Management Guru Takes Pyramid Apart

ERALD ROSS talks sympathetically of the plight of executives and other employees of companies in trouble.

``Most are good, loyal people trying to do the best they can in the worst of circumstances,'' says the co-founder of Change Lab International, a consulting firm based in Greenwich, Conn. In trying to save their companies, these usually bright people work long hours in a desperate search for solutions.

Ofttimes, he says, executives turn to management gurus with their ``magic bullets'' - the latest quick-fix idea that promises a cure for company ills. Mr. Ross cites some of the latest popular management themes - Total Quality Management, quality circles, benchmarking, reengineering, and downsizing. His remedies, of course, are not a ``quick fix'' in that they take years to implement.

Ross was in Boston to flog the book he and the other Change Lab founder, Michael Kay, have written, ``Toppling the Pyramids: Redefining the Way Companies Are Run'' (Times Books). It seems almost compulsory nowadays for management consultants to write books. In a way, these consultants are thereby marketing their own services to likely readers - namely managers.

The main thesis of Ross and Kay is that the nation's companies are facing the most revolutionary economic changes in 200 years. Usually big companies ride through economic slumps relatively unscathed. But in the 1990-91 recession, for the first time huge corporations, such as IBM, Digital Equipment Corporation, and General Motors, got into financial difficulties.

``The status quo no longer works,'' the two write. ``The aristocracy of business and government is toppling. The leading companies are shunted briskly aside by others who were only recently unknown - CNN [Cable News Network], home shopping companies, and Wal-Mart. Some of the old leaders may reinvent themselves, but in the meantime, there is a bonanza of opportunity.''

To meet the challenge, companies must reinvent the way they do business or sink, Ross and Kay argue. The traditional pyramid structure of management must go, they say. The pyramid has a top executive with a few senior vice presidents reporting to him or her, then a row of vice presidents reporting to the senior vice presidents, and eventually down to the workers on the factory floor. Orders come from the top and filter down to the bottom.

Academic attacks on the pyramid structure of management go back a few decades. In the 1960s, there was much written about ``participative management'' with business ideas going both up and down the pyramid, and with some power shifted to those more intimately familiar with problems at lower levels.

Nowadays, students at the top management schools are taught how to delegate authority and empower those further down in the corporate structure. They are told that employees who actually do the job are usually the experts and, thus, are more likely to come up with ways to fix problems than some study team from above. They are instructed on how to form project teams in which everybody is, at least in theory, equal to one another. It may even be that leadership of a team is rotated among its members.

Ross and Kay advocate a ``molecular management structure'' in which workers, managers, and executives are in direct contact with customers and clients. The boss deals with big strategic issues, leaving employees to put out fires. The flattened molecular structure, they argue, can take advantage of modern technology to customize products or services for each customer, rather than by producing large runs of identical goods.

Seeking more flexibility to meet changing consumer demand, clothing maker Benetton will die its sweaters after they have been knit. A Japanese luxury carmaker customizes a car moving down the assembly line as soon as an order comes in. A yogurt maker blends in flavors at the last minute to accommodate orders.

``This technological wizardry can be coupled with highly flexible human systems that abandon the stilted lines of management command for versatile work teams that operate with little or no supervision,'' they write.

The book takes advantage of the authors' consulting roles in several companies, including IBM and Aetna Life & Casualty, to provide anecdotes for the book. But, as might be expected, the relevant chapters were cleared with the firms. ``There was not much to sanitize,'' Ross says.

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