Information digest – The research essentials


Study of business practices in Singapore

The aim of this survey was to find out how Singapore business leaders were responding to the challenges faced by their business. Out of a sampling size of 1,540 chief executive officers, a total of 326 participated in the survey by completing a 255-item questionnaire. The report has six main sections dealing with strategy, internationalisation, quality, IT, environmental issues and skills shortages. The results of this survey have revealed that companies in Singapore were planning and operating with increased dynamism in their marketing strategies, regionalisation drive, quality management and information technology utilisation. While regional prospects and government policies are favourable, labour constraints and skills shortages are causing companies to proceed with cautious optimism.

Global leaders, global entrepreneurs: the myths of history

That the world is going global comes as a surprise to no one. Whereas world output grew by 600 percent in the past 50 years, world trade grew by 1,500 percent. In just the last decade, the annual flow of foreign direct investment “from all countries increased nearly sixfold to $315bn, a growth rate that was more than twice as fast as the growth rate in world trade”.

Senior management teams: what makes for success?

This paper presents the results of a research programme involving 54 senior management teams using direct data. The research assesses the importance of a mix of personalities in a team, and the process they employ in working together, in determining performance outcomes. It identifies the benefits of successful team processes, many of which relate also to Higgs and Dulewicz’s parallel studies of board processes (Higgs and Dulewicz, 1997). Finally, the paper describes an application of the research findings in the form of an approach to assessing and developing senior management teams which is illustrated by reference to a case study.



Managing yourself

Throughout history, people had little need to manage their careers – they were born into their station in life or, in the recent past, they relied on their companies to chart their career paths. But times have drastically changed. Today, we must all learn to manage ourselves.

What does that mean? According to Peter Drucker, it means we have to learn to develop ourselves. We have to place ourselves where we can make the greatest contribution to our organisations and communities. And we have to stay mentally alert and engaged during a 50-year working life, which means knowing how and when to change the work that we do.

It may seem obvious that people achieve results by doing what they are good at and by working in ways that fit their abilities.

But, Drucker says, very few people actually know – let alone take advantage of – their unique strengths.

He challenges each of us to ask ourselves fundamental questions: What are my strengths? How do I perform? What are my values?

Where do I belong? What should my contribution be? Don’t try to change yourself, cautions Drucker. Instead, concentrate on improving the skills you have and accepting assignments that are tailored to your individual way of working. If you do that, you can transform yourself from an ordinary worker into an outstanding performer.

Successful careers today are not planned out in advance. They develop when people are prepared for opportunities because they have asked themselves those questions, and they have rigorously assessed their unique characteristics.

This article challenges readers to take responsibility for managing their futures, both in and out of the office.

New thinking on how to link executive pay with performance

As the stock market began its ascent in the mid-’90s, executive pay – always the subject of heated debate – mounted along with it. That’s because among the largest US companies, stock options now account for more than half of total CEO compensation and about 30 percent of senior operating managers’ pay. One problem became particularly clear during the bull market’s astonishing run: even below-average performers reap huge gains from stock options when the market is rising rapidly.

The author proposes steps to close the gap between existing compensation practices and those needed to promote higher levels of achievement at all levels of the corporation.

For top managers, he recommends replacing conventional stock options with options that are tied to a market or peer index. Below-average performers would not be rewarded under such plans; superior performers could, depending on the way plans were structured, receive even more. He notes that managers at the business unit level should not be judged on the company’s stock price – over which they have little control – and advocates an approach that accurately measures the value added by each unit. Finally, he suggests how certain indicators of value can be used to measure the contribution of frontline managers and employees.



A new manifesto for management

The corporation has emerged as perhaps the most powerful social and economic institution of modern society. Yet, corporations and their managers suffer from a profound social ambivalence. Believing this to be symptomatic of the unrealistically pessimistic assumptions that underlie current management doctrine, Ghoshal et al. encourage managers to replace the narrow economic assumptions of the past and recognise that:

Modern societies are not market economies; they are organisational economies in which companies are the chief actors in creating value and advancing economic progress.

The growth of firms and, therefore, economies is primarily dependent on the quality of their management.

The foundation of a firm’s activity is a new “moral contract” with employees and society, replacing paternalistic exploitation and value appropriation with employability and value creation in a relationship of shared destiny.

In the ’80s, managers concentrated on enhancing competitiveness by improving their operating efficiencies. They cut costs, eliminated waste, downsized, and outsourced. They extracted value – as reflected in shareholder returns – but at what price?

