schneider and Susan White. 1992. The customers assess the quality by the service provided by the crew (service). psychological (visibility. service ability. which might not differ from one service to another. other customers. the criteria focus on estimating how the IT elements help the customer (reliability. tangibles could refer to the facilities for a sport centre and to an aircraft for an airline company. Content and form Some researchers (Gumesson. extendibility. They definitely affect customer behaviour (White and Schneider. as well as their perceptions of the organisation (Zeithman and Bitner.

For example. . 1995). the dishes. measures the ability and willingness of the personnel to give information about the menu.. DineServ. the SERVQUAL adapted to the restaurant industry. their ingredients. and methods of preparation (Stevens et al. instead of measuring the ability of the staff to answer questions.360 Tools: SERVQUAL authors developed typologies similar to SERVQUAL in order to be closer to the reality of each industry.

the study of service quality is both important and challenging. 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. this is not the only tool available to assess the quality of a service.Tools: SERVQUAL 361 V) Conclusion SERVQUAL is a useful tool to establish customers’ expectations and perceptions by grouping them into quality dimensions. its development concept could be used to create scales adapted to particular service needs. Although SERVQUAL has a fixed structure. The measurement of service quality can provide specific data that can be used in quality management. 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. Future efforts should continue to advance the understanding of the concept and the means to measure and improve it. Knowing how customers perceive service quality and being able to measure service quality can benefit industry professionals in both quantitative and qualitative ways. hence. service organisations would be able to monitor and maintain quality service. However. Assessing service quality and better understanding how various dimensions affect overall service quality would enable organisations to design the service delivery process efficiently. Generally speaking. . This helps organisations focus on efforts to develop services that fit customers’ requirements.

Vol. Brown. 30. No. The Service Quality Handbook: pp. 3-16. 6. «SERVQUAL revisited: a critical review of service quality». Eberhard E. «The internal/external framework and service quality: Toward theory in services marketing». pp. February. Zeithaml and Berry. .N. Parasuraman. July 2000. 25-39. 19. and William F. K. Johnson. P. M. and Bond. Scheuing. 62-81. R. Line Lervik. No. Scheuing. Eberhard E. 49-67. «Internal marketing and customer drivenwavefronts»..U.. Christopher. Collier.362 Tools: SERVQUAL VI) Bibliography ASI Quality Systems (1992). pp. (1986). Journal of Services Marketing. (1994). E. and Swan. David A. The Service/Quality Solution – Using Service Management to Gain Competitive Advantage: pp. and William F. Brooks.F. American Supplier Institute Inc. (1996). Quality function deployment – Practitioner workshop. Anders Gustafsson. 10. Servqual: A MultipleItem Scale for Measuring Customer Perceptions of Service Quality: p. The Service Quality Handbook: p. 15. 4. (1993). Service Industries Journal. Tor Wallin Andreassen. Journal of Marketing Management. III (1995). Gronroos (1990) Service Quality: Research Perspective Benjamin Schneider and Susan White (2004) Service Quality: Research Perspectives Michael D. J. Jaesung Cha.. S. Vol. I. Lings. USA.E. McCleary. (1999). pp. 5-29. Christopher. (1993). The evolution and future of National Customer Satisfaction Index Models. Asubonteng.A. and Botschen.W.J.

J. 27-42. International Journal of Quality & Reliability Management. «Using SERVQUAL to assess customer satisfaction with public sector services». Dotchin. Vol.com/methods_zeithaml_servqual_ fr.6. http://www.pdf#search=’SERVQUAL’. «Total quality management in services: Part 2 Service quality».Tools: SERVQUAL 363 Wisniewski..A. pp. Managing Service Quality.few. J. No.html http://www. (2001).S. and Oakland. (1994a). Web-o-graphy http://www. 3. 380-388. Vol.11.edu/~geigerr/Servqual/servqual. 11..nl/few/people/vaniwaarden/ publications/0009.ppt .12manage.eur. M.nku. No. pp.

born 24 October 1932 in Salt Lake City. selling over 15 million copies in 38 languages. social. Forbes named it as one of the ten most influential management books ever. It should also be clear that “effective” is applicable to all possible walks of life. and a DRE in Church History and Doctorate from Brigham Young University. 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. family. In addition. is the author of the bestseller “The Seven Habits of Highly Effective People”. it is de facto not a management book.364 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. Covey has . Covey (figure 1). I b) The author Stephen R. Utah. In 2002. etc. in addition. an MBA in Business Administration from Harvard University. religion. 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. and who enjoys living a very balanced and effective life. He has spent most of his career at Brigham University as professor of organisational behaviour and business management. and is a partner in the Franklin-Covey Corporation. Utah. Covey is the founder of the Covey Leadership Center in Salt Lake City. which makes planners and organisers and. It is a book that will be a ‘companion for life’ for anyone wanting to understand how to be an effective human being. be it business.

has been awarded four honorary doctorate degrees. In fact. it could be argued that the habits actually run counter to basic human nature. have utilised the seven habits. However. by working hard to internalise these seven habits we are able to develop a proactive attitude. He is read by a wide-ranging audience. 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. But also. from highpowered executives to ordinary people leading ordinary lives. 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. The Seven Habits is not based on original thoughts. his books also emphasise family and personal leadership. The author tries to help others bring proficiency into their lives. but adds that they are not necessarily “common practice”. as human beings. to a greater or lesser extent. we are capable of much higher thoughts and actions and. “you cannot really argue against them”.Tools: “The Seven Habits of Highly Effective People” 365 received the Thomas More College Medallion for continuing service to humanity and. especially within the context of business and management. that is. we can take charge of our own destinies and are capable of exerting influence on other people for the collective good. He believes the principles themselves to be “self-evident”. . By so doing. in addition. principle-based leadership. By our very nature. According to Covey. Covey says that the habits are “common knowledge”. we are reactive creatures and are inclined to act mainly out of self-interest. to sustain their success. and enduringly effective organisations. He claims they are to be found in all the major world religions. His view is that all highly effective people.

g. 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. Kaizen) and Continuous Process Improvements. A summary of critical notes can be found in section 5. to use Covey’s words.366 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.1 of this book. idealistic methods. people can become frustrated at the failure of the habits to place situations within their sphere of control or circle of influence. The late 1980s and management studies In management. When confronted with situations that contain elements that are outside the sphere of their personal influence. . Continuous Quality Improvement (e. Covey is sometimes said to preach impractical. In conclusion.

Exercising habits 4. In order to remain at the highest level in Covey’s framework. which is explained in habit 7 of the framework. 7 Sharpen saw Interdependence Understand Synergize 5 6 PUBLIC VICTORY Think win-win 4 Independence 3 1st things 1st PRIVATE VICTORY 1 2 Be Proactive End in mind Dependence Figure 1: From dependence to interdependence . Habits 1. a person needs to “sharpen the saw”. 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. having become liberated in a sense that he or she is independent rather than dependent. 2 and 3 focus predominantly on the self.Tools: “The Seven Habits of Highly Effective People” 367 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. 5 and 6 will ultimately bring a person his or her public victory. Exercising these habits will bring the user his or her “private victory”.

weeks and months this stroke of luck repeats itself again and again. This can be extrapolated to our personal relationships and business lives. The interaction of two or more agents or forces so that their combined effect is greater than the sum of their individual effects. The goose. adj. cooperative interaction among groups. 4. Useful definitions To read and understand the book well. operative. making a striking impression. n. of habere. to have].. he finds there are no eggs.. Effectiveness lies in the balance. 2. 3.368 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’. 1. characteristic condition of mind or body. 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. producing a desired result. it is helpful to understand the following definitions: • hab-it (hab’it). that creates an enhanced combined effect . easily. disposition. In this story. the eggs are referred to as the Product (P). Of course. and thus no future wealth. 1. equipped and ready for combat. efficient. is the Production Capacity (PC). 5. 5. habitus. 4. hence. having an effect. which Covey calls the P/PC balance. impressive. custom. as a soldier or ship • syn-ergy (syn-er’gie) n. 2. especially among the acquired subsidiaries or merged parts of a corporation. practice. pp. a usual way of doing • ef-fec-tive (a-fek’tiv. in effect. This is the story of a poor farmer who one day finds a golden egg in his basket of goose eggs. 6. During the following days. . i-). on the other hand. a thing done often and. [OFr. 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). < L.

beside + deigma example < deiknynai. or determined by something else. etc. a pattern. dependence on each other. mutual dependence. [<Fr. influenced.n. 3. controlled. 4. • interdependence (in’ter-di-pen’dens). relying (on someone or something) for support or aid. 1. GR < para.Tools: “The Seven Habits of Highly Effective People” 369 • par-a-digm (par’e-dim. free from the influence or control of others. adj. 2. adj. n. self-determined. example. self-reliant. hanging down. -dim’). Source: “Webster’s new world dictionary of the American language” . < LL. subordinate • independent (in’di-pen’dent). to show]. 1. or model • dependent (di-pen’dent).

as human beings. man has the freedom to choose”. or aggressive. Being proactive means taking the initiative ourselves.e. the environment. who recognised that “between stimulus and response. does not mean being pushy. selected and internalised values. conditions. Covey mentions the Austrian psychiatrist Viktor Emil Frankl (1905-1997). Although Frankl’s outlook on life was so restricted during his time in the concentration camp. Covey differentiates between reactive. and independent will (the ability to act based on self-awareness). however. 1 (1856-1939). a follower of Sigmund Freud1 and a survivor of a World War II concentration camp. conscience (an inner awareness of right and wrong). But it does mean recognising our responsibility to make things happen. the wellknown godfather of (the) psychoanalysis . 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). 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. In his book. He labels this our “social mirror”. circumstances. psychic determinism (your upbringing and childhood experiences mould you) or environmental determinism (environmental factors are responsible). Covey mentions that a person has to overcome his or her sense of determinism. i. and proactive people who are driven by carefully considered. Taking the initiative. be it genetic determinism (you inherit your personal tendencies and character). obnoxious.370 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. people driven by feelings. In addition.

