Management Theories and Strategies for the Electronics Industry

Introduction

"A goal is not a strategy. Strategy involves coherent and consistent decisions, coordinated resource allocations, and theories of action (outcome and response) that may help indirectly achieve a goal unattainable by direct frontal attack…" (Teece, 2010, p. 298).

When the economy is in a slump and times are tough, it is all the more important for businesses — in particular, the electronics industry — to embrace management theories that can bring the best possible results. This paper presents a variety of management approaches that reflect the diversity of employees in today's workplace. The views and strategies discussed here also address the flexibility that management must have in order to adjust to a changing workforce culture, one that innovative management must come to understand and address.

Presently, the problem for the electronics industry is the same problem that a myriad of companies and industries are suffering through: a stagnant economy that has created millions of layoffs, production crises caused by flat sales, and management changes brought on by recessionary conditions. However, sometimes the best opportunity for a company to reconfigure or re-evaluate its management theories and strategies arises during a slowed-down period in its production cycle. A company that has struggled under a strictly vertical approach to authority can use a slower period to embrace change management.

Of the several theories that have particular appeal to electronics companies — presented in this paper — change management has the broadest appeal and seems to be the easiest to incorporate into company culture. That, of course, assumes that the company is sufficiently forward-looking to be willing to change its approach to management. Change management takes the position that, while shareholders are very important to a company's economics and fiscal underpinnings, the thrust of management should not be to simply please shareholders. Instead, it should focus on the community of workers who come in each day, contribute their labor, and produce the goods and services that make the company function.

The philosophy embedded within change management theory holds that, in order to improve morale and production, employees should be made to feel empowered. With change management in place, production success should largely take care of itself. As for shareholders, they will be financially rewarded due to the energy and productivity of employees who operate within a more horizontally structured organization.

How Managers Are Expected to Function: U.S. Bureau of Labor Statistics

According to the U.S. Bureau of Labor Statistics (BLS) white paper on "Computer and Information Systems Managers," organizations that require a highly qualified team of Information Technology (IT) professionals — which electronics companies certainly do — will grow faster than the average for most occupations. It is no secret that electronics is a field that is expanding rapidly, with a constant stream of new devices that consumers need and want.

Within an electronics company, the chief technology officer (CTO) is responsible for evaluating the latest and most innovative technologies, and must be able to embrace a management theory in order to best train and supervise workers in their use. The BLS explains that the chief information officer (CIO) oversees the CTO; prior to purchasing new technologies and training staff, the CTO must convince the CIO that the investment is worthwhile and will yield a return (BLS, p. 1).

Another critical role within an electronics company is that of the IT director or director of Management Information Systems (MIS). This person must ensure that adequate services are in place to maintain "the availability, continuity, and security of data and information technology services" (BLS, p. 2). The BLS projects that employment of computer and information systems managers will grow 17 percent over the next decade — the fastest growth rate of any occupation in the United States (BLS, p. 3). The average annual salary for an IT manager in an electronics firm is reported at $112,210 (BLS, p. 4). According to the BLS, assuming that a company is well run with strong management theories in place, workers with specialized technical knowledge, good communication skills, and business acumen will find ample job opportunities.

Bad Management Theories Destroy Good Management Practices

Sumantra Ghoshal asserts that business schools have been teaching the wrong management theories. In fact, Ghoshal believes that business schools have been "propagating ideologically inspired amoral theories," and as a result have "actively freed their students from any sense of moral responsibility" (Ghoshal, 2005, p. 76). What Ghoshal means, in essence, is that because business schools are not teaching values as they should, there is today "the general delegitimization of companies as institutions and of management as a profession" (p. 76). Ghoshal contends that academic research into business and management has had "significant" and "negative" influences on the very practice of management (p. 76).

For example, the author points out that while theories in the physical sciences can be proven, theories in the social sciences tend to be "self-fulfilling" (p. 77). In other words, anyone can create a management theory that works in a particular environment — but does it carry morality and human values? The theory of subatomic particles does not change the behavior of those particles, Ghoshal explains (p. 77). Similarly, a theory of management does not inherently change the way people behave in an electronics business or any other business. However, if managers genuinely embrace the theory, it can gain "sufficient currency" to change the behavior of all actors within the company (p. 77).