In contrast, firms that seem to continuously proliferate new products and technologies (for example, HP, 3M, Disney, and Microsoft) have never accepted this logic of auto-dismemberment. They have escaped what the authors term “the deadly pincer of dominant theory and practice”: an almost exclusive focus on appropriation and control.

A different management model is now taking shape, based on a better understanding of individual and corporate motivation. As companies switch their focus from value appropriation to value creation, facilitating co-operation among people takes precedence over enforcing compliance, and initiative is valued more than obedience. The manager’s primary tasks become embedding trust, leading change, and establishing a sense of purpose within the company that allows strategy to emerge from within the organisation, from the energy and alignment created by that sense of purpose. The core of the managerial role gives way to the “three Ps”: purpose, process, and people – replacing the traditional “strategy-structure-systems” trilogy that worked in the past.

Transforming internal governance: the challenge for multinationals

Competitive discontinuities demand changes in how diversified multinational corporations create wealth. While executives agree that changes in the last decade are qualitatively different from those in the past, many fail to take action or they apply old solutions, such as cost cutting, to new problems. The challenge for companies is to move from the zone of comfort – the familiar – to the zone of opportunity – the unfamiliar.

Sources of discontinuity include more powerful, better informed consumers; the breakup of traditional channel structures; deregulation, privatisation, and globalisation; the convergence of traditional and new technologies; changing competitive boundaries; the evolution to new standards; shorter product life cycles; and the greater involvement of business in ecological and social issues.

In this environment, managers must develop new capabilities. They need to think and act globally, regionally, and locally; adapt to a different pace and rhythm in all aspects of a firm’s activities; integrate new technological knowledge with old and reconfigure that knowledge into new business opportunities; develop consensus-building skills; form alliances; and allocate resources under conditions of ambiguity. At the same time, they must ensure the profitability of current business.

The obstacles to transformation are formidable. Many senior managers have little knowledge or experience of alternate models of managing and responding to new customer expectations. They seek administrative clarity at the expense of strategic clarity and sometimes lack the stamina needed to sustain high performance.

Transformation requires interrelated systemwide changes. The effort must be driven by a new concept of opportunity and involve the entire organisation. The first step is to create a transformation agenda to mobilise the organisation. Managers must then fight inertia, align the organisation with the new direction, undertake projects that provide the basis for experimenting and learning, and evaluate failure and success.

Innovations in how firms manage must precede innovations in how they compete and create wealth.

Strategy, value innovation, and the knowledge economy

During the past decade, Kim and Mauborgne have studied companies of sustained high growth and profits. All pursue a strategy, value innovation, that renders competitors irrelevant by offering new, superior buyer value in existing markets or by enabling the creation of new markets through quantum leaps in buyer value.

Value innovation places equal emphasis on value and innovation, since innovation without value can be too strategic or wild, too technology-driven or futuristic. Hence, value innovation is not the same as value creation.

To value innovate, managers must ask two questions: “Is the firm offering customers radically superior value?” and “Is the firm’s price level accessible to the mass of buyers in the target market?” A consequence of market insight gained from creative strategic thinking, it focuses on redefining problems to shift the performance criteria that matter to customers.



The value of the design approach in newly emerging products, firms and markets

Venture capitalists and the London financial markets are NOT parasites, according to a report by a team of business school researchers. Without financial knowhow and the management skills to bring different sorts of expertise together, many new business ideas don’t get off the ground, says the report. Bringing in skilled partners may cost a project’s initiators a share of the profit stream. But the partners can help to make the overall profit pool so much larger that the initiators do better anyway. Successful new businesses in the 90s are often not so much about having a brand new idea as about bringing together different sorts of existing knowledge.

The Mondex cash card, for example, combines existing knowledge of cryptography (to provide security) with expertise in banking and retail. First Direct, the 24-hour telephone bank, brought together call-centre technology with financial muscle and a focus on convenience. But successful alliances do require different departments within a single company, and different companies within a single alliance, to work together in order to accelerate the development of a new product or to establish a critical mass in a new market.

