Modern Imperatives

As with everything else today, the notion of general management is in a state of transition.

The concept of the generalist executive who could utilise his or her general management principles effectively in any country, company or industry is dying. Conglomerate diversification is out; disciplined focus on core competencies within an industry is in.

Also going is the assumption that a lifetime of geographic and functional moves will prepare a manager for general executive responsibilities. New educational and organisational design models that facilitate functional synthesis are being sought. Emerging are models of the generalising specialist and the specialising generalist. To understand these concepts, however, we need to examine an older view of how generalists were developed.

The former path upwards

The Horatio Alger myth, that a determined young person could enter via the mail room and by dint of hard work and pluck move upward to the executive suite, died in the virtually universal requirement that one have at least a college education to get ones foot on the lower rung of the professional and managerial ladder.

In all industrialised companies the hierarchical pyramid was replaced by a two-class structure comprised of a larger, truncated lower pyramid of operating employees topped by a smaller pyramid of specialist managers and executives. From 1900 to the late 1980s in the industrialising countries, this administrative pyramid grew from roughly 5 to 25 per cent of total employees. Increasingly, one had to have the appropriate higher education to get access to the lower rungs of the upper pyramid which was entered directly, usually right out of college.

Those operating white-collar, blue-collar and white-coverall personnel in the lower pyramid have been increasingly restricted. The boundary between the two pyramids has become less permeable. Today, a three-class system may be emerging with post-college education (MBAs, LLDs and PhDs) becoming essential for a chance of making it to general management levels. For example, the budding stars nominated by their firms to attend the Wharton Advanced Management Programme possess the following degrees or equivalents: bachelors degrees (both US and non-US), 100 per cent; masters degrees, US 22 per cent, non-US 44 per cent; doctorates, US 29 per cent, non-US 22 per cent.

The upper managerial pyramid could be visualised as divided into three bands, each defined by the skills most relevant to effective performance. Thus, the lower portion into which a new graduate entered was primarily defined by technical or knowledge-based skills.

If a young person did well, then in five years or so he or she might begin the transition upward into the middle skill band, which would draw on interpersonal aptitudes or people skills. Here one would have to supplement technical ability with skill in communicating, directing and leading others. For many engineers and technocrats, of course, this could be a difficult transition, but if successfully navigated, it would set the stage for a second, more difficult, transition some 10 to 15 years later.

The skills at the upper levels were described a bit more ambiguously, but generally were seen as conceptual or integrating skills that is, the ability to see the big picture, particularly in integrating the companys various functions.

Assumed in this model was that the 15 to 20-year climb upward would be characterised by diagonal moves that would expose the future general manager to the organisations relevant activities so that in time there would emerge a happy congruence of level, skill and authority. Unfortunately, this assumption has collapsed. Size and complexity have sharply undermined the time = level = knowledge assumption. The pace of technical innovation and environmental change means that beyond the smaller firm no individuals career can embrace all the relevant dimensions. Indeed, complexity has forced increased focus in a career so that a managers upward movement became increasingly restricted within a specialised silo. As a result, the transition into the synthesising duties of senior general management became increasingly difficult with a consequent loss of visionary leadership at the top.

The managerial pyramid

The concept of technical, human relations and conceptual skills is still relevant. But, increasingly, organisations are demanding that young specialists and managers possess all three skills sooner in their careers.

This desire was clearly expressed by both managers and corporations when the Wharton School began revising its curricula five years ago. In executive education, it canvassed mid-career managers to see what they desired in a mid-career executive programme.

Overwhelmingly they wanted a programme that would assist them in making the transition from functional to general management. Up to around 35 years of age, everything in their education and careers had rewarded them for specialising in narrowing areas. But they recognised that they were bumping against the tops of their various functional silos or, if they had already been promoted to cross-functional responsibilities, that they were lacking in the integrating skills.

Accordingly, Wharton has developed an intense programme that emphasises participant heterogeneity and functional interdependence, coupled with encouraging thinking about the ambiguous and even paradoxical duties that confront senior executives.

Whartons MBA programme revision included some similar ideas. In response to its questioning, the corporate world told Wharton that it needed to strengthen its students skills in teamwork, interpersonal relations, negotiations and communications while also encouraging greater depth in their breadth.

