There are lots of theories about why corporate spending and investment remain flat: the Iraq war; the need to digest past capital expenditures; a distrust of the payoff from information technologies, especially after the collapse of the bubble; a manufacturing and services capacity glut, and the lingering impact of business excess and greed. These factors all contribute to a general business malaise, but I have one other to add: Many managers, including people in very high places, just don’t seem to have any ambition or much of an appetite to do something big within their companies.
This was driven home to me recently when one executive — whose company was in trouble — whispered in my ear that he, himself, was just fine. He had made a lot of money in the bubble and cashed out more than enough to build a house in Palm Beach. He was headed to his gated community and would escape the pressures of the business for a time. In his mind, things eventually would work out for his company. I also got the sense that he thought economic forces were so strong that whatever happened was outside of his control. Anyway, that’s what he was telling his investors. He was surfing the tide of business.
This lack of ambition isn’t just limited to those folks who cashed out a few years ago — although there are a lot of people who made big bucks and who, to their credit, have been able to protect their wealth during recent market downturns. I believe the loss of ambition goes beyond the class of manager who is now partially retired on the job.
When Michael Hammer and I introduced the concept of reengineering in our 1993 book, managers took up the ideas and used them to attack fragmentation, bureaucracy, and the crawl of their organizations. Companies mobilized to bring about work and process changes that contributed to the dramatic improvements in productivity of the 1990s.
Today, in contrast, many leaders are almost cynical about new ideas. If one were to construct an ambition index, you’d find evidence of a growling bear in the idea marketplace. Virtually every barometer is down: published business books, leadership lectures, consulting revenues, corporate investment in developing the knowledge, skills, and abilities of employees, venture capital money and deals, and issued patents. The numbers reflect a severe idea recession.
Many leaders, of course, have fed on a fad diet with far too many entrees. But now they seem to want to be entertained rather than challenged. Today they principally read the memoirs of great past managers, many of whom deserve accolades for their accomplishments, but whose experiences and advice may not be applicable to the cultures and conditions of other companies. These are interesting biographies, but not the stuff that will help build the next generation of great companies.
My concern, however, with this management malaise is not about the lack of contemporary role models or cheerleaders. Rather, it lies in the fact that the next round of business change will be very difficult; much more difficult than the operational changes that companies have made in the past. Still ahead are the massive work changes that technology will now enable. We know the economic case: a face-to-face transaction by a bank teller costs tens of dollars; the same transaction done telephonically costs just a few dollars; today that transaction can be done electronically for a few cents. All of the processes of a company will soon be subject to some form of digitization.
Companies like Wal-Mart, Dell, and Cisco make it look easy. They are prime examples of well-run organizations that have moved aggressively to leverage technology. But most companies still have to go through massive process and organizational change to enter the digital age. Commitment and lots of energy will be required.
All this will take great ambition on the part of forward-thinking leaders and a strong appetite to move to even greater levels of productivity. The work will be hard, but companies will have no choice. When the economy does awaken — and it will — only the operationally fit will thrive.
Managers have always had the seeds of great ambition. Now their ambition must also be reawakened, ahead of any economic recovery.
James Champy (email@example.com), chairman of Perot Systems’ consulting practice, is the author of X-Engineering the Corporation (Warner Books, 2002).