Executives and managers tend to repeatedly apply existing models even when they fail to bring the desired results. Renowned strategy expert Roger L Martin challenges this approach in his latest book, A New Way to Think: Your Guide to Superior Management Effectiveness (Harvard Business Review Press, 256 pages, Rs 970).
Martin is professor of strategic management, emeritus, at the University of Toronto’s Rotman School of Management, where he served as Dean from 1998 to 2013. He has co-written 12 books, including Creating Great Choices (2017), Getting Beyond Better (2015), and Playing to Win (2013). He serves as strategy adviser to the CEOs of global companies, including Procter & Gamble, Lego, and Ford. He was named the world’s No. 1 management thinker in 2017 by Thinkers50, a biannual ranking of the most influential global business thinkers. In an email interview, he speaks about why it is imperative to experiment with alternative frameworks, why data is not all, how B-schools can foster novel ways of thinking, and so on. Edited excerpts:
Why do you feel there is a need to rethink traditional management models?
Many just don’t work and their use impedes the progress of companies. The response of managers to a model not working is often to try harder using the same model. For example, if pursuing shareholder value maximisation doesn’t maximise, or even increase, shareholder value, they will put more effort and attention on pursuing shareholder value maximisation. Instead, I would want them to rethink the proposition that attempting to maximise shareholder value is causally related to maximising shareholder value. It isn’t causally related because shareholder value is derivative and can’t be maximised directly. It can only be influenced indirectly by focusing on making customers happy. Ironically, a focus on shareholder value will make it harder to have happy customers — so, the prevailing model works against its own goals.
This happens regularly with management models and, that is why, I believe that rethinking is necessary.
You make an interesting observation, 'In strategy, what counts is what would have to be true — not what is true'. Please elaborate.
Focusing on what is true will cause you to replicate what currently exists — typically the strategy of the best company in your industry. If instead, you focus on what would have to be true for an innovative approach to work, you can work on making true in the future the critical things that can power a new and distinctive strategy. The greatest strategies in history, from Apple to Vanguard to Google, make true something that was not previously true.
Employees look beyond position and perks these days. How best can organisations attract and retain talent, especially in the post-pandemic era?
They have to treat each member of the talent class as a unique individual, not a member of a class, regardless of how exalted the class may be. They have to invest in themselves in unique ways. Talents hate being treated as if they are completely generic: 'You are a senior research scientist who we will treat exactly like all the other senior research scientists. If you want something special/different then the answer is No because all senior research scientists are treated the same.' Talent will leave for a place that says: 'We know you are unique and we want to make sure that we are taking account of the things that you uniquely care about.' The answer to that question will often be less costly for the company, even though the talented person in question will value it more.
More the data, the better the decision-making. That seems to be the most common perspective among managers. Why do you think this approach is flawed?
All data is flawed from the past, as of the moment in time that is being analysed. By definition, it is impossible for that data to tell you anything about the future other than to convince you that the future will be a linear extrapolation of the past. Data enthusiasts would disagree — but they have no rationale for their disagreement.
If you want to create a future that does not now exist, you need to imagine that future and then work hard to make it happen. Making your criteria that you must have data to prove such a future is possible will discourage you from trying it because no new idea in the history of the world has been proven analytically in advance. They all come from imagining possibilities and making true tomorrow that which is not true today.
Managers often fail to consider new models since they are not taught or trained to do so. What role can B-schools play in fostering new ways of thinking?
Business schools are a very big part of the current problem. They systematically teach their students to overuse and rely overly on data analysis. At the same time, they discourage imagination. They also tend to teach the single-favoured model in each context and give too little attention to helping students understand the limits to those models and the alternative models that they might utilise.
There is nothing less than a revolution that is required in business education. First, they need to start teaching the fundamental limitations of data analytics to reel in its excessive and fallacious usage. Second, they need to teach methods for imagining possibilities and testing their logic. Third, they need to provide instruction on the boundaries and limits of every model they teach and present students with alternative models, not only a single ‘right’ model.
Many business schools and business school professors will claim that they are doing the above three things already. If they are, great. But most who say it are delusional about how they teach models and data analytics — and that is a big part of the problem in business education.
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