Sunday, September 2, 2012

Principles of Balanced Management and Leadership

Balance is the crux of human survival as well as growth. Nature’s ecology, as we all know, is held in a delicate and structured balance in terms of various ecological factors that operate. Human body, as per the ancient Ayurveda as well as the modern medicine, is held in an equally delicate balance by the internal factors of metabolism. Balance thus is crucial to orderly living and development. While the balance of the environmental system or the living system tends to get affected by accentuation or attenuation of one or more factors, eventually the systems return to a state of balance. A system in a state of perpetual imbalance ultimately destroys itself while a system that succeeds in maintaining a balance tends to be successful.

Corporations and organizations, which are the creations of the human being, are no exception to the essentiality of the balance. Corporations and organizations are created, operated and modified by management and leadership. Both management and leadership are vital ingredients of corporate development. These two practices, which at one level tend to be individual competencies and at another level emerge as institutional attributes, also need balance to be efficient and effective. It is important that managers and leaders appreciate how balance can be a great stabilizer as well as a growth driver. This blog post postulates ten significant principles of balance in management and leadership in this context, but not necessarily in any order of priority.

1. Leadership-Management Balance

Both leadership and management are vital for corporate development. All effective leaders would need to be efficient managers while all efficient managers may not become effective managers. Leaders are commonly thought to be required to envision, strategize and transform, but their role and responsibility in efficient execution cannot be underplayed. Managers are commonly thought to be required to plan, execute and monitor but their role and responsibility in effective strategizing, and becoming future leaders, cannot be overemphasized. Leaders being cognizant of the continuing managerial responsibilities and managers being aware of the leadership challenges provides for optimized leadership-management paradigm for an organization.

2. Change-Continuity Balance

As is said somewhat rhetorically, change is the only constant in today’s world. This is more so in the case of corporations which face organized competition to develop and manufacture new products or offer new services on a continuing basis to garner increased business. However, for each point of breakthrough innovation, which could take a few years, there would be years of continuous product life cycle management. Achieving efficiencies with current products, services, processes, technologies, people, assets and structures continuously is as important as aspiring for game-changing products and services and other factors of business on a periodic basis. Leaders and managers who optimize change with continuity help organizations and companies manage competitive forces with surefootedness. The orderly and yearlong succession rollout by Ratan Tata for Cyrus Mistry is a remarkable example of the maturity of the Indian conglomerate in ensuring change with continuity.

3. Authority-Responsibility Balance

Classical organization theory has spelt out the two fundamental factors of effective management of activities. These are authority (or power) and responsibility (or accountability). Power without accountability would be intoxicating and disruptive while responsibility without authority would be constraining and frustrating for people. Authority-responsibility balance needs a case by case application. In some cases, accountability precedes empowerment and in some cases the reverse is true. The use of power-accountability balance by leaders is like deriving mechanical advantage from a plank mounted on a fulcrum. The intelligent leader must know where the fulcrum must be situated, closer to authority or accountability, to derive maximal performance advantage from his or her people.

4. Structure-Process Balance

Some organizations and people tend to place extraordinary emphasis on organizational structures and reporting relationships to manage activities for results. Yet some others consider organizational systems and processes to be primary enablers of activities and results. All, however, probably recognize that each organizational structure solves certain problems but also creates new ones. Similarly, it is good to be bureaucratic, multi-layered and sequential occasionally (to add value and minimize risk) and also simplistic, flat-structured and simultaneous at other times (to gain speed and expand footprint). Effective leaders and managers realize that structures and processes must be designed and tuned to synergize, rather than impede, each other.

5. Market share-Manufacturing share Balance

Established research teaches us that market share is a virtuous objective to pursue for organizations, given the positive profit impact of high market share. Experts are, however, not united on whether marketing investments (for the pull impact of brand building) or manufacturing investments (for the push impact of scale and scope) impacts market share more profoundly. Undoubtedly, mind share of the customer is essential to ensure brand recall and greater purchase. Similarly, having higher scale relative to competitors helps achieve better economics as well as higher shelf-visibility. Finding the optimal balance between the pull and push systems in end-to-end supply chain planning is the key to manage demand and supply volatilities without losing the handle on growth.

