Management update: more firms are letting initiative blossom; The Change Masters: Innovation for Productivity in the American Corporation, by Rosabeth Moss Kanter. New York. Simon & Schuster. 432 pp. $19.95.

Today sees more ferment in American management thinking than has taken place in decades. Fresh theories of management were introduced in the business schools in the 1960s. But these ideas, like yeast in dought, have taken time to leaven the business community.

Challenged by compeition from the Japanese and hard hit by an energy crisis and a double recession, executivies in the United States are, as author Rosabeth Moss Kanter writes, "no longer complacent and insular. Now they are listening."

She likens corporate America to Rip van Winkle, waking up after 20 years of sleep. "If American organizations use this opportunity to arouse the potential entrepreneurs in their midst -- the people at all levels with new ideas to contribute -- they, unlike Rip van Winkle, they could be renewed, refreshed, and readied for a changing world. The spirit of enterprise could thus be reborn, heralding a kind of Renaissance for corporate America."

Dozens of books have fed or are feeding on the new interest in management, many dealing with the Japanese phenomenon, others concentrating on the American scene. One, "In Search of Excellence" by Thomas J. Peters and Robert H. Waterman Jr. (Harper & Row), for a while led the New York Times best sellers list for nonfiction, and still remains on that list.

"Change Masters" is an important book in this bumper crop of management books. But it is much more of a guidebook for executives trying to introduce modern management ideas into their corporations than a popular explanation of changing management views. It is also probably twice as long as "In Search of Excellence" and, for lay readers, far too detailed, unless they would like to read only the introduction, the first and last chapters, and another chapter on the evolution of management at General Motors. In fact, it may be too voluminous and professorial a diet for many a manager.

The book also suffers because Kanter, a professor of organization and management in the School of Management at Yale University, had to withhold some of the names of the corporations she has written abut. Undoubtedly, she would not have obtained so much inside information without agreeing to confidentiality. But somehow it removes the edge of excitement from her analysis of those companies.

Nonetheless, the book does offer a careful and balanced appraisal and outlien of modern management theories, wrapping in those ideas that have developed in the years since the 1960s.

One of the most pleasing elements of modern management is the increased recognition of the vital role of people. Employees are no longer just regarded as cogs in the machine whom bosses buy as they might a new word processor.

"In every sector, old and new, I hear a renewed recogniation of the importance of people, and of the talents and contributions of individuals, to a company's success," she writes. "People seem to matter in direct proportion to an awareness of corporate crisis."

She notes how "in turn-of-the-century organization theory and its 'scientific management' legacy, individuals constituted not assets but sources of error. The ideal organization was designed to free itself from human error or intervention, running automatically to turn out predictable products and predictable profits. Management was there to handle the few unexpected events that could occur."

Now, she says, many companies must learn "to trust their people -- and encourage their people to use neglected creative capacities in order to tap the most potent economic stimulus of all: idea power."m

Her book is intended to show how individuals can help corporations stay ahead of a changing environment with greater innovation. "Even small-scale innovations initiated by individuals -- 'micro-changes' -- can eventually add up to 'macro-changes' -- the company's ability to be responsive and adaptive as circumstances demand."

She finds that companies stagnate or innovate according to the degree of opportunity to use power effectively provided to or withheld from individuals. Those companies with progressive human-resource practices have had "significantly higher" long-term profitability and financial growth than their counterparts.

Through her activities as a professor and management consultant, Mrs. Kanter figures she has had contacts over the years with several thousand people in well over 50 companies. This book looks at 10 of these with some intensity.

Six are "new style" companies or major sections of ones in industries where America was still a world leader. These include Hewlett-Packard, Wang Laboratories, Polaroid, a computer manufacturer she calls "Chipco," and high-tech divisions of Honeywell and General Electric. She also examines four companies in older, more traditional industries wracked with change and thus needing innovation. These are General Motors and anonymous companies she calls "Meridian Telephone," "Southern Insurance," and "Petrocorp."

In these she examines 115 innovations in detail. These innovations are not just new products, but deal with significant financial, strategic, or organizational changes. Out of this she attempts to find solutions of broad application for the problems arising from change in the business scene.

Professor Kanter's term for old-fashioned, anti-change management is "segmentalism." It attempts to compartmentalize actions, events, and problems, and keep each piece isolated from the others. Such companies are likely to have a large number of compartments walled off from one another -- department from department, level above from level below, field office from headquarters, labor from management, or men from women.

She advocates an "integrative organization," something similar to what has been called "participative management" by others. "The organization that produces a great deal of innovation must, by definition, be less category-conscious. It must, by definition, give more people the opportunity to reach for power despite the box on the organizational chart they occupy. It must continually create teams that represent new and different configurations, offering the potential for many more people, in theory, to find a connection with nearly everyone else." Most of the book is occupied with a detailed examination of how this management style has worked or can be introducted in American -- not Japanese -- companies.

Mrs. Kanter concludes: "During the last twenty years, a large number of tools have been made available to American companies to stimulate the highest performance from their employees and managers, from more meritocratic performance-appraisal systems that reward individual achievement to cross-level problem-solving teams.

"The tools are there -- if we care to use them."

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