Punctuated and incremental change: the UK water industry

High-speed business change of the sort advocated by most management gurus works no better than piecemeal change. Often, companies adopt a radical change programme only because they have failed to adjust to new circumstances soon enough to choose the slower and safer path of gradual change, say the researchers in a report published today. And although a radical programme can cut more costs faster when it succeeds, when it fails it is more likely to fail spectacularly. The report is focused on the experience and performance of 10 water companies after privatisation in 1989. The team found that companies which pushed through change all at once were no more likely to succeed than those which went for gradual change. Nor was there evidence that rapidly introduced improvements were sustainable. But the high-speed companies did run larger risks of failure. The authors conclude that high-speed changes may be more likely to fail because their speed alarms staff at all levels, leading to confusion and disaffection, and a consequent loss of performance. But “incremental change, by its very nature, overcomes internal resistance … and develops the awareness, understanding and commitment necessary for success”.



Value in IT

Organisations have to admit it, but the ugly truth is that three out of four IT initiatives fail. Why? They were basically developed in a value vacuum. Translation: they had no real connection to the profit and loss drivers of the business, so no business unit had a vested interest in their success. For years CIOs provided Pavlovian responses to anyone requesting their services. They didn’t ask business units to justify why the technology was necessary; they just charged back the costs. Today’s leaner organisations can no longer tolerate such wasteful spending. CIOs need to collaborate with business unit managers to channel IT funds into projects that will contribute value to the measurable return on investment.


All reports cost £100.


The Knowledge Journey: A Business Guide To Knowledge Management looks at the intricacies of the subject and the arguments as to whether it is a fad or a reputable management discipline. The research looks at KPMG’s experiences in helping clients tackle knowledge management issues. Call David Parlby at KPMG, London.

Research released by KPMG suggests that the risks of outsourcing are often overshadowed by the potential rewards. Harnessing Outsourcing for Business Advantage is designed to guide outsourcers through the minefield of decisions that have to be made when establishing an outsourcing contract. Contact Denise O’Connor at KPMG on 0171 311 8869.

Andersen Consulting has released a supply chain management profile on mining companies in Australia and South Africa that could lead to savings of between $30m to $50m a year. The report suggests that mining companies do not focus on critical segments of the supply chain such as strategy, forecasting and planning, and sourcing, and valuable opportunities for controlling costs are lost. Contact Tery Everett on 27-11-328-3137.

The Top Ten Global Financial Services Industry Outlook for the Insurance and Banking/Securities Sector looks at the major business challenges that are facing senior decision makers, particularly in financial services institutions. The research looks at evolving industry trends, financial services indicators and has in-depth conversations with executives. Contact Deloitte Research at

Worldwide Demand For Telephone Service: A Post Crash Guide … looks at the rise of global supercarriers and their attempts to diversify in an uncertain and volatile landscape. The Deloitte research looks at domestic carriers, their joint ventures with foreign carriers, the problems of globalisation and the potential solutions. Contact

WEBSITE OF THE MONTH:, as the title suggests, offers users a lot of news. The focus primarily takes an IT slant and looks at issues connected with the industry in general. Although there are a great number of IT-related sites around, takes a different and interesting slant on what is happening.

An initial bonus of the site is the up-to-date news section, which is changed every day.

We are given various sections on the many aspects of today’s technological business arena. There are sections on e-commerce, Year 2000, consultancy, the net, communications and so on. These are, in the main, helpful and informative. The consultancy section concentrates on all aspects of the profession and offers information on things such as jobs moves in the industry and contract agreements, as well as interviews with industry figures. This on top of the more general news topics.

The other sections offer some interesting perspectives on current news events. What is useful is that in the middle of each story you are given the option to search out a wider perspective for the story. For example, you can click on to related news, go to message boards, or read about the story in a wider context. The search engine in the page also allows you to search for a subject that has been featured in the past.

There is also a section that takes you on a trawl on news from around the web, from various publications. Admittedly, the consultancy section is perhaps the weakest in numbers of articles, but there is plenty to choose from overall.

The design of the page is a basic no-nonsense, no-gimmicks one. Instead of detracting from the site this improves it. It very easy to navigate, allowing visitors the chance to get down quickly and simply to the nitty gritty of catching up on the hot topics.

For those interested in stocks and shares, the site offers up-to-date information on the latest share prices. You can also check up on various companies by getting a stock quote. There are also plenty of downloads available of software and services. You can also subscribe to the cnet online newsletter. The site is part of the cnet service which offers a great deal of other options as well as news. You can go on-line shopping, find out about your shares, and, of course, find another job. fits well into this package and is an invaluable site. Bookmark it now.

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