Given todays common matrix-like structures that demand cross-functional, multi-product/service, inter-regional teams, young professionals no longer have time to work alone while developing their interpersonal skills. These skills are increasingly required from the beginning. Accordingly, the most dramatic innovations in Whartons programme are the required team-oriented experiential courses in foundations of leadership and a cross-functional immersion in a real company.

In addition, given the sophistication of the specialities brought to bear on problems today, organisations want their young managers to be stronger in multiple areas. Wharton was told to maintain its tradition of an MBA major and to explore requiring all students to have multiple majors. (Although this latter suggestion was not formally implemented, students themselves have made it a de facto reality, since 85 per cent of strategic management majors also have a second major, often finance.)

Trends in power axis functions

The years since the second world war have seen significant changes in the power of the various functional specialities to control senior general management. National culture and tradition have affected these trends differently, but competition is forcing convergence.

The US, for example, came out of the war with an emphasis on manufacturing. Strong production managers tended to be those selected for the post of chief executive officer. Hence, the production function was closest to an imaginary power axis up through the centre of the managerial pyramid. Other functions were distant from the axis, with some, such as personnel, on the pyramids surface. Even today, of chief executives of the 1,000 most valuable US companies, only one has a functional background primarily in human resource management.

The prominence of engineering and manufacturing made sense in the immediate post-war era because it reflected the central challenge then confronting North American companies: the conversion from wartime to peacetime products, which had mostly been designed years before in the 1930s. Given pent-up civilian demands, selling was easy.

In a short time, however, immediate demand was met, competition for discretionary dollars intensified and an increased need to differentiate products and services emerged. With this need the modern marketing function began to move toward the power axis so that by the early 1960s it became the number-one supplier of US chief executives.

As recently as the 1960s, financial specialists were generally not seen as candidates for senior general management. The bean counter, green eye-shade stereotype was still strong and they were judged as lacking the synthesising big-picture skills necessary for the top. It was not until the rampant inflation of the 1970s and the dramatic increase in competition for equity and debt, along with the escalating sophistication of financial instruments, that the finance function moved to the power axis.

Today, among the chief executives of the 1,000 most valuable US companies, 264 are from finance backgrounds, 217 from marketing, 193 from engineering/technical, 144 were company founders, 110 from production/manufacturing, 73 from law, and seven from corporate planning.

However understandable the recent dominance of the marketing and financial functions in the US, it did create problems. Interest in manufacturing and production declined. Academic programmes stagnated or disappeared, and the brightest American students focused elsewhere. In Europe and Japan, of course, operations management never went out of style, which gave them an advantage in the 1970s and 1980s.

In recent years, US companies have rediscovered the centrality of these functional skills, and the latest generation of chief executives in many companies are drawn from the production function (and, as at General Motors and Ford, often developed while heading European operations). During Whartons curriculum reform, students demanded that the core component on operations management be expanded.

Of course, too narrow a production orientation also has its drawbacks. In my past consulting with some European industrial companies, I was frequently struck by the gap between their managers impressive engineering expertise and their naivety about marketing to customer desires. And not a few Japanese observers have commented on American and European inadequacies in human resource management. In a typical Japanese company, the senior human resource executive may be second in influence only to the chief executive officer.

The point is not what function should be dominant nor what country has the greatest relevant functional strength. What is called for are people and processes that effectively synthesise the specialist functions into general management.

Specialising generalists

The post-1987 stock market crash environment, particularly in the US, led to an era of unprecedented downsizing. The strengthening of shareholder demands for emphasis on total return from dividends and share price appreciation led to the emergence of a general manager who was a turnaround specialist. Experience in the industry was deemed less important than the will to impose a cost-cutting vision that would rapidly improve corporate profits and make the company more attractive to a prospective acquirer.

Scott Paper offers a dramatic illustration of this skill and its transferability. After earning some $100 million for resuscitating Scott and selling it to Kimberly-Clark, Albert Dunlop advertised himself as available to do it again for group of owners anywhere.

Whatever the merits of such turnaround specialising generalist executives, they do not offer a model for general executives because the challenge they face is relatively simple at least in comparison with the long-run building of a viable business strategy.

