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Economics and Innovation Management Relations.


Economics and Innovation Management  Relations.

   What does the future of management look like to you?  Cast  your mind forward a decade or two and ask yourself: How will tomorrow’s most successful companies be organized and managed? What new and unorthdox management practices will distinguish the vanguard from the old guard?  What will managers in bellwether organizations be doing, or not doing, that would surprise today’s business leaders?  What will be different about the way companies manage talent, allocate resources, develop strategy, and measure performance?

     

กิตตนันต์  พิศสุวรรณ

นักวิชาการอิสระ

[email protected]

คัดลอกบางส่วนของปริญญาดุษฎี  

Atlantic International University USA

 

 

Introduction: Purpose of the topic : Economics and Innovation Management  Relations

What does the future of management look like to you?  Cast  your mind forward a decade or two and ask yourself: How will tomorrow’s most successful companies be organized and managed? What new and unorthdox management practices will distinguish the vanguard from the old guard?  What will managers in bellwether organizations be doing, or not doing, that would surprise today’s business leaders?  What will be different about the way companies manage talent, allocate resources, develop strategy, and measure performance?

          In other words, can you imagine dramatic changes in the way human effort is mobilized and organized in the years to come?  Can you envision radical and far-reaching changes in the way managers manage?  Don’t be dismayed if the answer is “no.”  Given how little the practice of management has changed over the past several decades, it’s hardly surprising that most people have a hard time imagining how management might be reinvented in the decades to come.

Societies protect themselves from the threat of terrorism without trampling upon civil liberties?  How can they loosen the chains of special interest gridlock in order to head off the risks of global climate change?  Given these and other similarly vexing challenges, we must dare to hope that the practice of democracy will continue to evolve.

          If democracy still mountains to climb, some two-and-a-half thousand years after its birth in ancient Greece, it would be arrogant to assume that after a mere century of progress, modern management has exhausted its own evolutionary potential just as it would be foolish to assume that a technology that served us so admirably during the 20th century will turn out to be equally well-suited to the demands of the 21st.  The fact is, that despite its indisputable accomplishments to date, modern management has bequeathed to us a set of perplexing conundrums, troubling trade-offs that cry out for bold thinking and fresh approaches. And when we look forward, we are confronted by a slew of new problems mpredicaments and dilemmas that lay bare the limits of our well-worn management systems and processes.

Description  :

-Members were selected for positions based on their technical competence or education.

-Management worked for the owners of the enterprise, but were not the primary owners themselves.

-Everyone in the organization was subject to strict rules and controls relevant to their particular job. The rules were impersonal and uniformly applied.There is little here that would surprise a 21 st-century manager. And though Max Weber has been dead for nearly 90 years, control, precision, stability, discipline, and reliability the traits he saluted in his anthem to bureaucracy are still the canonical virtues of modern management. While we may deplore ‘’bureaucracy,’’ is still constitutes the organizing principle for virtually every commercial and public-sector organization in the world, yours included. And while progressive mangers may work hard to ameliorate its stultifying effects, there are few who can imagine a root-and-branch alternative.So here we are: still working on Taylor-type puzzles and living in Weber-type organizations. To be fair, many of the 21 st century’s new management challenges have been acknowledged in boardrooms and executive suites, and here and there one finds a truly serious attempt at management innovation (some of which will be described in the chapters that follow). Yet our progress to date has been constrained by our efficiency-centric, bureaucracy-based managerial paradigm. Most of us are still thinking like dogs.So we improvise and we patch and we retrofit. We create innovation projects and units, instead of organizations that are innovative from top to bottom. We call our employees ‘’associates’’ and ‘’team members,’’ but don’t dramatically enlarge the scope of their discretionary authority. We encourage people to welcome change but resist embracing the principles of grassroots activism. We talk about a meritocracy, but balk at the notion of a 360-degree compensation process.Truth is, most of us are partisans of the old paradigm. We’re members of the bureaucratic class. As executives, managers, and supervisors, we’ve learned how to use the technology of management the planning conferences, the budget meetings, and the performance measurement systems to get things done. More importantly, we’ve learned how to leverage our positional prerogatives, our access to power and our polished professionalism, to get ahead. Talk about revolution particularly management revolution makes us jittery. Who, one wonders, will come out on top if the rules and roles of management get turned upside down?

