Determining the Right Management Mindset for Today Competitiveness
Essay Preview: Determining the Right Management Mindset for Today Competitiveness
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Traditional management is an area that is extremely difficult to delineate. Change is a permanent feature of human societies. Today, we are living in a confused transition period to a new age defined by global competition, uncontrolled change, faster flow of information and communication, increasing business complexity, and persistent globalization. The economic and political changes over the last century have led to rapidly changing contexts of management marking an entirely new era of business. This new environment is also characterized by “more far-reaching technological advances, and a consumer who has adjusted to this quicker pace and whose fickle preferences are revised with the speed of a television commercial.” (Pasternack & Viscion, 1998).
According to Hanson, D., Dowling, P., Hitt, M.A., Ireland, R.D., and Hoskisson (2005) “The traditional management mindset cannot lead a firm to strategic competitiveness in the 21st Century landscape. Managers must adopt a new mindset, one that values flexibility, speed, innovation, integration and the capability to learn from constantly changing conditions. The purpose of this essay is to critically analyse the characteristics of the traditional mindset and the 21st century landscape to gain better understanding of their thought, and also to study and question the different approaches given to the issue by great strategists such as Igor Ansoff, Henry Minztberg, Michael Porter, and Jay Barney. The scope of this research is to determine if the traditional mindset is obsolete and intend to prove the hypothesis of strategic management for the 21st century as a mix of traditional and modern view instead of a complete transformation and discard of classic approaches.
The “Traditional Management Mindset” refers to the long-established idea about management as a top level hierarchy position, based in recognition, control, and authority, placing managers as self capable of analyze the internal and external business environment and form the needed management strategies focused on tasks performance which was plainly measured on budget spending. It is also characterized by not promoting collaboration and being reluctant to participate in different business activities or departments. Moreover, traditional functional thinking has also led to outdated management practices in the areas of goal setting and problem solving and it stifles innovation. (Kotelnikov and Spanyi, 2005). This mindset was initially adapted to an environment where change was slow rather than rapid and innovative. It helped to structured processes and promoted a sense of order and discipline. But its downside is that lacks of flexibility making the organizations unqualified to permanent external and internal changes. In other words, as expressed by Pasternack and Viscio, (1998) “This is not to say that the basics of traditional management should be ignored, but they are just not enough to get the job done any more”.
More precisely, when studying 2 main exponents of more traditional management approaches, it is possible to detect the flaws for todays competitive and changing business environment. Igor Ansoff (1965) finds strategy as an operational course of action that enables decision-making selected for different threats, For Ansoff the base of strategy is created by a combination of product and market, chosen carefully to achieve the planned objectives, while the main goals are only return on investment and growth, leaving aside effectiveness and customer satisfaction. Then the basic problem of Ansoffs view is that it pretends that management will have always control and rationality when changing situations. Similarly Michael Porter was the first to bring structural elements borrowed from industrial economics to the centre of the strategic management studies (Ahonen, 2004). Porters five forces model , Generic Strategies and value chain are helpful to describe an industry structure, but didnt considered an important strategic issue that is to understand why different firms, within the same environment, perform in a different way, and failed to see the benefits of combining the strategies he proposed – cost minimization, product differentiation, and market focus – instead on focusing juts in one.
Alternative latest strategist as Joe Barney and Minztberg considered the before ignored unstable external market environment and the potential of internal resources. By one side Minztberg (1988) analysed the changing and fluid strategic process and suggested to examine its management in 5 different forms: as a plan, a ploy, a pattern, a position and as a perspective, (Wikipedia. 2005)., which in essence shows strategy as a direction, guide, and tactic. The significance of his argument relies on the fact that it still recognizes the planning and analysis that Ansoff and Andrews (1980) considered as central for strategy formulation but includes the notion that only after a process of trial and error, strategy can be created and developed.
Likewise, Barney (1991) felt that internal company resources were the key for strategic competitive advantage. Seeing them as precious and not easy to replace, He distinguished strategy as a process of combining the best mix of resources, including human, technology, and suppliers, and then organizing them in unique and sustainable ways and in addition Barney stated that the way to achieve this competitive advantage was by gathering all the continuos improvements made along the companys growth. Equally to Barneys resource view, Hitt and Ireland (2002) have also highlighted the importance of human capital, affirming that its a business most “unique resource” and at the same time enhanced by the social capital that facilitate group effort and cooperation benefits.
After studying these different and complementary strategy approaches, is important to define, what is the strategic management role in the competitive environment in the 21st Century. According to Kotelnikov, (2005), there are Three Forces Driving the New Economy, which include: the importance of knowledge in the form of intellectual capital as strategic factor; Change, being continuos and complex; and Globalization, in many areas such as R&D, technology, production, etc that have resulted in opening economies and global competition and interdependency of business.
Therefore, the strategic management process adequate to handle this environment needs to be mainly focus on rapid adaptability, efficiency and reduction on the time of business processes. Also it is an environment based on customer satisfaction and managing resources to add value to the organisational