Such a specialising generalist focuses on the functional areas having the quickest payback (on closing plants, dismissing staff and reducing costs in the case of Scott) to the detriment of relations with surviving employees, customers and communities.

Another version of the specialising generalist is the habitual entrepreneur who creates multiple new business ventures. Such creators are the ultimate generalists, since in the early days of a new firm the entrepreneur must play many roles because staff tends to be very thin.

Entrepreneurship, therefore, is the most on-the-job training for general management that exists because it demands daily action in multiple functional areas.

Nonetheless, even the most courageous entrepreneur will probably be more successful if he or she has had significant work experience as an employee in the industry and market in which they expect to lead a new company (seven years or so appears to be the optimal time. Less means inadequate knowledge of the business, and more may mean excessive conservatism).

Entrepreneurs seldom provide models of general management in large corporations, however. They tend to be loners, primarily interested in personal achievement and uncomfortable with exercising power over a large organisation. Their personal career anchors tend toward autonomy/ independence or functional/ technical rather than aspiring personally to lead a large company. They are uneasy with the interdependence that management requires.

Often, once the company is successfully launched and has grown beyond a size that he or she can control personally, the entrepreneur becomes frustrated with the emergence of big-company-like bureaucracy and sells and/or departs the company.

Seymour Cray and Gene Amdahl both left large computer firms (Control Data and IBM) to found their own firms because of dissatisfaction with senior managements lack of adventurousness. But in time, with the success and perceived bureaucratisation of their own creations, they left once again to found new firms they could more personally control.

Edward Moldt, who played an important role in the early teaching in the Wharton Schools Snider Entrepreneurial Center, has started more than 25 successful companies.

Even when the entrepreneurial founding general executive stays and is effective, the chronic problem is often succession. Personal technical knowledge and leadership charisma, coupled with a disinclination to delegate significant authority, blocks the development of subordinate managers. The unhappy experience of Wang Laboratories after the death of its namesake founder is all too common.

The generalising specialist

A happier (to this writer) general executive model is offered by Louis Gerstner, chief executive at IBM, who represents a specialist able to generalise his expertise so that it reinvigorates an overly narrow company.

The core consumer marketing function orientation he brought to IBM seems to be exercising a beneficial influence on the companys technical culture to help it better define its product and service strategy in a way that prospective customers can understand. By taking a marketing orientation approach and integrating it into a strong but complementary organisational culture, longer-run possibilities emerge.

Of course, even this approach is not without pain of staff reduction, as old products and hoped-for innovations are jettisoned when no viable market can be developed. Nonetheless, the survivors will be less traumatised, to the extent that the senior executives are able to conceptualise and articulate how a new core emphasis is energising all of the companys functional activities.

Percy Barnevik of ABB presents another example of the generalising specialist who takes a critical skill and generalises it for the total organisations benefit. At ABB this is an organisational design philosophy that emphasises every managers responsibility to network within the family of companies. Developing informal relationships and looking for synergistic opportunities is every managers responsibility, not just the tops. Thus the intent is to disperse a synthesising perspective throughout the organisation.

General management attributes

When Wharton Executive Programme participants were asked what attribute they most admired in their personal heroes, the most common response was the ability to communicate a vision. Unfortunately, what President George Bush once described as the vision thing has become something of a cliche in recent years, as the expectation grew that effective leaders had to be able to commune with higher authority on some mist-covered mountain, returning with the magical words that would give everyone a sense of direction and mission.

So we heard that firms were over-managed and underled; leading to an unfortunate distinction between management and leadership with the pernicious implication that good management is somehow inferior and less important than leadership.

The distinction can cause great mischief when embodied in the belief that a senior executive need only be a good leader rather than an effective manager. Influential leaders who did not know how to manage have done much damage in human affairs as they raised expectations without the ability to deliver on them. And no effective number-two executive officer/chief operating officer/executive vice-present type can totally compensate for the destructive effects of a charismatic leader who has no aptitude for the nitty-gritty of actual management.

Of course, the good manager/non-leader can be boringly bureaucratic. In the long run such narrow people can also reduce human liberties and spirit, as adherence to rules becomes an end instead of a means. The worldwide scepticism about government-run business reflects this unhappy experience.

