Managing
Chapter 1
Foundations of Management
• Managing
• The External Environment
and Organizational Culture
• Managerial Decision
Making
Planning:
Delivering Strategic Value
• Planning and Strategic
Management
• Ethics and Corporate
Responsibility
• International Management
• Entrepreneurship
Strategy Implementation
Organizing: Building
a Dynamic Organization
Leading:
Mobilizing People
Controlling:
Learning and Changing
• Organization Structure
• Organizational Agility
• Human Resources
Management
• Managing the Diverse
Workforce
•
•
•
•
• Managerial Control
• Managing Technology and
Innovation
• Creating and Managing
Change
Leadership
Motivating for Performance
Teamwork
Communicating
1
P ART ONE
FOUNDATIONS OF MANAGEMENT
chapter
1
“
Managing
Management means, in the last analysis, the substitution of thought for brawn and muscle, of knowledge
for folklore and tradition, and of cooperation for force.
— Peter Drucker
”
LEARNING OBJECTIVES
CHAPTER OUTLINE
After studying Chapter 1, you will be
able to:
Managing in the New Competitive
Landscape
Globalization
Technological Change
Knowledge Management
Collaboration across “Boundaries”
Managing for Competitive Advantage
Innovation
Quality
Service
Speed
Cost Competitiveness
Delivering All Five
The Functions of Management
Planning: Delivering Strategic Value
Organizing: Building a Dynamic Organization
Leading: Mobilizing People
Controlling: Learning and Changing
Performing All Four Management Functions
Management Levels and Skills
Top-Level Managers
Middle-Level Managers
Frontline Managers
Working Leaders with Broad Responsibilities
Management Skills
LO 1
Summarize the major challenges of
managing in the new competitive
landscape. p. 4
LO 2
Describe the sources of competitive
advantage for a company. p. 9
LO 3
Explain how the functions of
management are evolving in today’s
business environment. p. 14
LO 4
Compare how the nature of
management varies at different
organizational levels. p. 18
LO 5
Define the skills you need to be an
effective manager. p. 20
LO 6
Understand the principles that will
help you manage your career. p. 22
You and Your Career
Be Both a Specialist and a Generalist
Be Self-Reliant
Be Connected
Actively Manage Your Relationship with Your
Organization
Survive and Thrive
Management Close-Up
CAN ELON MUSK KEEP TESLA MOTORS RUNNING?
A small player in the struggling global auto market,
future for electric cars. But the two often disagreed
California-based start-up Tesla Motors is trying to
about how to move the company forward. Costs and
revolutionize its industry. Headed by chief executive
conflicts escalated until 2007, when the board of direcElon Musk, Tesla has an ambitious vision: to mass protors ousted Eberhard.
duce electric cars that end
With Tesla at a turning
Americans’ dependence on
point, Musk helped the comTo be effective, a manager is often
fossil fuels and cut greenhouse
pany regroup, introducing its
compelled to create change. But
gas emissions. The South
first model, the all-electric
bringing about change is hard, especially
African–born Musk, who holds
Roadster, in 2008. The twoin a difficult business environment.
degrees in both physics and
seat sports car goes from 0 to
As you read this chapter, think about
finance, predicts that by 2030,
60 miles per hour in four secthe challenges Elon Musk faces as his
the majority of cars made in the
onds and hits a top speed of
company attempts to fundamentally
United States will be electric.
135 mph. Powered solely by a
change the way Americans think about
A bold prediction? Maybe.
lithium-ion battery, the Roadtheir cars.
