Which Management Tools Are Most Popular? New Economy Management Tools Are Being Thrown to the Wayside as Businesses Brace for a More Turbulent Economic Outlook
Siddle, Roger, Rigby, Darrell, European Business Forum
If soft sales following a year of chaotic growth have your company whipsawing from expansion to layoffs, you'll appreciate the insights of 451 senior executives from around the world who responded to Bain & Company's 8th annual Management Tools Survey. (See Figure 1). This year, respondents opted for 'tried-and-true' tools to manage the fundamentals of cost and corporate direction. Meanwhile, executives defected--at up to four times the mean--from new economy tools like Corporate Venturing and Customer Relationship Management, once thought to provide quick and easy paths to growth.
The survey examined the usage, satisfaction and effectiveness, across more than 30 industries, of 25 management tools widely used in 2000 as well as predictions of what tools companies are likely to use in 2001. Sixty-one per cent of respondents reported, when they cast their votes in early 2001, that they were concerned about an economic slowdown this year: Within this context, responses show executives continue to focus on improving the financial performance of their companies. But four out of ten companies that set up corporate venturing funds (often to take stakes in, or create, Internet startups) abandoned that tool.
Globally, the most widely used tools by senior managers in 2000 remain the same as in 1999 (See Figure 2).
* Strategic planning -76 per cent
* Mission and Vision Statements -70 per cent
* Benchmarking -69 per cent
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In the main, European companies' usage of management tools shadows that of their North American counterparts. Although this year's sample from Europe was unusually small, responses fit historical patterns (See Figure 3). The most widely used tool among European managers is Benchmarking, followed in equal second place by Strategic Planning and Mission and Vision Statements. In North America, senior executives use the same top tools with 80 per cent of senior executives using Strategic Planning; 76 per cent. Mission and Vision Statements; and 68 per cent, Benchmarking. South America strengthened the consensus with 89 per cent of respondents voting for Strategic Planning, 78 per cent for Benchmarking and 70 per cent for Mission and Vision Statements.
On another side of the world, however, Asian managers report Outsourcing to be their most popular tool, used by 70 per cent of respondent companies. Benchmarking comes a close second, though, at 68 per cent, followed by Mission and Vision Statements at 64 per cent.
Regional peculiarities notwithstanding, senior executives the world over endorsed all the top ten tools. All of these tools were used by nearly half the North American corporate population in each of the eight years that Bain has captured data on their use. And usage of these tools has remained consistent year on year in Asia and Europe. It's clear that when times get tough, we trust the familiar. Managers are falling back on widely understood tools that have helped them in the past. And all tools fare better when they are part of a major corporate effort. Ninety per cent of managers agreed that tools need top-down support to succeed.
'New economy' tools falter
Meanwhile, only a third or fewer respondents adopted the 'new economy' tools most frequently cited in the press, including:
* Market Disruption Analysis, used to identify where to launch new businesses to compete with startups.
* Corporate Venturing, used to build those new businesses with venture capital disciplines, often in hopes of creating public spin-off,
* Customer Relationship Management (CRM), which aspires to turn internet technology toward identifying and building loyalty among valuable customers. (See Sidebar: What's the Matter with CRM?)
Asian companies bucked this trend, with 55 per cent of respondent companies using CRM and a respectable 27 per cent of Asian firms utilising Corporate Venturing. …