Yet despite our reservations, we know that Kuhn’s central thesis is incontestable: real progress demands a revolution. You can’t shuffle your way onto the next S-curve. You have to leap. You have to vault over your preconceived notions, over everyone else’s best practices, over the advice of all the experts, and over your own doubts. As we’ll see, you don’t have to leap with hundreds of millions of dollars on the line, or with your career dangling precariously out of your pocket, you don’t have to leap with no sense of where you’re going to land. But you do have to leap at least with your imagination.

 

General Analysis :

Transcending Old Trade-offs Over the course of its development, modern management has wrestled a lot of burly problems to the ground  it has succeeded in breaking complex tasks into small, repeatable steps, in enforcing adherence to standard operating procedures, in measuring costs and profits to the penny, in coordinating the efforts of tens of thousands of employees, and in synchronizing operations on a global scale.  Yet these successes have come at a heavy price.  The machinery of modern management gets fractious, opinionated, and free-spirited human beings to conform to standards and rules, but in so doing it squanders prodigious quantities of human imagination and initiative.  It multiplies the purchasing power of consumers the world over, but also enslaves millions in quasi-feudal, top-down organizations.  And while modern management has helped to make businesses dramatically more efficient, there’s little evidence that it has made them more ethical.

          Modern management has given much, but it has taken much in return, and it continues to take.  Perhaps it’s time to renegotiate the bargain.  We must learn how to coordinate the efforts of thousands of individuals without creating a burdensome hierarchy of overseers; to keep a tight rein on costs without strangling human imagination; and to build organizations where discipline and freedom aren’t mutually exclusive.  In this new century, we must strive to transcend the seemingly unavoidable trade-offs that have been the unhappy legacy of modern management.

 

Actualization :

While the practice of management may not be evolving as fast as it once did, the environment that faces 21st-century businesses is more volatile than ever.  This new century may still be young, but it has already spawned a sizable brood of daunting management challenges that are markedly different from the ones that taxed our forebears:

-As the pace of change accelerates, more and more companies are finding themselves on the wrong side of the change curve.  Recent research by L.G. Thomas and Richard D’Aveni2 suggests that industry leadership is changing hands more frequently, and competitive advantage is eroding more rapidly, than ever before.  Today, it’s not just the occasional company that gets caught out by the future, but entire industries  be it traditional airlines, old-line department stores, network television broadcasters, the big drug companies, America’s carmakers, or the newspaper and music industries.

-Deregulation, along with the de-scaling effects of new technology, are dramatically reducing the barriers to entry across a wide range of industries, form publishing to telecommunications to banking to airlines.  As a result, long-standing oligopolies are fracturing and competitive “anarchy” is on the rise.

-Increasingly, companies are finding themselves enmeshed in “ value webs” and “ecosystems” over which they have only partial control.  As a result, competitive outcomes are becoming less the product of market power, and more the product of artful negotiation.  De-verticalization, disintermediation, and outsourcing, along with the growth of codevelopment projects and industry consortia, are leaving firms with less and less control over their own destinies.

-The digitization of anything not nailed down threatens companies that make their living out of creating and selling intellectual property.  Drug companies, film studios, publishers, and fashion designers are all struggling to adapt to a world where information and ideas “want to be free.”

-The Internet is rapidly shifting bargaining power from producers to consumers.  In the part, customer “loyalty” was often an artifact of high search costs and limited information, and companies frequently profited from customer ignorance.  Today, customers are in control as never before  and in a world of near-perfect information, there is less and less room for mediocre products and services.

-Strategy life cycles are shrinking.  Thanks to plentiful capital, the power of outsourcing, and the global reach of the Web, it’s possible to ramp up a new business faster than ever before.  But the more rapidly a business grows, the sooner it fulfills the promise of its original business model, peaks, and enters its dotage.  Today, the parabola of success is often a short, sharp spike.

