An Interesting Message From Harvard

Our Architecture Services Lead found this interesting Forbes article on “The Surprising Reasons Why America Lost Its Ability To Compete” written by several Harvard Business School MBA alumni. The big takeaway is that the article ultimately calls out management, not external factors as the reason for failure. As the article states “… if there are disastrous shortfalls in the ability to compete, then surely the quality of management itself—the art and science of getting things done—must have a lot to do with it.” 

Specifically, the article calls out the focus on short-term goals and blaming external factors for the loss of American competitiveness. At Xentity, we agree with Harvard’s reasoning. Though we do understand the management pressures in the private and public sector. We also understand that remaining within budget and maintaining shareholders. However, without investment in the out-years and next generation transformation, workforce, and research, the organization will not survive. They call this approach to management the “Bailing Water” approach.

The Concepts Discussed…

This article outlines the following concepts:

  • Management tends to blame external factors instead of innovating, adapting, overcoming
  • Management shifted to short-term focus and today’s numbers, versus investing in shared resources and pooling for longer haul
  • Managers have focused innovations and transformations more on cost-efficiency and cost-reductions and less on value-adding and increasing relevancy
    • Management education partly to blame focusing on short-term financial outcomes
    • Management shifted to focusing on maximizing shareholders outcomes while ignoring stakeholders needs
  • Instead of focusing on workforce/talent strategy, research, management instead continued focusing on short-term needs
  • Management can complain about government, external factors, but unless management finds way to not just focus on short-term needs, there is limited factors that government execution of new policies can do to stimulate growth
  • Management didn’t mention customer once in the report. C-level types have lost sight of understanding the communities of use, supply, and understanding their market
    • Management has lost ability to look back at the purpose of the program: to create the customer and balance with shareholder value

Our Two Cents On The Matter

These observations from the study are very in-line with the Xentity’s published list of anti-patterns, referenced in our core architecture concepts which show our view on transformation. As we published back in 2008, Our concepts are biased towards the next “generations” ccept. The solutions recommended by the article generally align with our focuses on change as well:

“Achieving continuous innovation and customer delight lies outside the performance envelope of firms that are built on hierarchical bureaucracy and focused on short-term gains and the stock price. It requires a fundamentally different way of leading and managing what is basically a paradigm shift in management.”

Here is a comparison between the Harvard study findings and Xentity’s core concepts:

Harvard Study: Management shiftsXentity Core concepts on addressing change
a shift from controlling individuals to self-organizing teams;We are growing partners.
a shift from coordinating work by hierarchical bureaucracy to dynamic linking;We think big on change, while changing small bits at a time
a shift from a preoccupation with economic value to an embrace of values that will grow the firm; andWe support executives transform their visions into action.
a shift from top-down communications to horizontal conversations.We share our concepts and supporting assets openly.

Solutions Discussed…

The solutions portion of the article wraps up with balancing shareholder/budget-interests focus with stakeholder/relevancy focus:

CustomerCapitalism-vs-CsuiteCapitalism

For further reading, we recommend:

Whether in the private or public sector, the management challenge is the same – external factors are continually battling against the mission, but management is doing the same thing to respond: Short-term cost-efficiency or cost-reduction approaches focusing only on the shareholder (private) or year-to-year budgeting (public). Management is not finding ways to balance the short-term and the long-term relevancy, and only education and leadership can help address this problem. Not waiting for external factors to make it easier.