INSTANT COFFEE AS MANAGEMENT THEORY.

For success in the $20-billion-a-year management-consultancy business, find a fad. In recent years total quality, culture change, core competences, organisational flattening, benchmarking, outsourcing and downsizing have all been touted as the sole path to corporate salvation. For a taste, take Michael Ham­mer and James Champy in their best-sell­ing book, “Re-engineering the Corpora­tion” (HarperBusiness, 1994): corporate America’s alternative to re-engineering, they say, is “to close its doors and go out of business. The choice is that simple and that stark.” Is management really so easy?

For all the hype, fad-based manage­ment usually fails to deliver. Quality pro­grammes are launched with great fanfare, then fade away: Florida Power & Light, an electricity company, at one time boasted an 85-person quality department and 1,900 quality teams, but saw little im­provement in its services. Cutting man­agement layers often disrupts internal communications, as firms such as Nynex and Sears, Roebuck have discovered. Many companies - among them Compaq and Harley-Davidson - have found outsourcing so hard to manage that some previously subcontracted production is now back in-house. And, according to the American Management Association, fewer than half of the firms that have downsized since 1990 have seen long-term improvements in quality, profitabil­ity or productivity.

Some economists argue that every fad leads managers down one or more of several “false trails”. These include believ­ing that ready-made techniques can solve any problem; taking action, any action (the “ready, fire, aim” stance); flattening ev­ery structure in sight; and constructing corporate cultures based on happy fam­ilies, not hierarchies.

They con­cede that these trails lead to some useful ideas. The snag, however, is that managers tend to take their usefulness on trust. This has spawned what is called “instant coffee” management: just open the jar and add water, no effort required. Worse, any manager who fails to follow the latest  fad - regardless of its relevance - risks being thought unprofessional. Faddishly following the false trails is damaging to “the sophisticated formal organisation and decision systems that corporations have evolved and which make management effective.” Companies are damaged in other ways, too. Management gurus encourage firms to believe that all fixes are not just easy to implement but quick to take ef­fect: quality programmes will produce rapid declines in defect rates; re-engineering will swiftly revitalise paralysed pro­cesses; making use of subcontractors will instantly clear clogged production lines. So managers take on too many fads at once, causing “an overdose of instant remedies” When the promised benefits fail to appear, managers lose heart - which is why most re-engineering and quality initiatives eventually break down.

The allure of fads undermines rational management and thinking at every level of the corporation. In the early 1990s Chrysler’s Jeep division found that sun vi­sors on some of its vehicles were splitting after sale. The team behind the visors took a fashionable tack: they set about re-engi­neering the entire product, along with the processes used to make it. Robert Lutz, Chrysler’s president, suggested that the team instead try to discover the specific cause of the defect. Only then did they find that a supplier’s worn tool was to blame - a glitch that was easily fixed with­out extensive re-engineering.

 As with sun visors, so with entire firms. A better approach is a return to what is called “professional management” But it is less clear about what this entails, apart from years of experi­ence, lofty ideals and ethics, and the abil­ity to use “sound reasoning” to assess the ideas behind the fads.

The trouble with ready-made one-size-fits-all management techniques is that they encourage “the outsourcing of critical thought”. Fads lead managers to believe that simple initiatives offer simple answers to the problems of the complex, inter-related system at the heart of the modern company. In reality, such an approach will probably have an unexpected - and often unwelcome - impact on many different aspects of the company’s operetions. Since firms also exist as part of a network of suppliers, patners and customers, the potential for chaos is vast.

What clever managers have in common is their ability to think about their companies in the way Mr Lutz thought about sun visors: appraise every situation individually, indentify the problems involved and the decisions that must be taken, then analyse the potential drawbacks or opportunities.

Thinking management, is the approach of some of the most successful companies of recent decades, such as Wal-Mart, Sony, Hewlett-Packard and Johnson & Johnson. These firms understand that there is no competitive advantage to be gained simply by adopting the same fad or strategy as your competitors. In­stead, they have consistently outclassed the “critical thinking skills” of their rivals in everything from product development to distribution and marketing - all with barely a fad in sight. It has to be asked: could fadless management be the next management fad?

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