An Innovation View of Management Consultancy

An Innovative View of
Management Consultancy
Complemented by
a comprehensive selection of tools
Dr Koenraad Tommissen
Introduction to the second edition 5
Introduction to the second edition

In retrospect, the first version of this book, which was a kind of ‘trial’
publication, proved to be incomplete. Consequently, thanks to some
very constructuve input, this second edition offers a broader view of
the topic.
The chapter on ‘Fear of change’ (or perhaps it should be called ‘Resistance

to change’) seemed essential, while another one on ‘Knowledge’ was
unavoidable, since this is the basis of the consultancy business.
Following a year of reflection, it became apparent that certain tools and

gurus were missing, too. Although some have been added, it is virtually
impossible to ensure the results are complete as they might be. For this
reason, I would like to take this opportunity to invite readers, students,
colleagues and anyone else interested in this field to provide the author
with their suggestions and constructive remarks. Please send them to:
k@opsisart.com and I will see just how much can be included in future
editions.
In the meantime, it is my duty and honour to thank my father, Professor

emeritus Dr Piet Tommissen, my much-appreciated colleague Professor
Dr Thiem Ton That Nguyen, the President of the IMC, Peter Sørensen,
my former student Vicky Tzivelis, and many others for their significant
contributions and suggestions. In the back of the book I have included
an index nominum with the hope that this will make it easier to use
and, more importantly, more useful.
My thanks to everyone.
Koenraad Tommissen
July 2007
Foreword 7
Foreword
It is always a pleasure to introduce a book on management consultancy.
This book is special, since it has been written by an expert in the field, who
is also a theoretician.
It introduces the readers to the people factor in the domain of consulting,

which is somewhat ambiguous for many people. Dr Tommissen wanted
management consultants to appear more human and thus more accessible, and
he has achieved this by focusing on such important points as how to choose
the consultant you want to work with, and the ethical side of this business.
Not only does the book serve as an introduction for those who know
nothing about management consulting, but the content will also refresh the
knowledge of the professionals working in this field. In addition, it gives a
short but pertinent overview of the different steps involved in establishing
and maintaining the client/consultant relationship.
In the second part the author gives an overview (in his words, “non
exhaustive”) according to various consultancy gurus, along with a list of
valuable tools, each of which has been placed in its historical context.
I mentioned the theoretician above, and among the tools I found the
Thiem Tom 10.5 S Framework which Dr Tommissen has developed in
collaboration with a Vietnamese professor. I particularly enjoyed reading
about this innovation.
I hope that this book will become a vade mecum for consultants who are
already in the business, and for all those who are interested in management
consultancy, especially students. I am now looking forward to the second
edition in which Dr Tommissen has promised me he will introduce additional
tools, new chapters, and other gurus. I intend to convince him to cover the
values of international certification of management consultants, too.
I greatly appreciate this kind of initiative and wish the book good luck and
a long life.
Peter Sørensen, CMC

Management Consultant
Chairman 2005-2007, International Council
of Management Consulting Institutes
Acknowledgments 9
Acknowledgments
It is always a pleasure to write a second edition since it means the first
one achieved a degree of success. I was lucky to receive some words
of encouragement and enthusiasm regarding the unfortunately still
relatively unknown domain of management consultancy.
On the other hand, I also received numerous mails, letters and phone
calls expressing regret. People regretted that I had not talked about this
or that method, while others were a little disappointed that I had not
mentioned one or another guru.
My problem is, of course, one of choice: knowing what to put in the

book and what to leave out.
As you will see, I have added several new tools, some gurus and two
chapters: one on change and one on knowledge – both basic elements
for the management consultancy business.
I hope you will appreciate them.
Once again, I would like to thank my wife for all the time she allowed
me to spend in my office rather than with the family.
I am also grateful for input from some of my students, from Peter

Sørensen, President of the ICMCI, and from Professor Dr Thiem Ton
That Nguyen, my best Vietnamese friend. I was pleasantly surprised
that my father, Professor Emeritus Dr Piet Tommissen gave his opinion
on the book and suggested some adaptations.
For the rest, I am indebted to all those who have been waiting for
too many weeks and months for this new edition – in addition to the
readers, this also includes those involved in editing, layout and printing
who were mentioned in the first edition.
Koenraad Tommissen
10 Even consultancy has an origin
Even consultancy has an origin
It is very important to point out that in French the word conseil is used
for the same purpose as ‘consultant’ in English/American. Personally,
I prefer the French word because of its Latin origin. Indeed, consilium
was first used in legal language to mean “a place where people
deliberate”, or “a reunion of people deliberating”. The correct translation
of this word into English is, of course, council, which we have used,
for example, in the European Council since 1979. Perhaps the word
counsellor would be more appropriate to use in this context?
With reference to the English language, I have another problem:

“to consult” means “to get information” and not “to give information”.
So, is the consultant someone who seeks information but does not give
any? Writing that feels a little like a Dilbert storyline, and, of course,
we all know that such ‘consultants’ exist.
The dictionary definition for the word counsellor (some who gives
advice about problems) seems much more appropriate than that for
the word ‘consultant’ (an expert who gives advice). It is obvious that
everybody can give advice and therefore be a consultant, but who
actually dares to give advice about problems? Only a real counsellor,
of course.
Consequently, the word ‘consultancy’ must also be banished, although

I found the following definition in the same dictionary: “The practice of
giving expert advice within a particular field”.
Rudyard Kipling 11
Rudyard Kipling
If
If you can keep your head when all about you

Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don’t deal in lies,
Or, being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise;
If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build ‘em up with wornout tools;
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: “Hold on”;
If you can talk with crowds and keep your virtue,
Or walk with kings – nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run –
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man my son!
12 Rudyard Kipling
You may find it very strange to start the chapter of a management book
with a poem. The reason is very simple: in this poem, the famous author
Rudyard Kipling addresses his thoughts to a (n imaginary) son. He teaches
him all the things needed to be a man in the tough world in which we are
living. In exactly the same way, I would like to analyse a large part of the
poem and adapt the explanation to the needs of a consultant.
Consultants must behave like normal people, with normal reactions

and, above all, they should be prepared to their job, just as Kipling tells
his son to be prepared for real life.
If you can keep your head when all about you

Are losing theirs and blaming it on you;
This is a very surprising statement: try to be cool and to avoid panic

when others are not capable of doing so. If, as a consultant, you can
keep a cool head, with clear ideas in a stressful situation, your reactions
will be better than those who cannot. It is up to you to calm the situation
down, to look beyond it and to find the right reaction.
If you can trust yourself when all men doubt you,

But make allowance for their doubting too;
Do not think that you are always right. Do not think that you are the only
person in the world who knows everything. But feel comfortable with
your feelings; do not hesitate if you think that you are right, but still try
to acknowledge other people’s objections. This also means not going too
fast, and not forgetting to listen to others. Nevertheless, this sentence
seems quite correct as it gives you the power to react correctly if you are
sure that the way you are thinking is the only way logically possible.
If you can wait and not be tired by waiting,

Or, being lied about, don’t deal in lies,
Patience is one of the major strengths a consultant should have. This

does not mean passively waiting. You cannot just sit and wait until
Rudyard Kipling 13
a solution comes to you; no, you should try to be patient while helping
others to bring you stones that can help you to create, in an unhurried
fashion, a wall of solutions. And never forget that many people will lie
to you, not necessarily on purpose, but often by omission or stupidity.
You should be able to forgive them, as well as helping them to find
the truth. Of course, all of this should never be a reason for you, the
consultant, to start lying yourself.
And yet don’t look too good, nor talk too wise;
Once again this is an important lesson in humility: you should not give
the impression of being TOO something, because that never helps. In
addition, the second part of the sentence is very basic for all consultants:
do not use complicated sentences, phrasing, or words unnecessarily.
The better you understand a problem, the easier it should be for you
to explain it. Your clients do not expect university vocabulary from
you: what they want from you is an understandable solution to their
problem. It is up to you to find a simple way to explain what exactly the
problem is and how you propose to help them to solve it.
If you can dream – and not make dreams your master;

If you can think – and not make thoughts your aim;
One of the most important characteristics of good consultants is that

they are able to think in an abstract way. They can ‘dream’ of a solution.
But, as mentioned in the poem, this is not enough because you cannot
simply ‘dream’ – you have to find a realistic solution which can be
adapted to the situation. You need a lot of imagination because you
have to be capable of seeing the solution in the future. You should be
able to ‘see’ your client’s company after the changes you would like to
carry out. If you can do this it will be easy for you to make realistic
plans towards your ‘dream solution’. The approach is exactly the same
for ‘thoughts’, of course.
If you can meet with triumph and disaster

And treat those two imposters just the same;
14 Rudyard Kipling
Not every mission you will have in your consultancy career will be a
successful one. Once in a while it may happen that the solution you
implemented was not the right one; and maybe your client’s company
will be in an even worse situation following your intervention. If this
is the case you should not be discouraged; on the contrary, you should
learn from this difficult experience and try to find out why you made
this mistake. You can and should learn a lot from your mistakes.
If you have had a huge success, you should not stop working or studying,
but rather you should try to stay humble, to study this success, and
try to find out if it was possible to do even better. That is the way you
should treat those two ‘imposters’ just the same.
If you can talk with crowds and keep your virtue,

Or walk with kings – nor lose the common touch;
It is not always easy, I know, but it is worth trying. Trying what?

Well, create contacts with everybody, making no distinction between
origin, race, sex, age, experience, education, and status in society.
A consultant must try to speak with everybody (if necessary) in your
client’s company. You should be able to speak with the management
of the company, keeping in mind that they are in charge of the staff
and that you are responsible for finding a good solution for all the
people working in this company. But you should also be able to speak
with the working class inside this company, because they can very
often explain why things go wrong. It is they who do the job. Be
humble, speak simply, and try to get them to help you. By acting this
way people will admire you, follow you and help you to implement the
solution you propose.
If neither foes nor loving friends can hurt you;

If all men count with you, but none too much;
You should be completely independent. Nobody should be able to

attack you morally or financially. You should be able to work in a calm
atmosphere where you can speak the truth and where you can act
without having to take into account the opinions of others. Everybody
should consider what you have told them, but you should also give
Rudyard Kipling 15
them the opportunity to hold their own opinion. Things can evolve and
you should be aware of that and accept that people can change their
minds.
And then comes the final verse which we could easily adapt as follows:
And – which is more – you can be a consultant now.

Chapter 1: Professionalism: what are the requirements for a good consultant? 17
Chapter 1: Professionalism: what are the

requirements for a good consultant?
Invincibility lies in oneself
Vincibility lies in the enemy.
Sun Tzu
This chapter deals with the personal attributes, the personal qualities and
other ‘things’ required when preparing for a consultancy job. It is not an
exhaustive list; simply a type of checklist from which you can pick what
you want. Personally, I am convinced that the more topics you select, the
greater will be your chance to succeed in your mission as a consultant.
It is always very useful to know your enemies and your friends, and
undoubtedly being aware of these things can be very positive.
As a ‘user’ of consultants it is interesting to feel the way they work, to try

to find out why they react in a certain way in some circumstances. As
will be shown later, a consultant is not always seen as a company’s friend
(even if he considers himself as such) because he sometimes gives the
managers of the company hiring his services a very negative impression.
This section will be split into four parts: the first will cover the analysis
made by the person himself, the second will deal with a later stage, where
the ‘almost-consultant’ observes his own reactions in certain situations,
the third will cover the necessary environment, and finally there are
some notes about time and how to use this ‘enemy of mankind’.
Who am I?
What personal attributes do I need?

• Fearlessness
• Rapid framing
• Humour and perspective
• Confidence and self-esteem
• Intellect
• Active listening
• Comprehensive questioning
18 Chapter 1: Professionalism: what are the requirements for a good consultant?
• Clear language
• Glocal thinking
• ‘Instantiation’
This list may seem very strange to those who have never approached
consultants, never hired one, or simply never thought about the feelings
and capacities a counsellor needs.
Most people have taken exams at least once in their life, and we all
remember the feeling when there was a teacher or professor with the
reputation for finding it difficult to give good marks. Even when you
knew a lot about the topic, you always wondered what his reaction would
be. This, of course, is the feeling a consultant has when he starts a new
mission: he does not know the company he is going to work with/in, he
does not know the people working there, and he has to find all this out
as objectively as possible. He is starting a kind of long-term examination,
and has to be able to control his apprehension or fear. He has to live in a
kind of fearlessness, or at least give the impression that he is.
But there is, of course, much more to the word ‘fear’. The consultant
has to be sure about his recommendations at the end of a mission, and
he should not fear the reaction of the company management, even if he
knows that what he is going to say will not be acceptable to them.
Imagine a consultant telling the management that the only problem in

the company, or the major cause of the company’s inefficiency, is actually
the management itself. It is a strange situation, but the consultant has
to tell the truth (see the chapter on ethics) even if he is apprehensive or
fearful about the results of his analysis.
Another kind of fear, is that of being in a state of permanent confrontation

with people who dislike consultants in general, or who think they are
specialists in management, and the consultant is unable to convince
them that they are wrong.
I put this on top of the list as it is probably the one the outside world
rarely thinks about. Fortunately, the other points are more positive.
Everybody has heard about a frame and knows what a framework is.
One way of detecting a good and efficient consultant is through his
response to framing. So, what does this mean?
When starting a new mission the consultant receives information from

one or several people about the company, the problem(s), and the
personnel, if necessary. It is the role of the consultant to detect what
has not been revealed, to make up his mind, to build a frame as rapidly
as possible so that he can start working on this. So that if the frame he
has made in his mind seems to be complete he can starting analysing
immediately; if not, he must work on it like a puzzle, filling in the gaps.
Therefore, it is important to be able to do ‘rapid framing’, just because
time is money. The shorter the framing period, the quicker people can
feel that the consultant knows what he is working on, and the faster he
will be accepted in what he does.
We will see later in Chapter 4 on ‘The entry phase’ that the first ones to
approach the client are those who need this capacity most.
As in daily life, everything turns on humour and perspective. People

with a broad sense of humour tend to be intelligent because, once in a
while they manage to use it to diffuse a potentially dangerous situation.
Putting things into a humorous context, and giving humorous examples
can help both parties to relax, and even to better understand what is
actually meant.
In a similar way, a perspective ‘way of thinking’ is also necessary. Those

who can put situations into perspective in the long term can explain
better why current situations are wrong. A big drama in a specific
place within a company may be almost ‘nothing’ compared to the real
problem that lies therein. It is also useful to use this ‘perspective view’
talent when explaining necessary changes the company must make.
For example: imagine that you have to disclose why you must fire 20
people in a company employing 150 (which is an extreme situation
for a consultant). This is not easy for anyone to accept. Therefore it is
necessary to explain why this action is essential: if the company does not
get rid of those 20 people its whole future is in jeopardy. Of course, this
is not enough for the employees; in the context of the perspective, the
consultant should also introduce the possibility of those 20 unfortunate
people finding a new job with financial assistance from the company.
By so doing the discussion will become much easier.
The above brings us directly to the next point: confidence and self-
esteem. Confidence is required to be able to act and react, as stated
in the example above. If the consultant is not confident either in what
he does or with the solutions he is defending, it is not necessary to
try to convince the management because they feel that the consultant
himself is unsure. And you should have plenty of self-esteem because,
without it, no one can expect the respect of others. But be careful – this
has nothing to do with being pretentious, which would be a negative
approach. In this context it simply means that a person has to know
exactly what he is worth and nothing more. Once he knows this it is
clear that other people will respect him for what he is, what he knows,
and for the way he behaves.
Intellect: this word, of course, is very close to ‘intelligent’ but is more

than just that. An intelligent person has a lot of knowledge, and has
probably studied a lot, whereas a person with intellect knows how to
use this knowledge, which is extremely important. One could compare
this, to a degree, with engineers and to those who build bridges. The first
one knows precisely (according to his university studies) how to build a
bridge on paper, and how to calculate exactly the different elements of
the bridge, but is probably unable to actually build the bridge because of
a lack of experience in that field. On the contrary, a workman knows how
to build the bridge, and where to start, but does not have the capacity
to conceptualise it. The consultant should have enough experience in
the field, and sufficient intellectual background so that he can help any
company in his area of competence in a practical way, simply because he
knows how to apply what he has learned in the field.
What is active listening about? Well, when you want to learn a lot about
a person or a situation you have to listen – but active listening is more
than that. It is asking the right questions at the right time without
interrupting the speaker. It is being positive in your questioning; it is
helping the other party in the discussion to reveal everything he knows

about the problem. It is also showing the other person that you are
interested, even if it only concerns minor details. Active listening also
means avoiding speaking too much about one thing which might be
hiding others. In my eyes this can be compared to detective work where
the officer wants to know everything about a crime – the smallest detail
is important, and it is the detective’s role to help the witness to mention
everything he knows.
This is, of course, linked closely to comprehensive questioning. Both

are necessary because a lot of people never talk. A person may be
frightened when questioned by a consultant because he does not realise
the importance of the mission, and only answers precise questions. If
the consultant is a good questioner he will help the other person to
overcome his fear and through this approach will obtain the necessary
information.
Most people think they use straightforward language, but unfortunately

this is not the case. In a consultancy job, speaking plainly and clearly is
very important because if people do not understand what a person is
talking about they cannot be helpful by giving correct information. This
has a lot to do with good pronunciation but much more to do with the
use of the correct vocabulary. It is not because people speak the same
language – for example Vietnamese – that they always understand
each other. One should speak at the level the other understands. This
means simply that it is not practical to use academic vocabulary with
less-well-educated workers. It is not easy to ‘translate’ a theoretical
approach learned at university into simple ‘human’ language. There is a
beautiful sentence in French that expresses exactly what is meant here:
Ce qui ce conçoit bien s’énonce clairement.
Glocal thinking: this famous phrase was ‘invented’ during the time
global thinking was necessary, but when people forgot to do things
locally. The contraction was derived from think globally, act locally. Of
course, this is applicable to everybody in charge of changes and analysis:
they need to apply what they know in general (globally) and must apply
it correctly in the field, where they are working (locally).
Instantiation: this word does not exist in any dictionary as far as I know,
but it is a powerful word. It is a compilation of instant and situation,
and describes exactly what it means: instant action in a given situation.
It is one of the characteristics of born leaders, but equally should be one
of good consultants, being able to take the right decisions immediately
at the right moment. Indeed, sometimes there is no time left to analyse
or reanalyse a problem, but a decision has to be made – those who can
take the right decisions at the right moment can help companies a lot.
They do not waste time but rapidly find and make the right conclusion;
they simply act without fear in order to avoid the situation deteriorating
further. Here we come back to the beginning, to instant decision-taking
without fear or apprehension.
What are my qualities?
As I have already mentioned at the beginning of this chapter, this is

a sort of analysis one makes (or better still, has to make) of himself
having experienced several difficult and complicated situations. The
kind of questions people with certain responsibilities often ask include:
did I take the right decision? Did I act correctly? Am I still able to work
as hard? Is there any risk for other people? Would I accept others acting
as I did, in the way that I behave? Is what I am doing sustainable? All
these elements can be itemised in a structured list:
• Intellectual abilities
• Understanding people
• Communication
• Emotional maturity
• Stress resistance
• Personal drive and initiative
• Ethics and integrity
• Physical and mental health
Do I have the right educational background to do this job? I know

a lot of consultants and I must admit that they come from different
fields of knowledge, mainly because most of them studied at university
with the right intentions, and with the right understanding of the word
‘university’ – from the Latin word universitas meaning ‘the whole,

total, universe, world/university’. They studied at university without
focusing on special topics all the time, but maintaining interests which
covered all subjects. Most of them combined studies in completely
different fields in order to broaden both their knowledge and their
perspective. They understood from the very beginning of their studies
that the more you know, the greater the possibilities for interesting
developments. Therefore, the question ‘Did I study the right thing?’ is
not the right one. The question should be: ‘Does my personal education
allow me to work on this topic? Do I know what it is about?’ It is very
important to have a global view on things, with a broad background,
where people can observe from different points of view so that the
global impression is closer to reality.
In order to understand people it is necessary to talk and listen a lot.

Never avoid contact with people from different origins – such as
cultural, hierarchical, levels and different educational backgrounds
– because this is exactly where you can learn a lot. Learn from the
others and try to understand what they mean, why their opinions differ
to yours. Surely it is worth trying to find out why somebody reacts
differently to you? In so doing you have to analyse the behaviour of
yourself and the other person.
Communication is not only the basis for business in general, but it is a

fundamental necessity for consultants. If you are unable to communicate
well would you be able to find out what the problem is? May be, but how
long would it take? Would you be able to implement your solution without
correct communication about it? No way! Therefore it is necessary to
analyse your communication capacities. There are, of course, different
levels of communication, and (luckily) not everybody needs the same
skills. First of all it is necessary to be able to make contact easily with
people in general, and not to be egocentric and blinkered. Secondly, as we
will see in Chapter 4 ‘The entry phase’, there is a written communication
in which the solutions are presented to the client. Finally, you must be
able to communicate in the field, and be a leader by showing the others
how to do things without imposing them. However, I am not saying that
at this stage every consultant needs all these faculties at the same time –
for example, some consultants never have close contact with the client
but are specialists in producing written documents.
Emotional maturity has nothing to do with age; it is about how people

react in given circumstances, and what experiences they have. In this
case, it is easier to understand by explaining with some examples.
Imagine that you have to explain to a boss that the way he manages
a company is not the right one, and that the only way to ‘save’ the
business is for him to leave the management. This is an emotional and
complicated situation. The person appearing in front of you is maybe
the one who hired you, the one who has given you the mission, and you
have to tell him that he is the real problem.
Here is another situation: the mission you accomplish has one possible
result: to close down the entire company so, at the very least, during
the closing down period you can offer the employees the opportunity
to find a new job, although maybe not for all of them. Will you be
psychologically strong enough to impose this solution? Is there
anything more difficult than ‘stealing’ jobs? Is there anything more
difficult for a consultant than putting people in challenging pecuniary
and family situations by removing the possibility to earn money and to
be the breadwinner?
Stress is not only due to an exaggerated amount of work – in which

case it would be easy to avoid it as it would be sensible to split the job
into two parts, create a new job and the stress would disappear. Stress is
also due to the complexity of the job. Many people work in jobs they are
not qualified for, and so they have to work above their normal capacity
all the time. This is not a good situation, as such people have to put all
their efforts into actually doing their daily job, leaving them no time or
energy to think about what they are doing, or to look for innovation
or change. Sometimes, stress is also due to ‘fear’ of those above them,
‘fear’ for the career, ‘fear’ about what people think of you.
In the consultancy business, the reasons for stress tend to be similar,

except that you always have to behave as an independent person without
any hierarchy. You have to act as if you were the only person responsible,
without having to take into consideration the position of the person
facing you. As a consultant, you have to convince yourself that you are
working objectively on a mission, and that all the people involved in
this can be changed, and are not necessarily the best ones for the job. Of
course, when speaking to a company boss you should be respectful, as
you should with all the others, but you should not give him any special
treatment and you should not believe him more than you do the others.
Everybody is the same at the analysis phase of a mission, which is very
often the grounds for a stressful situation. If you do not feel strong
enough to resist that then it is better not to accept this kind of job.
One of the characteristics I enjoy observing when young consultants

start work in a company is their personal drive and initiative, because
it is in these two fields that the ‘real consultants’ can be detected, those
who will make it, and the ‘average’ ones. Those who are enthusiastic
and bring a personal touch to the business are pleasant to work with; if,
in addition, they take initiatives (even if they are not always the right or
the best ones) they can do a good job, because by acting like that they
can boost the mission. So if a person feels during this analysis phase
that he does not need initiative, it might be better to forget the dream
of working as a top-level consultant.
I have already dedicated a whole chapter to ethics, and each one of

us must make his or her self-analysis to see if ethical correctness is
present in their behaviour. If not, then there is no possibility of working
as a consultant. Of course, linked to this is the integrity factor. The
dictionary reveals that this is, in fact, very close to ‘ethical behaviour’:
“Main entry: in·teg·ri·ty
Pronunciation: in-’te-gr&-tE
Function: noun
Etymology: Middle English integrite, from Middle French & Latin;
Middle French integrité, from Latin integritat-, integritas, from integr-,
integer entire
1. Firm adherence to a code of especially moral or artistic values:
INCORRUPTIBILITY
2. An unimpaired condition: SOUNDNESS
3. The quality or state of being complete or undivided:

COMPLETENESS
synonym see HONESTY”
Previously, I mentioned mental health in combination with stress

resistance and psychological and emotional maturity. Physical health
is also very important, because being on mission as a consultant can be
tough, not knowing when the day will start, or when it is going to end.
Very often there is a lot of travelling and living in hotels and restaurants
on top of actually doing the job. This is all very tiring so the consultant
must be in good physical shape.
What more do I need?
The question here is mainly relevant for people who want to start their
own consultancy business. Once again, this is not necessarily of great
interest for those who do not intend to be a consultant, but nevertheless
it is worth looking at it so that they can see what they have to check or
try to find out about a consultant they want to work with. I am thinking
here, in particular, about contacts: most good consultants always know
somebody who can help in any situation, so check this out.
Never hire people who are not adequately qualified: it is better to

wait for a professional collaborator than to hire someone who could
damage your reputation. The problem about hiring professional people
is twofold: one, they are more expensive than the others, and two, they
might leave your company quite quickly to start their own business.
The answer to those two objections is quite simple: if they are expensive
– and, in fact, they should be – it is up to you to add their value to your
mission so that it can be even more profitable than before. The second
point is more difficult: if they want to leave they will, but if from the
very beginning you want to keep them on-board, you will have plenty
of opportunities to convince them to stay. Pay them enough so that
they are not tempted to leave your company, give them enough free
time to study, pay for their education, make them junior partners if
necessary, give them more responsibility...
Like every other business in the world, there are several reasons why you
will need some entrepreneurial experience to start up your own consultancy
business. The more you know about entrepreneurship, the less time you
will spend on your own business, the more you can spend at your client’s
place, and the more you will be able to bill. Try to reduce the non-billable
hours and to increase the billable ones (at least those of the most expensive
collaborators). It is quite simple to learn this: start in another consultancy
company and observe as much as you can – ‘steal’ with your eyes. Perhaps
by doing this you will realise that you prefer to work in a larger organisation,
or to be a partner rather than to start up your own business.
One important thing in the consultancy business, and certainly at the

beginning, is the accessibility of the managing partners. Commonly
known as ‘open-door management’, it is very important that the
managing partners are available at all times, because their experience
is important to the consultancy company. Those who forget that, and
those who are not willing to share their knowledge will lose contact
with their daily business, and consequently with the consultancy job.
Here we come to a topic I like very much because it is very simple:

make a lot of contacts and invest in a good address book. How? How
long? How many addresses? These are the kind of questions I get asked
all the time, and the answers are easy – as many as you can, for as
long as you can manage. How do you get them? Everybody in this
business has studied and therefore has student colleagues. So begin
with those contacts: a lot of them will grow in importance in business,
in government, or outside the country – keep in touch. You will start
to live in a business environment, and will have colleagues, suppliers
and customers there, so keep their names. If your behaviour with them
is correct you will be able to use these contacts for the rest of your
life. Inform those you consider to be good contacts about your career
changes, and they will do the same, thereby keeping your address book
updated at all times. Of course, it is not enough to know where people
sit and work; it is important to know what they know, and whom they
know so that their address books can be added to yours. That is the way
it goes. Start it as early as possible, and teach your children how to do
it. They will be grateful later.
It is very important to work in a good atmosphere for the simple reason

that a negative atmosphere will have an adverse effect on the results,
or will, at the very least, slow down the working capacity of the people
involved. The atmosphere in the office has to be good, as it should be at
home. It maybe useful to repeat here that family life is important, too
– the time spent at home must be quality time.
Finally, the beginner consultant needs good support resources. Nobody

can do everything alone, and it is undeniably important to consider all
the resources required before starting your own business.
Know how to use time
This sub-chapter has nothing to do with the well-known ‘time-

management systems’ which exist all over the world. It is simply a list of
things to refer to constantly in order to maintain a correct business life:
• Integrate your personal and professional life
• Use lists
• Delegate
• Do not dally
• Do what you feel is right at the right time
• Sanctum sanctorum
• Spend money on efficiency
• Be selfish with your personal time
• Plan long-term investments
• Allow for the unexpected
All these points can, of course, be used in a variety of lifestyles, and in

different jobs, but we will stay focused on the consultancy business.
It is simply not necessary to be a workaholic. Normal professionals
have normal lives. What is meant by integration is simply making
people aware of the need to set time aside for the private part as
well as the professional part. A lot of consultants do not dare to say
to their clients that they never work on Sunday, which is a shame as
it is not normal to work on Sundays (unless it is really necessary).
Everybody needs a day of rest once in a while: explain to your client
that you need a day off in order to be fully fit for the following day. It
is much better to rest regularly when you want to survive for a long
time. ‘The entry phase’ in Chapter 4 will reveal that there is an even
more surprising thing that the clients will have to accept. I give the
following advice to consultants: once they have analysed the entire
problem they should just sit back and do nothing. But what is the
reason for this? Well, by resting and apparently do nothing, you give
your brain the chance to define the approach better than ever, just
as you tend to think up a lot of new ideas before falling asleep. Such
moments have to be created. So I repeat, after the analysis phase just
sit back and do nothing!
I know a lot of people pretend that they never forget anything. I even tend
to believe them because I know that they only promise big things, and not
those things in which they themselves have no interest. So I recommend
using lists in any shape or form: for some it is simply a piece of paper
pushed into the pocket, for others it is part of the daily agenda, or the
‘tasks’ function in Microsoft Outlook Express. It should be simple and
easy to use, a system not requiring you to copy one list to another, because
that is just a waste of time, and lists should be made to avoid this.
Delegation is the masterpiece of the real organiser, of the excellent boss,

of the remarkable consultant. It is a weapon with two strengths: on the
one hand, by delegating you indicate your trust in others while, on the
other hand, you give yourself more free time for other (more important)
tasks. By delegating you create a special atmosphere that is not always
clearly understood by others, because you regularly have to redefine the
roles played by the different actors. Let us suppose, for instance, that
you are CEO of a company dealing a lot with daily business, and you
suddenly realise that by delegating a large part (or even all) of the daily
business to a general manager you will have more time for strategic
management and other delicate tasks. So, you delegate everything
concerning the daily business to a person you trust 100%. What does
this change? More than you can imagine, in fact, as you now know that
you will have more free time for other tasks, that is if you really delegate
and do not spend your time controlling the newly appointed general
manager. You also know that he will have a lot to do as regards his new
responsibilities, and will be grateful to you because of this notable sign

of trust (and probably a significant pay rise). That is what you know and
see. But do the people inside the company know what is happening? Do
they understand why you made this strategic move, or do they think
that you want to retire gradually? Did you explain to your people that
you need more time for strategic business, what that actually means,
and that the person you made responsible for daily business has your
full support? Did you tell them that it makes no sense to come to you
with topics and questions concerning the daily life of the company?
If you did not then the situation will be a dangerous one.
Do not dally! Do not talk too much (see the Kipling poem at the
beginning of the book). Do not waste time in conferences or meetings
where everybody already knows what you are going to say. Do not repeat
things unnecessarily. Do not spend time on minor problems that can
be solved by others. Do not put energy into topics others can handle,
so that you can concentrate on the real problems, and on your main
business. I have known people who spent time organising meetings
about decorating the building while the company was experiencing
serious problems with both the customers and the competitors. So
please, do what you have to do – work.
Do what you feel is right at the right time. I mentioned a little earlier
that it is important to make decisions and to take initiative. That is
exactly what is meant here, too. If you really think that you have to
do something, and that what you want to do is correct, then do it and
do not spend another week or even another day discussing it. The
result will stay the same, except that you will have lost a day or a week
transforming your decision into reality. By waiting to implement an
idea that you think is correct you give others the opportunity to do so.
If you handle this correctly, you and your company will always be one
step ahead of your competitors.
Sanctum sanctorum: these Latin words mean a lot but are not easy
to translate correctly. One interpretation might be ‘the holy place of
the holiest places’. Everybody needs a place, or a situation where he
can be on his own – where he can find some space to think. This is
not necessarily a place where one is physically alone. It has to be an

environment where it is possible to think, rest and concentrate without
being disturbed. I can give the example of a somewhat surprising place:
the well-known French writer and philosopher Jean-Paul Sartre and
many others used to write large parts of their works in cafés in Paris.
Hardly quiet places but, nonetheless, places where they were able to
concentrate on the job in hand, places where they felt comfortable.
That is exactly what is meant by the sanctum sanctorum.
If you want to gain time, and if you do not want others to react faster
than you in their communications, please invest money in efficiency.
I often hear people say that a particular electronic gadget is not useful
to them as it is simply a gadget like any other. Do not be too hasty to
say that; try to analyse whether or not it can be useful to you or your
business and help you save time. Time is money! Think about those
countries where internet access is still restricted: this slows down
contact with the outside world, and with the continually increasing
speed of innovation. You should always think about investing correctly
in efficiency.
It is not egoistic to be selfish with your personal time. To a degree this is

linked to your mental state of health. Everyone should convince the other
parties involved in business (clients, colleagues, customers) that time off
is necessary. Personal time does not necessarily mean time to do nothing.
It can be time to read, to study, to think, to do sports, to discuss with
others, or to spend with the family. All those little ‘breaks’ are restful, and
it is important to make others realise this. Make this time part of your
personality. People should know that you need this, and will appreciate
you for it. Make clear to others that you do not need a ‘vacation’ as such,
but simply some time for yourself, time to find new resources.
Never invest in the short term alone – think far ahead and thus plan
your investments in the long term, both in your own career and in the
evolution of your business. Strategy is perhaps a well-known word in
military and business sectors, but it is also useful to think a long way
ahead in your private life. Make a life plan, with goals to be achieved,
bearing in mind that sometimes goals are impossible to reach, but other
possibilities may occur. Long-term investments may include starting new

studies at a certain age. One should think about this once in a while.
Unfortunately or, if you prefer, fortunately, life is not always predictable,
which is why you should always make allowances for the unexpected.
It is the same in business. So please do not fill up your agenda 100%
for the coming weeks because you will be unable to find time for great
opportunities. If you rarely find free time to help or listen to others they
will not come to you in the future and, after a while, you will become
isolated. A doctor is a good example of keeping some time free: he must
always allow for the unexpected. Can he tell a sick person asking for
help that he has no time for him on his agenda before the end of next
month because the illness was not planned? Does that mean that you
have to foresee when you are going to be sick by calling your doctor to
see when you can arrange an appointment? The situation is similar for
consultants: no company can foresee all the problems, and may need a
consultant at any time. It is up to the consultant to envisage some free
time for this. And, by the way, the unexpected missions are often the
most interesting ones because they are the result of sudden change.
Conclusion
The purpose of this chapter is not simply to make a checklist of the skills,
requirements, talents, etc. a person needs before he can imagine being a
consultant. Not at all. This is just a summary of my own thoughts about
possible ways of envisaging such a career in the demanding world of
professional consultancy. Each person should make his or her own list,
making sure it is well balanced, and that the positive and the negative
points are clearly defined. And then I would repeat the instruction I give
later in the book: just do nothing. The right choice will impose itself.
Chapter 2: Ethics in consultancy 33
Chapter 2: Ethics in consultancy

Wherever Law ends, Tyranny begins.
John Locke
Nothing is perfect!
Everyone has heard about ethical problems in the consultancy area, the
most important of which are still fresh in our minds. With the mere
mention of the name ENRON or other big companies, everybody is
horrified that this could ever happen in this business world we live in.
These things happen because some consultants do not respect the ethical
rules they should respect. But, as mentioned above, nothing is perfect.
The questions covered in this chapter will be the following: why is

ethical behaviour important? Are there rules for consultants?
Why is ethical behaviour important?
The first response to that question is clear: because it is a matter of

human reflex, and because this is simply a question of respect for both
the profession and the clients. But is it really that simple?
If all consultants were real consultants, meaning that they were really
concerned about their clients, we would never have any problems
because even in difficult situations they (the consultants) would give
objective, clear information. They would inform their clients about the
dramatic situation they live in, and would never hide anything or forget
to mention irregularities. Unfortunately, not all consultants are honest
and some are easily influenced.
In June 1997, a TV news presenter asserted during a discussion that there

are no qualifications or codes of ethics for management consultants – a
mistake which could have been avoided by simply making a telephone
call to either the Management Consultancies Association (MCA) or
the Institute of Management Consultants (IMC)1.
1
Management Consultancy, A handbook for best practice, Philip Sadler, Kogan Page Limited,
1998, pp. 33, 34
34 Chapter 2: Ethics in consultancy
The real problem seems to be that there are still many, many consultants
working who are not members of an association, which means that
they seem to feel that there are no rules to respect. The consultancy
profession is protected in a few countries, which means consultants are
given proper education, rules and constraints. Unfortunately, this is not
the case all over the world. In the early eighties, many top managers and
middle-management workers were fired, just because the economical
situation was very bad at that time. Some of these people suddenly
discovered a new vocation, declaring themselves to be ‘consultants’
and, because they were unable to find a new job they started their own
businesses. It is not because one has certain experience, or is an expert
in his or her field that he or she can be a good consultant. Just because
you have a business card with the word ‘consultant’ on it does not mean
to say that you are one! The basic problem is to find out whether or not
consultancy is a profession.
In 1989, Professor Jack Mahoney stated: “the Latin word profiteri

means literally to speak out, or to make a statement, or further to
give an undertaking to others”. That is what consultancy is all about.
Professionalism is not only having the professional skills, but also
respecting the moral contributions. If this is accepted, the professional
spirit of contributing to the community goes far beyond the idea of
having a job or making a career; it also takes on a social dimension,
thereby accepting a much broader role in society.
If we focus again on the ethical behaviour regarding the new definition

of professionalism it seems obvious that one has to respect the existing
laws and rules, simply because it is a matter of respect for the profession
and the clients, and for society as a whole. Therefore, it is normal that
non-respect of the rules is seen as a violation of the law, and punishable
as a crime, which brings us to the following:
Ethical rules
The easiest approach is simply to have a close look at the Code of professional
conduct of the Institute of Management Consultants (IMC)©2.
1
http://www.imc.co.uk/
This Institute is the only professional and regulatory body for individual
management consultants in the UK. There are other institutes like this
all over the world – some countries are setting up similar bodies while
others are thinking about doing so. Annually, all members of the IMC©
agree, in writing, to comply with the code of professional conduct. They
do so in order to officially recognise their obligations to their clients.
But they also have an other obligation: to undertake relevant and

continual professional development. This means that they have to
invest time and money in their education so as to keep up to date at
all times, which is important not only for themselves but also for the
people they hire. This is, of course, the only way to make a distinction
between real management consultants and other ‘practitioners’. It is up
to the clients to ask for proof of membership of the Institute.
A complete analysis, with examples of this code of conduct, is given

below. It is based on three basic principles:
• Meeting the client’s requirements
• Integrity, independence, objectivity
• Responsibility to the profession and to the Institute.
The rules under these three principles have to be respected, not only
by the subscriber but also by his partners and everyone under his
responsibility. As with every rule or law, it is necessary to explain
exactly what the terminology used means:
Member A fellow, full member, associate member or affiliate of the
Institute.
Client The person, firm or organisation with whom the member
makes an agreement or contract for the provision of
services.
Declaration A written statement referring to and disclosing the facts
relevant to the situations covered by particular rules of
the code.
Independent Always in a position to express your own opinion freely
without any control or influence from others outside the
(consulting) organisation, and without the need to consider
the impact of such opinion on your own interests.
Institute The Institute of Management Consultants©.
PRINCIPLE 1:
Meeting client requirements
The requirements and interests of the client are the main drivers of the
consultant’s behaviour during the entire mission.
Rules
Competence
1.1 A member will only accept work that the member is qualified to
perform and in which the client can be served effectively; a member
will not make any misleading claims and will provide references
from other clients if so requested.
This would seem obvious to all businessmen. Nevertheless, it is
sometimes difficult not to accept a mission, for several reasons. Suppose
you are starting up your own consultancy business and are asked to
carry out a mission for which you are not a specialist. It may be difficult
to simply say ‘no’, especially if you badly need turnover or if you are
actually looking for a new mission? It often happens that a client decides
on a new mission when another one is finishing, and asks the consultant
in place to do the job. Here it is the consultant’s duty to decline the offer
if he/she is not sufficiently qualified to do the job. Initially, the client will
be surprised, but will appreciate the honesty and the professionalism of
a consultant who behaves in an ethically correct manner.
Agreement on deliverables and fees

1.2 A member shall agree formally with the client the scope, nature
and deliverables of the services to be provided and the basis of
remuneration, before starting work; any subsequent revisions will
be subject to prior discussion and agreement with the client.
The major word in this rule is ‘before’. It is understandable that the
client wants to know what the consultant will cost, before starting
the collaboration. Sometimes, it is difficult for the parties to reach a
final figure, because there are some unknown areas within the task.
In that case, they should give the different options equal status so that
the client can stop when he decides to without being penalised. The
consultant should analyse the problem in depth before submitting
his financial proposal for agreement. Deliverables should also be

discussed before the work is started because client needs are not
always the same: sometimes the client wants much more than a final
solution – maybe he/she requires all the different steps of the analysis,
or the implementation documented with background research, with
graphs, with special support, etc. Obviously, these elements make a big
difference to the workload, and thus to the size of the final bill.
Subcontracting
1.3 A member shall subcontract work only with the prior agreement of
the client and, unless otherwise agreed, will remain responsible for
the performance of the work.
This is a very simple sentence to explain but it will help avoid several
problems. The first one concerns security: imagine that you subcontract
to a secured company and that you try to involve subcontractors who, for
whatever reason, are not acceptable to your client: what will his/her reaction
be? You, the consultant, will not be trusted in future. Secondly, there is the
matter of honesty: everyone knows that not every consultant company
works for the same fees: if you hire subcontractors, it might be because you
want to make money without investing anything, not even in your own staff.
In general, it is always wise and correct to tell your client that you will not do
the entire job alone – normally this will not be a problem if you explain your
reasons. Here, too, open book accountancy would be preferable.
Confidentiality
1.4 A member will keep all information concerning the client's affairs in
the strictest confidence and will not disclose proprietary information
obtained during the course of an assignment.
Like most of the points made in these rules, this also seems obvious.
Nevertheless, it should be clear to the client (and the consultant) that
NO information will be given to others – not before, during or after the
mission. In many cases the client even asks that his name should not
be mentioned in client lists because he does not want others to know
that he has previously asked external consultants for help. On the other
hand, sometimes clients agree to use a consultant’s name, such as when
the case the consultant worked on was important, gave good results,
and showed the client’s aggressiveness, the desire to innovate. Once in
a while a consultant may even discuss fees, and convince the client to
give him the opportunity to use his name (for publicity reasons) and
thus lower the fees.
Non-poaching
1.5 A member will not invite or encourage any employee of a client for
whom the member is working to consider alternative employment,
unless it is proposed by the assignment.
Surprisingly, nothing is mentioned about the client’s behaviour or the
time limit to be respected. It seems normal to limit this rule during
a period of six months (up to one year) after finishing the mission. It
is also prudent to mention in the agreements that the client should
not poach either. It is indeed in missions such as those involving a
consultant that people have to show their capacities, and where both
sides – the client as well as the consultant – can observe the behaviour
of staff and appreciate their know-how. This means that it is easy to find
the best people in different fields without having to pay for that service.
Transgression of this rule is severely punished in many countries.
Due care
1.6 A member will make certain that advice, solutions and recom-
mendations are based on thorough, impartial consideration and
analysis of all available pertinent facts and relevant experience,
and are realistic, practical and clearly understood by the client.
Impartial must be mentioned here because it refers to the issue of
independence. The consultant should clearly decide not to be influenced
by the proposals and suggestions made either by the client himself, or by
the customers among his own consultancy staff. This is precisely how
to find those consultants who behave correctly – those who start from
nothing each time they take on a mission, without any presumptions.
The other points are equally important: if the client understands the
recommendations and solutions well, he will be able to understand the
way they should be implemented, and may even be able to do it without
external help. If the solutions are neither practical nor realistic what
can a client do with them? The only thing a client wants is a possible
solution, which means one that he understands, can afford, and can
implement without unacceptable risks.
Communication
1.7 A member will ensure that the client is kept fully informed about
the progress of the assignment.
It is reasonable to expect the consultant to provide regular information.
Unfortunately, as this is not always, or rarely possible, the consultant
should have his own communication strategy. Communication takes a lot
of time, and thus costs a lot of money, which should be considered in a
consultant’s financial proposal. One very good communication strategy is
to have weekly meetings with the client, for instance every Friday afternoon,
so that the consultant can show the client the progress made during the
week, thereby giving a good idea of both progress and any possible delays.
Another advantage of these meetings is that the consultant can explain
what is going to happen during the coming week, giving the client an
opportunity to prepare his staff accordingly. In this case, when referring
to the client the consultant must try to involve all those concerned in the
mission, on his side as well as on the client’s side.
1.8 A member will encourage and take note of any feedback provided
by the client on the performance of the member’s services.
The meaning of ‘take note’ is clear: if a client has problems with something,
the consultant should react immediately and either explain or change the
way things are done. It is necessary that the consultant reacts positively to
any problems expressed by the client. By working in this way, both parties
will be able to progress rapidly and with mutual respect. The more they
exchange information and remarks, the better they will come to understand
each other, and the better they can collaborate. A client without problems
may not be a good client because that can indicate that he is not interested
in the mission or does not understand what the consultant is doing. And
there could be an even worse reason for such silence – that he does not
trust the consultant or is afraid to question him.
Respect
1.9 A member will act with courtesy and consideration towards the
individuals contacted while undertaking assignments.
In every collaboration it is important to respect colleagues, the
people you work with, and your superiors. It is not important what
level of education you have or the role you play in a company:
the important thing is that all the individuals can work together
respectfully because one can always learn from another. Can any
consultant dare to say that he has nothing to learn from others? Does
he know everything? Can he catch fish with their bare hands like
certain primitive fishermen do? Can he build a house alone? Can
he handle a boat in the middle of the ocean? It is exactly the same
when you have a mission in a company: the older workmen will show
how they used to do it, and maybe they will demonstrate the reason
why things should be changed, or not. The managers will show the
evolution they have made within the company, and thus indicate
to the consultant the reasons why some problems occur. One can
always learn from the other. On the other hand, you should also be
willing to share knowledge with others.
PRINCIPLE 2:
Integrity, independence, objectivity
A member shall avoid any action or situation which is inconsistent with the
member’s professional obligations or which might, in any way be seen to impair
the member’s integrity. In formulating advice and recommendations, the member
will be guided solely by his/her objective view of the client’s best interests.
Rules
Disclosure
2.1 A member will disclose at the earliest opportunity any special
relationships, circumstances or business interests that might
influence or impair, or could be seen by the client or others to
influence or impair, the member’s judgment or objectivity on
a particular assignment.
This is exactly the same rule as is applied to judges all over the world.
Nobody can pretend to be, or stay objective if either personal interests or a
particular mission concerns, indirectly or otherwise, personal interests. For
example, it is impossible to stay impartial if, by acting the way you should,
you will lose money. Can anyone accept that he or she has misjudged
his or her own friends in a business problem? Can one say, honestly and
impartially, to a business friend that you made wrong choices in the past,
and that the consultant assignment is only necessary now because of your
mistakes? There are thousands of examples of difficult situations so it is
important for a consultant to say stop as soon as possible.
2.1.1 Rule 2.1 requires the prior disclosure of all relevant personal,
financial or other business interests that could not be inferred from
the description of the services offered. In particular, this relates to:
• Any directorship or control in any business in competition with
the client
• Financial interests in goods or services recommended or supplied
by the client
• Any personal relationship with any individual in the client’s
employ
• Any personal investment in the client organisation or in its parent
or any subsidiary company
• Any recent or current engagements in sensitive areas of work with
directly competitive clients
• Any work for a third party on the opposing side of the transaction,
such as bid defence, acquisitions, work for the regulator and the
regulated, and assessing the products of an existing client.
Although this list may seem long it is, of course, not exhaustive, and one
should judge other cases on their individual merits. It is clear that it is
not possible to work on a mission where you might feel uncomfortable
because of the types of problems mentioned above.
Conflict of interest
2.2 A member shall not serve a client under circumstances that are
inconsistent with the member’s professional obligations or that
might be seen to impair in any way the member’s integrity. Wherever

a conflict or potential conflict of interest arises, the member shall, if
the circumstances so require, either withdraw from the assignment
or disclose to the parties concerned and obtain their agreement on
the performance or continuation of the engagement.
It is not always easy to see before an assignment starts that a conflict of
interest could arise. So, it is the consultant’s duty to be attentive at all
times, and to try to act as mentioned above in rule 2.2 as soon as the
problem occurs, without any delay. A solution can usually be found,
for instance, simply by changing one or more members of the staff
involved in the mission.
2.2.1 It should be noted that, depending on the circumstances, the
Institute may be one of the ‘parties concerned’. For example, if a
member is under pressure to act in a way that would bring the
member into non-compliance with the code of professional conduct,
in addition to any other declaration that it might be appropriate
to make, the facts should be declared to the Institute.
Luckily, such circumstances rarely occur, and in the countries where no
such Institute exists, the consultant should act as if he was a member
of an Institute – that is, he should try to avoid all situations in which he
contravenes the rules of professional conduct.
Inducements
2.3 A member shall neither accept discounts, hospitality, commissions
or gifts as an inducement to show favour to any person or body,
nor attempt to obtain advantage by giving financial inducements
to clients or their staff.
In a seminar given in HCMC in November 2002, I stated exactly that
and it was even well understood by the journalist present at the time.
He writes:“Consultants should not receive monies that are not stated
in contracts; ‘We even do not go out for meals paid by our clients,’ he
(Tommissen) said’. ” You should avoid being in any way dependent on
the client. Of course, it is possible to go out to lunch with the client, but
you yourself should pay for the client.
2.3.1 Payment for legitimate marketing activities may be made, and

national laws should be respected.
This rule is clear and does not require much explanation. The only
important thing to remember here is that external consultants have
to adapt their systems to the laws of the countries they are working in.
Therefore, it is sometimes very difficult to find acceptable, realistic and
practical solutions in all countries where a multinational is installed. It
is the role of the consultant and his staff to find a solution for his client
in accordance with the different legislations encountered.
Privacy of information
2.4 A member shall not use any confidential information about a client’s
affairs, elicited during the course of an assignment, for personal benefit
or for the benefit of others outside the client organisation; there shall
be no insider dealing or trading as legally defined or understood.
Once again, this is the same problem that judges have: they cannot
speak about a court case because they have taken a vow of silence. The
client should be able to act in complete confidence with the consultant,
knowing that he can explain his problems, and reveal all the relevant
figures without any risk of having them repeated outside his company,
even after the assignment has been completed.
2.5 When required or appropriate, a member will establish specific

methods of working that preserve the privacy of the client’s information.
Of course, this comes at a cost. It is possible that a client has such
a large amount of crucial, vital, secret information that he does not
allow consultants to work with their own laptops, and that even faxes
or mails are forbidden. In that case, the consultant must find a working
arrangement and work according to the demands and rules of the client.
Objectivity
2.6 A member will advise the client of any significant reservations the
member may have about a client’s expectations as regards benefits
from the engagement.
When it comes to an agreement, and the client gives an assignment to the

consultant, they will both have an idea about the benefits the client will
probably receive from this. It is the consultant’s task to inform the client
that he must limit them if they are significant. It is obvious that before a
mission starts no one can tell exactly what the outcome will be. The figures
given by the consultant will indicate the direction to be taken, which may
sometimes change dramatically during the assignment, either because of
hidden information or perhaps simply because outside influences have
changed the whole mission. For example, suppose 90% of a company’s
business is in the export field, and suddenly the currency of one of its main
clients collapses. It is simply not possible for a consultant to foresee such an
event. The only thing he can do when such a situation occurs is to contact
the client immediately and, if possible, to adjust his strategy.
2.7 A member will not indicate any short-term benefits at the expense
of the long-term welfare of the client without advising the client of
the implications.
One of the basic economic laws is that it is easier to make short-term
benefits than to do so in the long term. The client may not always
understand that, and may even be under pressure from his shareholders
to work in the short term. It is part of the consultant’s duties to show
the client both the risks and the opportunities by investing in the
long rather than in the short term. It is the client who decides, and
personally I always advise writing such decisions made by the client in
the contract. It is clear that the client will hesitate when you put such
responsibilities before him.
PRINCIPLE 3:
Responsibility to the profession and to the Institute.
A member’s conduct shall at all times endeavour to enhance the standing
and public recognition of the profession and the Institute.
Rules
What follows next is not yet applicable in Vietnam, but it is my dream to
see this country create an official Institute similar to the one on whose
rules I am commenting. Vietnam needs such an Institute to help make

the country more confident in consultants, to make it more independent
and to make the consultants themselves more responsible.
It is clear that currently there are still some people working as

‘consultants’ who do not respect any rules.
Annual affirmation
3.1 A member will provide the Institute with annual affirmation of
adherence to the code of professional conduct.
Obviously, it seems strange to affirm on a yearly basis that you are
adhering to the code, but the reason behind this rule is twofold: on
the one hand, it makes the consultant think about the code every year,
and may actually remind him that once in a while he almost forgot to
behave correctly; on the other hand, it reassures the Institute that the
member is still willing to act according to the rules, as well as being
willing to remain a professional in the consultancy business.
Continuing professional development

3.2 A member will comply with the Institute’s requirements on continuing
professional development in order to ensure that the knowledge and
skills the member offers to the clients are kept up to date.
There is no concrete rule saying how much, how long, at what speed,
where, etc. you should try to stay up to date, but a much ‘ruder law’
exists: the competitor. The consultant also has competitors, and the
only way for a consultant to keep good staff on-board is to give them
regular training and the opportunity to follow courses in the fields in
which they specialise. There is no better way of linking young or even
older intelligent people than by giving them the opportunity to train in
high level courses.
Every consultancy firm has its own rules, but all have specific budgets for
such training. They develop plans to train their staff in the same way as
they try to do for their clients. The level of knowledge or intelligence is the
one thing which makes consultants really different from one another.
3.3 A member will encourage management consultants for whom the

member is responsible to maintain and advance their competence
by participating in continuing professional development and to
obtain membership of the Institute.
It is, of course, never enough to simply offer the opportunity to study;
the members must also motivate people to do so. It can be done by
example, and also by giving staff the opportunity to take business
breaks to allow enough time to find the energy to study. If you want
your staff to increase their knowledge, their time management should
be flexible enough to allow for training.
Professional obligations to others

3.4 A member shall have respect for the professional obligations and
qualifications of all others with whom the member works.
This not only refers to rule 1.9, but also includes respect for the actual
qualifications people inside and outside the consultancy business.
3.5 A member referring a client to another management consultant will

neither misrepresent the qualifications of the other management
consultant, nor make any commitments for the other management
consultant.
This is one of the major rules in all business: never say anything which
may misrepresent your competitors. Indeed, it makes no sense to try to
blame your competitors – the only thing which counts is being better
than the others. It is up to your client to form his own opinion about
your ‘colleagues’. If your presentation, your quality, your pricing is better
than that of your competitors, you will be awarded the assignment
whatever happens. If not, it is a pity, but you can learn from it and be
better next time. You can only show that you respect your profession by
being honest, and working with dignity. That is all.
3.6 A member accepting an assignment for a client knowing that another

management consultant is serving the client will ensure that any potential
conflict between assignments is brought to the attention of the client.
It very often happens that a client hires the services from different
consultants at the same time, because his needs are in different fields. It
is up to the consultants to create an atmosphere of mutual respect, and to
avoid working on the same tasks. The client has to be informed continually
about any potential conflict between them. The client can never be blamed
if the consultants do not inform him about possible dangers.
3.7 When asked by a client to review the work of another professional,

a member will exercise the objectivity, integrity and sensitivity
required in all technical and advisory conclusions communicated
to the client.
Once in a while a client may be surprised by the results obtained by a
consultant, or may be uncertain about the conclusions given to him
after an assignment, and consequently wants another professional to
have a closer look at those results or conclusions. This is not a matter
of distrust, but simply a matter of feeling more comfortable. The client
often just wants the results to be confirmed by another consultant. The
main problem here is that the premises are no longer the same as the
first consultant found when he arrived. Therefore, it is very important
to be objective and try to imagine what the situation was like before.
Why not ask the other consultant (if the client agrees)?
Fees
3.8 A member will negotiate agreements and charges for professional
services only in a manner approved as being ethical and professional
by the Institute.
3.8.1 Members are referred to the Institute’s ‘Guidelines on Charging for
Management Consulting Services’.
It is clear that in countries where such an Institute exists it is quite easy to
make sensible proposals. In countries where they do not exist it is much
more difficult – you can find extremely high rates as well as dumping
prices. This is not the only purpose of this paragraph. You should not
forget, for instance, to explain clearly to the client what exactly your
working day is: 8, 9 or more hours a day? How many working days in
a week? What is included in the proposal – just a document, or all the
background information and assistance during a certain period, too?

