Monday, 6 February 2012

A New Era Needs New Kind Of Managers

The following is a short essay I wrote during the application process of Sabancı School of Management (Although I got an acceptance, I chose the Executive MBA program of Boğaziçi University):

A New Era Needs New Kind Of Managers

With the new millenium, the world entered a new era, moving from the last 250 years of the Industrial Age to the Information Age, an era of rapid and radical change. A new world is forming that bears little resemblance to that of past.

With in the Industrial Age, the rate of change was relatively slow and predictable, and seldom radical. The competitive environment was less intense and changed more slowly, product life spans were much longer. Competitive advantage came more from focusing resources on continuous improvement in quality, operational effectiveness and efficiency. Corporates used the “new” manufacturing methods to produce more, better and cheaper products (as it is humorously pictured in Charlie Chaplin’s “Modern Times”). The catchword of yesterday is “Doing things better”.

With the Information Age, the rules changed radically. People are now a part  of a network society, operate in an information economy, live in a global village and trade in a borderless world. Our world has become mobile, connected, interactive, immediate and fluid. Corporations still need continuos improvement in quality, operational effectiveness and efficieny, but the customers of this era expects immediate gratification, a greater choice of “fresh” products which results in a new dimension that corporations have to focus; “continuous corporate innovation”. The catchword of today is “Doing new things well”.

This is a turning point where the corporations confronted with new great challanges, but also offered “limitless” opportunities. This is a turning point as concepts of innovation, agility, optimisation and risk are defined as the four critical success requirements. This is a turning point where the corporations need to be agile and flexible, provide superior service, give quick responses, operate in niche markets, maintain closer customer relationships, create alliances, develop cross-cultural networks and maintain a diversity of contracts.

Turkey, as a close contributor of global world, experiencing this radical transition and transformation too.

In the history of Turkish business world, it can be seen that the state has an active, interventionist role from the first day of its foundation. This makes Turkish corporations to mainly focus on the business activities maintained by the state. This results as the core competence of corporations to gain “good” relations with the state to grow in a “protected” market. During this period, a common pattern of management practices is developed which has characteristics as centralised control, paternalism, short-termism and lack of delegation and autonomy. An interesting observation is that even the “protective” barriers of the market is removed with the 90s and new generations of managers are appointed for the period of last 15 years, this new generations tend to follow and internalize these values. In several studies, Turkey is characterized with low autonomy, low empowerment and low performance-reward contingency. A special case for Turkey is that family companies cover a substantial portion of the local private sector which show a great value of conservatism as a management behaviour.

However, in the Information Age, the shift toward creating and sustaining competitive advantage is largely based on capabilities rooted in innovativeness and change. Cutting costs and remaining efficient will still be necessary for corporate survival, but they won’t be enough. This shift to meet the new challanges of the new era, requires different sets of managerial values and approaches. Only with these attributes as committing profitability and customer satisfaction instead of endorsements and big balance-sheet values, managing without strict control, being a starter not a follower, promoting capabilities, speed and openess in decision making, building business partnerships without discrimination, free thinking, highlighting ethics can a corporation make necessary metamorphosis. Combining these terms will result in definition of “Professional Management”.

Professional management was born during 1841 at the United States after an accident, in which two trains collided. This accident showed the world that the owners of the railway company is not capable of managing the modern enterprise, there is a need of a new group of people who managed to act as business managers.

The current situation of Turkish business world bears a resemblance to that unfortunate train accident; local corparates powered with traditional, historic management model is going to be up against to corporates of global world powered with professional management, in a rapidly accelerated speed. Most Turkish large enterprises envisaged this for some time and made necessary metamorphosis actions like the magnificient transformation program Mr. Akın Öngör achieved at Garanti Bankası, but for most of the small and medium sized enterprises it is not possible to see any clear signs of awareness of the global change in the business world. And unfortunately for these unaware compaines, the result of a such collusion is already predetermined as vanishing from the future business environment. As Mr. Jan Nahum mentions in his talks about innovation and new management trends; “You can reach numbers as up to 50 billion dollars of annual import rates with current, traditional behaviour in Turkey’s automotive industry but after that a fall down is unavoidable. To go beyond that barrier, to move to a next level, you have to change how you perceive, how you think, how you act and how you manage”.

In this completely new economical, social and political environment, it is not likely that corporations can use yesterday’s strategies to solve today’s problems and expect to be in business tomorrow. To make the companies to shift towards these new paradigms, an important role is given to “professional” managers. This does not mean “professional management” is the only key factor effecting the success of this process; but without its wisdom, it is not possible to create learning, creative corporate organisations that has ability to easily adapt the new business environment; the corporate organisations of the future.

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