Change with the times

Theorists, whatever their fields of endeavor tend to be people and products of their times. Second, management theories, like theories in all fields, tend to evolve to reflect everyday realities and changing circumstances. By the same token, managers must be sensitive to changing circumstances and equally willing to change. If they do not they must be surpassed by more flexible competitors.

Both of these ideas apply to Henry Ford, the man who boldly embraced the ideas of scientific management, revolutionizing the auto industry and our society in the process.

Yet many of Ford’s managerial practices were conservative or unresponsive to changing times, and his hold on the automotive market was eventually wrested from him by companies more farsighted in their managerial theories and practices. Hostile to the banking community, for example Ford refused outside investments in his company throughout his life time, borrowing capital only when absolutely necessary and preferring to finance corporate activities solely through the company’s own income. He was also inclined to ignore the dynamics of the industry that he had largely founded. Although he opened up branch factories to cater to a growing European market, he failed to follow managerial advice to retool for both the hydraulic brake and six or eight cylinder engine; he also resisted management counsel regarding the advances in gearshift and transmission technology ad even put off introducing color variety into his product line (Ford preferred his cars to be black). His disinterest in consumer demands for comfort and style ultimately cost him his industry’s leadership, which passed to General Motors, a conglomerate assembled from over 20 diverse firms by founder William Durant and a second generation of American industrial organizers.

A Company of Business people:

For most of the twentieth century, the terms that have been used for relationships between people in the workplace have been supervisor/worker, manager/employee, the company/the union or us/them. It was expected that owners and managers would run the company, and workers would follow directions. Because of the dynamic marketplace changes of the past 20 years, many people are questioning whether this old thinking still works. Part of the story can be told in the recent history of failed American businesses and others that are struggling mightily.

Meanwhile a number of path-breaking managers in both large and small companies are ignoring old ideas as well as the latest innovations such as TQM. Instead, these managers are creating wholly different mind set about business and a different way of organizing work, one in which “us versus them” is a thing of the past. Whatever the differences and there are many the key lies not in a company of employees and managers but in “a company of business people”.

These new generation companies are scattered across any number of industries. Examples include Wabash National, which makes truck trailers, to Life-USA, which writes insurance. to Springfield Remanufacturing Corp., which rebuilds engines. Larger companies represented in this movement include Southwest Airlines and Wal-Mart. Some are tiny such as 18 employee Jamestown Advanced Products, a metal parts maker. What they have in common is a way of doing business and a way of thinking about business that is dramatically different from others. The key component: a new conception of how people in accompany work together. In the mind set created by these next generation companies, the traditional corporate pyramid goes out the window. Everyone is freed to think like an owner, and this an owner, and this attitude becomes a part of everyday life. At WalMart, associates, all of them shareholders, get weekly and monthly data on their stores’ performance, including detailed matters such as profit margins for each item and delivery times. At Chaparral, a steel company, compensation is tied to individual performance and company profits, and employees are encouraged to redesign jobs. At Southwest Airlines, financial information key to performance, such as revenue passenger miles and fuel usage, as well as the regular profit and loss statements are circulated to all employees. Each of these companies has been honored for its quality and success many times.

To become competitive in an increasingly changing market, many current day organizations might wish to look into the new organizational mind set to prepare for the future which is, as never before, fast approaching.