But. If we cannot then it lies within our Circle of Concern. we can do something about that. Figure 2 illustrates this concept: Circ le of Concer n 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. the current bird flu in Asia concerns people although we cannot do much about it. Proactive people focus their efforts in the Circle of Influence. changing our methods of influence and changing the way we see our no-control problems are all within our Circle of Influence. For example. 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. if our neighbour beats his wife up. Reactive people focus their efforts in the Circle of Concern. Covey refers to the possible outcome as an individual’s Circle of Concern. Changing our habits. If we can do something about it.Tools: “The Seven Habits of Highly Effective People” 371 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. it lies within our Circle of Influence. A part of this circle is known as the Circle of Influence. .

or we are the second creation of other people’s agendas. The key to the ability to change is a changeless sense of who you are. but we will only be effective if we begin with the end in mind. First. We may be busy. Covey states that management is doing things right. This refers back to Habit 1. and the basic direction from which you set your goals. or of past habits. while leadership is doing the right things. We are either the second creation of our own proactive 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. . what you are about.372 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. which means that leadership is the first creation. we may be efficient. of circumstances. Covey labels this as “re-scripting”. people should not get straight into managing with efficiency but should start by setting and achieving goals before even clarifying the values. According to the second habit. the vision and values which direct your life. Once you have a sense of mission. There is a first creation to every part of our lives. 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. then there is the physical or second creation. Management is the second creation. be proactive. Leadership and management Habit 2 is based on principles of personal leadership. there is the mental or first creation. and what you value. you have the essence of your own proactivity.

and power. As a principle-centred person. fundamental truths. . one tries to stand apart from the emotions of situations and from other factors to evaluate the options. 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. and generic common denominators. guidance. He mentions.Tools: “The Seven Habits of Highly Effective People” 373 At the centre of our lives Whatever is at the centre of our lives will be the source of our security. wisdom. classic truths. Covey mentions possible different centres which should all be partly at the centre of our lives but not the centre de facto.

Effective management is putting first things first. PC activities. Urgent Important Quadrant 1. pleasant activities Not important Quadrant 3. popular activities Table 1: Tool for understanding how to prioritise in life .374 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. recreation Quadrant 4. some mails. some calls – calls – reports – meetings. time-wasters. Proximate. Activities: prevention. Activities: trivia. some calls. pressing problems. Activities: crises. deadlines. 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. busy work. Covey offers us the following tool in table 1 which will help us to put first things first. recognising new opportunities. pressing matters. relationship building. planning. deadline-driven projects Not urgent Quadrant 2. Activities: interruptions.

Time management Time management. and demand instant reaction. no priorities and no focus on Quadrant 2 activities 3. later form. limited. Effective people invest more time in Quadrant 2 activities. . comes in four stages: 1. no dates. limited. comparing the relative worth of activities. according to Covey. Prioritisation – clarifying values. The only way to get time for Quadrant 2 is to limit time spent in Quadrants 3 and 4. partially limited due to the lack of focus on Quadrant 2 activities 4. priorities and no focus on Quadrant 2 activities 2. 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. Calendars and appointment books – later form. Preserving and enhancing relationships and accomplishing results – incorporates all of the above including Quadrant 2 activities. Notes and checklists – earliest form. Important matters contribute to our mission. 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. If this does not work.Tools: “The Seven Habits of Highly Effective People” 375 Urgent matters are usually visible.

Covey distinguishes between so-called gofer delegation and stewardship. too. Covey mentions that time management is still mainly practised on a daily basis. Stewardship delegation. is focused on results rather than methods. i. Then an efficient Quadrant 2 manager schedules his tasks and during their execution adapts on a daily basis. the PC one interacts with. e. father and fellow Christian in one’s religious society. go for that. Gofer delegation often results in one-on-one supervision of methods and is. In this respect. upfront mutual understanding and commitment regarding expectations in five areas: 1.e. as husband. It gives people a choice of method and makes them responsible for the results. then to select the goals to be pursued while acting in that role. it is necessary to identify the key roles it takes. i. He argues that it is important to be constantly aware of one’s personal mission statement. success should be achieved in all the various roles in life.376 Tools: “The Seven Habits of Highly Effective People” How do Quadrant 2 managers manage? First. In addition. ineffective. Consequences . in effect. Desired results 2. as manager in the office. by making a plan for the day ahead. Stewardship delegation involves clear. Covey refers to the importance of balancing one’s life. The accomplishment of tasks is done through delegation. Resources 4.e.e. Accountability 5. on the other hand.g. In addition. and preferably to have it portable and always within reach. and tell me when it’s done”. do that. do this. he advises the reader to make a weekly plan. either to time or to other people. which is not the custom for most people. i. reiterates this process whilst focusing at all times on the people. Gofer delegation means: “Go for this. Guidelines 3.

they go hand in hand.Tools: “The Seven Habits of Highly Effective People” 377 In essence. 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. Sound corporate backing. Habits 1. In Covey’s words. on the other hand there is resistance simply because change and resistance are implicit. the desired result. the consultant’s eventual objective. who take the initiative to do whatever lies in their reach to get the mission done. The reactive consultant will not have an effect or will follow the path of least resistance. Beginning with the end in mind means a management consultant needs to focus on a solution. as a manager you say: “I trust you to do the job. 2 . no advice is of any effective . sound backing. the consultant responds in a deterministic way. to get it done”. People who end up with the correct solutions are the proactive ones who. Bearing this force field in mind. 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. training and corporate beliefs are vital in this respect for a management consultant. No task. based on their personal and corporate baggage. to the path of least effort. In my opinion. provide solutions to problems. no solution. training and corporate beliefs increase a consultant’s Circle of Influence. break it down into day-to-day tasks while always keeping the link with the goal. not being able to make an effective change irrespective of the direction he eventually chooses. Habit 2 (begin with the end in mind) and management consultancy As a management consultant you need the ability to always see the end. On the one hand. there is a request and desire for some form of change but. stewardship means a job with trust.

. By identifying regularly where you as a consultant are spending time. 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. In that respect. In addition. 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. as you move towards a management role as a consultant. a strong consultant needs to break down this barrier of reluctance and make sure expectations are well synchronised. As a junior consultant. 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. 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. you can learn to steer and correct ineffectiveness. there should be a greater emphasis on Quadrant 2 activities.378 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. simply because you have no choice. a management consultant can avoid being trapped in time-wasting 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. In my opinion. I personally believe in lots of early investment in clarifying goals and ultimately defining a scope. I would expect you to be spending a lot of time in Quadrant 1. However. using Covey’s time-management grid.

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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.

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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.

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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.

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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.

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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,

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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.

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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

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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.

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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

g. To neglect one area has a negative impact on the rest.” Balance in renewal Sharpen the saw or the renewal process must include a balanced renewal in all four above-mentioned dimensions of our lives. The social dimension is developed primarily through our relationship with other people. Treat a man as he can and should be and he will become as he can and should be. value-based independent individuals. Covey recommends helping others by scripting them as principle-centred. 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. In addition.388 Tools: “The Seven Habits of Highly Effective People” one a month. he recommends writing. experiences and insights. . keeping a journal and writing down thoughts. In this respect he quotes Goethe who said: “Treat a man as he is and he will remain as he is. The daily Private Victory is the key to the development of the seven habits and it is completely within everyone’s Circle of Influence. e.

improved incredibly whilst the performance of the real “smart” group. by engaging others in the right way. In particular. With respect to this. in my opinion it is vital for any working person. a consultant will be able to improve overall performance. the consultant stays attractive to the market. By so doing. by effectively scripting others. . from worker to executive. it is apparent that looking after your physical dimension is important. As the job of a (management) consultant has the potential to be both satisfying and draining. Lots of stress and fatigue require a counterbalance for a consultant to stay healthy both physically and mentally. This practice also offers personal satisfaction as learning for most intelligent human beings means becoming a more complete and satisfied human being. to sharpen his or her physical and spiritual saw regularly. who were mistakenly treated as the smart group. mistakenly treated as the dumb group. After a while the mistake was recognised but astonishingly the results showed that the real “dumb” group. With respect to this.Tools: “The Seven Habits of Highly Effective People” 389 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. it is important to sharpen the social saw. A very interesting aspect of this is Covey’s approach to scripting others. a management consultant needs to be able to communicate effectively on a social level with all people on the work floor. not only a consultant. It became a self-fulfilling prophecy of those scripting others. This is sharpening the mental side of the saw. mentally and physically. However. mistakenly mixed up with respect to the good and bad performers. the more effectively one engages with others the better the results and personal satisfaction will be. He gives the example of two school classes. and gain respect and sympathy. had lowered significantly. Being a consultant means working with a wide variety of different people during your career. In order to feel comfortable with most people.

too driven and arguably slightly unbalanced. Some people deliberately do not have the best intentions towards others. He gives the impression that each one of us can change by applying the right principles (living the seven habits). order. When we read the phrases about the sounds of love 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. Throughout the book the reader becomes really convinced that Covey believes in general in the good of mankind. but I believe it is a sign of reality and awareness. meeting needs. It becomes even more obvious by simply looking at the vast amount of unethical business books currently on the market. developing talents. Covey’s enthusiasm for his own framework can be overdone and one loses a sense of objectivity when reading certain parts of his book. sometimes the book is too oriented towards an American public. For example.390 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. responsible independence. too. cooperation. Covey: First of all. helpfulness.” Personally. It is a sign of pessimism to argue against this. showing interest in each other’s talents. (It is strange to read that most people buy these books on the . but are blatantly selfish. etc. I feel this comes across as slightly exaggerated. 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. he writes the following about a personal mission statement: “In our home. greedy.