All this information must be written down in a clear comprehensive
‘trick-free’ document signed by both the parties.
Publicity
3.9 A member, in publicising work making representations to a client,
shall ensure that the information given is:
• Factual and relevant
• Neither misleading nor unfair to others
• Not otherwise discreditable to the profession.
3.9.1 Accepted methods of making experience and/or availability known
include:
• Publication of work (with the consent of the client)
• Direct approaches to potential clients via entries in any
relevant directory advertisement (in printed publication or on
radio or television), or public speaking engagements. Members
are referred to the Institute’s ‘Guidelines on the Promotion of
Management Consulting Services’.
Once again this rules of the Institute are only ‘law’ in countries which
have such an Institute. In the others, it is a matter of respect for the client.
The easiest way is to ask him in writing to give you the possibility to speak
about the assignment you have had in his company. If he does not agree to
this you will never be able to use the information. A second possibility is
to make an arrangement with the client where you promise not to use the
name of his company, nor its location, even changing the figures where,
and if, possible, so that you can use your experience for other means.
Personal conduct
3.10 A member shall at all times be of good reputation and character.
Particular matters for concern might include:
• Conviction for a criminal offence or committal under bankruptcy
proceedings
• Censure or disciplining by a court or regulatory authority
• Unethical or improper behaviour towards employees or the
general public.
3.11 A member shall not wilfully give the Institute false, inaccurate,
misleading or incomplete information.
Once again, this is a general rule. You should behave as a loyal, honest
businessman or woman. By the way, I have never seen any managers
or CEOs hire a consultant with a bad reputation. This rule is written
down as, unfortunately, it gives the Institute the opportunity to fire any
member not respecting it, who, by so doing, will be unable to exercise
his profession any more.
Summary:
I believe it is more important to pursue ethical behaviour and once
in a while to lose a client because he thinks you are too correct than
to make a lot of money and have a bad reputation. Although it can be
really difficult do try to convince your client to be honest, nothing pays
greater dividends in the long term than honesty.
Chapter 3: The client/consultant relationship 51
Chapter 3: The client/consultant relationship

Careful and correct use of language is a powerful aid to straight thinking, for putting into words
precisely what we mean necessitates getting our own minds quite clear on what we mean.
William Ian Beardmore Beveridge
3.1 Why ask the assistance of a consultant?
As is often the case in (business) life, people have good and bad reasons
for doing things. Collaboration between client and consultant is no
exception to this rule.
I will try to explain some of the main reasons why managers have to
ask for help. Unfortunately, a lot of these reasons are ‘bad’, and those
involved very often realise what they are doing – they are contacting
consultants for unacceptable purposes.
The lists (both bad and good) are not exhaustive, but the most common
motives will find a place here. Let us start with the bad reasons.
The one-man-show consultant

Although this situation does not occur very frequently, the consultant
has to play a very unproductive role here as he is being asked by the
management to play a role comparable to that of the show-master. He
will be playing the lead role in order to hide the real problems. For
example, this may occur during a board meeting, or an assembly of a
group’s international managers. Nobody cares about the cost, but this
game of diversion is much appreciated by the participants who forget
about all the rest or are not even informed about it.
The protector
This is a difficult role for the consultant to play. He is indeed the one
who announces (or at least is the reason behind) why difficult measures
have to be made. It is very often so in cases of significant restructuring,
where the consultant will invent – based on unknown sciences – that
the company has to get rid of a large number of collaborators, or even
to close down a plant. The measures have already been decided and the
consultant is often the only person the management can hide behind.
52 Chapter 3: The client/consultant relationship
In case of failure, they (the management) can always say that it was the
consultant’s decision they were following.
The alibi
Here the consultant is simply invited by the management as an alibi
– to appear to have a mission to accomplish. He is just there to show
that the company knows about the problem and is working on it.
The consultant is present to give collaborators the feeling that the
management is aware of the problem and is willing to work on it,
because they even hired a(n expensive) consultant. Can you think of a
more frustrating role than this?
The spokesman
The consultant explains the changes or the decision made by the
management to the general assembly or to the staff without intervening
himself. He is hired just to transmit a message to others because those
who are really behind the decision have not got the (legal) authority to
do so. Naturally, this can never be an internal consultant.
Energy man
The consultant is the one who will fight to obtain the results the
management wants: he has to overcome every obstacle, and will be
alone surrounded by enemies. This is the most tiring job a consultant
can imagine.
Of course, many other bad reasons might be invoked, such as

transmission of power to new management (in this case the mission will
be ordered by the shareholders), or the announcement of significant
restrictions, the takeover by a competitor, etc.
In addition to the above-mentioned reasons, there is a remarkable list

of ‘seven deadly sins’ which I came across in a book called Le conseil1.
1
Jean Simonet, Jean-Pierre Bouchez, Le Conseil, Ed. de l’organisation, Paris, 2003, p.109
The deadly ... when using consultants

sins
Greediness A lot of managers really want to sample the various new trends
which arise in business development. A lot of consultancy
companies know this and change the tools they use on a regular
basis; others ‘reinvent’ or adapt them to their own market
strategies coming from other countries (very often the USA).
Avarice Many managers hiring consultants have a strange idea or

concept in mind: they want the consultant to develop an
idea or a strategy, and will pay him for that without allowing
him to carry out the most satisfying part of the job – the
implementation of the plan. The manager keeps the results of
the consultant’s mission to himself and develops them later as
if they were his own ideas.
Anger Very often the management would like to fire an expensive

collaborator but they do not know how to do it. They hire
a consultant with the sole mission of finding mistakes,
inadequacies, poor results, strange behaviour, etc. by this
person. Once they have this information they fire the person
based on these ‘facts’. Fortunately, many consultants refuse to
work on such missions.
Jealousy As in ‘normal’ human life, mimesis also exists in business:

consultants are hired for the simple reason that the competitors
have done the same. There is no real reason for people to do this,
and it is simply a waste of time, money and energy for both parties.
Lust There are other types of managers with very strong egos. They
hire consultants because they feel that this gives them more
power. In addition, this kind of consultant knows exactly how to
flatter the manager in charge. However, they are often dismissed
without reason, just because the manager wants a change.
Pride It is a fact that sometimes big consultancy companies, or

consultants with a very good reputation (often based solely on
the high level of fees) are hired because this could improve the
reputation of those hiring ‘stars’.
Laziness Instead of developing internal competencies or skills, or

studying solutions internally, or investing time and energy in
seeking solutions, the management decides to hire consultants
to do the job in their place.
Now it is time to talk about the ‘good’ missions, the ones consultants
like, and those they live and work for. Here the list will be even less
exhaustive due to the fact that every mission is different, and that every
company has its own needs, and every consultant his own skills.
3.1.1 See where you stand; look around

As benchmarking is very time-consuming, and has to be repeated
continually, a lot of companies use a consultant who will assess the use
of the appropriate practices and, at the same time, will give the right
direction for the action plans. At the same time, the company is hiring
someone able to implement the new ideas. As a matter of fact, this
approach very often produces long-term results.
3.1.2 Do not try to do it on your own: do not reinvent the wheel

Many consultants implement the same techniques and tools over
and over again, sometimes in the same organisation, sometimes in
different ones. Franz Müller-Lyer (1857-1916), a German psychologist
who’s international fame is based on his study of optical illusions, also
coined the neologism nynoscopy in order to underline the errors caused
by the human tendency to judge the past and to ‘foresee’ the future
through the eyes of today. Yes, management consultants too should be
aware of the hidden seduction to look at a new problem through the
spectacles of previous experiences. I warn against this comprehensible
hazardous (dangerous?) reaction. Every case is another case and has to
be threatened as a new challenge, which needs its own response.
On the other hand, it is very useful to contact other consultants to help
you to do the job you have to do, as they have a lot of different experience
as regards the implementation.
Tim Laseter says: “Consultants fill important gaps for organisations that
need unique levels of technical expertise for short periods of time.”2
3.1.3 Get the knowledge where it is

Good consultants are well-organised people, capable of training,
helping and assisting people. It is very interesting to hire consultants
in fields where the company has insufficient knowledge. Not only
will the consultant assist in implementing the new idea, but he will
2
From Booz, Allen & Hamilton (BAH), www.boozallen.com
also train the people inside the company, and thus transfer his
knowledge. Implementation without training is complete nonsense.
It is acknowledged that when assistance was first given to developing
countries, the industrialised countries simply sent them money and/or
machinery. As long as no one provided the necessary training on how
to use this money correctly, or how to work the machinery, all such
efforts were in vain. Since instructors, teachers and assistants have
become involved in these humanitarian missions, the level of progress
has risen considerably. This applies equally to implementation without
solid training.
Consultants can help to transfer their knowledge to their clients, can
provide tailor-made solutions and train their client’s staff. The comment
made by Stork3 is very interesting and true.
3.1.4 Focus on problems

Very often problems exist for which no solution can be found. Frequently,
the solution comes without explanation, without anybody even knowing
why it suddenly appeared. The answer is simple: just because somebody
(in this case the consultant) focused on the problem. As soon as people
know that somebody is focusing on a problem (is aware of the problem and
is taking care of it) they increase their own interest in it and, in so doing,
contribute more than they ever imagined towards finding a solution.
3.1.5 Collecting data

It is normal to collect a lot of information before implementing a
change. Therefore, companies often ask their collaborators to gather
the necessary data, on top of taking care of their daily tasks and
responsibilities. Logically this leads to delays, stressed people and...
incomplete information. It is therefore useful to hire consultants to
gather the necessary information. They can present the necessary data
in a well-defined framework, so that the company can start the real job
with fresh people, ready for action. This help from outside is certainly
important when a company has many subsidiaries, as they do not
necessarily have the same way of acting or understanding. Therefore,
uniformity is only possible with outside consultants.
3
Stork & Associates, San Francisco
4
Peter von Loesecke used to work for Arthur D. Little, and is now CEO and Managing Director
at The MBA Tour (http://www.thembatour.com)
5
James Holec Jr. of PricewaterhouseCoopers (http://www.pricewaterhousecoopers.co.uk)
3.1.6 Drive change across multiple functions, business units

and national borders
When a company intends to make changes across the entire workforce –
all divisions, across all the different countries – it is always interesting to
ask external consultants for help because they can assist in the process,
being the drivers of it. “Consultants can help clients implement non-
traditional roles for procurement organisations around product design,
material selection, supplier services, etc.”4 It is considered as a kind of
investment in the future. “We become involved in change management
that transcends national boundaries. We help companies transform
themselves on a global scale by making processes consistent.”5
Often the problem is mainly to keep the process going. It is not at
all easy to keep internal people both motivated and able to motivate
others. External ‘experts’ can focus on the move, that is precisely their
job, when internal people have other things to look at.
3.1.7 Political assistance

Do you remember the ‘one-man-show-consultant’ and the ‘spokesman’
we talked about in the list of negative reasons? Well, such an approach
could be turned exactly the other way round: it is commonly advised
to hire external consultants when inside resources cannot make the
thought decisions required for supplier consolidation, outsourcing,
product design and cost reduction. The topics mentioned here are
politically too sensitive for the people; the links with the past, with
the internal hierarchy, the mentality, are all too great. It is therefore
preferable to work with outside, objective experts, as assistants.
3.1.8 Compare with the others

As consultants normally work in different fields of industry and trade, they can
bring innovation through ‘simply’ copying from other industries. In so doing,
they can be judge, referee and player at the same time. Indeed, as they see
how other industries proceed they can copy-adapt to your company. They do
not invent (see point 3.1.2) but they adapt and introduce into your company a
method which they have seen succeed in another firm. We should not forget
that a consultant is not stressed by the daily business and can invest time and
effort to analyse and adapt things he thinks may be useful elsewhere.
3.1.9 Time is money

Consultants may often be used as quick-start helpers – the quick
solution to a problem, a challenge, or a change. Like some experts, they
arrive, do what they have to do, if possible train the company’s staff,
and leave as soon as the trained staff can take over the job.
Consultants-experts are always a little further on in the evolution of the

market because they are observers and they know the upcoming needs.
They train their own experts and sell this competence to the market.
Large (and even some small) consultancy companies have the necessary
tools and methods to implement solutions faster than ever.
3.2 The nature and the purpose of the consultancy relationship
The use of the word relationship might seem to be a little strange or

exaggerated here, but it is the only correct one. We must not forget that
one party, the client, invites another one to help to solve a problem. One
of the first obligations the client has is to give as much information as
possible (even in strategic domains). The consultant has to keep secret all
the information he has. In addition, the two parties have to live together
in mutual confidence throughout the assignment. As is the case in every
good relationship, it is better to live in complete harmony.
It is necessary to have a closer look at all the actors in this business

game. On one side we have the client, on the other the consultant: what
are the roles they are going to play, what is one part going to ask from
the other, and what is the other willing to do?
Generally speaking, the situation is quite simple: the client needs help in a
domain in which he does not have the necessary experience, or for a task
he does not want to do himself, while the consultant offers the necessary
help or advice in one form or another in order to help the client. It is mainly
about the transfer of knowledge and/or expertise from one party to another.
Therefore, they both need a clear contract stating exactly what it is all about.
This contract must be fulfilled if both parties want to be satisfied at the end
of the process. We will speak about the contractual terms at a later stage.
Whatever the relationship, it involves three different dimensions:

• The contractual one: this is the legal part which contains the rules
of engagement both parties are willing to adhere to.
• The idealised relationship: completely different to the one above,
this is rather like that between friends, where one party tries to
find out the wishes and needs of the other.
• The authentic relationship: this stands above the others, where true
positions are taken and mutual confidence and esteem overrides
everything else.
3.3 Who is the client?
One fundamental question to be answered is who is the client? The

answer can seem very simple for those inexperienced in the field, but
it is not always that clear who the real client is – who gave the order
to hire a consultant, for instance. It is very important to find this out
in order to start the relationship on a solid base. When working for an
‘unknown boss’ it is difficult to give him exactly what he is looking for.
The first mission for the consultant is to find out who the real client is,
before the work begins.
There are several possibilities from the start:

• Is it the person who contacted you in the first place?
• Is it the stakeholders asking for a consultant to help solve a problem?
• Is it those who are going to pay for the mission?
• Is it the management who is going to work with you on the mission?
Very often it is a mix of these options, although there is also the

approach suggested by Cockman6:
• Those who know
• Those who care
• Those who can.
6
Cockman P. et al., Client-centred consulting, McGraw-Hill, Maidenhead, 1992
By taking a close look at the three possible types of clients mentioned

above you will, of course, have to adapt the way you work and suggest
your proposal for a solution.
Those who know will indeed be very helpful to you as they hold all
the means of finding the solution – they have access to all the sources,
which can be human resources management, general management,
clients or even customers.
Those who care are those personally involved in the problem – those
who would like a rapid solution because it would make their lives easier
or just because they like the company they are working in a lot. Those
who have certain responsibilities inside the firm are often a part of such
a group of people.
Finally, those who can – but can do what, in fact? They can help solve
the problem by doing something, either by giving the necessary funds,
or simply because they are the management and can help ‘impose’ the
consultant and his solution.
The best approach is to listen to all the participants and possibilities.
3.4 Phases of the relationship
Up to now, of course, nothing has happened. So, let us have a look at

the different stages of the client-consulting relationship.
Preparing to make contact

The first meeting between a consultant and his potential client can
be for different purposes. It can simply be an informal contact to see
precisely what a consultant can offer, or it could also be a kind of launch
meeting where the client states exactly what he is looking for and asks
the consultant to make a proposal or to tender. The second case is less
frequent but can happen if the client has already decided that he is
going to work with a consultant and has chosen a list of consultants
from which he will pick the one making the best proposal.
This face-to-face contact is very important because even at this early

stage a kind of trust-building is necessary. If this first contact is not
positive, the chances of succeeding later will be adversely affected.
From this point onwards, both parties will grow through different
phases that will be briefly explained:
• Orientation
• Identification
• Analysis
• Resolution (solution proposal?)
3.4.1 Orientation
Do not forget that if the company and the consultant have never worked
together before they will be complete strangers at the first meeting.
They have to learn a lot from each other. Each has to find out how the
other thinks, his weaknesses and strengths, any possible differences in
business approach, and so on.
Once the early steps have been completed and the two sides get to
know each other better they can start the negotiations, and establish
the roles they will each play.
As we have already seen in the chapter on the requirements for

the consultant, one important aspect will be to analyse their
different communication styles. It is necessary to understand this
to avoid further problems. For example, the client can only ask
for communication with the management, whereas the consultant
prefers to work ‘openly’, which means giving information to
everybody involved in the process, from the top to the bottom of
the company. This could be a point on which the two parties are
unable to agree, in which case the consultant has to withdraw from
any possible collaboration. I think it is the consultant’s role to adapt
his communication strategy to that of the client because he has to
respect the culture which exists inside the company. He can perhaps
try to convince the management of the company to accept a slight
change, but no more than that.
It is at this stage that the identity of the client must be evident to the
consultant. The openness and willingness to collaborate must be verified
here. The consultant must point out now, rather than later, that it is the
client’s role to ask for more clarification when he does not understand
the way the consultant is proceeding, as soon as the situation arises.
Remember that at this stage you still have not accepted any mission.
Try to find out the client’s feelings – is he anxious, nervous? Can you
work with him? Do you feel an open-minded relationship would be
possible or, on the contrary, do you feel it would be impossible to work
with that company (i.e. the people working there)?
This period of pre-introduction is crucial for both parties. On the one

hand, you have the client who is looking for a solution to his problem,
but who is also a little worried about opening all his company’s files
to ‘a stranger’. And, on the other hand, there is the consultant willing
to take on the mission but also aware of the client’s reservations. They
now have to build an atmosphere of mutual respect and confidence.
If they do not succeed in this they should not look for any further
collaboration, and should leave the negotiating table.
3.4.2 Identification
Once they have decided, at the end of the orientation phase, that they
can continue working together they will both have to concentrate on
increasing the mutual confidence, in order to make the relationship
closer and more effective. But be careful: there is still no contract
between the parties! They now have to identify the areas in which the
client wants the consultant to work, and the problems he would like
solved.
It is only now that the client will explain to the consultant the way in
which his company functions, how it is organised, the history of the
firm, and future plans (if any). The consultant must explain clearly what
he can offer, the tasks he can fulfil and how he will do it.
In simple terms, they explain what can be expected of themselves and

from one another. It is about how they can work together in mutual
understanding. However, there are some crucial questions to be
answered about how they are going to collaborate:
• Who is going to do the job? Is it the client with the consultant or
is it the consultant for the client? This is extremely important for
two different reasons: the first explains the involvement the client
wants to have in the process, and the second, the time frame the
consultant will need which, of course, will be much longer if there
is no collaboration foreseen from the client’s side.
• Different styles of consultancy missions exist. Which one is the
client going to choose (in the main, according to the culture
existing within the company)? Is it an autocratic one, where the
consultant decides and imposes the rules of the game? Is it one
where there will be very close collaboration, or will we go even
further with the consultant assisting and being ‘only’ the guide?
• To what level will each party participate and what roles are they
going to play? This is very closely linked to the previous question.
• Who will delegate what and at what level? Is the management
willing to delegate all the actions to the consultant or is the
consultant ‘the person who observes’?
• Will the consultant have access to all the company files (and secrets)?
Will certain access be denied? This can also give a clear view of the trust
the client has in the consultant. However, it should be acknowledged
here that the consultant does not necessarily need access to all the files
for every mission. The consultant must be correct in his approach and
accept that certain secrets are kept ‘closed’ even to him.
Care is required here as it is easier for the consultant to give his instructions,
to deliver the solution ‘on a plate’ rather than having to explain why he is
suggesting his solution. If the client wants such a solution then this is OK,
although it is preferable to help the client understand both the problem
and the solution so that there is a kind of knowledge transfer from the
consultant to the client. This would also help the client to introduce some
new know-how in-house, which will make the client less dependent on the
consultant. A good consultant should always work in this direction, even
if this does not help his own business. Never forget that if your client is
satisfied he will recommend you to others and come back to you if another
problem occurs. This, in my eyes, is more important.
3.4.3 Analysis
Next step: how are the parties going to work together and what strategy
are they going to follow? It is at this stage that the roles are assigned and
the type of interventions defined. According to the above-mentioned,
there are two types of intervention:
• The one where the consultant leads the process in an authoritarian
way:
1. Prescriptive: the consultant decides how things are going to
be developed, gives direction, guides the company, makes
recommendations and requests help and assistance.
2. Informative: the consultant explains the different steps, tries to
transfer knowledge by explaining what he is doing, interprets the
different reactions the client's staff may have, and simply gives the
necessary feedback.
3. Confronting: he pushes the client and his staff to react; he asks
challenging questions and may be contradictory so that he can assess
what the client has actually understood. He raises awareness.
• The type of intervention where the consultant helps the client to

feel confident and assisted throughout the process:
1. Cathartic (from the Greek καθαρσις, meaning cleansing): the
consultant clears the way for changes without tension. He gets
this result by asking the client to express his feelings, by easing
the tension, by using humour. The consultant plays the role of the
‘destresser’.
2. Catalytic (from the Greek καταλυσις, meaning dissolution): here
the consultant uses the client’s intelligence through provocation.
He helps the client to find out things for himself. Of course, this
takes much more time but has the advantage that the client then
understands. He summarises the situation regularly so that the
client can see all the steps they have been through together.
3. Supportive: the consultant shows the client his enthusiasm and his
belief in the success of the mission by indicating his appreciation
and affirmation.
As regards the various roles played by the two parties, once again there
are different possibilities. The consultant has to be adaptable as his role
can change in the middle of the process. We should not forget that
good consultants often play very different roles: they can be experts (on
a very special topic), counsellors (if the client wants some intellectual
assistance), salespeople (which is what they must be in the initial stages
if they want to secure a mission from a new customer), or trainers (if
they have to coach the client).
The value added by the consultant differs, of course, according to the

role he is going to play. I would say in all honestly that, in the case of
a consultant playing the salesperson, the added value is mainly for the
consultant himself (not forgetting the possibility of a positive result of
a mission he secures through his excellent sales capacities).
The role of expert is one where the consultant can demonstrate his
knowledge and his expertise in a specific field. This could be a very
dangerous situation because the consultant might forget that his client
does not understand the high level of technology he is using, or he
may forget his final goal – the solving of the problem. It is a fact that
specialists are so excited by good results that they continue working
theoretically in a certain domain while forgetting what the client was
actually looking for.
The role of ‘counsellor’ is the one most commonly known (see also the
Introduction to the book). Indeed, this is the role people appreciate the
most as it is person-centred. The danger of this approach is that it can
make people completely dependent.
One role clients would like consultants to play is that of advocate. Along
with the majority of consultants, I think that this is impossible and not
even interesting. Why should a consultant remain on the sideline like
a referee and simply observe? He has to show direction and to give his
own opinion. If the consultant does not dare to give his opinion, in my
eyes he is not worthy of being a consultant. Consequently, I prefer to
refer to this in the chapter on Ethics in consultancy.
A more useful and interesting role for both parties is that of coach.
The consultant educates people, shows them how to do things, and
plays the role for the others to follow. He transfers his knowledge and
observes in order to see how well his client(s) understands his message.
If he feels the client did not understand he will restart at the beginning
and retrain.
His role is exactly the same as that of a football trainer – most

trainers are ex-players, people with experience. The consultant
should have a lot of experience: he shows how to play the game,
arranges the different actors in the field, encourages them, and tries
to win the game (i.e. solve the problem). If he is a good consultant
(i.e. trainer/coach) he will be as happy as the players (i.e. client) if
that is done. Teaching means learning. The role of the consultant
has to be played well because he has to show his interest in the
people he is teaching. Do not forget, you cannot learn anything
from people you do not respect.
In the large consultancy companies, or in university centres which

have a consultancy department, the consultant can play the role of a
researcher. Unfortunately, smaller companies do not have enough time
or money to invest in pure research. It would probably be a good idea
to see smaller companies collaborate on larger study-objects, so that
together they can afford the research. Financial incentives coming from
the authorities would be welcome on this field, even if the researchers
worked abroad. Client-consultant collaboration is not very widespread
in this domain of course. Perhaps one can imagine big companies (and
they do exist) sponsoring their own consultancy departments for in-
depth research.
A final role the consultant could play is that of a facilitator: (from the
Latin facilitare: to make things easier). He helps the client to understand
his problems, and once he understands them it is, of course, easier to
understand how to find a solution and, even more fundamentally, that
a solution has to be found.
7
Living apart together n. A situation in which an unmarried couple live in separate residences
while maintaining an intimate relationship; a person in such a relationship. – adj. Also: LAT.
– live apart together v.in: http://www.wordspy.com/words/livingaparttogether.aspe
3.4.4 Resolution
Normally, at the end of the mission, both the client and the consultant
should be satisfied with the result, and they will go their separate ways.
But for how long? If they have had a really good collaboration (read:
relationship) they might get back together quite quickly, as soon as the
client has new needs. The consultant will keep in regular touch and ask the
client if everything is going well. They will live a sort of LAT-relation7.
Summary: it is important to spend a lot of time on building a solid

relationship between the client and the customer, not only in order to
know exactly what and how they are going to work together on this
specific mission, but also for looking further into the future.
3.5 Interventions and roles
It is obvious that the roles played by consultants are linked significantly

to their interventions. The more the consultant is implicated in a complete
process of change for instance, the more roles he will play, together with
his staff. A complete list of all the different types of interventions and
roles does not exist, and anyone concerned with this topic understands
well that each situation demands a specific approach.
Therefore it seems interesting to me to focus on some major (that

is, often used) roles attributed to the consultant: technical expert,
counsellor, researcher, coach, advocate and, finally, facilitator. For
obvious reasons I will treat them in pairs.
3.5.1 Technical expert and facilitator

In order to prepare a particular project it is important to determine
clearly the different tasks assigned to the consultant and his client.
The main roles played by the consultant are those of technical expert
and facilitator. The table below shows the different relationships/roles
according to the result the two parties want to achieve. But first it is
necessary to give a brief description of these two completely different
approaches.
As an expert, the consultant adds ‘value’ to the mission. He brings his

knowledge in a particular field of expertise. If the client finds this input
satisfactory and ‘enough’, the role played by the consultant will be very
limited. He will only give advice and guidance, whereas the client will
be the executor. The client will both facilitate and monitor the actions
of the expert. The consultant’s actions will be authoritarian, but not too
much as this could lead to the demoralisation of the client’s staff or, even
worse, it could make the client totally dependent. If, on the contrary,
the expert is not authoritarian enough, the client will be confused and
will not know how to proceed.
Diagnostic Search for Implementation Kind of

solutions relationship
client/consultant
Client + Client + Client + Assistance all

consultant consultant consultant along the change
process
Client + Client + Decision-making

consultant consultant process
Client + Diagnostic
consultant assistance
Consultant Consultant Consultant Outsourcing the

process
Consultant Consultant Classical

assistance model
Consultant Audit/evaluation
Client + Assistance
consultant for future
development
Consultant Solution hunting
Client + Coaching,
consultant training
Consultant Subcontracting
8
In Management Consultancy, A handbook for best practice, ed. by Philip Sadler, Kogan Page
Limited, London 1998, p. 83
Serious problems often arise when ‘experts’ forget to take into account
the human side of their task. When they omit to focus on the problems
those involved have, they will create a climate of resistance to change.
The facilitator is the one who normally does not forget this approach, so some
consultancy specialists refer to them simply as ‘process specialists’. There
is a very clear definition of this way of intervention given by John Milligan
and Paul Barber8: “Here the consultant facilitates the client’s emerging
understanding of their own problems and difficulties and strengthens their
ability to respond creatively and effectively to them”. The relation is based
entirely on collaboration, understanding and a common will to succeed.
Where ‘client + consultant’ is indicated in the table, the part of the

input given by the client is very often simply initial information. This is
certainly the case in the diagnostic approach.
Clients frequently forget that they can do the job on their own. It is therefore
useful to go back to the table of ‘deadly sins’ above in this chapter.
3.5.2 Researcher and counsellor

The theoretical approach of many consultants has been frequently
attacked as being useless. It is a fact that the role of implementing
theoretical ‘ideal’ solutions is not realistic. Nevertheless, studies by
many important consultants – even if they were only based on theories
– are still very much used today. In recent decades, large enterprises
have asked consultants to construct new views for the future so, based
upon this abstract approach, together with the consultants they build
a completely new view of business and business development. Thanks
to these rhetoricians, we are now able to work actively in SMEs. This
author-approach is good for the long-term relationship with the
business world as a whole. In the intial stages the consultants will then
collaborate with their clients and take a closer look at the results of
their theory rather than being involved in the process itself.
From this theoretical behaviour, the distance to the role of counsellor

is short. Indeed, the counsellor is person-centred. This is a kind of
tailor-made assistance where the support given by the consultant is
one where the explanation of the ‘how’, ‘what’ and ‘why’ is even more
important than the result itself. The consultant wants the client to do
the job knowing exactly what the consequences of his actions are.
3.5.3 Advocate and coach

A consultant cannot be completely neutral. That is the reason why
his possible role as advocate is also important. In that case he has to
develop, defend and protect his own theories, explaining as clearly as
possible the fundamental reasons for his behaviour and actions.
The advocate is the one who is going to support certain people inside
an organisation. It is of the greatest importance to have consultants
who, based upon specific values, are willing to defend a certain way of
acting throughout with a mind to supporting the client’s staff.
Central to all interventions by consultants is the coach/educator role.

It is clear that a consultant should not just come up with solutions,
but should also explain why a certain solution has been selected over
another one. People have to be educated and coached by experts in the
field. Unfortunately, many consultants are not educators at all, simply
because they do not have the necessary skills or, worse still, because
they are not willing to share their knowledge.
Conclusion
The most important decision here is not necessarily to choose the right
consultant, but to actually make the decision to work with a consultant.
Is this kind of collaboration with a ‘stranger’ really necessary? Does the
company already have the skills in-house? Where are the weaknesses in
knowledge? Can the company find in-house people to do the job, train
them, and hire new people? What is the advantage of getting temporary
‘intellectual’ assistance?
The second element to be considered is how to ensure that the knowledge

transferred from the consultant to the company will be guaranteed
equally by the way of working and the amount of involvement on behalf
of the company’s staff.
Chapter 4: How to choose a consultancy partner 71
Chapter 4: How to choose a consultancy partner

You have a choice, but choices always involve consequences
Kerry Fouché
4.1 Introduction
There are no rules about how to choose a consultancy partner. The
choice is large and the information available is poor, so it is difficult for
most enterprises to make the right choice. Below are some guidelines
to help you make the right decision.
4.1.1 We have already worked with them

The easiest way is to re-contact a consultancy company you have
already worked with. Although this would seem obvious and easy, such
an approach may carry some risks. The table below lists the advantages
and the disadvantages of this approach:
Advantages Disadvantages
• The collaboration with the • The consultants might feel too

consultant will usually be easier comfortable with this and may
since the staff know his way of consider the effort to produce results
working. is minimal, having been chosen by
the client for a second time.
• You have confidence in the
consultant since the results of • Are you sure that this consultancy
the previous mission were OK company has the necessary skills
(otherwise you would not have in-house for the new mission?
chosen them a second time).
• Will you be too dependent?
• There will be a huge time saving
• By doing this there may be a risk
as the consultant has already made
that the price you are going to pay
an analysis of the company and
is not competitive, since you have
learned a lot from his previous
not compared prices on the market.
assignment there.
• The input of new ideas will be
limited as the consultants will
remain the same.
72 Chapter 4: How to choose a consultancy partner
4.1.2 We have heard about them

Most of the managing directors and/or heads of department have both
informal and official contacts they can rely on. It is in these same circles
that they can collect information about consultants. It is very true that
in meetings with people who have similar interests and problems it
is interesting to ask other companies about their experiences with
consultants. It should be mentioned that the reputation of a consultancy
company can be destroyed during such meetings!
4.1.3 Official help can be useful

In many countries, the Ministry of Economic Affairs can help people
looking for sound advice. Although it is not really its job, they often have
accurate information to hand on this topic. Chambers of commerce
and other similar groups can be helpful too.
Lists which include companies able to deliver ISO certificates can also
set you in the right direction in your search for the best choice.
4.1.4 Consultants also inform you

Most consultants produce publicity (mainly leaflets) in which you can
find information about their clients (you can call them), and about the
way in which they proceed. Consultants also organise contact meetings
where you can ask all the questions you might have without feeling
obliged to hire them. Many consultants also speak at lunch meetings.
Try and meet them afterwards as they will be happy to give you all the
information you are looking for.
4.2 The entry phase
4.2.1 What is an entry phase?

The entry phase is the very important stage between the moment a
potential client invites a consultant to meet and the actual signing of
the contract. It is very often an informal chat during which the client
tries to find out if the consultant is really the one he wants to work with.
During this phase the consultant has to convince the potential client of
his aptitudes, his skills, and his uniqueness as this is the time when the
collaboration becomes feasible. It often happens that the client chooses

another consultant, but may come back later for a further assignment if
the impression given by the consultant was good.
Such an approach very often does not exist in public affairs, as public
authorities have to be as objective as possible and therefore they mainly
work with tendering procedures, where human contact is impossible.
Here, the entire entry phase is ‘on paper’: the consultant has to
convince the client by giving as much useful information as possible in
the documents he transmits to the client. In fact, this official approach
is much more complicated for the client, too, since it is he who has to
formulate his needs as accurately as possible.
4.2.2 How to formulate the demand

The demand can be for a unique consultant, but most likely it will be made
to ensure a degree of competition between several selected consultancy
companies. Even if the consultant has been chosen before this stage, it is
necessary for the client to put his demands and needs on paper. Not only
does this make him think about and rethink the situation his company is
in, but he will also be better prepared to analyse the proposal(s) made.
The demands can be written or oral. As regards oral demands, it is clear

that there is a risk that the client may omit certain details, whereas a
written demand is much better analysed and prepared.
Given this information, four types of demand exist:
Number of possible WRITTEN ORAL

suppliers/ways of
examination
1 By mutual agreement By mutual agreement
with written without specifications
specifications (safer) (what is the real mission?)
>1 Tendering procedure Competition without

(competition between written specifications
different companies based (this seems much too
on your specifications) subjective)
4.2.3 What do the parties expect from an entry phase?

The two main players have different expectations, of course, but are
playing the same game. Their input will provoke a reaction. If the
game is well played by both the actors, the result can be a positive
collaboration.
• Economic benefit: both the parties want to make money,
otherwise they would not be playing. The consultant wants to get
the assignment whereas the potential client wants to see how he
can profit from hiring the consultant.
• Listening: it is important that both the actors understand each
other. The consultant has to be sure that he knows the real
problem the client is facing and, in addition, that he has the skills
and the competence to accept the mission. For his part, the client
has to be sure about two things: first, that he has explained his
needs clearly and that they have been understood, and second
that he is willing to explain everything about his company to the
consultant. This means that the entry phase has to establish a
climate of mutual trust.
• Signing a binding contract: both parties should be able to sign
a contract that is clear, explaining all that has to be done, the
inputs from both parties, as well as possible changes during the
assignment.
• Finally, if at this stage they are unable to reach an agreement, they
should not feel they have failed. The consultant should consider
that he has done a good job, and that his reputation is still OK. This
means that he has made it clear to the client why they were unable
to agree on this assignment. The client has to be sure that he made
the right decision by not choosing a particular consultant.
It is essential to keep these four steps in mind: added economic value,

mutual trust, contractual clarity and the right decision.
4.2.4 What are the different steps during the entry phase?
4.2.4.1 Agreeing the brief and its scope
In this phase, both the parties have to listen carefully to what the
other is saying. This is what is called ‘active listening’, and it includes
asking the right questions. The consultant has to make it clear that he
understands the business the client is in. The consultant must have
the capacity to frame the context since the client very often has no
more than a vague understanding of the real problem he is facing. The
consultant must have the capacity to clarify his own ideas and those of
the client. He now needs two main skills: one is as a solution-provider
and the other is being creative. Once in a while he will also need the
capacity to negotiate. (This is usually when the client thinks that the
solution is either too complicated or too expensive for his company.)
4.2.4.2 Mentioning a potential planning draft

In order to indicate to the client how he is going to proceed the consultant
has to conceptualise his intervention so that the client can understand
the different steps envisaged. A clear structure of the mission should
give the client a good feeling. As the famous French phrase states: “Ce
qui se conçoit bien s’énonce clairement”. The consultant has to show the
client what resources he has at his disposal. He also has to explain the
way he understands project management.
4.2.4.3 Preparing and presenting the proposal

It seems easy enough to prepare a proposal. However, more often than
not the client reading the document is incapable of imagining the time
and energy spent on this. The consultant has to explain clearly to the
client that he has understood the problem needing to be solved. On top
of that, he has to show how he will proceed step by step while, at the
same time, being careful not to reveal all of his tools, as the client could
be tempted to try to make the changes himself.
The second stage is to estimate the time allocated to every step in

implementing the solution, and to put a price on this.
Finally, the proposal should be written so that the same document can
be used as a contract respecting the legal aspects. In point 4.2.4.4, we
will look at the various elements a proposal should contain.
The presentation of the proposal must also be unique and adapted to

the client’s needs and expectations. The consultant should have the
necessary presentation skills, and be a specialist in oral and written
(PowerPoint) presentations (see 4.2.4.5 below).
4.2.4.4 The content of a good proposal

As mentioned previously, the proposal must contain every element
necessary to convince the client that the company submitting it has
the best offer. In the introduction it is necessary to specify the way the
client explains his problem, and the way the consultant understands it.
The use of understandable words is law. It makes no sense to write a
proposal the client cannot understand as this will make him suspicious.
Consequently, it can be very useful to have the proposal read by
someone outside the business.
Explain to the client again that you understand the problem very well,
and repeat how you would like to proceed. This document is not a
scientific paper (even if the way you would like to explain some things
to the client is). It is merely a ‘selling’ document.
At the same time, as mentioned above, the document has to be legally binding.
Do not forget that the client will submit this document to his lawyer or to his
legal department. By mentioning that this document will be used afterwards
as the contract to be signed, you will help him to save time and money.
You should subdivide the document into small chapters so that the
client (i.e. the reader) can submit different chapters to different people
– not everyone is interested in the proposal in its entirety.
Therefore, I suggest the following sub-chapters:

• Description of the problem (see above). It is simply not good
enough to show that you have understood the problem: you
must focus on the client’s strategy, his methods and his financial
situation. You have to show that you can behave as if you yourself
were the client.
• You know that one of the major problems about securing an
assignment (certainly the large, important, expensive ones) is
to be able to convince the client that what you propose is not
expensive. Therefore, where possible, show him the advantages of
working with you. Demonstrate the short-, medium- and long-
term benefits of the assignment. The well-known ‘win-win’ is also
a kind of unwritten rule here.
• Never use unfamiliar words and complicated sentences. This
applies equally to speaking about methods and approaches. Write
a chapter on this explaining exactly what it is all about in the
client’s specific case.
• If possible at this stage of the approach, a sub-chapter could
focus on the direct results expected from your methodology.
As mentioned, this should be in a separate chapter since not
everybody will feel directly concerned by it.
• In another sub-chapter the consultant should explain clearly (with
figures) what is expected from these approaches.
• An entire chapter should be written on the consultancy company’s
experience, not only in the field of this mission (although this
should, of course, be the main part of this chapter), but also in
other fields so that the client can understand your broad field of
experience. Examples can be given and, if possible, a list of clients.
I have written “if possible” intentionally because many clients do
not want their names to be mentioned.
• Besides the experience of the consultancy company as a whole,
the CVs of the people the consultant wants to use in the mission
should also be inserted. This can give a positive, personal touch, as
well as indicating the value and experience of each person involved
in the programme.
• The final chapter concerns the legal and financial parts, and
should include all the standard terms and conditions. It is not
always clear in the client’s mind what the professional fees cover,
and what exactly is meant by expenses to be supported separately
by the client, such as travel fees, hotel costs, staff training, special
IT programs, etc.).
Billing arrangements are also part of this chapter: when and how
much a client will have to pay. Will there be any advanced payments?
Is the client supposed to pay in instalments according to the duration
of the assignment? What happens if the client does not pay on time?
The standard terms are, as the word indicates, ‘standard’. They do not
change from one contract to another.
4.2.4.5 What has to be taken into account when preparing the

presentation?
First of all, you should try to establish exactly what the client expects.
Does he want to invite other members of the staff (how many, at what
level)? Does he want you to make a formal presentation, or is he expecting
a discussion on a paper sent to him before this decisive meeting? How
much time does he want to spent on this? Is he himself interested, or is
it more for middle management, or even the shareholders?
If a lot of people attend the meeting it is always interesting and useful

to know what they are really interested in so that you can focus your
presentation accordingly. You should also try to find out how many
competitors have been invited to do the same and, if possible, who they
are. What is crucial to the client?
Once all this has been established it is time to concentrate on the

presentation. Try to keep your eye on the clock – never spend more
time than has been allocated. Accept questions, and be aware that you
may need the assistance of some of your in-house specialists. Make
sure they are available at the appropriate time.
The presentation must be client-centred: the time you need to present

your own business is time wasted as far as they are concerned, so keep
it short. After all, if they really want to they can read all about it in your
written document.
You should also give the person doing the presentation some flexibility
so that he/she can adapt the presentation according to the client’s
reactions to it. If several people are involved, make sure they all know
exactly what to say and when to say it. It is important to have a discussion
with the client. This shows several things: you are interested in what he
is asking, you are able to answer without prior preparation, and you can
demonstrate how you are going to work with him in the future.
Use some humour as you do not know how many similar presentations
he has already endured (perhaps on the same day). Be careful not to be
boring.
4.3 Conclusion
After all these phases it is up to the client to decide with whom he is
going to work. It is clear that this procedure can take a long time, and
very often this time is not available since the problem is an urgent one
for the company.
Nevertheless, it should be said that the client can only choose to

collaborate with a consultant he trusts, with one he feels able to
collaborate with. All the other arguments, whether financial or human,
cannot be taken into account. Without trust it will be impossible to
achieve good results since the client will have to give full (i.e. sometimes
secret) information if the mission is to succeed.
Chapter 5: Working with consultants 81
Chapter 5: Working with consultants

Major transformations are often associated with one highly visible individual...
This is a very dangerous belief.
John P. Kotter
Once the mission has been clarified between the two parties the real
work can start. In the beginning, the client may wonder why there are a
lot of junior consultants working on the job. Not to worry, this is only a
matter of collecting data. Once this has been done the seniors will start
their work by analysing the facts gathered and making a diagnosis.
Finally, the client will be invited to take part in the so-called ‘strategic
meeting’ where the method of implementation will be decided. In some
cases the client may prefer to assign the task of implementation to a
second consultancy company. In my opinion this is a mistake because,
if a problem occurs, the second firm does not know enough about the
client’s company to react correctly, while the first one, which carried
out the entire analysis, will probably know how best to act and thus to
avoid further dramas. Another problem exists on the consultancy side:
many companies do not implement their own solutions, which begs
the question: do they mistrust their own plans?
5.1 Data collection and diagnosis
The name of this sub-chapter is self-explanatory. First of all, as much

as possible information is gathered before an analysis of the problem(s)
and the solutions can be done.
5.1.1 Data collection

The data the juniors collect come from different sources can be split up
into two parts: external and internal data. Most of the internal data are
easy to collect as they are available in every well-managed company.
The problems occur when the management style of the company is the
main problem, and if a lot of this information is not available. But this
is a very special case.
82 Chapter 5: Working with consultants
Internal data includes:

• The company accounts. Together with the balance sheets of the
two or three previous years, the accounts can quickly provide
information on the company’s evolution. For example: shrinking
turnover, gross margin changing every year, salary costs too high
as a percentage of the TO, and so on.
• Business plans and budgets. Many companies do not use these
important tools, or simply draw them up but never compare
them with the actual budgeted figures during the year. Worse
still, some firms adapt plans in the middle of the year because
the deviation from the original plans and budgets is too high. It is
worthwhile trying to find out why people do this – is it because of
the shareholders, is it a management tactic, etc.?
• Technical and sales records. These two items can reveal a lot about
the company. Many sales managers only look at the number of new
clients, at the evolution of the general turnover, or at the figures from
important established clients. They often forget that it is much more
expensive (up to 15 times) to get a new client than to keep an old
one. Take a close look at this and never forget that every client can
become an advocate for the company. The advocates are those who
will always buy into the company and defend and recommend it.
Technical records usually exist, but are they updated regularly? Are they
only used internally or also as a tool for innovation and marketing?
• Personnel records. In many countries of the world it is a legal
obligation to keep records on the staff. These files are often little
more than a list of staff members with all their data. Indeed, it
is important for the consultant to look at staff turnover. Do
they change often? Do they stay in the company long? Are there
more female workers than male? Why? What are the politics
surrounding salaries? Does the human resources department use
all possible tools for internal career opportunities?
• Records on key suppliers. It is important to understand how a
company behaves in the business world. Does the management
know exactly where the suppliers stand as regards turnover, or how
profitable they are? Does the company have back-ups for all the main
suppliers? What do the suppliers think about the consultant’s client?
As regards the external data, the consultant will have more to do here
since a lot of information has to be found in different fields around the
client’s company.
• Who are the major shareholders? Where do they come from? Are
they active inside the company? Are they only interested in direct,
short-term profits, or are they interested in long-term growth?
• If it is a public company, what do the financial markets think about
the results?
• What do the company’s bankers think? Are they confident? Do they
trust the management currently in place? How is the company’s
financial position?
• What is the financial status of the main suppliers and customers?
What is their position on the market? Is any one of them interested
in buying the company or, on the contrary, is the company
interested in buying one or more of the suppliers, clients or even
competitors?
• How is the market in which the company is working defined? How
is the market evolving, and how is the evolution of the company’s
share here progressing?
• How does pricing policy compare with others in the same
market? How does the guarantee policy compare to others? How
is the company’s geographical position? And how is its historical
evolution?
5.1.2 How to collect data

Currently, four ways of collecting data are in common use and well
known to all consultants, but they all have their pros and cons:
• Reading reports and documents: most of the documents
and reports will give accurate information and therefore
be very useful. The negative point here is the possible lack
of objectivity since specific people have written all these
documents for a certain audience. The target will find in
the document what he/she wants to read, and the authors
may overlook some facts, either because they do not seem
important to the writers themselves, or because they want
to hide certain mistakes which they or members of their
department have made.
• Interviews: this approach is very time consuming and, of course,

all but objective. Nevertheless, it is very interesting to proceed
in this way since people will give their own opinions, their own
viewpoint as a worker, as a manager, as a supplier, without thinking
about the information they give. In large companies this task is
almost impossible to manage effectively.
• Questionnaires: where time matters, this method is more efficient.
However, it carries a significant risk: who can guarantee that
everyone interprets the questions in the same way? Who can phrase
the questions in a simple, understandable, comprehensive way?
Can the co-workers each have the same understanding of every
word? Do they have the same knowledge, the same approach?
• Observation: this very interesting technique has two negative
factors. The first one is that the consultant (i.e. the observer) will only
notice what he is looking for. On the other hand, it is almost certain
that the people being observed will behave uncharacteristically. Do
not forget that many people do not like to be watched while they
are working. People often say “don’t look at my hands”.
Once all this information has been collected the important task starts:
what do we have and what is still missing? After a second round of
collecting data it is the turn of the analysts to start working.
It is clear at this stage that the problems facing the client are in the
information. It should also be clear by now how far the client is willing
to go: is he really ready to change anything in the company?
Many new problems could appear during this phase: different divisions
are working in opposite directions, the results the sales team is striving
for are not in line with the management expectations due to incorrect
or partial information, and so on.
It is obvious that the client’s problem cannot be solved simply by giving

one solution as there is usually more than one reason behind a problem.
Therefore, a couple of precautions should be taken:
• Never jump to conclusions. It is better to take time out to think,
and to try to get a global view of the client’s company. Never feel
involved in the problem the client faces as, by so doing, your

objectivity will disappear, too.
• It is not what you actually see that is the reality: it is a collection
of different elements that you have to analyse. Do not proceed
too quickly, and look in all directions, or at least in as many as
possible.
• Note: it is not the client who will tell you what the real problem is
since he could be part of it himself. If he knew what the problem
was he would have found a solution, or at least asked for an
immediate solution rather than giving you (i.e. paying you) the
time to find this out.
Several techniques of analysis and diagnosis exist. You can find

many of them in the final chapter of the book. But before starting
to work with those management tools, you should keep in mind the
following:
• Often, what you see is not the real cause of the problem – it is
merely a symptom. You have to dig much deeper to find out the
real reasons. Although this is much more difficult, it is exactly
what the client is paying you for.
• As already mentioned, it would be something of a miracle if there
was only one reason for the problem you want to solve: so look
carefully for all the reasons before you start trying to solve the
problem.
• Often the management is a major reason behind a problem:
bad management is very difficult to change simply because
such managers will not accept that they themselves are the real
problem.
• Do not forget that the various causes are often linked to each
other. Think about it while you are analysing.
5.1.3 Conclusion
From the above it may appear easy to work as a consultant, but this
phase of analysis and data collection is essential. When this work has
been done correctly and in depth, it will make things much easier later
because it will provide a solid base on which to work.
5.2 Present the advice and the solutions
Once the first step, then the work done on the analysis has been
completed, it is time to present your advice and solutions to the client.
How to proceed here is explained in this sub-chapter.
5.2.1 Your own behaviour

What have you got to do at this stage? Every job will be different, but
you can take the same starting point each time by asking yourself the
‘whys and wherefores’.
You have to refer back to your mission to make sure you are moving in
the right direction. If you do not do this you will have problems later
on. You will be surprised by the mass of information you and your staff
have collected, and it will be difficult for you to focus on the task you
have been hired for, so here is a shortlist of questions to ask yourself:
• What is the client asking for? What can I do to help him with this?
• What are the problems according to the client? Are they the same
for me?
• Has the situation changed since the assignment was signed? Are
there any new situations for the company either internally or
externally? For example: a change in oil prices, new management
staff hired, etc.
• Is it possible to make a list of the problems in order of importance?
The most important one has to be treated as first. Can the client
live with this approach?
• Can I show the client exactly what profit he will make if he agrees
to implement the changes I propose?
• How much time will we need to make the changes under normal
circumstances? Does the company have this time?
5.2.2 What about the client?

Once this has been done you should see whether it is possible to involve
the client – where, when, how long, and who. This will also explain the
role you are going to play as a consultant.
If the client wants you to do the job alone, this is possible, although it
is not very interesting for him since the experience you could transmit
to his staff will be missing, and the chances of success will be less if he
is unwilling to collaborate.
There are three options:

• You give him the solution, show him how to proceed, and he does
the job on his own. In that case, you are just an external expert.
• You can do the job without his help. This is never the best solution.
• You can collaborate and share the tasks with the client. This has
several advantages. The first is that you can see if everything goes
as you have predicted. The second one is the transmission of
knowledge to the client. And last but not least, it will indicate to
the client that you are not afraid to implement your own solutions.
This will increase the trust he has in your company.
Before explaining to the client what it is all about (i.e. what problems he
is actually facing and what options you can offer him as a solution) you
should take into account the specifics of his organisation.
You should explain to the client that several options exist, that each
has its advantages and disadvantages, and that each also has a different
price and carries a different risk. Therefore, if possible, together you
should list the priorities:
• What are the most urgent needs?
• What would the client like to implement in the longer term?
• What skills and competences are available in-house? What, who
and how much can we train?
• How many costs can the company afford (short and long term)?
• Is any resistance to change apparent at this stage?
• What financial results would the client expect after the
implementation?
When you start writing the presentation of the proposal you are obliged
to keep an eye on the following points:
• Every proposal you make will involve several steps. Is there
consistency in your approach? Can all these steps exist together?
Is there a weak point in my approach?
• Can the company afford the approach? This means several things:
is there sufficient competence in-house and, if not, can people be
trained up in time? Can the company afford the costs (effort and
money)? Is there enough time left to implement the proposed
solution?
• Is the proposed solution a long-term one? Is the solution
strategically OK? Is the solution a long-lasting one?
It could also be useful to discuss the different options you propose with
members of the client’s staff. If you decide to do this so you should
provide every person at the meeting with as much information as
possible so that they can give their opinion based upon facts. It is much
more than a brainstorming session because it is about real life. The
actors – the client’s staff – can give their opinions and perhaps come
up with new input, new ideas which, if interesting, you can implement
in your final proposal.
It is very important to organise this kind of meeting when resistance

to change seems to be an important issue. Please note: if the proposals
made by the staff members are not used you should explain the
reasons why.
5.2.3 The report and proposal presentation

It is not easy to write a good, professional report, especially not the
final one which will contain all your recommendations. If you feel
uncomfortable with this, please ask somebody else either to give
you some training or at least some tips and advice, and to reread
your draft.
The text you write has to be read by your client – do not forget
that. Very often this report is not really necessary since the client
usually prefers a face-to-face verbal account so that he can respond
immediately with questions and receive answers. But if you do have

to write a report, keep in mind all those who are supposed to read it,
and follow some basic rules:
• A logical structure for the client. Think about what he expects
from you, and this idea will guide you throughout:
1. A short introduction in which you should focus on the
recommendations you are going to develop.
2. Explain (in brief ) the purpose of your mission. In fact, this is
simply a reminder, as not everybody may know why you have
been hired.
3. Give a short overview of all the tasks already accomplished by
you and your staff. Show all the data you have been collecting
and how they have been treated.
4. Indicate the problems you have identified. You should be very
careful here – some people might feel uncomfortable with
this section as they could be the reason for, or origin of, the
problem.
5. The section on recommendations must be clear to everyone:
not only do you have to show what you intend to do, but also
what the results of your actions will be.
6. Give a detailed list of everything that is going to happen so that
people can react at this stage, and are less likely to resist later.
7. Include as many annexes as possible. These provide the client
with information and show, once again, the tremendous amount
of work you have done up to now.
8. Leave enough space for the readers to make notes.
• While writing you should take into account that you are not writing
for experts or other consultants. You should use a language people
can understand – be clear and concise and avoid complicated
terminology. You should also try to adapt your vocabulary to
that used inside the organisation. Keep in mind the culture of the
people who are going to read this text.
• You should use some (but not too much) graphic material. It is
unnecessary to include complicated graphs that nobody can
understand: keep it simple and useful.
If you have to make an oral presentation then refer to 4.2.4.5.

5.2.4 Conclusion
Do not forget that you are going to work with the client, so please be
correct and positive in all you write and say. Act as if you yourself were
the client and you will handle things correctly.
5.3 Implementation
5.3.1 What exactly is implementation?

This is the stage where the consultant installs his recommendations.
This is where the reality begins, and where the consultant can show
that his ideas were the right ones. And it is also where resistance to
change occurs.
After all the theory, because that is what it has been until now, the
human part starts: the collaborators representing the client and the
consultant will have to work together to make the mission a success.
Where the human factor kicks in problems can occur.
5.3.2 Help with implementation

As stated above, problems often occur as a result of the human factor.
It is almost impossible to foresee all the problems before starting
the implementation. Therefore, it is useful to keep in mind some
‘techniques’ that might help you:
• Try to get the client on your side as soon as possible and get a
commitment from him. You can do so in several ways, the easiest
of which are as follows:
1. Organise communication. With the help of the top management,
set up a communication strategy inside the company. This is not
something you can simply invent: it has to be planned before
the start.
2. Try to meet the people as much as is necessary by organising
workshops where they can talk about the problems, and
where you can reinforce how and why you are proceeding
in the way you are. Do not forget that at this stage you are
the one who is leading the game; if a problem occurs you
have to be there to help the staff to solve it. You have to
be the facilitator, the one who leads the others through the
storm of change. You must always be available and willing
to listen.
3. Sometimes you can practise benchmarking by showing people
similar projects, similar achievements in similar businesses.
That will give them confidence. People only believe it if they
have seen it.
4. You have got to focus on the values. Very often many staff
members are unaware of an organisation’s values. If this is the
case you should explain the values, and certainly when they are
being submitted to change as a consequence of your mission.
• Every step should be measurable. Be sure that quality and
accountability are apparent so that everyone can follow what is
going on step by step. Here, too, you might need some help. Here
are some hints:
1. Divide the different steps of your implementation into two: the
so-called ‘projects’, where you have a project leader, a person in
charge of the project and responsible for it, and the so-called
‘just do it’, things the staff have to do without prior preparation.
Encourage this kind of initiative and people will feel free to act.
2. Give everybody a role. An actor running around on stage
without knowing what he is supposed to be doing is lost. It is
exactly the same in this implementation process: everybody
should know just what they have to do. The processes, and the
roles, must be clearly defined.
3. Wherever possible (and sometimes the unforeseen does
happen), respect the budgets, the timescale, and the quality
of what you are doing. This gives a feeling of security to those
around you.
4. Do not let people organise the teams themselves. If they do,
change the teams once in a while. This can create fresh energy,
increase competition, and thus makes things go faster.
5. Show how you measure the different steps. Make this
measurement tool visible for everybody, somewhere it will
attract the attention of the staff.
• You are working with people so try not to work too strictly. Accept
some changes, be flexible. As Nick Obolensky states: “When
implementation efforts do not go according to plan (although most
will) you have three basic ways to keep things moving forward: do
nothing; change how you do it; or change what you want.”
But what exactly does this mean?

Do nothing: many problems have the strange habit of sorting
themselves out. Everyone knows that. When a problem occurs it
can be solved even before you have had time to concentrate on a
solution.
Change how you do it: for example, if a delay is unacceptable you
can inject more money to make things go faster.
Change what you want: sometimes it is clear at a certain stage
that you will never obtain the desired results. In that case, you
can lower your expectations, because going further would be a
mistake at that moment. Wait and see if you can come back with
another solution later.
• All the required skills and competences will not necessarily
be present in the client’s company. Therefore, it is up to you to
encourage learning. How? Once again, there are various solutions,
among which team learning is the most common. It is here that
people learn from one another, exchange experiences, and
grow together. You could also train people for upcoming tasks.
However, this so-called ‘just-in-time training’ is dangerous since
you never know if the people you are going to train will make it in
time. Accept failures, and learn from them: never blame anybody
if he/she makes a mistake. On the contrary, take this opportunity
to explain what happened and why, so that in the future people
will avoid making the same mistake again.
Conclusion
The collaboration between the two parties involved, namely the

consultant and the client, will almost always create a tense atmosphere,
for various reasons. First of all there is the fear, the fear of working with
another unknown party, the fear of giving access to a lot of confidential
material, the fear of not being able to work on a par with the consultant,
the fear of a financial disaster, the fear of not getting positive results,
and so on. There is also this strange feeling of being unable to solve
a problem without external help, the difficult situation in which the
client finds himself, which makes him feel ill at ease.
The solution for all this is quite simple: the two parties should really trust
one another, should help one another whenever possible, and should
never conceal any information. They must both accept that without
each other there is no relationship. Whenever a situation occurs where
one of these elements is under threat they should both promise to take
the time required to talk it over.
From the consultant’s point of view it seems important to me that he

can explain correctly to his clients just how things work. For this reason
I felt it was a good idea to add a second part to this book presenting,
on the one hand, some gurus of management consultancy and, on
the other, some of the tools. The main purpose of this second part is
twofold: to enable the reader to recognise the important names in this
business, and to present a short overview of several commonly used
tools, most of which have been placed in the historical context in which
they were created.
Chapter 6: Change 95
Chapter 6: Change
But a man is not often found sufficiently circumspect to know how to accommodate himself
to the change, both because he cannot deviate from what nature inclines him to, and also
because, having always prospered by acting in one way, he cannot be persuaded that it is
well to leave it; and, therefore, the cautious man, when it is time to turn adventurous, does not
know how to do it, hence he is ruined; but had he changed his conduct with the times fortune
would not have changed.
Niccolo Machiavelli, The Prince, Chapter 25
Change is one of the most interesting elements of consultancy:

everybody knows that when consultants are hired a change will come;
everybody wants a change to take place, since consultants are usually
only hired because the situation is serious or even critical, but many
people do not accept the change as such.
This chapter has been split into two sub-chapters, as regards

management consultancy.
The first one, ‘Fear of change’, concerns the behaviour of those involved
in change programmes. It attempts to give an overview of all different
kinds of attitudes people have when change – mainly imposed by top
management – is on the way. Indeed, the role of the consultant is often
very important since he/she is considered to be – and usually is – the
source of the change to be implemented.
The second one analyses the different steps the consultant and/or
manager should follow while implementing (you can also call it leading)
a change process.
96 Chapter 6: Change
6.1. Fear of change
As previously mentioned, managers and consultants, too, often speak

about resistance to change. The real reason for such resistance lies in
fear. People are always afraid of the unknown, so it is important to give
information about what is going to change, what is going to be done,
and what exactly will happen to the positions and responsibilities of
each staff member concerned by the envisaged process of change.
There are acceptable – or even better – ‘understandable’ reasons for this
negative behaviour, some of which are based on tradition, expertise,
experience, habit, social climate, and so on. The lower the intellectual
background of the people concerned, the higher the resistance will be.
Good communication is vital here. The better the change process is
explained, the higher the chances of acceptance are.
When we look back at Chapter 1 we can understand why some bullet

points under the heading ‘Who am I?’ are important. It is here that good
consultants can show just how well they are able to convince people. The
reference to ‘fearlessness’ is also applicable in of the situation where people
are resisting change. Since they are afraid of what is going to happen,
they will behave as enemies. It is a well-known fact that when a group of
people are afraid they become aggressive. The consultant, or the person
taking the lead in the change process, should be strong enough to explain
to them in clear and simple words that there is no need to be scared.
Looking further down the list we see ‘rapid framing’. It is important to

understand immediately what exactly members of the staff are afraid
of. By rapidly understanding their deeper concerns it will be much
easier to convince them of their previous errors.
Other important steps in this dialogue include the qualities of active

listening and comprehensive questioning. However, as in many other
situations, the most important skill is the ability to use ‘clear language’.
By using words people can understand, by giving examples they know,
and by showing the benefits they will get, the resistance will rapidly
change into acceptance during the first stage and, if the communication
process goes on long enough, will become a kind of enthusiasm.
There are many techniques available to help people collaborate in the

change process. As soon as staff are convinced that if they do not accept
the change process the situation will soon become worse, they can be
the best collaborators imaginable. It is the role of the leader to make
them follow the same direction; it is he/she who will convince them of
the importance of a common effort.
It should not be forgotten that an important change is never made simply

for fun: deep reasons move the management towards such decisions.
The commonly accepted idea that change has to be implemented under
the direction of a ‘stranger’, someone coming from outside the company,
is often a significant mistake. Normally, somebody working inside the
company will have a deeper insight into the culture and habits within
the company. He/She is a part of it and, as such, will have a greater
chance of succeeding if they have been loyal to the company; even more
so if, up to the start of the change process, he or she has maintained a
loyal attitude towards both the company and the personnel.
It is very important to know how to communicate throughout the

process because it takes a very long time before a change can be
implemented completely, certainly in the minds of the people, and
before the new situation will become part of the company culture.
6.2 Different steps in an important change process
Before discussing this it is necessary to look at the possible driving

forces behind potential major changes within an organisation. We will
also refer to the ‘tools’ part of the book, in particular PEST analysis,
SWOT analysis, the Thiem Tom 10.5 S framework, Minzberg, etc.
because there you will find useful indicators as to when it is time to
think about introducing a major change in a company/organisation.
It might be useful for those who are really interested in this topic to
look at the section ‘Eight major steps to change’, by John P. Kotter, in the
chapter on tools at the end of the book.
It is now time to look at the different steps involved in the change

process itself. We do not need to reconsider the reasons for change as
they are easy to identify in the graph above.
There are five steps in total: 1. Find the people who will support the
change; 2. Develop a coherent strategy and show it to those involved;
3. Work on the basis; 4. Show immediate gains; and 5. Make the changes
deeper and more productive by changing the culture.
= SUCCESS
R E S P E C T F O R C U LT U R E A L L A L O N G
+ FIXED GAINS
+ SHORT-TERM GAINS
BROADER SOLID BASIS
COMMUNICATION
VISION + STRATEGY
SOLID GROUP (= HAPPY FEW)

1. Build a solid group

Good results can never be achieved in a change process alone. It is a
question of collaboration, of so-called ‘team-spirit’. Therefore, it is
absolutely essential to try to establish as broad a platform as possible of
collaborators capable of building a solid group. These people will be the
basis for the change programme. They will act like a kind of concrete
which solidifies the basements of the building you are going to change. If
possible, this group should comprise people coming from different levels
and departments within the company, since it is obvious that the broader
the approach is, the better the change will be explained and accepted.
This new entity should be powerful enough to make things happen.
2. Develop a vision and a strategy

A vision is nothing on its own. Therefore it is necessary to develop a
vision that will help the change process to follow the correct paths, and
to move in the desired direction. In support of this vision, strategies
should be developed that will help it to achieve its final goal. These
strategies should be accepted by as many people as possible so that the
efforts required to reach this ‘intermediate’ objective are acceptable by
those involved in the change process.
2.1 Communicate around this

Without communication about these moves, the vision, and the different
strategies, all these things will fail, without exception. People need to be
informed and to know what it is all about. As soon as the staff are informed
about the reasons for change, and what this involves, they have the
impression (which is correct) that all this has been taught over and over
again. Without adequate communication, people have the impression that
all is simple improvisation, which is the worst thing that could happen.
It is not only important to give information about the change process,

but also necessary to inform about the situation and the steps already
carried out. Leading people very often forget that they know what
is happening (since it is their role to be involved), but that other co-
workers may only be aware of what is happening in a small part of the
company, perhaps a separate department, and thus they need to be
updated about everything that is happening.
The more people know, the better they feel, and the more likely they are
to support the process of change.
3. Broaden that solid basis

One of the major problems in the change process is the lack of decision-
making and authority. It is absolutely essential to remove all possible
obstacles as quickly as possible. This will have two major effects: first,
people see that the leader of the project has enough power (read
‘authority’) to take immediate decisions. And secondly, of course: the
fewer obstacles you have the faster the change will succeed. Here we
can return to the Thiem-Tom 10.5 S framework (see tools). A close
look reveals that systems and structures play an important role in how
a company functions. Therefore, it is essential to adapt the structures
and systems that could undermine the change.
When change is necessary, it is also normal to adapt habits and

traditions. Innovation should not be instigated simply for the purpose
of innovating. When a company has opted for a change-model, that
same company (in particular the older staff members) should also
accept that non-traditional ideas will arise, new kinds of activities will
be created, and new actions must be tolerated. It will even be necessary
to take some risks, not as a system, but as a tool for encouraging people
to go beyond their own possibilities.
The only danger in this ‘risk-acceptance situation’ is that failure may

often occur, which could have a negative impact on the moral of those
people involved in the change process.
4. Short-term gains make you succeed

People like to win, and hate to fail. So if they can win very often,
by succeeding in small intermediate wins, they will be even more
enthusiastic and better adapted to the change process. Once again,
there is a similar approach to the so-called ‘superordinate goals’ in the
above-mentioned Thiem-Tom10.5 S framework.
By dividing the process of change into different actions, it is possible to

determine how many times a victory will be ‘celebrated’. Nevertheless,
it must never be forgotten that each minor victory is only a small step
towards the final achievement. So, referring back to point 2.2, not only
is it important to communicate all the small wins, but it must be done
with enthusiasm.
You also have another major trump card to play in this respect: you
can identify the people involved in the process by putting names to all
winning situations, whether small or large, and by so doing can make
alliances among the staff.
5.1 Deeper changes based on fixed gains can help you

Having analysed the gains made by various small wins, it is important to
enhance their importance. By doing this, and by changing the systems
and structures via various well-controlled steps, it will be possible to
increase the visibility of what has been done, and what remains to be
done. All small issues which do not comply with the direction needed
to realise the vision (be they parts of structures, systems, habits, etc.)
have to be changed, and first and foremost the staff involved in the
change process have to be convinced of the importance of so doing.
It is almost impossible to find personnel from inside the company who

will have the necessary skills to fulfil this dramatic and complicated
change programme. People must be trained in such skills, so companies
must hire them, support them, and help them develop the necessary
skills internally.
The process of change is not a short-term, rapidly fixed affair.