The effective general executive does not need to be an improbable philosopher-king, but does need an ability to uncover vision and convert it into action. Gerstner at IBM probably exaggerated when he exclaimed that his company did not need a new vision, just more effective execution. But he was correct in implying that the chief executive alone does not have to be the creator of the unifying vision. The vision may be more collective in origin than one individual, but clearly it must be shared and converted into management practice.

Proactive communication skills are important and the ability and willingness to initiate communications to stakeholders is critical. Verbal articulation is increasingly important to general managers. Some studies suggest that public speaking is our most feared activity, which may explain why the most common training requested by newly appointed senior executives is speech-making. Because of the worldwide competition for capital and the increased activism of corporate owners as represented by financial analysts, pension holdings, mutual funds and potential raiders speaking to stockholders, individually or in groups, is one of the most rapidly expanding time demands on senior executives.

Even more important than initiating communications, however, is the ability to receive them: that is, willingness to create an environment of approachability. My own research on how managers spend their time suggests that the most effective general executives spend less time on communications they initiate and more time talking to others who start the conversations. (Those rated more effective spent 16 hours per week communicating in response to others, and only 9.5 hours on conversations they initiated; less effective executives spent 11.3 hours per week on self-initiated conversations and only 6.5 hours responding to others).

The more effective executives control less by self-initiated interrogation and more by availability and receptivity to subordinates and colleagues. The best create an atmosphere of tranquillity and focus that communicates to their visitors that their presence is enjoyable and is at the moment the most important activity that the executive could be doing. Colleagues of as diverse a set of leader-managers as Winston Churchill and Reginald Jones, former chief executive of General Electric, have commented admiringly on this skill.

Some dramaturgy is involved in creating this environment, of course: not talking across a crowded desk but rising to move to another chair when a visitor enters; silent buzzers that prompt a secretary accidentally to interrupt a meeting to remind the executive of some real or imaginary pressing matter.

More fundamentally, however, effective general executives intrinsically enjoy conversation when people come to them and this enjoyment reinforces the willingness, especially of subordinates, to approach them. It is not that the subordinates habitually come to the executive with a request for permission to do something. Rather they come for advice: Boss, Im thinking of doing this; my analysis suggests it will work, but I know youve been down this road before; am I missing anything?

Most such conversations do not end with the general executives directive, but they do offer a mutual learning experience (and of course the opportunity for a veto if the subordinates intended action promises disaster).

The greatest advantage of general executive receptivity is the encouragement of an upward flow of communications that helps top managers to understand better the operating and environmental realities. It counters the kind of velvet cocoon (a term coined by President Lyndon Johnsons press secretary to describe the isolation that surrounded Johnson in the later days of his administration) in which a senior executive can become enveloped when he implies that it is dangerous to communicate truthfully when such truth conveys other than success a chronic problem for tyrants from Hitler and Stalin back down the ages. As an ancient Persian saying puts it: The messenger who conveys ambiguous news should have one foot in the stirrup.

When Gert Tagge became chairman of Siemens of Germany some years ago, he commented that he needed to Americanise the company by encouraging a more spontaneous flow of upward communications. While describing this as Americanisation was perhaps ill-advised in a German company , the notion is valid. In working with companies in Thailand, for example, I have seen how reluctant managers are to approach senior executives physically. It is not that they are afraid of the boss, but that their sense of his power is just so great that they fear making some social gaffe.

Encouraging candid upward communication requires substantial tolerance for error and even foolishness, of course. Churchill reportedly never criticised a subordinates proposal at first hearing. He recognised that a creative idea is most vulnerable shortly after birth. Rather, he expressed boyish enthusiasm about the most unrealistic ideas (some of which like the first world wars ill-fated Dardanelles invasion got implemented with less than desirable results). But more importantly, his subordinates were not afraid to voice new ideas so the organisation was rich with creativity.

Such a leader-manager, of course, cannot accept all proposals, but necessary vetoes can be issued on a somewhat delayed and more private basis so that the future floating of ideas is not discouraged. A variant of this encouragement of honest upward communication was expressed by Harold Geneen when he headed ITT. He warned his managers that the worst of ITT sins was not to communicate bad news in the misguided hope they could turn the situation around before Geneen found out about it.