Critics claim Covey over-intellectualises management philosophy. In addition. If this was not the case. Covey seems to ignore this and even brushes determinism aside. making it look insignificant.” By displaying a covertly promotional stance in corporations like IBM. The following passage is a good example: “I am always intrigued whenever I go to IBM and watch the training process there. e. Dr Lauras and Ophreys all trying to help others to live according to similar universal lessons associated with sane human beings. excellence. The seven habits book is non-academic and by no means can the habits be said to be situated on a high intellectual pedestal.Tools: “The Seven Habits of Highly Effective People” 391 excuse of better understanding their rivals at work. To live according to the seven habits framework.g. Time and time again. These things represent the belief system of IBM. Sometimes. It is very hard to co-operate with unethical. let alone change them. this book would not have sold over 15 million copies. etc. unstable childhood. . Some groups accuse the author of covert promotion. TV airtime is saturated by the Dr Phills. I find this unjust and possibly even offensive to certain people. Covey’s ignorance to address this in his book is frustrating. I think requires a mature and strong mind-set. I see the leadership of the organisation come into a group and say that IBM stands for three things: the dignity of the individual. I personally believe that lots of people experience major disadvantages in life. Covey makes it look too easy. greedy and selfish people. which would seem both true and obvious when reading the book. courses and TV shows. Covey loses objectivity. there would not have been such an enormous market for psychological self-help books. unbalanced culture and upbringing. and service. I do not understand this critical note I found on the internet. In fact.

to me. According to George A. wrote the “Seven Habits of Highly Effective Teens”. most likely. although it is generally perceived as one. this is not an objective view. seven is the magic number with respect to limits on our capacity for information processing. Miller. a management book. or the “33 strategies of war”.392 Tools: “The Seven Habits of Highly Effective People” Covey published a follow-up book on the eighth habit. irrespective of the fact that. per se. By placing emphasis on the good and ethical values in life. Seven habits are manageable – they are easy to remember and to exercise. his son. In my opinion. 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. it has the power to change attitudes. It appears to have become an effective family habit. without a doubt Covey’s credibility will start to become eroded. One could argue that the Coveys are milking their cash cow. how inappropriate are “37 very effective ways to beat stress”. it is a practical book with lots of examples that are applicable to everyday life. or “35 rules to becoming a perfect seducer”. In addition. Conclusions “The Seven Habits of Highly Effective People” is not. Sean Covey. By publishing even more follow-ups. . For example. this is an ethical guideline which is has been (and continues to be) read by millions of people and managers. its applicability. The book is cleverly written – Covey adopts a non-academic approach which inspires and captures the reader’s interest right from the first page. Any more laws or habits and it starts to lose its trustworthiness and.

” said the person in the woods who had spent five hours trying to saw down a tree. “I am too busy sawing”. the book should be treated as a companion in the long run. The seven habits are not easily adopted and. 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.Tools: “The Seven Habits of Highly Effective People” 393 As one person from Sri Lanka wrote in a blog (web-log). . In Covey’s own words. even if they can all be mastered to an acceptable degree. “I don’t have time to sharpen the saw. the reader will be making the mistake of not sharpening his saw.

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

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Shareholder value is created when a company generates free cash flows in excess of the shareholder’s investment in the business. 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. The ultimate goal of the shareholder value approach is not market share. Shareholder value is the difference between this investment from equity funds and market capitalisation plus dividends. and market capitalisation is a good and effective surrogate for the free cash flows. change in total assets over the base period is reduced by change in borrowings to give net equity funds invested in the company. It is also more relevant in today’s world where ‘share price’ is the key. For a typical business unit. the discounted value of the projected sale price of the business at the end of the tenth year. and perhaps the only. . arbiter. 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 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. These funds are either from retained earnings and/or from new equity issues. maximising cash flow can be estimated by adding the discount value of projected cash flows (inflows and outflows) for the next ten years. Thus. but rather to maximise discounted cash flow.396 Tools: Shareholder value approach Shareholder value approach I) What is it? The concept of shareholder value is a recurrent theme in today’s business.

The shareholder value approach theory follows the strictly economical approach that managers act as fiduciaries for the owners of the company as principals. The fundamental principle would be that a company only adds value for its shareholders when its returns on capital exceed its cost of capital. and the managers as agents acting on their behalf. as long as these decisions and the resulting actions are within the bounds of law. . This implies that every decision by management should be made with the intent of maximising the shareholder’s wealth.Tools: Shareholder value approach 397 II) How does it work? Shareholder value essentially looks at the value attributable to the company’s shareholders. they should either be monitored or given financial incentives. To ensure that management acts in the owner’s interest.

The principal requirement of shareholders. as rewards for their investment. which have been used for years. growth and opportunity. Companies that are shareholder-value-oriented realise which activities contribute most to value.398 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. to create shareholder value approach is to embark on a journey to map day-to-day strategic actions for continuous value creation. are sufficient to analyse the company’s performance? The trouble is that they are not. was a regular stream of dividends. 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. However. . such as earnings per share (EPS). Numerous studies carried out over time have shown that there is little empirical evidence of any correlation between earnings growth and share value. 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. Broadly.

aspx . B. Ivey Business Quarterly. W.valuebasedmanagement. Web-o-graphy http://www. CFO Dimma. Journal of Business Ethics. May 1991. B.com/news/12_28_2002.xml http://www.investordictionary. “Putting Shareholders First”. Autumn 1997. Financial Times Magazine.com/shareholder_value/atom.. Kay.net/ faq_what_is_value_based_management. H. Vol.htm http://www. “More Power to the Shareholders”. “Ethic of DU Pont’s CFC Strategy 1975-1995”. “Cingular 41 Billion Bid snatches AT&TW”. D. p 56-59 Smith. 1998. p 557-568 Roberts. July 1995.Tools: Shareholder value approach 399 IV) Bibliography Birchard.html http://www..pdinstitute... 18 Feb 2004. “How many masters can you serve?”. Management Today.com/definition/ shareholder+value. 17..juergendaum.

3. map it in four to five high-level steps (make it measurable). flip charts with headings (S-I-P-O-C) written on each.400 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. Identify the suppliers of the inputs that are required by the process. . Create an area that will allow the team to post additions to the SIPOC diagram. 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. Begin with the process. or headings written on Post-it notes stuck on a wall (make it simple. Identify the inputs required for the process to function properly. This could be a slide (to be projected by an overhead). clear and measurable). 4. 2.

6. Care must always be taken to involve as many players as possible in the process game. too). . because new items can always be added in every category. Below is an example of a SIPOC diagram used in an electrical appliances shop process. 7.Tools: SIPOC diagram 401 5. Identify the customers who will receive the outputs of this process (do not forget the internal customers. so that every step remains under control. Verify with the project sponsor and the other stakeholders involved. Identify the outputs of this process (internal and external). Therefore it is useful to remember point 1 of the steps to follow.

Example of a SIPOC diagram Electro shop Suppliers • Manufacturer • Supplier • Electro supplier • Soap supplier • Insurer (warranty) • Printer • Dishwasher • Soap • Worksheet • Warranty sheet Inputs Process Outputs Customers 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 402 .

com.asp http://www.uk/forum/ viewtopic.au/hcisite2/toolkit/causeand.asp http://quality.html http://www.Tools: SIPOC diagram 403 Web-o-graphy http://www.ph/tools/SIPOC.com/library/content/c010429a.uk/improvement_guide/ html_data_handling/data_gathering_concentration_charts.com/library/content/c060906b.asq.htm http://www.jozdev.asp www.com/SixSigSample/ SixS_TerminologyQuikSix-AC.asp http://www.co.org/chapters/H1245.htm http://www.htm .isixsigma.isixsigma.htm http://www.isixsigma.com/library/content/c010527c.isixsigma.sixsigmafirst.dlsu.asp http://finance.edu.com/isixsigma/six_sigma.leansigmanetwork.isixsigma.com/library/content/c060322a.hci.co.lindsaysherwin.php?p=130 http://europe.com/sstoclt.pdf http://www.

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. but also the follower’s level of readiness. and feels confident and motivated. R4 Able and willing The follower is experienced. but is either apprehensive about doing it alone or not motivated to do it properly. is that it is not only the leader’s style which is considered. R3 Able but unwilling The follower is experienced and capable. There are many theories about leadership that focus on the different types. but is motivated and confident as long as the leader provides support.404 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. This model provides a framework for analysing a particular situation and determining which leadership approach will have the highest probability of success. The innovation of the Situational Leadership model. commitment and motivation for doing a task well. experience and skills needed to accomplish a task – and his/her willingness – confidence. . Readiness is a function of a follower’s abilities – knowledge. R2 Unable but willing The follower lacks ability. created in the 60s by Paul Hersey and Ken Blanchard.

The leader provides coaching. but are motivated. The extent to which he or she uses either a more directive or a more supportive behaviour will depend on the follower’s readiness. It is often used when followers have little experience with a given task and need to be told how to perform it. but he seeks ideas and suggestions from the followers in order to involve them. due to the follower’s lack of competence and motivation to perform. The leader still provides most of the direction. • Relationship behaviour (supportive): the leader engages in two-way communication. therefore four leadership styles have been defined: S1 Telling This is a high-directive/low-supportive behaviour style. The leader should adapt to each particular situation. As the leader takes the decisions. or when an issue needs urgent action. Two types are defined: • Task behaviour (directive): the leader tells the followers specifically what to do. listening and giving support to the followers. and then controls and supervises their performance. Therefore. Through twoway communication and support. communication is largely one way. the leader defines their role and tasks. for example suggesting several options for doing . he gets the followers to “buy into” the decisions he makes. how and when to do it. encouraging them and facilitating their involvement in problem-solving and decision-making. and then supervises their execution. and not always use his or her preferred type of behaviour. S2 Selling This style is based on a high-directive/high-supportive behaviour.Tools: Situational leadership 405 II) How is it used? Depending on the follower’s readiness. managers applying this model should adapt their leadership behaviour accordingly. where the followers do not have the ability and knowledge.