6. Technology-Business Balance

The recent Apple-Samsung court battles on smart phone technologies have brought to the fore the importance of intellectual property and patent estate (reflecting broadly the innovative technological capability of the firm) to secure competitive advantage and even shut out competition in some cases. That said, technological virtuosity without business sensitivity or business smartness without technological foundations would both be sub-optimal. Leaders must focus on developing technologies that enable new business development. In a super-saturated tablet market of today for example, the right thinking leaders would not merely be thinking of the next generation of tablets but would be conceptualizing the next generation of devices that would be equally effective in professional and personal lives, for example.

7. Man-Machine Balance

Toyota Production System (TPS) exemplifies the optimum balance that can be struck between the men and machines. TPS does not advocate lavish investments in high-end and massive infrastructure nor does it advocate excessive use of labor. It combines the simplicity of unit operations, perfection of robotic operations, flexibility of human intervention and stringency of takt time to develop an integrated man-machine system that reflects both efficiency and effectiveness. The simple division of low cost and high cost labor countries to determine relative man-machine interface hardy does justice to the challenge of manufacturing competitiveness. Actualization of labor force to higher competencies through balanced deployment of men and machines holds the key to competitive manufacture in both developed and emerging countries. Application of Japanese manufacturing approaches has taken the Indian automobile industry several notches up over the last three decades, as a validation of this approach.

8. Effort-Result Balance

Managers and leaders have an eternal enigma: should we manage by results (and goals) or by efforts (and activities). There has been no convincing conclusion to the debate. Results are certain and well measured but are post-facto. Timely efforts are crucial to gainful results but current efforts, even if successful, provide no assurance that future efforts would be as successful. Should one measure competencies instead or micro-schedule the activities? Successful management is based not complicating the planning and monitoring processes to the detriment of human creativity but on bringing transparency and functionality by establishing the right linkages between efforts and results. It is important for leaders to distinguish between outcomes and results; all efforts lead to outcomes but not necessarily results. It is also important to follow the right processes and deploy right efforts; oftentimes right results follow right processes.

9. Convergence-Divergence Balance

The world has taken an unprecedented move towards convergence over the last two decades; whether through globalization as a very high level macro trend or products with multiple functionalities as a very fundamental level focus trend. That said, not all future opportunities would arise from globalization or from product convergence. Regional and country markets would demand customized products and services while markets would see new segmentations on functionalities and price points. The success of leaders would lie in achieving globally networked product development and manufacture while providing regionally distributed product and service offerings. In this model of balanced convergence-divergence, products found appropriate for one segment in one region could be found suitable to higher or lower segments in another region. The success of JLR as part of the larger family of Tata Motors illustrates the balance of a network that is appropriately convergent and divergent.

10. Present-Future Balance

Balancing the earnings and complexities of the present with the growth and the uncertainties of the future is the most profound leadership challenge. Companies which continue to invest in assets and add talent in difficult, and even in recessionary times, are better placed than firms which let their investment cycles mimic growth cycles. Not getting unduly discouraged by current challenges or future risks, and not feeling unduly encouraged by current stability or future potential provides the needed equanimity to leaders in balancing the present and the future. The recipe is not a split of initiatives and businesses in terms of a 2X2 grid; the formula is one of placing the right bets both on the present and the future in the context of organizational competencies and environmental opportunities.

Balance versus Disruption

The concept of balance cannot, and should not, be used to justify status quo or be allowed to result in slow growth. Leaders and managers have the right and responsibility to inject a level of disruptive thinking in organizations and manage consequent organized chaos for organizations to reach up to the next level of competitive advantage. The leadership skill lies in restoring the balance once the objective of taking the firm to the next superior trajectory is achieved. The ten principles discussed in this blog post are critical to such a virtuous balance.

Posted by Dr CB Rao on September 2, 2012

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