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Monday, September 3, 2012

The new management principle

Last week, during class discussion about the impact of globalization, a student asked: “Most people know that with globalization, things can change very fast and if you do not catch up, you will be left behind. How come many companies and management are still operating the same way like nothing happen?


I answered: Many people hear about globalization or read about the need to improve but it does not mean they really understand it. As long as things do not impact them, they do not want to do anything. Most people will only react when something happens to them. Today, in the fast changing world, reacting is too late. That is why in the past few years, there were over seventy eight thousands companies in the world collapsed and several millions people lost their jobs. This was not caused entirely by the financial crisis although most blamed it because it was easy to explain. Sometime the problem was not happen at company level but also at country level too. You could look at what happened in Greek, Spain, and Portugal as their economies were collapsing. For example, Portugal’s economy was depending on its low cost labor and tourism. Developed European countries routinely shift light manufacturing works there to take the advantage of lower costs. When Eastern European countries such as Poland, Hungary, Romania, Czech Republic, and Slovakia joined the European Union, they have lower costs, more labor workers, and good tax incentives. In just a short time, many businesses moved out of Portugal and into these Eastern European countries. Suddenly, Portugal’s economy experienced a significant downturn with high unemployment, rising costs of living, and huge inflation. Portugal didn’t recognize that its economy based on low labor costs can change so fast in a globalized world. No one in the government paid attention until it was too late. A similar situation can also be seen in Greek and Spain as these economies were also on the verge of being collapsed.

In my opinion, the issue there were the lack of vision and complacency. If they understand the impact of globalization, they will act. Since they did not act, it means they did not understand it well or have no vision about what the future will bring. When people do not have vision, they will not understand what may happen and only react when something happens. The lack of vision and understanding leads to complacency and passive attitude. For many years, there were people in these countries raised issues about the need to develop technology workers instead of labor workers but their leaders were too busy with mundane daily works and failed to act. Globalization is not a new thing but they did not see the urgency to do anything until it was too late. Today, Greek, Spain, and Portugal economies are in very bad shape and need financial aids from other European countries. However, it is only a temporary solution and will not solve the problem. Nobody know what will happen next.

The same thing were happened in the U.S. In the past 30 years the U.S has lost 80% of the market share in 20 major industries, including steel, automobile, electronics, textiles, and semiconductors. Since 1980, 180 of the top 500 companies in the U.S. have bankrupted(phá sản) and over 6.5 million jobs were eliminated. For example, before 1985, the U.S. exported steel to the world but now it imported 95% of steel from other countries. The U.S. steel industry was completely wiped out in just few years because they cannot compete with imported steel. For many years, the steel industry have enjoyed its success and high profit but had no vision about its future. Most of its manufactures were built in the late 19th century with old machines, archaic equipments, and low productivity. When other countries modernized their steel manufactures for better outputs, the U.S Steel industry did not invest in the modernization therefore it could not compete with better price and higher quality steel from others. The same thing were happened to textiles and electronics industries. What happened to companies of these industries? They were no longer exist. What happened to their workers? They had to find another jobs or stayed unemployed. If you look at the personal computer industry. In 1980, 98% of computer components were built in the U.S and San Jose were booming with thousands semiconductor companies and several million jobs. Today, 99% of computer components are built in another countries, the only U.S made component in computer is the CPU made by Intel. What happened to these electronic companies? Most were gone when Japanese flooded the U.S market with cheaper and better electronics components. What happened to these U.S. electronics workers? They had to find another jobs or stayed unemployed. It took 15 years for the steel industry and textile industry to disappeared in the U.S. but it only took less than 5 years for the electronic industry to collapse. Globalization can impact every industry, every country as it gather more momentum, the speed of impact can be devastating as global competition is getting fierce. 

Fifteen years ago, Japan’s electronics industry captured 80% of the world market but today it has only 42% as S. Korea and Taiwan are moving fast to compete with Japan and China is also positioning itself to be another competitor too. What happened to Japanese electronics companies when their market share fell into a half? Many Japanese electronics companies were gone, only larger and stronger ones survived. What happened to their workers? They had to find another jobs or stayed unemployed. In the past 10 years, Japanese economy was standing still with not much progress in sight. Today it is no longer the second economic power but fell to the third as China is occupied the second position. You can clearly see the change by looking at the consumer electronic such as television. Between 1940 to 1970, most TV were built by RCA, Zenith, and GE - all U.S companies. Then in 1980 to 2000, many TV were built by Panasonic, Sonny – all Japanese companies. What happened to Zenith, RCA or GE? They were gone and million jobs were lost in the U.S. Today, Samsung, LG, are moving quickly to compete with Sonny and Panasonic. What will happen for Japan’s electronic industry remain to be seen in the next few years as these companies fight for market share.