But Elon Musk is a skilled manster operates without engine
ager. By his thirties he had led
noise and can travel nearly
two successful Internet compa250 miles on a single charge. It
nies: Zip2 (later sold to Compaq) and X.com (which
also doesn’t emit any gases to the environment.
morphed into what is now known as PayPal). In 2004
Despite its substantial $109,000 price tag, the Tesla
Musk became chairman of Tesla Motors, a start-up
Roadster sold out almost immediately. Today, Tesla
founded the year before by CEO Martin Eberhard. Selfships 10 of the cars each week and has a year-long waiting list.1
professed car geeks, Musk and Eberhard saw a bright
{
}
4
Part One
Foundations of Management
Tesla Motors’ Elon Musk is arguably one of the most interesting leaders in business
today. He combines strong creative skills with a keen ability to see the big picture—
and he’s been remarkably successful at building organizations. Of course, not every
manager or organization succeeds. A recent story of failure that shocked many Americans involved the care provided to wounded soldiers at the Walter Reed Army Medical Center in Washington, D.C. Reporters investigating outpatient facilities of Walter
Reed—which ranks among the nation’s top military hospitals—discovered that in
some facilities, outpatients were coping with mold, roaches, rodents, and damaged
walls and doors. Many outpatients, some with serious injuries and mental impairments, complained of paperwork problems that kept them from receiving services.
Testifying before Congress, General Richard A. Cody, the Army’s vice chief of staff,
admitted fundamental management problems:
Our counselors and case managers are overworked, and they do not receive enough training.
We do not adequately communicate necessary information. Our administrative processes are
needlessly cumbersome and . . . take too long. Our medical holding units are not manned to
the proper level, and we do not assign leaders who can ensure a proper accountability, proper
discipline and well-being, . . . and our facilities are not maintained to the standards that we
know is [sic] right.2
Major General George W. Weightman, who lost his job as Walter Reed’s commander
as a result of the scandal, acknowledged that the organization had experienced a “failure of leadership.”3
Companies, like individuals, succeed or fail for a variety of reasons. Some of these
reasons are circumstantial. Most are personal and human and include the decisions
managers make and the actions they take.
In business, there is no replacement for effective management. Companies may fly
high for a while, but they cannot do well for very long without good management. It’s
the same for individuals: BusinessWeek’s Managers of the Year succeed by focusing on
fundamentals, knowing what’s important, and managing well. The aim of this book is
to help you succeed in those pursuits.
Managing in the New Competitive Landscape
LO 1
When the economy is soaring, business seems easy. Starting an Internet company
looked easy in the 1990s, and ventures related to the real estate boom looked like a
sure thing during much of the past decade. But investors grew wary of dot-com startups, and the demand for new homes dropped off the table when the economy crashed
in late 2008. At such times, it becomes evident that management is a challenge requiring constant adaptation to new circumstances.
What defines the competitive landscape of today’s business? You will be reading
about many relevant issues in the coming chapters, but we begin here by highlighting
four key elements that make the current business landscape different from the past:
globalization, technological change, the importance of knowledge and ideas, and collaboration across organizational “boundaries.”
Globalization
Far more than in the past, today’s enterprises are global, with offices and production
facilities in countries all over the world. Corporations operate worldwide, transcending national borders. Companies that want to grow often need to tap international
markets, where incomes are rising and demand is increasing. GE, which became a
massive and profitable corporation by selling appliances, light bulbs, and machinery
to U.S. customers, recently announced that it expected its foreign sales to equal its
sales within the United States. GE’s biggest foreign customers are in Europe, but sales
volume in China and India is rising fast.4
Managing
Globalization also means that a
company’s talent can come from anywhere. As with its sales, half of GE’s
employees work outside the United
States.5 Cisco, a leader in equipment
for computer networking, considers
maintaining operations in India to be
an essential tactic for staying competitive. Cisco serves the fast-growing
Indian Internet market at a crucial
time: the growth in demand is attracting low-cost competition from Chinese businesses.6
Another force that is making globalization both more possible and more
inevitable is the Internet. Now that
more than a billion users have come online, more and more of the new users are in
developing nations such as China, India, Russia, and Brazil.7 As people in developing
nations increasingly turn to the power of the Web, they become a force to develop
content in their own languages and suited to their own means of access, such as inexpensive laptops.
The global reach of the Internet pushed Mitch Free to expand his business, MFG.com, into
China. MFG.com runs a Web site where manufacturers that need parts post their specifications online, and suppliers bid to provide those parts. Free, who grew up in a small
town in Georgia and had barely traveled outside the United States, had never planned
to be an international manager, but Chinese suppliers soon began submitting requests to
participate. At the same time, manufacturers were pressing MFG.com to include Asian
suppliers, which often could offer the best prices.