Consequently, once in a while it is necessary to revitalise the entire
approach. This has already been done, to a certain extent, by installing
the short-term-wins programme. But these revitalisation effects can
be further improved by launching new projects on a regular basis, by
introducing new themes in the approach, and perhaps more interesting,
by changing the people in charge of change. New faces give new power
and new energy.
5.2 And the culture?

It is virtually impossible to change the culture of a country, a nation, or
a company. The best that can be hoped for is a slight adaptation to new
circumstances. It is not necessary to actually change the culture, but
it is imperative to change the habits of the people, which is something
completely different of course.
What can be of assistance here, for instance, is changing the behaviour

towards the clients, which is not the same as having a quality control
system to live by. During a change programme it is important to make
people responsible for that quality control – as soon as they are part
of this control, they will recognise their responsibilities and produce a
better final product for the customer. And that is what it is all about.
And it is not only the workers who are responsible for the so-called
culture – the leaders and managers are also partly in charge of this. It
is extremely important to take a close look at the competences of the
company’s management, and to ask the question: does the company
have born leaders? This all seems quite easy on paper, but several risks
and challenges will subsist. The following interesting questions should
also be taken into consideration: How can you ensure the succession
of the company’s current leader? How can new leaders be ‘grown’
within the existing organisation? How can the competencies of young
potentials be nurtured? How can an interesting link be made between
organisational change and new attitudes?
Although it is somewhat unusual to end a chapter with a question

mark, I think this is the correct thing to do for change, because it is
precisely such persistent questioning which will help you to bring
about successfully whatever changes you want to implement.
Chapter 7: K 105
Chapter 7: K
“If you have knowledge, let others light their candles at it.”
Margaret Fuller (1810-1850)
“Knowledge is power.”
Sir Francis Bacon (1561-1626)
“The only good is knowledge, the only evil is ignorance.”

Socrates (469BC - 399BC)
As you can see, there are numerous interesting quotations about

knowledge. This chapter is all about the ‘K’ in management consultancy.
As I have already mentioned, the transfer of knowledge and the ability
to share that knowledge are the basic qualities of a good consultant.
The person who keeps his/her wisdom for him- or herself, and who
does not share is an egoistic outdated type of business person; the one
who shares and, above all, wants to share is the person who will need
to improve his/her own knowledge all the time – in a lifelong learning
cycle.
It is quite difficult to find a correct definition of knowledge. Here is

just one of many, found on the web at http://www.yourdictionary.com/
ahd/k/k0094000.html
1. The state or fact of knowing;

2. Familiarity, awareness, or understanding gained through
experience or study;
3. The sum or range of what has been perceived, discovered, or
learned;
4. Learning; erudition: teachers of great knowledge;
5. Specific information about something.
This kind of approach has the advantage of offering you a choice of

entries. Let us take a closer look at them.
The first proposal, and the most common one, is simply an observation:
106 Chapter 7: K
the fact of knowing. This is an approach often found in dictionaries

covering different languages; I do not like it at all as the definition
simply repeats what is in the basic approach of the word. The definition
neither brings any new facts, nor helps us to understand this difficult
concept.
The second suggestion brings us much closer to the work done
by consultants, which is based on understanding gained through
experience or study. This assumes correctly that knowledge cannot
be gained without effort. Experience is also based on ‘having done
something’, in the same way as study implies intellectual involvement.
From the third definition we can see that this is about much more than
simple familiarity – it is about the sum of everything gained in the past,
and is much more of an encyclopaedic approach, whereby things have
been structured, linked together, and systemised. And this is precisely
what the consult should be able to do: revisit all his or her previous
experiences and be able to carry out a rapid framing procedure (see
page 1, Chapter 1).
The fourth definition – teachers of great knowledge – is another

approach the consultant should take into consideration. He or she
should not think that they know more than their clients: they must
respect them, treat them as equals, and try to get to know more about
the subject than the client himself.
The last definition is clear: mainly as a result of experience and study,

the consultant tends to know more about specific cases. In many cases,
the consultant should be ‘the expert’ in the field in which he or she is
working, and thus able to give clear and comprehensible explanations
designed to help solve a client’s problem.
From the above it should be clear that, for the most part, I insist on
two points: gain experience (and knowledge at the same time) and be
willing to share this with others.
In order to be able to set up a system where, on the one hand there are
people who share their knowledge, their expertise and, on the other
Chapter 7: K 107
hand, there are people who are curious to learn and happy to be taught,
the basic principle of respect must be instigated. As long as we do not
respect others as being equal to ourselves, we will have a problem either
of inferiority or of superiority.
If we translate this into a normally company organisation it is easy to

understand that we cannot live in, or develop, a company on our own:
we need the input, the effort, the willingness to invest time and energy
on behalf of all the staff. On a larger scale, the same reasoning applies
to cities, countries, etc.
High
Professional know-how
The professional The leader

Low
The clerical staff The manager
Low High
Managerial know-how
Source of graph: K E Sveiby(1992), “The know-how company: strategy formulation in knowledge-
intensive industries”
108 Chapter 7: K
By studying the balance of knowledge diagram, it is possible to see the

differences made by knowledge in the different categories of staff.
In the lower left quadrant, there are the ‘basic people’, who make the
business run without giving the impression to others that they are
valuable, even necessary – but can you imagine a company without
those devoted collaborators? They make life inside the company easier
to bear, make things operate faster, and make company life more human.
The reason why many people do not appreciated them, unfortunately,
is simple: they studied less and are not billable.
In this diagram there may be a new way of looking at those organisations

that we see around us without understanding their hierarchical
structure: just above the clerical staff we see the experts, the real
professionals, those who make the company they work for so exclusive,
so exceptional. But why are they not in the upper-right quadrant? There
are two simple reasons for this: first, they are not usually interested
at all in playing the role of a leader, where they have to be attentive,
supportive, comprehensible, sociable ...; and secondly, because most of
the time they do not have the skills of all what preceded.
On the right side of the graph we also find two parts which appear to
confuse certain staff members: what is the difference between a manager
and a leader? I say that the difference can be seen and understood by
observing people playing those roles. The manager is the one who
knows exactly what everything is about, who knows exactly how to
do things right since he or she knows how the rules are made, how to
follow them; whereas the leader knows how and when to do the right
things.
Chapter 7: K 109
The leader sets the example for the company – a visionary who can
maintain calm among the staff, even when a storm is raging outside.
The manager adheres strictly to the rules he or she has been given or
may even have made. The manager takes care of daily business and
daily problems; the leader is responsible for the strategy, the long-term
development and the essential, vital challenges facing the company.
At the end of this short, but important chapter I would like you to
listen to the pronunciation of the word ‘knowledge’, because it is this
which sets the tone of what it is all about. The chapter is called ‘K’, as
in knowledge, and it is that letter which you do not pronounce. It is
precisely the presence of the unseen that is important in all kinds of
knowledge.
Gurus 111
Strategy formulation and consulting models

and techniques plus some ‘founding fathers’
Gurus
The purpose of this chapter is certainly not to be exhaustive, for two

simple reasons. The first one is that it is impossible to be exhaustive,
and the second one is that management consultancy is in perpetual
motion, evolving all the time and thus continually creating new tools.
As to the so-called ‘founding fathers’, I simply wanted to mention some
of those who have had a significant influence on me in particular and
on consultants in general.
One concept is analysed in greater depth: the Thiem-Tom 10.5 S framework©.

The reason for this is simple: it was developed by Professor Dr Tôn That
Nguyên Thiêm and myself in Vietnam, and has proved very useful in several
cases which we have worked on together. In addition, at the time we were
grateful to the fruitful input of one of our students, Mr Nguyen Duc Thong.
112 Gurus: Russell L. Ackoff
Russell L. Ackoff
Professor Emeritus Dr Ackoff was born in 1919. His academic life was
really rather impressive: Bachelor of Architecture from the University
of Pennsylvania 1941, Doctor in Philosophy of Science from the same
university in 1947, and Doctor of Science from the University of
Lancaster in 1967. During his career, he held various positions at many
universities and institutions.
Dr Ackoff worked mainly in two specific research domains. In the first

one, which concerned ‘operations research’, he was one of the pioneers
to define the field. The second domain was ‘systems thinking’, an area
where many people refer to him as “the dean”.
He himself said the following: “The field of operations research, or
operational research as it was called in England, was developed with
efforts to manage WW2 more efficiently. In fact, there was a book
written in which the success of the allies was attributed to three
technological developments. One was radar, one was sonar and the
other was operational research. So, at the end of the war for the first
time it began to be employed outside the military, and that’s where we
played a major role.
Operational research attempts to provide an objective role and
quantitative basis for the solution of managerial and administrative
problems. It was one of the key tools used by allied forces in the war.”
And he continues to explain: “ ... analysis cannot produce understanding

of systems.... (a system) is not the sum of its parts, it’s a product of the
interaction of the parts”.
He is equally famous for advocating that managers need to rethink how

they approach problem solving and innovative approaches in particular.
This is what he refers to precisely as ‘systemic’ thinking.
Since he gave an impressive number of interviews and wrote

hundreds of articles it is very easy to let him explain in his own words
just what his aims were: “Creativity involves a three-step process:
identify assumptions that you make which prevent you from seeing
Gurus: Russell L. Ackoff 113
all the alternatives; deny these constraining assumptions; explore the

consequences of the denials”.
This brings us closer to the other guru presented in this book, Herbert
Simon, who also developed a theory that takes the alternatives into
consideration. People very often focus on problems, strategies and
options they already have in mind, but they forget to look for all the
other possibilities.
Since his theories are very complex (please do not read ‘complicated’,
since they are clearly explained in his books), it seems more useful to
refer to the bibliography below.
When asked to give a conference presentation on the future, Ackoff ’s

response revealed a couple of interesting things about the man himself,
his approach to business, and to life as a whole.
“I am a presentologist, not a futurologist.”
“My preoccupation is with where we would ideally like to be right
now. Knowing this, we can act now so as constantly to reduce the gap
between where we are and where we want to be. Then, to a large extent,
the future is created by what we do now. Now is the only time in which
we can act.”
“Forecasts are about probabilities; assumptions are about
possibilities.”
“Development is a process, the process of increasing one’s competence, an
ability to satisfy one’s own needs and legitimate desires and those of others.”
“I have learned the following from my efforts to facilitate the
development of others:
1. Organisations, institutions...of any size can serve as facilitators of
development
2. A pool of resources – financial, human and equipment –
should be made available to those who are less developed. The
recipients, not the donors, should decide how. The donors
may express their opinions but should not impose them on the
recipients of their efforts.
114 Gurus: Russell L. Ackoff
3. The less advantaged should be allowed to make non-self-

destructive mistakes (experience is the best teacher). We can
only learn from mistakes, by identifying them, determining their
source and correcting them.
4. Decisions on how to use these resources should be made
democratically.
5. Corruption should not be tolerated. Its presence should be a
sufficient reason for discontinuation of a development-support
effort.
6. The effort should be monitored and evaluated objectively by a
group whose members are acceptable to both the recipients and
the donors of aid.
Bibliography
Re-Creating the Corporation, a Design of Organizations for the

21st Century, 1999.
The Democratic Corporation, A Radical Prescription for
Recreating Corporate America and Rediscovering Success,
Oxford University Press, New York, 1994, ISBN 0-19-508727-5.
Creating the Corporate Future, John Wiley and Sons, 1981, ISBN
0-471-09009-3.
The Art of Problem Solving Accompanied by Ackoff ’s Fables, John
Wiley and Sons, 1987, ISBN 0-471-04289-7.
116 Gurus: Kenneth R. Andrews
Kenneth R. Andrews
Kenneth R. Andrews was born in New London (Connecticut) in 1916
and became a professor at the Harvard Business School in 1946.
Historical context in the business area
Until the 19th century, the scope for applying competitive thinking to
business situations appeared to be limited: intense competition had
emerged in many lines of business, but individual firms apparently
often lacked the potential to have much of an influence on competitive
outcomes. Instead, in most lines of business, firms had an incentive to
remain small and to employ as little fixed capital as possible.
By the late 19th century, a new type of company began to emerge,

first in the United States and then in Europe: the vertically integrated,
multidivisional (or “M-form”) corporation that made large investments
in manufacturing and marketing and in management hierarchies to
coordinate those functions. The scope for strategy as a way to control
market forces and shape the competitive environment started to
become clearer by the end of this century.
Emergence of the corporate strategy

Alfred Sloan (chief executive of General Motors from 1923 to 1946) devised a
strategy that was explicitly based on the perceived strengths and weaknesses
of its competitor, Ford. In the 1930s, Chester Barnard, a top executive
with AT&T, argued that managers should pay especially close attention to
“strategic factors” which depend on “personal or organisational action”.
In the academic area, Harvard Business School was one of the first to
promote the idea that managers should be trained to think strategically
and not just to act as functional administrators. Kenneth Andrews
expressed his perception on this by stating:
“Every business organisation, every subunit organisation, and even every
individual [ought to] have a clearly defined set of purposes or goals
which keeps it moving in a deliberately chosen direction and prevents its
drifting in undesired directions.”
Gurus: Kenneth R. Andrews 117
As the Harvard Business School was one of the first to promote the
idea that managers should be trained to think strategically and not just
to act as functional administrators, students in the early 1950s were
already being taught through the case-study approach to question
whether a firm’s strategy matches its competitive environment.
In the 1960s, classroom discussions during business policy courses

focused on matching a company’s “strengths” and “weaknesses” with
the “opportunities” and “threats” faced by it in the market place.
Andrews put these elements together in a way that became known as
the SWOT analysis, a concept that was widely diffused in a business
policy conference held at Harvard in 1963.
To avoid students having to read hundreds of case studies to understand

how policy decisions are made within companies, Andrews made the
relevant material (without the cases) directly available in textbooks, which
he published in 1971 under his most well-known title: “The Concept of the
Corporate Strategy”, in which he developed a prescriptive corporate strategy
model. This can be defined as being “the pattern of decisions in a company that
determines and reveals its objectives, purpose or goals, produces the principle
policies and plans for achieving those goals and defines the range of business
the company is to pursue, the kind of economic and human organisation it is
or intends to make to its shareholders, employees, customers, communities” .
Andrews saw corporate strategy as the interfunctional synthesis of

business strategy and functional strategy. He discussed strategy in two
key parts: formulation and implementation.
The formulation comprises four analyses based on four practical statements:

• What we might do (identifying market and economic opportunities
and risks)
• What we can do (determining competence and firm resources)
• What we want to do (examining personal values and aspirations)
• What we should do (considering obligations to society/social
responsibility).
118 Gurus: Kenneth R. Andrews
The implementation focuses on three points:

• Organisation structures and relationships that require work
allocation, coordination of responsibilities, and an effective
information system
• Organisational processes and behaviours that entail establishing
standards and measures of performance, the use of motivation and
incentive systems, recruitment and development of management,
etc.
• Top management versatility that needs the CEO to be an architect
of strategy, organisation leader and the personal leader. A man with
a vision, the architect of purpose must be expert at anticipating
what future business environments are to be like, and at devising
appropriate product-market strategies which create and sustain
environment, values and resources congruence by matching those
environmental opportunities and threats facing the organisation
with its resource strengths and weaknesses. The organisational leader
then uses administration techniques to plan its implementation by
developing organisational capabilities, educating and motivating
its people, etc. Finally, he has to use his personal leadership skills
such as communication, persuasion and articulation to create the
favourable moral and ethical climate in which this implementation
will be maximised.
In terms of assessing the strategy’s effectiveness, Andrews listed several

criteria summarised in ten questions:
• Is the strategy identifiable and clear?
• Does it identify all opportunities specific to the company businesses?
• Does it fully exploit opportunities?
• Is the strategy consistent with the company’s corporate resources?
• Is it consistent internally?
• Is the level of risk acceptable in economic and personal terms?
• Is it consistent with the values and aspirations of key managers?
• Does the strategy contribute to society to a reasonable extent?
• Does it generate organisational commitment?
• Is the strategy designed so that its success or failure can be
evaluated fairly early in the process?
Gurus: Kenneth R. Andrews 119
So, whilst the strategic frameworks and models being developed by

academics and consultants in the 1960s focused mainly on strategic
issues at business unit level, rather than trying to define an overall
strategy for companies with many different businesses, Andrews, in
defining – with a forerunner holistic stakeholder approach – the main
task of corporate-level strategy as identifying the businessess in which
the firm would compete, has provided a much more relevant tool for
modern companies often involved in different businesses.
Bibliography and Web-o-graphy
• “Management Consultancy” by Philip Sadler, Second Edition,

Publ: Kogan Page Ltd., 2001
• “The Concept of the Corporate Strategy” by Kenneth R. Andrews,
Revised Edition, Publ: Homewood, IL: Richard D. Irwin, inc., 1980
• “A Guided Tour Through Kenneth R. Andrews’ The Concept
of Corporate Strategy (Revised Edition, 1980)” by Dave
Payne; http://leeds.colorado.edu/phd/payned/classes/
PRES-Andrews-CncptCrpStrt_files/outline_expanded.htm
• “How Business Strategy Tamed the Invisible Hand” by
Pankaj Ghemawat, 2002, Harvard Business School Working
Knowledge, http://hbswk.hbs.edu
• “Three Forms of Strategy” by Fred Nikols, 2000;
http://home.att.net/~nickols/three_forms_of_strategy.htm
• “Concept of Corporate Strategy Outlines”;
www.online-magazine.com/careertapes/audiobooks/
• “Why diversify? Four Decades of Management Thinking”,
The Academy of Management Executive; Ada; Aug 1993;
http://gemini.tntech.edu/~rcp3228/mbpcorp.html
• “The Emergence of Strategic Management” by John L. Thompson;
http://thomsonlearning.co.uk/businessmanagement/thompson4/
I_01emergence.htm
• Baker Library, Harvard Business School, on-line catalogue:
http://voyager.library.hbs.edu/
• “The Concept of Corporate Strategy” by Kenneth R. Andrews,
Publ: 1971, Dow Jones-Irwin; www-bus.colorado.edu/phd/
story/andrews.doc.
120 Gurus: H. Igor Ansoff
H. Igor Ansoff
Igor Ansoff was an applied mathematician and business manager. He is
known as the ‘father of strategic management’.
H. Igor Ansoff was born in Russia in 1918 and immigrated to the United
States with his family. He studied general engineering at the Stevens Institute
of Technology and continued his education there, receiving his Master of
Science degree in the dynamics of rigid bodies. Following his studies at
Stevens he received a doctorate in applied mathematics with a major in
mathematical theory of elasticity and plasticity, at the Brown University.
During World War II he was a member of the US Naval Reserve and

served as a liaison officer with the Russian Navy and as an instructor in
physics at the US Naval Academy.
In 1956, he was employed as a planning specialist for the Lockheed

Aircraft Corporation where he gained practical experience in analysing
the complexities of a business environment.
In 1965, during his work as Professor of Industrial Administration

at the Carnegie-Mellon University (1963-1968) he published his first
book entitled “Corporate Strategy” which provides a practical method
for strategic decision within a business focused on the social-economic
environment and a practical system of objectives4.
More than 120 papers and articles were published and translated into eight
languages. Dr Ansoff ’s books (“From strategic planning to strategic management”,
“Strategic Management”, “Implanting strategic management” and “The new
corporate strategy”) on planning, strategy and management thinking lead the
field in applying strategic thinking to businesses, bridging the gap between
concepts and practice. Worldwide, Ansoff is known for his research in three
specific areas: the concept of environmental turbulence, the contingent strategic
success paradigm, and real-time strategic management5. He was sought after
by corporations around the world for his management theories. Through his
private consulting firm, Ansoff Associates, he advised such major companies as
General Electric, Philips, IBM, Gulf Oil, General Foods and Westinghouse.
4
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965 p ix
5
http://www.ansoff.com
Gurus: H. Igor Ansoff 121
He died of complications from pneumonia in San Diego, California, on

14 July 2002.
Historical context of the ‘60s
General context
Many of the trends during the 1960s were due to the demographic
changes brought about by the ‘baby boom’ generation, the height of
the Cold War, and the dissolution of European colonial empires. The
rise in the social revolution, the human rights movement and the civil
rights movement, especially in the United States, lasted from 1954 to
1965 and is also known as the Black Revolution. The period marks the
transition from the liberal consensus of the fifties to the rebellious
tendencies that came with the sixties.
Other events, such as the anti-war movements and the counter-culture

movement, are just some of the characteristics that defined the 1960s.
Many experts attribute the 1960s “counter culture revolution” to the
major social and political factors that arose in the 1950s6.
The ‘60s revolution spread far beyond the borders of America and Western
Europe. In South America, revolutions were at a high, in the Eastern Bloc,
movements were being made – inspired by the Hungarian Revolution
(1968) – to reject Soviet domination, and in the Middle East, attempts were
being made to resist Soviet and American domination. Overall, the ‘60s
affected almost the entire globe. It was during this time that protectionist,
command, and mixed economies all reached their peak.
The sixties generation was a generation of experimental rebels. This period

also refers to the complex of inter-related cultural and political events which
occurred in approximately the same period, in Western countries, particularly
Great Britain, France, the United States and West Germany. Social upheaval
was not limited to these nations alone, it became large scale in nations such
as Japan, Mexico and Canada, too. The decade was also labelled the ‘Swinging
Sixties’ because of the libertine attitudes that emerged then.
6
http://www.let.rug.nl/usa/H/1994/ch12_p15.htm
Some events actually happened outside of this period. For example,

although some of the most dramatic events of the American civil rights
movement occurred in the early 1960s, the movement had already
begun in earnest during the 1950s. On the other hand, the rise of
feminism and gay rights only began very late in the 1960s.
Nevertheless, the ‘sixties’ has become synonymous with all the new,
exciting, radical, subversive events and trends of the period7.
The economic context

From the late ‘50s, the question of economic development of less-
well-developed countries and newly independent colonies was widely
taken up at an international level. The development of capitalism
and an internal market, and the objective of an independent national
economic dynamism, constituted the economic ideal of these countries.
Established countries in Western Europe grew to become economic
powerhouses that rivalled the United States, and economic relationships
came to predominate in a world that increasingly recognised military
might could not be the only means of growth and expansion8.
In the sixties, in particular, the United Stated enjoyed the most sustained
period of economic expansion it had known, accompanied by rising
productivity and low unemployment. Real income rose 50% during the
decade, and US investment in foreign countries reached $49 billion in
1965, up from $11.8 billion in 1950. Business and government were
both powerful forces in the economy during this period, when large
industrial corporations accounted for vast portions of the national
income, and the federal government expanded its role in such areas as
social welfare, scientific research, space technology, and development
of the nation’s highway system9.
Because of this economic development it became necessary to

restructure international monetary arrangements with the creation
of the International Monetary Fund and the World Bank, institutions
designed to ensure an open, capitalist international economy. Business,
meanwhile, entered a period marked by consolidation. Firms merged
to create huge, diversified conglomerates.
7
http://usinfo.state.gov/products/pubs/oecon/chap7.htm
8
http://fbc.binghamton.edu/commentr.htm
9
http://www.nationsencyclopedia.com/Americas/United-States-economy.html
Strategic thinking
The organisational challenges involved in World War II were an
important factor to strategic thinking because wartime destruction
led to excess demand which limited competition as firms rushed to
expand their capacity. In the 1960s, diversification and technological
changes increased the complexity of the strategic situations that many
companies faced, and intensified their need for more sophisticated
measures that could be used to evaluate and compare many different
types of businesses. Many large multinational corporations were forced
to consider global competition as a factor in planning10.
The need for a formal approach to corporate strategy was first articulated
by top executives of General Motors from 1923 to 194611. It devised
a strategy that was explicitly based on the perceived strengths and
weaknesses of its competitors. A more direct bridge to the development
of strategic concepts for business applications was provided by inter-
service competition in the US military after World War II, which
necessitated an integration of strategic and tactical planning.
As defined by Mintzberg12, strategic thinking is about synthesis and

using intuition and creativity to formulate an integrated perspective, a
vision, of where the organisation should be heading.
“Corporate Strategy” - 1965
An overview
In the 1960s, diversification and technological changes increased the
complexity of the strategic situations that many companies faced, and
intensified their need for more sophisticated measures that could be
used to evaluate and compare many different types of businesses.
Based on the ideas of strategic thinking and the competitive environment

of this decade, Ansoff published his book “Corporate Strategy” based
on strategic decisions within a firm. He separated the decisions about a
business into three areas13:
10
Kai John, “Mastering Strategy Resource Based Strategy” see http://www.johnkay.com/strategy/135
11
Alfred Sloan, My years with General Motors, Doubleday, New York, 1990, first edition 1963
12
Mintzberg, Henry. “The fall and rise of strategic planning”; In Harvard Business Review, 1994,
January-February , p 107-114
13
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965 p 9
• The operational decision which involves pricing, setting production

schedules, etc. when establishing a marketing strategy.
• The administrative decision, or how we support and organise what
we do, which are decisions concerned with structuring the firm
resources in order to create a maximum performance potential.
• The strategic problems such as the firm’s objectives and goals,
the search for diversity, and how a company should develop and
exploit its present product-market position.
Ansoff argued that each firm should have economic and social objectives
to optimise the efficiency of its total resource and social conversion
process. The objectives should be an analysis of the strengths and
weakness of the firm14.
In order to measure the resource conversion process, the firm’s purpose

should be to maximise long-term profitability (return on investment),
to assess synergy (the desired characteristics of appraising the firm’s
competence profile) and to decide how to expand, how to diversify,
how to assess, whether entry to an industry is likely to give the
desired ROI, whether to acquire or go for organic growth, and how to
weigh alternatives, taking into account a large number of highlighted
factors15.
He stresses the need for a ‘common thread’ (the firm’s mission) for
all of a company’s business if it is to add value16. In order to define
the common thread, Ansoff developed four categories17: the growth
vector: which indicates the direction in which the firm is moving
with respect to its current product-market posture; the product-
market scope: which specifies the particular industries to which the
firm confines its product-market position; the competitive advantage:
which seeks to identify particular properties with individual product-
markets which will give the firm a strong competitive position; and
synergy: that is a measure of the firm’s ability to make good on a new
product-market entry18.
14
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, pp 37-42
15
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, 49-100
16
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, p 104
17
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, 105-111
18
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, pp 105-109
Ansoff ’s Matrix
Ansoff also focused his theory on translating the logic of the SWOT
matrix. In order to systematically explore the four categories stated above,
he proposed comparing the possible “growth vectors” of a firm. Basically,
he started from the company’s present situation with its present products
serving present customer segments or market needs and then introduced
the options of developing new products and serving new markets. With the
following four product-market strategies he describes strategic alternatives
which often fit with different stages of a company’s ‘life cycle’19:
Market penetration: denotes a growth direction through the increase of
market share for the present product markets.
Market development: new missions are sought for the firm’s products.
Product development: creates new products to replace current ones.
Diversification: widening the mission and types of product in the portfolio.
Ansoff ’s Matrix today

Many techniques have been developed, based on Ansoff ’s Matrix, that
help organisations to determine strategies from their environmental
opportunities and pressures, or from their own internal resources.
Ansoff ’s Matrix is presently used as a form of product portfolio

management20. It has become a standard tool kit of any marketing, strategy
analysis business planning, strategic planning, competitor evaluation,
product development and research reports. This tool offers strategic
choices to achieve objectives. It is used by marketers who have objectives
for growth opportunity to make an acquisition, a potential partnership,
changing a supplier, outsourcing a service, activity or resource and
investment opportunity, and is an accepted way of identifying and
categorising market and product developments and opportunities21.
The following shows the use of this matrix for the development of a
marketing strategy22:
Market penetration: here the firm increases the market share on
existing products. This means increasing its revenue by, for example,
promoting the product, repositioning the brand, and so on.
19
Ansoff Igor, “Corporate Strategy”, New York: McGraw Hill, 1965, p 110
19
Ghemawat Pankaj, “Competition and Business Strategy in Historical Perspective”,
see http://www.hbs.edu/bhr/PDF/760102.pdf0
19
http://www.i-m-c.org/imcass/VUs/IMC/content.asp?id=20996&parentKey=60372
19
http://www.marketingteacher.com/Lessons/lesson_ansoff.htm
Market development: the existing product range will be marketed in a

new market. This means that the product remains the same, but it is
marketed to a new audience – exporting the product, or marketing it
in a new region.
Product development: a new product is developed to be marketed to

the existing customers. Here the firm develops and innovates new
products to replace existing ones. Such products are then marketed to
its existing customers. This often happens with the automotive markets
where existing models are updated or replaced and then marketed to
existing customers.
Diversification: In this phase, a firm markets completely new products

to new customers. There are two types of diversification, namely related
and unrelated diversification. Related diversification means that the
company remains in a familiar market or industry. For example, a soup
manufacturer diversifies into cake manufacture (i.e. the food industry).
Unrelated diversification means that the firm previously has neither
industry nor market experience.
Bibliography and Web-o-graphy
Publications by Igor Ansoff :

• With Romain Lombriser: “How Successful Entrepreneurs
Pilot Firms Through The Turbulence In The 1990’s”, Strategic
Change, 1995, Vol 4(2)
• “Implanting Strategic Management”, London, Prentice-Hall,
1984, 1990
• “New Corporate Strategy”, New York, Wiley, 1988
• “Understanding and Managing Strategic Change”,
Amsterdam, Elsevier/North Holland, 1982
• “Strategic Management”, London, Macmillan, New York,
Wiley, 1979
• “Strategic Business Areas”, Tehokas Yrtys, Johtaminstoimen,
Ammattilehti. Jan, 1979
• “From Strategic Planning to Strategic Management”, London:

Wiley, 1976
• “Management on the Threshold of the Post-Industrial Era”,
The Conference Board, New York, Free Press, 1973
• “Business Strategy”, Penguin Books, Harmondsworth, 1969
• “Handbook of Business Administration, Research and
Development Planning”, New York, McGraw-Hill, 1967
• “Organizational Decision Making, a quasi-analytic method for
long range planning”, Englewood Cliffs, NJ, Prentice Hall, 1967
• “Corporate Strategy”, McGraw-Hill, New York, 1965.
• Ghemawat Pankaj, Competition and Business Strategy in

Historical Perspective, see http://www.hbs.edu/bhr/PDF/760102.pdf
• Kai John, Mastering Strategy Resource Based Strategy, see
http://www.johnkay.com/strategy/135
• Mintzberg Henry. The fall and rise of strategic planning.
In Harvard Business Review, 1994, January-February
http://www.ansoff.com
http://www.let.rug.nl/usa/H/1994/ch12_p15.htm
hhtp://usinfo.state.gov/products/pubs/oecon/chap7.htm
http://fbc.binghamton.edu/commentr.htm
http://www.nationsencyclopedia.com/Americas/
United-States-economy.html
http://www.i-m-c.org/imcass/VUs/IMC/
content.asp?id=20996&parentKey=60372
http://www.marketingteacher.com/Lessons/lesson_ansoff.htm
128 Gurus: Kenichi Ohmae
Kenichi Ohmae
Kenichi Ohmae is considered to be among the world’s all-time leading
gurus of management. He was a partner in McKinsey & Company, Inc.
for 23 years and co-founded its strategic management practice. He
made a name for himself with his book on corporate strategy that was
published 20 years ago, called “The Mind of the Strategist”.
He suggested that any business strategy will need to take into account
three main players, the names of whom each begin with ‘C’, i.e. customer,
corporation, and competitors. The job of a strategist is that of ensuring
that superior performance can be achieved relative to the competition
in the eyes of the customer, and that this matches the strengths of the
corporation. For a strategy to be successful, the dynamics of the three
Cs, both within and between each of them, need to be borne in mind.
The book contains a list of things to avoid and things to concentrate
on; tunnel vision and the peril of perfectionism are to be avoided, while
focusing on the key factors and challenging the constraints are to be
encouraged. Strategy, he insists, is a question of attitude more than
numbers.
Having written this “bible of corporate strategy”, Ohmae moved on

to the wider issues of the changing shape of the world of business,
although he always related his thoughts back to the implications for the
leaders of the corporations. The title of his recent book, “The Invisible
Continent”, encapsulates his idea that the world today is so different
from the past that it is like discovering a new continent. The business
implication of this invisible continent is both risk and opportunity.
Since this invisible continent is in the state of free entry and in the
process of developing infrastructure, it is time to enter before things
become too fixed. On the other hand, there is a greater concern for
this new continent, which he refers to as the “governance of the new
continent”. As he says in his conclusion, we are at the beginning of the
journey. True, while falling short of forecasting 9.11 which happened
after the publication of the book.
Gurus: Kenichi Ohmae 129
Now he is respectfully described as a man of many parts with a finger in

lots of different pies. Not only is he a much sought-after management
consultant, an author and a public speaker, but he is also a founder
of the socio-political reform movement, an advisor to government, a
public policy advocate and a business entrepreneur who founded and
runs many businesses.
His economic logic may not always appear very sound, and some of
his theses have been proven to be dubious. However, as he emphasised
in his early work, successful business strategies do not come from
rigorous analysis but from a thought process that is basically creative
and intuitive rather than rational. His undisputed creativity and
unequivocal appeal to intuition makes him a guru of the century.
Bibliography
“The Next Global Stage - Challenges and Opportunities in our

Borderless World”, Wharton School Publishing, 14 March 2005
(English)
“The Invisible Continent - Four Strategic Imperatives of the

New Economy”,
HarperBusiness, US, June 2000; Revised version by Nicholas
Brealey, UK, 2001 (English)
“The Evolving Global Economy - Making Sense of the New

World Order” (edited with a preface), Harvard Business School
Press, October 1995 (English)
“The End of the Nation State - How Region States Harness the
Prosperity of the Global Economy”, Free Press, McMillan, Inc.,
May 1995 (English); Kodansha Publishing Company, March
1995 (Japanese)
130 Gurus: Kenichi Ohmae
“The Ohmae Report - Toward a Fundamental Restructuring of

Japan”, Kodansha Publishing Company, November 1993
“Sekai no Mikata Kangaekata - The Japanism”, Kodansha

Publishing Company, March 1991, Paperback
“The Borderless World”, Harper & Row, US, June 1990,

Paperback, 1991 (English); President Inc., November 1991,
Paperback; Shinchosha, 1994 (Japanese)
“Fact and Friction”, The Japan Times Ltd., Japan, May 1990
(English)
“Beyond National Borders”, Dow Jones Irwin, US, February

1987, Paperback; Kodansha International, 1988 (English)
“Japan: Obstacles and Opportunities”, John Wiley and Sons, US,

(English); President Inc., February 1983 (English)
“The Mind of Strategist: The Art of Japanese Business”, McGraw-

Hill, US, May 1982, Paperback, 1991 (English); President Inc.,
January 1984, Paperback; Shinchosha, 1984 (Japanese).
132 Gurus: C. K. Prahalad
C. K. Prahalad
C. K. Prahalad completed his DBA from Harvard University in 1975
and has since lectured at various renowned universities (such as the
Indian Institute of Management, the European Institute of Business
Administration and the University of Michigan Business School) and
consulted with numerous well-known companies (for example, AT&T,
Colgate Palmolive, Honeywell), acquiring an excellent reputation as a
professor and specialist in corporate strategy and the role and value it
constitutes for top management in large, multinational corporations.
Business Week named him as one of the top ten business professors in
the US, following the results of a nationwide poll among MBA alumni,
and speculated that he “may well be the most influential thinker on
corporate strategy today”. The Wall Street Journal even suggested he
is one of the top teachers in the world, in a special report on executive
education in September 1993. The Indo-American Society presented
Professor Prahalad with their 1994 Annual Award for his exceptional
contribution toward the promotion of Indo-American goodwill,
understanding and friendship. In 1995, he received the American
Society for Competitiveness Award for his outstanding academic work
on competitiveness.
Apart from the professional achievements mentioned above, C. K.

Prahalad’s fame is due, above all, to his numerous, widely acknowledged
literary contributions. His Harvard Business Review articles “Strategic
Intent”, “The Core Competence of the Corporation” and “The End of
Corporate Imperialism” won the McKinsey Prize in 1989, 1990 and
1998, respectively. He received awards for two further articles on core
competencies, both in the US and Europe, and saw his book “Competing
for the Future” (1994), co-authored by Gary Hamel, translated into
13 languages. Other well-appreciated articles include “Do You Really
Have a Global Strategy?”(1985), “Collaborate With Your Competitors –
and Win” (1989), and “Strategy as Stretch and Leverage” (1993)
(www.tlp.org/bios/c_k_prahalad.htm).
Gurus: C. K. Prahalad 133
As we can see from the titles cited, Prahalad is primarily interested in

the notions of core competence, competition, and corporate strategy
– notions which he approaches in a different, innovative way, he
considers crucial for a company’s success, and which can probably be
summarised best as the necessity for corporate strategy to be based on
and nurtured by the clear definition of core competences, as well as a
constant search for new sources of competitive advantage.
Prahalad begins his enormously successful Harvard Business Review

article “The Core Competence of the Corporation” (which he wrote
together with G. Hamel) with the rather mysterious sentence: “The
most powerful way to prevail in global competition is still invisible to
many companies”. He then maintains that, in order to be successful
in the long run, companies have to re-establish themselves in “core
competencies” which he defines as “the collective learning of the
organisation, especially how to coordinate diverse production skills
and integrate multiple streams of technology”.
By “competencies” Prahalad does not only refer to “knowledge assets”,

which may intuitively be considered the most important components in
bringing sustained competitive advantage to firms, but also to physical
assets. He mentions Sony’s capacity to miniaturise or Philips’ optical
expertise, and explains that “the theoretical knowledge to put a radio on
a chip does not in itself assure a company the skill to produce a miniature
radio no bigger than a business card. To bring off this feat, Casio must
harmonise know-how in miniaturisation, microprocessor design, material
science, and ultra-thin precision casing – the same skills it applies in its
miniature card calculators, pocket TVs, and digital watches.” Staying with
the Sony example, to realise miniaturisation of its products, of course,
Sony must make sure that technologists, engineers, and marketers
have a shared understanding of both customer needs and technological
possibilities. Core competence is therefore a mixture of communication,
involvement, and a deep commitment to working across organisational
boundaries, involving many levels of people and all functions.
Prahalad adds that quite a few business failures result from management’s
perception of the company as a “collection of discrete businesses”, of its
being trapped in the strategic business unit (Prahalad even speaks of
the “tyranny of the SBU”), and its inability to identify, cultivate and
exploit the core competencies that make growth possible. Establishing
a portfolio of competencies rather than a portfolio of businesses means
that, over time, companies have to identify and develop key areas of
expertise which are distinctive to themsleves, enhanced as they are
applied and shared and, finally, critical to their long-term success. These
areas of expertise may be in any area but are most likely to develop
in the critical, central areas of the company where the most value is
added to its products. A competence which is central to the company’s
operations but which is not exceptional in some way should not be
considered a core competence as it will not differentiate the company
from similar firms.
Prahalad suggests three factors which help to identify core competencies

in a company:
1. Extendibility: a core competence which provides potential
access to a wide variety of markets. In other words, it helps the
company to expand into different markets and thus exploit new
opportunities. For example, competence in display enables a
company to take part in such diverse businesses as calculators,
miniature TV sets, monitors for laptop computers, etc. This
made Casio’s entry into the hand-held TV market predictable for
Prahalad. Apple has receded to only a few areas of application
advantage while Microsoft continues its impressive growth.
2. Customer value: a core competence which makes a significant
contribution to the perceived customer benefits of the end
product. This means that a core competence adds value for
customers by increasing the benefits derived from a product.
Honda’s engine expertise clearly fulfils this criterion.
3. Difficulty of duplication: a core competence is difficult for
competitors to imitate. A rival may well be able to copy some
of the technologies that comprise the core competence, but it
will be very difficult for him to duplicate a well-established and
complex pattern of internal coordination and learning.
As Prahalad’s idea of core competence is not too easy to envisage, his

comparison between Chrysler and Honda may bring more clarity:
unlike Honda, Chrysler has tended to view engines and power trains as
simply one more component. It augmented the number of outsourced
engines from 252,000 to 382,000 between 1985 and 1987, thus
rendering itself increasingly dependent on Mitsubishi and Hyundai.
It is difficult for Prahalad to imagine “Honda yielding manufacturing
responsibility, much less design, of so critical a part of a car’s function to
an outside company. ... Honda has been able to pool its engine-related
technologies; it has parlayed these into a corporate-wide competency
from which it develops world-beating products, despite R&D budgets
smaller than those of GM and Toyota1.”
Closely tied to the concept of core competence, in particular features 1 and

2 mentioned above, namely extendibility and customer value, and ideally
chronologically preceding, is the question of what the customer wants. In
“Competing for the Future”, Prahalad (again together with Gary Hamel) states
that the future belongs to companies which not only understand customer
needs, problems, expectations and complaints, but anticipate them. He
distinguishes three kinds of firms: companies that try to lead customers where
they do not want to go (these are the companies which find the idea of being
customer-led an insight); companies that listen to customers and then respond
to their articulated needs (needs that are probably already being satisfied by
competitors with greater foresight); and companies that lead customers where
they want to go, without realising it initially. Such companies which are able
to create the future do more than satisfy customers – they constantly amaze
them. Any company that can do no more than respond to the articulated
needs of existing customers will quickly become a laggard. Being customer-
focused is therefore more than being customer-led, according to Prahalad. It
means “innovatively distilling customer knowledge and insight into loyalty-
earning products”. Customer-focused companies must be able to answer the
following two critical questions: 1. What range of benefits will customers
value in tomorrow’s products? 2. How might we, through innovation, pre-
empt competitors in delivering those benefits to the market place2?
In his more recent comments on how to gain, satisfy and keep

customers, in “The Future of Competition: Co-Creating Unique Value
1
C. K. Prahalad and Gary Hamel, “The Core Competence of the Corporation”, Harvard Business
Review, 90(3), 1990, pp. 79-91
2
C. K. Prahalad and Gary Hamel, “Competing for the Future”, Harvard Business School Press,
1994, 107
with Customers” (co-authored by Venkat Ramaswamy), Prahalad states

that in the 21st century, customer relationships based on traditional
products will increasingly be substituted by relationships based on
experiences – the product is thus no longer the basis of value, the
experience is. He again underlines that delivering a superior customer
experience will be the differentiator between successful companies
and also-rans. He claims more emphatically than ever before that the
definition and creation of value cannot be unilateral anymore as there
will be a dramatic shift in the role of the customer – from isolated to
connected, from unaware to informed, from passive to active – and
competition will further intensify, shrinking profit margins. The
decision how to define and create value for customers must therefore be
taken collaboratively – consumers have to be engaged and challenged to
inject their personal views of value on to the menu of what companies
have to offer rather than accept the company’s menu. No longer
seeing consumers as passive targets – as a matter of fact, companies
have to figure out ways to engage customers as equal problem-solvers
in order to get value that is unique. Thanks to wireless mobility and
the internet, globalisation and ubiquitous connectivity constitute big
advantages and big challenges at the same time. To meet the challenge,
companies will need to build more flexible, dynamic information
backbones to capture and deliver the real-time insights required to
deliver on-demand customer value and service that is meaningful to
individuals within the context of their day and location. Very likely,
such flexible, dynamic information platforms will be internet-based,
creating thematic communities, enabling rapid word-of-mouth, and
constituting an unspeakably precious source of up-to-date information
about what people want.
As a practical example of how customer expectation and value today

often diverges from the actual product or service provided, Prahalad
mentions the video rental business, an $8 billion business in the US
in 2002. “When I visit the local rental store, I may not find my first,
second or even third choices. Once I do pick one or two videos, I must
watch them within the company-allowed time frame. If I find two hot
releases, then I must return them together. If I want to watch both,
then I must reorganise my life around the rentals or pay a late fee.
By contrast, Netflix has developed a video rental system designed

around consumer-think. As a Netflix customer, I pay a flat monthly fee
of $20 to choose from the film’s inventory of more than 15,000 DVD
titles. At the Netflix website, I can explore all available titles by genre,
director, actor, top picks of critics and so on, and order films. The first
three DVDs arrive in my home mailbox; I can keep the movies as
long as I want and when I’m done, I simply seal them in the prepaid
envelope provided by Netflix and pop it into the nearest mailbox. It’s
up to me how quickly I watch the films. The experience is mine, not the
company’s.”
Prahalad adds that such changes apply across industry and across
companies and there are no exceptions.
Bibliography
C. K. Prahalad and Venkat Ramaswamy, “The Future of Competition:

Co-Creating Unique Value with Customers”, Harvard Business School
Press, 2003
Prahalad C. K. and Hamel G. (1990), “The Core Competence of

the Corporation”, Harvard Business Review, 68, 78–91.
138 Gurus: Herbert Simon
Herbert Simon
Herbert Simon was born in Milwaukee, Wisconsin in 1916. While
studying at the public school in the town he developed a deep interest in
sciences. At a very young age he became convinced that it was possible
to study human behaviour scientifically. In 1933, he went to a university
in nearby Chicago where he studied social sciences and mathematics as
a result of the early influences in his life. His doctoral dissertation dealt
with the organisational decision-making process. Later, he started an
in-depth study in economics in the institutional area.
Between 1950 and 1955, together with David Hawkins he developed

and proved the so-called Hawkins-Simons theorem on the “conditions
for the existence of positive solution vectors for input-output matrices”.
They started to apply this theorem to organisations and rapidly realised
(in 1954) that the best way to study this field was by using computer
programs. This, in turn, led Simon to become interested in the computer
simulation of human cognition.
He was interested in so many fields of human behaviour that it is difficult

to mention them all. Artificial intelligence was just one – together with
Allen Newell he created the General Problem Solver (GPS)1 in 1975.
This tool was probably the very first method proposed to separate
problem-solving strategy from information about specific problems.
Herbert Simon was also interested in the role of knowledge in expertise.

It was he who said that a minimum of ten years of experience is needed
to build an expert. Together with his colleagues, they estimated
that expertise was the result of some 50,000 pieces of disparate
information.
He was also at the basis of the concept of organisational decision-

making, which is a revolutionary step in the field of microeconomics.
He was the first person ever to point out what seems obvious nowadays:
it is impossible to have perfect and complete information at any given
time to make a decision. In 1978, he was awarded the Nobel Prize in
this field of competence.
1
The General Problem Solver (GPS) was a theory on human problem solving presented in
the form of a simulation programme (Ernst & Newell, 1969; Newell & Simon, 1972). This
programme and the associated theoretical framework made a significant impact on the
subsequent direction of cognitive psychology. It also introduced the use of productions as a
method for specifying cognitive models.
Gurus: Herbert Simon 139
His main area of research has always been the industrial organisation.
Herbert Simon’s first book, his doctoral dissertation “Administrative
Behaviour” formed the basis for the rest of his professional life. In the
middle of this book we find the behavioural and cognitive processes
of making rational human choices, commonly called ‘decisions’.
Any decision made involves a choice between a selected number of
alternatives directed towards an organisational (sub) goal. For him, the
task of this rational decision-making process is to select the alternative
that results in the preferred set of all possible consequences. We can
divide this task into three sub-tasks:
1. The identification and listing of all possible alternatives;
2. The determination of all the consequences resulting from each of
the alternatives; and
3. The comparison of the accuracy and efficiency of each of these
consequences.
This, of course, is pure theory since no individual or organisation can

ever know all the alternatives, or all the consequences of them.
So the question is a simple one: what techniques are available to direct

an organisation to a choice that is the closest possible to the best result.
Herbert Simon writes: “The human being striving for rationality and
restricted within the limits of his knowledge has developed some working
procedures that partially overcome these difficulties. The procedures
consist in assuming that he can isolate from the rest of the world a closed
system containing a limited number of variables and a limited range of
consequences.”2
The next step in his analysis is obvious: which authority takes the
decision? Using his own language, we could easily say that the authority
is well defined in the organisational context as the ability and the right
(= duty?) of an individual of higher rank to determine the decision of
an individual of lower rank. By reading this carefully it can be deduced
immediately that the authority has a huge influence on the formal
2
Simon, H., Administrative Behavior, The Free Press, New York, 1976, 3rd ed., p. 82.
140 Gurus: Herbert Simon
structure of the organisation (sanctions, rewards, communication

systems, goals – better known in business as budgets and strategy – and
even the values).
Each individual will behave differently when taking a decision on behalf
of the group he belongs rather than for himself. The ‘group’ is used on
purpose because an individual belongs to different organisations in the
course of his/her own normal social life (business, geographical, social,
sports, race, gender etc.).
On the other hand, the conclusion drawn from this approach is that
an individual identifies him- or herself with a group while, in decision-
making, that individual evaluates the different choices available in
terms of the consequences for that group.
Once a decision has been made the correctness of it should be assessed.

This can be done using two major criteria: to what extent the goal has
been achieved and the efficiency with which this result has been obtained.
Although many members of any organisation will focus on the adequacy of
the decision, the overall administrative management must pay particular
attention to the efficiency with which the goal was achieved.
The pioneer Herbert Simon died in 2001.
Bibliography
Administrative Behavior: A study of Decision-Making Processes

in Administrative Organizations, 4th edition, The Free Press
(1997), ISBN 0-684-83582-7.
Models of Discovery, and other topics in the methods of science,
Reidel Publ. Co., Boston, 1977.
Reason in Human Affairs, Stanford University Press, Stanford,
1983, ISBN 0-8047-1848-2.
The Sciences of the Artificial, 3rd edition, MIT Press, 1996.
An Empirically Based Microeconomics, Cambridge University
Press, 1997, ISBN 0-521-62412-6.
Gurus: Herbert Simon 141
Tools 143
Tools
As previously mentioned in the introduction to the gurus section,

this part of the book is not intended to be exhaustive. The length of
the different parts has nothing to do with my view on the tools, but is
simply determined by the length of the discussions I have had with my
students in class. Sometimes this was because of the importance of the
tool, and sometimes because the tool was completely unknown.
Some of the tools are outdated, while others are still used on a daily
basis by professionals in consultancy.
This section will again be completed in the next edition of this book, so
that my students (and others in the know), will have a more complete
overview on what is available in the competitive world of consultancy.
144 Tools: Action-Centered Leadership
Action-Centered Leadership
Action-Centered Leadership (ACL) and John Adair
I) Who: biography
British leadership-development consultant and writer, born in 1934.
John Adair had a colourful military career having studied at

Cambridge, London and Oxford universities. He developed
his Action-Centered Leadership model while involved with
leadership training at Sandhurst Military Academy (1963-1969)
and as an associate director and head of the leadership department
at the Industrial Society (1969-1973). His theory adds a simple
dimension to the works of Maslow, Herzberg and Fayol.
Adair wrote over 40 books on management and leadership and

has his own publishing company in Surrey, England. He became
the world’s first professor of leadership studies at the University
of Surrey (1979-83). The People’s Republic of China awarded
him the title of honorary professor for his work.
Achieving
the task
Building
and maintaining Developing
the team the individual
Tools: Action-Centered Leadership 145
II) What: the Action-Centered Leadership model
The model – comprising three overlapping circles – distinguishes

three groups of activities which are highly interrelated. None can
be viewed in isolation and all must receive leadership attention
in order for any to work effectively and for organisational goals
to be met.
The Adair model indicates that the action-centered leader gets

the job done through the work team and relationships with
fellow managers and staff.
According to Adair’s explanation, an action-centered leader

must:
- direct the job to be done (task structuring)
- support and review the individual people doing it
- co-ordinate and foster the work team as a whole
The responsibilities for the task are:

- define the task
- make the plan
- allocate work and resources
- control quality and rate of work
- check performance against plan
- adjust the plan
The responsibilities for the team are:

- maintain discipline
- build team spirit
- encourage, motivate, give a sense of purpose
- appoint sub-leaders
- ensure communication within the group
- develop the group
The responsibilities for the individual are:

- attend to personal problems
- praise individuals
- give status
- recognise and use individual abilities
- develop the individual
Conclusion
1. Leadership consists of three mutually dependent circles:
task, team and individual, the size of which can change
depending on the situation.
2. Leadership is a skill: it is no longer an inborn capability.

