As customers’ needs become more diverse, the managers of the future must adapt to meet their demands.
Today’s post is by Jonathan Byrnes, author of CHOOSE YOUR CUSTOMER: How to Compete Against the Digital Giants and Thrive (CLICK HERE to get your copy).
Managing at the right level is the most important element in effective management in the Age of Diverse Markets. This is a huge change. In the prior mass markets era, companies had homogeneous markets, so they needed to plan and coordinate only at the executive level, with the rest of the company’s managers focusing on their respective functional specialties. Today’s markets are rapidly becoming highly fragmented, reflecting diverse customer needs. This requires a much more decentralized set of management structures and processes, which strongly affects managers at all levels of a company’s organization.
Today, executive managers must be responsible for developing their company’s positioning and capabilities in three to five years, the transition period for managing paradigmatic change. They bear responsibility for installing and overseeing the company’s four cornerstone business processes—strategic positioning and risk management, profit driver management, transition initiative management, and profit-driven process management.
Within this context, these top managers must take the lead in defining the company’s strategic group through its strategy and risk management process, and they must oversee the company’s profit driver management process. Importantly, they have to mentor the company’s VP- and director-level managers.
The VPs and directors group, working through their MPG Committee, is the locus of the company’s profit-generating activities. They have to be fully fluent in transaction-based profit metrics and analytics, and they must use this knowledge to analyze and recommend to top management the company’s strategy and risk trajectory. They need to determine and actively manage the company’s profit drivers, and they need to define each profit driver’s profit streams. They also have to define and manage the company’s transition initiatives and profit showcases.
Beside these high-level coordination activities, these upper-level managers need to mentor and develop the sales and operating managers below them, and they need to set up and oversee the profit crossroads that is essential to these managers’ success in coordinating with each other.
The sales and operating managers run the company on a day-to-day basis, both by managing the company’s core profit-driven processes and by coordinating with each other in tightly managed, multifunctional teams that manage the company’s diverse, rapidly changing profit streams.
The Manager of the Future
In today’s Age of Diverse Markets, managers’ activities could not be more different from those required of managers in the prior mass market era. Successful managers today must be overwhelmingly broad and holistic in their perspective; their work is disruptive, innovative, and strategic; and they are primarily team oriented.
This difference in management is analogous to the difference between a good cook and a great chef. A good cook flawlessly follows a set of predetermined recipes, always creating very good meals. A great chef, on the other hand, has the vision and capability to create an increasingly superb set of innovative, new dishes that continually transform a cuisine—producing the recipes that good cooks follow.
A great chef is a master, in the sense of the guild masters of old. The Manager of the Future must reflect these attributes. Even at the day-to-day sales and operating level of a company, the Managers of the Future must coordinate with each other on multifunctional teams to identify and fulfill the emerging needs—often unrecognized even by the customers themselves—of the company’s increasingly diverse set of customers.
The Manager of the Future—the successful manager in the Age of Diverse Markets—needs a completely different development pathway:
Broad academic background: Managers need to be immersed in examples of changing needs and changing fulfillment of needs. They need to understand best practice in the process and politics of change management, especially ways to speed change and increase its effectiveness. This means that they need a broad background in literature, history, political science, and even the history of science. Instead of spending years gaining a deep technical background in one functional area, they need to develop a broad high-level view of all of the functional areas of business, and how they interact with each other to create unique customer value.
Deep immersion in customers: Managers today have to spend a significant amount of time actually physically in customers—walking in the customer’s shoes. They must be involved in profit-showcase projects with customers, which are opportunities to develop new forms of their customer value footprint, learning by doing.
Understanding your profit landscape: Managers at all levels need training and practice in understanding transaction-based profit information—not as technical specialists but rather, as informed, creative users of this information both for targeting customers and for shaping the extended products that are produced by the multi-capability teams on which they will be integral participants.
Building relationships: Managers today need to work closely with their peers on multifunctional teams. This means that they need to build close working relationships with their counterpart managers throughout the company well before they are needed. They need to understand how their counterparts think, what they are trying to accomplish, and what barriers to successful change they are encountering.
Understanding the company’s history: The key to really understanding a company is to know that most often it is doing what it needed to do 5 to 10 (or more) years ago. These practices—including customer targeting and management, category management, and supply chain and operations management—get embedded in a company’s culture and are passed along from manager to manager, year after year.
This embedded operating paradigm is both tacit and pervasive, and it appears as simply “the way we do business.” This is why the obsolete Age of Mass Markets paradigm has such an incredibly strong influence on managers today, becoming a sea anchor on most established companies’ ability to respond quickly and ably to market opportunities, and explaining to a large extent why the most successful companies today did not exist 50 years ago, while nearly all of the most successful companies 50 years ago have fallen by the wayside.
Managing the change process: Today’s business world is changing and fragmenting at an accelerating pace. The currents of change are gathering speed; they do not embody a finite shift from one state to another, but rather, they scribe a trajectory of constant change.
This pathway means that managers need to be extremely flexible and capable of identifying these constant shifts, developing and delivering ever-changing packages of products and related services, and managing change—both inside their own companies, and in their customers and suppliers.
Training and mentoring others in this new mode: The key to manager success is ultimately training subordinates to be effective. This means that successful managers not only have to be capable of managing in this new mode, but they also have to be capable of training their subordinates in the new mode as well. After all, a manager can rise in the organization only as fast as his or her subordinates become capable of taking his or her place.
Excerpt from Choose Your Customer: How to Compete Against the Digital Giants and Thrive by Jonathan L.S. Byrnes and John S. Wass, pp. 247-251 (McGraw Hill, May 2021).
Jonathan Byrnes is founding partner and chairman of Profit Isle, a highly successful MIT spin-off SaaS software company that helps organizations increase profits by 10–30 percent using its profitability analytics and management process. A widely followed thought leader on profitable growth and innovative customer-supplier relationships, Byrnes is a frequent speaker and writer who has advised over 100 companies and institutions. He earned a doctorate from Harvard, and has been a Senior Lecturer at MIT for 30 years. In addition to his popular HBS column, “The Bottom Line,” he is the author of CHOOSE YOUR CUSTOMER: How to Compete Against the Digital Giants and Thrive and Islands of Profit in a Sea of Red Ink, an Inc. Best Book for Business Owners.
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