What's Today's Special at the Consultant's Cafe?

What's Today's Special at the Consultant's Cafe?

How do executives decide whether to spend $30 million on reengineering, knowledge management, mission statements, core competencies, or some other management tool or technique?

  • min read


What's Today's Special at the Consultant's Cafe?

Shoppers can check Consumer Reports before spending $3 on a box of Wheaties, but how do executives decide whether to spend $30 million on reengineering, knowledge management, mission statements, core competencies, or some other management tool or technique? Research shows these are to some extent fashion items, becoming chic or declasse with the march of the management zeitgeist.

We've all suspected as much, but we can now prove and even quantify it. In 1993, Bain & Co. launched a multiyear research project into the usage and satisfaction levels of such tools and techniques. It is now possible to trace the ups and downs of these tools over time. The surveys show that tool usage is high across all industries and in all countries, with the average respondent using 13 of the top 25 tools. Yet 77% of executives report that tools promise more than they deliver, and even highly rated tools vary widely in their ability to improve financial results, customer equity, and competitive advantage. Indeed, management tools are not silver bullets. They are more like chain saws—potentially powerful when applied to the right problems, but extraordinarily dangerous in the wrong hands.


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Managers report that the most dangerous tools seem to include activity-based costing, knowledge management, and reengineering. Reengineering's five-year survey scores reveal the vagaries of a tool's results over time. In 1993 and 1994, reengineering was the rage. Early adopters gave it impressive ratings, and its usage climbed from 67% of respondents to 71%. But in 1995 reengineering's satisfaction scores plummeted. Early users started to complain about unexpected long-term side effects such as declining morale, loss of innovation, an erosion of trust, and weakened teamwork.

Despite these warning signs, reengineering's usage climbed even higher, to a peak of 78% in 1995. Then the news began to spread. In 1996 and 1997, its satisfaction scores fell to the bottom of the heap, and usage declined to 64%. Trend lines indicate that it will probably fall even further.

As previously hot tools such as reengineering and total quality management cool off, other approaches rise to take their place. The latest surveys show that tool preferences are shifting away from cost-reduction techniques toward tools for retaining customers, outsmarting competitors, motivating employees, and accelerating innovation. Today 90% of managers report that they want to improve performance through revenue growth, not downsizing. To accomplish that, they are implementing strategic planning systems, and 87% are polishing up their mission and vision statements—making these the two most popular tools. Slightly more than three-quarters admit that their company's managers have been focused on operations at the expense of strategy.

As business conditions change over time, the richness of information about management tools will continue to grow. Five years may sound long enough to test the mettle of any tool. But during the period from 1993 to 1998, stock prices have grown faster than earnings (20% vs. 16%), and earnings have grown faster than revenues (16% vs. 7%). How will tools such as pay for performance do in a bear market? Could an economic downturn revive reengineering?

It is realities like these that should guide companies' choice of tools, not the buzz surrounding them or their market share.


Benchmarking. Compares a business' activities to those of the best companies.

Core competencies. Build capabilities that customers will value and that competitors can't replicate.

Customer satisfaction measurement. Focuses on identifying and meeting customer needs.

Growth strategies. Aim to lift profits by expanding revenues, not just cutting costs.

Mission and vision statements. Describe what the company will become and how it will get there.

Pay for performance. Ties compensation to reaching specific business goals.

Reengineering. Radically redesigns business processes to improve productivity.

Strategic alliances. Create business partnerships among customers, suppliers, and even competitors.

Strategic planning. Develops a comprehensive program to position businesses for long-term success.

Total quality management. Seeks to eliminate errors in order to reduce costs and better serve customers.

The database includes 4,137 survey responses and 224 personal interviews with senior managers in 15 countries.

These Management Tools Were 1997's Favorites (by percent of users)

Strategic planning90%
Mission and vision statements87%
Customer satisfaction measurement79%
Pay for performance78%
Strategic alliances68%
Core competencies67%
Growth strategies61%
Total quality management60%

But They Go in and out of Fashion...

Because Companies Disagree About Their Value Ranking by percent of extremely satisfied minus dissatisfied users

DissatisfiedExtremely satisfied
Strategic planning: 208%28%
Strategic alliances: 188%26%
Customer satisfaction meas.: 166%22%
Mission and vision statements: 1412%26%
Pay for performance: 1410%24%
Core competencies: 115%16%
Benchmarking: 97%16%
Growth strategies: 710%17%
Total quality management: 214%16%
Reengineering: -116%15%

DARRELL K. RIGBY prepares the annual Management Tools and Techniques survey for Bain & Co., of which he is a director.


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