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Essay: Management fashion

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Management fashion

Task: Analyze the concept of Management Fashion with regard to theories of legitimacy and institutionalization.

Management Fashion

Introduction

Organizations today operate in an environment characterized by hypercompetition (D’ Aveni, 1995). While organizations strive to survive the challenges of the niche market they operate, different environmental factors came into surface and have changed the way organizations perform their tasks. The management system and strategy of each and every organization is accountable for the maintenance of the organization’s strength and survival in the stiff competition in the business world. The role of the management and the strategy imposed by the organization as a whole should always be open minded for the occurrences of changes in order to adjust and cope with the tremendous development that are happening in the internal and external environment of the organization. With the constantly changing environment, many people especially those in the working organization find themselves normally adapting. This is because change can bring many improvement and development in different aspects of competency. Likewise, change has been modified and tailored by various work organizations for varied reasons. With these changes in business processes, the evolution of different management strategies among business practitioners becomes the new trend. The emergence of the so-called management fashion is now influencing most of businesses today. With this consideration, this paper will be discussing the issues of changes among business in accordance to management fashion as it complies with the theories of legitimacy and institutionalization.

Discussion

The continuous and dynamic competition in the global business arena has been very stiff and complex. In this regard, the organization must be able to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals (Thompson & Strickland, 2003).

The evolution of ideas and innovativeness have been rapidly changing, different organizations have to cultivate ideas that can meet the demands of the market. To meet these challenges and achieve a competitive edge, they must formulate and implement strategies based on innovation, technology and the development of intellectual capital. Few companies, even those at the leading edge of knowledge management, have all the management processes, culture and tools in place to create and harness knowledge in a systematic way. Those starting out on the knowledge management path assume it is a simple extension of information management. In reality, effective knowledge management can involve major changes in process, culture, and technology.

Management thought has evolved over the years. With this, there emerged a modern definition management: that management is the process of planning, organizing, leading and controlling the organizational members and organizational resources to achieve some started goal. Management is the organizational process that includes strategic planning, setting; objectives, managing resources, deploying the human and financial assets needed to achieve objectives, and measuring results (Henry, 2006). Management also includes recording and storing facts and information for later use or for others within the organization.

Over the last two decades of the twentieth century, theories of organizational change have had a tremendous impact on business and not-for-profit companies. The extent of the influence of popular theories of change – including ‘Culture Change’, Total Quality Management (TQM), Business Process Re-engineering (BPR), Organizational Learning, and, more recently Six Sigma – is evidenced throughout the business world as application and outcomes are reported and debated in the business presses, consulting reports, management journals and ‘best-selling’ business trade books.

Changes in the world is a natural phenomenon. As argued in the paper of Abrahamson, 1996, the popularity of change programmes among businesses has achieved the status of a fad or fashion (Abrahamson, 1996). Keiser (1997) detailed the time span and different forms that management fads take. For example, by 1996 TQM and re-engineering had gone from being the hottest management trend to a fad, whose day has come and gone (Jacques, 1996). It was not a coincidence that both culture change and re-engineering were at their peak of popularity when they were implemented at Nova Scotia Power. Abrahamson (1996:255) refers to the trend of adopting the latest management ideas as ‘theories of management fashion’. He argues that they are shaped, not only by ‘organizational performance gaps’ opened by technical and economic environmental changes, but by ‘socio-psychological forces’, including ‘aesthetic tastes, childlike excitement, mass conformity, and even something akin to manias or episodes of mass hysteria’. While reference to fads and fashion helps to characterize the popularity of change programmes it does not explain that popularity. As R�ling (1998) puts it:

    “As a concept in its own right, ‘management fashion’…lacks conceptual clarity. Whereas some authors build on an everyday understanding of ‘fashion’, others discuss the specificity of management fashion either in terms of formal properties, e.g., its cyclical nature (Kieser, 1997), or other attributes, e.g., associated claims for rationality and progress (Abrahamson, 1996).”
    (R�ling, 1998)

What is needed, according to R�ling (1998), is an approach that ‘combines institutional and discourse analysis’. He explained that fashion is created and mediated through institutions, rules and routines present in a field. On the other hand, it is primarily linguistic in nature and thus relies on constant reproduction through individual actors.

Apparently, it is argued that, within management thought and practice, the notion of organizational change has changed in significance over the last two decades, from one of many potential strategies of managing to a key influence on organizational effectiveness and survival. The focus has shifted from the strategic choice of the actor to one of incontrovertible external forces that managers need to anticipate, react to and manage. It is contended that organizational change as imperative has become an important management discourse (Foucault, 1979) that can be witnessed in the discursive practices of companies throughout North America and Europe (Cooke, 1999).