It may vary from one person to another. where the followers lack commitment. or the same person may be led in one way or another according to the situation. . The leader is still involved in decisions and problem-solving. but the followers have the control. the appropriate leadership style is one with low amounts of both directive and supportive behaviour. As a follower’s level of readiness increases. he or she also needs to provide feedback to let the followers know that their contribution has been noticed and appreciated. the leader needs to adapt to suit the follower’s growth. Followers need little guidance and supervision because they take responsibility for their own projects. Delegating When the followers reach the highest level of readiness. Regularly. The leader should build up the follower’s development level.406 Tools: Situational leadership S3 S4 a task and encouraging the followers to use what works best for them. The situational leadership model also stresses the fact that the level of the follower’s readiness increases in terms of accomplishing a specific task. However. they need support and encouragement from the leader to build their confidence and motivation. Participating It is a low-directive/high-supportive behaviour style. Success in leadership is achieved when the leadership style matches the follower’s readiness. but where they do not need much direction or control because they have already demonstrated that they know how to accomplish their tasks. Hence the leader has a supporting role and the decisionmaking process is shared. to be able to use less timeconsuming styles over time.

LEADER BEHAVIOUR HIGH S3 IPA TI High Relationship and Low Task S2 NG SE High Relationship and High Task LL IN PAR T IC G RELATIONSHIP BEHAVIOUR S4 ING S1 TEL EG AT LI EL D Low Relationship and Low Task Low Relationship and High Task G N LOW LOW Able and willing or confident TASK BEHAVIOUR Able but unwilling Unable but willing or insecure or confident HIGH Unable. He “assesses the performance of others and takes the responsibility for making things happen”. However. 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.Tools: Situational leadership 407 In simple terms. unwilling or insecure R4 R3 R2 R1 FOLLOWER READINESS . The reason may not always be related to work. for this model to be really effective. a situational leader can adopt different leadership styles depending on the situation.

Dewey E.com http://www.com http://www. Englewood.1000ventures.od-centre. Johnson. “A project of the Developing Effective Leaders. Kenneth H.situational.kenblanchard. Blanchard. “Management of organizational behaviour – utilizing human resources”.org .408 Tools: Situational leadership III) Bibliography Paul Hersey. 1988 Doris ‘Katey’ Walker. Web–o-graphy http://www.com http://www. by Kansas State University. Major Program Team”. Cliffs.

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which would mean “digging a hole more deeply” in the same place and within the same perceptual framework. Lateral thinking means exploring a subject from different angles. which seeks to facilitate decision-making processes in groups and to inspire creative thinking. For example. creator of Six Thinking Hats® I) What is it? The Six Thinking Hats is a method developed by Edward de Bono. 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. help to overcome negative attitudes during a phase of discussions. but this way of “black thinking” should not dominate the thinking process. “That’s not going to happen” often ‘block’ thinking processes and destroy creativity. Compared to ‘vertical thinking’. nevertheless. As part of his concept of lateral thinking. in particular. it would be starting to “dig a fresh hole” which. However. Litterally. lateral thinking means moving to a different position and a different perceptual framework. de Bono observed that phrases like: “That won’t work” and “That’s wrong”. can help to find solutions for the same subject or problem. . primarily the six hats help to define several thinking phases and to ensure that each phase also receives a fair share of time. 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.410 Tools: Six Thinking Hats Six Thinking Hats® “The quality of our thinking determines the quality of our future” – Dr Edward de Bono. this method – which he developed in just one afternoon – should. de Bono has developed several tools and techniques that are supposed to help people to shift to different and more creative modes of thinking. Therefore.

The idea is that in any creative thinking process. Very often in a debate that is seeking to find a solution to a problem. can help to avoid such a blockage from the start. it creates a rather positive environment. several different perspectives should be used in order to maximise the thinking output. 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. The Six Thinking Hats. 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. That also means that it is easy to distinguish more easily between the argument and the person developing the argument.Tools: Six Thinking Hats 411 The Six Thinking Hats is a fairly easy method that can be applied by almost everyone. could lead to “an entrenched negative mode of thinking”. because everyone is in the same boat or under the same hat and can focus on the issue coming from one perspective. By involving everyone in every phase of thinking (parallel thinking) the fullest potential of everyone may be used. . These. the arguments brought forward are linked to the person (or even its status or position). however. At the same time. everywhere. along with the focus on “black thinking”. Such debates can thus often be characterised by socalled “power plays”.

This phase should. 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. There is no need for reasons and justifications. however. The green or creative hat examines all existing possibilities and/ or looks for alternatives. and makes . in a way. black. the coordinator or team leader. new ideas and concepts. While wearing the black hat we ask ourselves why something may not work and we analyse all related dangers and problems and faults. The black hat represents the sceptical perspective. each characterised by a different colour: blue.412 Tools: Six Thinking Hats II) How does it work? The method can be applied relatively simply. by stressing (both known and potential) values and benefits and by looking for the good in something. The blue hat. 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. An important task for this hat is to overcome the problems that had been defined by the black hat (and also may. 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. Under the yellow hat logical reasoning is also important – it is the “positive head” and. red. Only when we move on to the red hat phase are we allowed to use our feelings and intuition “at this point”. Moving on to the white hat means focusing on neutral and objective data and information. green. at a later stage. The blue hat perspective is the only one solely undertaken by one person. the manager of the thinking modes. an opponent of the black hat because it seeks to analyse why something may work. There are six different perspectives or “hats”. Logical reasons must be provided in the thinking phase. sets the focus. be rather short. yellow and white.

who sets the time.Tools: Six Thinking Hats 413 the overviews. . It also coordinates the development of an action plan. the success of the whole exercise may also largely depend on the skills of the blue hat coordinator. provides the needed input. and decides when to switch to the thinking mode. It can thus be helpful for the blue hat to have some proper training regarding the method. Arguably. summaries and conclusions.

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). 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. implementing versus new ideas and alternatives). de Bono recommends determining the sequence at the beginning. and coming up with an action plan after the session. in particular the coordinator. summarising the results. 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? . there is no formal rule as regards starting with the red or black hat.414 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). summarising. And it is all up to the experience of the participants. For lessexperienced groups and coordinators. and the blue versus the green hat (limiting. to determine the right sequence at the beginning. However. a certain sequence can be applied for using the different colour perspectives. It is advisable that the blue hat starts and ends every session by defining the purpose and framework of the session. coordinating. the yellow versus the black hat (optimism versus dangers).

In particular.Tools: Six Thinking Hats 415 After the session. a rough guideline could be one minute of speaking time per person per hat. Depending on the group size. and/or the design or solution. De Bono recommends limiting the time for each session. the red hat time should be limited because here people should respond quickly and spontaneously without judging or analysing. . the blue hat indicates what we have achieved and summarises the outcome or conclusion. and the next steps to be taken.

for example. Nevertheless. or for developing new products or designs. The main purpose is certainly to facilitate decision-making processes. And thus also has personal and group development potential. 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. it can certainly also help the individual (and not only the groups) to further develop thinking capacities by developing an individual’s weaker hats. It has also been used for conflict resolution and as part of leadership development trainings. The method has been developed for groups. One main reason was thus to improve “group thinking” or group decision-making processes. There are no prerequisites either regarding age. As we recall. for improving processes in an organisation. 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. 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 be used . be used for preparing for discussions. The method can thus be used to facilitate very different kinds of meetings or group gatherings. and the six hats have thus been shown to be very effective as a team-building measure. It may. 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. background and culture. everywhere. Since each person usually has a preference for one thinking mode. Theoretically.416 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.

Nevertheless. for example. . Ford or Ericsson have all applied the six thinking hats method. 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. It has not been specifically designed for businesses or management purposes. schools or almost any other type of organisation can be cited as an example of a success story for Mr de Bono. trainers and consultants.Tools: Six Thinking Hats 417 by everyone. Within these organisations we find. 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. project managers. For example. major corporations like IBM. governments. DuPont. Shell. even when the method is not being applied. team leaders. 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. meeting facilitators. McKinsey. In addition. administrations. 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.

The team leader then . since everyone was now keen to present the best business plan. but also for the (new) individual teams on each level to learn to work together. After a team leadership training. and many of their top-level executives have been officially trained in the different possibilities the method provides. during which he had learned about the six hats method. who headed the business development plan team. which created a team of more than 140. The challenge was not only for the corporations to deal with and overcome the cultural clash. Official training is not necessary and may be replaced by experience. The team leader then sent an email request to the team for an outline of a business plan for the next meeting. 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. At the meeting. each member made a brief presentation. The team leader observed the negative impact of this behaviour on both the team spirit and on productivity and creativity as a whole. opted for the Six Thinking Hats method as the merger had created a strong culture clash and increased the power plays in his team. the number of examples of Six Thinking Hats users is enormous.418 Tools: Six Thinking Hats V) Example in SMEs and/or other organisations Due to its simplicity. In order to present just one example.000 employees in 160 countries – and not only new opportunities but chaos too. information and facts needed (the white hat perspective). Criticising the ideas of others very strongly seemed to increase one’s chances of being the winner with the best business plan. let me tell you a success story regarding one group after the 2002 merger of Hewlett-Packard and Compaq Computer Corporation. Yet many of the larger companies have opted for official training either by de Bono or another certified consultant. he asked a consultant to help him implement it. Each member was asked to prepare to present the neutral details. One Hewlett-Packard team leader.