Finally, senior general executives require great behavioural flexibility. Among all kinds of specialist and manager positions, general management allows the incumbent the greatest discretionary control of personal behaviour and requires the greatest behavioural flexibility. Unlike functional control managers, service managers and other specialised positions, general managers have the potential for personality to be reflected in how they spend their time. The time horizons and decision demands, for example, are much longer than those for an operating supervisor.

But this means that general managers must have a wider repertoire of behaviours: enduring periods of uncertainty about what subordinates are doing; withstanding the temptation to intervene prematurely after they have supposedly delegated authority; accepting results inferior to those they could have achieved by doing the task themselves; listening through a subordinates proposal when they could simply tell him or her what to do in a fraction of the time (a patience associated with Dwight Eisenhower that earned him great dedication from his people).

And, of course, general executives must know when their leadership style should be participative and when authoritarian. Being authoritarian all the time is the easiest style. It will work in lower management levels, with entrepreneurial start-ups and in many corporate turnaround situations where the objectives are clearly defined and the problem relatively simple intellectually if not behaviourally. But such a constant authoritarianism will be disastrous in a competitive and changing environment where the companys success depends on the ability to utilise all the divergent skills present among its key players. Even here, however, talk must eventually come to an end and action commence. In those circumstances when consensus cannot be reached, the senior general executive must issue the decisive word.

The Japanese have a most descriptive term for the person who can do this. He is the one who listens with an inner ear to the implicit consensus of which the management team is not yet aware, and then articulates it at the propitious moment.

Developing generalised skills

Since specialised skills and education will remain critical to a viable organisational career, the challenge seems to be how to help the specialist gain himself or herself a generalised expertise as rapidly as possible. As we have seen, in general management the ability to conceptualise how parts and functions fit together is critical. This is an integrating, or synthesising, skill (in contrast to the specialists analysing, or breaking-apart, approach).

This synthesising ability is related to creativity, most of which consists not of conjuring up totally new ideas but in putting common elements together in novel ways, often by borrowing from a separate context. For example, a professional architect/amateur fisherman who was designing a roof for a tropical building wondered how the flounder changes its colour depending on the sea bottom. The technology of small bubbles, which expand or contract among fish scales, was adopted to the building of the roof, white balloons expanding to reflect heat; contracting to absorb it.

Such creative synthesising ability is not totally understood, but there are some instructive lessons for developing general executives. People who are more creative tend to expose themselves to a more heterogeneous mix of incoming stimuli for example, more varied reading, odder hobbies and a wider diversity of people with whom they talk.

This curiosity may be reinforced by a more liberal education since there is some evidence at a leading US university that liberal arts students during their undergraduate years tend to increase their synthesising skill, while this skill stagnates for engineering students (but engineering students increase their analytical skills which, equally, appear to stagnate among liberal arts students).

It is not clear what the impact is of undergraduate business education, but the intention at most such institutions is to combine the analytical development of a technical education with the integration of liberal arts development. Thus, variety of experience provides the potential cues for borrowing synthesising ideas.

One of the paradoxes of management development is that one must sometimes throw away specialised knowledge, so painfully gained, by periodically changing functional responsibilities. Short-term individual and corporate performance must be harmed in the interest of building stronger integrating forces. Research on conflict resolution strongly supports the conclusion that homogeneous groups composed of people with no personal experience of an opposed group are much less likely to resolve their differences with that group than when at least some members in each group have had experience in the other. As a native American saying puts it: Walking a mile in the moccasins of your opponent enables you to understand his grievance.

In addition, the rhetorical gap between senior executives and recruiting managers should be bridged. Many general executives offer vocal support for the hiring of humanities and liberal arts students for managerial careers. But the operating departments doing the actual hiring mainly look for more narrowly educated technocrats.

Finally, the dramatic pruning of corporate staff and middle managers in recent years has led to new concerns about the elimination of general management positions crucial to developing people for top executive jobs.

General Electrics Jack Welch has been cited as endeavouring to reduce the number of hierarchical levels by half in order to promote more rapid decision making. But this objective might backfire if it fosters increased centralisation of integrating-type decisions so that lower managers are excluded until they have climbed higher.