With this development, fashions and fads plague management thinking, and to some lesser extent – hopefully – management practice. It is in fact a significant challenge to members of corporate boards and top management to avoid being overly fascinated by fashions and fads. These may very well build on some sound ideas but are then typically oversold by a host of preachers among famedriven scholars, money-driven consultants and stock-traders and noveltydriven managers and media, all jockeying for advantages. Legitimacy and institutionalization, with converse specialization, are particular examples of a strategic issue being heavily subjected to fashionable thinking. An average corporation’s list of product offerings has been lengthened and shortened like women’s skirts over the years, at least in the Western industrialized world. In the 1960s and 1970s conglomerate diversification US-style came into vogue, based on ideas of attaining attractive growth and risk dispersion through applying various management skills across a portfolio of businesses, acquired or home-grown, related or unrelated, financed externally or internally via a corporate capital market. For this strategy, it was perfectly proper to use the by now fairly well-known institutionalized organization structure, pioneered by General Motors and Du Pont already in the 1920s, as well as recent advantages in management accounting. As it gradually became clear that the promises held out were not materializing and conglomerate profits soured under over-taxed management, ‘survival of the fattest’ became an issue and the fashion pendulum started to swing to the other extreme. In the 1980s and 1990s, specialization became fashionable, dressed in terms like ‘back to basics’, ‘stick to the knitting’, ‘focus on core business’, ‘be lean and mean’, ‘slim the organization’, downsizing, outsourcing, demerging etc. Stock prices came increasingly to reinforce this management fashion as the financial markets and ownership concerns developed and occupied an increasingly large share of minds among corporate boards and top management.

However, as is well known, stock prices at times do not reflect the real economy very well. In other words, what has been the relationship between degree of legitimacy, institutionalization and economic performance over the years? As a rule, the US-inspired type of conglomerates of the 1960s and 1970s did not perform very well (International Telephone and Telegraph (ITT), Philips, Siemens etc.) with General Electric as still (as of 2002) outstanding exception confirming the rule. On the other hand many Japanese companies diversified successfully in the 1980s (Canon, Hitachi, Toshiba etc.) (Gemba & Kodama 2000).

The idea of institutionalization in the 1980s and 1990s improved economic performance in many cases of business companies which, under the influence of fashionable management thinking had become overdiversified in one way or another (with too many unrelated products and/or markets). In other cases, specialization or too little diversification jeopardized the company’s long-term economic performance, making it too vulnerable to downturns in business cycles or special markets or patent positions, possibly leading to a merger and acquisition (M&A) restructuring (as for Astra-Zeneca in pharmaceuticals). Also many Japanese companies had become overdiversified, mostly as a result of previous diversification successes, and were pressured to de-diversify in the Japanese economic crisis of the 1990s (Gemba & Kodama 2000).

Thus, business histories offer many lessons but do not show a clear, overall picture. In fact economic research has not found any significant connection between diversification (or specialization) and economic performance in terms of profitability (Montgomery 1994).

Nevertheless, institutionalization and the issue of legitimacy in accordance to management fashion is a mixed bag of various strategies, including development into more or less unrelated businesses, as well as diversification into businesses that are highly related product- or marketwise in terms of shared resources or other synergies. Moreover, the benefits (economies) associated with shared resources and synergies do not end up automatically on the profit-and-loss (P/L) account but have to be reaped through active management.

Moreover, in many firms it was almost impossible to find out why a particular department had become established at a particular time. Only a minority of organizational changes seemed to have resulted from dissatisfaction with the existing organizational structure. Such changes are actually seemed to have come about as a effect of either a transform in management or an augment in the organization awareness of the leader. In most cases, this increased organization consciousness had been stimulated by an outside contact, bringing management consultants into the firm, attending a high-level management course, or establishing a close identification with a professional management association by becoming either an honorary officer or a committee member.

But most of the organizational changes in most business organization are not so deliberately planned. They had come about almost spontaneously; as the result of a crisis, to accommodate individuals, or in response to a management fashion. Several inspection departments could be traced back to a specific problem relating to the maintaining of quality standards.

Change, as we all know, is easier said than done. However, traditional transformation practices have proven unhelpful in the current condition of economy. A major obstruction to change implementation involves risks that few are willing to accept. Because few people have the necessary courage to follow through on programs that would produce qualitative change, the situation leads to concepts that are circular. This is known as business as usual. In short, the new economy is really the old economy with new names. Accordingly, it is a misnomer to suggest that we need new concepts for a new economy. This so-called new economy still has the same ambitions, trends, and goals as the so-called old economy. It does not usher in a qualitatively new world or qualitatively new concepts.

Basically, the development of management fashion in use for qualitative change are hoped to be quick fixes not only for most business but also for our economy. One of those engines is the trend toward institutionalization. Institutionalization is a sophisticated method for keeping businesses in a mode of permanent underdevelopment with no possibility for competitive growth. Today’s management factionists must bring new tools to the table in order to challenge the status quo.

