STARTING AND MANAGING A BUSINESS FOR PROFITS AND WEALTH
Part 19: So What Really Works?

The Crown Plaza in Shanghai was crowded but we have a nice pleasant room in a quiet part of the hotel. A group of CEOs, senior managers and a couple of directors gathered for a morning session to discuss management issues. They come from a wide variety of industry ranging from chemical and manufacturing to construction and consulting. I was leading a discussion on “ What really matters in management? “  With reference to a research carried out by Harvard professor Dr. Nitin Nohria. The central question which is “ What management practices actually contribute to performance? ” was the subject for the group.

We had a rather energetic discussion on this and although there was no complete consensus but three factors came out as being important factors in the China scenario; “Low Cost Operations”, “Well defined strategy” and “Having a great Leader”.

The first point was quite easily agreed to as China is often regarded as the factory for the world. However most of the participants agreed that this advantage will be fast disappearing as labour cost escalates. The general agreement is that low cost can no longer be relied on in China for organizational performance in the future, in entirety and has to be supported if not replaced by Quality and Customer Satisfaction as a key determinant.

Most of the participants agreed that Clear Strategy is another key factor and we went on to discuss Asian companies that has clear well defined strategy and those that don’t. It was pointed out that Asian companies are generally opportunistic and especially family-owned companies traditionally  has a tendency to jump into a great variety of businesses with no clear strategy and “as  long as it makes money”. On the other hand we have organizations that appear to have clear strategy if you ask them but it resides mostly in the minds of the management. The challenge in most Asian organizations is communicating that strategy in a clear simple way to the rest of the work force so that the organization would be aligned in terms of directions and efforts. Otherwise it would be tantamount to the scenario of the head of an animal moving forward but having to drag the rest of the body to follow.

The discussion on leadership in Asia produces a wide variety of opinions. The agreement is that the charismatic and the authoritarian leadership style are common in Asia. However the more effective consensus-building leader and the team-building leader is required in today‘s fast moving business environment which requires the fast responses that the traditional hierarchical companies are unable to produce.

I suggested that leadership today is really more about bringing the work force from a compliance state to a committed state. So the question raised by the group is “How do we get a committed work force?”  and if getting a committed work force is about empowering them, “Can Asian workers be empowered?”We seems to agree that unlike the  western work force the Asian workers generally are less receptive to being empowered and tend to be content to be told what to do. But then we also agree that the Gen Y workers today  is unlike the previous generations and would want to be given more freedom and are more vocal. The change obviously comes from the different ways in which the different generations are brought up. Today’s managers have some challenges in managing the GenY work force because of that difference.
We went on to explore Dr. Nitin Nohria’s extensive research on 220 management practices across all 160 companies in forty different industries over a ten years period. His findings came out with 18 key factors that contribute to organizational performance; the key measure of performance being total returns to shareholders.
Professor Nohria outlines the primary and secondary factors that winning companies have in common. His findings provide a template of practical and useful tools for getting ahead in today’s competitive business environment.
His research provided four primary factors and four secondary factors. He suggested that having the four primary factors are critical and having two of the our secondary factors would b significant ion becoming a winning company.

The Primary factors are
1.    Clear, focused, well-understood strategy
The emphasis is on clarity of strategy not only to the work force but also to the customer and that it should be shaped by the external market rather than internally generated.

2.    Flawless Execution that consistently meets Customer Expectations
The challenge for organization is how to consistently deliver the value to the customer. There is also a need to empower the frontline to respond quickly to the changes and to eliminate wastages.

3.    High-performance and high-values culture
Organization need to establish and religiously follow its core values. Work culture need to align with the values of the today’s work force; fun challenging and satisfying.

4.    Simple organizational structure that is easy to work with and work in
Simplicity of structure seems to be the answer and promoting synergy and alignment across the whole organization is important.

The Secondary factors are
5.    Extraordinary talent throughout the firm
An organization is only as good as its pool of talents; and the challenge is to recruit, groom and retain.

6.    Superior board and leadership team
Two things came out as critical; ability of the leader to connect with this work force and the ability to see things before others do.

7.    Transforming innovation
There is no doubt that in a fast changing market place; innovation and technological advancement are key determinants for success.

8.    Disciplined Mergers & Acquisitions capability
This is a surprise but the research shows that this competency is significant although rare and it is known that M & A that are mismanaged could destroy an organization.

Although the research is American-based., the forum agreed that the factors discussed are generally relevant in a changing Asian business environment. We finished with lunch in an American hotel franchise crowded with a multi-cultural patrons served by largely Chinese workers.

This article is based on a management forum discussing Professor Nitin Nohria’s book “What Really Works, William Joyce, Nitin Nohria, and Bruce Roberson”, and the notes of his lecture on “What really matters?”