It can be learned on the “field of action”.
3. The model adds the element of leadership to the management

skills.
III) Historical context
Theories of leadership: many of these ideas remain popular today and

there is no agreement as to which is preferable or the most effective:
1. Classical school (1900): Fayol: task-oriented and authority
2. Traits theory (20s-50s): completing the task, self-confidence....
3. Leadership styles and behaviours (60s):
a) Douglas McGregor: Theory X managers take a fairly negative
view of human nature (authoritarian management style
because the average person dislikes work). Theory Y managers:
participative management style because people will apply self
control and they accept and seek responsibility.
b) Blake and Mouton: this model focuses on the task and
employee orientations of managers.
4. Situational leadership (end 60s-70s-80s):
a) Hersey and Blanchard: it is possible for a leader to adapt
his or her style to the situation according to the skill and
maturity level of the followers.
b) John Adair: ACL – 1973.
5. Transformational leadership: James McGregor Burns
(1978): followers are converted into leaders, and leaders
into moral agents. Leaders and followers lift one another
to higher levels of motivation and morality.
6. Charismatic leadership (80s-90s): Weber and House:
this type of leader can rebuild morale and offer a positive
vision for the future.
7. Servant and team leadership (90s): for a servant leader,
the emphasis is on the moral and ethical dimensions of
leadership. Team leadership means that the leader chooses
to delegate and share team roles.
8. Distributed leadership (90s): this means that individuals
at all levels in the organisation and in all roles can exert
leadership influence over their colleagues.
9. Future leadership: a leader will consider the changing
nature of society.
IV) Importance in actual business and in other fields of life
No empirical studies have been done to prove the usefulness of

the Action-Centered Leadership model. In addition, it simplifies
human interaction – it is its very simplicity which makes it so
appealing. Overall the approach can be quickly adapted to a
company’s specific situation.
His model is used for training in the British armed services and
has been taught to more than 1 million managers throughout
the world. It continues to be applied in organisations of all
sizes (ICI, assessment centres). The Adair model states that the
action-centered leader gets the job done through the work team
and relationships with fellow managers and staff.
Adair changed the perception of management to encompass

leadership, to include associated abilities of decision-making,
communication and time-management.
The challenge for the leader is to manage all sectors of the diagram.
Action-Centered Leadership is something in which a leader is

required to perform actions promptly, effectively and efficiently in
order to complete the organisation’s objective. This model adapts
to the demands of modern business management extremely
well. When applying it in a modern company, the manager has
to think about the aspects of performance necessary for success
in his own situation, and to incorporate relevant local factors
into the model to create his own interpretation.
Good managers and leaders should have full command of the

three main areas of the model. This will give them a useful
management framework. The leader will place more or less
emphasis on the functionally-oriented behaviours according to
what is involved in the actual situation. Situational and contingent
elements call for different responses from the leader.
V) Web-o-graphy
- http://www. johnadair.co.uk/adviser.html
- http://www.businessballs.com/action.htm
- http://www.biography.com/find/printable.jsp ?aid=9175373
- http://www.businessballs.com/herzberg.htm
- http://www.onepine.info/fayol.htm
- http://www.businessballs.com/maslow.htm
- http://www.telusplanet.net/public/pdcoutts/leadership/
LdrVsMngt/htm
- http://www.12manage.com/description_action_centered_
leadership.html
- http://www.floor.nl/management/adair.html
- http://www.corporateteambuilding.com/mission.php
- http://www.leadership-studies.com
- http://www.windsorleadershiptrust.org.uk/images.what%20
is%20leadershipto20Paper_487.pdf_
- http://www.your-business-coach.blogspot.com/2005/08/
action-centered-leadership.html
- http://www.businessball.com/davidmcclelland.thm
150 Tools: Activity-Based Costing
Activity-Based Costing
Activity-Based Costing (ABC) is an accounting technique
and management decision tool that allows an organisation to
determine the actual costs associated with each product or
service produced.
I) The historical context of Activity-Based Costing
Although Robert S. Kaplan, the Baker Foundation Professor at

the Harvard Business School (and a member of the HBS faculty
since 1984), is regarded as the spiritual father of ABC, he is the
first to admit that this is not totally true. Instead, he thinks “that
it frequently happens that new ideas and tendencies develop
simultaneously in different places”. Together with Thomas
Johnson, co-author of the groundbreaking book Relevance Lost
and, like Kaplan, a consultant and university professor (Portland
State University), he was able to be in contact at an early stage
with different organisations and people who had encountered
problems using traditional cost-accounting methods.
For example, the John Deere Company realised in the mid-80s

that their traditional method for the distribution of overhead
costs was causing problems. In fact, there was a real need for
new methods of cost and price calculating in the 80s. It was
also connected with increasingly tougher conditions in terms
of competition. Combined with a faster pace of production
and technological change, many entrepreneurs realised that
traditional costing systems were inaccurate. On top of all this,
the rapid development of information technology has also
influenced the importance of activity-based costing.
According to Johnson, he had been asked by Kaplan, as early

as 1982, to “shift attention away from studying management
Tools: Activity-Based Costing 151
accounting’s role in the growth of American business before 1930”

and rather “join him in studying the changes in management
accounting after 1930 that caused it to be implicated in the
decline of American manufacturing”, which was regarded as “a
matter of great national concern by the late 1970s”.
This cost-management system emerged in the late eighties (1988)

and was designed to deal with the inadequacies of traditional
costing methods which tend to be unable to determine accurately
real product or service costs. This major deficiency results from
the way in which resources and costs are applied to products
or services. Some resources can be attributed directly to a
particular product or service – the so-called ‘direct costs’, like
direct material and direct labour. Examples include the semi-
conductors in a computer and the salaries of the assemblers.
All other resources which contribute indirectly to the final
product or service, or which are less significant as regards cost,
are categorised as ‘overhead costs’. Examples include marketing
costs and property taxes. This pool of costs is usually allocated
on some kind of volume-based driver, such as direct labour
hours or labour dollars, or is often even attributed arbitrarily.
It is obvious that managers in modern organisations, which

are facing greater competition and increasing (technological)
overhead costs, are doomed to take incorrect decisions based
on inaccurate data from traditional cost systems. The higher risk
is for companies with multiple products and services.
152 Tools: Activity-Based Costing
II) What
Activity-Based Costing does not change the way direct material

and direct labour are attributed to manufactured products or
delivered services. However, it does radically change the way
overhead costs are allocated. The primary task of ABC is to
break up these indirect activities and costs into meaningful
pools which can then be assigned to processes and products in
a manner that better reflects the way costs are actually incurred.
The system must recognise that processes or products consume
resources in different proportions for each activity. Only then
will it make sense for managers to determine the appropriate
mix of their product lines, to price their products and services
competitively, to identify the real profits or losses, and even to
assess new technologies. (Refer to Exhibit 1 below for a practical
demonstration.)
One of the basic issues surrounding ABC is the difficulty

of implementation. Identifying activities or processes to be
allocated properly is cumbersome and takes a lot of effort. It
requires that processes are adequately mapped throughout
the organisation. An equally important obstacle centres on
the problem of collecting and processing the necessary data in
the correct format at a reasonable cost. Many methodologies,
guidelines and books on implementing ABC have been written
over the years, but the simple truth is that there is no one way to
proceed. ABC must be tailored for each organisation in the light
of its strategy and particular requirements, using a degree of
analysis that is affordable and realistic. Perhaps the best way to a
successful implementation is to approach ABC as a continuous
improvement project with the model being developed until
the resulting incremental improvements no longer justify the
additional development or data collection expense.
III) When it can be used
As with any other management tool, ABC is not a miracle business

cure, nor should all organisations implement or embrace it as a
religion. It is an operational strategy that needs to be carefully
reviewed for applicability. The following circumstances could be
warning flags for hidden ABC needs:
• Sales are increasing, but profits are declining
• Some products that have reported high profit margins are not
sold by competitors
• Overhead rates are very high, and increasing over time
• Product lines are diverse
• Stiff competition, high cost of errors
• Product-line profit margins are difficult to explain
• Line managers suggest that apparently profitable products be
dropped
• Direct labour is a small percentage of total costs
• The results of bids are difficult to explain
Exhibit 1: Traditional costing versus Activity-Based Costing
The widely differing overhead costs are a result of the inherent

inaccuracy of the single volume-based overhead rate. The relative
usage of direct labour by the two production orders does not reflect
their relative usage of other manufacturing support services.
Two recent production orders had the following requirements 20.000 Units Box C52 10.000 Units Box W29
Direct labour hours 42 21
Raw material cost 40,000 35,000
Hours in design department 10 25
Production runs 2 4
Machine hours 24 20
Traditional Costing Method
Based on direct labour hours
The direct labour budget calls for 4,000 hours
Total budgeted overheads 1,020.000 €
Total budgeted direct-labour hours 4 000 hr.
Predetermined overhead rate 1,020.000€/4,000hr. = 255 €/hr.
Overhead per order 42 hr. x 255 €/hr. = 10,710 € 21 hr. x 255 €/hr. = 5,355 €
Overhead per box 10,710 € / 20,000 = 0.5355 € 5,355 € / 10,000 = 0.5355 €
Activity-Based Costing Method
Based on each cost driver
Tools: Activity-Based Costing
Purchasing, storage and material handling ... 20% x 40,000 € = 8,000 € 20% x 35,000 € = 7 000 €
Engineering and Product Design ... 20 €/hr. x 10 hr. = 200 € 20 €/hr. x 25 hr. = 500 €
Machine Setup ... 70 €/run x 2 runs = 140 € 70 €/run x 4 runs = 280 €
Machine Depreciation and Maintenance ... 3 €/hr. x 24 hr. = 72 € 3 €/hr. x 20 hr. = 60 €
Factory Depreciation, Taxes, Insurance ... 2 €/hr. x 24 hr. = 48 € 2 €/hr. x 20 hr. = 40 €
Other Manufactoring Overhead Costs ... 1.5 €/hr. x 24 hr. = 36 € 1.5 €/hr. x 20 hr. = 30 €
Overhead per order 8,496 € 7,910 €
154
Overhead per box 8,496 € / 20,000 = 0.4248 € 7,910 € / 10,000 = 0.7910 €
IV) Bibliography
Hilton Ronald W., “Managerial Accounting Creating: Value in a

Dynamic Business”, McGraw-Hill Corporation, New York, 2005,
p.24 (2), pp 187-188
Cooper Robin, “Does Your Company Need a New Cost System?”,

Harvard Business Review 67, no.1, 1989, pp.77-82
Paduano Rocco and Cutcher-Gershenfeld Joel, “Boeing

Commercial Airplane Group Wichita Division (Boeing Co.):
Employing Activity-Based Costing and Management Practices
Within the Aerospace Industry: Sustaining the Drive for Lean”,
Labor Aerospace Research Agenda, Massachusetts Institute of
Technology, Cambridge MA, 2001
Johnson H. Thomas, “Accounting History”, Special Interest Group

of Accounting Association of Australia and New Zealand School of
Accounting and Finance, 2002 (found on www.findarticles.com)
Kaplan Robert S. and Johnson H. Thomas, “Relevance Lost: The

Rise and Fall of Management Accounting”, Boston: Harvard
Business School Press, 1987.
Web-o-graphy
http://www.applause.hu/terms_e.htm)
http://dor.hbs.edu/fi_redirect.jhtml?facInfo=bio&facEmId=rkaplan
http://www.onderwijsportaal.nl/plot-Persoonlijk/uvt-kaplan1.htm
(Interview in December 1990 with Professor Kaplan for
Controllers Magazine, no.8, p.10-15)
156 Tools: Benchmarking
Benchmarking
I) What
Benchmarking is a practical tool or method which forms part
of an integrated approach used by an organisation to improve
its organisational performance. The benchmarking process
is tailored by each organisation to suit its own strategies and
objectives but, in essence, all benchmarking uses a comparative
approach to solve common organisational problems. Therefore,
at its most basic, benchmarking means “Improving ourselves
by learning from others”1, or as Bob Camp, VP of Xerox, was
quoted in Financial World as saying: “Benchmarking is nothing
more than admitting that someone else is capable of doing
something better than you.”
Benchmarking, as it is known today, was developed in the USA

in the 1970s where its origin is often attributed to the Xerox
Corporation. However, the underlying concept has been in
existence for considerably longer, as suggested by the Japanese
word dantotsu which means striving to be ‘the best of the best’.
Originally, benchmarking was developed and utilised by

companies operating in an industrial environment where it
permitted them to gain and maintain a competitive edge over their
rivals, although in recent years it has been successfully applied
within government agencies, hospitals and universities. In these
institutions, benchmarking has been used to improve processes
and systems, whilst more recently still, public authorities have
begun to explore the use of benchmarking to improve policy
implementation processes and thereby bring about the delivery
of effective and efficient modern public services.
Although it is a very versatile tool that can be applied either

alone, or in conjunction with other improvement tools (e.g.
Tools: Benchmarking 157
the balanced score card), first and foremost benchmarking

endeavours to compare an organisation’s processes, operations
or services with others that are recognised to be the ‘best in
class’. The comparator organisations are termed ‘benchmarking
partners’ and they either run similar processes, operations,
services or systems or are direct competitors of the organisation
being benchmarked.
A plethora of different definitions are used to distinguish the

various ways of applying benchmarking, so it helps to first
focus on the process of benchmarking before considering its
application.
Although at present there is no standardisation of the phases,

stages and steps, in practice the benchmarking process usually
includes:
1. regularly comparing aspects of performance (functions or
processes) with best practitioners;
2. identifying gaps in performance;
3. seeking fresh approaches to bring about improvements in
performance;
4. following through with implementing improvements; and
5. following up by monitoring progress and reviewing the
benefits.
II) When it can be used
Specific aspects of an organisation’s operations can be targeted

for improvement through the selection and application of
a suitable benchmarking process. A few of the most used
approaches are listed below:
1. Strategic Benchmarking – examines the long-term
strategies and general approaches that have enabled high
performers to succeed.
2. Performance Benchmarking or Competitive Benchmarking
– compares an organisation with the best of their direct
competitors, drawn from the same sector.
3. Process Benchmarking – compares specific critical
processes and operations with benchmarking partners
from best-practice organisations that perform similar
work or deliver similar services.
4. Functional Benchmarking or Generic Benchmarking
– uses benchmark partners drawn from different business
sectors or areas of activity in order to find ways of
improving similar functions or work processes.
5. Internal Benchmarking – compares similar operations
within one’s own organisation, e.g. comparing business
units located in different regions.
6. External Benchmarking – compares an organisation with
outside organisations that are known to be best in class
and are currently at the ‘leading edge’.
7. International Benchmarking – is used where ‘best
practice’ partners are located in other countries.
Organisations undertaking benchmarking for the first time often

opt to use internal benchmarking to build up experience of the
benchmarking process before attempting either external or functional
benchmarking. By contrast, larger organisations often progress
through the various types of benchmarking over time in order to
gain the maximum positive impact on overall performance.
When used appropriately, benchmarking has proven itself to

be one of the most effective tools for bringing about quantum
leaps in organisational performance. It has led to significant
improvements in quality and cost of services. However, the
biggest challenge for benchmarking will continue to be to
demonstrate the benefits of change to those who are fiercely
protective of the status quo.
III) Example: UPS and benchmarking
“At UPS, we are major disciples of the benchmarking process as

we continually strive to maintain our position as a ‘world-class
service provider’. ”
“We utilise people, competition, technology and our company

goals to analyse best practices, and to continuously develop
our service performance, both for our internal and external
customers.”
“We set Key Process Indicators (KPIs), performance

measurement tools, and Minimum Acceptable Requirements
(MARs), all of which are reported on a daily, monthly or annual
basis depending on the task. These are reviewed across all areas
of the business.”
“We reward our people for good performance with incentives

and further development opportunities within the organisation.
We also motivate our below-par performers to improve to reach
the MARs.”
“Finally, and most importantly, we monitor our progress using

the Employee Retention Index (ERI) internally to see how
our people think we are progressing, and with the Customer
Satisfaction Index (CSI) externally to review our external
customer feedback.”
“We are continually ranked in industry and business as a ‘world-

class performer’ with a ‘world-class brand’ and we will continue
to use benchmarking as an essential means to maintain this
position.”
“In my experience, identifying the toughest competitors and

world-class performers, and then aspiring to beat them is the
best way to achieve competitive advantage.”
Bill Cockburn – BT Group MD
IV) Sources
The European Benchmarking Code of Conduct

Xerox Corporation
© Crown Copyright 2006
The Public Sector Benchmarking Service (PSBS)
UPS Ltd.
Web-o-graphy
http://www.benchmarking.gov.uk/about_bench/whatisit.asp
http://www.investorwords.com/457/benchmark.html
http://www.books.md/B/dic/benchmarking.php
http://66.124.245.130/wib.htm
http://www.longbeachworkforce.org/SCRPEF/PDFS/
Benchmarking_Overview.pdf
http://www-mmd.eng.cam.ac.uk/people/ahr/dstools/proces/
benchm.htm
http://bwnt.businessweek.com/Glossary/
definition.asp?DEFCode=B18
http://www.productivesolutions.com.au/benchmarking.htm
http://www.benchmarking-in-europe.com/library/
archive_material/articles_publications/archive_psi_articles/
explained.htm
164 Tools: Boss styles
Boss styles
Whenever I think of bad bosses, two people come to mind:

the callous and insensitive PR director who made my life hell
for a year and the birdbrained supervisor in the movie Office
Space. I would not wish either on anyone except maybe my
worst enemy.
Although two-thirds of workers told CareerBuilder that they

were satisfied with the person they report to, the remainder
were dissatisfied with their bosses. Today’s workers are voicing
concerns about their supervisor’s ability to lead, with 42%
claiming they can do their supervisor’s job better. Part of their
criticism is attributed to the amount of individual attention
given to employees, as well as to their perceptions of character.
Twenty-four percent say their supervisor does not take the time
to review job concerns, and 22% feel their supervisor is not
trustworthy.
Chances are that you have encountered a supervisor who has

made your life miserable or made work days unbearable. For
example, there was a supervisor who made an employee write
her papers for her MBA classes, and then turned around and
reported her for doing it on company time; or the executive
vice-president who addressed an employee’s weight rather than
performance in an annual review.
Just as there is a myriad of nightmare bosses, there are many

ways to deal with their workplace terrors. In The Worst Case
Scenario Survival Handbook: Work (Chronicle Books), Joshua
Piven and David Borgenicht describe some of these bosses and
how to deal with them:
Tools: Boss styles 165
The Control Freak micromanages every move you make.

How to deal with it: bombard this person with emails, reports
and meetings, which might overwhelm him and throw him off
his controlling behaviour.
The Buddy tries to solicit personal information and seeks

inclusion as though you are best of friends.
How to deal with it: include this person but keep your distance.
Invent a fictional hobby, extend invitations you know he or she
cannot accept, and avoid hugs.
The Workaholic has sacrificed his life for his job and expects
the same from you.
How to deal with it: let this person know there is life outside of
work. Discuss family, friends and hobbies at every opportunity.
The Teller of Bad Jokes always has one just for you and it is
always bad.
How to deal with it: be prepared for the painful punchline, feign
amusement, then change the subject.
The Supreme Delegator takes all of the credit and none of the
blame and essentially is setting up others to take the fall.
How to deal with it: in writing, advise on all key decisions and
plans, but be prepared for a denial of knowledge if anything goes
wrong.
The Yes/No Manager could not care less about useful

information or discussions and simply wants every decision
boiled down to «yes» or «no.»
How to deal with it: present summaries with several alternatives
for action. If asked for a recommendation, give it orally.
166 Tools: Boss styles
The Passive-Aggressive Boss procrastinates, complains about

not enough time, and then blames others for a bad job.
How to deal with it: involve others in projects as often as is
necessary so that you have witnesses.
The Indecision Maker needs information from many different

sources before making any sort of ‘independent’ decision.
How to deal with it: present any question as if you have made a
survey of information from any key employees who might have
a stake in the problem.
The All-Business-is-Personal Manager cannot separate busi-

ness and personal life.
How to deal with it: make your work time enjoyable – one bad
incident could ruin your work relationship.
In the long run, though, your nightmare could turn into a sweet
dream. That toxic supervisor could be the factor which motivates
you to make a change for the better.
Tools: Boss styles 167
Bibliography
Adair, John, (2007), The Art of Creative Thinking, Kogan Page,

London and Philadelphia, ISBN 978-0-7494-4799-1
Blanchard, Kenneth H.and Zigarmi Patricia,(1985) Leadership
and the One Minute Manager , William Morrow, New York,
ISBN 0-688-03969-3
Bogard, Morris R (1979)-. The Manager’s Style Book:
Communication Skills to Improve Your Performance, Prentice
Hall, ISBN: 0135491967
Straw, Julie and Brown Celier, Aliston (2002), ‚The 4-Dimensional
Manager: Disc Strategies for Managing Different People in the
Best Ways’, Berret Koehler Publishers, San Francisco, ISBN
1-57675-135-x
168 Tools: The Boston Matrix
The Boston Matrix

I) What
The Boston Matrix (BCG Matrix), which was developed in the
70s by the Boston Consulting Group, remains to this very day
one of the most used tools in the strategic analysis of product
portfolios. It is a graphical representation of the positioning
of each company’s products in the market, taking into
account variables such as sector development, and the relative
participation in the market.
The matrix identifies four types or families of products: stars,

cash cows, dogs, and question marks, suggesting strategies
adjusted to each situation. Their characteristics are as follows1:
The Boston Matrix

HIGH
M Star
➡ Question Marks
a
r
k
e
t
➡
G
r
o
w
t
h Cash Cow
➡ Dog
LOW
HIGH Market Share LOW
1
Illustration taken from the “Tutor2u – on-line Learning Resource of the Year”
Tools: The Boston Matrix 169
II) How it should be used
Stars: high relative participation in the market (high market

share) and high market growth – “stars are successful products
for which there is significant market demand”2. Stars products
are in leading market positions generating high incomes for the
company; nevertheless they consume great amounts of cash to
finance the product’s growth.
Cash Cows: high participation in the market (high market share)

and slow market growth. Sales of cash cow products reach a
stable maximum level of growth. Cash cows are very profitable
products contributing to the company cash flow. They generate
more cash than the amount they need to grow in the market and
those ‘extra amounts’ of cash can be used to create or to develop
other businesses.
Question Marks (also called ‘wild cats’ or ‘problem child’):

products with a high market growth but which have failed to
establish a significant market share. Such a product might be
inferior to those of its competitors; its marketing strategy might
be inferior or the market might be growing too fast demanding
large amounts of money to finance its growth. In these cases, the
company needs to analyse its failure to gain market share and to
develop strategies to overcome the problem. The company must
evaluate whether or not to continue investing in this product.
Dogs: low participation in the market (low market share) and

low market growth. These products are usually linked to low
profits, the company is not one of the leaders in the ‘area’ and the
market is not growing. Dog products will not be able to compete
with other products and will not attract the resources needed to
improve their position in the market, therefore they must either
be ‘reconstructed’ or eliminated.
2
www.market-modelling.co.uk
III) Example
The above-mentioned classification is useful to identify the

most efficient portfolio composition of a company, so that the
largest objective (maximisation of the profits) is reached. Firms
must then choose on the basis of the closely linked combination
of sustainable competitive advantage and potential financial
contribution to the company.
Underlying this theory is the product life-cycle concept which

states that business opportunities move through life-cycle
phases of introduction, growth, maturity and decline. The
following illustrates the relationship between the product life
cycle and the Boston Matrix:
1. A new product is commonly launched as a ‘question mark’

into a high-growth market as it will eventually create greater
returns. Nevertheless, at this stage it suffers from a low
market share and more investment has to be made in terms
of market awareness and to stimulate the sales volume.
2. Then, if sales develop at a faster rate than that of the other
competing products, the production will move into a ‘star’
position as sales and market share increase. These products
have reached their maturity and entail a significant cash
flow for the company.
3. In case the market growth slows down but market
leadership is reached, it will enter the ‘cash cow’ position.
At this stage, sales have grown to a stable maximum level
and the product has become very profitable, contributing
significantly to the company’s cash flow.
4. In the case where a product ages and loses market share
we face the ‘dog’ position – that is, the product is no longer
contributing to the company portfolio, it gives low or no
profits and is not able to compete with other products in
the market.
Tools: The Boston Matrix 171
At each position within the matrix there are a number of

opportunities open to the company; for example, at cash cow
stage the options are either to invest to maintain market share
or to minimise investment in the product, maximise the cash
returns, and grow market dominance with other products.
In conclusion, to be successful, a company should have a

portfolio of products with different growth rates and different
market shares. A portfolio in equilibrium will then include
a number of question mark and star products, although the
former should be greater in number to allow for market failures.
Moreover, a healthy portfolio will also have a number of cash
cow products to reduce the risks associated with the business
being dependent upon the sales of a single product. Ideally,
there should be relatively few or no dog products.
For more information on the Boston Consultancy Group, see

Experience curve below.
IV) Bibliography
Brown, Stephen, “Writing Marketing – Literary Lessons for

Academic Authorities”, Sage Publications, 2005
Wales Jerry Reaich, Neil Reaich: Business Studies As OCR
Specifications, 2004
Web-o-graphy
http://www.marketingteacher.com/Lessons/
exercise_boston%20matrix.htm
http://www.market-modelling.co.uk/MATRIX/
MATRIX_Step08_1.htm
http://www.dpu.se/boston_e.html
http://www.elsevier.com/wps/find/
bookdescription.cws_home/677106/description#description
http://www.brs-inc.com/models/model14.asp
http://www.atwebo.com/boston_matrix.htm
174 Tools: The Catell 16 PF Personality Profile
The Cattell 16 PF Personality Profile

I) What
In 1949, Dr Raymond B. Cattell published one of the first measures
of personality by proposing the Sixteen Factor Questionnaire
(16PF). The 16PF scales that he derived measure temperament
– a person’s characteristic style of thinking, perceiving, and
acting over a relatively long period of time and in a wide range
of different situations.
Each of the 16 factors of personality traits is manifested in a set

of attitudes, preferences, social and emotional reactions, and
habits. The table below provides the main factors and indicates
the extremes of each scale.
Factor Descriptors (range to – from)

A Warmth Reserved Outgoing
B Reasoning Less intelligent More intelligent
C Emotional stability Affected by feelings Emotionally stable
E Dominance Humble Assertive
F Liveliness Sober Happy-go-lucky
G Rule consciousness Expedient Conscientious
H Social boldness Shy Venturesome
I Sensitivity Tough-minded Tender-minded
L Vigilance Trusting Suspicious
M Abstractedness Practical Imaginative
N Privateness Straightforward Shrewd
O Apprehension Self-assured Apprehensive
Q1 Openness to change Conservative Experimenting
Q2 Self-reliance Group-dependent Self-sufficient
Q3 Perfectionism Self-conflict Self-control
Q4 Tension Relaxed Tense
Tools: The Catell 16 PF Personality Profile 175
Nowadays, the Cattell 16PF model is the world’s most-widely

used (administered worldwide in 40 languages) system for
assessing, categorising and defining personality characteristics.
Unlike other common personal profiling, the Cattell 16PF aims
to uncover the deep, basic traits that underlie human behaviour,
without regard to how individuals apply it to the environment
in which it is applied.
It is taught in psychology, widely applied by HR consultancies and

can help in personnel selection and development by identifying
the nature of personal qualities that influence behaviour in work
settings. Thus, the Cattell 16PF may be applied to characterising
problem-solving style, interpersonal or management style,
planning work and career performance objectives or directions,
and to providing effective training for career development.
A variation of the Cattell 16PF – the five factors – has recently

become more common, resulting in a sharper picture of the
underlying personality.
Factor Descriptors (range to – from)

Extraversion Introverted, socially Extroverted, socially
inhibited participative
Anxiety Low anxiety, Easily worried and
unperturbed generally tense
Will Open-minded, receptive Resolute and determined
to ideas
Independence Accommodating and Independent and
selfless persuasive
Self-control Free-thinking and Structured and inhibited
impulsive
II) When it can be used
Selection – for roles where correlations have been found

between primary traits and criteria for success, check match
with candidate profile.
Executive coaching and management development – assess

management potential/style, raise subject self-awareness and
build him/her a development plan.
Team building – assess personalities in the dynamic of the

group to create a better match in team building and for drafting
a team-improvement plan.
Career guidance – evaluate career expectations against

personality profile and also provide reorientation and
improvement directions.
Counselling – identify factors that may contribute to emotional

and social problems.
Research – identify factors most likely to support, by positive

correlations, theories on performance in various domains of life.
III) Example in an SME and/or other organisation
The complexity of the test and its administration makes it

less attractive to SMEs, while service companies oriented to
assessment, selection, counselling and orientation, thrive on it
and use it alongside other personality tests like MBTI, MMPI-II
or CPI.
Companies like OPP in Europe or Pearson Assessments in

the US have, among their clients, organisations like IBM,
Bank of America, Toyota or US Transportation Security
Administration.
The internet has brought PF closer to clients as many small

counselling and evaluation companies have sprung up on the
web (see below).
Virginia Military Institute is using PF16, along with MBTI,

for cadets’ follow-ups. Their experience shows that successful
cadets score high on dominance and reasoning and low on
extraversion. They also identified that low scores on dominance
and self-control, together with high scores on anxiety, correlate
with a higher drop-out rate. Finally, there is constant growth,
throughout the school years, for dominance, self-control and
tough-mindedness among all students.
PF16 has a good grip in the research environment where it has

been used to study the effects of ageing, to understand differences
in learning styles, to improve selection and training of military
pilots, to study equivalence of cross-cultural test translations,
to investigate the effects of social desirability on tests, and to
understand issues of sexual orientation.
IV) Historical context
In the aftermath of World War I, at a time of social unrest, intense

scientific progress and reassessment of Western values, the field of
psychology flourished. Cattell was influenced in his early academic
years by the ideas of George Bernard Shaw, Aldous Huxley, H. G.
Wells and Bertrand Russell, and developed his conviction that a
solution to the problems of humanity lay in a better understanding of
human temperament and motivation. He was strongly motivated by
the work of Freud and Jung, and had the chance to work with Charles
Spearman who revealed to him the power of factor analysis.
In 1939, the imminence of World War II put pressure on

improving screening and selection methods, and Cattell
continued his research from his position in the US Adjutant
General’s Office, Personnel Research Division. In the same
period, Myers and Briggs were releasing the MBTI which was to
become heavily used by US forces.
The end of the war found Cattell at the University of Illinois where
Illiac I, the first electronic computer, was raising hopes for a better and
more accurate factor analysis deployment for proving the theory.
The post-war period has been full of other major leaps forward
such as the transistor (1947), the Big Bang theory (Gamow,
1946) and the discovery of nucleic acids (Franklin, 1951).
While his PF16 model came under heavy criticism from Fiske
(1949), Cattell pushed the model further and by 1957 had
released the 16PF5. In 1963, Warren Norman confirms the
existence of five major personality factors.
In 1968, Walter Mischel – a behaviourist – overtook the traits

movement up until 1981 when H.J. Eysenck published his three-
personality-factor theory.
V) Bibliography
Eysenck, Michael W., “Psychology: An International Perspective”,

Psychology Press, 2004, p 984, ISBN: 1841693618
Conn, Steven R., Rieke, Mark, “16PF Fifth Edition Technical
Manual”, 1994, IPAT
Hall, C. S., Lindzey, G., & Campbell, J. B. (1998), “Theories of
personality” (4th ed.). New York, Wiley
Web-o-graphy
http://www.personalityresearch.org/papers/fehringer.html
http://www.psypress.com/pip/resources/slp_demo/c13-4.asp
http://www.pearsonassessments.com/tests/sixtpf_5.htm
http://www.cattell.net/devon/rbcbio.htm
http://www.centacs.com/quickstart.htm
http://www.ou.edu/russell/pdf/ATC’00.pdf
http://www.utsc.utoronto.ca/~psyb30/PSYB30LEC04.ppt
http://media.wiley.com/product_data/excerpt/49/04712342/
0471234249.pdf
180 Tools: Cycle of learning/Cycle of training
Cycle of learning/Cycle of training

Confucius around 450 BC:
«Tell me, and I will forget. Show me, and I may remember.
Involve me, and I will understand.»
I) Who: biography
David A. Kolb
Professor of Organisational Behaviour, Weatherhead School of

Management, Case Western Reserve University
David Kolb is the founder and chairman of EBLSI (Experience
Based Learning Systems, Inc.) and professor of organisational
behaviour at the Weatherhead School of Management, Case
Western Reserve University.
He is the author of Experiential Learning: Experience as the source
of learning and development, and creator of the Kolb Learning
Style Inventory. Other works include: Conversational Learning:
An experiential approach to knowledge creation, Innovation
in professional education: Steps on a journey from teaching to
learning, Organizational Behavior: An experiential approach,
and numerous journal articles on experiential learning. He has
received four honorary degrees recognising his contribution to
experiential learning in higher education.
Tools: Cycle of learning/Cycle of training 181
II) What: Cycle of learning/Cycle of training
Concrete
Experience
Active Reflective
Experimentation Observation
Abstract
Conceptualisation
This suggests that there are four stages which follow from each
other: Concrete Experience is followed by Reflection on that
experience on a personal basis. This may then be followed by
the derivation of general rules describing the experience, or the
application of known theories to it (Abstract Conceptualisation),
and hence to the construction of ways of modifying the next
occurrence of the experience (Active Experimentation), leading
in turn to the next Concrete Experience. All this may happen in
a flash, or over days, weeks or months, depending on the topic,
and there may be a «wheels within wheels» process at the same
time.
Experiential Learning Styles
Honey & Mumford: Typology of Learners
Activist: prefers doing

Concrete and experiencing
Experience
Reflector: observes
and reflects
Active Reflective Theorist: wants to

Experimentation Observation understand underlying
reasons, concepts,
relationships
Abstract Pragmatist: likes to
Conceptualisation "have a go" try things
to see if they work
Honey and Mumford (1982) have built a typology of Learning

Styles around this sequence, identifying individual preferences
for each stage (Activist, Reflector, Theorist, Pragmatist,
respectively). Kolb also has a test instrument (the Learning Style
Inventory) but has carried it further by also relating the process
to forms of knowledge.
Two ways of “knowing”
Concrete Experience corresponds to “knowledge by

acquaintance”, direct practical experience (or “Apprehension” in
Kolb’s terms).
Abstract Conceptualisation corresponds to «knowledge about»
something, which is theoretical, but perhaps more comprehensive
(or “Comprehension” in Kolb’s terms).
Concrete
Experience
by direct experience
"apprehension"
Active Reflective
Experimentation by "comprehension" Observation
or knowing about
Abstract
Conceptualisation
Two ways of understanding
Reflective Observation concentrates on what the experience

means to the person who experiences it, (it is transformed by
«Intension») or its connotations
Active Experimentation transforms the theory of Abstract
Conceptualisation by testing it in practice (by «Extension») and
relates to its denotations.
Concrete
Experience
Active by using "denotation" Reflective

Experimentation by thinking "connotation" Observation
Abstract
Conceptualisation
Forms of Knowledge and the Learning Cycle
The four quadrants of the cycle are associated with four different
forms of knowledge, in Kolb’s view. Each of these forms is paired
with its diagonal opposite.
Concrete
Experience
Accommodative Divergent
Active Reflective
Experimentation Observation
Convergent Assimilative
Abstract
Conceptualisation
Convergent thinking
- science and technology (?)
Facts
Answer
Divergent thinking
-arts and humanities (?)
Idea
Stimulus
Assimilation: fit to practice to theory

Complex but familiar external objects are simplified
to fit pre-existent categories in your head
Outside Inside your head Outside
Accommodation: fit theory to practice

You have to change the ideas in your head
to fit the realities of external objects
Outside Inside your head Outside

Learning styles mean that:

At a minor level there is a need for adjustment between learner
and teacher: sometimes their preferences are complementary,
sometimes antagonistic, and of course sometimes collusive if
they both tend to go for the same stages in the cycle;
At a major level, neglect of some stages can prove to be a major
obstacle to learning.
Kolb's
learning Concrete Experience
styles Feeling
Accommodating Diverging
(feel and do) (feel and watch)
CE/AE CE/RO
how we think about things
Perception Continuum
Active Processing Continuum Reflective

Experimentation how we do things Observation
Doing Watching
Converging Assimilating
(think and do) (think and watch)
AC/AE AC/RO
Abstract
Conceptualisation
Thinking
©
Kolb learning styles, definitions and descriptions
Knowing a person's (and your own) learning style enables

learning to be orientated according to the preferred method.
That having been said, everyone responds to and needs the
stimulus of all types of learning styles to one extent or another
– it is a matter of using emphasis that fits best with the given
situation and a person's learning style preferences.
Here are brief of the four Kolb learning styles:

• Diverging (feeling and watching - CE/RO): These people
are able to look at things from different perspectives. They
are sensitive. They prefer to watch rather than do, tending to
gather information and use imagination to solve problems.
They are best at viewing concrete situations from several
different viewpoints. Kolb called this style “Diverging”
because these people perform better in situations that require
ideas-generation, for example, brainstorming. People with a
Diverging learning style have broad cultural interests and like
to gather information. They are interested in people, tend to be
imaginative and emotional, and tend to be strong in the arts.
People with the Diverging style prefer to work in groups, to
listen with an open mind and to receive personal feedback.
• Assimilating (watching and thinking - AC/RO): The
Assimilating learning preference is for a concise, logical
approach. Ideas and concepts are more important than
people. These people require a good clear explanation rather
than practical opportunity. They excel at understanding
wide-ranging information and organising it in a clear
logical format. People with an Assimilating learning style
are less focused on people and more interested in ideas and
abstract concepts. People with this style are more attracted
to logically sound theories than approaches based on
practical value. These learning style people are important
for effectiveness in information and science careers. In
formal learning situations, people with this style prefer
readings, lectures, exploring analytical models, and having

time to think things through.
• Converging (doing and thinking - AC/AE): People with
a Converging learning style can solve problems and will
use their learning to find solutions to practical issues. They
prefer technical tasks, and are less concerned with people
and interpersonal aspects. People with a Converging
learning style are best at finding practical uses for ideas
and theories. They can solve problems and make decisions
by finding solutions to questions and problems. People
with this style are more attracted to technical tasks and
problems than social or interpersonal issues. A Converging
learning style enables specialist and technology abilities.
People with this style like to experiment with new ideas, to
simulate, and to work with practical applications.
• Accommodating (doing and feeling - CE/AE): The
Accommodating learning style is 'hands-on', and relies on
intuition rather than logic. These people use other people's
analysis, and prefer to take a practical, experiential approach.
They are attracted to new challenges and experiences, and
to carrying out plans. They commonly act on gut instinct
rather than logical analysis. People with an Accommodating
learning style tend to rely on others for information than
carry out their own analysis. This learning style is prevalent
and useful in roles requiring action and initiative. People
with an Accommodating learning style prefer to work in
teams to complete tasks. They set targets and actively work
in the field trying different ways to achieve an objective.
Examples and practical use:

• practitioners of creative disciplines, such as the arts, are
found in the Divergent quadrant
• Pure scientists and mathematicians are in the Assimilative
quadrant
• Applied scientists and lawyers are in the Convergent

quadrant
• Professionals who have to operate more intuitively, such as
teachers, are in the Accommodative quadrant
A number of criticisms can be made of the Kolb model.
“It pays insufficient attention to the process of reflection” (see
Boud et al., 1983);
“The claims made for the four different learning styles are
extravagant” (Jarvis 1987; Tennant 1997);
“The model takes very little account of different cultural
experiences/conditions;
the idea of stages or steps does not sit well with the reality of
thinking” (Dewey 1933);
“The empirical support for the model is weak” (Jarvis 1987;
Tennant 1997).
Critiques of David Kolb's theory from a training perspective

by Claire Forrest in Train the Trainer Issue 12 (2004):
• "The idea of a nice set of neat learning stages does not equate
to most people's reality. The problem is that a number of
processes can occur at once and stages can be jumped or
missed out completely."
• "The experimental research base for the model was small,
and there have been only a few further studies."
• "Several commentators suggest that the learning styles are
too simplistic and, whilst they fit neatly into Kolb's cycle,
they fail to take account of ways of learning other than
experiential."
• "The inventory has been used within a fairly limited range
of (mainly Western) cultures and thus the assumptions that
underpin the Kolb and Fry model are Western. There is a
need to consider the different cultural models of selfhood."
III) Web-o-graphy
David Kolb’s website:

http://www.learningfromexperience.com/
Claire Forrest's website:
http://www.structuredlearning.com
James Atherton:
http://www.learningandteaching.info/learning/experience.htm
Tim Pickles:
http://reviewing.co.uk/research/experiential.learning.htm
http://www.businessballs.com/kolblearningstyles.htm
192 Tools: Delphi Method
Delphi Method
I) What is the Delphi Method?
The Delphi Method (DM) is a technique used to structure a
group communication process to deal with a specific issue. More
specifically, the DM provides a structured process for collecting
and distilling knowledge from a group of experts. The knowledge
is gathered using questionnaires and the participating experts
will never meet in person. The group communication process
and its final outcome will thus not suffer from ‘follow the leader’
tendencies, which often hamper the quality of group opinion in
conventional face-to-face group discussion processes. The DM is
based on the ‘Dialectic Inquiry’ philosophy, meaning that it uses the
group communication process to move from thesis (establishing an
opinion) over antithesis (conflicting opinion) to synthesis (a new
consensus). In other words, the DM uses the conflicts which arise
between contrary propositions in a group communication process,
centred around a specific issue, to find a new proposition.
The practical application of the DM can be summarised in ten

steps. First, it is necessary to build a Delphi team to set up and
monitor the project. Second, the Delphi team must find a panel of
experts to participate in the forecast. Third, a questionnaire needs
to be developed by the Delphi team. Fourth, the Delphi team must
thoroughly test the wording of the questionnaire to make sure it
avoids ambiguity. Fifth, the questionnaire is distributed to the panel
of experts. Sixth, the responses to the questionnaires are analysed.
Seventh, a new questionnaire is developed by the Delphi team,
the aim of which is to move the panel of experts closer towards
consensus. Eighth, the new questionnaire is transmitted to the
experts. Ninth, the new answers are analysed and the process of
developing new questionnaires will continue until stable results are
obtained. The tenth and final step would be for the Delphi team to
prepare a report which summarises the findings of the process.
Tools: Delphi Method 193
II) When can the Delphi Method be used?
The DM is particularly useful for forecasting a specific, single-

dimension future issue. In recent years, the DM has been
particularly popular in research studies concerning the areas of
public health issues and education. Thus, in theory the DM could
be used by UBI if the business school wanted to forecast whether
or not a specific new management trend should be incorporated
into the curricula of its BA and MBA programmes. Examples of
other applications of the DM include facilitating group consensus
building and helping to generate creative ideas.
III) Example: Case study of Delphi Method application
In 1994, the DM was applied by the Institut de médecine sociale

et préventive (IDMSEP), Lausanne, Switzerland. Using the
DM framework, IDMSEP explored and identified the potential
implications associated with introducing Switzerland’s first AIDS
vaccination. The IDMSEP Delphi team selected a panel of experts
comprising 30 participants with a good knowledge of and interest
in the area. The participants’ contributions to the study were
anonymous, so they never met one another in person. The study
used an existing scenario as its focal point, which modelled the
traits of the first preventive, partially effective, AIDS vaccination.
The IDMSEP Delphi team created three rounds of questionnaires

before developing its final report on the issue. Those filling in the
questionnaires were asked the following three qualitative questions.
First, they were asked to list which objectives they thought needed
to be achieved during the first five years of the AIDS vaccinations
in Switzerland. Secondly, they were asked to evaluate whether
certain forwarded proposals, focusing on the development of a
public health strategy and the AIDS vaccination, were acceptable
and feasible. Thirdly, they were asked to estimate how different
groups of users could potentially use the AIDS vaccination.
The Delphi procedure performed by the IDMSEP produced two

main outcomes. A number of strategies and recommendations
were proposed for the creation of an AIDS-prevention campaign.
Secondly, an institutional framework was proposed to support the
setting up of a future AIDS vaccination strategy.
IV) History: Who invented the Delphi Method?
The DM was created by the US Army in the 1950s. However, several

personalities can be mentioned in the chain of events which led
to its creation. The American General, Henry Harley Arnold, saw
the need for the US Army to develop a technique for forecasting
future technological capabilities that might serve American
interests. With this perceived need as his major motivator, General
Arnold helped establish the RAND (Research and Development)
project in 1946. Throughout the 1950s and 60s, several RAND
researchers contributed to the creation of the DM, three of whom
are recognised as the ‘founding fathers’: Olaf Helmer, T.J. Gordon
and Norman Dalkey.
Historical context of the DM
The US had been deeply involved in World War II until it ended

in 1945. This was followed by its deep involvement in the Cold
War throughout the 1950s and 60s. So, the US was a nation facing
significant military threat during the DM’s early years. The scope
of the security threat posed by the Cold War is well illustrated by
the following incidents: the Vietnam War (1945-1975), the Korean
War (1950-1953) and the Cuba Crisis (1962). The Cold War was
characterised further by the competitive arms race between
the US and the Soviet Union. Thus, both superpowers were
pushed to seek innovation, which resulted in many significant
technology innovations, such as NASA’s Echo 1, the world’s first
communications satellite (1960).
From an analytical point of view it is no wonder that the US

Army finally developed a method aimed at improving technology
forecasting. In short, the US was under pressure to be constantly
ahead of the game when it came to the procurement and
development of cutting-edge defence technologies. This was not
just because of major military threats but also due to the political
pressures which arose from competing with the Soviet Union to be
the world’s largest superpower.
It is noteworthy that during the period of the Cold War the

counterculture movement was started by the American youth. The
counterculture was triggered in particular by the horrors of the
Vietnam War, and was a generation’s outcry for peace. By means
of protests and anti-war demonstrations, a whole generation of
young people spoke out for peace and challenged the structure of
US society. Through this counterculture, music genres such as rock
and folk music were established as a way of expressing radical ideas
and of rebelling in a peaceful maner.
V) Bibliography
Adler Michael, and Ziglio Erio (1996), “Gazing into the Oracle:
The Delphi Method and its Application to Social Policy and Public
Health”, London, Jessica Kingsley Publishers
Fowles Jib (1978), “Handbook of Futures Research”, Westport,

Connecticut, Greenwood Press
Cornish Edward (1977), “The Study of the Future”, Washington,

DC, World Future Society
Zuber Patrick (1994), “Introducing a First AIDS Vaccination in

Switzerland: A Delphi Policy Analysis”, Lausanne, Institut de
médecine sociale et préventive.
Web-o-graphy
http://www.12manage.com/methods_helmer_delphi_method.html
http://www.12manage.com/methods_dialectical_inquiry.html
http://www.bbc.co.uk/history/war/wwtwo/
http://www.cnn.com/SPECIALS/cold.war/
http://www.cyberlearning-world.com/nhhs/html3/culture.html
http://www.henleymc.ac.uk/general/delphi.nsf/homepage
http://www.theworkingmanager.com/articles/detail.asp?ArticleNo=164
http://www.sncpr.org.uk/delphi.htm
http://www.propertyrightsresearch.org/delphi_technique.htm
http://scholar.lib.vt.edu/ejournals/JVTE/v15n2/custer.html
http://www.marquette.edu/coa/team-creativity.html
198 Tools: Eight steps for major change
Leading successful organisational change:

Eight steps for major change
I) History
All organisations have to undergo periods of change in order
to adapt to the fast-changing environment in which they exist.
This is crucial, not only for competitive advantage but for mere
survival. Although this seems to be common knowledge in the
business world, when put into practice there are few who exploit
change to the maximum and secure a successful outcome.
The complexity of change is nothing new. During the 16th
century, Niccolo Machiavelli, declared in The Prince that: “there
is nothing more difficult to take in hand, more perilous to
conduct, or more uncertain in its success, than to take the lead
in the introduction of a new order of things”. Risk, uncertainty
and resistance are always present when managing change but,
nevertheless, through the passage of time we have developed
certain techniques and processes to overcome these obstacles
so as to adapt to the changing world or organisations in which
we live.
John P. Kotter has developed eight steps for major change. A
Harvard Business School professor and world authority in
the field of leadership and change, he has more than 20 years
of experience in the area and has written 15 books since
1970s. In his book Leading Change (1996), he describes the
obstacles organisations face when attempting to conduct major
modifications.
Tools: Eight steps for major change 199
II) What is the eight-steps process?
There are many factors to be addressed when dealing

with organisational change. Such factors can both create
vulnerabilities and opportunities, but in order to ensure it is
the latter, change has to be dealt with properly. The key lies in
understanding why organisations resist the need for change, the
appropriate multi-step process to achieve successful change,
and understanding how leadership over management is critical
to drive the process. In Leading Change, John P. Kotter describes
an eight-step process for managing effective major change in an
organisation. He also identifies eight common critical errors
when transforming a business:
1. Allowing too much complacency
2. Failing to create a powerful guiding coalition
3. Underestimating the power of vision
4. Failing to properly communicate the vision
5. Allowing obstacles to block the new vision
6. Failing to create short-term wins
7. Proclaiming victory too soon
8. Neglecting to anchor changes firmly to the corporate
culture
From these common mistakes he develops a process in which
it is important to go through every step in sequence, as even if
you end up dealing with more than one phase at the same time,
a completely linear approach is likely to fail.
Before defining the process, it is important to appreciate the
importance of making a clear distinction between management
and leadership. While one cannot operate at its best without
the other in a changing process, they are distinct in both their
nature and purpose. Management deals with the responsibility
of making sure that the processes and systems used in an

organisation run smoothly by supervising the functions of
such.
For its part, leadership adapts organisations to the changing
world by motivating and directing its members towards a
common purpose. It defines a future, and aligns the members
of the group with the vision by inspiring them to take action
to make change happen despite the obstacles. Diagram 1 shows
the process Kotter proposes for successful change management,
which comprises the following:
1. Establishing a sense of urgency
2. Creating a guiding coalition
3. Developing the vision and the strategy
4. Communicating the changed vision
5. Empowering broad-base action
6. Generating short-term wins
7. Consolidating gains and producing more change
8. Anchoring the new approaches to corporate culture
III) Establishing a sense of urgency
When companies experience a low sense of urgency, it is

normally due to a high level of complacency. The stage of
establishing a sense of urgency requires a great deal of co-
operation, willingness and initiative, as falling into complacency
is very easy and common, and may occur in spite of the presence
of highly intelligent and well-intentioned employers and
employees. Kotter highlights some reasons for these obstacles
and explains how to avoid them:
1. Lack of visible crisis

When companies lack visible crisis within certain departments,
they fail to feel bound to address them. While one department
may be doing exceptionally well, another may be struggling
for many reasons. If this crisis is not visible to everyone in the
organisation, the other departments will do little to confront
the problem. Therefore, a leader must make everyone in the
company aware of any crisis that may affect the company in
order to provoke a reaction.
2. False sense of security

This occurs when employees succumb to the feeling that because
they are working for a wealthy corporation they no longer
require the state of awareness needed to react to a crisis. They
feel comfortable with the idea that no matter what happens the
company will be able to survive due to its affluence. Leaders must
eliminate this false sense of security if they want their employees
to be willing and ready to react, change and make sacrifices for
the future success of the organisation.
3. Inappropriate management performance-measurement

methods
Management will fall into the trap of measuring performance
against low standards, which are more comfortable to attain.
In this way, progress is unlikely to be made, and little effort
will be put into meeting high standards. A high performance
standard has to be set in order to achieve top-level performance.
Comparison to competitors within or outside the company is
crucial to maintain the highest possible standard of performance.
Business as usual is not enough as it creates the risk of falling
behind and not appreciating what the real situation is.
4. Rigged internal planning and control systems

Business structures may cause members of the company to focus
on narrow functional goals within their specific departments
without paying attention to the bigger picture, and establishing
a sense of contribution to the company’s overall performance.
Therefore, functional goals and their measurement need to be
broadened to encompass the overall goals and functioning of the
organisation as a whole rather than as individual departments.
5. Lack of external feedback

Organisations often fall into the trap of acquiring 100% of their
performance feedback from internal sources by comparing
departments among the company. Without feedback from
external stakeholders, employees will never appreciate the
reality of their performance, and will therefore fall behind.
Employees have to be made aware not only of what they are
producing but also about the impact this is having on overall
business performance, and comparing it to what the competition
is doing.
6. Reprimands for external discussions about company

performance
On the other hand, those employees who do seek feedback
from external stakeholders and engage in honest discussions
about organisational performance are often reprimanded
for inappropriate behaviour, due to the risk of disseminating
confidential information. Here, the organisation has to make
sure that employees have the appropriate amount of feedback
from external stakeholders either by promoting their interaction
with customers, or by holding controlled discussions or seminars
about “what is going on out there”.
7. Denial of “what we do not want”

People have a tendency to deny certain problems that may disrupt
their ‘comfort zone’ and thus avoid doing the work necessary to
address them. It is generally easier to ignore dilemmas that do
not have an immediate impact on your performance although
they can lead to bigger problems in the future. We often tend
to leave these problems aside subconsciously; in which case,
the use of consultants is important to overcome this. They will
provide unbiased feedback and will not (or should not) avoid
making ‘uncomfortable’ criticisms.
8. ‘Happy talk’ from senior management

Senior management often tends to cultivate a false sense of
complacency by playing up small successes and fostering a false
sense of security and achievement. Whilst it is important to praise
small-scale success, the degree of celebration is critical to avoid
any risk. Senior management should facilitate and encourage
honest discussions on accomplishments without going over the
top with praise and avoiding ‘happy talk’ whenever possible.
IV) Creating a guiding coalition
It is crucial to create an effective guiding coalition to lead the

process of change. This group must be made up of leaders
who do not necessarily come from top management. One
leader is not enough to motivate and lead change throughout
an organisation. The right team must be assembled to include
the correct balance of people displaying a high level of trust,
and having the same awareness of problems, opportunities and
commitment to change.
A leader should ask him- or herself a series of questions
when brainstorming about the possible team members. These
questions such include: does the team posses enough individuals
with the right skills and influence to lead change? Do they
have the right level of diverse expertise to produce intelligent,
informed decisions? Do they possess the right level of credibility
amongst the rest of employees? Does the group have enough
legitimate and respected leaders? From these questions, four
critical attributes of a good team can be established: power,
expertise, credibility and leadership.
Two of the most critical characteristics for success demanded
of the team are trust and sincerity. These are fundamental for a
shared commitment to a common goal. All team members must
share the same strong desire for excellence and success.
V) Develop a vision and strategy
A coherent and realistic vision is one of the most important

aspects of change, as it provides the explanation for why the
change is needed, what the change is leading to, and how it will
develop. This is why it is important to have a realistic vision
which can be implemented in practice. The group has to bear in
mind that it will take time to implement a new vision, as it is not
something which is going to change over night since it will have
to meet high standards. Kotter claims it is the key component
to all great leadership and is crucial for leading and breaking
through the forces that support the status quo.
The guiding coalition has to deal with certain obstacles when

developing the new vision, and handle internal struggles and
doubts about change that the team members themselves have
to overcome. There are many internal questions the team has to
address before they can effectively implement change, and this
will take time. If the vision is not clear to everyone in the team,
and not everyone agrees on the direction, then more time must
be spent dispelling such doubts.
VI) Communicate the vision for change
There are two obstacles at this stage which have to be dealt with
carefully in order to succeed. An ineffective communication
strategy and an inconsistent message can result in total failure.
The guiding team has to make sure that they are delivering a
consistent message. Merely communicating this is not enough
– efforts have to be made to ensure that the team itself and
the rest of the employees understand the message correctly, as
people from different levels and backgrounds tend to interpret
messages in various ways.
Key factors for delivering a vision successfully:
• Simplicity: the message has to be simple and leaders have

to be able to deliver it in no more than five minutes in
simple language that will be understood by everyone in the
company.
• Metaphors: it is important to deliver visible examples of
best practice to the employees. Analytical data and theories
are often hard to understand and apply in practice without
a clear and simple example of how these things function in
reality.
• Multiple forums and repetition: all possible appropriate
communication channels have to be exploited to deliver the
new vision. The more employees hear and see something,
the more likely they are to remember it. Leaders have
to avoid falling into the trap of feeling that no more
communication is needed. A constant flow of information
is more likely to lead to success.
• Leadership by example: top management and leaders have
to act in accordance with the new vision and reflect the
new practices in everything they do.
• Explanation of apparent inconsistencies: employees may

detect inconsistencies in the new vision, which will often
be because the new vision might differ significantly from
the previous one. All inconsistencies have to be explained
since it is only by understanding why certain things are the
way they are that employees will be able to adjust to them.
• Give and take: discussions have to be encouraged, and
attention paid to possible proposals or observations made
by employees, as these may help direct the vision in a better
way. Information must flow both ways to acquire constant
feedback and appreciate how employees are ‘digesting’ the
new approach.
VII) Empowering broad-based action
In the change process, empowerment is a concept which cannot

be overlooked. Barriers to action have to be removed to allow
employees to implement change on their own, once they have
understood and embraced the new vision. This also enables
lower-level management to participate in the change process
and feel part of ‘the team’. As mentioned before, change takes
time, and leaders must bear in mind that they have to allow
employees this time.
In order to give employees more power in the process, they

must be educated and given training on new concepts and skills
which they will need for the new culture. If you nurture your
workforce properly, you will give them enough confidence to
take decisions on their own, thereby creating the opportunity
to delegate tasks. By eliminating decision barriers, managers
and leaders can improve efficiency and develop a less timely
process.
VIII) Generating short-term gains
Short-term gains offer a better chance of leading change

effectively over time, although if they are to be effective they
must be visible to everyone in the company, to make them
aware of the progress being achieved and to motivate them to
keep going. They are also a good way of quietening critics of the
change process, as employees will be aware of the achievements
which can be made with change. Kotter argues that the best
way to achieve these short-term wins is to plan ahead. He
emphasises the difference between real short-term gains and
“gimmick wins”. Change will not be successful in the long run
if top management celebrates too many gimmick wins. This
could work in the short run but in the end it would simply feed
that false sense of security by making employees believe that
everything is going extremely well while, in fact, there are no
real reasons to celebrate an achievement which has not really
been achieved.
IX) Consolidating gains and producing more change
Claiming victory too soon is a common mistake when leading a

change process. Top-level management can disrupt successful
change by celebrating small victories too much, without looking
at the bigger picture and at the necessary victories ahead. Kotter
argues that at this point there are five steps which are required
to keep change going.
1. Introduce more and harder changes: if the effort towards

making changes seems to be decreasing, or the leaders
have realised over time that extra or harder changes are
needed, these should be planned and implemented, going
through the steps as before, starting at step 3.
2. Bring in more help to ensure the programme’s success:
as issues arise, more help may be needed to confront new
challenges or to deal with new changes which are to be
implemented. As these situations may arise unexpectedly,
the company may not have the resources at its disposal
to confront them, so extra expertise may be needed from
consultants.
3. Management should continue to focus strongly on
purpose: with time, eagerness and motivation may slip
away unconsciously. Therefore, managers and leaders in
particular should be the ones to keep a strong focus on the
purpose of the change process, to remind employees day
after day that this is an ongoing thing, even after 12 or 24
months.
4. Decentralisation of projects is imperative: this will allow
leaders to focus on more specific tasks within their expertise
to give them a better chance of succeeding. Instead of
branching out to every element of the organisation, by
decentralising projects, subgroups can be created.
5. Eliminate unnecessary interdependencies: these simply

slow down some processes, so as long as it remains
feasible, interdependencies within a company should
be kept at a minimum, allowing departments to operate
faster and more efficiently. At this stage, employees should
have received the necessary training and empowerment to
make this step more practical.
X) Anchor new approaches to culture
Attaining the objective of transmitting the new vision and

adapting the organisation to it is in itself a great achievement, but
it does not stop there – it is important to anchor the new ways to
the corporate culture if they are to stay. Change may have been
accomplished but if, after several years, the organisation reverts
back to its old ways, all the efforts will have been wasted. The
essential key for long-term change is not merely about changing
the vision, mission statements and developing training manuals,
but changing the actual corporate culture and making this
culture last. It is about getting people to follow this new culture
without even thinking about it, as part of a natural process which
develops subconsciously.
Leaders must show employees how the new changes have
helped the organisation. Comparisons must be made in order to
communicate the feeling of positive change among employees,
to let them see that all their sacrifices were for a good cause and
that they have achieved something valuable which will benefit
the company as a whole.
One important aspect to remember is that culture change comes
last, not first. Before changing the culture, the organisation has
to change the systems; failure to do so can put the company at
great risk as too many negatives may develop with it. Kotter
asserts instead that it is better to find and express what needs
to be changed, implement these changes, and then change the
culture around that.
XI) Conclusion
In a fast changing world such as the one we live in today, it is

difficult to predict what our companies will be subjected to in
the future and where we will be headed. Consequently, such a
process stresses the importance of having the strong sense of
urgency necessary to be able to react when required to do so
without falling into the complacency trap.
Changes are ever present in the business world, and companies
will be obliged to follow them regularly. One very important
aspect of this is the need for teamwork among top management.
When essential members of an organisation work together as a
team it is easier to move in the right direction. A united effective
direction is necessary, and if this direction is driven from the top
the chances of achieving success are greater.
This procedure, like many others, is a theory that may not apply
(completely) to every organisation needing change as not all
theories apply to all kinds of situations. Nevertheless, it is a good
guideline to appreciating what obstacles may arise when dealing
with major change, and the possible ways to overcome them.
Steering a course along the bumpy road to success is never easy,
but procedures like those mentioned above will certainly help
smooth the way.
XII) Bibliography
John P. Kotter, Leading Change (1996), Harvard Business School

Press.
Web-o-graphy
http://www.johnkotter.com
http://www.theheartofchange.com
http://www.allbusiness.com/management/
change-management/388052-1.html
http://www.gse.harvard.edu/hfrp/eval/issue32/spotlight1.html
216 Tools: The Experience Curve
The Experience Curve

I) History
The Boston Consulting Group (BCG) is an international strategy
and general management consulting firm whose mission is
to help leading corporations create and sustain competitive
advantage. Today, BCG is among the largest and most profitable
management consulting companies in the world. It has 60 offices
in 37 countries and in 2004 had a revenue of US$1.3 billion.
BCG was founded in 1963, in Boston, by Bruce D. Henderson.