Whether reducing bureaucratic levels aids or hinders development of future general managers appears to depend on the causes of the pruning. If the drive is to reduce expenses and quickly improve profits, power flows upward rapidly and lower-level discretion is squeezed out. Morale declines and personal development slows down even among the survivors.

If, however, the pruning is accompanied by viable product and service innovation that draws on close-to-the markemulti-functional teams, the opportunities for general management training increase.

The threat of success

Personal career success can be a grave threat to those who have climbed to the general management ranks. Unhappily, such success often leads to inflexibility as one loses the motivation and courage to change. With time we tend to lose the ability to distinguish the new from the old, the unique from the regular. We interpret cues as warranting previously successful responses inappropriate to the changed situation. It is the very busy-ness of managerial life that contributes to the problem.

The reality of most executives days is not like that implied in management textbooks, neatly divided into periods of planning, controlling, structuring, staffing and directing. Rather, it is a seeming chaos of time, talking in many short conversations covering multiple topics, broken by five or so previously scheduled meetings per day.

On an average day, the managers whom I have observed each talk with more than 25 different people, which takes over 60 per cent of their time (perhaps 13 hours per week on the telephone!). And the day is jumpy: the average interval of quiet time without interruption is less than 10 minutes; the average incident, such as talking to someone, lasts about two minutes.

Under such conditions, an executives day is extremely fractionated, devoted mainly to responding to various telephone calls, visitors and meetings. His or her life is dominated by the present and by fighting immediate fires. The future shrinks in apparent importance because there is no time to deal with it.

Now making transitions from short-run emergencies to longer-run challenges is tough; ten minutes alone are helpful only for work on small, immediate issues. They are unsuitable for longer-range, less-structured projects.

Many executives simply do not believe they have up to 90 minutes alone each day; they feel that they scarcely have time to start a new task, drink a cup of coffee or even take a deep breath before being interrupted by a ringing telephone, an unexpected fax, an uninvited visitor or a clanging bell on the computer announcing another incoming e-mail message.

Continual dominance by immediate demands means inadequate time for future-oriented reading and thinking. As a result, many executives tend to be narrow in their interests, concentrating on technical and business reading. Time-harried people take insufficient time for exploration of the different. Dominated by response behaviour for long periods, they can lose track of who they are and what they believe. Losing touch with their own values and aspirations, they find it impossible to initiate fundamental changes. The future is never confronted.

Short-term performance measures also encourage executives to concentrate on the now. They feel that they are rewarded or punished for this year, based on annual measures of costs, earnings and growth. In the long run, they will be dead or transferred.

Ross A Webber is chairperson of the management department and professor of management at the Wharton School, Philadephia, and formerly vice-president for development and university relations at the University of Pennsylvania. He is currently the academic director of the Wharton Executive Development Programme: The transition from functional to general management.

Summary

The old certainties in general management are breaking down. Size and complexity have undermined the traditional three-tier upward climb, which starts with technical knowledge and qualifications, continues as broader inter-personal aptitudes are developed, and ends with mastery of the big picture and an ability to integrate all the companys functions. Increasingly organisations want young managers to acquire all these skills at an earlier stage.

The power axis of management has also changed over the last 50 years. In the US, at least, the prominence of engineering/ manufacturing made sense after the second world war. Marketing people became more assertive in the 1960s, while finance gained more importance as competition for debt and equity increased in the inflationary 1970s. The point, though, is not what function should be dominant today: the current environment calls for people and processes that effectively synthesise specialist functions into general management.

One broad type is the specialising generalist, such as the turnaround executives of the late-1980s or the habitual entrepreneur who creates multiple new business ventures. A happier model is the generalising specialist able to reinvigorate an overly narrow company. Vision and leadership, though, are no substitute for the nitty gritty. Effective general management includes the ability to communicate, to be approachable, to encourage and respond to the upward flow of ideas, and to adopt great behavioural flexibility.

Creative, synthesising skills are vital, as is a preparedness sometimes to discard painfully gained specialist knowledge.

Signpost

General Management

This introduction to Mastering Management covers all the various facets involved in general management. The subject itself is not covered again since general management is the synthesis of many management functions, such as accounting and marketing, which will appear in their own right in future modules of the series. However, it was felt appropriate to begin the series with an in-depth look at what general management actually is.