Why Management is of fundamental importance today and what should be done about it at the European Level
February 27, 2012
Sociologists characterize 20th century society as a society with fundamentally new characteristics compared with previous historical societies. It is a society of organizations. Organizations have pervaded all parts of our lives. They range from business organizations, to education, hospitals, semi-public and public organizations, NPOs, and so on. They are the organs of modern society – hence society is dependent on the quality of its organizations. For organizations to function they need to have means to achieve their purpose. This is where management comes in – without proper management the organizations cannot achieve their purpose. It is quite obvious for businesses, but equally clear for education institutions, hospitals, research organizations and public sector bodies.
Against a backdrop of the modern society of organizations, the systematic study of management started in the early part of the 20th century and saw a notable acceleration in the post-war years. University based Business Schools and independent institutions sprang up everywhere leading today to a mind-boggling number of more the 12000 globally. Large businesses were the natural place to start with education and the systematic application of management as their increasing scale, scope and complexity required specific skills to survive and thrive in competitive markets. The emerging discipline of management included various elements such as operations, human resources, strategy, leadership, innovation and entrepreneurship. General management and increasingly specialized disciplines took on an accelerated development, which can be measured by the number of books, scientific articles and management conferences. Besides a few fads a huge body of useful knowledge (ancient Greek -Techne) was produced that made Management an essential social technology. Yet outside business the application of management knowledge was rather limited, to say the least.
Fast forward to today’s situation: In order to get back to sustainable growth, high performing organizations are needed in all parts of society. Even though budgets are being cut, higher and better outputs from organizations are required. “More for less” is the mantra. While large businesses are overzealous in cost cutting (including human resources), non-business organizations and the public sector have not yet fully woken up to this new challenge. The latter introduces at best formal rules to reduce civil servants over time (e.g. hire only 1 for two leavers). However, the creation of more and new value with less resource is the mandate for the future. This means that organizations need to be better managed towards achieving a higher degree of value creation by innovating in all fields of their activity: providing products and services that meet the needs of customers and hence of society but also innovating in the way they operate e.g. by introducing new HR practices taking into account the multigenerational workforce, by implementing new ways to develop transformational leaders with strong entrepreneurial capacity, by implementing new tools for creating and sharing knowledge etc.
When we look at the specific subject of research and innovation – the translation of research into innovation is hardly perceived as a management challenge. It is somehow assumed that good research will lead to good innovation. However, this is clearly not the case as the conversion rate of R&D into innovation is very low – according to various studies. Can this rate be improved by better management practices? I certainly believe it can. There is a very significant body of knowledge in this field – good practices and results from broad based empirical research. As an example – open innovation has been emerging as a key subject during the last 10 years. MIT and other Universities have done significant work to drill deep into this subject, and a group of companies have founded the “Open Innovation Policy and Strategy Group” with the European Commission. However, this is currently an isolated initiative that demonstrates the need for a more comprehensive approach.
In his new book “The Learning Curve” Santiago Iniguez, the dean of the Spanish Business School Instituto de Empresa expressed it this way: ‘What the world needs now is good entrepreneurs, good managers, and good business leaders. I believe the best antidote to intolerance or the clash of cultures or poor foreign policies, is to develop good managers, create new businesses, innovate and generate value and wealth at all levels of society.’
Hence the following specific topics are proposed for future EFMD EU Affairs activities to react/respond to:
- Is management education and research a blind spot in European policy?
- Should this be addressed and if so what are the priorities??
- How can management capabilities for innovation and entrepreneurship be better embedded in existing programmes?
- What would the benefits be of large-scale cooperation in Europe on these subject (along the lines of “technology platforms”)?
- How could the subject of management research and education be included in the Innovation Union?
Dr. Richard Straub
Director of EFMD EU Affairs & Corporate Services
February 15, 2012
EFMD is a leading international network of business schools, companies and consultancies (770 members across 82 countries) at the forefront or raising the standards of management education and development globally. EFMD runs the EQUIS & EPAS, accreditation systems and is one of the key reference points for management education worldwide. www.efmd.orgAuthor : Jocelyne Wang