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PART 1 MANAGEMENT AND ORGANISATIONAL BEHAVIOUR
Mr Rigby surveyed 475 companies in the US and Europe
during 1999. A third of the companies had sales revenues
of more than Dollars 2bn (Pounds 1.3bn), while 27 per cent
had sales of between Dollars 600m and Dollars 2bn. He
explained 25 management techniques, ranging from the
straightforward, such as strategic planning, to the more
esoteric ‘agile strategies’ and competitive gaming. As well
as examining which techniques are in most common use,
the report looks at how satisfied companies are with them.
Although there are more than 100 recorded management
techniques in use**, Mr Rigby chose the 25 he judged
‘most relevant to senior management, topical and mea-
sureable’. Effectiveness, he concedes, depends largely on
how the techniques are used. ‘Anybody can use tools,’
says Mr Rigby. ‘I could wear the same trainers as Michael
Jordan, but I sure as hell won’t get the same results.’
Mr Rigby says Bain is not in the business of selling these
or any other techniques, or helping other firms to sell theirs.
‘I get 50 or 100 calls each year from people wanting me to
add their tools to the survey,’ he says. Nor is the company
hunting for the next ‘big idea’, although his firm probably
would not mind if one came along.
The last great management fad was process re-
engineering, the unplanned blockbuster technique devised
in 1990 by CSC Index, a US consultancy, which doubled
the firm’s revenue at the height of its popularity in the mid-
1990s. According to Mr Rigby, the technique promised to
‘redesign business processes to improve productivity’.
The latest survey shows that last year companies used
an average of 11 of the 25 selected techniques, down from
the previous study’s findings of more than 13.
Rightly or wrongly, companies rely on management tech-
niques to help them create value. But it is not the number
of tools used that counts: Mr Rigby advises companies to
use a few tools well, concentrating on the mainstream ones
such as strategic planning and benchmarking. Those that
do, he claims, achieve superior financial results.
Benchmarking (detailed comparison of the performance
of a part of an organisation with similar operations else-
where), tops the poll in Europe, as it has for the previous
two years.
In North America, strategic planning, used by 89 per
cent of companies, is the favourite technique.
Benchmarking comes only third in North America, while
strategic planning comes third in Europe.
Mission and vision statements take the number two slot
on both sides of the Atlantic. Measuring customer satisfac-
tion comes fourth on both continents.
European companies, perhaps unsurprisingly, generally
use fewer management tools than the North Americans (and
the British rather less than other Europeans). But, as the
chart shows, European behaviour is more consistent: 78 per
cent of the North American companies surveyed used
process re-engineering in 1995, the peak year of popularity
for the technique, compared with only 56 per cent in Europe.
The following four years showed a sharp decline across
the Atlantic in the use of process re-engineering but less so
in Europe, and last year the two groups were virtually level.
The techniques began to lose popularity when compa-
nies reported that 70 per cent of re-engineering projects
were not delivering the promised reductions in costs and
life-cycle times.
A buoyant global economy may also be part of the
explanation for the general fall in the popularity of process
re-engineering. Respondents said strong sales and a short-
age of staff had led them to focus on ‘tried and true’
techniques, such as benchmarking.
After process re-engineering, total quality management
showed one of the sharpest falls in popularity last year,
continuing a trend first detected in 1996. For the first time,
TQM is now more widely used in Europe than in the US.
Perhaps the priority in the US last year, when TQM was
used by 41 per cent of respondents, compared with 55 per
cent the previous year, was to get the goods out of the
door, but perhaps quality standards have also improved.
Certainly, Japanese companies no longer enjoy as big a
quality advantage as they did in the 1980s.
If the lessons have not sunk in by now, the laborious
paperwork demanded in formal TQM methods is unlikely to
help the technique regain its popularity.
Some of the 25 tools studied held their own against the
overall decline in use. Strategic planning, mission and
vision statements, the balanced score card (working to a
wide range of performance measures, not just financial
ratios), and merger integration teams (to secure the bene-
fits of integration) all did well.
Although the use of merger integration teams might
sound more like common sense than a specific manage-
ment technique, and will reflect the level of M&A activity of
the moment, it is increasingly popular in the US.
Such teams are more common in the US than elsewhere
– 38 per cent in North America compared with 18 per cent
in Europe, where management audits among the merged
companies are fast growing in popularity.
Viewed objectively, the fact that some management tools
have consistently scored 70–90 per cent among users over
the last five years is remarkable. However informally they
are being used, the fact that some techniques remain
perennial favourites shows how much support insecure
managers still need to tackle business problems.
*Copies of the survey are available from Bain & Co
www.Bain.com London office: 020 7723 0208 ** Guide to
Management Ideas, Tim Hindle, Economist Books/Profile
Books 2000.
(Reproduced with permission from the Financial Times Limited, © Tom Lester)
Exhibit 3.2 continued