Leadership Coaching: Efficiency Vs Innovation In Management

July 10, 2012 by  Filed under: Management 

Economic Crisis and Efficiency- Based Strategies

Management experts sprout profusely during a recession. It is in these times when their services are highly in demand. The sole strategy of organizational leaders in dealing with the economic downturn is often to cut costs, lay off workers and implement efficiency- based management strategies.

By much of the end of the last century, businesses lived by the credo of operational efficiency. Operations have to be lean and mean, and leaders optimize means to cut costs. Nonetheless, efficiency as the fundamental mantra in running a business remains to be questionable. Leaders have mistakenly driven their businesses with efficiency. Business results obtained from implementing efficiency- based strategies generated disastrous results, according to an article in Forbes written by Adam Hartung. Hartung made reference to “Blue Ocean Strategy”, a book authored by Renee Mauborgne and W.Chan Kim of the INSEAD Business School. In the book, Kim and Mauborgne argued that businesses should create a “Blue Ocean”- a new market space – instead of being compelled by competition in the industry. The book further stated that although radical innovations comprise only 14% of total productivity, they garner 61% of the company’s profits.

Efficiency Vs Innovation

Why does innovation poorly impact the success of a business? The core problem, as noted by Hartung is the constant battle between innovation and efficiency in management strategy. In 1899, Frederick Winslow Taylor asked the simple question “Throughout one working day, how many tons of pig iron bars can be loaded into a rail car by a worker?” which subsequently formulated the Management theory. Taylor, who was the founding father of the management business, authored the book “The Principles of Scientific Management”. Lillian Gilbreath, the mother of modern management initially helped to promote the industrial management movement. However, she later expressed serious doubts about the movement she primarily supported. For the past century, western businesses held Taylor’s principles of scientific management as the Bible of their management practices. The discrepancy, nevertheless, was that Taylor did better as a salesman than as a scientist.

Humanistic Vs Technical Management

Matthew Stewart in his book “The Management Myth: Why The Experts Keep Getting It Wrong” explained how Taylor produced his data, perjured himself to his clients and exaggerated his results. American business leaders are obsessed with efficiency strategies of planning and saving costs because they mistakenly believe that human beings function efficiently like machines. Creating new market space or nurturing a creative blue ocean at work results to better productivity and profits. Excessive focus on traditional operational efficiency stifles innovation.

By the way, do you want to learn more about leadership in your company? If so, download your FREE ebook here: Guide to Elegant Courage Leadership

Jodi and Mike specialize in executive coaching with individuals and teams. http://lighthouse-leadership.com

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