It was initially called the Management and Consulting Division
of the Boston Safe Deposit and Trust Company, which was a
subsidiary of The Boston Company. Henderson completed
a degree in engineering before attending Harvard Business
School. He left HBS 90 days before graduation to work for
Westinghouse Corporation, where he became one of the
youngest vice-presidents in the company’s history, and worked
for Arthur D. Little’s management services unit before accepting
a job offer from the Boston Safe Deposit and Trust Company to
start a consulting arm for the bank.
In his efforts to differentiate this new consultancy from the

many competing consultancies of the time, he decided to assign
it a distinctive mission. As the historical analysis of the time will
show, the 1960s were characterised by a trend, in companies
as much as in arts, culture and politics, to look towards the
future by acquiring a more global and long-term perspective of
issues and goals. It was in this context that Henderson proposed
creating a consultancy that would challenge companies “to look
beyond their immediate horizons to future developments, to
position themselves for tomorrow by acting today”.
Tools: The Experience Curve 217
One of the first breakthrough concepts developed by BCG

consultants was the Experience Curve. The insightful
discovery that unit costs decrease over time as “experience”
(or cumulated volume) grows, resulting from BCG’s work for
a leading semiconductor manufacturer, became a “conceptual
cornerstone in the understanding of both the role market share
plays in establishing competitive advantage, and the importance
of asset allocation in portfolio management”.
This paper will begin with an analysis of the historical context

within which this concept was developed, and then describe
the Experience Curve in more detail. It will also look at
similar theories developed at the time, and finally explore the
implications of the theory with a view to understanding its
pitfalls and its usefulness in the field of management.
The 21st century saw dramatic changes in the way companies

were structured and run. The small, family-owned firms started
growing into larger and more complex companies, thanks to the
development of several means of transportation and the growth
of the targetable markets. “Vertically integrated, multi-divisional
(or “M-form”) corporations” began to take shape and influence
the competitive environment. Adam Chandler, a great thinker
of the time, argues that this fundamental and universal change
in the structure of American companies was aimed at helping
corporations grow and diversify.
In fact, it was in the 1950s and 60s that the discipline of

“specifying an organisation’s objectives, developing policies and
plans to achieve these objectives and allocating resources so as
to implement the plans,” namely, strategic management, was
developed.
Among the elements that created the need for such strategic
thinking in the management of resources was World War II
whose challenges involved “allocating scarce resources across
the entire economy”. The destruction which resulted from this
war also led to an excess in demand, which pushed companies
in the 1950s and 1960s to look at a new global market. Strategies
were geared toward growth and diversification. Several thinkers
contributed to the development of this more pragmatic and
growth-oriented view of management.
In 1962, Alfred Chandler narrated the developments of the

managerial revolution, analysing the shift in focus from Adam
Smith’s “invisible hand” of market forces to the “visible hand” of
managers who started influencing the size and concentration of
American industry. Managers were no longer co-ordinators of
small units, but rather, they were strategists who needed to ensure
that “every subunit of organisation, and even every individual
have a clearly defined set of purposes or goals which keeps [the
organisation] moving in a deliberately chosen direction”.
At the same time, as a result of Philip Selznick’s revolutionary

idea of matching the internal factors of the organisation with
external environmental circumstances (1957), the Harvard
Business School General Management Group developed the
well-known SWOT analysis. Once again, the focus was on a
“large picture” of the company.
Focusing on the long term, in 1965, Igor Asnoff (see chapter on

gurus) developed a strategy grid that aimed to prepare companies
for future challenges and opportunities. In 1954, Peter Drucker
developed the theory of management objectives focusing on
monitoring the progress of a company towards its objectives.
Drucker also contributed to the field of strategic management by
introducing the idea of the worker as an intellectual resource.
It was clearly a period of strategic thinking; a period where a

company and the role of management were being studied
through a broad outlook while, at the same time, paying close
attention to pragmatic and practical solutions to enable growth
in the future. Management needed to focus on several levels, on
processes, on the external environment and on the long term.
These trends were not unique either to the field of management
or to the economic sector.
The 1960s saw the first men stepping on the moon, the creation
of the first satellites, as well as the development of the precursor
to the internet. These technological innovations reflected the
need to look at the world from a new standpoint. In this context,
2001: A Space Odyssey hit the movie screens, and Star Trek made
its debut in 1966.
Politically, the 1960s were a time of revolution, not only in

the United States but worldwide, too: the Cultural Revolution
in China, the Stonewall Riots in New York City, the Vietnam
War and protests, the Nigerian Civil War, etc. People were
becoming involved in and opinionated about political issues:
the American Civil Rights movement, the rise of radical
feminism, and anti-war movements, were just some of the
issues troubling young Americans. The US needed change, and
a new view on societal issues.
Even the music youngsters played was rebellious: the 60s were
the time of rock’n’ roll, a type of music that was generally
condemned by the older generations. The fine arts also moved
away from the abstract and began incorporating elements from
popular culture (pop art) employing images that would appeal
to a broad audience, rather than the élite.
The America of the 1960s was looking for practical and concrete
changes for the future growth of the economy and society. A
generation of Americans who had lived through wars and
revolutions was now searching, in all fields, for solutions that
would boost the healthy growth of American society. It was
during this period that BCG’s first consultant discovered a
concept that would enable companies to shape strategies for
achieving a considerable market share in their industry. The
Experience Curve would become a great tool for those managers
looking for a quick-and-easy solution to achieve growth.
II) What: Experience Curve and its origins
The Experience Curve finds its origins in the related concept of

the Learning Curve, which was developed during World War II.
During the construction of military aircraft, it was observed that
the amount of experience that workers’ acquired had an impact
on the cost of production. More specifically, the direct labour
costs decreased by a constant percentage (about 10-15%) every
time the cumulative quantity of aircraft produced doubled.
While this theory was innovative and useful for several industry
sectors, it was however, limited in scope as it applied only to
labour costs. The development of the Experience Curve was to
prove a great breakthrough as it applied to process-oriented
situations, not only labour-intensive ones.
The Experience Curve was formulated as a result of BCG’s

work for a semiconductor manufacturer who asked for BCG’s
services in seeking to better understand the industry’s chaotic
pricing behaviour. The wide variety of semiconductors was a
good opportunity to compare differing growth rates and price-
decline rates in a similar environment. The BCG team observed
that costs usually declined with cumulative production.
Unit Cost
1.00
.80
.64
.50
10 20 40 60
Cumulative Output
As opposed to a labour costs, the Experience Curve explains a

decrease in unit cost in terms of “experience”: producers become
increasingly efficient as they gain experience in production. The
relationship between costs and cumulative production became
known as the Experience Curve and was summarised as follows:
production costs declined steadily at a constant rate of about
20-30% each time accumulated experience doubled.
In brief, the more often a task is performed (production of

any good or service), the lower will be the cost of doing it. The
implications of this theory are far-reaching.
Graphically, the curve is plotted by representing the cumulative

units produced on the x-axis, while the unit cost (real unit cost
of adding value) is represented on the y-axis. A curve which
depicts a 25% reduction in cost for every doubling of output is
a “75% experience curve”, as the unit costs decrease to 75% of
their original level.
Unit Cost
100
90
81
70 90 % Experience Curve
49
70 % Experience Curve
1000 2000 4000 Cumulative Output

The reasons behind the Experience Curve are secondary,

Henderson said, as compared to the single fact that it is a
universally observable phenomenon. However, he listed several
factors which can explain the Experience Curve. These factors
work in combination to create this effect:
• Learning: workers who learn to do a task better can perform
the task in less time.
• Specialisation: when the scale of activity increases, it is
more efficient to split tasks so that one person does the
same, smaller task, more times. Experience is enhanced by
specialisation.
• Investment: investment is fundamental for capacity increase.
• Scale: scale creates the potential for volume discounts,
vertical integration and the division of labour which, in
turn, facilitates learning.
The hypothesis developed by Henderson was tested in the

1970s, in several different sectors and industries (aerospace,
shipbuilding, raw materials, purchased parts, etc.), and
Experience Curve effects ranged from 10-25%.
III a) Implications and limitations
The Experience Curve suggested that systematic cost differences

among competitors could arise merely due to the fact that some
have developed more production knowledge than others.
This was a practical and revolutionary insight that would have
significant implications for companies.
A company working to accelerate its production experience by

increasing its market share could gain a notable cost advantage
in its industry. In other words, any effort and energy invested
in pursuing market share in the short term could lead to great
returns and cost-cutting in the long term. This conclusion
contradicted some basic assumptions of classical economics
which assume that there is “a finite minimum cost which is a
function of scale [...] and all competitors can achieve comparable
costs at volumes much less than pro rata shares of market”.
The Experience Curve provided the founding elements of

strategic thinking as far as managing competitive advantage
was concerned. BCG recommended that its clients capitalised
on the experience effect resulting from increasing capacity. If
increased activity resulted in increased learning, lower costs,
lower prices, and increased market share, then the most effective
business strategy was to aim for market dominance:
Increased Lower
Learning Costs
Lower
Increased activity
Prices
Increased
profitability Increased
& market Market Share
dominance
Therefore, according to this model, if a competitive market

share cannot be achieved, it is best to concentrate resources
elsewhere. Moreover, cost reductions should be translated into
price decreases. Maintaining high prices would only create
opportunities for new entrants in the market in the long run.
Competitive entry can be discouraged by decreasing prices as
unit costs fall, and even pricing below cost in the short run in
order to achieve greater market share and further cost reductions
in the future.
Of course, the Experience Curve will vary from one industry or

product to another, and it should be used in combination with
a company’s overall strategy. If a company prefers to cover a
strategic niche in the market, differentiating itself for “quality
or prestige”, the Experience Curve will only be relevant in
explaining the decreasing costs, but price and market share may
voluntarily be kept unchanged.
It is also evident that in the case of a change in technology, the

Experience Curve may be interrupted, although the knowledge
part may still be transferable.
III b) Advantages and uses of the Experience Curve
The Experience Curve shows that any activities/investments

which may lead to an increase in market share can be justified.
As the chart above illustrates, penetration pricing strategies,
investment in advertising, sales personnel, production capacity,
etc. which may increase market share may ultimately lead to a
gain in competitive advantage. This conclusion adds safety to
the initial investments which managers are often reluctant to
attribute to new products.
James P. Gilbert defines three areas where Experience Curves

may be applied. First of all, for strategic use, the Experience Curve
may be used to determine “volume-cost changes, estimating new
product start-up costs, and pricing of new products”. According
to the Curve, and its implications, prices should be competitive
and aggressive in the new product launch, and high promotion
costs should be accepted in the short term.
The Curve may also be used by a company internally in order

to develop “labour standards, scheduling, budgeting, and make-
or-buy decisions”. Finally, the Experience Curve may be used
externally for “supplier scheduling, cash-flow budgeting, and
estimating purchase costs”.
The Experience Curve should be considered by companies

seeking to achieve competitive advantage through growth. It
provides an explanation for cost reductions and opportunities
for allocating those resources towards the company’s future
growth.
IV) Criticisms of the Experience Curve and its assumptions
The success of applying the Experience Curve, however,

depends on several factors, including the “frequency of product
innovation, the amount of direct labour versus machine-paced
output, and the amount of advanced planning of methods and
tooling”.
Some authors have argued that the effects of the Experience

Curve are hard to quantify as they are closely intertwined with
economies of scale (the process of learning usually coincides
with the expansion of scale), and if costs are not well-managed,
they may even tend to rise.
Another pitfall associated with the Experience Curve is the

assumption that knowledge gained is kept within the company.
This holds true less and less nowadays, since employee turnover
is growing every year.
Moreover, Marvin Lieberman noted that the Experience Curve

may only apply to the initial stages of production, especially in
industries where process technology is disseminated rapidly.
If all industry participants are experiencing rapid growth and
declining costs, the Experience Curve may not lead to competitive
advantage since competitors are acquiring experience at the
same rate.
V) Conclusion: “Progress comes from

the intelligent use of experience”
The Experience Curve was the first and one of the most valuable
discoveries made by the Boston Consulting Group. It contributed
great insight to the field of strategic management, in particular
to the development of techniques that would help managers to
achieve competitive advantage and properly allocate portfolios
in a period where companies were competing fiercely to gain a
strong foothold in the newly developing global market.
Whether or not it is a universally observable phenomenon which

characterises all industries is not crucial, especially in view of
the recent changes in the economic environment, the rapid
diffusion of technologies, and the high turnover of workers.
Nonetheless, the Experience Curve can be considered a very
useful management tool.
This tool, and all its implications, need not be the unique
strategy for a company to grow. The concept of the Experience
Curve may be most useful when considered in a broader sense:
while the Curve is based on an economic finding, its underlying
meaning is quite simple in nature. As American author Elbert
Hubbard put it, “Progress comes from the intelligent use of
experience”.
Managers should use the lessons learnt from the Experience

Curve by employing “effective human resource selection,
training, and deployment processes that facilitate learning by
doing”. Experience, whether employed in such a way so as to
reduce costs, or lower prices, will aid a company’s competitive
advantage, which is the main lesson to be learnt from this tool.
VI) Bibliography
Kenneth R Andrews, “The Concept of Corporate Strategy”,

Homewood, Ill., fifth edition 1971
Igor H. Ansoff, “Corporate Strategy”, McGraw-Hill Book
Company Inc., New York, 1965
Alfred D. Chandler, Jr. “Strategy and Structure: Chapters in the
History of the American Industrial Enterprise”, MIT Press Ltd,
1962
Alfred D. Chandler Jr., “The Visible Hand, The Managerial
Revolution in American Business”, Paperback edition, January
1993
George S. Day, and David B. Montgomery, “Diagnosing the
Experience Curve”, Research Paper 641, Stanford University,
April 1982
Peter F. Drucker, “The Practice of Management”, HarperCollins
Publisher Inc., New York, 1993
Pankaj Ghemawat, “Competition and Business Strategy in
Historical Perspective”, Business History Review, Vol. 76, No. 1,
Spring 2002
Philip Selznick, “Leadership in administration; a sociological
interpretation”, Evanston, III, Row, Peterson, 1957.
Web-o-graphy
http://www.bcg.com/home.jsp – the official site

http://www.quickmba.com/strategy/matrix/bcg/
http://www.consultant-news.com/BCG.asp
http://www.bcg.com/this_is_bcg/news/BCG_web_layout.pdf
230 Tools: Force Field Analysis
Force Field Analysis

I) What is Force Field Analysis?
Force Field Analysis is a management technique developed
by Kurt Lewin (1890-1947) – a pioneer in the field of social
psychology sciences – for diagnosing situations. Lewin thought
that any situation should not be considered as a consistent stable
system but as a dynamic balance or temporary equilibrium.
He assumed that in every situation there are both driving and
restraining forces that influence any change that may occur.
Driving forces are those forces affecting a situation that are

pushing in a particular direction; they tend to initiate a change
and keep it going. In terms of improving productivity in a work
group, pressure from a supervisor, incentive earnings, and
competition may be examples of driving forces.
Restraining forces are those acting to restrain or decrease

the driving forces. Apathy, hostility, and poor maintenance of
equipment may be examples of restraining forces.
Types of forces include: resources, traditions, vested interests,
regulations, relationships, agencies, values, costs, present or
past practices, organisational structures, desires ...
Equilibrium is reached when the sum of the driving forces

equals the sum of the restraining forces.
In the context of process improvement, we use Force Field Analysis

to evaluate these opposing forces and set the stage for enabling
changes to be made. For changes to be possible, the driving forces
must overcome the restraining forces. Usually, diminishing or
removing restraining forces is the most effective way to do this.
However, it can be tempting to try strengthening the driving forces
instead, but this tends to intensify the opposition at the same time.
Tools: Force Field Analysis 231
II) When can Force Field Analysis be used?
Force Field Analysis makes people think about what works for
and against the status quo, and it helps team members to view
each case as two sets of offsetting factors. It can be used to study
existing problems, or to anticipate and plan more effectively
for implementing change. When used in problem analysis, it
is especially helpful in defining more subjective issues, such as
morale, management, effectiveness, and work climate.
Force Field Analysis also helps keep team members grounded

in reality when they start planning a change by making them
anticipate systematically what kind of resistance they could
meet. Conducting such an analysis can help build consensus by
making it easy to discuss people’s objections and by examining
how to address their concerns.
Example:
Forces For Changes Forces Against Changes
loss of staff
overtime 3
4 customers want
new products
staff frightened of
new technology 3
3 improve speed of
production
Plan:
Upgrade factory
environmental
with new
manufacturing
impact of new
techniques 1
2 raise volumes
of output
machinery
cost
3
1 maintenance costs
increasing
disruption
1
Total: 10 Total: 11
Once you have decided to carry out a project, the Force Field
Diagram can help you analyse how you can push through a
project that may be in difficulty. Here you have two choices:
• To reduce the strength of the forces opposing a project
• To increase the forces pushing a project.
The first is often the most elegant solution: just trying to force
change through may cause its own problems as, for example,
the staff can be provoked into active opposition to a plan rather
than simply not welcoming it.
Take the example of a manager who wants to upgrade a factory

with new manufacturing machinery. He has to list all the driving
forces (forces for change) and the restraining forces (forces
against change) and then quantify them on a scale from 1 to
5. The equilibrium is at the point where the restraining forces
(against the plan) are more important than the driving forces in
a ratio of 11:10. In the example above, knowing all the factors
facing the manager who was tasked with pushing through the
project, the analysis might suggest a number of points:
• By training staff (increase cost by 1) fear of technology
could be eliminated (reduce fear by 2)
• It would be useful to show staff that change is necessary for
business survival (new force in favour, +2)
• Staff could be shown that the new machines will introduce
variety and interest to their jobs (new force, +1)
• Wages could be raised to reflect new productivity (cost +1,
loss of overtime -2)
• Slightly different machines with filters to eliminate pollution
could be installed (environmental impact -1)
These changes swing the balance from 11:10 (against the plan),
to 8:13 (in favour of it).
Field approach
Kurt Lewin’s field theory has its roots in the Gestalt theory. It is
a theory of mind and brain which proposes that the operational
principle behind the brain is holistic, parallel, and analogue, with self-
organising tendencies. The classic Gestalt example is a soap bubble,
whose spherical shape (its Gestalt) is not defined by a rigid template,
or a mathematical formula, but rather it emerges spontaneously by
the parallel action of surface tension acting at all points on the surface
simultaneously. This is in contrast to the “atomistic” principle of the
digital computer’s operation, where every computation is broken
down into a sequence of simple steps, each of which is computed
independently of the problem as a whole. The Gestalt effect refers to
the form-forming capability of our senses, particularly with respect
to the visual recognition of figures and whole forms instead of just a
collection of simple lines and curves.
Others concepts at that time:

The Law of Effect – Edward Thorndike (1874-1949) – states
that people tend not to engage in behaviour that does not result
in consequences. An act with no consequences is considered a
weakened act.
The individual psychology – Alfred Adler (1870-1937) – assumes

that human personality could be explained teleologically, as
separate strands dominated by the guiding purpose of the
individual’s unconscious self ideal to convert feelings of inferiority
to superiority (or rather completeness). The desires of the self ideal
were countered by social and ethical demands. If the corrective
factors were disregarded and the individual overcompensated,
then an inferiority complex would occur, the individual becoming
egocentric, power-hungry and aggressive, or worse. Adler believed
that personality could be distinguished into four types: getting,
avoiding, ruling and socially useful.
The international context: World War I (1914-1918) with the

rise of nationalism and the emergence of communism in October
1917. World War II (1939-1945) with the setting up of the nazi
concentration camps which forced Lewin to fly to USA in 1937.
IV) Bibliography
Clare Morell and Gill Harvey, “The Clinical Audit book”, 2000, BCM
362.1 MOR.
Web-o-graphy
http://www.accel-team.com/techniques/force_field_analysis.html
http://www.extension.iastate.edu/communities/tools/
forcefield.html
http://www.sytsma.com/tqmtools/force.html
http://www.muskingum.edu/~psych/psycweb/history
http://www.infed.org/thinkers/et-lewin.htm
http://www.nwlink.com/~donclark/hrd/history/lewin.html
http://en.wikipedia.org/wiki/Alfred_Adler
http://tip.psychology.org/wertheim.html
236 Tools: Formula of change
Formula of change
I) Historical context
Since 1970, globalisation and modern technology have brought

about new opportunities and new challenges to which board
managers need to be able to apply new strategies and new
thinking. Other trends, such as ageing populations, global
warming, falling levels of growth, or increased competition from
abroad frequently require organisation managers to redesign
their organisation structures.
II) The Formula of Change
The Formula of Change proposes that the product of

organisational dissatisfaction, the vision of what is possible in
the future and being aware of the first steps towards reaching
this vision, must be greater than the resistance to change within
the organisation in order for any change to be successful:
DxVxF>R
Where
D = Dissatisfaction with the present situation
V = Vision of what is possible in the future
F = First steps towards reaching this vision
R = Resistance to change
If any of the three (D,V,F) is zero or near zero, the product will
also be zero or near zero and therefore the resistance to change
will dominate, since the cost of changing will be too high.
Tools: Formula of change 237
Dissatisfaction
Some form of dissatisfaction in an organisation may occur as a
result of internal or external forces. The board managers must
be aware of the need for change and the consequences of their
actions. Therefore, an internal analysis of the organisation must
be carried out in the present situation. The board managers
must ask themselves:
What is happening?
Why are these outcomes occurring?
Dissatisfaction is a key factor in motivating people to change but

is limited in that it does not provide any direction. That is why
two more elements are necessary to overcome the resistance to
change.
Vision
A vision is a picture of the ideal organisation, information
system, supply chain, personnel policies, etc. It is a detailed
picture of a desired state in the future. The vision stimulates
people to change and provides direction for that change. The
board managers must ask themselves:
Why don’t we like the current situation?
What will the new situation do for us?
Beckhard calls this the “desirability of the end state”.
First steps
Before taking the decision or carrying out the change, board
managers have to be very clear about the first steps to be taken
towards reaching the derived state. The first steps towards the
transformation of an organisation might be: clear priorities, goals
and objectives, a portfolio of initiatives, and a communication
plan. A high-level project plan covering the major activities,
deliverables, and benefits can help increase the motivation to
change.
Beckhard calls this the “practicality of the change”.
Resistance
As Beckhard says, “wherever there is a change effort, there will
be resistance”. The resistance may be caused by:
• Employees: People are comfortable with what they know.
They do not like to move outside of their “comfort zone”.
On the other hand, resistance may also result from the fear
of failing or of looking silly or incompetent.
• Client: Fear of losing customers, whether the change is
carried out in the business strategy or product.
• Costs: Some changes imply such enormous investments in
organisational structure that the company cannot afford
them.
Beckhard calls this the “cost of change”.
III) When can the Formula of Change be used?
The Formula of Change is an internal tool that provides a quick

and first impression of the possibilities and conditions required
to change an organisation successfully. The Formula of Change
can help board managers to face external and internal forces
which affect the organisation.
Once the board managers have accepted the change, there is no

longer a desire to return to the old state. At this moment, the
role of the board managers is to manage the changes and lead
the organisation from the current state to future state.
Beckhard refers to this as the “transition state”.
The board managers must be sensitive to several aspects during

the transition state:
• Managing the work: the managers need to define what has
to be done, how it must be done and who should do it.
• Developing structures appropriate for and dedicated to
managing specific tasks and activities.
• Devising strategies and plans for ensuring the commitment
of key players to the change objectives and their personal
involvement in achieving them.
• Creating a communications strategy to support the change
objectives.
IV) Who invented the Formula of Change?
The Formula of Change was developed in 1987 by Richard

Beckhard and Reuben Harris but is attributed to David Gleicher.
Beckhard is considered the founder of the field of organisational
development, a pioneering consultant on issues of managing
change, and adjunct professor at the Sloan School from 1963-
1984.
For nearly 50 years, Professor Beckhard helped organisations to
function in a more humane and high-performing manner, and to
empower people to become agents of change. In the late 1950s,
he began collaborating with the late MIT Professor Douglas
McGregor who created the Organisation Studies Department
at the School School. With Dewey Balch, they initiated a project
designed to facilitate the change process in organisations, which
they referred to as organisation development.
In the late 1960s, with colleagues Warren Bennis and Edgar
Schein (the latter now a Sloan professor emeritus), he launched
the Addison-Wesley Organisation Development Series. In
1967, he set up the Organisation Development Network,
the first training programme for specialists in organisation
development.
Beckhard wrote eight books and numerous articles, including
Organization Development: Strategies and Models; Changing
the Essence; and Agent of Change: My Life, My Practice.
Below is an example of change within an organisation:
Situation
For many years, the Xerox Corporation maintained a
commanding position in the office machine business. In
recent years, competitors such as Kodac Company and Nec
Corporation gained market share from Xerox. So Xerox’s CEO
became concerned that the Xerox Corporation needed a change
to recapture the market lead.
First, Xerox’s top management realised that they needed a
rallying vision. They thought that the solution was to launch
new successful products which were totally different from those
of their competitors. They also realised that the present culture
in the company had not produced the level of creativity and
innovation necessary to make it the leading competitor. The top
management knew that this was not because of a lack of talent,
therefore it must be related to the conditions and environment
in which people operated. With the help of external consultants,
the CEO tried to analyse by means of the Formula of Change if
they could accomplish the change.
Dissatisfaction
A loss of market share and the new products being produced
were no longer at the leading edge. A diagnostic process was
carried out to find the answer; it revealed that:
• Small innovations and ideas were not valued by the
company;
• Activity was valued much more than learning; the
capacity to learn was critical in Xerox’s highly competitive
environment.
Vision
The idea was to launch new innovators products in order to get
a competitive advantage over the company’s competitors.
Steps
• To change reward system in order to motivate employees
to provide ideas;
• To provide training and education programmes to help
employees develop their careers.
Resistance
The changes the CEO carried out did not produce resistance from
employees since, in this case, they brought rewards. Moreover,
these changes did not imply too many costs for Xerox.
Today, Xerox’s CEO links the change effort with significant
improvements in new product innovations and a subsequent
increase in market share.
V) Bibliography
Richard Beckhard, Organization Development: Strategies and

Models, 1969.
Richard Beckhard and Reuben T. Harris, Organizational
Transitions: Managing complex change, 1977. (ISBN 0-201-
00335-X).
Richard Beckhard and Wendy Pritchard, Changing the Essence:
The Art of Creating and Leading Fundamental Change in
Organizations, 1991 (ISBN 1-55542-412-0).
Web-o-graphy
http://www.12manage.com/
methods_beckhard_change_model.html
http://en.wikipedia.org/wiki/Richard_Beckhard
http://www.drjohnlatham.com/Beckhard.html
244 Tools: GE/McKinsey Portfolio Analysis Matrix
GE/McKinsey Portfolio Analysis Matrix

I) What is this?
In order to visualise the particular role to be played by each
business unit, each strategic business unit is plotted in a nine-
block matrix according to their market attractiveness and
competitive strength (X and Y axes).
• Market size is represented by the size of the circle.
• Market share is shown by using the circle as a pie chart.
• The expected future position of the circles is indicated by
an arrow.
COMPETITIVE STRENGTH
LOW MEDIUM HIGH

LOW
MARKET ATTRACTIVENESS
MEDIUM
HIGH
GE McKinsey Matrix
Tools: GE/McKinsey Portfolio Analysis Matrix 245
There are numerous factors that can play a role in the Y axis,
such as:
• Market size
• Market growth
• Industry profitability
• Segmentation
• Pricing trends
• Competitive intensity
• Demand variability
• Supplier availability
• Distribution structure
• Environmental factors
• Global opportunities
And numerous factors that can play a role in the X axis, such as:
• Relative market share
• Market share growth
• Strength of resources and competencies
• Brand equity
• Customer loyalty
• Relative cost position
• Relative price position
• Relative profit margins
• Service
• Marketing trends
• Distribution strength
• Production capacity
• Technology and innovation
• Access to financial resources
II) When to use it?
There are three basic insights a manager can gain from the
McKinsey Matrix:
1. The graph provides a powerful and compact visualisation
of the strengths of the company’s business portfolios.
2. It is a mechanism to identify the potential for cash generation
as well as the cash requirements of each business unit, and
thus it helps in balancing the firm’s cash flow.
3. Because of the distinct characteristics of the business
units, it can suggest unique strategic directions for each
business:
• Increase market share
• Hold
• Harvest/divest
• Divest
• Invest in new business
III) How to use it
Neubauer proposes the following steps for building up the

matrix:
1. Identify strategic business units (SBUs) (segment)
• There are four main methodologies (the GE method,
step-by-step, PIMS, and multi-dimensional) but what
is really important is that each SBU is autonomous
and independent, otherwise this would lead to mis-
representation in the matrix
2. Evaluate attractiveness of each SBU’s market
• This is an external-to-company measure
3. Evaluate competitive position
• This is an internal-to-company measure
4. Develop a portfolio (depict positions of each SBU in portfolio)
5. Identify natural strategies for each region of the matrix.
For instance:
• Let us say that you have selected the market growth
share as a proxy to measuring market attractiveness.
Because of the business life-cycle concept – which states
that every business evolves according to the embryonic,
growth, maturity and ageing stages – you know that high
attractiveness actually corresponds to an embryonic or
growth state
• Then you know you should penetrate the market
6. Select a strategy for each SBU and reconcile this with
corporate strategies
7. Review existing management structures
8. Implement selected strategies
High Protect Position Invest to Build Build Selectively

65%
Market Attractiveness
Selectively/ Limited
Medium Build Selectively Manage for Expansion
Earnings or Harvest
Manage for
Low Build Selectively
Earnings
High Medium Low
Strategic Business Unit Strength
Below is an example from Colgate-Palmolive for a toothbrush

portfolio in 1992:
Superpremium Value Professional
5.00
Market Attractiveness
3.67
2.33
1.00
1.00 2.33 3.67 5.00
Business Strength
The recommendations are:

• Superpremium: “protect position” by investing to grow at
the maximum digestible rate and concentrating effort on
maintaining strength
• Professional: very strong business in a moderately

attractive market. The generic recommendation is to “build
selectively” by investing heavily in the most attractive
market segments and building up the ability to counter
competitors’ moves
• Value: “protect and refocus” by maximising current

earnings, concentrating on attractive segments, and
defending the business’ strengths.
A decisive impulse for strategic planning activities came from

the ideas promoted by the Boston Consulting Group (BCG) in
the late 60s. The essence of BCG’s approach was to present the
firm in terms of a portfolio of businesses, each one offering a
unique contribution with regard to growth and profitability.
However, following some criticisms on the limitations of the

BCG matrix, General Electrics, McKinsey, Shell, 3M and others
unified their efforts and built a new version of it.
V) Bibliography
• Obolensky, N. (1994), “Practical Business Re-engineering:

Tools and Techniques for Achieving Effective Change”,
London: Kogan Page
• Porter, M. (1980), “Competitive Strategy: Techniques for Analysing

Industries and Competitors”, New York: The Free Press
• Porter, M. (1985), “Competitive Advantage: Creating and

Sustaining Superior Performance”, New York: The Free Press
• Sadler, P. (ed.) (2001), “Management Consultancy:

A Handbook for Best Practice”, London: Kogan Page
Web-o-graphy
• http://www.mckinsey.com
• http://www.zanthus.com/databank/strategy/
business_strategy.asp
• http://faculty.fuqua.duke.edu/~dbanks/mktg468/
Marketing%20Strategy%20Calendar.htm
252 Tools: Just-in-time management
Just-in-time management
I) What is it?
Just-in-time ( JIT) production
Just-in-time (JIT) is defined in the APICS dictionary as “a
philosophy of manufacturing based on planned elimination of
all waste and on continuous improvement of productivity”. It
has also been described as an approach with the objective of
producing the right part in the right place at the right time (in
other words, ‘just in time’). Waste, not only of effort, but also
of financial investment, results from any activity that adds cost
without adding value. We can take as an example the unnecessary
moving of materials, which happens when the inventory is too
high, and the goods have to be moved several times from one
place to another – the accumulation of excess inventory.
JIT (also known as lean or stockless production) should improve

profits. Of course, there is never a zero-stock situation, but the
level of stock should be as near to that as possible. Therefore,
subcontractors tend to build their own factories as close as they
can to the client to avoid any problems of in-time delivery, due
to traffic jams or any other transport delay.
The return on investment must also improve since the inventory

levels are reduced to the minimum (this increases the inventory
turnover rate but also reduces the costs of the inventory). The JIT
system tends to reduce variability and improve product quality.
Of course, the logical result is also a reduction in production
and delivery lead times, as well as a lowering of other costs,
such as those associated with machine set-up and equipment
breakdown, simply because if everything is delivered on time
there is no need to start up the machines again.
JIT only applies to repetitive manufacturing processes in which
the same products and components are produced over and over
Tools: Just-in-time management 253
again. Well-known examples of such include all chain-building

activities (cars, electronic equipment, textiles, etc.). The general
idea is to establish flow processes by linking work centres so that
there is an even, balanced flow of materials throughout the entire
production process, similar to that found on an assembly line.
This means that there will be different JITs at different stages
of production. Once again, the example of the car industry can
be useful: tyres, engine components, and dashboard parts are
delivered JIT by different suppliers at different stages of the
production process. To accomplish this, an attempt is made to
reach the goal of driving all inventory buffers toward zero.
Of course, on the surface the advantages of the system seem
quite obvious: minimum costs, minimum warehousing efforts,
minimum transport costs, top quality, etc. However, when we
take a closer look we can immediately that there is a weakness –
what happens if there is a problem with the supplier’s production
or delivery system: the entire production chain will be affected.
Consequently, today the concept of JIT has been slightly changed
and made more realistic: once again, small inventories exist and
the fines imposed for non JIT delivery are extremely high.
254 Tools: Just-in-time management
II) Who invented it?
Taiichi Ohno, (1912-1990) is considered to be the father of the

Toyota Production System – also known as JIT. He wrote several
books about this system, the most popular of which is Toyota
Production System: Beyond Large-Scale Production. Initially, he
was an employee of the Toyota family's Toyota Spinning, before
moving to the motor company in 1943 where he gradually rose
through the ranks to become an executive. In what is considered
to be somewhat of a slight, he was denied the normal executive
track and later in his career was sent instead to consult with
suppliers .
Shigeo Shingo (1909-1990) was Taiichi Ohno’s perfect
contemporary. Although not very well known, he is one of the
most important Japanese engineers in the field of quality systems.
He was not only the Japanese master of kanban (a production
method), but also of the SMED (Single Minute Exchange of Die)
system at Toyota. His system helped to reduce the machine stop
times dramatically. They were slashed from a couple of hours
to just a couple of minutes. This invention helped Japanese
companies to increase their competitiveness and made Japan
into an industrial genius.
In the USA, it was the Ford Motor Company which first saw the
real advantages of the Toyota Production System.
As mentioned above, the basic elements of JIT were developed

by Toyota in the 1950s, and became known as the Toyota
Production System (TPS). JIT was well established in many
Japanese factories by the early 1970s, and began to be adopted
in the USA in the 1980s (General Electric was one of the first to
adopt it). The JIT/lean concepts are now widely accepted and
used worldwide.
Tools: Just-in-time management 255
III) Bibliography
Graham Jan R., Just in Time Management of Manufacturing,

Chandos Publishing, 1988, ISBN 1-84334-100-X.
Kanban, Just-in-Time at Toyota, Japanese Management
Association, 1989.
Sandras, William A. Jr., Just in Time: Making things Happen:
Unleashing the Power of Continuous Improvement, John Wiley
and Sons, 1989, ISBN 0-471-13266-7.
Schniedermans, M., Advanced Topics in Just-in-Time Management,
Quorum Books, 1999, Westport, ISBN 1-56720-155-5.
Web-o-graphy
www.edbatista.com/2005/11/justintime_mana.html
www.gbr.pepperdine.edu/032/supplychain.html
www.personal.ashland.edu/~rjacobs/m503jit.html
www.shareme.com/showtop/just-in-time-management.html
256 Tools: The management styles grid (Blake and Mouton)
The management styles grid

(Blake and Mouton)
I) Introduction
I a) About the authors
Blake was born in 1918 and studied psychology at Berea College,

University of Virginia, USA, where he took his MA in 1941,
before moving on to the University of Texas in Austin, where he
pursued his PhD in 1947. He stayed at the University of Texas as
a professor until 1964, receiving an LL.D in 1992.
Jane Mouton studied pure mathematics and physics at the

University of Texas and was awarded an MA in psychology from
Florida State University in 1951 and a PhD from the University
of Texas in 1957.
Blake and Mouton developed the concept of the Managerial

Grid while working together at the University of Texas, and their
ideas were tested and developed through the implementation
of an organisational development programme in Exxon, the
American oil corporation.
Tools: The management styles grid (Blake and Mouton) 257
I b) About the grid
This managerial grid could be used to identify a manager’s

existing style and thus provide a ‘path’ to the ideal management
style.
MANAGERIAL GRID
Concern
for People 9.9 Team
management
9
1.9 “Country Club”
8 management
7
6 5.5 Middle-
of-the-road
5 management
4
3
1.1 Impoverished 9.1 Task
2
management management
1
Concern
1 2 3 4 5 6 7 8 9 for Production
Blake, Mouton and McCanse Leadership Grid
The Managerial Grid is based on two behavioural dimensions:

• Concern for people: this is the degree to which a manager
considers the needs of the team members, their interests,
and areas of personal development when deciding how
best to accomplish a task;
• Concern for production: this is the degree to which a
manager emphasises concrete objectives, organisational
efficiency and high productivity when deciding how best to
accomplish a task.
The two variables – ‘concern for production’ and ‘concern for

people’ were plotted on a grid showing nine degrees of concern
for each, ranging from 1 indicating a low level of concern, to
9 indicating a high level. Five positions on the grid represent five
different management styles.
The bottom right-hand corner of the grid represents a

9.1 style of management – maximum concern for the efficient
accomplishment of tasks, but minimum concern for human
relationships. People in this category believe that employees are
simply a means to an end. They are very autocratic, have strict
work rules, policies and procedures, and view punishment as
the most effective means of motivating employees.
In contrast, the 1.9 position at the top left of the grid focuses on the
needs and feelings of members of his/her team, and has been called
the “country club” style of management. This approach tends to
produce a work environment that is very relaxed and enjoyable but
where production suffers due to a lack of direction and control.
The 1.1 management style – minimum concern for both production

and people – is characterised by a desire to avoid responsibility,
and to exert the minimum effort. He/she has neither a high regard
for setting up systems to get the job done, nor for creating a work
environment that is satisfying and motivating.
The 5.5 manager tries to maintain a balance between both

methods. The primary objective of the middle-of-the-road style
is to maintain employee morale at a level sufficient to get the
organisation’s work done.
The 9.9 management style, which integrates maximum attention

to both people and production, is put forward as the most
effective approach. This creates a team environment based on
trust and respect which leads to high satisfaction and motivation
and, as a result, high production.
II) Analysis
We can analyse this model more clearly by finding answers to

the following questions:
- Why does the manager want to do that? (What is his/her
motivation?)
- What is such a person’s typical behaviour?
- When is this style appropriate?
- If the manager uses this style inappropriately, what will
happen?
9.1. Task management (authoritarian)

Motivation:
• Results at all cost
• Considers people solely as a means to achieve the aim
Behaviour:
• No delegation or implication of others
• Aggressive attitude
• Makes little effort to listen to people
• Use of authority and threat
• Strong emphasis on planning
• Aggressive and confrontational
• Direct
• Objectives are precise but come form only one person
When is this style appropriate?

• When 9.9. or 5.5 have failed
• In case of emergency
Results of inappropriate use:

• Passive revolt of practitioners
• Fear of the manager
• Limited creativity
• Practitioners do not assume responsibility
1.9. “Country club” management

Motivation:
• Really cares for well-being of practitioner
• Wants to be loved and appreciated
Behaviour:
• Defends people’s interests, even going against company’s
interest
• Makes a significant effort to listen to people
• Avoids confrontation
• Puts working atmosphere and good relations before results
• Limited previsions
• No planning

• When a practitioner has personal problems
• To stimulate creativity

• Loss of productivity
• Loss of manager credibility
• Loss of authority
1.1. Impoverished management

Motivation:
• Survival without risk-taking
• Frightened to take a decision or to have a personal opinion
Behaviour:
• Abandoning of power
• No decision-taking
• Denial of problems
• Says “yes” to everything, without necessarily doing it

• Sometimes, when honest answers would do more harm
than good
• With certain practitioners who tend never to take decisions
alone (to force them to take themselves in hand)

• Limited results
• Frustration among practitioners and superiors
• Manager becomes “dead meat” or will be avoided
• Practitioners have the choice between two reactions:
1. Being passive
2. Taking over leadership
5.5. Middle-of-the-road management (compromise)

Motivation:
• Achieve objectives according to practitioner co-operation
• Obtain “acceptable” results without too much effort
Behaviour:
• Listens
• Negotiates in order to find ways to co-operate at all cost
• Sometimes exaggerated delegation
• Planning often changed
• Tendency to slow down decision process

• When compromise is the only way to achieve results

• Relatively agreeable atmosphere
• “Bargaining” climate
• In case of emergency, slow reaction
• In the mid to long term, dissatisfaction from practitioners
and superiors
9.9. Team management

Motivation:
• Thinks that company objectives must be achieved and that
this can only be done by practitioner competence.
• Respects practitioners as «adults»
Behaviour:
• Treats others as adults
• Proposes ambitious goals
• Implicates practitioners when looking for a means to
achieve these goals
• Listens actively
• Asks questions
• Strong at delegating
• Confrontations are assertive
• Reacts rapidly to facts rather than people
• Problem-solving attitude
• Trusts his/her practitioners
III) Applying the Blake and Mouton managerial grid
Being aware of the various approaches is the first step in

understanding and improving how well you perform as a
manager. It is important to understand how you currently operate
so that you can then identify ways of becoming competent in
both areas.
Step One: identify your management style

Think of some recent situations in which you were the
manager.
For each situation, place yourself in the grid where you think
you best fit.
Step Two: identify areas of improvement and develop your

management skills
Look at your current management style and analyse its
effectiveness using a critical eye.
See how you can improve it. Are you settling for ‘middle of the
road’ because it is easier than trying to achieve more?
Identify ways to acquire the skills you need to reach the team
management position. This may include involving others in
problem-solving or improving how you communicate with them,
if you feel you are too task-oriented. Or it may mean becoming
clearer about scheduling or monitoring project progress if you
tend to focus too much on people.
Step Three: put the grid in context

It is important to recognise that the team leadership style is not
always the most effective approach in every situation. If your
company is in the midst of a merger or making some other
significant changes, you should place a greater emphasis on
people rather than on production. Likewise, when faced with
financial hardships or physical risk, you should focus on tasks
which achieve high productivity and efficiency.
IV) Conclusion
The Blake and Mouton managerial grid is a practical and useful

framework that can help you to think about your management
style. The grid training approach has been used to train
hundreds of thousands of people to develop the two key types of
managerial behaviour.
V) Bibliography
Blake, R.R. and Mouton, J.S., The Managerial Grid
Web-o-graphy
http://www.nwlink.com/~donclark/leader/leadcon.html
http://www.gridinternational.com/
http://www.valuebasedmanagement.net/
http://poynteronline.org/column.asp?id=34&aid=45239
266 Tools: Maslow’s five-stage Hierarchy of Needs
Maslow’s five-stage Hierarchy of Needs

I) Who was he?
Abraham Maslow was born in 1908 in Brooklyn, New York, and died
in 1971. He was the first of seven children born to Jewish immigrants
from Russia. His parents, wanting the best for their children in their
new world, pushed him hard for academic success. Consequently,
Maslow became very lonely, finding his refuge in books. To satisfy
his parents, he first studied law at the City College of New York
(CCNY). He married and moved to Wisconsin with his wife and two
daughters to continue his studies at the University of Wisconsin.
He attained a BA in 1930, an MA in 1931, and a PhD in 1934, all
in psychology. A year after graduation, he returned to New York
to work with E.L. Thorndike at Columbia, where Maslow became
interested in research on humans and developed a motivational
analysis model which he called the Hierarchy of Needs.
Below is an illustration of this model and the driving forces that
determine the needs according to Maslow’s research.
MASLOW’S HIERARCHY OF HUMAN NEEDS
Self-Actualization
Self-Fulfillment LEARNING
Prestige
Status GOAL/NEED
Self-Respect FULFILLMENT
Affection
Friendship TENSION DRIVE BEHAVIOR
Belonging
Safety, Security COGNITION

Order, Stability
Protection TENSION RELIEF/
REDUCTION
Air, Water, Food
Shelter, Sex
MOTIVATION PROCESS
Tools: Maslow’s five-stage Hierarchy of Needs 267
II) Historical context
In 1943, Maslow published his first conceptualisation of the

Human Hierarchy of Needs theory. Since then it has become one
of the most popular and cited theories of human behaviour. In
1954, he tried to synthesise a large body of research related to
human behaviour and motivation and posited the Hierarchy of
Needs based on two groups, namely deficiency needs and growth
needs. In 1971, Maslow differentiated growth needs of self-
actualisation and beyond to include self-transcendence, which
is connecting to something beyond ego, such as the need to help
others, to find self-fulfilment and to realise one’s potential.
Hierarchy of Needs structure

Maslow’s Hierarchy of Needs is often depicted as a pyramid of
five, and in some cases, six levels, the four lower levels being
grouped together as deficiency needs, while the two upper levels
are grouped as the being or growth needs. Basically, his theory
states that within the deficiency needs, each lower need must
be fulfilled before moving to the next higher level. Once each of
those needs has been satisfied, the next need emerges.
The following is one example of the Hierarchy of Needs pyramid,

which illustrates the developmental sequence of the human
needs, as revealed by Maslow’s research.
ACTUALISTATION
ESTEEM
LOVE/BELONGING
SAFETY
PHYSIOLOGICAL
III) Physiological needs
Physiological needs are pre-portend needs in that a person who

lacks food, safety, love, and esteem would most likely hunger
for food more than anything else. All capacities are channelled
into satisfying hunger. The first need for existence is for the
body to achieve wholeness. This is obtained from food, water
and air. Human physiological needs take the highest priority.
In view of this, an individual will re-prioritise needs, all other
desires and capacities. Physiological needs can control thoughts
and behaviour and, if deprived, can make people feel sick, pain,
discomfort and, in the worst-case scenario, can cause death.
Individuals at this level need to meet their basic requirements

with food, health, shelter, clothes, sleep and exercise. From the
business point of view, physiological needs include activity,
stimulation, rest periods, work breaks, lunch breaks and wages.
If deprived of these needs, employees become demotivated,
depressed, non-productive, or worse, rebellious.
When fulfilled, physiological needs cease to exist as

determinants of human behaviour or are simply pushed into
the background. However, if thwarted, they re-emerge to
dominate human behaviour in the manner described above.
Addressing physiological needs

Maslow and other management scholars, such as Herzberg,
suggested ways of responding to identified needs. While some
physiological needs can be provided for naturally, e.g. air and
water, some can only be satisfied following efforts either by
the recipient or by the responsible people or authorities. Some
governments and/or social authorities have put mechanisms
in place to make sure that all their citizens have been provided
for as regards their physiological needs. For example, in many
countries social funds are set aside to address these needs as
required, and many human rights organisations have undertaken

to see that those responsible have met this requirement. If not,
international laws are employed against those who default on
human rights legislation.
However, from a company or an organisation’s point of view,

policies are drawn up to ensure that employees have been
provided with the means to satisfy their physiological needs,
such as:
1. Medical insurance
2. Adequate compensation
3. Health clubs
4. Rest periods
5. Labour safety devices
6. Efficient work scheduling
7. Canteens/vendor machines
8. Daycare centres
9. Comfortable working environment
Companies such as SAS have put in place facilities which address

the above.
IV) Security needs
Once the physiological needs are answered, a new set of needs

emerges, namely safety needs. This refers to the need for
protection from any possible danger, for stability and freedom
from fear and anxiety, and for a stable environment.
Here, we can look at the following security categories:
• Social security from violence and other aggression
• Security of employment
• Security of continuous revenues and resources
• Moral and physiological security
• Family security
• Health security
Social security
This refers to situations of social unrest caused by lawlessness,
and inadequate protection from social attacks such as riots,
criminal behaviour, and political unrests leading to conflict.
Security of employment
This refers to the non-availability of employment opportunities.
Most people living in the developing countries fall victim of such
needs, while those in the developed world have been protected
from this by their economies.
Security of continuous revenues and resources

People in this category require adequate and continuous supplies
of funds to meet their basic living needs, such as food, shelter,
clothes, health and the supply of other basic utilities. They
seek adequate provision of resources to provide a comfortable
standard of living, for example, homes, furniture, etc.
Moral and physiological security

In general, people want to live in an organised and decent society
with high moral values that assures safety for all its members.
Family security
Most people are content if they feel assured about the safety
of their families from all possible aggression and threats which
may cause them harm or discomfort.
Health security
People find it easier to plan for the future if they can count on
adequate health provisions both now and in the long term.
We have seen from the hierarchy that the lowest unmet need
determines motivation. Once we gratify a need, the next need
dominates, and the search for its gratification organises our
behaviour. It is in this context that Maslow’s model seeks to clarify
that even as regards ourselves the hierarchy still prevails.
Therefore, this means that people long for a safe, orderly,

predictable and stable, lawful and organised environment which
they can rely on.
Depriving people of, or thwarting their safety needs may cause

fear, anxiety, neurosis, crime waves, chronic social disorders
and, in the worst-case scenario, war.
Addressing security needs

Generally speaking, government policies in most countries have
addressed the possible security threats to their citizens in the form of
regulations and legal protection. They have ministries and organisations
such as the army, police and the courts to address such needs.
Various societies have also put measures in place to maintain

their acceptable norms, such as churches.
Other companies and organisations have drawn up specific

policies that provide employees with security of employment,
revenue, family and health.
Employment contracts with various conditions of service that

specify progressive compensation structures, job security
clauses as well as other benefits, such as health insurance and
retirement benefits, go a long way to address employees’ relevant
security needs.
Some companies have other arrangements to meet special

family needs, such as child daycare facilities, transport and work
schedules, guidance and mentoring programmes, all of which
can provide employees with some form of security.
Trade unions have also been set up to address most of the

employees’ safety needs discussed above.
V ) The need to be loved and to belong
After fulfilling physiological and security needs, the need

for love, acceptance and belonging emerges instinctively and
demands attention.
This involves the desire to fulfil emotionally based relationships

in general, sexual relationships, and the need for companionship.
People need to belong to a family, tribe or clan, or to groups
such as religious bodies. They need to be loved by others and
to be accepted by them. In the absence of such needs, people
become increasingly susceptible to loneliness, anxiety and even
depression.
People abandoned emotionally or physically too often as infants

subconsciously grow a personality sub-self who remains terrified
of being abandoned throughout adulthood. Alternatively, their
sub-self may try and protect them from further abandonment
(subconsciously) by never bonding with anyone. Subconscious
fear of rejection and abandonment is one root cause of
relationship enmeshment, addiction and/or codependence.
Addressing love needs

Like the aforementioned, love needs are actionable, and satisfying
them requires effort by the parties involved, with the exception
of children who can only be loved to know and understand what
love and acceptance is, and to be able to extend these gifts to
other people in adulthood.
However, most social policies have addressed this, for example,

by setting up and organising social clubs, churches, sports
facilities and homes for the abandoned.
Companies and organisations as such have come up with

numerous social activities, including clubs, team events, and
social groups, which encourage employees to meet in a social
context and bond with other employees.
Some companies, like Virgin Airlines, even organise parties and

holidays for groups of staff and their families.
VI) Esteem needs
According to Maslow’s definition, there are two types of needs

of this nature – the self-esteem resulting from competence or
the mastery of tasks, and the attention or recognition gained
from others.
People at this level have a need for achievement, and to engage

themselves so as to gain recognition and appreciation. They need
to take part in activities that add value to themselves, they desire
prestige and status, and need to feel adequate, to be respected,
to gain self respect, and to respect others.
Imbalances at this level can result in low self-esteem and

inferiority complexes while, on the other hand, it can also result
in an inflated sense of self and snobbishness.
Addressing esteem needs

Governments and local authorities worldwide have addressed
this need through the provision of schools, universities and
other technical colleges to provide skills to those aspiring to
fulfil their need for esteem.
However, organisations have also put in place incentives for

career advancements and development, which entail additional
responsibilities or, in some cases, financial compensation. Other
organisations have reward and recognition arrangements such
as awards, trophies, holiday vouchers, bonuses and gift vouchers
for outstanding performance. In most companies, training and
development is available to assist the promotion of ambitious
people who aspire to achieve top-level posts.
Self-actualisation
Maslow defines self-actualisation as the desire to become
everything one is capable of becoming. This implies that each
person has unique talents and abilities which they long to develop
and use to benefit the world if all their needs are fulfilled.
At this level, people seek knowledge, peace, aesthetic experiences,

etc. before becoming creative, energised, centred, focused and
productive. They live up to their highest personal potential.
Characteristics of self-actualising people

Research has revealed that self-actualising people are those who:
1. Embrace the facts and realities of the world (including
themselves) rather than denying or avoiding them
2. Are spontaneous in their ideas and actions
3. Have a system of morality that is fully internalised and
independent of external authority
4. Judge others without prejudice, in a way that can be termed
objective
5. Are realistically oriented
6. Are problem-centred rather than self-centred
7. Have an air of detachment and need privacy
8. Are autonomous and independent
9. Have a fresh appreciation of people and events rather than
a stereotyped one
10. Have profound mystical or spiritual experiences (not
necessarily religious)
11. Have intimate relationships with a few especially close
people and tend to be profound.
Most political and international organisations strive to win the

attention of self-actualising people to improve their image and
strengthen their position both locally and internationally.
Within companies and organisations, people at this level are

usually at the highest decision-making rank, and are involved in
strategic planning, future expectations and board decisions, etc.
VII) Transcendence needs
Maslow’s initial hierarchy ended at self-actualisation needs.

However, with further research into the human forces behind
motivation, he realised that people need to transcend and thus
added it to the top of the hierarchy.
He believed that people study and cultivate peak experiences

as a way of providing a route to achieve personal growth,
integration and fulfilment. Peak experiences are unifying
and ego-transcending. Individuals most likely to have peak
experiences are self-actualised, mature, healthy, and self-
fulfilled. He originally found the occurrence of peak experiences
in individuals who had self-actualised, but later discovered that
peak experiences also happened to non-actualisers, although
not often.
The following is an illustration which summarises Maslow’s

model, as discussed above:
Self-actualization is not an endpoint,

but a self-renewing need/drive
➡ Self-
Actualization
Needs
Reaching your
potential
Independence
Creativity
Creativity
Self-expression
• Involvement in planning
your work
• Opportunity for growth
and development
• Creative work
Esteem Needs • Freedom to make decisions

Responsibility | Self-respect • Status symbols
Recognition • Recognition, awards
Sense of Accomplishment • Challenging work
Sense of Competence • Opportunity for advancement
Sense of Equity • Sharing decision making
Social/Affiliation Needs • Opportunity to interact/network

Companionship | Acceptance • Team-based work
Love and Affection | Group Membership • Friendly co-workers
• Fringe benefits
Safety/Security Needs • Job security
Security for Self and Possessions • Sound policies and practices
Avoidance of Risks | Avoidance of Harm • Proper supervision
Avoidance of Pain • Safe working conditions
Physiological Needs • Adequate compensation

Food | Clothing | Shelter • Rest periods
Comfort | Self-preservation • Labor-saving devices
• Efficient work methods
How the Workplace

Can Meet These Needs
Needs that Herzberg theorized Needs that Herzberg theorized
could be met by motivators could be met by hygiene factors
From Verma, V.K., “Human Resource Skills for the Project Manager: The Human Aspects of Project
Management”, Volume Two, Project Management Institute, 1995, p 61
VIII) Linking Maslow’s theory to the consultant
What is the relevance of the above to the consultant? It indicates

that the job of a consultant lies in the need to be fulfilled;
therefore it is important to understand the needs of all clients
before attempting to provide solutions to their problems.
The consultant manager can use this to categorise clients/

customers according to their needs and their level in the
hierarchy, and to provide solutions that will satisfy their needs
accordingly. In this way the consultant will avoid providing
the wrong solutions to the problems presented by his or her
clients.
Limitations of Maslow’s theory

Marslow’s Hierarchy of Needs is an interesting theory, although
its use in the organisation tends to work best at the individual
level. Many factors vary greatly between individuals, especially
when we move beyond the basic health and safety levels. What
motivates one person can be very different from what motivates
their peers or colleagues. It can therefore be very difficult to try
and create a perfect motivator vehicle for an entire department
or organisation, based solely on Maslow’s theory, as so many
factors are involved.
The theory generalises the motivational factors that influence

the desire to fulfil the needs. It does not take account of the
influence of an employee’s cultural and socio-economic level in
various organisations.
IX) Conclusion
In this era of accelerating change, the companies which are

most likely to succeed are those that have developed the ability
to anticipate and effectively manage the needs of a changing
workforce. For this, companies such as SAS have put in place
responsible policies regarding employee needs, such as health,
maternity leave, child care, care of the elderly, social clubs and
other work-based issues which are important to attract and
retain the best employees on offer.
Observing Marslow’s Hierarchy of Needs can be a useful way

for an organisation to categorise and create for their employees
an atmosphere that drives their performance towards self-
actualisation, to serve customer needs appropriately, and to
select the best suppliers at the right time.
X) Bibliography
Buchanan, D. and Huczynski, A. (1997), “Organisational

Behaviour: an Introductory Text”, 3rd edition, Prentice Hall
Maslow, A. Harold (1943), “A Theory of Human Motivation”, in

The Psychological Review, vol. 50 n° 4, pp 370-396
Maslow, A. Harold (1954), “Motivation and Personality”, New

York, Harper & Row
Mullins, L.J. (1996), “Management and Organisational

Behaviour”, 4th edition, London, Pittman Publishing
Web-o-graphy
http://www.xenodochy.org/ex/lists/maslow.html
http://www.chiron.edu/whuitt/col/regsys/maslow.html
http://www.tms.com.au/forum/DC Forum ID2/60.html
http://www.chiron.valdosta.edu/whuitt/col/regeys/maslow.html
http://www.deepermind.com/20maslow.html
http://www.chacocanyon.com/essays/hierachyofneeds.html
http://www.pateo.com?article6.html
http://www.easytraining.com?motivation.htm
http://www.change-management-toolbook.6m/too/satw.html
282 Tools: Maturity Matrix
Arthur D. Little Maturity Matrix
Dominant
Strong
Competitive Position
Favourable
Tenable
Weak
Embryonic Growth Mature Ageing
Industry Maturity
I) Introduction
It is not very clear whether the Hofer Schendel matrix or the

A. D. Little matrix was developed and used first. Both of these
approaches are said to have been published in 1978. Both are
very similar to one another and could therefore be called variants
of each other. They are both versions of the same theme.
Very similar to the Hofer Schendel model, this one was developed
by the consulting firm Arthur D. Little Inc. in the late 1970s:
Tools: Maturity Matrix 283
- The approach uses the dimensions of both environmental

and business strength assessment. The environmental
measure is an identification of the industry’s life cycle.
The business strengths measure is a categorisation of the
corporation’s strategic business units (SBUs) into one of six
possible competitive positions.
- One of the most important factors in this approach is
to identify SBUs correctly. The natural business unit is
made up of a product or product lines with identifiable
independence from other products and product lines.
- Arthur D. Little grouped the life cycle of an industry into
four stages: embryonic, growth, mature and ageing.
- The assessment of strategic competitive position is subjective
and based on certain guidelines. There are five categories:
dominant, strong, favourable, tenable and weak.
- The assessment of industry maturity and competitive
position is made on the basis of business market share,
investment, and profitability or cash flow.
- There are certain steps to follow when using the Arthur D.
Little life-cycle approach: identifying the SBUs; classifying
each SBU in terms of industry maturity; characterisation of
each SBU’s competitive position; positioning the SBU on
the Arthur D. Little matrix according to its classifications;
selecting an appropriate strategic thrust; selecting an
appropriate generic strategy; testing for financial and
management feasibility; and analysing the risk involved.
- Arthur D. Little described four types of natural thrusts
from the positioning on the matrix.
- Natural development: these strategies are appropriate
when the SBU is in a mature industry and is competitive.
The SBU positioned here deserves strong support.
- Selective development: this refers to strategies that
concentrate on industries that are attractive or on SBUs
with competitive competencies.
- Proved viability: refers to transitional strategy that cannot

be sustained, so the situation must be changed.
- Out: this is the strategy for withdrawal. The strategy for
businesses lying here is to abandon or write off the business
in such a way as to maximise the potential tax shelter.
- Once the natural strategy and strategic thrust of the SBU
has been determined, a generic strategy must be chosen.
The generic strategies are stated in tactical terms and refer
to operational planning.
- Arthur D. Little Inc. incorporates some aspects of risk
analysis to cross-check the suitability of the strategy that
has been chosen.
- Use of this matrix is claimed to help in reducing and
balancing overall risk for the portfolio of SBUs.
- The criticisms levelled at the Hofer Schendel market
evolution matrix can be applied to the Arthur D. Little
Inc. matrix as well. According to Michael Porter, such
limitations are fourfold (see below).
- A common analytical framework must be used for all the
products or SBUs and the involvement of all principal
functional managers is important.
II) History
In the early 1970s, the Arab-Israeli conflict triggered an energy

crisis. During the war, the Arab world imposed the 1973 oil
embargo on the United States, Western Europe, and Japan.
Suddenly, the great Western oil conglomerates faced a unified
bloc of producers.
The US economy remained stable until the 1970s, when the US

suffered stagflation*. Richard Nixon took the United States out
of the Bretton Woods system, and further government attempts
to revive the economy failed. As the decade progressed, the
situation worsened. During the oil crisis, companies had to
revert to ways to make them more efficient, which is probably
why the Arthur D. Little matrix was marketed at this time.
*Stagflation, a portmanteau of the words stagnation and

inflation, is a term in macroeconomics used to describe a period
of high price inflation combined with slow output growth, high
unemployment, or recession. «Stag» refers to a sluggish economy,
while «flation» signifies rapidly rising consumer prices.
III) What and how
The ADL Maturity Matrix or the Life Cycle Portfolio Matrix,

commonly known as ADL, was developed by Arthur D. Little
Inc., consultants in the late 1970s. It revolves around strategic
business units (SBUs). The reason behind grouping similar
businesses of a company into strategic business units is to reduce
the complexity of the company being analysed.
The ADL portfolio comprises four procedures:
1) Classification: classify all the businesses of a company into

SBUs. In the ADL approach, the line of business or SBU
is not specifically defined by a product or organisational
unit. The strategist must identify discrete businesses by
finding commonalties among products and business
lines, using the following criteria as guidelines: common
rivals, prices, customers, quality/style, substitutability and
divestment or liquidation;
2) Positioning: position the SBUs in a matrix;
3) Evaluate: evaluate the conditions of the industries in which
each SBU operates;
4) Decide: make a decision.
ADL has 24 quadrants which will be explained in section 3.

