Tis the season for “year’s best” lists — and even, this year, for “decade’s best” lists — and who are we to resist the urge? A few of us HBR editors (Gardiner Morse and Steve Prokesch helped especially) took the opportunity to look back on the past ten years of management thinking and are ready to declare our choices for the — well, why not say it — most influential management ideas of the millennium (so far).
- Shareholder Value as a Strategy. The notion of producing attractive returns for investors is as old as investing, but this was a decade when the pursuit of shareholder value eclipsed too much else. Increasingly sophisticated tools and metrics for value-based managementpushed the consideration of stock price effects deep into operational decision-making, and made sure everything pointed toward bonus day. By 2009, even the man most known for focusing on value was saying it was a dumb idea. “Shareholder value is a result, not a strategy,” Jack Welch proclaimed. “Your main constituencies are your employees, your customers and your products.”
- IT as a Utility. The current mania for cloud computing is the latest step in a long process by which enterprises have dispensed with their proprietary glass houses and begun buying computing capabilities as services. One impetus was the Y2K scare, which forced attention onto those onerous legacy systems as the new millennium dawned.
- Enterprise Risk Management. Sounds crazy right now to say that the last decade was notable for risk management. But especially after 9/11, companies saw the sense of bringing the many and various pockets of it under the same umbrella. Newly empowered chief risk officers looked for trouble spots on a landscape ranging from financial hedging to pirates on the open sea.
- The Creative Organization. The decade saw a general revolution in the way many organizations came to view their source of competitive advantage, and a commitment to finding ways to produce creative output more reliably. Even before they embraced “design thinking,” managers were encouraging collaboration, drawing on diverse perspectives, and engaging whole workforces in “ideation.”
- Open Source. Purist geeks will be quick to point out that the term open source and some very substantial achievements came in the late 1990s, but here we pay homage to the spread of that model beyond software code. Was it only in 2001 that Wikipedia was born? And how many things have been wiki’ed since?
- Going Private. Cheap debt reignited the LBO scene just as post-Enron reforms created real disincentives to operate as a public company. As the decade wore on, private equity’s playbook for turning around businesses was increasingly held up as best-practice management. Now, ideas like, ahem, leveraging up don’t seem so wise, but private equity’s devotion to strategic focus and demanding governance might endure.
- Behavioral Economics. Okay, by now, you’re all shouting “that’s definitely older than 10 years” and you’re right. But talk about a set of ideas whose time has come. In the prior decade, can you remember when someone with Steven Levitt’s profile had a breakout bestseller? Or when someone modifying the word economist with “rogue” (or “rock star”) could keep a straight face?
- High Potentials. Consulting firms and other deeply knowledge-based businesses knew this all along, but in the past decade the rest of the corporate world woke up to the fact that some managers are more equal than others. Formal programs were established to identify, cultivate, and retain “hi-po’s”. Executive coaching, a perk often provided for the anointed, experienced explosive growth as an industry.
- Competing on Analytics. Decades of investment in systems capturing transactions and feedback finally yielded a toolkit for turning all that data into intelligence. Operations research types, long consigned to engineering realms like manufacturing scheduling, got involved in marketing decisions. Managers started learning from experiments that were worthy of the name.
- Reverse Innovation. The bigger story here is the maturation of the concept of globalization, particularly with regard to emerging economies. Most big corporations in 2000 saw them primarily as a source of natural resources and, increasingly, cheap labor. Then, as rising employment fueled the development of middle classes, cities in India and China came to represent valuable markets. Now, these non-US consumers are coming to the foreground. Firms like GE and Microsoft are doing R&D in emerging markets, optimizing on those preferences and constraints, and then bringing the results back home.
- Sustainability. More than anything, the first ten years of the 21st century will be remembered as the decade that businesses went green — if only in their marketing to a public highly attuned to Al Gore’s inconvenient truth. We’re not cynical on this point, however. The efforts we see by companies large and small to reduce their carbon footprints and other environmental impacts are sincere and effective, as far as they go. But ten years from now, as we revisit this exercise, forgive us if we declare 2010-2020 to be the decade of sustainability. “The idea was in the air before 2010,” we can picture ourselves writing. “But this was the decade when it really took hold.”
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