-Plummeting communication costs and globalization are opening up industries to a horde of new, ultra-low-cost competitors.  These new entrants are eager to exploit the legacy costs of the old guard.  While some veterans will join the “race to bottom” and move their core activities to the world’s lowest-cost locations, many others will find it difficult to reconfigure their global operations.  As Indian companies suck in service jobs and China steadily expands its share of global manufacturing, companies everywhere else will struggle to maintain their margins.

 

Discussions :

Management innovation also encompasses value-creating changes to organizational structures and roles, Companies consist of business units, departments, work groups, communities of practice, and alliances with suppliers, partners and lead customers, A new way of connecting these entities can constitute a management innovation. For example, InnoCentive, a spin-off from Eli Lilly and Company, has created a global market for scientific expertise that allows “seeker’’ companies to bid out tough technical challenges to a network of more than 70,000 scientists around the world. In the three years following is launch, InnoCentive channeled more than $1 million in ‘’bounty’’ payments to its community of ‘’solvers,’’ who often succeeded in cracking problems that had stumped internal R&D teams. While the goal of InnoCentive is scientific innovation, the processes and structures that support its global network of seekers and solvers is a first-rate example of management innovation, in that it involves new ways of aligning effort, coordinating activities, and applying knowledge all components of managerial work.

While operational innovation focuses on a company’s business processes (procurement, manufacturing, marketing, order fulfillment, customer service, etc.), management innovation targets a company’s management processes the recipes and routines that determine how the work of management gets carried out on a day-to-day basis.     Typical processes include:

-Strategic planning

-Capital budgeting

-Project management

-Hiring and promotion

-Training and development

-Internal communications

-Knowledge management

-Periodic business reviews

-Employee assessment and compensation

These processes establish standard protocols for common management tasks such as evaluating as employee or reviewing a budget request. They propagate best practice by translating successful techniques into tools and methods that can be broadly applied. They also shape management values by reinforcing certain behaviors and not others.Put simply, management processes are the “gears” that turn management principles into everyday practice. In even a medium-sized organization, it’s impossible to change the what and how of managing without changing the processes that govern that work.

 

 

 

General Recommendations :

This assertion, bold as it may seem, is buttressed by the findings of military theorists who’ve explored the origins of sustained superiority in war making. Here, too, management innovation seems to be key, In battle, as in business, most victories are pyrrhic and temporary. Yet here and there, as in the bloody pages of history, one observes a military regime that has consistently bested its enemies, often despite a deficit of men and materiel. As you might imagine, these cases are of great interest to military scholars who, like business school professors, have an interest in uncovering the deep roots of competitive advantage. Why is it, these analysts ask, that some armies and navies have enjoyed prolonged periods of military supremacy?

          When confronted with this question, a layperson is likely to credit superior weaponry. Prime exhibits might include:

-The deadly and much-feared yew-wood longbow, which, in the 14th century, allowed      the archers of King Edward III   to deal out a series of crushing blows to England’s enemies

-The agile and speedy three-masted caravel, a product of 15th century Iberian ingenuity, which gave European powers a sizable advantage in building their globe-spanning empires

-The breech-loading needle gun, perfected in the mid-19th century, which gave Prussian infantrymen a considerable firepower advantage over their European adversaries

-The laser-and satellite-guided missiles that enabled coalition forces to surgically destroy Saddam Hussein’s military installations in both the first and second Gulf Wars

These tasks are central to the accomplishment of human purpose, be it mounting a mission to Mars, running a middle school, producing a Hollywood blockbuster, or organizing a church bake sale, Anything that dramatically changes how this work gets done can be labeled as management innovation.

Management innovation also encompasses value-creating changes to organizational structures and roles, Companies consist of business units, departments, work groups, communities of practice, and alliances with suppliers, partners and lead customers, A new way of connecting these entities can constitute a management innovation. For example, InnoCentive, a spin-off from Eli Lilly and Company, has created a global market for scientific expertise that allows “seeker’’ companies to bid out tough technical challenges to a network of more than 70,000 scientists around the world. In the three years following is launch, InnoCentive channeled more than $1 million in ‘’bounty’’ payments to its community of ‘’solvers,’’ who often succeeded in cracking problems that had stumped internal R&D teams. While the goal of InnoCentive is scientific innovation, the processes and structures that support its global network of seekers and solvers is a first-rate example of management innovation, in that it involves new ways of aligning effort, coordinating activities, and applying knowledge all components of managerial work.