.involve everyone in the group and use everyone’s (and the group’s) potential to its best. The normal argument and debate and thus the whole meeting time were significantly reduced.create a positive team atmosphere (through parallel thinking which reduces the “ego-games”) . thereby maximising thinking output . All initiatives were now better prioritised and evaluated on a “do-ability vs. Are we ready to implement? The result was astonishing for both the team leader and the team members.reduce meeting time significantly . problems.find comprehensive solutions to complex problems . For the first time the team felt it had accomplished something as a team.foster creative thinking. impact-basis”.Tools: Six Thinking Hats 419 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. Some of the advantages of the method are thus clear. No one continued arguing after the meeting. This team spirit now increased from meeting to meeting (when the Six Thinking Hats method was applied). 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. Everyone seemed to accept the results. It helps to: .

the coordinator. A human resource consultant. The method can thus help groups or their leaders to realise their full potential by involving and training everyone. 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. said that using the method may enable you to achieve up to 36% more output in 66% less time. Therefore. brainstormer. Some of the difficulties with the six hats method relate to the role of the blue hat. First of all.420 Tools: Six Thinking Hats With the Six Thinking Hats a division of Siemens could. which may be perceived by some as too simple and game-like. who has been working with this method for more than ten years. The method may also foster learning from one another. the participants need to be willing to learn and apply this method. Thus both team skills and individual skills can be developed – in particular. implementer. shaper. for example. etc. . Another major corporation was able to reduce a series of multinational project meetings from 30 days to two days.). reduce the product development time by 50%. The method may also not work in all groups. a proper training may be advisable. developer. and provide enough time and space to cover all dimensions (without the ego arguments and without giving preference to dominant personalities). 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.

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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.

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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.

Web-o-graphy:
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

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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.

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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,

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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

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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.

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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.

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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.

. The spiral of knowledge is not a tool but rather a concept to be implemented. creating concepts. externalisation. combination and internalisation 3) Two dimensions: epistemological and ontological 4) Five conditions: intention. which was 1995. IV) Conclusion Setting up a knowledge culture demands a lot of effort and a change of mentality among everyone in the company. building an archetype. redundancy. Nevertheless. Bureaucracy can be seen as the structure of traditional divisions in a company. and crosslevelling knowledge 6) Management style: middle-up-down management 7) Organsational structure: hypertext organisation. justifying concepts.430 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. with innovation and thus competitive advantage as consequences. autonomy. this remains a concept able to draw a company’s attention to the implementation of the knowledge-creation process. and requisite variety 5) Five phases: sharing tacit knowledge. fluctuation and creative chaos. We must take into account the period during which this concept was created by the two professors. and the task force as a project team achieving their project within that company. The hypertext organisation they refer to is known today as a matrix organisation (weak or strong) within the domain of project management.

com/fisikepsic/spiral.psicopolis.uk/KM.frand/researcher/ speeches/educom98pkm/sld033.htm http://www.simulations. Web-o-graphy http://www.html http://www.co. The Spiral of Knowledge.htm http://www.Tools: The spiral of knowledge 431 V) Bibliography Ikujiro Nonaka and Hirotaka Takeuchi. 1995 ISBN: 978-0-19-509269-1.anderson.edu/faculty/jason.nwlink.com/~donclark/history_knowledge/ nonaka.ucla.htm .

give direction. it must be logical and unique.432 Tools: Strategic intent Strategic intent Strategic intent is a high-level statement of the means by which an organisation will achieve its vision. Therefore. and provide an opportunity that can be conveyed as worthwhile to all employees. These statements must represent the whole as seen from any location within the organisation. as the implementation of the strategy will be based upon experience. believe in it and perform it accordingly. 2003 . Linking creation and implementation supports the overall process. “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. as those are already part of the company’s visions and missions. will give rise to problems in its evolution. A statement of strategy must become a statement of design through which the principles and practices of the organisation are developed. of course. It has to be formulated clearly so that employees can understand it. but stated in present terms. It is a company’s vision of what it wants to achieve in the long term.”1 The strategic intent should never focus on daily problems. It should try to show tomorrow’s opportunities. Peter Skat-Rordam. 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. 1 Changing Strategic Direction. This. and thus a strategy emerges and evolves.

goals. tactics and finally the action plans. the success factors required to develop the company in this direction.”2 The traditional view on strategy always referred to the Strategy Pyramid with the vision on the top. the factors critical to success in the future. with it. strategic intent cannot be planned completely in advance. and the environment is unstable. This was built on existing competencies in an almost stable environment. This is also one of the reasons why such a strategy cannot be set up in one session: it needs time to mature. “To achieve great things. 2 ibid . The purpose of this exercise is to define an end result situated far beyond the present planning period. Nowadays. it is a permanent exchange between challenges and opportunities. we prefer to speak about strategy which stretches in a bidirectional way: top-down and bottom-up. strategies. Hence. And it does not matter that a vision cannot be laid out in detail. 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 is the direction that counts. which makes convincing people to work with this system even more difficult. then the mission.Tools: Strategic intent 433 One of the important parts of strategic intent is to specify the competitive factors – in other words. Here the competencies are new. It sketches the company’s future in ten to 15 years and. Intermediate goals should accompany strategic intent to make it possible to measure the achievements in the future. you need ambitious visions.

or visions. . In particular. During analysis of the strategic planning. Codification means clarifying and expressing the strategies in terms which are sufficiently clear to render them formally operational. subtlety and qualification. so that their consequences can be worked out in detail. programmes and overall action plans must be specific. the articulation and elaboration of strategies. In this way. Elaboration means predigesting the strategy and giving details in brief. the representative should be able to interpret and give his attention to finding out the nuance. from Henry Mintzberg’s definition in his summary of the book. that already exist. as practised. he points out three steps: codification. has really been strategic programming. and conversion of strategies. downsizing or layoffs. elaboration.434 Tools: Strategic planning from Mintzberg Strategic Planning from Mintzberg I) What is it? Strategic planning. 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. When he wrote an outline for his book called “The Theory of Management Policy” circa 1973 (see figure 1). in the light of his or her knowledge of the actual management process. especially strategic planning. such as reorganisations. etc. clear and specified in each strategy. which are easy to fabricate in order to confuse employees and shatter their confidence in the organisation. This approach can prevent rumours within an organisation. when a company has notable events to publish. ad hoc.

often strategies cannot be developed on schedule or ‘immaculately conceived’. mountaineering. or an unofficial party.Tools: Strategic planning from Mintzberg 435 II) When is it used? Organisations might encounter a wide variety of dramatic changes. It involves intuition and creativity. and you can see how quickly the event becomes formalised (mission statements in the morning. due to the various cultures of different regions. in contrast. assessment of corporate strengths and weaknesses in the afternoon. which is the perception of the significance and nature of events before they have changed – for instance. which is one danger of mixing them. They must be free to appear at any time and at any place in the organisation. who and what would be affected as regards budgets. Mintzberg makes a very clear distinction between them. There is confusion between strategic planning and strategic thinking (or so-called strategic creation) for some managers. hiking. then ask conventional planners to organise it. Strategic planning has been applied to all kinds of activities. strategic thinking is about synthesis. a not too precisely articulated vision of direction that must be free to appear at any time and at any place in the organisation. by Mintzberg’s experience). it should remain flexible. and so on. That is to say. The outcome of strategic thinking is an integrated perspective. strategies carefully articulated by 5pm. performance controls. such as retreating to an informal place to talk about strategy – for example. . This way is more human and easier to accept although. a planner should have foresight. But if you call that activity “planning”. like the strategic thinking described above. Planning is about analysis. downsizing. so conversion means considering the effects of the changes on the organisation’s operations. However. 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.

436 Tools: Strategic planning from Mintzberg In addition. 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. as we now know. In fact. Most significantly. 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. Managers do not always need to programme their strategies formally. it has indicated something about how we think as human beings as regards programming strategies. And they can also be strategy programmers. 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. They should support strategy making by helping managers to think strategically. In this way. does such strategic programming make sense. Sometimes they must let their strategies remain flexible. as broad visions. Hence. to adapt to a changing environment. Planners should supply the formal analyses that strategic thinking requires. . helping to specify the steps needed to carry out the vision. analysing the fall and risk of strategic planning. sometimes planning has not exactly worked out like that. In the past. organisations disenchanted with strategic planning should transform the planning job. Mintzberg emphasises that strategic programming is not “ the one best way” or even necessarily a good way.

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 437 Figure 1: Outline of “Theory Management Policy” by Henry Mintzberg.

. Web-o-graphy http://www.com. 1994). Harvard Business Review (January-February. ISSN: 0017-8012 Henry Mintzberg.goalsys. HBR article.htm http://www.htm .floor. 1993 in Arthur Bedeian Management Laureates.htm http://www.com/id88.438 Tools: Strategic planning from Mintzberg IV) Bibliography “The Fall and Rise of Strategic Planning”.nl/management/top100.kmgconsulting..au/bookroom/bookstrat. “The Illusive Strategy . 25 Years Later”. summary of Henry Mintzberg’s planning book.

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Effective communication is critical to the success of any organisation.440 Tools: Supervisory and coaching skills Supervisory and coaching skills As a manager or leader of company. . It is an important role as regards earning your co-employees’ respect. Motivation 3. Supervisory and coaching skills can help your company to increase employees’ productivity and innovation in order to achieve the business targets. if you lead by example the others will follow. The topics focus on: 1.Knowledge . 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: . Remember. It comprises moving information and understanding between parts of and people in an organisation and the various media involved in communication interchanges.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. Building trust 4. and the overall success of your company. Communication 2. you must know how to supervise your employees properly in today’s working place. running day-to-day operations efficiently.

We communicate a lot through “non-verbal behaviour”. 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. If the listener misunderstands me then this is his/her problem. We communicate many things we are not even aware of. We only communicate through words. and peers can mean the difference between success and failure. But what about the other side – the listener? The contrast between hearing and really listening can be as different as night and day. 4. Words depend on one another’s perception or experiences. 5. What we say is the same as what the listener hears. 4. Words mean the same to the listener as they do to us. 2. 3. when a misunderstanding occurs in the workplace.Tools: Supervisory and coaching skills 441 There is a big difference between the myth and the reality in communication: Myths 1. 3. What we say may NOT be the same as what the listener hears. The true test of how you communicate is the listener’s reaction. employees. 6. It is a natural response of people towards others. 6. Communication means two-way communication. This is human nature. And in a business environment. We communicate only when we choose to communicate. 5. 2. 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 . Communication means ‘telling’ others what to do. not listening effectively to customers. What skills are necessary for effective communication? Often. Realities 1.