However, in some books they mention 20 quadrants while in
ADL consultancy they use 32 quadrants. In the matrix below,
only 24 quadrants are represented. The SBUs are classified in
three different colours: green, yellow and red.
Dominant G G G G
Strong G G G Y
Favourable G G Y Y
Tenable G Y R R
Weak Y R R R
Non-viable R R R R
Embryonic Growth Maturity Ageing
Figure 1: ADL Strategic Business Unit Model or Maturity Model
SBUs with high market share and an attractive market are

classified as Green, and those in the middle are Yellow. Those
in a less mature market, with low market share are classified as
Red.
Based on this classification, the strategist can move forward

to propose appropriate plans, focus, penetration, divest, or
diversification.
IV) Competitive position of the ADL Maturity Matrix
4.1 Two main dimensions

ADL has two main dimensions – competitive position and
industry maturity. It is the combination of these two dimensions
that will help in the decision-making process.
4.1.1 Competitive position

Competitive position is driven by the sectors or segments in which
a SBU operates. It depends on the product or service which the
SBU markets and the market it accesses, i.e. product and place.
1. Dominant or Leading – this is the best position in the
market, near monopoly or protected market. Examples of
companies in this segment are Microsoft and Danone.
2. Strong – here companies have a lot of freedom since their
position in an industry is comparatively powerful, e.g.
Apple’s iPod products. A strong SBU can usually follow a
strategy without consideration of rival counter moves.
3. Favourable – companies with a favourable position tend
to have the competitive strengths of a fragmented market
place. The industry is fragmented, so there is no clear
leader among stronger rivals.
4. Tenable – here companies may face stronger competitors
that have a favourable, strong or competitive position.
Companies here do not have a sustainable competitive
advantage.
5. Weak – this is an enviable position, but not many companies
can move away from this position by implementing the
right strategies. They are typically too small to be profitable
or to survive over the long term. It could apply to a large
firm which is suffering from previous mistakes or a critical
weakness.
6. Non-viable – this position is not the best position to be
in, so companies finding themselves here need to abandon
this segment.
4.1.2 Industry maturity

The industry matrix is similar to product life cycle, but segments
can also be considered.
The AD Little company found that industry maturity is

determined by and has an impact on observable business
actions. Maturity of the industry can be tracked by assessing the
level and rate of change in variables such as technology, breadth
of product line, rate of growth compared to GNP growth, degree
of market concentration and conditions for entry and exit.
Business market share, investment and profitability or cash flow
are also used as guidelines in assessing the industry maturity.
AD Little grouped the life cycle of an industry into four stages:
The Embryonic Stage – this is usually characterised by rapid

growth, changes in technology, pursuit of new customers, and
fragmented and changing shares of the market.
The Growth Stage – is a still rapidly growing stage but customers,

shares and technology are more stable and entry into this market
is more difficult than at the earlier stage.
The Mature Stage – is characterised by stability in known

customers, technology and market share. The industry may still
be competitive.
The Ageing Stage – is characterised by a falling demand, a

declining number of competitors and often a narrowing of the
product line.
4.2 Applying the Matrix

By knowing the competitive position, the strategic position
of a company can be established. Different strategies can be
employed. In the table below, only 20 quadrants will be used as
most of the time the non-viable segment will be eliminated.
The life-cycle stage will be assessed for each business. This
assessment is made on the basis of business market share,
investment, and profitability or cash flow.
Competitive
Position
Dominant Fast grow Fast grow Defend Defend

Start-up Cost position position
Probably leadership Cost Focus
profitable Renew leadership Renew
Defend Renew Grow with
Position Fast grow industry
Profitable, Profitable, net Profitable,
probably cash producer net cash
not cash producer
producer
Strong Start-up Fast grow Harvest, Find niche

Differentiate Catch-up hand-in Hold niche
Fast grow Attain cost Find niche Hang-in
Maybe leadership Hold niche Grow with
unprofitable, Differentiate Renew industry
net cash Probably Differentiate, Harvest
borrower profitable focus Profitable,
Probably Grow with net cash
not cash industry producer
producer Profitable, net
cash producer
Competitive
Position
Favourable Start-up Differentiate, Harvest, Retrench

Differentiate focus hand-in Turnaround
Focus Catch-up Find niche Moderately
Fast grow Grow with Hold niche Profitable,
Probably industry Renew cash flow
profitable, Marginally Differentiate, balance
net cash profitable, focus
borrower net cash Grow with
borrower industry
Moderately
Profitable, net
cash producer
Tenable Start-up Harvest, Harvest Divest

Grow with catch-up Turnaround Retrench
industry hold niche Find niche Phase-out
Focus Hang-in Retrench Withdrawal
Unprofitable, Find niche Minimally Minimally
net cash Turnaround profitable profitable,
borrower Focus cash balance cash balance
Grow with
industry
Unprofitable,
borrower or
cash balance
Weak Find niche Turnaround Withdraw Withdraw

Catch-up Retrench Divest Unprofitable
Grow with Unprofitable, Unprofitable
industry net cash Possibly net
Unprofitable, borrower cash borrower
net cash
borrower
Figure 2: Strategic positioning in terms of market share/investment and profitability

V) Model use and applicability
ADL can be used in the reduction and balancing of overall

risk for the portfolio of strategic business units. It can be used,
for example, when a firm wants to know what the investment
potential of the businesses is likely to be – the industry maturity
gives a good indication of this.
This model may be usefully applied to assigning strategies to

each SBU using the generic strategies. It is particularly useful for
high-tech industries in which life cycles are relatively short and
therefore if situational strategies are not employed, a strategic
business unit may fall short of its goals. It can also be used to
establish the desired corporate portfolio profile, to formulate
specific business strategies for each SBU, and close any gap
existing between corporate and SBU level. Likewise, the model
can be used for competitor analysis at both the corporate and
SBU level.
VI) What Is wrong with this model?
The criticisms levelled at the Hofer Schendel market evolution

matrix can be applied to this matrix as well. According to
Michael Porter, these limitations are fourfold:
1. The length of the stages in the cycle can vary enormously from
industry to industry and it is often not very clear what stage
the industry is in.
2. Industry growth does not always go through the typical s-

shape described by Hofer and Schendel, Arthur D. Little and
others. Some industries go straight from growth to decline
and some industries revitalise themselves during a decline.
Other industries do not have a slow introductory growth
stage but enter directly into a sharp growth phase.
3. Firms can alter the life-cycle shape themselves through

product innovation, creative marketing and repositioning. If
a company takes the life cycle as a given, it can become a self
fulfilling prophesy.
4. Competition at each stage of the life cycle is different in

different industries.
Porter argues that except for industry growth, there is little or

no rationale for the reason competitive changes associated with
the life cycle will occur. Nothing in the life cycle concept allows
us to predict when it will hold true and when it will not.
This, in turn, raises the concern of the appropriateness of the

generic strategies at each position of the matrix.
VII) Conclusion
The ADL matrix is synonymous with the product life cycle. At its
best, the matrix helps to reduce complexity, enable the smooth
sharing of resources across a company, and establish economies
of scale. In the complex environment in which companies are
evolving these days, the ADL matrix enables the definition
of the industry or segment attractiveness. This assessment
needs to be supplemented by an assessment of the company’s
competitive position in this industry or segment. Combining
these two assessments will allow development opportunities to
be defined.
Similar type of matrices can be used for technology

assessment:
- assessment of competitive impact of the technology: from
base technology(mature/ageing) to emergent technology
(embryonic/emerging);
- assessment of the competitive position of the company in
that technology (from weak to strong);
- a combination of those two dimensions enables identification
of a technology to develop or acquire.
Notes:
A base technology is one that is a threshold to entering the
particular market a company is in – for example, the ability to
bend sheet metal is a base technology for a car company. There
is no competitive advantage to be derived from this type of
technology.
A key technology is one that currently provides a competitive
advantage
A pacing technology is one that will provide competitive
advantage in five to ten years.
An emerging technology is one in which it is unknown whether
the technology will ever provide competitive advantage.
VIII) Web-o-graphy
http://www.cipher-sys.com/hofhelp/ad%20little/
adlhelp.htm
lesson_a_d_little.htm
methods_adl_matrix.html
296 Tools: Myers Briggs Type Indicator
Myers Briggs Type Indicator

I) What is it?
Much has been written about the Myers Briggs Type Indicator®
(MBTI) in its lifetime which spans more than 60 years; it has
attracted both strong support and a lot of criticism. However,
one thing is certain: today, MBTI is the most widely used
personality test. To call it a test is arguable as nobody can ever
fail it as there is no right or wrong personality type. MBTI
assesses four core dimensions of human personality, modelled
on Carl Jung’s framework of type preferences. Form M of the
MBTI questionnaire has 93 items and provides the basic type,
while Form Q has 144 items and provides not only the type, but
also results for 20 facets of that type.
According to Jung, people can be characterised depending on:

- the way they are energised: extroverts, attuned to the
external world of people and facts, and introverts, oriented
towards their inner self and world of ideas (E/I type).
- the perceptive capacities, seen in the way they perceive the
world and gather information: using all their five senses or
their intuition. Sensation is the perception of facts, while
intuition is the perception of the unseen (S/N type).
- the rational capacities, seen in the way they make decisions:
thinking (analytical, deductive cognition), or feeling
(synthetic, all-inclusive cognition) (T/F type).
- the way people live their lives: in a planned, orderly way,
aware of their environment, or in a flexible and spontaneous
manner, perceiving the external world (J/P type).
From the combination of mutually exclusive answers to the

questionnaire, MBTI determines 16 personality types which
have each been associated with characteristically common
behaviours, preferred career choices, and preference over other
Tools: Myers Briggs Type Indicator 297
types. In spite of criticism about its lack of sound scientific

grounding, the success of MBTI relies on the fact that it offers
individuals a good glimpse of themselves, being a valuable tool
in team-building, improving communication, and resolving
personality-based conflict.
Eight major personality types can be defined, each with its own
name:
ES(T/F)P = Adventurer: present-oriented, practical,
spontaneous, quick
IS(T/F)P = Navigator: present observer/recorder, facts-past-
oriented
EN(T/F)P = Explorer: future-oriented, seeking opportunities,
change, external patterns
IN(T/F)J = Visionary: future-oriented, far-reaching visions,
holistic insights
E(S/N)TJ = Pilot: analytical, direction, energy, organising,
goals
I(S/N)TP = Inventor: analytical, objective, detached, systems/
models
E(S/N)FJ = Harmoniser: concerned by people needs, shared
goals, caring, energy
I(S/N)FP = Poet: flexible, tolerant, nurturing, values and ideas
II) When can it be used?
Personality tests are increasingly popular tools in workforce

management, primarily for career development and team-
building purposes.
Major users of personality tests (as reported by product vendors)

include government agencies, hospitals, schools, and vocational
centres. Positions for which testing is used include management
– in leadership and coaching programmes – customer service,
sales, administration and clerical, with the purpose of ensuring
higher rates of success on the job, for individuals and for teams.
However attractive it may be, the MBTI is not a tool designed for
hiring purposes, and its use in such circumstances is unethical
(as there is no good or bad personality type). Moreover, it does
not provide any indication of whether a candidate is fit for a job,
from the point of view of skills, commitment, personal goals and
loyalty to the company. As the publishers of the test say, MBTI is
meant for inclusion, not for exclusion, its aim being to leverage
better understanding and acceptance of oneself and others.
Example in SMEs and/or other organisations

Most Fortune 500 companies use MBTI for various purposes.
Major success stories worldwide, as reported by CPP Inc, the
publisher of MBTI, include St Luke’s Hospital and Health
Network, Pennsylvania, AIM Investment Services, a subsidiary
of the London-based financial giant AMVESCAP, Marriott,
Texas Instruments and numerous others. Three of these cases
are summarised below:
- General Motors, where MBTI was a key part of an executive
training programme between 1997 and 2000 and is still
widely used today in workforce development.
- The consulting company Ernst & Young used a series of
leadership development seminars to help manage change
following restructuring, to align development to the Ernst

& Young leadership values, and to encourage development
of interpersonal skills. The restructuring brought together
two considerable E&Y business units, with a workforce
of approximately 1,200 and a leadership group (directors
and partners) of around 100. The seminars were aimed at
ensuring that the new leadership had clarity and consistency
around the direction of the new business and that they were
able to share information, and to motivate and empower
the wider employee base. The seminars concentrated on
interpersonal qualities, and MBTI (both phases) played a
key role. Following the success of these seminars in 2004, in
2005 E&Y decided to run a communications-focused event
for their Direction Setting Team, a group of eight senior
partners comprising business and industry leaders. This
new programme was also based on the MBTI framework
and was deemed a success by participants.
- Nokia, a global leader in mobile telecommunications,
established a new Enterprise Solutions business to serve
mobile business users with wireless terminals, and to
offer improved internet security to its customers. Since
wireless computing and internet access are at the cutting-
edge for innovative Nokia, and as the business unit’s
global workforce was widely dispersed, the company
sought an approach to performance development for the
new business unit. An assessment, training, and coaching
structure was established to that end, blending flexibility
and convenience of on-line access with personal coaching
at key points. Participants were helped to define individual
needs, preferences and values using various tools, including
MBTI. The result was that people understood themselves
better and took ownership of their careers.
In another example below, one personality type has been

developed by showing its main characteristics:
INTJ (Introverted, Intuitive, Thinking, Judging): “The Visionary”

The INTJ person:
- Self-confident, sometimes mistaken for arrogant by less-
decisive people.
- INTJs know what they know and, more importantly, they know
what they don’t know.
- Also known as “system builders”, they possess the unusual
combination of imagination and reliability.
- Professionally, they are “pacesetters”, perfectionists, often
disregarding authority.
- They have an unusual independence of mind, which frees them
from the constraints of authority and convention.
- Typical career choices are the sciences and engineering. They
can rise to high management positions if they are prepared to
invest time in marketing their abilities.
- Some of them manage to simulate some degree of surface
conformism, to mask their inherent unconventionality.
- Personal relations, especially romantic ones, can be their
Achilles heel.
- Many of them do not readily grasp social rituals, and they are
usually extremely private people.
- However, their assets in the interpersonal area include
their intuitive abilities and their willingness to ‘work at’ a
relationship. Those relations, which the INTJ ultimately
establishes, are characterised by their robustness, stability and
good communication.
The INTJ manager:

- Architect of progress and ideas, he is interested in principles
and meanings behind the events and elements.
- Expecting a great deal of himself, he always feels restless
and unfulfilled, tending to escalate standards for himself and
others. As his level of achievement is very high, so is the need
for rewards, mainly valuing rewards from other NT types who
are either intellectual equals or superiors.
- Involved in a creative process, he has enormous drive; but
once the ‘castle’ is designed, he is more than willing to allow
somebody else to take over.
- He may not be aware of the feelings of others; intellectually
oriented, this person will not value subordinates (or superiors!)
who are not intellectually competent.
- An excellent decision-maker within the organisation, the INTJ
is a “portrait of ideas”.
- He is comfortable in a management system focused on results
rather than on procedures.
- Finally, the INTJ may quickly leave an organisation (physically
or psychologically) if his talents are not fully used.
The idea of developing a psychological instrument based on

Carl Gustav Jung’s theory of types and preferences emerged in
1941 in the US. The architects of the tool were Katharine Briggs
and Isabel Myers, mother and daughter, both with a profound
interest in applied psychology. The foundation of the tool was
the idea that understanding oneself can help one appreciate his
or her own strengths, gifts and potential developmental needs,
as well as understand and appreciate differences among people.
At that time, Myers and Briggs wanted to help the American war
effort, in response to a call by the government for “more effective
ways of doing things”. Characteristic of American society then
was the desire for development and self-improvement, at both
individual and social group level. However, as the Americans
were focusing then on the quantifiable, and measurable, and
were standardising everything from clothes sizes to industrial
processes, the model proposed by Myers and Briggs was not
embraced with enthusiasm, as Jung’s dimensions were difficult
to measure.
It took decades of experimental studies, data gathering, mapping

on to statistical methods and development for MBTI to become
recognised as a major personality assessment tool.
However, it is worth mentioning that Jung’s theory is a fruit

of modernism in Europe, along with numerous other theories
exploring the human psyche. That (1890 until after WWII) was a
period of introspection, of attempts to push aside current barriers
of thought, behaviour and social order. European intellectuals
were trying to explain what could possibly justify the horrors
of war. Each of the theories revealed some aspects of human
personality, none of them being 100% correct or complete, but
they all led to a better understanding of humanity.
Types, therefore, do not explain all the behaviour of healthy

humans, and certainly did not help the understanding of the
dark ages of humanity. However, what a correct understanding
of types – using MBTI – does successfully, is to sort preferences
and help build successful teams.
Each tool that has been subsequently developed based on

these theories not only has to be administered by certified
professionals, but the results have to be considered with care, in
line with the purposes for which the tests have been designed.
IV) Bibliography
Mailleux and Associates, Brussels – “Leadership training”,

2005.
Web-o-graphy
http://www.cpp.com/content/case_studies.asp
http://www.adventureassoc.com/THRIVE/Fall/
corporatecasestudy.html
http://www.myersbriggs.org/
http://www.petergeyer.com.au/library/thesis.php
http://www.en.wikipedia.org/wiki/Modernism
http://www.workforce.com/section/06/feature/23/57/09
306 Tools: The need for new competences...
The need for new competences...
In the figure below you can observe the different angles and the
different viewpoints on management styles. Each of these styles is
unique, but every manager belongs, more or less, to all of these.
It is important to know which type you belong to, and even more
so to see whether or not this is the one you thought you would
be associated with.
FLEXIBLE
COLLABORATE CREATE
MENTOR INNOVATOR
FACILITATOR BROKER
INTERNAL EXTERNAL
MONITOR PRODUCER
COORDINATOR DIRECTOR
CONTROL COMPETE
CONTROLLING
At the top right, under the term INNOVATOR you will find
the managers who love change, who are not afraid of new
possibilities, and who think in a creative way. They are also
capable of managing change, but hate people who resist it. This
kind of manager looks around him- or herself, observes the new
economic models and trends, and will thus be able to project
the changes required. One thing is important for this type of
management: stress-resistance and, above all, accepting to
coexist with uncertainty and risk.
Tools: The need for new competences... 307
In that same upper-right quadrant we find another type of

‘hyperactive’, never-standing-still manager: the BROKER. This
manager has a solid basis of external legitimacy, plus an enormous
address book. He/She works as much as possible with external
resources, and is persuasive, strong and influential. He/She
meets people from outside in order to negotiate and convince
them to work with him/her, thereby acting as the spokesperson
for the unit and/or company.
Still on the flexible side of management (the upper part of

the circle), but this time on the left (collaborate) we find two
complementary management styles: the MENTOR and the
FACILITATOR.
The facilitator is the manager who builds teams, whose work

is built on collaboration. He/She loves giving people a boost
and talking to them; they know their staff and understand their
problems, wishes, and aspirations. Everything he/she does is
process-oriented. This manager hates conflicts between staff
members and tries to solve them, fights for cohesion, and very
often achieves positive input and participation.
Contact with people is the most important driver for the mentor
who takes care of them. Personnel perceive this type of manager
as someone who is helpful, considerate, sensitive, open and fair.
This is the manager who really listens – on receiving a positive
and legitimate request he/she stands behind them and helps
them to acquire what they want. He/She takes care of staff
training by identifying training opportunities, builds career
plans and so on. One of the best things that can happen to young
graduates is to be the protégés of this type of manager, because
this will ensure they have a successful career in the future.
308 Tools: The need for new competences...
Slowly but surely we move down in the circle into the controlling
part in the bottom half. As the name implies, there is no flexibility
at all at this level. You have to choose what kind of manager you
want to be.
Are they less funny? The fact is that these managers are closer
to the facts, since everything has to be measurable for the
MONITOR and COORDINATOR.
The monitor is expected to know everything that is going on in

his/her department, unit or whatever level he/she is responsible
for. For this manager there are two important points:
1. Are the people working for him/her doing so according to
the rules, the procedures (internal as well as external)?
2. Is everybody, every unit, every department meeting its
quotas. If not why not, and how can the gap be filled
immediately. This question will also be essential if quotas
are exceeded.
It is easy to explain the roles played by the coordinator-manager

to those among us who know the Thiem-Tom 10.5 S framework,
and/or the McKinsey 7S framework. This is the person who takes
care of the structure and flow of the system(s) and, as such, is
completely reliable and ethically correct. He/She is an expert in
scheduling, planning, organising and coordinating efforts. This
manager should be able to handle crises, although here he/she
fails in the roles played by the mentors and facilitators.
This manager type is an expert in technology, housekeeping and
logistics.
Tools: The need for new competences... 309
Finally, we come to the last quarter of the pie, which is least liked
by the staff : the DIRECTOR and the PRODUCER. The director
sets the goals and plans everything, and should be the one who
defines problems and brings various alternatives. He/She is the
one who assigns the roles different people have to play, writes
the internal rules, sets out the politics to be followed and gives
strict instructions.
People with significant personal drive, an enormous amount of

energy and who are super-motivated tend to be producers. Of
course, they accept responsibility and complete assignments,
although they do not accept that their own level of productivity
may decline. This is why they often try to motivate collaborators
to increase productivity and to always try to attain higher goals.
They drive themselves and their staffs unrelentingly towards a
stated objective.
Maybe you have not been able to identify your exact type
from the choice above, since the mix you represent is too
complicated at the moment, but one thing is for sure – there are
a lot of managers you can fit into each of the above-mentioned
categories.
310 Tools: Open Space Technology
Open Space Technology

I) What is it?
Open Space Technology (OST) is a meeting process developed
by Harrison Owen, an American consultant. An OST meeting is
unique as it lacks the fundamental requirement of the traditional
meeting: a predetermined agenda. In an OST meeting, issues
are identified by participants, discussed in self-organised and
self-facilitated work groups and moved forward by participants
taking personal responsibility.
An OST meeting generally unfolds as follows:

1. The group begins in a circle, with no tables in the room.
One wall of the room is left blank, and in the centre of the
circle is a pile of papers, pens and the facilitator.
2. The facilitator “opens the space” by explaining the process,
stating the theme of the event and inviting those with a
passion for a particular topic to come forward and place
that topic on the agenda.
3. Participants come forward, identify a topic, write it on a
large piece of paper, post it on the blank wall and choose a
time and a place for the discussion to begin on this topic.
4. When there are no more topics, the group moves to the wall
to see what is on offer and each participant decides how they
will spend their own time for the duration of the meeting.
5. Groups are self-organised and meet at predetermined times
and locations and self-facilitate. A report is generated and
posted on a “news wall” in the room. During the course of
the meeting, the news wall fills with reports of completed
sessions.
6. At the conclusion of the meeting, the group reconvenes in
a circle and shares their thoughts about the meeting. The
reports are gathered up and copied for each participant.
7. In certain situations where concrete action plans are
Tools: Open Space Technology 311
desired, a “convergence” and action planning activity takes

place, whereby participants prioritise actions and take
personal responsibility for seeing them through.
At the heart of an OST meeting are four principles and one law.
These are commonly articulated as follows:
1. Whoever comes is the right person: people who show up
are those who care.
2. Whatever happens is the only thing that could have
happened: people focus on the moment.
3. When it starts is the right time: people’s genuine
performance and creativity happens at anytime.
4. When it is over it is over: when ideas are generated,
participants move on to another topic.
The ‘Law of Two Feet’ is known as follows: “If you find yourself in
a group where you are neither learning nor contributing, use your
two feet and move to another group or somewhere where you can.”
These principles and the Law of Two Feet give participants

power, freedom and responsibility. The facilitator’s role shifts
from controlling the process to “holding the space”, which can
loosely be defined as ensuring that the space is fully open for
creativity and freedom to unfold.
The Law of Two Feet and the process of self-organisation create

a powerful space in which participants are free to choose where
they will go, what they will work on and how that work will be
carried out.
Surprisingly enough, OST has been embraced by some large

organisations and has proved to generate leadership, structure,
efficiency and effectiveness in amounts not generally seen in
other meeting processes and facilitation tools.
312 Tools: Open Space Technology
II) Bibliography
Owen, Harrison; “Open Space Technology User’s Guide”, second

edition, Berrett-Koehler Publishers, San Fransisco.
Web-o-graphy
http://www.openspaceworld.org/
http://www.chriscorrigan.com/openspace/
http://www.ourfuture.com/osover.htm
http://www.openspacetechnology.com/articles/oscowhat.html
http://www.seedstraining.com/openspace/
314 Tools: The Pareto Principle
The Pareto Principle

I) History
Vilfredo Pareto
Born on 15 July 1848, the son of a Genoese father and a French
mother, Vilfredo Pareto was educated in both France and Italy. He
is known for being one of the theorists who developed the field
of microeconomics using tools such as indifference curves.1
Joseph Juran
Born on 24 December 1904, Joseph Juran was known as a
business and industrial quality ‘guru’. Dr Joseph Moses Juran
was an industrial engineer and philanthropist who made
significant contributions to management theory, human
resource management and consulting. He wrote several books,
and is known worldwide as one of the most important 20th
century thinkers in quality management.
Contribution to microeconomics
As an economist Pareto made several important contributions
to economics and sociology, especially in the study of income
distribution and in the analysis of individual choice. He created
the Pareto index2 which is a measure of the inequality of income
distribution.
Pareto’s Principle
The Pareto Principle is the main focus of this section. In a
nutshell, the background of this principle is that in 1906 he
made the famous observation that 20% of the population owned
80% of the property in Italy. This was later generalised by Joseph
M. Juran and others into the so-called Pareto Principle (also
called the 80-20 rule), and generalised further to the concept of
the Pareto distribution3. In his “Trattato di Sociologia Generale”
Tools: The Pareto Principle 315
(“The Treatise on General Sociology”) first published in English

under the title “Mind and Society”, he put forward the first social
cycle theory in sociology.
Contribution to quality and management

After World War II, Japan experienced a crisis in product
quality. Japanese goods were considered cheap, easily broken
and generally of extremely poor quality. The Japanese Union
of Scientists and Engineers (JUSE) recognised these issues
and invited Juran to Japan in 1954. He worked independently
of W. Edwards Deming who focused on the use of statistical
quality control. Juran, who concentrated on managing for
quality, went to Japan in 1954 and started courses in quality
management – this was a part of his contribution to the theory
of Total Quality Management. His trainings primarily targeted
top and middle management. In the United States, the idea
that top and middle management needed training found much
resistance. It would take some 20 years for the training to pay
off in Japan. In the 1970s, Japanese products began to be seen
as the leaders in quality, which would lead to a quality crisis in
the United States in the 1980s.
When Juran began his career in the 1920s, the principle

focus in quality management was on the evaluation of
manufactured product quality. The tools used were from
the Bell system of sampling inspection plans (tables), and
the Shewhart control charts. Frederick Winslow Taylor’s
ideas dominated. Juran is widely credited for adding the
human dimension to quality, which is why he pushed for
the education and training of managers. For Juran, human
relations problems were the problems to be isolated.
Resistance to change – or in Juran’s terms cultural resistance
– was the root cause of quality issues.
In 1966, Juran promoted the Japanese idea of Quality Circles,

and developed the ‘Juran’s trilogy’ which is an approach to cross-
functional management that is composed of three managerial
processes: planning, control, and improvement. In 1979, he
founded the Juran Institute.
‘Discovering’ the Pareto Principle

It was in 1941 that Juran discovered the work of Vilfredo Pareto.
Juran would expand the Pareto principle to quality issues (e.g.
80% of a problem is caused by 20% of the causes). This is also
known as the vital few and the useful many.
General historic events
Intellectual development
This can be seen as a period of enlightenment when many
great theorists introuced their extremely revolutionary theories
which still influence our lives today. For example, Max Weber’s
sociology theories are still considered and applied today.
According to Wikipedia Encyclopaedia: “he is considered
one of the founders of the modern, anti-positivistic study of
sociology and public administration. His major works deal with
rationalisation in sociology of religion and government, but he
also wrote much in the field of economics.”
Another great theorist of this generation was Albert Einstein.

He was the author of the general theory of relativity and made
important contributions to the special theory of relativity,
quantum mechanics, statistical mechanics, and cosmology.
Setbacks
As shown on the timeline, there were two main periods of war
during this time – World War I 1914-1918, and World War
II, 1940-1945. Periods of war are periods in which intellectual
growth is slowed down, as resources are used for pure survival

rather than for human development, which could be considered
an item of luxury at this point in time.
Technological development
During this period there were many inventions related to both
human and technological development. In 1930, the planet
Pluto was discovered – this was a time when mankind tried to
look beyond the known planets to place us in the universe.
In 1941, the digital computer was discovered, which was one of

the great steps forward in technology, as a result of which we
now rely heavily on robotics and other computers to enhance
our quality of life.
Results
In general, we can say that all these developments were major
steps towards what we are today. We can also say that we now have
a greater acceptance of softer theories and their implementation
in corporate strategy and international governance.
Of course, during this period there was not the same amount of
tolerance toward soft theories, which is why this paper looks at
two men behind this theory – one who created it and the other
who popularised the theory.
Pareto timeline
In 1870, Vilfredo Pareto received an engineering degree from
what is now the Polytechnic University of Turin. He started life
in the Italian state railways, but in 1873 switched over to the
iron-industry of his country. In 1886, he became a lecturer in
economics and management at the University of Florence. Later,
in 1893, he was appointed as a lecturer in economics at the
University of Lausanne in Switzerland where he remained for
the rest of his life. In 1906, he came up with the Pareto Principle
while working as a professor in Switzerland. Just 17 years later
he died, in 1923.
In 1924, Joseph Moses Juran graduated with a Bachelor’s

degree in electrical engineering; later he was also awarded a
degree in law. After graduating, Juran joined Western Electric
at the Hawthorne manufacturing plant in the US. His first role
was in the inspection branch. In 1928, he was promoted to a
managerial position and the following year became division
chief. He published his first quality related article on mechanical
engineering in 1935. In 1937, he moved up to Western Electric/
AT&T’s headquarters in New York. In 1941, he discovered the
Pareto Principle, putting it in a different guise as the theory of
the vital few and the trivial many. In 1966, he wrote his book “The
Quality Cycles”, and in 1979 he founded the Juran Institute which
encouraged the research and development of intelligence.
We can see from this timeline that the two may have had the
chance to meet, but never actually managed to.
The Pareto Principle
Background
The principle was suggested by management thinker Joseph M.
Juran. It was named after the Italian economist Vilfredo Pareto.
Vilfredo Pareto’s theory

Pareto observed that 80% of property in Italy was owned by 20%
of the Italian population.
He states that for many phenomena 80% of consequences stem
from 20% of the causes.
The assumption is that most of the results in any situation are

determined by a small number of causes. Such a statement is

testable, is likely to be approximately correct, and may be helpful
in decision-making.
Joseph Juran’s interpretation

Since Joseph Juran adopted the idea, it might be better referred
to as ‘Juran’s assumption’. He states the theory of the vital few
and trivial many. He claims that results in any situation are
determined by a small number of causes. Examples of this are,
for example, file size distribution of internet traffic which uses
the TCP protocol. There are many smaller files, and few larger
ones. Another example could be the oil reserves in oil fields –
there are a few large fields, but many small ones.
1
Indifference curves: An indifference curve is a graph showing combinations of
goods to which a consumer is indifferent, that is, he or she has no preference for one
combination over another. Indifference curves are a device to represent preferences
and are used in choice theory.
2
Pareto Index: “In economics, the Pareto index, named after the Italian economist and
sociologist Vilfredo Pareto, is a measure of the breadth of income distribution. It is one
of the parameters specifying a Pareto distribution and embodies the Pareto principle,
which was an observation that 20% of the members of Italian society owned 80% of
the wealth. One of the simplest characterisations of the Pareto distribution, when used
to model the distribution of wealth, says that the proportion of the population whose
wealth exceeds any positive number x > xm is where xm is the wealth of the poorest
people (the subscript m stands for minimum). The Pareto Index is the parameter α.
The larger the Pareto Index, the smaller the proportion of very wealthy people.”
3
The Pareto Distribution: named after the Italian economist Vilfredo Pareto, is a
power law probability distribution found in a large number of real-world situations.
Outside the field of economics it is at times referred to as the Bradford distribution.
II) What is it?
Pareto Distribution
In this paragraph, we will discuss the Law of Probability
Distribution. The Pareto Distribution is a power law probability
distribution found in a large number of real-world situations.
Outside the field of economics, at times it is referred to as the
Bradford distribution. Pareto originally used this distribution
to describe the allocation of wealth among individuals since it
seemed to show rather well the way that a larger portion of the
wealth of any society is owned by a smaller percentage of the
people in that society.
It can be seen in the probability density function (PDF) graph

below. This graph shows that the “probability” or fraction of the
population f(x) that owns a small amount of wealth per person
(x) is rather high, and then decreases steadily as wealth increases.
This distribution is not limited to describing wealth or income
distribution, but to many situations in which an equilibrium is
found in the distribution of the “small” to the “large”.
3.0
2.5 k=3
k=2
2.0 k=1
1.5
1.0
0.5
0.0
0 1 2 3 4 5
The Pareto Chart

This is a technique used to identify quality problems according
to their degree of importance. This chart shows that only a few
quality problems are important, whereas many others are not
crucial.
In quality management, the logic behind Pareto’s Principle is

that most quality problems are the result of only a few causes.
The trick with this chart is to identify these causes. One way to
use the Pareto analysis is to develop a chart that ranks the causes
of poor quality in decreasing order based on the percentage of
defects each has caused.
Conclusion
To understand Pareto’s Principle we should see it in its
entirety. Within this, it is crucial to identify that Pareto was
a microeconomist and from this viewpoint he found this
consistency as regards the 20-80 rule. A quality guru, he
discovered this theory and translated it into his time to give us
the theory of the vital few and the trivial many.
To look at the theory with a critical eye we have to say that it

can be easily misinterpreted as it is such a simple concept which
people tend to lose focus of. This is where the Pareto Chart can
be valuable as it help us as to concentrate on certain elements
in order to see the picture as a whole. The challenge is to find
the right processes. For example, we can develop a chart that
ranks the causes of poor quality in decreasing order, based on the
percentage of defects each has caused. In this case a tally can be
made of the number of defects that result from different causes.
From this, a percentage of defects is taken which can be computed
from the tally and logged in a Pareto chart. In general, one tends
to find a few causes which account for most of the defect.
We cannot forget the advantages that this theory has as it allows

us to set our priorities straight and is easily adaptable as it:
1.Prioritises tasks, 2. Reminds a manager to focus on 20% that
really matters, and 3. Is an easily adaptable and simply theory of
the vital few and trivial many.
III) Bibliography
Dan Reid, “Operations Management”, University of New

Hampshire, Wiley Publishers, Danvers, 2002
Larry Ritzman, “Operations Management”, Prentice Hall,

New Jersey, 2005
Web-o-graphy
Juran Institute, http://www.juran.com/, 03/02/2006
Adrian Savage, “How useful is the Pareto Principle?”,

http://www.lifehack.org/articles/lifehack/
how-useful-is-the-pareto-principle.html, 31/10/2005
324 Tools: PEST Analysis
PEST Analysis
I) What is PEST Analysis?
It is very important that an organisation considers its environment
before beginning the marketing process. In fact, analysis of the
environment should be continuous and should feed all aspects of
planning. An organisation’s marketing environment comprises:
- The internal environment: staff, office technology, wage
and finance structure, etc.;
- The micro-environment: external customers, agents and
distributors, suppliers, competitors, etc.;
- The macro-environment: political (and legal) forces,
economic forces, social forces, and technological forces.
These are known as PEST factors.
• Political factors
• Economic factors
• Social factors
• Technological factors
Tools: PEST Analysis 325
II) How to use the tool
II a) Political factors
The political arena has a huge influence upon business regulation

and the spending power of consumers and other business. Issues
to be considered here include:
- How stable is the political environment?
- Will government policy influence laws that regulate or tax
your business?
- What is the government position on marketing ethics?
- What is government policy on the economy?
- Does the government have a view on culture and religion?
- Is the government involved in trading agreements such as
WTO, ASEAN, etc.?
II b) Economic factors
Marketers need to consider the state of a trading economy in

both the short and the long term. This is especially true when
planning for international marketing, when you need to look at:
- Interest rates
- The level of inflation/employment per capita
- Long-term prospects for the economy, Gross Domestic
Product (GDP) per capita, etc.
II c) Social factors
The social and cultural influences on business vary from country

to country. It is very important that factors such as the following
are considered:
- What is the dominant religion?
- What is the local attitude to foreign products and services?
- Does language impact upon the introduction of products

into the markets?
- How much time do consumers have for leisure?
- What are the respective roles of men and women in
society?
- Do the population have a strong or weak opinion on ‘green’
issues?
II d) Technological factors
Technology is vital for competitive advantage, and is a major driver

of globalisation. The following points should be considered:
- Does technology enable products and services to be made
more cheaply and to a better standard of quality?
- Do the technologies offer consumers and businesses more
innovative product services, such as internet banking, new
generation mobile telephones, etc.?
- Has distribution been changed by new technologies such as
books, via the internet, auctions, etc.?
- Does technology offer companies a new way to communicate
with consumers, e.g. banner, Customer Relationship
Management (CRM), etc.?
III) Why is PEST Analysis important?
PEST Analysis is a simple but important and widely used tool

that helps us understand the big picture regarding the Political,
Economic, Socio-Cultural and Technological environment
in which we are operating. PEST is used by business leaders
worldwide to build their vision of the future.
It is important for the following main reasons:

- First, by making effective use of PEST Analysis, you
ensure that what you are doing is positively aligned to the
powerful forces of change that are affecting our world. By
taking advantage of change, you are much more likely to be
successful than if your activities oppose it;
- Secondly, the appropriate use of PEST Analysis will help
you to avoid taking action that is doomed to failure for
reasons beyond your control; and
- Thirdly, PEST is useful when you start operating in a new
country or region. Its use helps you to free yourself from
subconscious assumptions, and to adapt quickly to the
realities of the new environment.
IV) Conclusion
PEST Analysis is a useful tool for understanding the ‘big

picture’ of the environment in which you are operating, and the
opportunities and threats that lie within it. By understanding
this environment, you can take advantage of those opportunities
and minimise the threats.
This provides the context within which more detailed planning

can take place to take full advantage of the opportunities that
present themselves.
Other forms of PEST: PESTLE, PESTLIED, STEEPLE and

SLEPT
Some people prefer to employ different ‘flavours’ of PEST
Analysis, using other factors for different situations. The variants
are:
• PESTLE/PESTEL: Political, Economic, Sociological,
Technological, Legal, Environmental;
• PESTLIED: Political, Economic, Social, Technological,
Legal, International, Environmental, Demographic;
• STEEPLE: Social/Demographic, Technological, Economic,
Environmental, Political, Legal, Ethical; and
• SLEPT: Social, Legal, Economic, Political, Technological
V) Bibliography
Hone, Jim, “Analysis of Vertebrate Pest Control (Cambridge

Studies in Applied Ecology and Resource Management)
Web-o-graphy
http://www.quickmba.com/strategy/pest/
http://www.netmba.com/strategy/pest/
http://marketingteacher.com/Lessons/lesson_PEST.htm
http://www.valuebasedmanagement.net/methods_PEST_
analysis.html
330 Tools: Porter’s Five Forces
Porter’s Five Forces

I a) Historical context
Looking back at the past, we could draw various conclusions
when considering global economy and competition. The period
from 1960 until 1980 was described as a two-decade period
that highlighted policies for “governmental protection and
intervention rather then competition in domestic markets”. The
distortion of market functions created scarcity and empowered
monopolistic as well as oligopolistic structures that created
further narrow centralisation of economic power. By reinforcing
these types of market structures, foreign competition at that time
was strongly discouraged and disinterested. Another interesting
historical fact relating to this period is the continuous inflation
problem followed by the high unemployment rate in the 70s in
the US. Some say that supplies in the US were prevented from
performing at their best due to a high taxation rate in the 1970s
and 80s (18.7% of GDP). In addition, shortfalls occurred in
food supplies. For instance, the 3% shortfall in grain supply in
the early 70s led the US market to a two-year food crisis (1972
to 1974) and to an increase in grain price of up to 250%. One
other factor that discouraged foreign suppliers in the 80s was
a significant rise in international shipping costs which affected
the global supply chain.
Tools: Porter’s Five Forces 331
I b) Need for Porter’s Five Force Model
What can be derived from the historical context is the fact

that past competitive strategies were completely uninspiring
for domestic as well as for foreign markets. There was a great
need for stabilisation and proper evaluation of potential
opportunities and competitive markets. As a result, at the
beginning of the 80s, Michael E. Porter created a Five Force
Model that responded to the needs of the global market
place, and established five competitive forces which identify
potential threats and opportunities either for ‘newcomers’ or
for firms already in existence within an industry. Also, in the
1980s, economics was characterised by cyclical growth with the
primary objectives of profitability and survival. “A prerequisite
for these objectives was optimisation of strategy in relation to
the external environment.” Inspired by this economic situation,
Porter developed the Five Competitive Force Model that would
later become an important tool for analysing industry structure
in strategic processes. Porter felt the need to respond to the
economic world of the 80s and explain why some industries
were more profitable then others. He implied that the answer to
this question lies in understanding the dynamics of competitive
structure within an industry.
I c) The inventor of the Five Force Model
Michael E. Porter was born in Ann Arbor, Michigan, in 1947.

Famous as a football and baseball player in high school, in 1969
he graduated from Princeton University with high honours in
aerospace and mechanical engineering. As a man of various
interests, Porter also worked on strategy problems in fields
different from those in his educational background – music
and art. Throughout life, Professor Porter has centralised his
focus on how to build a competitive advantage in a region or
a firm. As the Bishop William Lawrence University Professor
based at Harvard University, Michael E. Porter is now a “leading
authority on competitive strategy and the competitiveness of
economic development of nation states and regions”, as well as
the leading contributor to strategic management theory. His
strategic system is based on six aspects:
- Five Competitive Forces analysis
- Strategic groups
- Value chain
- Generic strategies
- Market positioning
- Porter’s clusters for regional economic development
Professor Porter is the author of over 125 articles and 17 books,

including “Competitive Strategy: Techniques for Analyzing
Industries and competitors” which explains Porter’s Five
Competitive Forces in his first book on strategy. The book was
published in the 1980s and was translated into 19 languages. It
is currently in its 63rd reprint.
II) What
Porter’s Five Force Model is based on understanding industry’s

structure and the way it changes. It focuses on corporate strategy
that meets various opportunities and threats in an organisation’s
external environment. The model discovers sources of
competition within the industry and describes external effects
due to the same (competition). Moreover, it teaches industry how
to obtain competitive advantage in a highly competitive market.
In order to better explain his understanding of competitive
strategies in an industry/region, Porter identifies five forces that
shape every industry in every market. This Five Force Model
consists of the following forces:
1. Threat of new entrants
2. Availability of substitutes
3. Bargaining power of suppliers
4. Bargaining power of customers
5. Competitive rivalry within the industry
Threat of
new entrants
Competitive
Bargaining power rivalry within Bargaining power
of suppliers the industry of customers
Threat of
substitutes
- Threat of new entrants: the higher the competition within

an industry, the easier it is for other companies to enter. The
more companies enter the industry, the higher production
capacity becomes, which leads to further reduction of the
product price and an increase in buyers’ bargaining power.
In this case, the new entrants could affect the entire market
environment. Hence, the level of effect the new entrants
can have on the market depends on the level of barriers to
entry. These entry barriers depend on following issues:
- Economies of scale
- Product differentiation
- Capital requirements
- Switching costs
- Access to distribution channels
- Cost disadvantages independent of scale
- Government policy
- Availability of substitutes: “Substitute products are

goods or services from outside a given industry that
perform similar or the same functions as the product that
the industry produces.” Hence, if there are many of these
substitutes on the market for a lower price but with same or
similar functions to the industry’s product, consumers will
easily switch to the substitute. On the other hand, there are
some factors that could prevent the customer from doing
this:
- Brand loyalty
- Close customer relationships
- High switching costs
- Substitute’s performance in relation to its price
- Current trends
- Bargaining power of suppliers: means that the suppliers

have the power to bargain with an industry/buyer to obtain
higher prices, delivery of larger quantities, threaten with
lower quality, etc. This could happen as a consequence of:
- High switching costs to another supplier/product
- Domination of a few suppliers for the specific product
- Non-existence of substitutes for the product
- Supplier’s customers are fragmented
- High product importance to the buyer/industry
- Bargaining power of customers: depends on the extent to

which a buyer can impose pressure on a product’s volumes
and margins. Buyers’ tendency to ask for higher product
quality and lower prices is constant, and yet unstoppable.
The higher the bargaining power of buyers, the lower
industry’s average profit. Buyers’ bargaining power
increases when:
- They purchase large volumes of industry’s output
- There are low switching costs to another product
- The supplier has high fixed costs
- The product in not a priority for the buyer
- Competitive rivalry within the industry: refers to the

intensity of competition between the existing players. High
competition within an industry could lead to lower product
prices, lower margins, and therefore lower revenues for
each competitor. Potential reasons for high competition
within an industry are:
- Large number of equally-balanced competitors
- Slow industry growth
- High fixed and/or storage costs
- Lack of differentiation and low switching costs
- High exit barriers
As an interesting remark, I would like to mention the ‘extensions’

to Porter’s Five Force Model that were developed in the 90s and
were considered to be an expansion of the model itself. The
first one of the two extensions was introduced by Professor
Brandenburger then later mastered by Professor John Nash;
and we were able to see it in the movie A Beautiful Mind a few
years ago – the so-called “Game Theory”! The second ‘extension’
was presented by Professor Nalebuf in the mid 90s and was
called “complementors” – the sixth force. “Complementors are
companies that sell a product (or products) that complement
the product of another company by adding value to them;
for example, Intel and Microsoft (Pentium processors and
Windows).
III) Advantages and disadvantages of the model
The advantages of the Five Force Model can be seen through

three major analysis: statical, dynamical, and option analysis. By
using the statical analysis we can compare the effect this model
has on our own firm/organisation with that on a competitor’s
organisation. Through dynamical analysis, the model discloses
inside information about the potential attractiveness of the
industry in the future (due to predictions of economical,
technological, and political changes). Last but not least, through
option analysis, the knowledge about the power of the competitive
forces can be used to manipulate them in a way that could create
a competitive position for the one that is manipulating them.
Furthermore, another advantage I find interesting is the fact
that the model displays a structured and systematic analysis of
competitive situation and market structure, and can be applied
to specific market segments, regions, companies, or industries.
On the other hand, the model has some major disadvantages that
have been reinforced by a number of various critiques over time.
The major weakness of the model lies in its historical context.
When Porter’s Five Force Model was created the economy was
based on a cyclical growth and two major focuses – profitability
and survival. Nowadays, the economy is focusing on much more
than that and yet it is more complex and much more intense
then the model itself assumes. In the 80s, the development of
most industries was more or less predictable and stable while
today industry development is booming on an almost daily
basis. In addition, the model refers to classic perfect markets
as well as to simple and static market structures, which is
rarely the case in today’s highly dynamic world. Lastly, by being
alerted by competition, the model ignores other strategies such
as strategic alliances, information systems, electronics, etc. that
could certainly affect the potential market place just as much.
IV) Conclusion
In conclusion, I would like to briefly highlight some important

things about the Five Force Model, such as the fact that it has
become an important tool for analysing industry structure in
strategic processes, especially in the 80s and mid-90s. It has
also become a very helpful instrument in entry/competitive
strategies as a starting point for further analysis in industries
today. That said, some of the industries that use the Five Force
Model as the first step are: the car industry (BMW, Mercedes
Benz, etc.), the wine industry (California), the strawberry
industry (Australia), the healthcare industry, the clothing
industry (Marks & Spencer - UK), the tourism and aircraft
industries, and many others. The model is also highly favoured
by management consultants looking at the current industry/
organisation’s situation and simplified way of understanding
it. However, the actual implementation of the model in the
present business world is neither completely accurate for every
industry nor widely applicable due to its limitations as regards
considering new models and the present dynamics of diverse
markets. Finally, this model is one that best served its purpose
in the 1980s and 90s yet, today, the model is still good to be used
as the first step of a complex industry analysis which is followed
by a number of other more compound steps.
V) Bibliography
Thomson, “Strategic Management”, sixth edition, International

Student Edition, Hitt-Ireland-Hoskisson, South-Western, 2004,
p 55-59
Stead W. Edward, Stead Jean Garner, “Sustainable Strategic
Management”, M.E. Sharpe Inc, 2004, p 72-77
Web-o-graphy
http://www.oecd.org/dataoecd/0/3/2434995.pdf
http://home.att.net/~Resurgence/6Economy.htm
http://www.fao.org/DOCREP/003/X6930E/X6930E02.htm
http://dor.hbs.edu/fi_redirect.jhtml?facInfo=bio&facEmld=mp
orter&loc=extn
http://themanager.org/pdf/p5f.pdf
http://en.wikipedia.org/wiki/Complementors
340 Tools: Porter’s three generic strategies
Porter’s three generic strategies

I) What are they?
Competitive forces:
It is generally accepted that in a market economy there are five
competitive forces:
• Threat of new entrants into one’s industry
• Bargaining power of customers and buyers
• Bargaining power of suppliers
• Substitute products or services
• Intensity of rivalry among competitors
Porter’s strategies:
Porter presents three strategies for dealing with these competitive
forces.
His first strategy is to differentiate products. By making

products or services different (that is “better” in the eyes of
the customers), a firm may be able to charge higher prices and
perhaps deter customers from moving to competitive products
or services, lower the bargaining power of buyers, and so on.
This is probably the most popular of his three strategies.
Porter’s second strategy is to become the low-cost producer. He

also warns that simply being one of the low-cost producers is not
enough. Not being the lowest-cost producer causes a company
to be stuck in the middle with no real competitive edge.
The third strategy is to focus on a segment of a product line

or a geographical market, i.e. finding a niche. Companies that
focus on a niche can often serve their target market effectively
and efficiently – at times being both the low-cost producer and
having a highly differentiated product, too.
Tools: Porter’s three generic strategies 341
II) Marketing and financial performance

of Porter’s strategy types
In terms of financial and marketing performance, Porter did not

say one strategy type would perform more successfully than the
others.
A lot of research has been done recently into the area of product
differentiation and low-cost production. The research findings
are mixed regarding the comparative return on investment
performance of differentiators and cost leaders. A number of
studies have found differentiators achieve a higher return on
investment performance than cost leaders, while other studies
have found cost leaders achieving a higher return on investment
performance than differentiators.
342 Tools: Porter’s three generic strategies
III) Research findings
Porter concentrated on the relationships between marketing and

financial performance for each strategy type. The differentiation
strategy, with its emphasis on innovation, is expected to perform
well in terms of new markets and new products.
The combination strategy is said by Porter to be rare in

practice yet the proposition is that it will perform equally
with differentiation and cost leadership strategies. There are
a number of reasons put forward to support the possibility of
combining both differentiation and cost leadership which are
both not mutually exclusive dimensions. Cost leadership and
differentiation are not at opposite ends of a strategy continuum
because both strategies are subject to the same underlying cost
trade-offs. Research has shown that Japanese competitors often
achieve both low cost and differentiation.
Another perceived logical reason for the viability of the

combination strategy is that differentiation can lead to the
attainment of a low-cost position.
Tools: Porter’s three generic strategies 343
IV) Bibliography
Barbara C.McNurlin, Ralph H. Spargue JR., “Information Systems

Management in Practice” (7th Edition), Prentice Hall 2006
Philip Kotler, “Marketing Management Analysis, Planning,
Implementation and Control” 2002 (7th edition)
Web-o-graphy
http://grahambarlow.com/Porter_Strategy.pdf
lesson_generic_strategies.htm
http://www.quickmba.com/strategy/porter.shtml
http://www.cba.uc.edu/faculty/matthewsc/sbp/bpchecksheet/
sld008.htm
344 Tools: SERVQUAL
SERVQUAL – a tool to measure

quality of service
Introduction
Managers in the service sector are under increasing pressure
to demonstrate that their services are customer-focused and
that continuous performance improvement is being delivered.
Given the financial and resource constraints under which
service organisations must manage, it is essential that customer
expectations are properly understood and measured and that,
from the customer’s perspective, any gaps in service quality are
identified. This information helps a manager to identify cost-
effective ways of closing service quality gaps and to prioritise
which gaps to focus on – a critical decision when resources are
scarce.
While there have been efforts to study service quality, there has
been no general agreement on how to measure the concept.
Most of the work to date has attempted to use the SERVQUAL
methodology (Parasuraman et al., 1985; 1988) in an effort to
measure service quality (e.g. Brooks et al., 1999; Chaston, 1994;
Edvardsson et al., 1997; Lings and Brooks, 1998; Reynoso and
Moore, 1995; Young and Varble, 1997; Sahney et al., 2004). One
of the aims of this analysis involves the use of the SERVQUAL
instrument to ascertain any perceived or actual gaps between
customer expectations and perceptions of the service offered.
Another aim is to point out how the management of service

improvement can become more logical and integrated with
respect to the prioritised service-quality dimensions and their
effects on increasing/decreasing service-quality gaps.
Tools: SERVQUAL 345
I) Overview of service quality
In an effort to better understand what SERVQUAL is, it should

be positioned in the time when it was created, in the eighties.
In the UK in particular, this decade is often referred to as «the
decade that taste (or style) forgot», referring to questionable
fashions, hairstyles and music. Other nicknames include “the
me decade” and “the greed decade”, reflecting the economic
and social climate. In the US and UK alike, «yuppie» entered
the lexicon for the 1980s, referring to the well-publicised rise of
a new middle class within the upper economic strata. College
graduates in their late 30s/40s were entering the workplace
in prestigious office professions, holding more purchasing
power in trendy, luxurious goods. Despite the political and
economic conservatism displayed amongst yuppies, and much
of the general public, the 1980s was a time of social and cultural
liberalism, changing the American character in the process and
making people more sensitive to quality and more willing to
have more service in their lives.
What is service?
Service is the unique performance between the buyer (customer)

and the seller (service or product provider). Companies who
provide better quality can secure a competitive edge.
What is service quality?
Service quality is a concept that has aroused considerable interest

and debate in research literature because of the difficulties in
both defining it and measuring it, with no overall consensus
emerging on either (Wisniewski, 2001). There are a number
of different ‘definitions’ as to what is meant by service quality.
A commonly used one defines service quality as the extent to
which a service meets a customer’s needs or expectations (Lewis
and Mitchell, 1990; Dotchin and Oakland, 1994a; Asubonteng
346 Tools: SERVQUAL
et al., 1996; Wisniewski and Donnelly, 1996). Service quality can

thus be defined as the difference between customer expectations
of service and the perceived service. If expectations are greater
than performance, then perceived quality is less than satisfactory
resulting in customer dissatisfaction (Parasuraman et al., 1985;
Lewis and Mitchell, 1990).
One important question persists: why should service quality be
measured? Measurement allows for comparison before and after
changes, to identify quality-related problems, and to establish
clear standards for service delivery. Edvardsen et al., (1994) state
that, in their experience, the starting point in developing quality
in services is analysis and measurement. The SERVQUAL
approach, which is studied here, is the most common method
for measuring service quality.
What is the difference between service quality and manufacturing

quality?
Does the way to manage service quality differ from the way to
manage manufacturing quality? The answer is no. They all belong
to TQM: Total Quality Management consists of three basic
management components – foundation, infrastructure, and
processes. These are essential both in managing service quality
and in manufacturing quality. The major goals of TQM are to
have lower costs, higher revenues, and satisfied customers. Thus,
managing service quality is similar to managing manufacturing
quality (Eberhard E. Scheuing, 1993).
However, service quality is more difficult to manage than
manufacturing quality because service quality performance is
more difficult to define, measure, and execute consistently, for
the following reasons:
- Service quality involves human behaviour. Products do not
exhibit personalities, expectations, or cultural values, but
service must consider human behaviour.
- Each service may be different because it is not to be repeated
Tools: SERVQUAL 347
exactly, but most manufactured products are identical;

unlike manufactured products, it is more difficult for a
customer to have a concrete expectation for a service.
- Compared to a product, a service is more complicated to
design, deliver, and manage.
- It is more difficult to forecast human behaviour in a service
setting than to forecast product demand in a manufacturing
setting.
- Standards of performance require more human and
qualitative factors when performing a service than when
producing a product.
- Service has less error margin than manufactured products
because there is no lead time between service production
and delivery (David A. Collier. 1994)
If the company can provide better service quality, it can develop a
unique capability which is valuable, rare, and difficult to imitate.
Therefore, this company can gain and maintain a competitive
advantage.
The best way to achieve comparative advantage in the market

is to provide better service quality. Excellent service quality can
help companies to differentiate their products from those of their
competitors. “Excelling at service/quality is also the toughest
competitive strategy to implement and the most difficult for
your competitors to duplicate” (Eberhard E. Scheuing, 1993).
How can service quality be measured?
Service quality has three unique features: intangibility,

heterogeneity and inseparability from production and
consumption (Parasuraman, Zeithaml and Berry, 1986).
Product quality seems to be different than service quality
because products are tangible, homogenous and standardised.
The need for services differs from customer to customer with
no situations reoccurring. Certain standard procedures can be
348 Tools: SERVQUAL
established in order to achieve a more homogenous service,

but individual needs have to be considered to adapt services
to their requirements. The inseparability of production and
consumption adds more pressures to services since a mistake
cannot be prevented from reaching the customer if it is part of
the process.
Tools: SERVQUAL 349
II) SERVQUAL
SERVQUAL comprises a model developed by Parasuraman,

Zeithaml and Berry (1986) which helps measure service quality
via a series of steps. It concentrates on the notion of perceived
quality. “Perceived quality refers to a consumer’s judgment
about a product’s overall excellence. Perceived quality is more
subjective than other definitions of quality” (Zeithaml). By
means of research conducted with focus groups, the researchers
asked about the characteristics a service provider should have
in order to attain high quality. They established that all of the
members of the focus group consistently had similar criteria.
Using these findings, they created ten quality dimensions. Later,
the researchers found that these ten dimensions overlapped
and that customers could only distinguish five dimensions
(Parasuraman, Zeithaml and Berry 1986). This perception of
service quality builds from attitudes developed by customers
over time towards a product or service. The other element
present concerns consumer satisfaction that has actually been
achieved by using a product or service.
The level of service quality is the difference between the
perceived service and the customer’s expectation. Therefore, it
is necessary to establish a good method for evaluating service
quality and to know what kind of service customers want.
We can measure service quality in five dimensions:
- Tangibles
- Reliability
- Responsiveness
- Assurance
- Empathy
To gather information on both the customer’s expectations and
perception, the researchers developed a survey so that a more
complete scaling system could be achieved. For example, the
survey could ask for a customer’s expectation about a particular
aspect, rating it on a scale of 1 to 10, 10 being agrees strongly
350 Tools: SERVQUAL
with the statement and 1 disagrees strongly. Then, using the

same rating system, a question could be asked on the customer’s
perception. Having obtained both ratings, the difference
between expectation and perception could be calculated . This
was repeated with 90 pairs of items.
Nowadays, there are no longer five dimensions as they have
been changed and applied to today’s market and customer’s
expectations. We now have ten dimensions, as we can see in
the table below which regroups these ten new dimensions with
a small selection of sample questions that could be asked of
customers.
Tools: SERVQUAL 351
Sample of questions that

Quality dimension
could be asked
Tangibles: • Are facilities attractive?

Appearance of physical facilities, • Are staff dressed appropriately?
equipment, personnel, printed and • Are written materials easy to
visual materials understand?
• Does the technology look
modern?
Reliability: • If a response is promised in a

Ability to perform promised certain time, does it happen?
service dependably and accurately • Are the exact client specifications
followed?
• Are statements or reports free of
error?
• Is service performed correctly the
first time?
• Is level of service the same at all
times of day and for all members
of staff?
Responsiveness: • When there is a problem, does

Willingness to help customers to the organisation respond to it
provide prompt service quickly?
• Are staff willing to answer client
questions?
• Are specific times for service
accomplishments given to client?
• Are public situations treated
seriously and with care?
Competence: • Can staff provide service without

Possession of required skill and fumbling around?
knowledge to perform service • Are the materials provided
appropriate and up to date?
• Can staff use the technology
quickly and skillfully?
• Do the staff appear to know what
they are doing?
352 Tools: SERVQUAL

Quality dimension
could be asked
Courtesy: • Does staff member have a

Politeness, respect, consideration pleasant demeanour?
and friendliness of contact • Do staff refrain from acting busy
personnel or being rude when clients ask
questions?
• Is the telephone manner of the
staff considerate and polite?
• Are staff considerate regarding
the property and values of clients?
Credibility: • Does service organisation have a

Trustworthiness, credibility, good reputation?
honesty of the service provider • Do staff members refrain from
pressuring the client?
• Are responses accurate and
consistent with other reliable
sources?
• Does the organisation guarantee
its services?
Security: • Is it safe to enter the premises and

Freedom from danger, risk, or use the equipment?
doubt • Are documents and other
information provided for the
client held securely?
• Are user records of clients safe
from unauthorised use?
• Can clients be confident that
services are provided correctly?
Tools: SERVQUAL 353

Quality dimension
could be asked
Access: • How easy is it to talk to

Approachability and ease of contact knowledgeable staff member
when client has a problem?
• Is it easy to reach the appropriate
staff person
- in person?
- by telephone?
- by email?
• Are service access points
conveniently located?
Communication: • When client contacts service

Listening to customers and point, will staff listen to their
acknowledging their comments; problem and demonstrate
Keeping customers informed using understanding and concern?
a language they can understand • Can staff explain clearly the
various options available to a
particular query?
• Do staff avoid using technical
jargon when speaking to clients?
• Does a staff member call if a
scheduled appointment will be
missed?
Understanding the customer: • Does someone on staff recognise

Making an effort to know regular clients and address them
customers and their needs by name?
• Do staff try to determine what
client’s specific objectives are?
• Is level of service and cost of
service consistent with client
requirements and budget?
• Are service providers flexible
enough to accommodate client’s
schedule?
354 Tools: SERVQUAL
III) How the scale was determined?
Statistical tools were applied in order to achieve the different

quality dimensions and to group the survey items into the above-
mentioned dimensions. The first phase eliminated items that
had a low alpha coefficient. This tool was used by the researchers
because previous studies established that this was a good way to
examine the quality of an instrument. Factorial analysis was then
performed to group the survey items into common categories.
These categories had a low correlation between them, thus
confirming that the dimensions extracted were correct. These
dimensions were later defined as the following: availability,
responsiveness, timeliness, completeness and pleasantness of
support.
Once the dimensions have been determined, calculations can be
performed for each of them, considering mean and distribution.
An example of this type of calculation could be a survey carried
out with a customer who expects timeliness as regards products
ordered on the internet. The customer’s experience with the
company reveals that the products are consistently arriving
past their promised date. In this case, perception registers lower
than expectation, which will result in a negative value for their
difference. The company could put greater effort into achieving
the customer’s expectation thereby improving its service
quality.
The aim of these measures is to reduce the gap between
expectations and perception to 0 at least. Then it is up to the
company strategy to define in which dimension they would be
more performing the best.
Tools: SERVQUAL 355
Conceptual model of service quality
Word of mouth
Personal needs Past experience
Communications
Consumer
Expected service
Gap 5
Perceived service
Gap 6
Provider
Service delivery Gap 4 External
(including pre-and communications
post contracts) to customers
Gap 1
Gap 3
Employee Translation of
perceptions perceptions into
of consumer service quality
expectation specifications
Gap 2
Gap 7
Management
perceptions
of consumer
expectations
Model of service quality gaps

(Parasuraman et al., 1985; Curry, 1999; Luk and Layton, 2002)
356 Tools: SERVQUAL
This model is useful to perform a gap analysis between each of

the individual elements. The ideal of every organisation is to
meet the expected service in full so that there is no gap between
management perceptions and expected service.
Brief explanation of gaps:
- Gap 1: Knowledge Gap: The company works on creating

processes and services that appeal to customers’ expected
service. Companies have to be careful here as not
accomplishing an expected service will have a negative
effect on their sales. Excess satisfaction may bring additional
costs to the company which may reduce profitability and
may not be fully appreciated by the customer.
- Gap 2: Standards Gap: The company must fully
understand customers’ expectations so that specifications
can be created to ensure that the services provided meet
customers’ needs.
- Gap 3: Delivery Gap: Although specifications have been
created to ensure services meet customers’ needs, there
may be a difference between the planned service and
the actual delivery. This might be caused by variations
in worker performance, inadequate training, or lack of
communication by clients.
- Gap 4: Communication Gap: Companies must make
an effort to communicate the purpose of their services
and attributes to make them appealing to customers.
Miscommunication by the company or word of mouth from
other customers can cause significant damage to efforts to
approach customers and achieve satisfaction.
- Gap 5: Expectation and Perception Gap: This final gap
measures the difference that occurs when the customer
uses a service which either meet or do not meet his/her
expectations. If gaps are present in the preceding items,
than the difference here will be great. The customer will
Tools: SERVQUAL 357
probably not use the service again and word of mouth to

other customers will damage the company’s reputation.
- Gap 6: Discrepancy between customer expectations
and employees’ perceptions: as a result of differences in
understanding customer expectations by front-line service
providers.
- Gap 7: Discrepancy between employees’ perceptions
and management perceptions: as a result of differences in
understanding customer expectations between managers
and service providers.
According to Brown and Bond (1995), «the gap model is one of

the best received and most heuristically valuable contributions
to the services literature». The model identifies seven key
discrepancies or gaps relating to managerial perceptions of
service quality, and tasks associated with service delivery to
customers. The first six gaps (1, 2, 3, 4, 6 and 7) are identified
as functions of the way in which service is delivered, whereas
Gap 5 pertains to the customer and, as such, is considered to
be the true measure of service quality. The gap on which the
SERVQUAL methodology has influence is number 5. In the
following, the SERVQUAL approach is demonstrated.
358 Tools: SERVQUAL
IV) Other tools and theories about service quality

Gronroos’ Dimensions
In 1990, Gronroos defined six criteria to measure service quality.