While operational innovation focuses on a company’s business processes (procurement, manufacturing, marketing, order fulfillment, customer service, etc.), management innovation targets a company’s management processes the recipes and routines that determine how the work of management gets carried out on a day-to-day basis. Typical processes include:

 

 

Conclusion: A new perspective

- Allocating capital. DuPont played a pioneering role in the development of capital-budgeting techniques when it initiated the use of return on investment calculations in 1903. A few years later, the company also developed a standardized way of comparing the performance of its numerous product departments. These advances addressed a pressing problem: How to allocate capital rationally when confronted with a bewildering array of potentially attractive projects? DuPont’s new decision tools would help it to become one of America’s industrial giants.

-Managing intangible assets. Procter & Gamble’s preeminence in the packaged goods industry has its roots in the early 1930s, when the company began to formalize its approach to brand management. At the time, the idea of creating value out of intangible assets was a novel idea. In the decades since, P&G has steadily built upon its early lead in building and managing great brans. In 2007, P&G’s business portfolio included 16 brands that were delivering more than $1 billion in annual sales.2

- Capturing the wisdom of every employee. Toyota is the world’s most profitable carmaker by a long margin. Much of its success rests on an unmatched ability to enroll employees in the relentless pursuit of efficiency and quality. For more than 40 years, Toyota’s capacity for continuous improvement has been powered by a belief in the ability of “ordinary” employees to solve complex problems. Indeed, people inside Toyata sometimes refer to the Toyota Production System as the “Thinking People System.” In 2005, the company received more than 540,000 improvement ideas from its Japanese employees.3

- Building a global consortium. Visa, the world’s first “virtual” company, owes its success to organizational. When Visa’s founding banks formed a consortium in the United States in the early 1970s, they laid the groundwork for what would become one of the world’s most ubiquitous brands. The key management challenge: building an organization that would allow banks to compete for customers while collaborating around infrastructure, standards, and brand-building. Today, Visa is a gossamer web that links more than 21,000 financial institutions and 1.3 billion cardholders. The Visa network processes more than $2 trillion of purchases every year about 60 percent of all credit card transactions.

          These cases (as well as more recent ones, which we will explore in subsequent chapters) highlight the decisive role that management innovation often plays in helping companies build durable advantages. Indeed, no other factor seems to have been similarly instrumental in underwriting long-term competitive success.

          This assertion, bold as it may seem, is buttressed by the findings of military theorists who’ve explored the origins of sustained superiority in war making. Here, too, management innovation seems to be key, In battle, as in business, most victories are pyrrhic and temporary. Yet here and there, as in the bloody pages of history, one observes a military regime that has consistently bested its enemies, often despite a deficit of men and materiel. As you might imagine, these cases are of great interest to military scholars who, like business school professors, have an interest in uncovering the deep roots of competitive advantage. Why is it, these analysts ask, that some armies and navies have enjoyed prolonged periods of military supremacy?

 

References:

Feldman, Burton (2001). The Nobel prize: a history of genius,    

controversy, and prestige. Arcade controversy, and prestige.  Arcade Publishing. ISBN 1559705922.

Leroy, Francis (2003). A century of Nobel Prizes recipients:

chemistry, physics, and medicine. CRC Press. ISBN  0824708768.

Levinovitz, Agneta Wallin (2001). Nils Ringertz. ed. The Nobel

Prize: The First 100 Years. Imperial College Press and World  Scientific Publishing. ISBN 981-02-4664-1.

Shalev, Baruch Aba (2002). 100 years of Nobel prizes. Americas

          Group. ISBN 0935047379.

Wilhelm, Peter (1983). The Nobel Prize (First ed.). Springwood

          Books. ISBN 9780862541118.

Chen,Nai-Ryenn (2009).Chainess Economics Statistics. Chicago :

          Aldne Publishing.

McEachern (2009). William A. Principle : A contemaporary

Introduction. South-Western, Adivistion of Cengage Learning.

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