Questioning skills Open questions: . Listening skills include • Probing questions • Paraphrasing • Empathy • Summarising • Do not assume (retain your judgment) • Acknowledgement (verbal and non-verbal) D. .Level 3: active listening – two important active listening skills are asking open-ended questions. thinking or feeling C.Level 2: logical listening . In certain situations. such as work and office noise. Three levels of listening . The key to their effectiveness is to be aware of when and why you are using them. poor telephone lines.Questions that ask for an opinion .Level 1: passive listening – the listener acts as the receiver of a message . they can be effective in helping an individual to achieve a particular result.Questions that stimulate discussion . and reflecting what the speaker is saying. A. crashed computer or distracting wall. Barriers to listening: .Language .Emotional: the ability to listen to people’s egos B. Keep in mind that the following listening blocks should not always be seen as bad.Physical: pertain to the physical distance.442 Tools: Supervisory and coaching skills you and others demonstrate when not listening effectively.

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.. II a) There are two basic forms of motivation: . etc. To do this.Questions that have a one word or yes/no answer Probing questions: . travel opportunities. creativity. effective management and leadership. etc. working environment. subsequently. leading to more stable behaviour than extrinsic motivation. 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. Intrinsic motivation is often considered more powerful.Intrinsic motivation: refers to engaging in an activity purely for the pleasure and satisfaction derived from doing that activity: serving others. working with machines.Tools: Supervisory and coaching skills 443 Closed questions: . . .Extrinsic motivation: refers to engaging in various behaviour as a means to an end but not for their own sake: high salary. the manager must be able to motivate them.

No clear direction .Lack of recognition .Frequent sick leave or absence .No involvement . .Boredom .Conflict with other work.444 Tools: Supervisory and coaching skills II b) The dangers of demotivation: Causes of low motivation .Lack of interest . burn out .Etc.Change in basic personality . overload.Missed deadlines .Constant criticism .No enthusiasm .Lack of co-operation from colleagues .No energy .Clock watching .Lack of support from the boss .Indifference .No sense of achievement .Thoughts of resigning .Verbal abuse .No freedom of speech .Restricted environment .Low productivity .Communication barriers .Work not completed .Lack of respect Signs and symptoms of demotivation .Mood swings .Ideas not encouraged .

Live the company values . On the other hand.Poor working habits . Problems concern: .Performance . Providing employees with the knowledge and skills they need to perform their job tasks is not employee coaching – it is employee training.Walk the talk . In today’s working environment. openness. too many leaders cling to outdated ideals of what it takes to be a good coach. organisations cannot afford the concept of trial and error. it helps to know what employee coaching is and what it is not. understanding. things must be done correctly the first time. When do we need to coach an employee? In fact. To understand that statement.Tools: Supervisory and coaching skills 445 III) Building trust Building trust helps people to develop mutual respect. employee coaching is an ongoing process of helping employees to identify and overcome the hurdles that prevent them from excelling in their jobs.Be a person of principles IV) Coaching for success Nowadays.Keep your promises .Treat others the way you want to be treated . focusing on improvement and correcting performance after mistakes have happened. They cannot let go of the misguided concept that good coaches help their teams learn from mistakes. Behaviour that promotes trust: . most of the time a manager should not coach his/her employees. as well as assisting them to develop communication and teamwork skills. and empathy.

Establish the purpose of your discussion 3. Chose an appropriate time and place for the discussion 2. Cost-effectiveness There are many causes of performance problems. 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. including: • interference • attitude • skills Of course. which can occur at various levels: • individual performance problems • team performance problems • unit (e. it is not enough simply to be aware of problem performance in an organisation. department or division) performance shortfalls • organisational performance problems When an employee’s work falls short of achieving results that are measured as follows: 1.g.446 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. Quality 2. Quantity. Listen to your employee’s explanation . a manager or leader needs to know how to improve performance. Describe the performance gap in specific terms 4. Timeliness 3. There is an eight-step model for handling a performance problem discussion: 1.

. .appoint a coach to support the employee. 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. Ask for his/her ideas for solving the problem 6. It is essential that the manager is then able to apply three techniques to support the under-achieving employee: . Discuss ideas and action plans 7. 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.apply rigorous supervision techniques to help the employee to improve. Agree on an appropriate follow-up to monitor progress 8. An effective manager will recognise that different organisations require different measures to improve performance.Tools: Supervisory and coaching skills 447 5. and this course will indicate one way of identifying appropriate management practices to improve performance in different types of organisation.use a specific training programme to resolve the problem. a manager should be aware that the system rather than an individual employee is causing the performance problem. Sometimes. Set an appointment to review and thank the employee. however. Then the manager must introduce a system of monitoring performance to ensure that the planned improvement has actually taken place.

etc.g. You also need to check progress and. safety violation) How to address this problem As a supervisor you need to discuss the problem with your employee in a positive way. Try to make the employee understand that the problem belongs to him/her. Offer your help.) • Habits that become too annoying or offensive to overlook (e. When a situation becomes chronic and/or more serious. too much chit-chat) • Habits that violate universal policies and procedures (abusing company email. and set timelines to correct the problem. the imposition of a probationary period.448 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. . the supervisor is expected to take more formal action. if necessary. as does the solution. Employees with poor working habits may create friction among their workmates and damage the entire group’s morale. 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. suspension with or without pay. telephone. while maintaining the employee’s self-esteem. too many coffee breaks) • Habits that affect the output of other employees (e. propose further action. There are different types of poor working habits which may affect your work unit: • Habits that affect the employee’s output (e. or involuntary termination.g. Such actions may include additional documented meetings with the employee addressing the performance inadequacies.g. Solicit the employee’s feedback and co-operation in solving the problem.

com/html/business_management_ videos.org/training/past/2004/supervising/ coachingskills. Supervisors should contact the Human Resources Manager for assistance prior to proceeding with any disciplinary action.com/course_hierarchy/ Business_and_Management_Skills/Managing_People/ .com/graduate_courses/full_course_listing/ on-site/coach/ http://www.training-classes. .bizhotline.pdf http://www. C. Behaviour Coaching Web-o-graphy http://www. Crisp: Excellence in Supervision: Essential Skills for the New Supervisor (Crisp 50-Minute Book) Zeus and Skiffington. including adherence to state and federal regulations governing equal employment opportunity and non-discriminatory practices. V) Bibliography Conlow.plsweb.infopeople.html http://www.Tools: Supervisory and coaching skills 449 The Human Resources Manager and the Ombudsman/EEO officer are assigned the responsibility for employee relations at the Institution.

it is instrumental in strategy formulation and selection. 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. As such. 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. Carrying out a SWOT Analysis helps you to focus activities in areas where you are strong and where the greatest opportunities lie.450 Tools: Swot Analysis SWOT Analysis I) What is it? SWOT Analysis is a tool for auditing an organisation and its environment. . Opportunities. and Threats involved in a project or business venture. Weaknesses. and those external to the company can be classified as Opportunities and Threats. Situation factors internal to the company can usually be classified as Strengths and Weaknesses.

• 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.Tools: Swot Analysis 451 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. efficiency. • 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. originality. if all your competitors provide high-quality service. . resources. then a high-quality service procedure is not a strength in the market. WEAKNESSES The absence of certain strengths may be viewed as a weakness. it is a necessity. competitive advantages. customer service. etc.

Or. events. and puts problems into perspective. analyse your Weaknesses and ask whether you could open up Opportunities by eliminating them. • 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. increasing market saturation. Possible Opportunities and Threats: changes in technology and markets. business alliances. THREATS Changes in the external environmental may also present Threats to the company. etc.452 Tools: Swot Analysis OPPORTUNITIES The external analysis may reveal certain new Opportunities for profit and growth. . change in lifestyle. changes in government policy related to your industry. • 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.

The SWOT Analysis has been a strategic tool for different industries. avoid complexity • Be realistic about the Strengths and Weaknesses of your organisation • Analysis should distinguish between where your organisation is today. Roles for a successful SWOT • Be specific. or just • Reviewing their business operations to make improvements. . and where it could be in the future • Analyse in comparison to your competition (better or worse than your competition) • Be aware. entrepreneurs and business managers. SWOT Analysis can be used for decision-making within departments and committees or even by individuals. it is a decision-making aid when new programmes are planned. SWOT Analysis is subjective. avoid grey zones • Keep SWOT short and simple. whether they are: • Just starting a business • Planning to roll-out a new service or product • Seeking financing. and all types (small to large co-operations) of companies.Tools: Swot Analysis 453 IV) Who uses SWOT? It is being used by companies who want to understand critical issues facing their business. It goes through all market segments.

Situations change with time and an updated analysis should be carried out frequently. It looks at future possibilities. whatever course of action is decided upon. SWOT Analysis can form a foundation upon which to construct numerous strategic plans. SWOT Analysis must also be flexible in order to be used most effectively. in both positive and negative concerns. using a systematic approach. and concerns to others. Used creatively. and it is neither cumbersome nor time-consuming. Probably the strongest message from a SWOT Analysis is that. policies. It is a relatively simple way of communicating ideas.454 Tools: Swot Analysis V) Summary SWOT Analysis can be a fast and excellent tool for exploring the possibilities for initiating new concepts. SWOT is effective because of its simplicity. decision-making should contain each of the following elements: • Building on Strengths • Minimising Weaknesses • Seizing Opportunities. and • Counteracting Threats. .

cfm/148 . 1969.com/Lessons/lesson_swot. C.com/strategy/swot/ http://www. and William D. Web-o-graphy http://www.htm http://www. Learned. Text and Cases”. Kenneth Andrews.Tools: Swot Analysis 455 VI) Bibliography Edmund P. IL: Irwin.marketingteacher.com/strategy/swot/ http://www.quickmba.com/pages/article/newTMC_05.bplans.netmba. Homewood.mindtools. Roland Chistiansen.com/dp/article.htm http://www. Guth in “Business Policy.