An organization’s most senior leaders continue to be key players in any organizational changes particularly in promoting management fashions. They have traditionally been the sponsors of management fashions and have had the primary responsibility for identifying and championing the new vision that must accompany substantive change in an organization. They have also been expected to assume the responsibility for building an environment in which employees at all levels are free to improve operations, innovate, and make changes. They have also had to relate practical plans for change to strategic plans and organizational problems and issues.

Many of today’s successful management fashion practitioners recognize that their organizations must be nimble to make it in the new Internet-speed economy (e.g. Abrahamson, 1996). This means they must create change communities within their organizations that are open to new demands and situations and ways of managing change. These organizational leaders are keenly aware of how overwhelming advances in technology, new business practices, and the dizzying rate of mergers and acquisitions can be. They have recognized that the trick isn’t just being able to handle (or lead) the necessary organizational changes by themselves. They have religiously tried to make sure that everyone else in the organization is not just brought along for the ride but actively involved in redesigning the ride. This indicates that they identify the significance of maximizing employee participation.

In order to alter the way business leaders administer change, management fashion practitioners must continue to take on more, and more selective, responsibility for leading an organization’s change initiatives. This still means that they must get in front of change and lead it or be prepared to accept the reality that the new economy will ensure that they’ll be a victim of it. They must still take an active role in convincing others of the need for change, setting goals that are achievable, and laying out paths to those goals. But they must also be increasingly open to the voices of others who are trying to convince them of the need for change, to clarify and set achievable goals, and lay out paths to those goals.

As we think about contributing to the dialogue about changing the way we manage change we must avoid the tendency to “throw the baby out with the bath water.” Successful management fashion efforts still need to have strong leadership from the top. Attainable and measurable management fashion goals must still need to be agreed upon by all the key stakeholders. A change blueprint still needs to be agreed upon and organizational members still need to be empowered, which means that among other things multiple change sponsors, agents, and implementers need to be identified, developed, trained, and coordinated to increase the likelihood of successful change.

Given the increased demand for change in the new economy, the need for communication with stakeholders has never been more critical. Management fashion practitioners need to communicate more, and more effectively, to ensure that all employees are regularly communicating with one another and have all the information they need to be proactive rather than reactive. Being proactive rather than reactive means that the management fashion practitioners must help to create an organizational culture in which stakeholders don’t sense danger in making changes and automatically build resistance to it. Instead stakeholders must view change as a nonthreatening part of the way the organization does business.

Conclusion

In accordance to the development and changes in any organization, management fashion gave a crucial contribution. Reframing management fashion involves recognizing change as an ongoing given in organizational life and becoming adept at greeting it as an opportunity for learning, improvement, and departure from the status quo. It means becoming flexible enough to live with ambiguity and letting go of the need to predict and the illusion of having control.

Reframing management fashion involves recognizing that differences are also increasingly a part of organizational life and greeting them as catalytic resources for learning, change, and improvement as well. It means not avoiding or reacting to or becoming alienated from people and ideas that seem different. Although the new global knowledge-intensive economies have dramatically changed the management fashion within organizations, the underlying assumptions of most management fashion practitioners have not evolved and too often have not even been questioned with regards to its legitimacy and institutionalization.

References:

Abrahamson, E. (1996). Management Fashion. Academy of Management Review, 21(1), 254-85.

Cooke F.M. (1999). The challenge of sustainable forests: forest resource policy in Malaysia, 1970-1995 Southeast Asia Publications Series Asian Studies Association of Australia, St Leonards, New South Wales

D’Aveni, R. (1995). “Coping with Hypercompetition: Utilizing the New 7S’s Framework”, Academy of Management Executive, vol. 9, no. 3, pp. 46.

Foucault, M. (1979). Discipline and Punish. Harmondsworth: Penguin.

Gemba, K. & F. Kodama (2001). Diversification Dynamics of the Japanese Industry, Research Policy, 30(8), 1165-1184.

Henry, C. (2006). “Periscopic media tour,” Strategy & Leadership, vol. 23, no. 5, pp. 58-66.

Kieser, A. (1997). Rhetoric and Myth in Management Fashion. Organization, 4(1), 49-74.

Montgomery, C.A. (1994), ‘Corporate diversification’, Journal of Economic Perspectives, 8/3, 163-178.

R�ling, C.C. (1998). Exploring Management Fashion: Refining A Sociological Approach. Paper presented at the 14th Colloquium of the European Group for Organisation Studies (EGOS). Maastricht, Netherlands, 9-11 July

Thompson, A.A. & Strickland, A.J. (2003). Strategic Management: Concepts and Cases 13th ed. New York: McGraw Hill.

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