Managing Through Turbulent Times. Anthony Holmes
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that the basic condition of stability that underpins management’s rational processes is absent.
Kotter’s functions contain no comment about building in flexibility and adaptability that allow the plan to evolve. He tends to be concerned only with the rectification of deviations from the plan to enable the agreed programme to get back on track. Something that is probably not feasible when turbulence is encountered.
Having observed the catastrophic virtual collapse of the world financial system in 2008 and the precipitous descent into global recession we are forced to conclude that either:
1 Drucker and Kotter were wrong and that the economic environment is not a knowable and controllable place.
2 Those charged with the management of the system have abandoned the techniques designed to maintain control.
3 The techniques themselves are deficient.
I suggest that most of the answer lies in 1 and 3 above.
The world economic system is not like a machine in which the function, behaviour and relationship to one another of the component parts can be described in mechanistic terms. In recent years we have come to understand that it is a complex system that behaves in a chaotic way, [7] like the weather or a crowd of people leaving a stadium, and that it is prone to sudden and apparently unpredictable changes.
It is difficult to control a dynamic system that you cannot predict and for this reason alone management, during times of turmoil, cannot rely on the systematic tools that they use when the world seems a more reliable place.
The established techniques of management science seem to work in the spring and summer of the business cycle but become unreliable in the winter.
In turbulent times the urgent time frame of action and the necessity to modify plans and budgets in response to unexpected events added to the possibility of their ‘out of trend’ scale cannot be accommodated by the rigid adherence to established processes on which scientific management depends.
Yet the ultimate test of management is performance. Achievement rather than comprehension remains, of necessity, the aim. Management, in other words, is a practice, rather than a science or a profession, although it contains elements of both.
Indeed, I suggest that if managing in stable periods is a science then in turbulent times it is more of an art.
The managerial toolkit
My concern about the dependability of the ‘tools’ of management science is such an important point that I need to offer a little more justification.
I do not want you to feel that I am stripping you of all weapons and armour at the moment when you are about to go into battle. But neither do I want you to believe that wooden shields are going to stop bullets.
When the turbulence is particular to your company, in other words the external environment is not turbulent but for whatever reason your company encounters a destabilising event, then the tools of management science continue to be dependable.
This type of problem can be defined clearly and often can be dealt with as if it were a broken part in a machine, with reasonable confidence that the external environment is not going to change significantly over the timescale in which remedial action is planned.
Of course the problem you encounter may be of such severity that it cannot be resolved or the shape of the company cannot be preserved in its current form.
For example, the failure to derive the anticipated benefits from a major acquisition leaves the combined business with all the costs but without the rewards to pay them. Plan A has failed and must be abandoned. Plan B must adopt less ambitious benefits with the objective of making the new financial structure bearable. The conventional managerial toolkit is at its most effective in such circumstances provided significant deterioration in the operating conditions is not the primary cause of the trouble.
I want you to appreciate that in turbulent times the challenges you will confront are unpredictable and while your established techniques will be useful weapons against swords and spears, they will have little effect on an unspecific enemy who deploys its technologically superior weapons from a distance beyond your reach. To survive and emerge unscathed you will need other tools.
The set of tools on which managers rely are based on rational quasi-scientific methods of analysis and deduction. They were developed to be applicable to a wide range of enterprises and organisations and are based on the presumption that the problems managers encounter are not necessarily industry specific but are universal, and the range is finite. The managerial confidence that equips people to control complex, multi-location, diverse companies is built on the presumption that most problems they may encounter will be susceptible to treatment with this standard ‘toolkit’ of procedures.
For this to be a viable proposition dissimilarities must be either insignificant or irrelevant and the ‘workbench’ on which these universal tools are used must be stable.
Let me illustrate this point with an analogy. A surgeon uses a scalpel as part of her standard toolkit. This is a low-tech reliable implement that she uses with confidence. However, her confidence is based on the expectation that the patient will be immobilised and the operating table will be stable. The surgeon cannot have the same confidence if the patient or the operating table are moving unpredictably.
Similarly, the tools used with confidence by management in stable times cannot be used with equivalent confidence in turbulent times.
When local turbulence is either caused by or arises simultaneously with external instability then the tools of management science become less reliable. But in either case it is pointless agonising over your preference or what might have been. The situation has changed and the status quo ante cannot be recreated.
When a company encounters difficulties at a time of general economic turbulence the problems management faces are similar to the surgeon and the scalpel. All the elements in the picture are the same but the turbulence renders the previously dependable tool unreliable. If you are unable to stabilise the turmoil you cannot use the tool with confidence.
Managers are trained and encouraged to approach each problem in a manner which enables them to apply one of the methodologies contained within their toolkit. This is understandable because the tools, such as budgeting, strategic planning, management by objectives, discounted cash flow analysis, SWOT analysis, etc. all appear powerful and universally applicable. Moreover, the problem cannot be ignored and if there are no better tools available you must utilise those you have.
If you are a surgeon you may turn to the scalpel because you have no knowledge or experience of non-invasive procedures. But there is danger in shaping the problem to fit the tools available.
The managerial toolkit will also be deficient if it is applied to a problem that falls outside the scope of regularly occurring problems for which it was designed. A scalpel is unlikely to cure influenza. An irregular or novel problem will, therefore, in all probability be approached inadequately by a manager if he or she possesses neither the specialist tools nor the experience that are appropriate.
This incompatibility between the set of managerial competencies and the situation to which they are applied arises most conspicuously at times of significant change. The turbulence and comparative unpredictability of such times renders inadequate the technical processes of management designed to impose control during less turbulent times when change is moderate and incremental.
Returning to our surgeon and scalpel analogy, what can be done? Must the patient die because the turbulence prevents the surgeon using her scalpel with confidence? Or should the surgeon use the scalpel even though she knows it is the wrong tool?
You may not be able to calm the turbulence but you can reduce its effect by installing an inertial dampening system. However, if you cannot stabilise the patient, the table and yourself sufficiently then you must abandon the scalpel and find a new tool. You can attempt another procedure that is less invasive or a non-surgical regime to stabilise the patient until