Soft management issues such as corporate culture, environmental protection and knowledge management have shifted to the forefront of executive thinking, according to Bain & Company's 'Management Tools & Trends 2007' study.
The survey of more than 1,200 international executives found that 90% believe that corporate culture is important as a strategy for business success, while 70% consider that environmentally friendly products and practices are an important part of their overall strategy.
Emerging market bias
Interestingly, an environmental focus is more important to those in emerging market countries (77%) than it is in established market countries (59%). Knowledge management - for the first time ever - now also ranks among the top ten most used executive tools.
"Executives are actively addressing higher order needs, changing the rules and the tools of management," said Darrell Rigby, senior Bain & Company partner and author of the study. "Organisational culture and so-called 'softer issues' are now top of mind. Executives are clearly looking beyond cost-cutting for success."
Top ten executive tools
The top ten most used tools identified by the study are:
- Strategic planning;
- Customer relationship management (CRM);
- Customer segmentation;
- Core competencies, tied with:
- Mission & vision statements;
- Business process reengineering, tied with:
- Knowledge management, also tied with:
- Scenario & contingency planning.
Best and worst tools
When asked to consider both usage and satisfaction with management tools overall, executives gave strategic planning, customer relationship management, core competencies and customer segmentation above average rankings.
Conversely, RFID technology, corporate blogs, consumer ethnography, loyalty management, and shared service centres all scored below average in both usage and satisfaction.
At a time when public attention and debate on outsourcing continues to grow, the study found one particular tool losing favour among executives: When compared to results from the previous report in 2005, outsourcing dropped from 3rd to 7th place in usage. Offshoring - a form of outsourcing - fell from 7th to 16th place in satisfaction. Offshoring also now has the 6th highest defection rate (in terms of the occurrence of companies that have stopped using it during that time).
Other highlights from the study included:
- Economic pessimism in China: 45% of executives in China are bracing for an economic slowdown compared to 27% in North America, 18% in other Asia-Pacific countries, 15% in Europe and 10% in Latin America.
- Continued globalisation: 42% agree that cross-border acquisitions will be critical to achieving growth objectives in the next five years; 53% say working with China and India will be vital to success over that same period; nearly two-thirds say innovation could be boosted dramatically by collaborating with outsiders, and even competitors.
- Emerging vs. Established markets: Executives in emerging markets tend to use the following management tools more often than their counterparts in established markets: total quality management, supply chain management, six sigma, corporate blogs, shared service centres and consumer ethnography. Executives in established markets are more likely to use mergers and acquisitions, offshoring, benchmarking, scenario and contingency planning and strategic alliances.
- Private vs. Public: 43% agree and 25% disagree that their companies would have better long-term results if privately owned; 39% would rather work for a privately owned company, while 27% would not.
- Expectation vs. Reality: 87% agree that information technology can create significant advantages; at the same time one-third of the executives also believe that expected paybacks from IT investments are rarely achieved.
"We are keenly aware that management attitudes often shift faster than results do," explained Paul Rogers, a London-based Bain partner and head of the firm's global organisation practice. "While corporate culture, for example, is receiving considerably more management attention than in previous years, our research shows that fewer than 10% of companies currently succeed at building high-performance cultures."