5 S framework© I) What is it? .5 S framework© Thiem-Tom 10.456 Tools: Thiem-Tom 10.

with some interesting input from one of our students Mr Nguyen Duc Thong. 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 1 This was developed in the early 1980s and used as a basis for research for R. skills.5 S framework© 457 II) How can it be used? As mentioned in the introduction to this chapter. Is the company simply filling a gap in the personnel files. 1988. The model’s first three Ss are described as “hard Ss”: • Strategy: the actions a company starts with which must be maintained. paperback. this framework has been developed by Professor Dr Tôn That Nguyên Thiêm and myself. strategy and shared values. which is why McKinsey called them “soft Ss” – they are more cultural: • Style: is about the management style – how the management behaves. • Structure: this is how the company is organised – the way people work together and how tasks are distributed. systems. • Systems: is about the processes and global information linking each part of the organisation to the other parts. staff. As the name implies. • Staff : the way the company finds future managers – how it selects and educates the personnel. . or is the management looking for the best person in the right place. in “In Search of Excellence. This is the global direction in which the company wants to evolve. It is important to know this as this gives a clear indication of the way things could go in the future. Lessons from America’s Best Run Companies”. The four remaining Ss are less tangible. giving him or her a career opportunity? • Skills: what capabilities and important attributes can be found in the organisation. this ‘first’ framework comprised seven Ss: structure. style. Waterman. It all starts with the McKinsey 7S framework1 which is wellknown and has been adapted many times.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. .458 Tools: Thiem-Tom 10.

sustainable for the future. in times of difficult economic situations. and as the outside world continues to put new pressure on the business.5 S framework© 459 III) Innovation A combination of all these topics provides a new effective framework for the analysis of an organisation and its activities. Therefore. Vapec. the second element (which counts for a half and thus explains the 10. style. 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. and is part of the hard Ss.Tools: Thiem-Tom 10. Chiên Luoc. In the middle of the framework we introduce two important points: the first is Sustainability which. In combination with the five competitive forces. several new items became important. 2 Thi Truong. and the organisations. In his book on Strategic Management2.5) is the financial situation guaranteeing this: the Stability. is at the top of the outer circle. co câu. the companies. Ho Chi Minh City 2003. 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. this is a good start for a complete external and internal analysis for every organisation. as it is measurable. etc. p 392 . resulting from the new trend towards environmentally correct behaviour and to social responsibility. as times change. by adding Superordinate Goals. It is their main task to try to make the organisation and its structure. The first one. Professor Dr Tôn That Nguyên Thiêm developed an 8S framework. is one many managers forget.

it could happen).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. and can help overcome differences between the groups.alleydog. Definition found at: ttp://www.com/glossary/ definition.cfm?term=Superordinate%20Goals .g. encourages people to see one another simply as people rather than as part of “that other group that we dislike”.460 Tools: Thiem-Tom 10. maybe the two groups get lost in the jungle together and the only way they can survive is to work together – hey. This breaks down barriers.

ISBN 2-9600590-0-X Thiem. Vapec. Co Cau. Chien Luoc. Koenraad. HCMC Vietnam . Ton That Nguyen. Apsis. La Hulpe Belgium.Tools: Thiem-Tom 10.5 S framework© 461 V) Bibliography Tommissen. ( 2003).( 2006) An Introduction to Management Consultancy. Thi Truong.

. not urgent. important.462 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. both or neither. The judgment as to whether activities are urgent. The decision whether a task is urgent or not. important or not is subjective and will differ from one person to another. is crucial for good time management. important and not important.

busy-work • Junk mail • Some phone messages/ email • Time wasters • Escape activities • Viewing mindless TV shows Important • Medical emergencies • Pressing problems • Deadline-driven projects • Last-minute preparations for scheduled activities Quadrant of Necessity III (AVOID) • Interruptions.Tools: Time management matrix 463 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. some calls Not Important • Some mail and reports • Some meetings • Many ‘pressing’ matters • Many popular activities Quadrant of Deception Quadrant of Waste .

II) What Ideas for managing tasks First quadrant The tasks in this quadrant are those which need to be performed right away. A manager should help the originators of these demands to reassess the real urgency and priority of these tasks. according to who shouted the last and loudest (interestingly. The manager should evaluate the importance and urgency of such tasks. . Any spare time is typically spent in box 4. Most people spend the least time of all in box 2. with a commitment to resolve or complete at a later date. discuss and probe the actual requirements and deadlines with the task originators or with the people dependent on their outcomes. which discourages most people from questioning and probing the real importance and urgency of tasks received from bosses and senior managers). and people who are neither good at time management. which is the most critical area for success. If two or more tasks appear equally urgent. 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. and prioritise them according to their relative urgency. nor at managing their own environment. which only comprises aimless and non-productive activities. Poor time managers tend to prioritise tasks (and thereby their time). They should include activities that you have previously planned in box 2. tend to spend most of their time in boxes 1 and 3. but which move into box 1 when the time slot arises. development and proactive self-determination. will enable him/her to resume other planned tasks. loudness normally correlates to seniority.464 Tools: Time management matrix Most inexperienced people.

and help (even your boss and your senior managers) to reassess the real importance of these tasks. Where possible. Activities here include planning. etc. deciding direction and aims. not just quick fixes.. A manager should look for reasons why demands in this area are repeated and try to prevent their reoccurrence. including customers. Third quadrant A manager must scrutinise these demands ruthlessly. strategic thinking. A manager should break big tasks down into separate logical stages and plan time slots for each stage. or reshaping the demand into something more strategic. and yet tend to be the most neglected. or ‘urgent’ matters from quadrants 1 and 3 will take precedence. For significant repeated demands . fellow staff and superiors. he/she should reject and avoid these tasks immediately. Having a visible schedule is the key to being able to protect these vital time slots. This can be done by educating and training others. The manager should explain why the tasks cannot be done and find another way of achieving what is required. He/She should practise and develop the ability to explain and justify why it is not possible to carry them out. using project management tools and methods. informing and managing people’s expectations and sensitivities accordingly. if necessary. with a more sustainable solution. A manager must plan time slots for doing these tasks and. which are all crucial for success and development. to identify long-term remedies.Tools: Time management matrix 465 Second quadrant These tasks are most critical to success. suppliers. which might involve delegation to another person. plan where they can be carried out free from interruptions.

Fourth quadrant The activities in this quadrant are not tasks. The best method for stopping these activities. These activities affirm the same ‘comfort-seeking’ tendencies in other people. Old policies and assumptions should be questioned to assess whether or not they are still appropriate. and are therefore demotivating. which the manager is able to create in quadrant 2. the manager can create a project to resolve the cause. They are often stress related.466 Tools: Time management matrix in this area. is to have a clear structure or schedule of tasks for each day. and for removing the temptation to gravitate back to them. which will be a quadrant 2 task. 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. . He/She should challenge habitual systems. The manager should help others to manage their own time and priorities so that they do not ‘bounce’ their pressures on to someone else. a group or entire department doing a lot of quadrant 4 activities will create a non-productive and ineffectual organisational culture. procedures and expectations – for example. These activities have no positive outcomes. «we’ve always done it this way». processes. they are habitual comforters which provide a refuge from the effort of discipline and proactivity.

info/management/print_671. IV) Bibliography Covey.co.htm .Tools: Time management matrix 467 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. Stephen R.uk/cedtraining/handouts/hand09. The Seven Habits of Highly Effective People.timethoughts.com/timemanagement/ importance-time-management.. Great time management is one of the most important skills a person can develop.cfm http://www.srds.smallfarmsuccess.htm http://www. Simon and Schuster. ISBN 0-671-66398-4 Web-o-graphy http://www.(1989). it takes practice to manage your time effectively.

Quality is said to be “the ability to satisfy. Others define it as: “Quality is fitness for use”2. TQM principles are also known as total quality improvement. total service quality. Before understanding the concept of ‘total quality management’ (TQM) one must define quality. TQM is a quality-centred. New York. Mc Graw Hill. There are numerous definitions of TQM.. Crosby. committed to total customer satisfaction through continuous process of improvement. or “Quality is a conformance to requirements or specifications”3. and the contribution and involvement of people”4. continuous quality improvement. Marketing Management: A Strategic Decision-Making Approach. Plume Books. the word “quality“ shows a concern for customer satisfaction. Quality Without Tears: The Art of Hassle-Free Management. customer-focused. Juran’s Quality Handbook. 1985 4 Mullins. but one recent definition says it is “A way of life for an organisation as a whole. or even exceed. team-driven. International Edition. 1 Mullins. The word “total“ in Total Quality Management means that everyone in the organisation must be involved in the continuous improvement effort. senior-management-led process to achieve an organisation’s strategic imperative through continuous process improvement. New York. International Edition. Philip B. Total Quality Management is an organisational management approach to long-term success through customer satisfaction. world-class quality. the needs and expectations of the customer”1. 1999 2 3 . Marketing Management: A Strategic Decision-Making Approach. and the word “management“ refers to the people and the processes needed to achieve the quality. and total quality leadership. fact-based.468 Tools: Total Quality Management Total Quality Management I) What is it? In society today quality plays an important role in customer satisfaction. 1998 Juran.

An ISO implementation is the basis for a TQM implementation. The requirements for TQM can be considered ISO plus. implementing TQM is being proactive about quality rather than reactive. about 75 percent of the steps are in place for TQM. continuous improvement and customer focus. The key principles of TQM include management commitment. employee empowerment. Where there is an ISO system. . In short. fact-based decision-making.Tools: Total Quality Management 469 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. ISO 9000 is a set of Quality System Management Standards. TQM focuses on process rather than outcome.

. many TQM techniques may seem simple and based on common sense.470 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. As a result. This transformation is not easy to achieve. many people are sceptical about TQM. At first glance. TQM it is not for the weak or the statistically untrained. competitiveness or financial return. when you look at successful companies you find a much higher percentage of successful TQM implementation. Many companies have difficulties in implementing TQM. However. productivity. 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. but they must be understood and used correctly for TQM to function properly.