My question is what will happen to workers who are spending their entire careers in this industry if it is gone? What will happen to an economy where some major industries collapse with millions of workers lose their jobs? With globalization, there is no such thing as “job for life” but only “Employability” as things change fast. That is why as students, you must think about lifelong learning instead of having degrees. You must develop a sense of awareness of what is happening in the industry as well as in the world so you can prepare yourself to learn new skills, new areas if needed. Today with the internet, you can learn so many things about technology, skills, what is hot and what is not in the job market. However knowing is not enough, you must act by continuous learning new things, new skills so you are “Employable” even when things change.

With globalization, managers must stay current with what is happening in the world and improve their skills too. With global changes, management jobs are also changing so they need to learn new skills to be “employable”. For many years, management training is based on the Taylor’s theory of monitor and control. This theory considered management job is to manage the people who work for them. They give orders to workers and workers have to follow orders to do their jobs. This theory works well in a manufacturing environment with labor workers who are not well educated. These workers are trained quickly to do a specific work in an assembly line. In the fast changing world, this principle does not work anymore. As things are changing rapidly, workers who wait for order from manager will not be able to do anything. Lower level manager is not trained to make decision, they are only trained to manage their own people so they but wait for higher level to give them direction. Since there are many levels of management, the entire system become bureaucratic(quan liêu) and very slow to change. That is why even with changes in the world, many companies are still operating like nothing happen. Most managers are still waiting for the direction from the top managers and without order, they cannot act. Some companies have good workers who can make things happen but their management do not have vision and understanding. They only react if things happen to them and refuse to listen to their workers. Of course, good workers are frustrated and leave then be replaced by mediocre workers because they are easier to find. Company like that cannot survive in this competitive world. That was what happened to the U.S textiles industry, the U.S steel industry, and the U.S electronics industry.

With globalization, successful company hires the best workers they can find, share visions and directions with them, and allow them to do whatever they need to success. The new theory of management is not about control anymore but support workers, remove roadblocks, “enable” them to make things happen according to the company goals and directions. In the 21st century, in the globalized world, most manufacturing works will be highly automated with machines replacing labor workers. The workers are highly educated, highly skilled, better, smarter, and more ingenious who design, build and operate these machines. The management job of these highly educated workers is not control them but lead them and enable them to do their jobs. The new job of management in the globalized world is to provide leadership NOT manage. Top manager must develop vision, strategy and goals and share them with their people. To do that, they must study more, read more and be aware of the fast changing world.

Today the new management training includes: Setting vision, formulating strategy, organizing direction, set business goals, motivate workers, listening skill, teamwork skill, counseling skill, coaching skill, mentoring skill, teaching skill, and problem solving. It requires that all levels of management must build relationship with workers and letting go of their own ego(cái tôi) because the success of the company depends on the talent of the workers. Manager is no longer a person who monitor and control workers but a “Partner” and “Mentor” who listen to them, understand them, and “enable” them to do their jobs to achieve the goals of the company. This new concept is difficult for current managers to grasp as many are afraid of losing control of their powers. Many managers have their own egos and a sense of power over their workers and that is why it is difficult for them to change. However, in this fast changing world, there is no choice as they either change or be eliminated. They have to accept the fact that the new management principle is “Collaboration NOT control”. That is why in the past few years, many companies are spending millions to retrain their management to this new concept. In 2010, the U.S. spent more than $500 million in management training alone.

If you have talent workers but they are not producing results, ask yourself whether you are blocking their way. Or if you do not have the talent workers then you need to ask yourself why not and go and hire young talented, highly trained people to work for you. In this globalized world, not just workers have to improve their skills but managers too because achieve the remarkable results is set by the vision of the leader but implemented by the talent of the workers.
Prof John Vu    
Carnegie Mellon University

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