He focused mainly on the functional rather than the technical
issues (Gronroos, 1990), proposing dimensions which are close
to those developed in the SERVQUAL model:
- Professionalism and Skills
- Attitudes and Behaviours
- Accessibility and Flexibility
- Reliability and Trustworthiness
- Recovery
- Reputation and Credibility
Let us take a closer look at the dimensions that differ slightly or
more from the SERVQUAL model. The first one is Accessibility
and Flexibility. Gronroos also considered Recovery (how the
company makes sure that the customer stays in control when
something goes wrong, and how hard it works to find a new
solution) as a full dimension when the SERVQUAL model only
includes this idea in the Responsiveness dimension (Benjamin
Schneider and Susan White, 2004).
Some other authors gave credit to Gronroos’ Recovery dimension
by estimating that when a complaining customer is persuaded
to continue business with an organisation, he/she will become
even more loyal than they were before the complaint (Fornell
and Wernerfelt, 1987, 1988).
Gummesson’s Dimensions
In 1992, Gummesson revisited the SERVQUAL model by giving

more credit to the tangible aspects of the service. He simply
considered three dimensions for evaluating a service:
- The service element
- The tangibles element
- The software or information technology elements
Tools: SERVQUAL 359
He then gives a list of criteria that the customers will use in

order to estimate the quality of the service delivered. The
criteria related to the service elements are very close to those
in the SERVQUAL typology. The specificity of Gummesson’s
research is the importance given to the tangibles elements.
They can be estimated by three kinds of perspective: goods
(reliability, performance, features, conformance, service ability,
and aesthetics), psychological (visibility, mapping, affordability,
constraints, customer control, knowledge needed, and feedback),
and environmental (ambient factors, functionality, aesthetics,
service personnel, other customers, other people). Finally, for
software elements, the criteria focus on estimating how the IT
elements help the customer (reliability, extendibility, integrity
and user-friendliness).
He gives us the example of an airline flight. The customers
assess the quality by the service provided by the crew (service),
the physical aircraft (tangibles), and the information technology
(software), (Benjamin Schneider and Susan White, 2004).
Gummesson’s views have been validated by other writers who
also believe in the importance of tangible aspects of service.
They definitely affect customer behaviour (White and Schneider,
2000), as well as their perceptions of the organisation (Zeithman
and Bitner, 2000).
Content and form
Some researchers (Gumesson, 1992; Schneider and Bowen,

1995) tried to go further by proposing an adaptation of the
SERVQUAL typology to each service industry. The SERVQUAL
dimensions give a means of measuring the quality of the content
of the service, which might not differ from one service to
another. However, it does not make any difference in the form
taken by this service.
As an example, tangibles could refer to the facilities for a sport
centre and to an aircraft for an airline company. Therefore, some
360 Tools: SERVQUAL
authors developed typologies similar to SERVQUAL in order to

be closer to the reality of each industry. For example, instead of
measuring the ability of the staff to answer questions, DineServ,
the SERVQUAL adapted to the restaurant industry, measures
the ability and willingness of the personnel to give information
about the menu, the dishes, their ingredients, and methods of
preparation (Stevens et al., 1995).
Tools: SERVQUAL 361
V) Conclusion
SERVQUAL is a useful tool to establish customers’ expectations

and perceptions by grouping them into quality dimensions.
Although SERVQUAL has a fixed structure, its development
concept could be used to create scales adapted to particular
service needs. This helps organisations focus on efforts to
develop services that fit customers’ requirements.
However, this is not the only tool available to assess the quality
of a service. It has been proved that some other dimensions
(such as recovery) or some other aspects (such as the tangibles)
should also be taken into consideration.
Knowing how customers perceive service quality and being able

to measure service quality can benefit industry professionals
in both quantitative and qualitative ways. The measurement
of service quality can provide specific data that can be used
in quality management; hence, service organisations would be
able to monitor and maintain quality service. Assessing service
quality and better understanding how various dimensions affect
overall service quality would enable organisations to design the
service delivery process efficiently. By identifying the strengths
and weaknesses pertaining to the dimensions of service quality
organisations can better allocate resources to provide better
service and ultimately better service to external customers.
Generally speaking, the study of service quality is both important
and challenging. Future efforts should continue to advance the
understanding of the concept and the means to measure and
improve it.
362 Tools: SERVQUAL
VI) Bibliography
ASI Quality Systems (1992), Quality function deployment –

Practitioner workshop, American Supplier Institute Inc., USA.
Asubonteng, P., McCleary, K.J. and Swan, J.E. (1996),
«SERVQUAL revisited: a critical review of service quality»,
Journal of Services Marketing, Vol. 10, No. 6, pp. 62-81.
Brooks, R.F., Lings, I.N. and Botschen, M.A. (1999), «Internal
marketing and customer drivenwavefronts», Service Industries
Journal, Vol. 19, No. 4, pp. 49-67.
Brown, S.W. and Bond, E.U. III (1995), «The internal/external
framework and service quality: Toward theory in services
marketing», Journal of Marketing Management, February, pp.
25-39.
Eberhard E. Scheuing, and William F. Christopher, (1993), The
Service Quality Handbook: pp. 3-16.
David A. Collier, (1994), The Service/Quality Solution – Using
Service Management to Gain Competitive Advantage: pp. 5-29.
Eberhard E. Scheuing, and William F. Christopher, (1993), The
Service Quality Handbook: p. 15.
Parasuraman, Zeithaml and Berry, (1986), Servqual: A Multiple-
Item Scale for Measuring Customer Perceptions of Service
Quality: p. 30.
Gronroos (1990) Service Quality: Research Perspective
Benjamin Schneider and Susan White (2004) Service Quality:
Research Perspectives
Michael D. Johnson, Anders Gustafsson, Tor Wallin Andreassen,
Line Lervik, Jaesung Cha, The evolution and future of National
Customer Satisfaction Index Models, July 2000.
Tools: SERVQUAL 363
Wisniewski, M., (2001), «Using SERVQUAL to assess customer

satisfaction with public sector services», Managing Service
Quality, Vol.11, No.6, pp. 380-388.
Dotchin, J.A. and Oakland, J.S., (1994a), «Total quality
management in services: Part 2 Service quality», International
Journal of Quality & Reliability Management, Vol. 11, No. 3, pp.
27-42.
Web-o-graphy
http://www.few.eur.nl/few/people/vaniwaarden/
publications/0009.pdf#search=’SERVQUAL’,
http://www.12manage.com/methods_zeithaml_servqual_
fr.html
http://www.nku.edu/~geigerr/Servqual/servqual.ppt
364 Tools: “The Seven Habits of Highly Effective People”
“The Seven Habits of Highly Effective People”

I) What is it?
I a) The book
“The Seven Habits of Highly Effective People” was first published
in 1989 by Simon & Schuster and has been a bestseller ever
since, selling over 15 million copies in 38 languages. One of the
reasons this book appeals to so many is that it is written in a
very catching and non-academic but understandable form. In
addition, it is de facto not a management book. It is a book that
will be a ‘companion for life’ for anyone wanting to understand
how to be an effective human being, and who enjoys living a very
balanced and effective life. It should also be clear that “effective”
is applicable to all possible walks of life, be it business, family,
social, religion, etc. In 2002, Forbes named it as one of the ten
most influential management books ever.
I b) The author
Stephen R. Covey (figure 1), born 24 October 1932 in Salt Lake

City, Utah, is the author of the bestseller “The Seven Habits
of Highly Effective People”. Covey is the founder of the Covey
Leadership Center in Salt Lake City, Utah, and is a partner in
the Franklin-Covey Corporation, which makes planners and
organisers and, in addition, performs (time) management
consulting focusing on a principle-centred approach to leadership
and management. Covey has a BSc in Business Administration
from University of Utah in Salt Lake City, an MBA in Business
Administration from Harvard University, and a DRE in Church
History and Doctorate from Brigham Young University. He has
spent most of his career at Brigham University as professor of
organisational behaviour and business management. Covey has
Tools: “The Seven Habits of Highly Effective People” 365
received the Thomas More College Medallion for continuing

service to humanity and, in addition, has been awarded four
honorary doctorate degrees.
Covey published follow-up titles to The Seven Habits which are

meant both to add to the book and to form a cohesive philosophy
on personal, principle-based leadership.
The author tries to help others bring proficiency into their lives,
especially within the context of business and management.
However, his books also emphasise family and personal
leadership. He is read by a wide-ranging audience, from high-
powered executives to ordinary people leading ordinary lives.
According to Covey, The Seven Habits is not based on original

thoughts. He does not claim to be the originator of the ideas but
simply to have found a framework and a language for articulating
the timeless principles embedded in the habits. He claims they
are to be found in all the major world religions. He believes the
principles themselves to be “self-evident”, that is, “you cannot really
argue against them”. His view is that all highly effective people, and
enduringly effective organisations, have utilised the seven habits,
to a greater or lesser extent, to sustain their success.
Covey says that the habits are “common knowledge”, but adds
that they are not necessarily “common practice”. In fact, it could
be argued that the habits actually run counter to basic human
nature. By our very nature, we are reactive creatures and are
inclined to act mainly out of self-interest. But also, as human
beings, we are capable of much higher thoughts and actions and,
by working hard to internalise these seven habits we are able to
develop a proactive attitude. By so doing, we can take charge of
our own destinies and are capable of exerting influence on other
people for the collective good.
Critics say Covey’s methods offer a “quick fix” that dissipates

when measured against the reality of day-to-day life. When
confronted with situations that contain elements that are
outside the sphere of their personal influence, people can
become frustrated at the failure of the habits to place situations
within their sphere of control or circle of influence, to use
Covey’s words. In conclusion, Covey is sometimes said to preach
impractical, idealistic methods. A summary of critical notes can
be found in section 5.1 of this book.
The late 1980s and management studies

In management, the late 1980s was an era during which
scientists and authors focused on so-called Quality Circles and
Participatory Management techniques such as Total Quality
Management, Continuous Quality Improvement (e.g. Kaizen)
and Continuous Process Improvements.
II) The road to interdependence
Figure 1 illustrates the ultimate purpose of Covey’s framework.

A dependent person can become an interdependent person by
exercising and living according to the seven habits. Habits 1, 2
and 3 focus predominantly on the self. Exercising these habits
will bring the user his or her “private victory”, having become
liberated in a sense that he or she is independent rather than
dependent. This level acts as the basis for the next ‘battle’ – the
so-called “public victory” which puts emphasis on the self in
relation to others. Exercising habits 4, 5 and 6 will ultimately
bring a person his or her public victory. In order to remain at the
highest level in Covey’s framework, a person needs to “sharpen
the saw”, which is explained in habit 7 of the framework.
7
Sharpen saw
Interdependence
Understand Synergize
5 PUBLIC 6
VICTORY
Think win-win
4
Independence
3
1st things 1st
PRIVATE
1 VICTORY 2
Be Proactive End in mind
Dependence
Figure 1: From dependence to interdependence

The P/PC balance

The P/PC balance is a paradigm of effectiveness which Covey
explains by telling us the fable of the ‘Goose and the Golden Egg’.
This is the story of a poor farmer who one day finds a golden
egg in his basket of goose eggs. During the following days, weeks
and months this stroke of luck repeats itself again and again. The
farmer becomes incredibly rich but with his wealth comes greed
and one day he decides to kill the goose to get all the eggs at once.
Of course, he finds there are no eggs, and thus no future wealth.
In this story, the eggs are referred to as the Product (P). The goose,
on the other hand, is the Production Capacity (PC). Covey explains
that it is necessary to be good to the PC (the goose) in order to get the
desired P (the golden eggs each morning). This can be extrapolated
to our personal relationships and business lives. Effectiveness lies
in the balance, which Covey calls the P/PC balance.
Useful definitions
To read and understand the book well, it is helpful to understand
the following definitions:
• hab-it (hab’it), n. [OFr. < L. habitus, pp. of habere, to have],
... 4. characteristic condition of mind or body; disposition.
5. a thing done often and, hence, easily; practice; custom. 6.
a usual way of doing
• ef-fec-tive (a-fek’tiv, i-), adj. 1. having an effect. 2. producing
a desired result; efficient. 3. operative; in effect. 4. making a
striking impression; impressive. 5. equipped and ready for
combat, as a soldier or ship
• syn-ergy (syn-er’gie) n. 1. The interaction of two or more
agents or forces so that their combined effect is greater
than the sum of their individual effects. 2. cooperative
interaction among groups, especially among the acquired
subsidiaries or merged parts of a corporation, that creates
an enhanced combined effect
• par-a-digm (par’e-dim, -dim’), n. [<Fr. < LL. GR < para,

beside + deigma example < deiknynai, to show], a pattern,
example, or model
• dependent (di-pen’dent), adj. 1. hanging down. 2. influenced,
controlled, or determined by something else. 3. relying (on
someone or something) for support or aid. 4. subordinate
• independent (in’di-pen’dent), adj. 1. free from the influence
or control of others; self-determined, self-reliant, etc.
• interdependence (in’ter-di-pen’dens),n. dependence on
each other; mutual dependence.
Source: “Webster’s new world dictionary of the American language”

III) The Private Victory: from dependence

towards independence
Habit 1: Be proactive
Proactivity and our social mirror
Proactivity means that in normal life we, as human beings, are
ultimately responsible for our own lives. Normal life is mentioned
because of course there are situations where this responsibility
is taken away from us and given to others.
Covey differentiates between reactive, i.e. people driven by

feelings, circumstances, conditions, the environment, and
proactive people who are driven by carefully considered, selected
and internalised values.
In his book, Covey mentions the Austrian psychiatrist Viktor Emil Frankl
(1905-1997), a follower of Sigmund Freud1 and a survivor of a World
War II concentration camp, who recognised that “between stimulus and
response, man has the freedom to choose”. Although Frankl’s outlook
on life was so restricted during his time in the concentration camp, he
realised that the Nazis could not take away his sense of imagination (the
ability to create something in our minds beyond our present reality),
conscience (an inner awareness of right and wrong), and independent
will (the ability to act based on self-awareness).
In addition, Covey mentions that a person has to overcome
his or her sense of determinism, be it genetic determinism
(you inherit your personal tendencies and character), psychic
determinism (your upbringing and childhood experiences
mould you) or environmental determinism (environmental
factors are responsible). He labels this our “social mirror”.
Being proactive means taking the initiative ourselves. Taking the

initiative, however, does not mean being pushy, obnoxious, or
aggressive. But it does mean recognising our responsibility to
make things happen.
1
(1856-1939), the wellknown godfather of (the) psychoanalysis
Circle of Concern and Circle of Influence

When a person has to answer the question “Where do you focus
your time and energy?” that person will come up with an answer
that satisfies his or her concern. Covey refers to the possible
outcome as an individual’s Circle of Concern. A part of this
circle is known as the Circle of Influence. Figure 2 illustrates
this concept:
le of Concer
Circ n
Circle of influence
Circ rn
le of Conce
Figure 2: The Circle of Concern and the Circle of Influence
The distinction between the two circles is easy to see. If we can

do something about it, it lies within our Circle of Influence.
If we cannot then it lies within our Circle of Concern. For
example, the current bird flu in Asia concerns people although
we cannot do much about it. But, if our neighbour beats his
wife up, we can do something about that. Proactive people
focus their efforts in the Circle of Influence. Reactive people
focus their efforts in the Circle of Concern. Changing our
habits, changing our methods of influence and changing the
way we see our no-control problems are all within our Circle
of Influence. The ability to make and keep commitments and
promises is at the heart of our Circle of Influence. Covey also
mentions that by acting and behaving proactively we learn to
expand our Circle of Influence.
Habit 2: Begin with the end in mind

All things are created twice
All things created by human beings are created twice. First,
there is the mental or first creation; then there is the physical
or second creation. Covey mentions that by beginning with the
end in mind is to begin with the image of the end of your life as
the frame of reference by which everything else is measured. We
may be busy, we may be efficient, but we will only be effective if
we begin with the end in mind.
There is a first creation to every part of our lives. We are either

the second creation of our own proactive creation, or we are the
second creation of other people’s agendas, of circumstances, or
of past habits. This refers back to Habit 1, be proactive.
Leadership and management

Habit 2 is based on principles of personal leadership, which
means that leadership is the first creation. Management is
the second creation. Covey states that management is doing
things right, while leadership is doing the right things.
According to the second habit, people should not get straight
into managing with efficiency but should start by setting and
achieving goals before even clarifying the values. Covey labels
this as “re-scripting”.
A tool for habit 2: a personal mission statement

The most effective way to begin with the end in mind is to
develop a personal mission statement. The key to the ability
to change is a changeless sense of who you are, what you are
about, and what you value. Once you have a sense of mission,
you have the essence of your own proactivity; the vision and
values which direct your life, and the basic direction from which
you set your goals.
At the centre of our lives

Whatever is at the centre of our lives will be the source of our
security, guidance, wisdom, and power. Covey mentions possible
different centres which should all be partly at the centre of our
lives but not the centre de facto. He mentions, for example:
• Spouse centredness
• Family centredness
• Money centredness
• Work centredness
• Possession centredness
• Pleasure centredness
• Friend/enemy centredness
• Church centredness
• Self centredness
The Principal Centre

Covey calls the Principle Centre the right centre. Our lives
need to be centred on correct principles – deep, fundamental
truths, classic truths, and generic common denominators. As
a principle-centred person, one tries to stand apart from the
emotions of situations and from other factors to evaluate the
options.
Habit 3: put first things first

Habit 3 is the second or physical creation mentioned in habit
2. It is the exercise of independent will towards becoming
principle centred.
Things that matter should never be at the mercy of things that

do not matter.
Effective management is putting first things first. Covey offers

us the following tool in table 1 which will help us to put first
things first.
Urgent Not urgent
Important Quadrant 1. Activities: Quadrant 2. Activities:

crises, deadlines, prevention, PC
pressing problems, activities, relationship
deadline-driven building, recognising
projects new opportunities,
planning, recreation
Not important Quadrant 3. Activities: Quadrant 4. Activities:

interruptions, some trivia, busy work,
calls – calls – reports some mails, some calls,
– meetings. Proximate, time-wasters, pleasant
pressing matters, activities
popular activities
Table 1: Tool for understanding how to prioritise in life

Urgent matters are usually visible, and demand instant reaction.

Important matters contribute to our mission. Covey gives the
following guidelines with respect to the four quadrants defined
in table 1:
• Effective people limit the time spent in Quadrant 1
• Effective people stay out of Quadrants 3 and 4
• Quadrant 2 is the heart of effective personal management.
Effective people invest more time in Quadrant 2 activities.
The only way to get time for Quadrant 2 is to limit time spent
in Quadrants 3 and 4. If this does not work, Covey says you are
either:
• Unable to prioritise
• Unable to organise around those priorities, or
• You suffer from a lack of discipline to execute Quadrant 2
activities.
Time management
Time management, according to Covey, comes in four stages:
1. Notes and checklists – earliest form, limited, no dates,
priorities and no focus on Quadrant 2 activities
2. Calendars and appointment books – later form, limited,
no priorities and no focus on Quadrant 2 activities
3. Prioritisation – clarifying values, comparing the relative
worth of activities, later form, partially limited due to the
lack of focus on Quadrant 2 activities
4. Preserving and enhancing relationships and accomplishing
results – incorporates all of the above including Quadrant
2 activities.
How do Quadrant 2 managers manage?

First, it is necessary to identify the key roles it takes, then to
select the goals to be pursued while acting in that role. Then
an efficient Quadrant 2 manager schedules his tasks and during
their execution adapts on a daily basis, i.e. reiterates this process
whilst focusing at all times on the people, the PC one interacts
with. In addition, Covey mentions that time management is
still mainly practised on a daily basis, i.e. by making a plan for
the day ahead. In this respect, he advises the reader to make a
weekly plan, too, which is not the custom for most people.
In addition, Covey refers to the importance of balancing one’s

life, i.e. success should be achieved in all the various roles in
life, e.g. as manager in the office, as husband, father and fellow
Christian in one’s religious society. He argues that it is important
to be constantly aware of one’s personal mission statement, and
preferably to have it portable and always within reach.
The accomplishment of tasks is done through delegation, either

to time or to other people. Covey distinguishes between so-called
gofer delegation and stewardship. Gofer delegation means:
“Go for this, go for that, do this, do that, and tell me when it’s
done”. Gofer delegation often results in one-on-one supervision
of methods and is, in effect, ineffective. Stewardship delegation,
on the other hand, is focused on results rather than methods. It
gives people a choice of method and makes them responsible
for the results. Stewardship delegation involves clear, upfront
mutual understanding and commitment regarding expectations
in five areas:
1. Desired results
2. Guidelines
3. Resources
4. Accountability
5. Consequences
In essence, stewardship means a job with trust; as a manager

you say: “I trust you to do the job, to get it done”.
Habits 1, 2 , 3 and management consultancy

Habit 1 (be proactive) and management consultancy
Being a management consultant often means that you are in the

centre of a corporate force field. On the one hand, there is a
request and desire for some form of change but, on the other
hand there is resistance simply because change and resistance
are implicit, they go hand in hand. Bearing this force field in
mind, a consultant has to adopt the habit of being proactive
simply because otherwise he or she would float somewhere in
the middle of this force field, not being able to make an effective
change irrespective of the direction he eventually chooses. The
reactive consultant will not have an effect or will follow the path
of least resistance. In Covey’s words, the consultant responds in
a deterministic way, to the path of least effort. In my opinion,
sound backing, training and corporate beliefs are vital in this
respect for a management consultant. People who end up with
the correct solutions are the proactive ones who, based on their
personal and corporate baggage, provide solutions to problems,
who take the initiative to do whatever lies in their reach to
get the mission done. Sound corporate backing, training and
corporate beliefs increase a consultant’s Circle of Influence, the
consultant’s eventual objective.
Habit 2 (begin with the end in mind) and management consultancy
As a management consultant you need the ability to always

see the end, the desired result. Beginning with the end in mind
means a management consultant needs to focus on a solution,
break it down into day-to-day tasks while always keeping the link
with the goal. No task, no solution, no advice is of any effective
use if the link between the end, the mission’s goal and the task at
hand is lost. In that respect, I personally believe in lots of early
investment in clarifying goals and ultimately defining a scope,
and creating boundaries so that you are able to clearly define the
desired result. From personal experience I see this process as
something that is usually experienced with a sense of reluctance.
Stakeholders do not have the full picture and certainly think they
have better ways of spending their time in the early stages of a
change process or project. In my opinion, a strong consultant
needs to break down this barrier of reluctance and make sure
expectations are well synchronised.
Habit 3 (put first things first) and management consultancy
Time management is crucial to a consultant – rates are high and

output is expected. This means there is pressure on management
consultants to use their time very effectively. By identifying
regularly where you as a consultant are spending time, you can
learn to steer and correct ineffectiveness. In addition, using
Covey’s time-management grid, a management consultant can
avoid being trapped in time-wasting activities.
Quadrant 2 activities are sometimes not easy to apply to junior

management consultants since their mission is broken down
and defined by others who expect instant high-frequency
results. As a junior consultant, I would expect you to be
spending a lot of time in Quadrant 1, simply because you have
no choice. However, as you move towards a management role as
a consultant, there should be a greater emphasis on Quadrant 2
activities. Keep the P/PC balance for your own staff and invest
time in external relations with the customer to sustain a high
level of commitment from both sides and simply to recognise
new opportunities.
The Public Victory: from independence towards interdependence

The emotional bank account
The emotional bank account is a metaphor which quantifies the
amount of trust that has been built up during a relationship. One
can make deposits in another person’s emotional bank account by
courtesy, kindness, honesty and by keeping commitments. In this
way a precious reserve can be built up in another person’s emotional
bank account. But by being in the habit of showing discourtesy,
disrespect, cutting the other person off, etc., you are actually making
a withdrawal from someone else’s emotional bank account. This is
the way to lose trust and flexibility with the other person. According
to Covey, our most constant relationships, in particular, such as
those with spouses or partners, require our most constant deposits.
Covey mentions six major deposits which can help you to make
deposits in another person’s emotional bank account:
1. Understanding the individual
2. Attending to little things
3. Keeping commitments
4. Clarifying expectations
5. Showing personal integrity
6. Apologising sincerely when you make a withdrawal
Habit 4: Think win-win
The six paradigms of human interaction

1. Win-win – A frame of mind and heart that constantly looks
for agreements or solutions that are mutually beneficial.
Covey calls this a belief in a third alternative – a better way.
2. Win-lose – It says “I win and you lose” or “I get my
way and you don’t get yours”. Covey states that most of
life is an interdependent, not an independent reality (in
your marriage, who won today?). The most sought-after
results depend on co-operation and a win-lose mentality
is dysfunctional towards that co-operation.
3. Lose-win – This paradigm says “be a nice guy”, even if you

have to finish last. According to Covey, win-lose people
love lose-win people because they can feed on them. It
complements their strengths. It is capitulation.
Both win-lose and lose-win are weak positions because they are
based on personal insecurities, Covey asserts.
4. Lose-lose – This results when two win-lose people meet –

the interaction of two determined, stubborn, ego-invested
individuals. Covey says they both become vindictive and
want to “get back” or “get even”, blind to the fact that
revenge is a double-edged sword.
5. Win – People inspired by the win paradigm find the other
person’s result irrelevant, win or lose. He tries to secure
his own ends and leave it to others to secure theirs. Win is
the most common approach in every day negotiations.
6. Win-win or no deal – When no deal is an option, Covey
says it liberates the mind because there is no need to
manipulate, to push one’s own agenda and to drive for
what one wants. A person can be open and in a better
position to understand the deeper underlying issues. This
option is most realistic at the beginning of a relationship
or start up of an enterprise.
Covey states that the principle of win-win embraces five main

interdependent dimensions of life:
1. Character as the foundation of win-win. Integrity,
maturity and abundance mentality (i.e. there is enough for
everyone) are the three essential to the win-win paradigm
2. Relationships encompass courtesy, respect and appreciation
3. Agreements
4. Supportive systems
5. Processes.
Habit 5: Seek first to understand, then to be understood

From a young age we spend years learning how to read, write
and to speak. However, apart from listening exercises to learn a
foreign language, most people have never experienced learning
classes. Covey states that although listening is a necessary
skill to be able to communicate effectively with others, most
people listen with the intention of replying rather than with the
intention of understanding.
Empathic listening
When another person speaks, we usually ‘listen’ at one of four
levels:
• Ignoring
• Pretending
• Selective listening, or
• Attentive listening.
However, very few people ever practise the highest form of

listening which, according to Covey, is empathic listening, which
means getting inside another’s person’s frame of reference. One
looks through it and sees the world the way they see the world
and understand how they feel. It is important to understand
that emphatic listening does not mean agreeing with the other
person – it is understanding fully and deeply the other person
both emotionally and intellectually.
Empathic listening involves four developmental stages:

• Mimic content
• Rephrase the content
• Reflect feeling
• Rephrase the content and reflect the feeling
The key to empathic listening is to genuinely seek the welfare of

the individual to whom you are listening.
Diagnose before you prescribe

Before a doctor prescribes a medicine he has to diagnose the
patient’s symptoms. When a good lawyer describes a legal case,
he starts writing the opposite attorney’s case. When an engine
malfunctions on a jet, the pilots are expected to make a (snapshot)
assessment before they handle the situation. Diagnosing before
prescribing is a correct principle which manifests itself in many
areas of life.
In business, a good salesman sells solutions after a process of

listening to his customer and understanding his or her needs. A
bad salesman sells products and moves on after striking up his
commission.
The four autobiographical responses

Because people tend to listen autobiographically, we tend to
respond by evaluation, probing, advising and interpreting, i.e.
you try to explain their motives, their behaviour based on your
own motives and behaviour.
Understanding and perception

As you learn to listen deeply to other people, you will discover
tremendous differences in perception. Habit 5 is the first step
in the process of win-win. Knowing how to be understood is
the other half of Habit 5 and is crucial in reaching win-win
solutions.
One on one
Habit 5 is right in the middle of your Circle of Influence. You can
always seek first to understand. Spend time with your partner
and children, one on one.
Habit 6: Synergise
Synergy is a Greek word which explains that the whole is
greater than the sum of its parts. Nature thrives on synergy. For
example: it is well known that one horse can pull about 4 tonnes.
However, two identical horses are able to pull 22 tonnes. This
is nearly six times as much (or one horse in the team appears
to be working nearly three times harder). Another example
comes from chemistry. Both sodium (Na) and chloride (Cl) are
poisonous for human beings. However, if put the two elements
together you have a substance which is vital for any human
being – table salt. This is called synergy. In teamwork, synergy
results in a higher output than could be reached by the sum of
the individual effort.
According to Covey, few people experience synergy in their lives

because most have been scripted into defensive or protective
communications. Synergy can be unnerving unless a person has
a high tolerance for ambiguity and gets security from integrity
to principles and inner values.
Synergy in business
To achieve synergy in business requires people to be spontaneous,
open and authentic. When a person opens himself up to the
influence of other group members, he gains new insights and
facilitates the generation of new options. High trust and high
co-operation among people can really create wonderful things.
Synergy and communication

Low-trust situations result in low levels of effective communication.
This is characterised by protectiveness, defensiveness and
an attitude whereby people cover themselves in the event of
things not working out the way they want them to. During my
professional experience I have seen the destructive potential of
this on projects put under high pressure because of overselling,
with teams created from large numbers of contractors from

different agencies. Without proper leadership, hardly any synergy
or even negative synergy will exist and the blame game will start
early, resulting in a very unsatisfactory working atmosphere.
The middle level of communication is respectful communication.

Picture this as a situation where fairly mature people communicate
on a mature level. This is a basis for synergy but it might go
either way, synergy or no synergy.
The highest level of communication is known as synergistic

communication, where all participants have a win-win frame of
mind.
Valuing the differences

According to Covey, this is the essence of synergy. A person
should learn to recognise his own perceptual limitations and
the availability of rich resources through interaction with
others. In any situations where they interact, human beings are
complementary. Not using each other’s complementary skills is
to ignore the differences, which will not lead to synergy.
Force field analysis

Performance of an endeavour by human beings creates a certain
equilibrium between driving forces that encourages upward
movement and the restraining forces that restrain it – a force
field. By looking at synergy through a force field analysis, the
following distinction can be made between the different forces
which affect synergy:
• Driving forces are generally positive, reasonable, logical,
conscious, and economic.
• Restraining forces are often negative, emotional, illogical,
unconscious, and social/psychological.
Habits 4, 5, 6 and management consultancy

Habit 4 (think win-win) and management consultancy
Good management consultants implicitly think win-win. They
want to leave the client ultimately with a feeling that he is happy
and they themselves have learned valuable lessons from the
job that has been done. On the other hand, I can imagine that
a consultant often feels trapped in a lose-win situation. One
example would be a consultant who has specific knowledge
and is sent out to clients to implement the same thing over and
over again. There is no doubt that the client wins. But does the
consultant win? In this respect, it is very important that good
consultants get the opportunity to diversify, i.e. will be able to
work with a sustained level of win-win attitude.
Another important aspect of win-win attitude towards human

interaction is that a management consultancy company can only
receive appreciation if their consultants have a win-win attitude,
and definitely not a win-lose, lose-win, lose-lose or win attitude.
Customer satisfaction is usually one of the highest goals of a
company’s mission, so it is important that it is recognised that
this is achieved mostly through their employees. It is corporate
suicide to put individuals on missions who do not have a
customer satisfaction attitude indelibly printed in their minds.
Habit 5 (seek first to understand, then to be understood)

and management consultancy
Seek to understand then to be understood works in combination with

habit 2 (begin with the end in mind), a habit which, on a strategic
level, is of high importance to a management consultant. In order to
assess a situation in which a management consultant finds himself, he
needs to gain confidence to reassure himself that he is the right person
for that particular job, while also giving his customer confidence that
he is or knows the right person for this job. As Covey mentions,
understanding the other by emphatic listening is extremely important
as regards earning credit, to make a deposit in a client’s emotional

bank account. So the knife cuts both ways. If a consultant does not
practise listening well enough he loses the objective from his viewpoint
and, more importantly, he loses a customer’s loyalty, trust and co-
operation. Covey mentions that good lawyers write the opposite side’s
case so as to be fully prepared for any obstacle on the way to the end
result. In this respect, management consultants could increase their
efficiency by putting themselves in their customer’s situation and
frame of mind. In this way the consultant learns to understand the
customer’s demands, learns to ask the essential questions, and gains
a deep insight into implementing the right strategy and the resulting
tactics to address the particular problem in hand.
Habit 6 (synergise) and management consultancy
Creating synergy is not an easy task for a member of staff, a manager

leading a team, a senior manager leading multiple teams and giving
direction to a company but, on the other hand, it is absolutely vital
there is a high level of synergy simply to gain momentum and to
establish a high degree of satisfaction for all stakeholders. Having
worked as a consultant in software solutions, and now working as
a manager I have seen lots of culture builders and culture breakers,
and one of the culture breakers, as far as many people on the work
floor are concerned, are (management) consultants. Consultants
are perceived as outsiders who are brought in by the management
because the people on the work floor are either not good enough or
because the project or change is under such pressure that there is
no way round it. But irrespective of the real reason for bringing in a
(management) consultant, he comes in with a disadvantage, i.e. the
general opinion of the people on the work floor and sometimes even
those in management. In this respect, a (management) consultant
really needs to be a culture builder, someone who understands the
principle of synergy and is perceived as a person making a change
for the better for everyone. This is extremely hard and often comes
with age, experience, character and time spent with the customer.
Staying interdependent
Habit 7: Sharpen the saw
Habit 7 is about taking the necessary time to sharpen the saw.

This is a Quadrant 2 activity and focuses on one’s own PC. It is
preserving and enhancing the greatest asset a person has – him-
or herself.
The four dimensions of renewal

Covey advises the reader to renew the four dimensions of his or
her nature – the universal four dimensions – which are:
• Physical
• Spiritual
• Mental
• Social
The physical dimension is looked after well by eating the

right kind of food at the right time, getting sufficient rest and
relaxation, and exercising on a regular basis.
The spiritual dimension provides leadership in a person’s life

(think of habit 2). The spiritual dimension refers to one’s core,
one’s centre and to the commitment to one’s values. You can
sharpen the saw with respect to your spiritual dimension by
meditating, practising a religion, listening to music or simply
enjoying nature. Covey sees this as a Quadrant 2 investment
which we cannot afford to neglect. He advises us to review our
personal mission statement frequently so as to have a good
understanding of our purpose.
The mental dimension is neglected once we leave formal

education, according to Covey. It is important to avoid mental
atrophy. The mind should be challenged. In this respect he
recommends avoiding TV, or limiting it to one hour per day,
and reading a lot, preferably one book a fortnight but at least
one a month. In addition, he recommends writing, e.g. keeping a

journal and writing down thoughts, experiences and insights.
The social dimension is developed primarily through our

relationship with other people. Covey recommends helping
others by scripting them as principle-centred, value-based
independent individuals. In this respect he quotes Goethe who
said: “Treat a man as he is and he will remain as he is. Treat a
man as he can and should be and he will become as he can and
should be.”
Balance in renewal
Sharpen the saw or the renewal process must include a balanced
renewal in all four above-mentioned dimensions of our lives. To
neglect one area has a negative impact on the rest.
Synergy in renewal
By synergy in renewal Covey means that if you sharpen the
saw in any one dimension it will have a positive impact on the
other dimensions. The daily Private Victory is the key to the
development of the seven habits and it is completely within
everyone’s Circle of Influence.
Habit 7 and management consultancy

Habit 7 (sharpen the saw) and management consultancy
It is important for a (management) consultant to develop his

knowledge and skills continuously. This is sharpening the mental
side of the saw. By so doing, the consultant stays attractive to
the market. This practice also offers personal satisfaction as
learning for most intelligent human beings means becoming a
more complete and satisfied human being.
Being a consultant means working with a wide variety of different

people during your career. In order to feel comfortable with most
people, it is important to sharpen the social saw. In particular, a
management consultant needs to be able to communicate effectively on
a social level with all people on the work floor, from worker to executive.
With respect to this, the more effectively one engages with others the
better the results and personal satisfaction will be. A very interesting
aspect of this is Covey’s approach to scripting others. He gives the
example of two school classes, mistakenly mixed up with respect to the
good and bad performers. After a while the mistake was recognised but
astonishingly the results showed that the real “dumb” group, who were
mistakenly treated as the smart group, improved incredibly whilst the
performance of the real “smart” group, mistakenly treated as the dumb
group, had lowered significantly. It became a self-fulfilling prophecy
of those scripting others. However, by effectively scripting others, by
engaging others in the right way, a consultant will be able to improve
overall performance, and gain respect and sympathy.
As the job of a (management) consultant has the potential to be

both satisfying and draining, mentally and physically, it is apparent
that looking after your physical dimension is important. Lots of
stress and fatigue require a counterbalance for a consultant to stay
healthy both physically and mentally. With respect to this, in my
opinion it is vital for any working person, not only a consultant, to
sharpen his or her physical and spiritual saw regularly.
Critical notes and conclusions

Critical notes
After reading the book and searching the internet for comments
I have compiled the following critical notes on “The Seven
Habits of Highly Effective People” by Stephen R. Covey:
First of all, sometimes the book is too oriented towards an

American public. Covey’s enthusiasm for his own framework can
be overdone and one loses a sense of objectivity when reading
certain parts of his book. For example, he writes the following
about a personal mission statement:
“In our home, we put our mission statement up on a wall in the

family room so that we can look at it and monitor ourselves
daily. When we read the phrases about the sounds of love in
our home, order, responsible independence, cooperation,
helpfulness, meeting needs, developing talents, showing interest
in each other’s talents, and giving service to others it gives us
some criteria to know how we’re doing in the things that matter
most to us as a family.”
Personally, I feel this comes across as slightly exaggerated, too

driven and arguably slightly unbalanced.
Throughout the book the reader becomes really convinced that

Covey believes in general in the good of mankind. He gives the
impression that each one of us can change by applying the right
principles (living the seven habits). It is a sign of pessimism
to argue against this, but I believe it is a sign of reality and
awareness, too. Some people deliberately do not have the best
intentions towards others, but are blatantly selfish, greedy, etc.
It becomes even more obvious by simply looking at the vast
amount of unethical business books currently on the market.
(It is strange to read that most people buy these books on the
excuse of better understanding their rivals at work. It is very

hard to co-operate with unethical, greedy and selfish people, let
alone change them. Sometimes, Covey’s ignorance to address
this in his book is frustrating.
To live according to the seven habits framework, I think requires

a mature and strong mind-set. If this was not the case, there
would not have been such an enormous market for psychological
self-help books, courses and TV shows. In fact, this book would
not have sold over 15 million copies. TV airtime is saturated
by the Dr Phills, Dr Lauras and Ophreys all trying to help
others to live according to similar universal lessons associated
with sane human beings. Covey makes it look too easy. In
addition, I personally believe that lots of people experience
major disadvantages in life, e.g. unstable childhood, unbalanced
culture and upbringing, etc. Covey seems to ignore this and
even brushes determinism aside, making it look insignificant.
I find this unjust and possibly even offensive to certain people.
Critics claim Covey over-intellectualises management philosophy.

I do not understand this critical note I found on the internet.
The seven habits book is non-academic and by no means can the
habits be said to be situated on a high intellectual pedestal.
Some groups accuse the author of covert promotion, which

would seem both true and obvious when reading the book. The
following passage is a good example: “I am always intrigued
whenever I go to IBM and watch the training process there. Time
and time again, I see the leadership of the organisation come
into a group and say that IBM stands for three things: the dignity
of the individual, excellence, and service. These things represent
the belief system of IBM.” By displaying a covertly promotional
stance in corporations like IBM, Covey loses objectivity.
Covey published a follow-up book on the eighth habit. Sean

Covey, his son, wrote the “Seven Habits of Highly Effective
Teens”. It appears to have become an effective family habit.
One could argue that the Coveys are milking their cash cow.
By publishing even more follow-ups, without a doubt Covey’s
credibility will start to become eroded.
Conclusions
“The Seven Habits of Highly Effective People” is not, per se, a
management book, although it is generally perceived as one. It
provides a great framework for people in all walks of life looking
for “answers” to some of life’s greatest challenges and battles to
be fought in the inner self.
The book is cleverly written – Covey adopts a non-academic

approach which inspires and captures the reader’s interest right
from the first page. In addition, it is a practical book with lots of
examples that are applicable to everyday life.
In my opinion, this is an ethical guideline which is has been (and

continues to be) read by millions of people and managers. By
placing emphasis on the good and ethical values in life, it has the
power to change attitudes, irrespective of the fact that, to me,
this is not an objective view.
According to George A. Miller, seven is the magic number with

respect to limits on our capacity for information processing. Any
more laws or habits and it starts to lose its trustworthiness and,
most likely, its applicability. For example, how inappropriate are
“37 very effective ways to beat stress”, or “35 rules to becoming
a perfect seducer”, or the “33 strategies of war”. Seven habits are
manageable – they are easy to remember and to exercise.
As one person from Sri Lanka wrote in a blog (web-log), the

book should be treated as a companion in the long run. The
seven habits are not easily adopted and, even if they can all be
mastered to an acceptable degree, it is very likely that the skills
and habits will be eroded over time unless there are frequent
reminders to read them again and again. In Covey’s own words,
the reader will be making the mistake of not sharpening his saw.
“I don’t have time to sharpen the saw,” said the person in the
woods who had spent five hours trying to saw down a tree, “I am
too busy sawing”.
IV) Bibliography
Stephen R. Covey:
• “The Seven Habits of Highly Effective People”, 1989
(ISBN 0671708635)
• “Principle Centered Leadership”, 1992 (ISBN 0671792806)
• “First Things First”, co-authored by Roger and Rebecca Merrill,
1994 (ISBN 0684802031)
• “Living the Seven Habits”, 2000 (ISBN 0684857162)
• “The 8th Habit: From Effectiveness to Greatness”, 2004
(ISBN 0684846659)
For more information on the author, refer to Covey’s website:

http://www.stephencovey.com
396 Tools: Shareholder value approach
Shareholder value approach

I) What is it?
The concept of shareholder value is a recurrent theme in today’s
business. Pressure from investors to deliver sustained superior
returns has made shareholder value enhancement a principal
issue facing the CEOs and CFOs of most publicly listed
companies. The ultimate goal of the shareholder value approach
is not market share, but rather to maximise discounted cash
flow. For a typical business unit, maximising cash flow can be
estimated by adding the discount value of projected cash flows
(inflows and outflows) for the next ten years, the discounted
value of the projected sale price of the business at the end of the
tenth year.
Shareholder value is created when a company generates free cash

flows in excess of the shareholder’s investment in the business,
and market capitalisation is a good and effective surrogate for
the free cash flows. It is also more relevant in today’s world
where ‘share price’ is the key, and perhaps the only, arbiter. The
proof of its importance is every company’s mission statement
that the responsibility of the management is to “maximise” a
shareholder’s total returns via dividend and increase in market
price of a company’s share. It is the difference between the
market capitalisation (number of issued shares x share price)
of the company and the net (net of debt) capital employed by
the company. Thus, change in total assets over the base period
is reduced by change in borrowings to give net equity funds
invested in the company. These funds are either from retained
earnings and/or from new equity issues. Shareholder value is
the difference between this investment from equity funds and
market capitalisation plus dividends.
Tools: Shareholder value approach 397
II) How does it work?
Shareholder value essentially looks at the value attributable to

the company’s shareholders. The fundamental principle would
be that a company only adds value for its shareholders when
its returns on capital exceed its cost of capital. The shareholder
value approach theory follows the strictly economical approach
that managers act as fiduciaries for the owners of the company
as principals, and the managers as agents acting on their behalf.
This implies that every decision by management should be made
with the intent of maximising the shareholder’s wealth, as long as
these decisions and the resulting actions are within the bounds
of law. To ensure that management acts in the owner’s interest,
they should either be monitored or given financial incentives.
398 Tools: Shareholder value approach
III) When is it needed?
Why is there a need for the market to use a performance

measure? Surely earnings measures, such as earnings per share
(EPS), which have been used for years, are sufficient to analyse
the company’s performance? The trouble is that they are not.
Numerous studies carried out over time have shown that

there is little empirical evidence of any correlation between
earnings growth and share value. The principal requirement
of shareholders, as rewards for their investment, was a regular
stream of dividends.
However, now investors are increasingly looking behind the

traditional earnings model to measure more informatively a
company’s long-term prospects to adequately understand the
risk, growth and opportunity, and cost of capital which are key
issues in any investment decision. Shareholder value approach
analysis provides this type of assessment and comparison using
both financial and non-financial information.
Broadly, to create shareholder value approach is to embark on

a journey to map day-to-day strategic actions for continuous
value creation. Companies that are shareholder-value-oriented
realise which activities contribute most to value.
Tools: Shareholder value approach 399
IV) Bibliography
Birchard, B., “How many masters can you serve?”, July 1995,
CFO
Dimma, W., “Putting Shareholders First”, Autumn 1997, Ivey
Business Quarterly,
Kay, H., “More Power to the Shareholders”, May 1991,
Management Today, p 56-59
Smith, B., “Ethic of DU Pont’s CFC Strategy 1975-1995”, 1998,
Journal of Business Ethics, Vol. 17, p 557-568
Roberts, D., “Cingular 41 Billion Bid snatches AT&TW”, 18 Feb
2004, Financial Times Magazine.
Web-o-graphy
faq_what_is_value_based_management.html
http://www.juergendaum.com/news/12_28_2002.htm
http://www.pdinstitute.com/shareholder_value/atom.xml
http://www.investordictionary.com/definition/
shareholder+value.aspx
400 Tools: SIPOC diagram
SIPOC diagram
A SIPOC diagram is a tool used by a team to identify all relevant

elements of a process-improvement project before work
begins.
The tool’s name is an acronym for:
• Suppliers of the process
• Inputs to the process
• Process you want to improve
• Outputs of the process
• Customers who receive the process outputs
The SIPOC tool is very useful when the following questions

arise:
• Who are the suppliers of inputs to the process?
• What specifications are placed on the different inputs?
• What kind of output is regularly needed?
• Who are the true customers of the process? (internal and
external)
• What are the requirements of the customers we know of?
(maybe an additional brainstorming session is necessary)
SIPOC diagrams are easy to complete by following these steps:

1. Create an area that will allow the team to post additions to
the SIPOC diagram. This could be a slide (to be projected
by an overhead), flip charts with headings (S-I-P-O-C)
written on each, or headings written on Post-it notes stuck
on a wall (make it simple, clear and measurable).
2. Begin with the process; map it in four to five high-level
steps (make it measurable).
3. Identify the inputs required for the process to function
properly.
4. Identify the suppliers of the inputs that are required by the
process.
Tools: SIPOC diagram 401
5. Identify the outputs of this process (internal and

external).
6. Identify the customers who will receive the outputs of this
process (do not forget the internal customers, too).
7. Verify with the project sponsor and the other stakeholders
involved.
Below is an example of a SIPOC diagram used in an electrical

appliances shop process. Care must always be taken to involve
as many players as possible in the process game, so that every
step remains under control.
Therefore it is useful to remember point 1 of the steps to follow,

because new items can always be added in every category.
Example of a SIPOC diagram Electro shop
Suppliers Inputs Process Outputs Customers
• Manufacturer • Dishwasher • New client account • Buyer
• Supplier • Soap • Payment • Electro department
• Electro supplier • Worksheet •Service/warranty • Service department
• Soap supplier • Warranty sheet contract • Warranty department
• Insurer (warranty) • User manual
• Printer • Paperwork to
Developed below manufacturer
Tools: SIPOC diagram
Present different Agreement on price, Sign contract and

Meet the new Understand machines to the delivery date and handover warranty
client needs Client (+ options) delivery mode papers
402
Tools: SIPOC diagram 403
Web-o-graphy
http://www.isixsigma.com/library/content/c010429a.asp
http://finance.isixsigma.com/library/content/c060322a.asp
http://quality.dlsu.edu.ph/tools/SIPOC.html
http://www.leansigmanetwork.co.uk/forum/
viewtopic.php?p=130
http://europe.isixsigma.com/library/content/c060906b.asp
www.isixsigma.com/isixsigma/six_sigma.asp
http://www.lindsaysherwin.co.uk/improvement_guide/
html_data_handling/data_gathering_concentration_charts.htm
http://www.isixsigma.com/library/content/c010527c.asp
http://www.hci.com.au/hcisite2/toolkit/causeand.htm
http://www.sixsigmafirst.com/sstoclt.htm
http://www.asq.org/chapters/H1245.pdf
http://www.jozdev.com/SixSigSample/
SixS_TerminologyQuikSix-AC.htm
404 Tools: Situational leadership
Situational leadership
I) What is it?
Your leadership style is how you behave when you are trying to
influence the performance of others.
There are many theories about leadership that focus on the

different types. The innovation of the Situational Leadership
model, created in the 60s by Paul Hersey and Ken Blanchard,
is that it is not only the leader’s style which is considered, but
also the follower’s level of readiness. This model provides a
framework for analysing a particular situation and determining
which leadership approach will have the highest probability of
success.
Readiness is a function of a follower’s abilities – knowledge,

experience and skills needed to accomplish a task – and his/her
willingness – confidence, commitment and motivation for doing
a task well. The model describes four levels of readiness:
R1 Unable and unwilling
The follower does not have the specific skills to perform a
task and lacks the motivation and confidence to tackle it.
R2 Unable but willing
The follower lacks ability, but is motivated and confident as
long as the leader provides support.
R3 Able but unwilling
The follower is experienced and capable, but is either
apprehensive about doing it alone or not motivated to do it
properly.
R4 Able and willing
The follower is experienced, and feels confident and
motivated.
Tools: Situational leadership 405
II) How is it used?
Depending on the follower’s readiness, managers applying this

model should adapt their leadership behaviour accordingly. Two
types are defined:
• Task behaviour (directive): the leader tells the followers
specifically what to do, how and when to do it, and then
controls and supervises their performance.
• Relationship behaviour (supportive): the leader engages
in two-way communication, listening and giving support
to the followers, encouraging them and facilitating their
involvement in problem-solving and decision-making.
The leader should adapt to each particular situation, and not
always use his or her preferred type of behaviour. The extent to
which he or she uses either a more directive or a more supportive
behaviour will depend on the follower’s readiness, therefore four
leadership styles have been defined:
S1 Telling
This is a high-directive/low-supportive behaviour style,
due to the follower’s lack of competence and motivation
to perform. Therefore, the leader defines their role and
tasks, and then supervises their execution. As the leader
takes the decisions, communication is largely one way. It
is often used when followers have little experience with a
given task and need to be told how to perform it, or when
an issue needs urgent action.
S2 Selling
This style is based on a high-directive/high-supportive
behaviour, where the followers do not have the ability and
knowledge, but are motivated. The leader still provides
most of the direction, but he seeks ideas and suggestions
from the followers in order to involve them. Through two-
way communication and support, he gets the followers
to “buy into” the decisions he makes. The leader provides
coaching, for example suggesting several options for doing
a task and encouraging the followers to use what works

best for them.
S3 Participating
It is a low-directive/high-supportive behaviour style, where
the followers lack commitment, but where they do not
need much direction or control because they have already
demonstrated that they know how to accomplish their
tasks. However, they need support and encouragement
from the leader to build their confidence and motivation.
Hence the leader has a supporting role and the decision-
making process is shared.
S4 Delegating
When the followers reach the highest level of readiness, the
appropriate leadership style is one with low amounts of both
directive and supportive behaviour. Followers need little
guidance and supervision because they take responsibility
for their own projects. The leader is still involved in
decisions and problem-solving, but the followers have the
control. Regularly, he or she also needs to provide feedback
to let the followers know that their contribution has been
noticed and appreciated.
Success in leadership is achieved when the leadership style

matches the follower’s readiness. It may vary from one person
to another, or the same person may be led in one way or another
according to the situation.
The situational leadership model also stresses the fact that

the level of the follower’s readiness increases in terms of
accomplishing a specific task. The leader should build up
the follower’s development level, to be able to use less time-
consuming styles over time. As a follower’s level of readiness
increases, the leader needs to adapt to suit the follower’s
growth.
Tools: Situational leadership 407
In simple terms, a situational leader can adopt different

leadership styles depending on the situation. He “assesses the
performance of others and takes the responsibility for making
things happen”.
However, for this model to be really effective, the leader has to

understand what motivates the followers and why a particular
person may experience a change in his/her readiness level at
some point. The reason may not always be related to work.
LEADER BEHAVIOUR
HIGH
S3 S2
High Relationship High Relationship
and NG SE and
TI
LL
IPA
Low Task High Task

IN
T IC
G
RELATIONSHIP BEHAVIOUR
PAR
S4 S1
ING
TEL
AT
EG
LI
EL
G
N
Low Low
D Relationship Relationship
and and
Low Task High Task
LOW
LOW TASK BEHAVIOUR HIGH
Able and willing Able but unwilling Unable but willing Unable, unwilling
or confident or insecure or confident or insecure
R4 R3 R2 R1
FOLLOWER READINESS
III) Bibliography
Paul Hersey, Kenneth H. Blanchard, Dewey E. Johnson,

“Management of organizational behaviour – utilizing human
resources”, Englewood, Cliffs, 1988
Doris ‘Katey’ Walker, “A project of the Developing Effective
Leaders, Major Program Team”, by Kansas State University.
Web–o-graphy
http://www.situational.com
http://www.kenblanchard.com
http://www.1000ventures.com
http://www.od-centre.org
410 Tools: Six Thinking Hats
Six Thinking Hats®

“The quality of our thinking determines the quality of our future” –
Dr Edward de Bono, creator of Six Thinking Hats®
I) What is it?
The Six Thinking Hats is a method developed by Edward de
Bono, which seeks to facilitate decision-making processes in
groups and to inspire creative thinking. As part of his concept
of lateral thinking, de Bono has developed several tools and
techniques that are supposed to help people to shift to different
and more creative modes of thinking. Lateral thinking means
exploring a subject from different angles. Compared to ‘vertical
thinking’, which would mean “digging a hole more deeply” in the
same place and within the same perceptual framework, lateral
thinking means moving to a different position and a different
perceptual framework. Litterally, it would be starting to “dig a
fresh hole” which, nevertheless, can help to find solutions for
the same subject or problem.
The Six Thinking Hats method has to be seen as one of the

techniques that de Bono developed in the frame of his concept
of lateral thinking. However, this method – which he developed
in just one afternoon – should, in particular, help to overcome
negative attitudes during a phase of discussions. For example, de
Bono observed that phrases like: “That won’t work” and “That’s
wrong”, “That’s not going to happen” often ‘block’ thinking
processes and destroy creativity. There are times when these
rather sceptical modes of thinking are appropriate and such an
approach really helps to define the overall problems that need to
be tackled, but this way of “black thinking” should not dominate
the thinking process. Therefore, primarily the six hats help to
define several thinking phases and to ensure that each phase
also receives a fair share of time.
Tools: Six Thinking Hats 411
The Six Thinking Hats is a fairly easy method that can be applied
by almost everyone, everywhere. One precondition is that
people are willing to use this method (which is a bit like a game
and may appear not sophisticated enough for some) and that
they are willing to (learn to) apply different modes of thinking.
The idea is that in any creative thinking process, several different

perspectives should be used in order to maximise the thinking
output. By involving everyone in every phase of thinking (parallel
thinking) the fullest potential of everyone may be used. At the
same time, it creates a rather positive environment, because
everyone is in the same boat or under the same hat and can
focus on the issue coming from one perspective. That also means
that it is easy to distinguish more easily between the argument
and the person developing the argument. Very often in a debate
that is seeking to find a solution to a problem, the arguments
brought forward are linked to the person (or even its status or
position). Such debates can thus often be characterised by so-
called “power plays”, where one person argues against another
person which can shift focus away from the issue or problem
that needs to be solved. The often-observed “motivation to fuel
one’s ego” was another frequent element in discussions that de
Bono thought about overcoming with the Six Thinking Hats.
These, along with the focus on “black thinking”, could lead to “an
entrenched negative mode of thinking”. The Six Thinking Hats,
however, can help to avoid such a blockage from the start.
II) How does it work?
The method can be applied relatively simply. There are six

different perspectives or “hats”, each characterised by a different
colour: blue, black, red, green, yellow and white. The black hat
represents the sceptical perspective. While wearing the black hat
we ask ourselves why something may not work and we analyse all
related dangers and problems and faults. Logical reasons must
be provided in the thinking phase. Only when we move on to the
red hat phase are we allowed to use our feelings and intuition “at
this point”. There is no need for reasons and justifications. This
phase should, however, be rather short.
The green or creative hat examines all existing possibilities and/

or looks for alternatives, new ideas and concepts. An important
task for this hat is to overcome the problems that had been
defined by the black hat (and also may, at a later stage, be used
to reinforce the values that the yellow hat phase will define – or
depending on the how often the perspective will be changed
– has defined. Under the yellow hat logical reasoning is also
important – it is the “positive head” and, in a way, an opponent
of the black hat because it seeks to analyse why something
may work, by stressing (both known and potential) values and
benefits and by looking for the good in something.
Moving on to the white hat means focusing on neutral and

objective data and information. In this phase it is important to
check the information that is available so far to see if there are
certain facts missing and to define where it could be sourced.
The blue hat perspective is the only one solely undertaken by
one person, the coordinator or team leader. The blue hat faces
the decisive and maybe also difficult task of coordinating the
whole discussion and deciding how much time to attribute to
each phase and when to go back to one perspective. The blue hat,
the manager of the thinking modes, sets the focus, and makes
the overviews, summaries and conclusions. It also coordinates

the development of an action plan. It can thus be helpful for the
blue hat to have some proper training regarding the method.
Arguably, the success of the whole exercise may also largely
depend on the skills of the blue hat coordinator, who sets the
time, provides the needed input, and decides when to switch to
the thinking mode.
III) Further guidelines on how to use this method
Depending on the purpose for which the method is used (the type
of meeting), a certain sequence can be applied for using the
different colour perspectives. However, there is no formal rule
as regards starting with the red or black hat. And it is all up to
the experience of the participants, in particular the coordinator,
to determine the right sequence at the beginning. For less-
experienced groups and coordinators, de Bono recommends
determining the sequence at the beginning. More experienced
groups under the leadership of a certified trainer could also
use an “evolutionary method” where the group determines
the switch to the next hat. In this respect it is also important
to keep in mind that to a certain extent some of the hats do
reflect opposing views or functions: the white versus the red hat
(information versus emotions), the yellow versus the black hat
(optimism versus dangers), and the blue versus the green hat
(limiting, coordinating, summarising, implementing versus new
ideas and alternatives).
It is advisable that the blue hat starts and ends every session by
defining the purpose and framework of the session, summarising
the results, and coming up with an action plan after the session.
The blue hat should thus raise the following questions at the
beginning:
• Why are we here?
• What are we thinking about?
• What is the definition of the situation or problem?
• What are the alternative definitions?
• What do we want to achieve?
• Where do we want to end up?
• What is the background to the thinking and is there a plan
for the sequence of the hats to be used?
After the session, the blue hat indicates what we have achieved
and summarises the outcome or conclusion, and/or the design or
solution, and the next steps to be taken.
De Bono recommends limiting the time for each session.

Depending on the group size, a rough guideline could be one
minute of speaking time per person per hat. In particular, the red
hat time should be limited because here people should respond
quickly and spontaneously without judging or analysing.
IV) Who can use it and when?
A distinguishing feature is that the method is very simple and

can therefore be used by almost everyone, everywhere. The main
purpose is certainly to facilitate decision-making processes, to
ensure that different perspectives have been taken into account
and to involve and use the potential of everyone in the group or
team. The method can thus be used to facilitate very different
kinds of meetings or group gatherings. It may, for example, be
used for preparing for discussions, for improving processes in an
organisation, or for developing new products or designs. It has
also been used for conflict resolution and as part of leadership
development trainings. And thus also has personal and group
development potential.
The method has been developed for groups. As we recall, one

of the reasons for developing the method was to deprive people
of “showing how clever they are” by “winning an argument”
against someone else in the group. One main reason was thus to
improve “group thinking” or group decision-making processes,
and the six hats have thus been shown to be very effective as a
team-building measure.
Nevertheless, the method could also be used by an individual

because it can help to structure the thinking process and to
ensure that information linked to the six defined perspectives
has been collected and evaluated. Since each person usually has
a preference for one thinking mode, it can certainly also help the
individual (and not only the groups) to further develop thinking
capacities by developing an individual’s weaker hats.
There are no prerequisites either regarding age, background and

culture. The method is simple and can be easily explained that it
may be used for pre-schoolchildren or top-level executives for a
wide range of purposes. Theoretically, the method can be used
by everyone. It has not been specifically designed for businesses

or management purposes. Nevertheless, throughout the last
20 years a large number of firms have successfully applied
the method and achieved very good results regarding the
improvement of their decision-making processes. For example,
major corporations like IBM, Shell, DuPont, McKinsey, Ford or
Ericsson have all applied the six thinking hats method.
In addition, governments, administrations, schools or almost

any other type of organisation can be cited as an example of a
success story for Mr de Bono. He also claims that he himself has
been very surprised by the success of the method, and wants to
spread knowledge about its use worldwide.
Within these organisations we find, for example, project

managers, team leaders, trainers and consultants, meeting
facilitators, managers or product developers who all thought
it worthwhile to familiar themselves and their teams with the
method and to use it wherever they regard it as added valued.
Teams who are familiar with the six hats often refer to the “black
hat thinking” or “red hat thinking”, in both formal and informal
contexts, even when the method is not being applied.
V) Example in SMEs and/or other organisations
Due to its simplicity, the number of examples of Six Thinking

Hats users is enormous. Official training is not necessary and
may be replaced by experience. Yet many of the larger companies
have opted for official training either by de Bono or another
certified consultant, and many of their top-level executives have
been officially trained in the different possibilities the method
provides. In order to present just one example, let me tell you
a success story regarding one group after the 2002 merger of
Hewlett-Packard and Compaq Computer Corporation, which
created a team of more than 140,000 employees in 160 countries
– and not only new opportunities but chaos too. The challenge
was not only for the corporations to deal with and overcome
the cultural clash, but also for the (new) individual teams on
each level to learn to work together. One Hewlett-Packard team
leader, who headed the business development plan team, opted
for the Six Thinking Hats method as the merger had created a
strong culture clash and increased the power plays in his team,
since everyone was now keen to present the best business plan.
Meetings and discussions about the business plans were thus
characterised by a very negative spirit because everyone wanted
to win and outrun the other team members. Criticising the
ideas of others very strongly seemed to increase one’s chances
of being the winner with the best business plan. The team leader
observed the negative impact of this behaviour on both the team
spirit and on productivity and creativity as a whole. After a team
leadership training, during which he had learned about the six
hats method, he asked a consultant to help him implement it.
The team leader then sent an email request to the team for an
outline of a business plan for the next meeting. Each member
was asked to prepare to present the neutral details, information
and facts needed (the white hat perspective). At the meeting,
each member made a brief presentation. The team leader then
explained the method and led the team through the various
thinking modes according to the following scheme:
White Hat: Any questions on the details presented? Has anyone

any missing facts?
Yellow Hat: What are the benefits of this initiative?
Black Hat: What are the cautions, problems, challenges?
Green Hat: What are ways to overcome the Black Hat concerns?
What are some alternative solutions/ideas?
Red Hat: What is your gut feeling about the plan?
Blue Hat: Identify next steps. Are we ready to implement?
The result was astonishing for both the team leader and the team
members. The normal argument and debate and thus the whole
meeting time were significantly reduced. Everyone seemed to
accept the results. No one continued arguing after the meeting.
For the first time the team felt it had accomplished something as
a team. This team spirit now increased from meeting to meeting
(when the Six Thinking Hats method was applied). All initiatives
were now better prioritised and evaluated on a “do-ability vs.
impact-basis”.
Some of the advantages of the method are thus clear. It helps

to:
- find comprehensive solutions to complex problems
- involve everyone in the group and use everyone’s (and the
group’s) potential to its best, thereby maximising thinking
output
- create a positive team atmosphere (through parallel
thinking which reduces the “ego-games”)
- reduce meeting time significantly
- foster creative thinking.
With the Six Thinking Hats a division of Siemens could, for

example, reduce the product development time by 50%. Another
major corporation was able to reduce a series of multinational
project meetings from 30 days to two days. A human resource
consultant, who has been working with this method for more
than ten years, said that using the method may enable you to
achieve up to 36% more output in 66% less time. The method
can thus help groups or their leaders to realise their full
potential by involving and training everyone. Thus both team
skills and individual skills can be developed – in particular, if
we regard the different preference for certain thinking modes
that the individual has or the specific role the individual likes to
play in a group (for example, brainstormer, shaper, developer,
implementer, etc.). The method may also foster learning from
one another, and provide enough time and space to cover all
dimensions (without the ego arguments and without giving
preference to dominant personalities).
Some of the difficulties with the six hats method relate to

the role of the blue hat, the coordinator. The blue hat can be
quite influential in defining the framework and maybe leading
towards an outcome that is rather in line with his or her own
opinion or preferred solution. Therefore, a proper training may
be advisable. The method may also not work in all groups. First
of all, the participants need to be willing to learn and apply this
method, which may be perceived by some as too simple and
game-like.
VI) The author and the method in context
The author, Edward de Bono, was born 1933 in Malta. He

studied in La Valetta, Oxford, London, Cambridge and Harvard,
and acquired degrees in psychology, physiology and medicine.
During the last decades he has not only been working as a
psychologist and physician, but mainly as a consultant. He has
devoted his time to his research and writing and to teaching
his thinking methods to a wider audience. As to applying his
methods, he has worked with governments, corporations,
organisations and individuals. But as a well-known thinker and
developer of creative thinking, in 1969 he founded the Cognitive
Research Trust (CoRT) and the SITO – the ‘Supranational
Independent Thinking Organisation’. He has written 65 books
which have been translated into 37 languages.
To see the method in a wider context it is necessary to focus on

two developments that have affected de Bono’s research: first
of all, the increased complexity and availability of information.
De Bono aims to reduce the complexity by allowing everyone
to focus on one dimension at a time. Secondly, we have to see
the developments regarding the concept of empowerment
that evolved in the mid-1980s. De Bono developed a method
that would allow everyone to be involved. It has been used by
children and top-level executives and has been very successfully
applied by several large corporations. It creates possibilities for
everyone to speak and, by allocating time per person, which de
Bono suggests, it can help to put everyone independently on an
equal level of status, position or personality.
To conclude, one may find that by developing the Six Thinking

Hats, de Bono can be said to have transformed theories about
thinking into very practical and usable tools and thus contributed
to advancing applied psychology.
VII) Bibliography
The development of this thinking method has to be seen in the

frame of his concepts of creative and lateral thinking. Edward
de Bono wrote the “Six Thinking Hats” in 1985 and published a
revised and updated version in 1999. Prior to this he had already
published several books regarding lateral and creative thinking.
De Bono, Edward, “The Six Thinking Hats”, 1999, Penguin
Books, England.
Web-o-graphy:
http://www.edwarddebono.com/
http://www.debonoforbusiness.com/asp/
case_studies.asp#Interview_with_Dr._Edward_de_Bono
http://www.edwdebono.com/debono/biograph.htm
http://www.jwelford.demon.co.uk/brainwaremap/debono.html
http://www.innovationtraining.com
http://www-mmd.eng.cam.ac.uk/people/ahr/dstools/proces/
benchm.htm
http://www.debonoforbusiness.com/asp/
case_studies.asp#An_Interview_with_Edward_de_Bono
424 Tools: The spiral of knowledge
The spiral of knowledge

I) History
In the 90s, Ikujiro Nonaka and Hirotaka Takeuchi, two
Japanese professors tried to find out why Japanese companies
where performing better and were more competitive than
Western ones. They discovered that the Japanese companies
were more innovative, in their products as well as in their
processes and services. The reason for this was that those
companies managed knowledge, and specifically the creation
of it, at organisational level.
Japanese companies have experienced a very chaotic period

since World War II (wars, economic crises, more competitors,
bursting of the economic bubble) which explains why they felt
they were continually on the losing side and always having to
catch up in the market. They had to live through periods of
constant change and had to be able anticipate that change.
Innovation was one answer to this. They succeeded in finding
knowledge in the overall business environment (so also outside
the company), bringing and keeping it inside and embedding it in
their products, processes and services. By definition, innovation
leads to competitive advantage.
Trying to explain the spiral of knowledge is, in fact, a way of

trying to show how the knowledge-creation process takes place
in such companies and how they can be an example to others.
Tools: The spiral of knowledge 425
II) What
The spiral of knowledge is a concept which tries to set up a

knowledge culture in a company. To do this, therefore, we need
to understand what knowledge is about. Two professors looked
at all kinds of management theories (from Plato, Aristotle, Sartre,
Porter, Peter Drucker, Senge, Prahalad and many more) and
came to the conclusion that Japanese and Western companies
either dealt with knowledge differently, or not at all. Knowledge
can be looked at from two dimensions. The first one – the
epistemological one – is the philosophical inquiry of knowledge.
The second one is the ontological one – the structures through
which knowledge is disseminated.
They came up with two types of knowledge: tacit and explicit.

