BINGE management is the phrase coined by Donal Carroll, of consultancy Critical Difference, to describe a debilitating condition afflicting much of UK plc. Symptoms include hypochondria, panic attacks, addiction to dieting and round-the-clock consumption of miracle remedies.
In management terms most companies are overweight and some obese. Almost all are unfit and sluggish, spending too much time and effort pushing paper and not nearly enough lifting weights in the gym.
Like human addicts, companies (and particularly their representative associations) have the unattractive habit of seeking to blame everyone else for their ills. But much of the condition is self-inflicted. Consider the analogy of regulation at the national level. The Better Regulation Task Force (BRTF), established in 1997 to lighten the regulatory overhead, estimates that regulation costs the economy around pounds 100 billion or 10-12 cent of GDP a year – about the same as income tax.
Of that, it reckons that 60-70 per cent is related to policy – improving health and safety, protecting the environment and so on – and therefore has benefits as well as cost. While there is always scope for improving policy-driven regulation by increasing the ratio of benefits to costs, the main opportunity for improvement lies in eliminating the substantial 30-40 per cent of regulation which is bureaucracy, ie waste pure and simple.
Shedding pointless red tape could free up 1 per cent of GDP for economic muscle-building, the BRTF reckons. There is a behavioural hit, too: just as losing weight allows individuals to lead a more adventurous lifestyle, so cutting regulation should produce a bolder, more entrepreneurial economy.
Industry has by and large welcomed the BRTF recommendations, while urging it (and the government) to do more. But there is plenty to do to bring its own addictive behaviour under control.
GE reckons that 40 per cent of its $150bn revenues are devoted to administration and back-office functions. In less efficient companies than GE the figure will be much higher. Firms, therefore, have at least as much to gain from displacing resources from bureaucratic to productive purposes as the economy as a whole. So what scope is there for adopting better regulation guidelines inside firms?
As the task force recommends in a recent paper, the overriding principle is ‘less is more’. The first thing is to stand on the scales, measure the flab and resolve to remove it. But experience tells that reflex reactions generally do not do the trick. Caution is in order – it is important that the remedy should not make matters worse.
In slightly differing ways, in both public and private sectors, one of the most insidious problems is what the BRTF calls ‘regulatory creep’ – the instinctive tendency of administrators to inflate the importance of the rule book and constantly invent new refinements to it. In universities, schools, police and the NHS, it’s not so much regulatory creep as regulatory sprint, as local managers enthusiastically embellish centrally set targets with their own variations and extra demands, as a result of which many professionals feel they are spending so much time accounting and managing that there is none left for the original task.
In companies, the phenomenon takes the form of new management initiatives raining down from on high with little explanation or consultation. According to management consultancy Bain, on average, companies currently have 13 major management tools in use. But these tools impose their own costs. Thus, companies’ attempts to downsize and outsource have shifted cost from the waist, as it were, but as usual where there is no method, it simply reappears on the thighs or bottom. Automating offices transfers employment from clerks to IT support staff more subtly, shunting customer service into robotic call centres offloads costs on to customers who extract payment through churn, ill temper and viral bad mouthing.
Similarly, lemming-like outsourcing, it is now clear, may have cut the cost of some activities, but the price is a ‘hollowing out’ of larger commissioning skills, so that many organisations have lost the capability to design, specify and project-manage solutions to their own problems. The cost is tears and recriminations and yet another remedy that falls short of expectations.
In the end, few tools turn out to be real management innovations. They offer no differentiation, since mass suppliers are prescribing exactly the same thing for competitors. They end up being just another cost of doing business: yet more management overhead or burden that, like the ageing population, has to be paid for by a smaller and smaller productive workforce.
In the short-term both public and private sector managers should take to heart the BRTF’s ‘one in, one out’ principle, under which every new rule intro duced should be balanced by another removed. The government has in principle accepted the recommendation, borrowed from the Dutch, although there is little sign so far of much effect on the ground. (In fact, it could be argued that the better regulation apparatus, consisting of simplification targets, plans and units in departments and regulators, is itself a net addition to the regulatory regime.) It is also sensible to cost the impact of new rules, rather than simply taking the benefits on trust, and consider non-regulatory alternatives. Finally, what is the worst that can happen if we don’t do this? As the poet Allen Ginsberg once wrote, ‘It’s never too late to do nothing at all.’
Weight control of all types comes down to concentrating on essentials, self-discipline and constancy of purpose. Rule books, hierarchies and multiplying management initiatives grow up to compensate for the lack of these things. At least in Ricardo Semler’s account, the culture at Semco, the Brazilian engineering firm, is so strong that it needs practically no rules at all. So let’s make 2006 the year of managing in moderation and ban the binge.