Xerox is a microcosm of what has happened to much of American industry. It went on believing that it would always be successful. Many of you will remember the first plain paper copier. In fact. . even as its market share began to shrink. But with two decades of success. That woke Xerox up in a hurry and it went to work in earnest to begin closing the gaps. Some people have called the 914 the single most successful product ever made. Xerox assumed that because the machines were low cost. Xerox reacted in time. they were of low quality – it was wrong! Then it tried to convince itself that the Japanese could not be making money. In the late 1970s. 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.Tools: Total Quality Management 471 III) Example: “Quality and participation at Xerox©” In many ways. this was their industry as they had created it. Xerox people told themselves. After all. Fortunately. Xerox became complacent and took its eyes off both the customer and the competition. Wrong again! They were profitable. the Xerox 914 which was introduced in 1959. hard look at what Xerox was doing and how the business was being run. the company started to take a long. but it did not take the threat seriously. And it started to take an equally hard look at how its competitors were running their business. The company saw the Japanese coming at the low end of the market. the Japanese were selling their small machines for what it cost Xerox to make their own. it had to challenge everything it had done in the past. It launched Xerox into an era of feverish growth and success. which quickly created an entire new industry. It realised that to be a world-class competitor in the 1980s and 1990s.

Our incentive is a powerful one – survival as a successful business entity.”5 5 By Paul A. it’s involvement. editor at 513-381-1959 . tough road back. and although there is still a long way to go. We are doing it by involving all of our people in problem-solving and quality improvement. Paul A. “Xerox Corporation Copyright by the Association for Quality 1989”. Xerox is perhaps the first American company in an industry targeted by the Japanese to regain market share. There is no magic formula. 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. Rickard. And it has done so without the aid of tariffs or protection of any kind. Allaire of Xerox says: “It’s not magic.472 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. the results are gratifying: • Reduction of average manufacturing costs by over 20 percent. After about five years of being in the process of changing the corporation. The entire management team has a deep and real commitment to employee involvement. Allaire and Norman E. People sometimes ask how we are doing it at Xerox – how we have reversed our slide and begun the long.

high-quality products. gain a substantial foothold in American markets. Eventually. Toyota and Mazda are examples of this). and Xerox began adopting Deming’s principles of TQM. In the 1970s and 1980s. He later became a professor of statistics at the New York University Graduate School of Business Administration. with their inexpensive. Dr Deming was invited by the Japanese Union of Scientists and Engineers to give lectures on his statistical quality techniques. While working on the Japanese census. While the Japanese business world was concentrating on producing quality products. This gradually led to their regaining some of the markets previously lost to the Japanese. including Dr Deming. many American companies. The success of TQM through Deming’s approach can be seen in Japanese industry (Honda. including Ford. Dr Deming’s universal 14 points for quality management are the foundation of Total Quality Management and guide the entire TQM process. Edward Deming who at the time was an advisor in sampling at the Bureau of Census. After World War II. many Japanese manufacturing companies adopted his theories and were able to produce quality products at reduced costs. 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. He had little success convincing American businesses to adapt to TQM but his management methods did gain success in Japan.Tools: Total Quality Management 473 IV) Historical context Total Quality Management was developed in the mid-1940s by Dr W. IBM. General MacArthur took 200 scientists and specialists. . to Japan to help rebuild the country.

At the simplest technical level. the use of Pareto Diagrams to prioritise quality improvements. in recent years it has also been adopted by some public organisations. Ishikawa’s biggest contribution is in simplifying statistical techniques for quality control in industry. and Ishikawa Diagrams. In the 1970s. Although TQM gained its prominence in the private sector. He also introduced Quality Circles. Crosby also did a considerable amount of work on TQM – he is best known for his work on the cost of quality. his work has emphasised good data collection and presentation. . These are three aspects of company-wide strategic quality planning. quality improvement and quality control.474 Tools: Total Quality Management Juran developed the idea of a quality trilogy: quality planning.

“What does ‘product quality’ really mean?”. Florida.org/quality/tqm/tqm.). 1984. Vanderbilt University (http://www.html http://accurapid.bnet. J. A.sytsma. 1996. Sid Sytsma & Dr Katherine Manley.. J..ppt) “The Quality Tools Cookbook”.ischool.htm) Deming website (http://deming.Tools: Total Quality Management 475 V) Bibliography • Cartin.utexas. McGraw-Hill. Wisconsin.htm http://www. Sloan Management Review..com/journal/21quality. H. (2nd ed.net/~iso9k1/tqm/tqm. Delray Beach.edu/~rpollock/tqm. 1994. T. California Polytechnic and State University (http://www.edu/ Engineering/CIS/Sloan/web/es130/quality/qtooltoc.csupomona.htm http://www.managementhelp. “Principles of Total Quality”. Web-o-graphy http://jobfunctions. Ferris State University (http://www.html) “Review of Japanese and Other Quality Tools”. V. “TQM Simplified. New York. and Ross. “Principles and Practices of TQM”.com/tqmtools/tqmtoolmenu. St Lucie Press • Saylor.htm http://home. Engineering Science 130. E. 1993. Milwaukee.vanderbilt.. Quality Press • Garvin. A Practical Guide”. J. D. p 24-43 • Omachonu. K.html “Technology and Operations Management”.com/05Instructors/TQM.com/OPERATIONS/Quality/ Total+Quality+Management/ http://tkdtutor. Prof.att. 26(1).org/) .edu/~hco/301/08-TQM.

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

Henderson Budgets Building trust Business plans Business Week 150 238 156 178 161 168. 442 150 69 233 218 116. 63 53 425 282 282 186 53 B Baker Foundation Beckhard Benchmarking Big Bang theory Bill Cockburn Boston Consulting Group Bruce D.Index 477 Index A 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. 216 216 82 440 82 132 . 123 52 60. 20.

440 82 418 36 17 17. 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. 206 22. K. 95 97 147 116 132 190 18 35 69 67 440 58 434 55 99.478 Index C Carl Gustav Jung Carnegie-Mellon University Case Western Reserve University Cash Cow Casio Catalytic Cathartic Change Change process Charismatic leadership Chester Barnard C. 23. 39. 20 37 41 10 10 74 308 133 200 .

68 112 180 D 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 E Economic benefit Edward de Bono Edward Thorndike Eight steps for major change Elaboration E. 24 381 52 72. Thorndike Emotional maturity Empathic listening Energy man Entry phase 74 410 233 198 434 266 22.Index 479 Corporate Strategy Counsellor Creativity Cycle of learning/Cycle of training 116 . 123 64. 120. 117.L. 74 .

298 138 392 125 18. 21 53 111 . 33 22 64 F Facilitator Fearlessness Fear of change Fees Force Field Analysis Ford Motor Company Formula of change Framework Future leadership Futurologist 65. Miller Ghemawat Pankaj Glocal thinking Greediness Gurus 132 244 473 123. 66. 307 17 95 36. 47 230 254 236 19 147 113 G Gary Hamel GE/McKinsey Portfolio Analysis Matrix General MacArthur General Motors General Problem Solver (GPS) George A.480 Index Ethical Ethics Ethics and integrity Expert 34 25.

198. 150. 40 17.Index 481 H Harvard Business School Harvard University Hawkins-Simons theorem Henry Harley Arnold Henry Mintzberg Herbert Simon Hersey and Blanchard Hewlett-Packard H. independence. 44 25 35. 20 22 20 367 . 216 132 138 195 434 138 147 418 120 424 282 26 182 19 17 I Identification Igor Asnoff Ikujiro Nonaka IMC Implementation Incorruptibility Indecision Maker Independence Independent Inducements Innovator Instantiation Institute in·teg·ri·ty Integrity. Igor Ansoff Hirotaka Takeuchi Hofer Schendel Honesty Honey & Mumford Humour Humour and perspective 116. 61 218 424 33 90 25 166 367 14. objectivity Intellect Intellectual abilities Intelligent Interdependence 60. 35 42 306 18 35.

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 . Kotter Johnson Joseph Juran Joshua Piven Jung just do it Just-in-time management 34 55 147 53 252 144 150 33 68 81.482 Index International Monetary Fund Interviews ISO ISO certificates 122 84 469 72 J Jack Mahoney James Holec Jr. James McGregor Burns Jealousy JIT John Adair John Deere Company John Locke John Milligan John P. 198 150 314 164 296 91 252 K K Kai John Ken Blanchard Kenichi Ohmae Kenneth R.

132 457 35 307 332 284 138 123 17 308 440 296 N Netflix Nguyen Duc Thong Niccolo Machiavelli Nokia Non-poaching 137 457 95 299 38 . Porter Michael Porter Milwaukee Mintzberg.Index 483 L Laziness Leader behaviour Lose-lose Lust 53 407 380 53 M 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. Henry Mission Monitor Motivation Myers Briggs Type Indicator 257 105 125 169 125 169 227 266 128.

484 Index O Objectivity Observation one-man-show Open Space Technology Orientation 43 84 51 310 60 P 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 .

Ackoff 17 58 68 60.Index 485 Q Qualities Question Marks Questionnaires Quick-start 22 168 84 57 R Rapid framing Relationship Researcher Resolution Respect Restraining forces Reuben Harris Richard Beckhard Richard Nixon Robert S. Kaplan Russell L. 66 20 230 240 240 285 150 112 S 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 .

390. 67 17 459 440 63 459 117. 218 450 383 T 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 . 118 433 24 22 37. 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. 462 432 217 434 123 99.486 Index Star Stephen R.

Index 487 Thiem-Tom 10. Edward Deming William Ian Beardmore Beveridge Win-lose Win-win World Bank 178 473 51 379 379 122 X Xerox Xerox Corporation 471 156 . 242 W Walter Mischel W.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 U Understanding people University of Illinois University of Surrey University of Texas UPS 22 178 144 256 160 V Vilfredo Pareto Vision 314 99. 199 .

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