Tacit knowledge is about values, perceptions, intuition, what
you feel and what cannot be expressed easily in words. You try
to explain either by using figurative language and symbolism,
or by holding brainstorming sessions where everybody shares
their knowledge (dialogues). Explicit knowledge, however, can
be formal and expressed in a systematic language. It can be
documented on paper or saved in databases. They found that
explicit knowledge was dominant in Western companies and
tacit knowledge in the Japanese companies. The most important
event in the knowledge-creation process is how to convert tacit
knowledge to explicit knowledge.
Four modes of knowledge conversion
With two dimensions and two types of knowledge, we can try to

understand the conversion process:
1) Socialisation: conversion from tacit knowledge to tacit.
Let people brainstorm and share knowledge.
2) Externalisation: conversion from tacit knowledge to
explicit. For example, try to translate feelings, perceptions,
intuitions into product features.

3) Combination: conversion from explicit knowledge to
explicit. When product features are known, call in the
engineers with their explicit knowledge to create the
product physically.
4) Internalisation: conversion from explicit knowledge
to tacit. What you have learned and applied – try to
disseminate that knowledge and to learn by doing.
These conversions happen primarily at the individual level

(knowledge creation) and are subsequently disseminated towards
the group level, organisation level and inter-organisation level
(the ontological dimension) which gives rise to the spiral of
knowledge.
Espistemological dimension
Combination (explicit linking)
Externalisation (dialogue)
Explicit
knowledge
Internalisation
(learning by
doing)
Socialisation (field building)

Tacit
knowledge
Ontological
Individual Group Organisation Inter-organisation dimension
Knowledge level
Implementation strategy
There are several steps to go through before setting up a

knowledge culture in a company. It is not a process which can
be achieved in one day.
Step 1: Five conditions for knowledge creation

1) Organisational intention: defining a strategy for developing
the organisational capability to acquire, create, accumulate
and exploit knowledge. A vision of what knowledge
should be developed, close to strategy, vision and mission
definition.
2) Autonomy: give the individual enough autonomy to
create innovative ideas. This provides for the possibility
of increasing unexpected opportunities and is a great
motivator.
3) Fluctuation and creative chaos: organisations should
adopt an open attitude towards environmental signals and
individuals should break out of their routines. Creativity
can be stimulated from chaos, and chaos can occur when
a certain event happens in the market, or can be created
on purpose by top management.
4) Redundancy: refers here to the intentional overlapping of
information. Sometimes more than one team is created
in product development so that they can compete with
one another to develop the best prototype. The sharing of
information during this developing phase is an example
of redundancy of information which can generate new
knowledge. You must be aware of possible information
overload.
5) Requisite variety: everyone (while respecting a certain level
of security) should have access to all kinds of information
within the company. Sometimes top management changes
the organisational structure or moves people to other
divisions to stimulate the acquisition of new knowledge.
Step 2: The knowledge creation process in five phases

1) Sharing tacit knowledge: bring together people from
different backgrounds and with different perspectives and
let them brainstorm (dialogue).
2) Creating concepts: once tacit knowledge is translated into
explicit knowledge (verbalised) you come up with product
features (or new process or service features).
3) Justifying concepts: if the concept is ready it has to be
justified according to the organisation’s intentions (is
the product in line with company strategy). Is it worth
pursuing product development.
4) Building an archetype: try to build a prototype of the
product using the explicit knowledge of engineers, for
example.
5) Cross-levelling knowledge: disseminate knowledge hori-
zontally and vertically across the organisation.
Step 3: Changing the management style

The professors suggest using a different management style, rather
than the top-down or bottom-up approach. The first approach
is the traditional hierarchy in which information is processed
and passed to the top of the pyramid where top management
create, then plans and give orders. They are the only ones
allowed to create knowledge and the explicit knowledge of the
lower part of the pyramid is not used. The second approach
gives more autonomy to the basis of the pyramid where workers
work on their own with little interaction. Those experts are very
knowledgeable about what they are doing but have difficulties
disseminating that knowledge to others. Top management serve
only as sponsors and there is almost no hierarchy.
In this way they have come up with a management style

which they call the middle-up-down management, which
communicates best the continuous iterative process of
knowledge creation. Top management provides a sense of
direction (organisational intention), the frontline workers
perform as experts, and the middle managers are at the centre
of that process looking after the conversion of the types of
knowledge, and trying to facilitate the process – acting as
‘agents of change’. Top management are called the knowledge
officers, the middle management the knowledge engineers, and
the frontline workers accumulate and generate tacit and explicit
knowledge.
Step 4: Organisational structure for the knowledge-creation

process
The classic structures are known as bureaucracy or the task force.
They both apply, for example, to the US army. In peacetime,
the army with its different divisions (navy, air force, marines)
is a traditional hierarchy with different levels (grades) acting as
a bureaucracy. But in time of war, a task force is formed with
soldiers taken from those different divisions. Once the war or
battle is over, they return to their own bases. The professors
mention that both structures are good and should not be seen
as independent from one another but rather as complementary.
They call this new structure a hypertext organisation where
bureaucracy deals with combination and internalization,
and task force with socialisation and externalisation, thereby
encompassing the four modes of knowledge conversion.
III) Summary
The spiral of knowledge deals with:

1) Two types of knowledge: tacit and explicit
2) Four modes of conversion: socialisation, externalisation,
combination and internalisation
3) Two dimensions: epistemological and ontological
4) Five conditions: intention, autonomy, fluctuation and
creative chaos, redundancy, and requisite variety
5) Five phases: sharing tacit knowledge, creating concepts,
justifying concepts, building an archetype, and cross-
levelling knowledge
6) Management style: middle-up-down management
7) Organsational structure: hypertext organisation.
IV) Conclusion
Setting up a knowledge culture demands a lot of effort and a

change of mentality among everyone in the company. The
spiral of knowledge is not a tool but rather a concept to be
implemented.
We must take into account the period during which this

concept was created by the two professors, which was 1995. The
hypertext organisation they refer to is known today as a matrix
organisation (weak or strong) within the domain of project
management. Bureaucracy can be seen as the structure of
traditional divisions in a company, and the task force as a project
team achieving their project within that company.
Nevertheless, this remains a concept able to draw a company’s

attention to the implementation of the knowledge-creation
process, with innovation and thus competitive advantage as
consequences.
V) Bibliography
Ikujiro Nonaka and Hirotaka Takeuchi, The Spiral of Knowledge,

1995
ISBN: 978-0-19-509269-1.
Web-o-graphy
http://www.anderson.ucla.edu/faculty/jason.frand/researcher/
speeches/educom98pkm/sld033.htm
http://www.nwlink.com/~donclark/history_knowledge/
nonaka.html
http://www.psicopolis.com/fisikepsic/spiral.htm
http://www.simulations.co.uk/KM.htm
432 Tools: Strategic intent
Strategic intent
Strategic intent is a high-level statement of the means by which

an organisation will achieve its vision. It is a company’s vision of
what it wants to achieve in the long term, but stated in present
terms.
It has to be formulated clearly so that employees can understand

it, believe in it and perform it accordingly. Therefore, it must
be logical and unique. The purpose of strategic intent is to help
individuals and organisations share the common intention not
only to survive but also to extend themselves through time and
space.
This, of course, will give rise to problems in its evolution, as the

implementation of the strategy will be based upon experience.
“Separating strategy creation from strategy implementation by
using corporate planners or consultants for the former activity
is thus a hindrance to the evolution of the successful strategy.
Linking creation and implementation supports the overall
process, and thus a strategy emerges and evolves.”1
The strategic intent should never focus on daily problems, as

those are already part of the company’s visions and missions.
It should try to show tomorrow’s opportunities, give direction,
and provide an opportunity that can be conveyed as worthwhile
to all employees.
A statement of strategy must become a statement of design

through which the principles and practices of the organisation
are developed. These statements must represent the whole as
seen from any location within the organisation.
1
Changing Strategic Direction, Peter Skat-Rordam, 2003
Tools: Strategic intent 433
One of the important parts of strategic intent is to specify the

competitive factors – in other words, the factors critical to
success in the future. The purpose of this exercise is to define
an end result situated far beyond the present planning period.
Intermediate goals should accompany strategic intent to make it
possible to measure the achievements in the future.
This is also one of the reasons why such a strategy cannot be

set up in one session: it needs time to mature. It is a visionary
approach of the future in which an effort is made to define the
customer’s future needs, taking into account the changes in daily
life. It sketches the company’s future in ten to 15 years and, with
it, the success factors required to develop the company in this
direction. “To achieve great things, you need ambitious visions.
And it does not matter that a vision cannot be laid out in detail.
It is the direction that counts.”2
The traditional view on strategy always referred to the Strategy

Pyramid with the vision on the top, then the mission, goals,
strategies, tactics and finally the action plans. This was built
on existing competencies in an almost stable environment.
Nowadays, we prefer to speak about strategy which stretches
in a bidirectional way: top-down and bottom-up. Here the
competencies are new, and the environment is unstable; it is
a permanent exchange between challenges and opportunities.
Hence, strategic intent cannot be planned completely in advance,
which makes convincing people to work with this system even
more difficult.
2
ibid
434 Tools: Strategic planning from Mintzberg
Strategic Planning from Mintzberg

I) What is it?
Strategic planning, as practised, has really been strategic
programming, the articulation and elaboration of strategies, or
visions, that already exist, from Henry Mintzberg’s definition
in his summary of the book. When he wrote an outline for his
book called “The Theory of Management Policy” circa 1973
(see figure 1), he stressed to his management school students
that it is important for a manager to assess the relevance and
weaknesses of each management science technique, especially
strategic planning, in the light of his or her knowledge of the
actual management process. During analysis of the strategic
planning, he points out three steps: codification, elaboration,
and conversion of strategies.
Codification means clarifying and expressing the strategies

in terms which are sufficiently clear to render them formally
operational, so that their consequences can be worked out
in detail. This approach can prevent rumours within an
organisation, which are easy to fabricate in order to confuse
employees and shatter their confidence in the organisation,
ad hoc, when a company has notable events to publish, such
as reorganisations, downsizing or layoffs, etc. In this way, the
representative should be able to interpret and give his attention
to finding out the nuance, subtlety and qualification.
Elaboration means predigesting the strategy and giving details

in brief. In particular, programmes and overall action plans must
be specific, clear and specified in each strategy.
Tools: Strategic planning from Mintzberg 435
II) When is it used?
Organisations might encounter a wide variety of dramatic

changes, so conversion means considering the effects of
the changes on the organisation’s operations. That is to say, a
planner should have foresight, which is the perception of the
significance and nature of events before they have changed – for
instance, who and what would be affected as regards budgets,
performance controls, downsizing, and so on.
Strategic planning has been applied to all kinds of activities, such

as retreating to an informal place to talk about strategy – for
example, mountaineering, hiking, or an unofficial party. But if
you call that activity “planning”, then ask conventional planners
to organise it, and you can see how quickly the event becomes
formalised (mission statements in the morning, assessment of
corporate strengths and weaknesses in the afternoon, strategies
carefully articulated by 5pm, by Mintzberg’s experience). This
way is more human and easier to accept although, due to the
various cultures of different regions, it should remain flexible.
There is confusion between strategic planning and strategic

thinking (or so-called strategic creation) for some managers, which is
one danger of mixing them. Mintzberg makes a very clear distinction
between them. Planning is about analysis; in contrast, strategic
thinking is about synthesis. It involves intuition and creativity. The
outcome of strategic thinking is an integrated perspective, a not
too precisely articulated vision of direction that must be free to
appear at any time and at any place in the organisation. However,
often strategies cannot be developed on schedule or ‘immaculately
conceived’. They must be free to appear at any time and at any place
in the organisation, like the strategic thinking described above,
typically through messy procedures of informal learning that must
by necessity be carried out by people at various levels who are deeply
involved with the specific issues in hand.
In addition, organisations disenchanted with strategic planning

should transform the planning job. Planners should supply
the formal analyses that strategic thinking requires. They
should support strategy making by helping managers to think
strategically. And they can also be strategy programmers,
helping to specify the steps needed to carry out the vision.
In the past, planning systems were expected to produce the

best strategies as well as step-by-step instructions for carrying
out those strategies so that the managers could not get them
wrong. In fact, as we now know, sometimes planning has not
exactly worked out like that. In this way, analysing the fall and
risk of strategic planning, Mintzberg emphasises that strategic
programming is not “ the one best way” or even necessarily a good
way. Managers do not always need to programme their strategies
formally. Sometimes they must let their strategies remain flexible,
as broad visions, to adapt to a changing environment. Only when
an organisation is sure of the relative stability of its environment
and is in need of the tight co-ordination of a myriad of intricate
operations, does such strategic programming make sense.
Hence, strategic planning is not only about the formal technique

itself but also about how organisations function and how
managers do or do not deal with functioning. Most significantly,
it has indicated something about how we think as human beings
as regards programming strategies.
Tools: Strategic planning from Mintzberg 437
Figure 1: Outline of “Theory Management Policy” by Henry

Mintzberg, circa 1973
The Policy Elements
The work The structuring The Goals of

of the Manager of Organisations Organisations
The Policy Making Process
The Making of Strategic Decisions
The Formulation of Strategies
Management Science at the Policy level
Analytic Programmes Planning Programmes
The work of the Policy Analyst
Management Policy Tomorrow

IV) Bibliography
“The Fall and Rise of Strategic Planning”, Harvard Business

Review (January-February, 1994); summary of Henry Mintzberg’s
planning book. HBR article, ISSN: 0017-8012
Henry Mintzberg, “The Illusive Strategy ... 25 Years Later”, 1993
in Arthur Bedeian Management Laureates.
Web-o-graphy
http://www.kmgconsulting.com.au/bookroom/bookstrat.htm
http://www.floor.nl/management/top100.htm
http://www.goalsys.com/id88.htm
440 Tools: Supervisory and coaching skills
Supervisory and coaching skills

As a manager or leader of company, you must know how to
supervise your employees properly in today’s working place.
It is an important role as regards earning your co-employees’
respect, running day-to-day operations efficiently, and the
overall success of your company. Remember, if you lead by
example the others will follow.
Supervisory and coaching skills can help your company to

increase employees’ productivity and innovation in order to
achieve the business targets.
The topics focus on:
1. Communication
2. Motivation
3. Building trust
4. Coaching skills
What makes a successful leader in the business world?
Manager gurus and organisation development researchers have

conducted extensive surveys and studies on this question and
have narrowed their findings to three factors:
- Knowledge
- Communication skills
- Positive attitude
I) Communication
Communication can be considered as a personal process that involves

the transfer of information while also involving some behaviour
input. It comprises moving information and understanding between
parts of and people in an organisation and the various media
involved in communication interchanges. Effective communication
is critical to the success of any organisation.
Tools: Supervisory and coaching skills 441
There is a big difference between the myth and the reality in

communication:
Myths Realities
1. We communicate only when we 1. We communicate many things
choose to communicate. we are not even aware of. This
is human nature. It is a natural
response of people towards
others.
2. Words mean the same to the 2. Words depend on one another’s
listener as they do to us. perception or experiences.
3. We only communicate through 3. We communicate a lot through
words. “non-verbal behaviour”.
4. Communication means ‘telling’ 4. Communication means two-way
others what to do. communication.
5. What we say is the same as what 5. What we say may NOT be the
the listener hears. same as what the listener hears.
6. If the listener misunderstands 6. The true test of how you
me then this is his/her problem. communicate is the listener’s
reaction.
What skills are necessary for effective communication?
Often, when a misunderstanding occurs in the workplace, it

is attributed to a lack of communication which most of time
implies that whoever was delivering the message did not do an
effective job. But what about the other side – the listener?
The contrast between hearing and really listening can be as

different as night and day. And in a business environment, not
listening effectively to customers, employees, and peers can
mean the difference between success and failure.
One of the best ways to begin to improve your listening skills is to

get a better understanding of some of the most common behaviour
you and others demonstrate when not listening effectively. Keep

in mind that the following listening blocks should not always be
seen as bad. In certain situations, they can be effective in helping
an individual to achieve a particular result. The key to their
effectiveness is to be aware of when and why you are using them.
A. Barriers to listening:
- Physical: pertain to the physical distance, such as work and
office noise, poor telephone lines, crashed computer or
distracting wall.
- Language
- Emotional: the ability to listen to people’s egos
B. Three levels of listening

- Level 1: passive listening – the listener acts as the receiver
of a message
- Level 2: logical listening
- Level 3: active listening – two important active listening
skills are asking open-ended questions, and reflecting what
the speaker is saying, thinking or feeling
C. Listening skills include

• Probing questions
• Paraphrasing
• Empathy
• Summarising
• Do not assume (retain your judgment)
• Acknowledgement (verbal and non-verbal)
D. Questioning skills
Open questions:
- Questions that stimulate discussion
- Questions that ask for an opinion
Closed questions:
- Questions that have a one word or yes/no answer
Probing questions:
- Questions to collect more information or to clarify: Who?
What? When? Where? Why? How?
II) Motivation
The job of a manager in the workplace is to get things done by

means of his/her employees. To do this, the manager must be
able to motivate them. Human nature can be both very simple
yet very complex. Understanding and appreciating this is a
prerequisite to effective employee motivation in the workplace
and, subsequently, effective management and leadership.
II a) There are two basic forms of motivation:
- Extrinsic motivation: refers to engaging in various behaviour

as a means to an end but not for their own sake: high salary,
working environment, travel opportunities, etc.;
- Intrinsic motivation: refers to engaging in an activity purely
for the pleasure and satisfaction derived from doing that
activity: serving others, working with machines, creativity,
etc.
Intrinsic motivation is often considered more powerful, leading

to more stable behaviour than extrinsic motivation.
II b) The dangers of demotivation:
Causes of low motivation

- Lack of recognition
- No sense of achievement
- Conflict with other work, overload, burn out
- Lack of co-operation from colleagues
- Lack of support from the boss
- Ideas not encouraged
- Communication barriers
- No involvement
- Restricted environment
- No clear direction
- No freedom of speech
- Verbal abuse
- Lack of respect
Signs and symptoms of demotivation

- Lack of interest
- Boredom
- Clock watching
- Indifference
- Thoughts of resigning
- No enthusiasm
- Work not completed
- Missed deadlines
- No energy
- Constant criticism
- Low productivity
- Frequent sick leave or absence
- Change in basic personality
- Mood swings
- Etc.
III) Building trust
Building trust helps people to develop mutual respect, openness,

understanding, and empathy, as well as assisting them to develop
communication and teamwork skills.
Behaviour that promotes trust:

- Live the company values
- Keep your promises
- Walk the talk
- Treat others the way you want to be treated
- Be a person of principles
IV) Coaching for success
Nowadays, too many leaders cling to outdated ideals of what it

takes to be a good coach. They cannot let go of the misguided
concept that good coaches help their teams learn from mistakes,
focusing on improvement and correcting performance after
mistakes have happened. In today’s working environment,
organisations cannot afford the concept of trial and error; things
must be done correctly the first time.
When do we need to coach an employee? In fact, most of the time

a manager should not coach his/her employees. To understand
that statement, it helps to know what employee coaching is and
what it is not. Providing employees with the knowledge and skills
they need to perform their job tasks is not employee coaching – it
is employee training. On the other hand, employee coaching is an
ongoing process of helping employees to identify and overcome
the hurdles that prevent them from excelling in their jobs.
Problems concern:
- Performance
- Poor working habits
IV a) Performance problems
These may occur at any time when there is a discrepancy

between the sought-after results and the actual results, which
can occur at various levels:
• individual performance problems
• team performance problems
• unit (e.g. department or division) performance shortfalls
• organisational performance problems
When an employee’s work falls short of achieving results that

are measured as follows:
1. Quantity; Quality
2. Timeliness
3. Cost-effectiveness
There are many causes of performance problems, including:

• interference
• attitude
• skills
Of course, it is not enough simply to be aware of problem

performance in an organisation; a manager or leader needs to
know how to improve performance. Most managers will begin
with relatively informal approaches to improving performance,
such as a discussion between the manager and the problem
performer during which the manager will advise the employee of
the problem and then devise a plan for remedying the situation.
There is an eight-step model for handling a performance problem

discussion:
1. Chose an appropriate time and place for the discussion
2. Establish the purpose of your discussion
3. Describe the performance gap in specific terms
4. Listen to your employee’s explanation
5. Ask for his/her ideas for solving the problem

6. Discuss ideas and action plans
7. Agree on an appropriate follow-up to monitor progress
8. Set an appointment to review and thank the employee.
Then the manager must introduce a system of monitoring

performance to ensure that the planned improvement has
actually taken place.
But improving performance also requires that the employee be

given support to develop his or her skills, knowledge or whatever
has caused the performance problem. It is essential that the
manager is then able to apply three techniques to support the
under-achieving employee:
- use a specific training programme to resolve the problem;
- appoint a coach to support the employee;
- apply rigorous supervision techniques to help the employee
to improve.
Sometimes, however, a manager should be aware that the system

rather than an individual employee is causing the performance
problem. This in turn means that the manager must know how
to change the design of a task or alter the way a team operates
in order to improve performance. An effective manager will
recognise that different organisations require different measures
to improve performance, and this course will indicate one way
of identifying appropriate management practices to improve
performance in different types of organisation.
IV b) The problem of poor working habits
Your success as a manager or leader depends on your ability

to maintain teamwork within your work unit. Employees with
poor working habits may create friction among their workmates
and damage the entire group’s morale. There are different types
of poor working habits which may affect your work unit:
• Habits that affect the employee’s output (e.g. too many
coffee breaks)
• Habits that affect the output of other employees (e.g. too
much chit-chat)
• Habits that violate universal policies and procedures
(abusing company email, telephone, etc.)
• Habits that become too annoying or offensive to overlook
(e.g. safety violation)
How to address this problem
As a supervisor you need to discuss the problem with your

employee in a positive way, while maintaining the employee’s
self-esteem. Solicit the employee’s feedback and co-operation in
solving the problem. Try to make the employee understand that
the problem belongs to him/her, as does the solution. Offer your
help, and set timelines to correct the problem. You also need to
check progress and, if necessary, propose further action.
When a situation becomes chronic and/or more serious, the

supervisor is expected to take more formal action. Such actions
may include additional documented meetings with the employee
addressing the performance inadequacies, the imposition of
a probationary period, suspension with or without pay, or
involuntary termination. Copies of all written materials relating
to these more formal disciplinary steps must be given to the
employee and retained in his/her personnel file.
The Human Resources Manager and the Ombudsman/EEO

officer are assigned the responsibility for employee relations
at the Institution, including adherence to state and federal
regulations governing equal employment opportunity and
non-discriminatory practices. Supervisors should contact the
Human Resources Manager for assistance prior to proceeding
with any disciplinary action.
V) Bibliography
Conlow, C. , Crisp: Excellence in Supervision: Essential Skills for

the New Supervisor (Crisp 50-Minute Book)
Zeus and Skiffington, Behaviour Coaching
Web-o-graphy
http://www.plsweb.com/graduate_courses/full_course_listing/
on-site/coach/
http://www.bizhotline.com/html/business_management_
videos.html
http://www.infopeople.org/training/past/2004/supervising/
coachingskills.pdf
http://www.training-classes.com/course_hierarchy/
Business_and_Management_Skills/Managing_People/
450 Tools: Swot Analysis
SWOT Analysis
I) What is it?
SWOT Analysis is a tool for auditing an organisation and its
environment.
Situation factors internal to the company can usually be

classified as Strengths and Weaknesses, and those external to
the company can be classified as Opportunities and Threats.
The following diagram shows how a SWOT Analysis fits into a
strategic situation analysis:
II) Why use it?
A SWOT Analysis is a strategic planning tool used to evaluate

the Strengths, Weaknesses, Opportunities, and Threats
involved in a project or business venture. It helps organisations
to evaluate the environmental factors and internal situations
facing a project.
The SWOT Analysis provides information that is helpful

in matching a company’s resources and capabilities to the
competitive environment in which it operates. As such, it is
instrumental in strategy formulation and selection.
Carrying out a SWOT Analysis helps you to focus activities

in areas where you are strong and where the greatest
opportunities lie.
Tools: Swot Analysis 451
III) How to use SWOT
Before creating a SWOT Analysis it is advisable to answer the

following questions:
STRENGTHS
A company’s strengths are its resources and capabilities that can
be used as a basis for developing a competitive advantage.
• What are your assets?
• What experience do you have?
• What advantages do you have?
• What do you do well?
• What are your important resources?
• What are your core competences?
• What do other people see as your strengths?
• Where are you making money?
Think about your strengths in relation to your competitors – for example,

if all your competitors provide high-quality service, then a high-quality
service procedure is not a strength in the market, it is a necessity.
WEAKNESSES
The absence of certain strengths may be viewed as a weakness.
• What do you do badly?
• What do you need?
• What could you improve?
• What should you avoid?
• Where do you lack resources?
• Where are you losing money?
For example: are your competitors doing any better than you?
Do people seem to perceive weaknesses that you do not see?
Possible Strengths and Weaknesses: experience, resources, originality,

customer service, efficiency, competitive advantages, etc.
OPPORTUNITIES
The external analysis may reveal certain new Opportunities for
profit and growth.
• What new customer needs could you meet?
• What are the technological breakthroughs?
• Where do the best opportunities lie?
• What are the economic trends that benefit you?
• What are the emerging political and social opportunities?
• What interesting trends are you aware of?
• Where are the niches your competitors have missed?
When analysing the Strengths ask yourself whether these open

up any Opportunities. Or, analyse your Weaknesses and ask
whether you could open up Opportunities by eliminating them.
THREATS
Changes in the external environmental may also present Threats
to the company.
• Which weaknesses seriously threaten your business?
• What barriers do you face?
• Which required specifications are changing as regards
products or services?
• What financial/cash-flow/debt problems do you have?
• What are the negative economic trends?
• What are the negative political and social trends?
• What is your competition doing?
Analysis Threats often reveal what needs to be done, and puts

problems into perspective.
Possible Opportunities and Threats: changes in technology and

markets, changes in government policy related to your industry,
events, change in lifestyle, business alliances, increasing market
saturation, etc.
IV) Who uses SWOT?
It is being used by companies who want to understand critical

issues facing their business, whether they are:
• Just starting a business
• Planning to roll-out a new service or product
• Seeking financing, or just
• Reviewing their business operations to make improvements.
SWOT Analysis can be used for decision-making within

departments and committees or even by individuals.
The SWOT Analysis has been a strategic tool for different

industries; it is a decision-making aid when new programmes
are planned. It goes through all market segments, and all types
(small to large co-operations) of companies, entrepreneurs and
business managers.
Roles for a successful SWOT

• Be specific, avoid grey zones
• Keep SWOT short and simple, avoid complexity
• Be realistic about the Strengths and Weaknesses of your
organisation
• Analysis should distinguish between where your
organisation is today, and where it could be in the future
• Analyse in comparison to your competition (better or
worse than your competition)
• Be aware, SWOT Analysis is subjective.
V) Summary
SWOT Analysis can be a fast and excellent tool for exploring

the possibilities for initiating new concepts. It looks at future
possibilities, using a systematic approach, in both positive and
negative concerns. It is a relatively simple way of communicating
ideas, policies, and concerns to others. Probably the strongest
message from a SWOT Analysis is that, whatever course of
action is decided upon, decision-making should contain each of
the following elements:
• Building on Strengths
• Minimising Weaknesses
• Seizing Opportunities, and
• Counteracting Threats.
SWOT Analysis must also be flexible in order to be used most

effectively. Situations change with time and an updated analysis
should be carried out frequently.
SWOT is effective because of its simplicity, and it is neither

cumbersome nor time-consuming. Used creatively, SWOT
Analysis can form a foundation upon which to construct
numerous strategic plans.
VI) Bibliography
Edmund P. Learned, C. Roland Chistiansen, Kenneth Andrews,

and William D. Guth in “Business Policy, Text and Cases”,
Homewood, IL: Irwin, 1969.
Web-o-graphy
http://www.netmba.com/strategy/swot/
http://www.quickmba.com/strategy/swot/
http://www.mindtools.com/pages/article/newTMC_05.htm
http://www.marketingteacher.com/Lessons/lesson_swot.htm
http://www.bplans.com/dp/article.cfm/148
456 Tools: Thiem-Tom 10.5 S framework©
Thiem-Tom 10.5 S framework©

I) What is it?
Tools: Thiem-Tom 10.5 S framework© 457
II) How can it be used?
As mentioned in the introduction to this chapter, this framework

has been developed by Professor Dr Tôn That Nguyên Thiêm and
myself, with some interesting input from one of our students Mr
Nguyen Duc Thong.
It all starts with the McKinsey 7S framework1 which is well-

known and has been adapted many times. As the name implies,
this ‘first’ framework comprised seven Ss: structure, systems,
style, staff, skills, strategy and shared values.
The model’s first three Ss are described as “hard Ss”:

• Strategy: the actions a company starts with which must
be maintained. This is the global direction in which the
company wants to evolve.
• Structure: this is how the company is organised – the way
people work together and how tasks are distributed.
• Systems: is about the processes and global information
linking each part of the organisation to the other parts.
The four remaining Ss are less tangible, which is why McKinsey

called them “soft Ss” – they are more cultural:
• Style: is about the management style – how the management
behaves. It is important to know this as this gives a clear
indication of the way things could go in the future.
• Staff : the way the company finds future managers – how it
selects and educates the personnel. Is the company simply
filling a gap in the personnel files, or is the management
looking for the best person in the right place, giving him or
her a career opportunity?
• Skills: what capabilities and important attributes can
be found in the organisation, and which ones does the
company want to develop for and in the future?
• Shared values: does the company have a set of values every
1
This was developed in the early 1980s and used as a basis for research for R. Waterman,
in “In Search of Excellence. Lessons from America’s Best Run Companies”, paperback, 1988.
staff member can stand behind? Is this list imposed by the

management, or is it a set of values shared with all the staff?
Without a correct value-set it is impossible to build a strong
company.
III) Innovation
A combination of all these topics provides a new effective

framework for the analysis of an organisation and its activities.
It is a kind of checklist intended to establish how good a
management team is as regards harnessing every single part of
its organisation for the business it is in.
In his book on Strategic Management2, Professor Dr Tôn

That Nguyên Thiêm developed an 8S framework, by adding
Superordinate Goals.
While working together we developed this new framework

which we explain as follows: the explanation given above remains
unchanged with the Superordinate Goals playing their role in
the centre. However, as times change, and as the outside world
continues to put new pressure on the business, the companies,
and the organisations, several new items became important.
The first one, resulting from the new trend towards

environmentally correct behaviour and to social responsibility,
is at the top of the outer circle, and is part of the hard Ss, as it
is measurable.
In the middle of the framework we introduce two important

points: the first is Sustainability which, in times of difficult
economic situations, is one many managers forget. It is their
main task to try to make the organisation and its structure,
style, etc. sustainable for the future. Therefore, the second
element (which counts for a half and thus explains the 10.5) is
the financial situation guaranteeing this: the Stability.
In combination with the five competitive forces, this is a good

start for a complete external and internal analysis for every
organisation.
2
Thi Truong, Chiên Luoc, co câu, Vapec, Ho Chi Minh City 2003, p 392
IV) Superordinate Goals
These are goals that get people from opposing sides to come
together and work towards a common end result. For example,
if you have two groups of people who seriously dislike each other
you might set up a situation in which they simply have to work
together in order to be successful (e.g. maybe the two groups
get lost in the jungle together and the only way they can survive
is to work together – hey, it could happen). This breaks down
barriers, encourages people to see one another simply as people
rather than as part of “that other group that we dislike”, and can
help overcome differences between the groups.
Definition found at: ttp://www.alleydog.com/glossary/

definition.cfm?term=Superordinate%20Goals
V) Bibliography
Tommissen, Koenraad,( 2006) An Introduction to Management

Consultancy, Apsis, La Hulpe Belgium, ISBN 2-9600590-0-X
Thiem, Ton That Nguyen, ( 2003), Thi Truong, Chien Luoc, Co
Cau, Vapec, HCMC Vietnam
462 Tools: Time management matrix
Time management matrix

I) Introduction
Stephan Covey designed a time-management matrix to help
people manage themselves by prioritising their tasks. He
categorised the tasks as: urgent, not urgent, important and not
important.
The judgment as to whether activities are urgent, important,
both or neither, is crucial for good time management. The
decision whether a task is urgent or not, important or not is
subjective and will differ from one person to another.
Tools: Time management matrix 463
The time-management matrix
Urgent Not Urgent
I (MANAGE) II (FOCUS)
• Crisis • Preparation/planning
• Medical emergencies • Prevention
Important
• Pressing problems • Values clarification

• Deadline-driven projects • Exercise
• Last-minute preparations • Relationship building
for scheduled activities
• True recreation/relaxation
Quadrant of Quality and

Quadrant of Necessity
Personal Leadership
III (AVOID) IV (AVOID)

• Interruptions, some calls • Trivia, busy-work
• Some mail and reports • Junk mail
Not Important
• Some meetings • Some phone messages/

email
• Many ‘pressing’ matters
• Time wasters
• Many popular activities
• Escape activities
• Viewing mindless TV shows
Quadrant of Deception Quadrant of Waste

Most inexperienced people, and people who are neither good

at time management, nor at managing their own environment,
tend to spend most of their time in boxes 1 and 3. Poor time
managers tend to prioritise tasks (and thereby their time),
according to who shouted the last and loudest (interestingly,
loudness normally correlates to seniority, which discourages
most people from questioning and probing the real importance
and urgency of tasks received from bosses and senior managers).
Any spare time is typically spent in box 4, which only comprises
aimless and non-productive activities. Most people spend the
least time of all in box 2, which is the most critical area for
success, development and proactive self-determination.
II) What
Ideas for managing tasks
First quadrant
The tasks in this quadrant are those which need to be performed

right away. The manager should evaluate the importance and
urgency of such tasks, and prioritise them according to their
relative urgency. If two or more tasks appear equally urgent,
discuss and probe the actual requirements and deadlines with
the task originators or with the people dependent on their
outcomes. A manager should help the originators of these
demands to reassess the real urgency and priority of these tasks.
They should include activities that you have previously planned
in box 2, but which move into box 1 when the time slot arises. A
manager will have to look for ways to break a task into two stages
if it is an unplanned demand – often a suitable initial ‘holding’
response or acknowledgment, with a commitment to resolve or
complete at a later date, will enable him/her to resume other
planned tasks.
Second quadrant
These tasks are most critical to success, and yet tend to be

the most neglected. Activities here include planning, strategic
thinking, deciding direction and aims, etc., which are all crucial
for success and development. A manager must plan time slots
for doing these tasks and, if necessary, plan where they can be
carried out free from interruptions, or ‘urgent’ matters from
quadrants 1 and 3 will take precedence. A manager should break
big tasks down into separate logical stages and plan time slots
for each stage, using project management tools and methods.
Having a visible schedule is the key to being able to protect these
vital time slots.
Third quadrant
A manager must scrutinise these demands ruthlessly, and help

(even your boss and your senior managers) to reassess the real
importance of these tasks. He/She should practise and develop
the ability to explain and justify why it is not possible to carry
them out.
Where possible, he/she should reject and avoid these tasks

immediately, informing and managing people’s expectations
and sensitivities accordingly. The manager should explain why
the tasks cannot be done and find another way of achieving what
is required, which might involve delegation to another person,
or reshaping the demand into something more strategic, with a
more sustainable solution.
A manager should look for reasons why demands in this area

are repeated and try to prevent their reoccurrence. This can be
done by educating and training others, including customers,
suppliers, fellow staff and superiors, to identify long-term
remedies, not just quick fixes. For significant repeated demands
in this area, the manager can create a project to resolve the

cause, which will be a quadrant 2 task. He/She should challenge
habitual systems, processes, procedures and expectations – for
example, «we’ve always done it this way». The manager should
help others to manage their own time and priorities so that they
do not ‘bounce’ their pressures on to someone else. Old policies
and assumptions should be questioned to assess whether or not
they are still appropriate.
Fourth quadrant
The activities in this quadrant are not tasks; they are habitual
comforters which provide a refuge from the effort of discipline
and proactivity. These activities affirm the same ‘comfort-seeking’
tendencies in other people; a group or entire department doing
a lot of quadrant 4 activities will create a non-productive and
ineffectual organisational culture.
These activities have no positive outcomes, and are therefore

demotivating. They are often stress related, so a manager must
consider why he/she carries out these tasks and if there is a
deeper root cause then it should be addressed.
The best method for stopping these activities, and for removing
the temptation to gravitate back to them, is to have a clear
structure or schedule of tasks for each day, which the manager
is able to create in quadrant 2.
III) Summary
Whenever possible a manager can assign some of the tasks to a

capable colleague or an employee as long as that person has the
right skills and knowledge to perform it.
Great time management is one of the most important skills
a person can develop; it takes practice to manage your time
effectively.
IV) Bibliography
Covey, Stephen R.,(1989), The Seven Habits of Highly Effective

People, Simon and Schuster, ISBN 0-671-66398-4
Web-o-graphy
http://www.srds.co.uk/cedtraining/handouts/hand09.htm
http://www.smallfarmsuccess.info/management/print_671.cfm
http://www.timethoughts.com/timemanagement/
importance-time-management.htm
468 Tools: Total Quality Management
Total Quality Management

I) What is it?
In society today quality plays an important role in customer
satisfaction. Before understanding the concept of ‘total quality
management’ (TQM) one must define quality. Quality is said
to be “the ability to satisfy, or even exceed, the needs and
expectations of the customer”1. Others define it as: “Quality is
fitness for use”2, or “Quality is a conformance to requirements
or specifications”3.
Total Quality Management is an organisational management

approach to long-term success through customer satisfaction.
There are numerous definitions of TQM, but one recent
definition says it is “A way of life for an organisation as a whole,
committed to total customer satisfaction through continuous
process of improvement, and the contribution and involvement
of people”4.
TQM principles are also known as total quality improvement,

world-class quality, continuous quality improvement, total
service quality, and total quality leadership.
TQM is a quality-centred, customer-focused, fact-based,

team-driven, senior-management-led process to achieve an
organisation’s strategic imperative through continuous process
improvement.
The word “total“ in Total Quality Management means that

everyone in the organisation must be involved in the continuous
improvement effort; the word “quality“ shows a concern for
customer satisfaction; and the word “management“ refers to the
people and the processes needed to achieve the quality.
1
Mullins, Marketing Management: A Strategic Decision-Making Approach, International Edition, 1998
2
Juran, Juran’s Quality Handbook, Mc Graw Hill, New York,
3
Crosby, Philip B., Quality Without Tears: The Art of Hassle-Free Management, Plume Books,
New York, 1985
4
Mullins, Marketing Management: A Strategic Decision-Making Approach, International Edition, 1999
Tools: Total Quality Management 469
TQM is very different from other management styles in that it

recognises that the quality as determined by the provider might
be much different from the quality as perceived by the receiver.
TQM focuses on process rather than outcome.
The key principles of TQM include management commitment,

employee empowerment, fact-based decision-making,
continuous improvement and customer focus.
An ISO implementation is the basis for a TQM implementation.

ISO 9000 is a set of Quality System Management Standards.
Where there is an ISO system, about 75 percent of the steps are
in place for TQM. The requirements for TQM can be considered
ISO plus. In short, implementing TQM is being proactive about
quality rather than reactive.
II) When can it be used?
Total Quality Management requires an organisational

transformation: a totally new and different way of thinking and
behaving. This transformation is not easy to achieve.
TQM it is not for the weak or the statistically untrained. At first

glance, many TQM techniques may seem simple and based on
common sense, but they must be understood and used correctly
for TQM to function properly.
Many companies have difficulties in implementing TQM.

Surveys by consulting firms have found that only 20 to 36
percent of companies that have undertaken TQM have achieved
either significant or even tangible improvements in quality,
productivity, competitiveness or financial return. As a result,
many people are sceptical about TQM. However, when you look
at successful companies you find a much higher percentage of
successful TQM implementation.
III) Example: “Quality and participation at Xerox©”
In many ways, Xerox is a microcosm of what has happened to

much of American industry. Many of you will remember the first
plain paper copier, the Xerox 914 which was introduced in 1959,
which quickly created an entire new industry. Some people have
called the 914 the single most successful product ever made. It
launched Xerox into an era of feverish growth and success.
But with two decades of success, Xerox became complacent and

took its eyes off both the customer and the competition. The
company saw the Japanese coming at the low end of the market,
but it did not take the threat seriously. It went on believing that
it would always be successful, even as its market share began to
shrink. After all, Xerox people told themselves, this was their
industry as they had created it.
Fortunately, Xerox reacted in time. In the late 1970s, the

company started to take a long, hard look at what Xerox was
doing and how the business was being run. And it started to
take an equally hard look at how its competitors were running
their business.
Xerox was startled by what it found. One of the first things it

realised was that its costs were too high – and not just a little
high. In fact, the Japanese were selling their small machines
for what it cost Xerox to make their own. Xerox assumed that
because the machines were low cost, they were of low quality
– it was wrong! Then it tried to convince itself that the Japanese
could not be making money. Wrong again! They were profitable.
That woke Xerox up in a hurry and it went to work in earnest to
begin closing the gaps.
It realised that to be a world-class competitor in the 1980s and

1990s, it had to challenge everything it had done in the past.
It had to change dramatically – from the way it developed and

manufactured its products to the way it marketed and serviced
them.
After about five years of being in the process of changing the

corporation, and although there is still a long way to go, the
results are gratifying:
• Reduction of average manufacturing costs by over
20 percent, despite inflation
• Reduction in the time it takes to bring a new product to
market by up to 60 percent
• Substantial improvement in the quality of products.
Xerox is perhaps the first American company in an industry

targeted by the Japanese to regain market share. And it has done
so without the aid of tariffs or protection of any kind.
Paul A. Allaire of Xerox says: “It’s not magic; it’s involvement.

People sometimes ask how we are doing it at Xerox – how we
have reversed our slide and begun the long, tough road back.
There is no magic formula. We are doing it by involving all of
our people in problem-solving and quality improvement. The
entire management team has a deep and real commitment
to employee involvement. Our incentive is a powerful one –
survival as a successful business entity.”5
5
By Paul A. Allaire and Norman E. Rickard, “Xerox Corporation
Copyright by the Association for Quality 1989”, editor at 513-381-1959
Total Quality Management was developed in the mid-1940s

by Dr W. Edward Deming who at the time was an advisor in
sampling at the Bureau of Census. He later became a professor
of statistics at the New York University Graduate School of
Business Administration. He had little success convincing
American businesses to adapt to TQM but his management
methods did gain success in Japan.
After World War II, General MacArthur took 200 scientists and
specialists, including Dr Deming, to Japan to help rebuild the
country. While working on the Japanese census, Dr Deming was
invited by the Japanese Union of Scientists and Engineers to give
lectures on his statistical quality techniques. Eventually, many
Japanese manufacturing companies adopted his theories and
were able to produce quality products at reduced costs.
While the Japanese business world was concentrating on

producing quality products, businesses in the US were more
concerned with producing large quantities of products. Their
emphasis on quantity at the expense of quality let the Japanese,
with their inexpensive, high-quality products, gain a substantial
foothold in American markets.
The success of TQM through Deming’s approach can be seen

in Japanese industry (Honda, Toyota and Mazda are examples
of this).
Dr Deming’s universal 14 points for quality management are

the foundation of Total Quality Management and guide the
entire TQM process. In the 1970s and 1980s, many American
companies, including Ford, IBM, and Xerox began adopting
Deming’s principles of TQM. This gradually led to their regaining
some of the markets previously lost to the Japanese.
Juran developed the idea of a quality trilogy: quality planning,

quality improvement and quality control. These are three aspects
of company-wide strategic quality planning.
Ishikawa’s biggest contribution is in simplifying statistical

techniques for quality control in industry. At the simplest
technical level, his work has emphasised good data collection
and presentation, the use of Pareto Diagrams to prioritise quality
improvements, and Ishikawa Diagrams. He also introduced
Quality Circles.
In the 1970s, Crosby also did a considerable amount of work on

TQM – he is best known for his work on the cost of quality.
Although TQM gained its prominence in the private sector,

in recent years it has also been adopted by some public
organisations.
V) Bibliography
• Cartin, T. J., “Principles and Practices of TQM”, 1993,

Milwaukee, Wisconsin, Quality Press
• Garvin, D. A., “What does ‘product quality’ really mean?”,
1984, Sloan Management Review, 26(1), p 24-43
• Omachonu, V. K. and Ross, J. E., “Principles of Total Quality”,
1994, Delray Beach, Florida, St Lucie Press
• Saylor, J. H., “TQM Simplified. A Practical Guide”, 1996,
(2nd ed.), New York, McGraw-Hill.
Web-o-graphy
http://jobfunctions.bnet.com/OPERATIONS/Quality/
Total+Quality+Management/
http://tkdtutor.com/05Instructors/TQM.htm
http://www.managementhelp.org/quality/tqm/tqm.htm
http://www.ischool.utexas.edu/~rpollock/tqm.html
http://accurapid.com/journal/21quality.htm
http://home.att.net/~iso9k1/tqm/tqm.html
“Technology and Operations Management”, California
Polytechnic and State University
(http://www.csupomona.edu/~hco/301/08-TQM.ppt)
“The Quality Tools Cookbook”, Prof. Sid Sytsma & Dr
Katherine Manley, Ferris State University
(http://www.sytsma.com/tqmtools/tqmtoolmenu.html)
“Review of Japanese and Other Quality Tools”, Engineering
Science 130, Vanderbilt University (http://www.vanderbilt.edu/
Engineering/CIS/Sloan/web/es130/quality/qtooltoc.htm)
Deming website (http://deming.org/)
“Total Quality Practices of Award Winning Builders”

(http://www.toolbase.org/Docs/ProgramsNav/
ForBuilders/3014_Total_Quality_Practices_of_Award_
Winning_Builders_2001_c.ppt?TrackID=&CategoryID=908&D
ocumentID=3014)
Index 477
Index
A
Abraham Maslow 266
Abstract Conceptualisation 183
Accessibility 27
Accommodation 186
Action-Centered Leadership 144
Active listening 17, 20, 442
Activity-Based Costing 150
Advocate 69
Alfred Adler 233
Alfred Chandler 218
Alfred Sloan 116, 123
Alibi 52
Analysis 60, 63
Anger 53
Aristotle 425
Arthur D. Little 282
Arthur D. Little Maturity Matrix 282
Assimilation 186
Avarice 53
B
Baker Foundation 150
Beckhard 238
Benchmarking 156
Big Bang theory 178
Bill Cockburn 161
Boston Consulting Group 168, 216
Bruce D. Henderson 216
Budgets 82
Building trust 440
Business plans 82
Business Week 132
478 Index
C
Carl Gustav Jung 302
Carnegie-Mellon University 120
Case Western Reserve University 180
Cash Cow 168
Casio 133
Catalytic 63
Cathartic 63
Change 92, 95
Change process 97
Charismatic leadership 147
Chester Barnard 116
C. K. Prahalad 132
Claire Forrest 190
Clear language 18
Client 35
Coach 69
Coaching 67
Coaching skills 440
Cockman 58
Codification 434
Collecting data 55
Communicate 99, 206
Communication 22, 23, 39, 440
Company accounts 82
Compaq Computer Corporation 418
Competence 36
Comprehensive questioning 17
Confidence and self-esteem 17, 20
Confidentiality 37
Conflict of interest 41
Conseil 10
Consilium 10
Contract 74
Coordinator 308
Core Competence 133
Corporate culture 200
Index 479
Corporate Strategy 116 , 117, 120, 123

Counsellor 64, 68
Creativity 112
Cycle of learning/Cycle of training 180
D
Data collection 81
David A. Kolb 180
David Borgenicht 164
David Hawkins 138
Declaration 35
Delegate 28
Delegation 29
Deliverables 36
Delphi Method 192
Dependence 367
Diagnosis 81
Disclosure 40
Dissatisfaction 241
Distributed leadership 147
Diversification 125
Dog 168
Driving forces 230
Due care 38
E
Economic benefit 74
Edward de Bono 410
Edward Thorndike 233
Eight steps for major change 198
Elaboration 434
E.L. Thorndike 266
Emotional maturity 22, 24
Empathic listening 381
Energy man 52
Entry phase 72, 74
480 Index
Ethical 34
Ethics 25, 33
Ethics and integrity 22
Expert 64
F
Facilitator 65, 66, 307
Fearlessness 17
Fear of change 95
Fees 36, 47
Force Field Analysis 230
Ford Motor Company 254
Formula of change 236
Framework 19
Future leadership 147
Futurologist 113
G
Gary Hamel 132
GE/McKinsey Portfolio Analysis Matrix 244
General MacArthur 473
General Motors 123, 298
General Problem Solver (GPS) 138
George A. Miller 392
Ghemawat Pankaj 125
Glocal thinking 18, 21
Greediness 53
Gurus 111
Index 481
H
Harvard Business School 116, 150, 198, 216
Harvard University 132
Hawkins-Simons theorem 138
Henry Harley Arnold 195
Henry Mintzberg 434
Herbert Simon 138
Hersey and Blanchard 147
Hewlett-Packard 418
H. Igor Ansoff 120
Hirotaka Takeuchi 424
Hofer Schendel 282
Honesty 26
Honey & Mumford 182
Humour 19
Humour and perspective 17
I
Identification 60, 61
Igor Asnoff 218
Ikujiro Nonaka 424
IMC 33
Implementation 90
Incorruptibility 25
Indecision Maker 166
Independence 367
Independent 14, 35
Inducements 42
Innovator 306
Instantiation 18
Institute 35, 44
in·teg·ri·ty 25
Integrity, independence, objectivity 35, 40
Intellect 17, 20
Intellectual abilities 22
Intelligent 20
Interdependence 367
482 Index
International Monetary Fund 122

Interviews 84
ISO 469
ISO certificates 72
J
Jack Mahoney 34
James Holec Jr. 55
James McGregor Burns 147
Jealousy 53
JIT 252
John Adair 144
John Deere Company 150
John Locke 33
John Milligan 68
John P. Kotter 81, 198
Johnson 150
Joseph Juran 314
Joshua Piven 164
Jung 296
just do it 91
Just-in-time management 252
K
K 105
Kai John 123
Ken Blanchard 404
Kenichi Ohmae 128
Kenneth R. Andrews 116
Kerry Fouché 71
K E Sveiby 107
Key Process Indicators (KPIs) 160
key suppliers 82
Kipling 11
Knowledge 105
Index 483
L
Laziness 53
Leader behaviour 407
Lose-lose 380
Lust 53
M
Managerial grid 257
Margaret Fuller 105
Market development 125
Market growth 169
Market penetration 125
Market share 169
Marvin Lieberman 227
Maslow’s five-stage Hierarchy of Needs 266
McKinsey 128, 132
McKinsey 7S framework 457
Member 35
Mentor 307
Michael E. Porter 332
Michael Porter 284
Milwaukee 138
Mintzberg, Henry 123
Mission 17
Monitor 308
Motivation 440
Myers Briggs Type Indicator 296
N
Netflix 137
Nguyen Duc Thong 457
Niccolo Machiavelli 95
Nokia 299
Non-poaching 38
484 Index
O
Objectivity 43
Observation 84
one-man-show 51
Open Space Technology 310
Orientation 60
P
Parasuraman 355
Patience 12
Pareto Principle 314
Paul A. Allaire 472
Paul Barber 68
Paul Hersey 404
Personal conduct 48
Personal drive and initiative 22
Personnel records 82
PEST Analysis 324
Peter Drucker 425
Peter von Loesecke 55
Philip Sadler 67
Philip Selznick 218
Physical and mental health 22
Physiological needs 268
Plato 425
Porter 425
Porter’s Five Forces 330
Porter’s three generic strategies 340
Prahalad 425
Presentation 78
Presentologist 113
Pride 53
Privacy of information 43
Product development 125
Profession 44
Professionalism 17
Proposal presentation 88
Protector 51
Publicity 48
Index 485
Q
Qualities 22
Question Marks 168
Questionnaires 84
Quick-start 57
R
Rapid framing 17
Relationship 58
Researcher 68
Resolution 60, 66
Respect 20
Restraining forces 230
Reuben Harris 240
Richard Beckhard 240
Richard Nixon 285
Robert S. Kaplan 150
Russell L. Ackoff 112
S
Sales records 82
Sanctum sanctorum 28
Sandhurst 144
Sartre 425
Senge 425
SERVQUAL 344
Shareholders 83
Shareholder value approach 396
Shigeo Shingo 254
SIPOC diagram 400
Sir Francis Bacon 105
Situational leadership 404
Six Thinking Hats 410
Social responsibility 459
Socrates 105
Solutions 86
Sony 133
Spokesman 52
Stakeholders 58
486 Index
Star 168
Stephen R. Covey 364, 390, 462
Strategic intent 432
Strategic management 217
Strategic Planning from Mintzberg 434
Strategic thinking 123
Strategy 99, 118
Strategy Pyramid 433
Stress 24
Stress resistance 22
Subcontracting 37, 67
Sun Tzu 17
Superordinate Goals 459
Supervisory and coaching skills 440
Supportive 63
Sustainability 459
SWOT 117, 218
SWOT Analysis 450
Synergise 383
T
Taiichi Ohno 254
Task 145
Team 145
Technical 66
The Boston Matrix 168
The Buddy 165
The Cattell 16 PF Personality Profile 174
The Control Freak 165
The Experience Curve 216
The management styles grid (Blake and Mouton) 256
The Seven Habits of Highly Effective People 364
The spiral of knowledge 424
The Supreme Delegator 165
The Wall Street Journal 132
The Workaholic 165
The Yes/No Manager 165
Index 487
Thiem-Tom 10.5 S framework 456

Time management matrix 462
Tim Laseter 54
Tôn That Nguyên Thiêm 457
Total Quality Management 468
Toyota Production System 254
TQM 468
Trainer 65
Training 67
Transformational leadership 147
U
Understanding people 22
University of Illinois 178
University of Surrey 144
University of Texas 256
UPS 160
V
Vilfredo Pareto 314
Vision 99, 199 , 242
W
Walter Mischel 178
W. Edward Deming 473
William Ian Beardmore Beveridge 51
Win-lose 379
Win-win 379
World Bank 122
X
Xerox 471
Xerox Corporation 156

An Innovation View of Management Consultancy

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An Innovation View of Management Consultancy

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An Innovative View of

Introduction to the second edition

The chapter on ‘Fear of change’ (or perhaps it should be called ‘Resistance

Following a year of reﬂection, it became apparent that certain tools and

In the meantime, it is my duty and honour to thank my father, Professor

It introduces the readers to the people factor in the domain of consulting,

Peter Sørensen, CMC

My problem is, of course, one of choice: knowing what to put in the

I am also grateful for input from some of my students, from Peter

Even consultancy has an origin

With reference to the English language, I have another problem:

Consequently, the word ‘consultancy’ must also be banished, although

If you can keep your head when all about you

Consultants must behave like normal people, with normal reactions

If you can keep your head when all about you

This is a very surprising statement: try to be cool and to avoid panic

If you can trust yourself when all men doubt you,

If you can wait and not be tired by waiting,

Patience is one of the major strengths a consultant should have. This

If you can dream – and not make dreams your master;

One of the most important characteristics of good consultants is that

If you can meet with triumph and disaster

If you can talk with crowds and keep your virtue,

It is not always easy, I know, but it is worth trying. Trying what?

If neither foes nor loving friends can hurt you;

You should be completely independent. Nobody should be able to

And – which is more – you can be a consultant now.

Chapter 1: Professionalism: what are the

As a ‘user’ of consultants it is interesting to feel the way they work, to try

What personal attributes do I need?

Imagine a consultant telling the management that the only problem in

Another kind of fear, is that of being in a state of permanent confrontation

When starting a new mission the consultant receives information from

As in daily life, everything turns on humour and perspective. People

In a similar way, a perspective ‘way of thinking’ is also necessary. Those

Intellect: this word, of course, is very close to ‘intelligent’ but is more

helping the other party in the discussion to reveal everything he knows

This is, of course, linked closely to comprehensive questioning. Both

Most people think they use straightforward language, but unfortunately

What are my qualities?

As I have already mentioned at the beginning of this chapter, this is

Do I have the right educational background to do this job? I know

‘university’ – from the Latin word universitas meaning ‘the whole,

In order to understand people it is necessary to talk and listen a lot.

Communication is not only the basis for business in general, but it is a

Emotional maturity has nothing to do with age; it is about how people

Stress is not only due to an exaggerated amount of work – in which

In the consultancy business, the reasons for stress tend to be similar,

One of the characteristics I enjoy observing when young consultants

I have already dedicated a whole chapter to ethics, and each one of

3. The quality or state of being complete or undivided:

Previously, I mentioned mental health in combination with stress

What more do I need?

Never hire people who are not adequately qualiﬁed: it is better to

One important thing in the consultancy business, and certainly at the

Here we come to a topic I like very much because it is very simple:

It is very important to work in a good atmosphere for the simple reason

Finally, the beginner consultant needs good support resources. Nobody

Know how to use time

This sub-chapter has nothing to do with the well-known ‘time-

All these points can, of course, be used in a variety of lifestyles, and in

Delegation is the masterpiece of the real organiser, of the excellent boss,

responsibilities, and will be grateful to you because of this notable sign

not necessarily a place where one is physically alone. It has to be an