What’s New in Business Management?
May 14 2012 by Bob Donnelly
Over twenty years ago now, two management scientists wrote in the same issue of the Harvard Business Review some words of wisdom that still have not been fully put into practice by many CEOs.
At the time (1989) Theodore (Ted) Levitt was the editor, and in the November-December issue he wrote an editorial on innovation, a “hot” current topic. Some of what he wrote still rings true today, and probably will forever.
He said “there is nothing you can do about the past, but you can do something about the future and what might happen.”
“Everybody should try to develop the ability to interpret the pace, direction, meaning, and significance of what’s happening. And, as long as people are reasonably free to follow their own inclinations, there will be innovation, because they will find way to offer improvements of what is already available, and ways to buy faster, cheaper, and more congenially,”
“That is why one of the chief duties of managers is to encourage their people and their organizations to think imaginatively and act aggressively – even to smash the constraints of the required routine and to circumvent the systems over which they preside.”
Levitt concluded the editorial with now famous words: “nothing is more wasteful than doing with great efficiency that which should not be done.”
In the same issue, Bruce Henderson, the founder and Chairman of the Boston Consulting Group, wrote his well known tome on the “Origin of Strategy,” wherein he quoted Gause’s Principle of Competitive Exclusion: no two species can coexist that make their living in the same identical way.
Henderson reiterated the principle in his own words. “Competitors that make their living in the same way cannot coexist – no more in business than in nature. Each must be different enough to have a unique advantage.”
“What differentiates competitors in business is the customers perception of the products and its suppliers. Indeed, image is often the only basis of comparison between alternatives.”
And he captured the concept of strategy eloquently by stating “strategy is the deliberate search for a plan of action that will develop a business’s competitive advantage and compound it.” He concluded that unless a business has a unique advantage over its rivals, it has no reason to exist.”
His contribution to management theory is his lasting statement “strategy is the management of natural competition. That is how it compresses time.”
If you reflect on these insights by these two management thinkers from over 20 years ago – what’s new? Aren’t we still talking about:
- Developing a unique value proposition?
- Competitive advantage?
- Brand equity as an emotional bond?
Every CEO should be developing a strategy to inculcate innovation in the fabric of their company so that they have a sustainable unique value proposition which gives them a competitive advantage by creating an emotional bond with their customers.
You may not remember Levitt and Henderson, but their views about winning are fundamental even today.