Ghoshal attacks the "agency theory" of management, which holds that shareholders are the "principals" and managers are merely "agents" carrying out the will of shareholders. When the agency theory is in place, Ghoshal explains, several things typically happen: independent directors are expanded on corporate boards to "effectively police management"; the roles of board chairman and chief executive officer are split to lessen the CEO's authority; markets for corporate control are created to encourage hostile takeovers; and management is paid in stock options to "ensure that they relentlessly pursue the interests of the shareholders" (p. 80).

To confirm his disapproval of the agency theory, Ghoshal reviewed 54 studies examining the performance effects of such board compositions. There was no "significant effect" on corporate performance found in any of the 54 studies. In critiquing another 31 studies focused on separating leadership roles — such as splitting the roles of board chairman and CEO — Ghoshal found that such approaches do not affect corporate performance "in any way" (p. 80).

Leadership Strategies from Effective Business Leaders

Michael Abrashoff was the commander of the Navy ship USS Benfold, which, before his arrival, was an unproductive vessel with all the latest technology but none of the leadership required to make it as efficient as it should have been. In his book It's Your Ship, Abrashoff reflects a management style that any company could adopt. He called it "listening aggressively," and to ensure full communication, he personally interviewed five sailors a day until he had spoken with all 310 crew members (p. 45). "I became their biggest cheerleader. How can you treat people poorly when you know and respect them?" he stated (p. 46). Beyond listening, Abrashoff demonstrated good communication by acting on his crew's suggestion to replace ferrous-metal bolts with stainless steel bolts, so that crewmembers would not have to sand down rust every month. He also held weekly cookouts and stood in line with the crew to demonstrate equality.

One of Abrashoff's heroes was Peter Drucker, often referred to as the "father" of modern management theory. Drucker predicted the emergence of the innovative knowledge worker — the kind of talented employee that electronics firms hire as often as they can — and he developed a management style that sought to "embrace team members' creativity and intellectual contributions," according to M. E. Oss, writing in Behavioral Healthcare. Drucker developed the idea of decentralizing the workplace and viewing it as a "human community" built on full trust and deep respect for the worker, not merely a place where profit is the sole motive (Byrne et al., 2005). Drucker treated workers as "assets" rather than "liabilities," and long before other management leaders, he recognized that the knowledge worker would become very important as the "essential capital" of the new economy (Byrne et al., 2005).

Jack Welch is widely regarded as a charismatic and innovative manager credited with transforming General Electric from a stagnant corporation into a flourishing, successful company. His work in the 1980s as CEO is seen as a milestone in the development of innovative management theories and strategies. His theory is threefold: engage employees, satisfy customers, and build solid cash flow. It is not by coincidence that he lists employee engagement first, since employees are the backbone of any company. His theory is to "energize" employees to the point that they believe in the company's mission. He suggests measuring "employee engagement" at least once annually through "anonymous surveys," allowing employees to speak freely about the company. Key questions include: How do employees feel about "the strategic direction" of the company and its impact on their career? Do they feel that the company "cares" about them and has given them "the opportunity to grow?" (Welch, 2010).

The Starbucks brand has been a powerful force in the United States for many years. The CEO of Starbucks, Howard Schultz, has a management theory worthy of attention — whether in the electronics field or the coffee business. First, Schultz argues that management must have a vision. Every company has to stand for something, and "your company's vision must be in your mind every day" (Vogan, 2006). The second key trait is passion: managers must "light the fire" in the bellies of employees (Vogan, 2006). The third trait is becoming a "great decision maker," the fourth is becoming "a team builder," and the fifth is having "character" — without which all of the other four keys are "for naught" (Vogan, 2006).

The CEO of the Virgin brand, Richard Branson, believes that the people working for the company are "the heart and soul of our brand," and that by offering customers a "better experience" with some fun along the way, management can attract "very bright and enthusiastic people" as employees (Branson, 2010). Branson argues that business schools teach marketing in terms of brand values as though "they are the end result of a scientific process" (Branson, 2010). His theory, however, is to rely on intuition, empathy, and creativity rather than "theoretical" approaches (Branson, 2010). For electronics companies, adopting a management theory that taps into the brightest ideas means carefully studying the strategies of leaders like Branson, Schultz, Drucker, Welch, and Abrashoff.