So Free traveled to Shanghai, China. He learned about the business culture, such as
the importance of cultivating business relationships and networks. After a difficult search,
he made a key hiring decision: general manager James Jin, who speaks fluent English, studied global management, and has experience in manufacturing both in the United States
and China. The effort was well rewarded. Jin has helped Free navigate the fast-growing,
ambitious business landscape of his native China. Sales in China accounted for more than
10 percent of MFG.com’s total annual sales and are growing faster than overall sales.8
Companies can get their message to users on every continent and often are expected
to provide service anytime, anywhere. This can affect how and when people work.
Laura Asiala, a manager for Dow Corning, based in Midland, Michigan, supervises
employees in Tokyo, Seoul, Hong Kong, Shanghai, and Brussels. To keep in touch
with them, she may start working at 5:00 a.m. some days and end as late as midnight.
She takes a break from 3:30 to 9:30 each day, and technology makes it possible to do
some of her communicating from home.9
Successful CEOs know that the change from a local to a global marketplace is gaining momentum and is irreversible.10 For example, PepsiCo’s chief executive, Indra
Nooyi, brings a much-needed global viewpoint to a company whose international
business has been growing three times faster than sales in the United States. Nooyi,
who was raised in India and educated there and in the United States, has steered the
company toward more “better for you” and “good for you” snacks with acquisitions
including a nut packager in Bulgaria and a hummus producer in Israel.11
Chapter 1
5
Globalization has changed the face
of the workforce. Management in
this new competitive landscape
will need to attract and effectively
manage a talent pool from all over
the globe.
6
Part One
Foundations of Management
Thus globalization affects small companies as well as large. Many small companies
export their goods. Many domestic firms assemble their products in other countries.
And companies are under pressure to improve their products in the face of intense
competition from foreign manufacturers. Firms today must ask themselves, “How can
we be the best in the world?”
For students, it’s not too early to think about the personal ramifications. In the
words of CEO Jim Goodnight of SAS, the largest privately held software company
in the world, “The best thing business schools can do to prepare their students is to
encourage them to look beyond their own backyards. Globalization has opened the
world for many opportunities, and schools should encourage their students to take
advantage of them.”12
Technological Change
The Internet’s impact on globalization is only one of the ways that technology is
vitally important in the business world. Technology both complicates things and creates new opportunities. The challenges come from the rapid rate at which communication, transportation, information, and other technologies change.13 For example,
after just a couple of decades of widespread desktop use, customers switched to laptop
models, which require different accessories.14 Any company that serves desktop users
has to rethink its customers’ wants and needs, not to mention the possibility that these
customers are now working at the airport or a local Starbucks outlet, rather than in
an office.
Later chapters will discuss
technology further, but here we
Google search sites span the Internet in more than 100 languages.
highlight the rise of the Internet
and its effects. Why is the Internet so important to business?15 It is a marketplace, a means for manufacturing goods
and services, a distribution channel, an information service, and more. It drives down
costs and speeds up globalization. It improves efficiency of decision making. It facilitates design of new products, from pharmaceuticals to financial services. Managers
can watch and learn what other companies are doing—on the other side of the world.
While these advantages create business opportunities, they also create threats as competitors sometimes capitalize on new developments more than you do.
It may be hard to imagine that just a few years ago, going online to order plane
tickets, read the news, or share photos was a novelty. Some online success stories, such
as Amazon, Monster, and Google, are purely Internet businesses. Other companies,
including Barnes & Noble, Best Buy, and Office Depot, have incorporated online
channels into an established business strategy.
The Internet’s impact is felt not only at the level of businesses as a whole but also by
individual employees and managers. Just as globalization has stretched out the workdays of some people, high-tech gadgets have made it possible to stay connected to
work anytime, anywhere. This ability is both a convenience and a potential source of
stress. The stress comes when employees or their supervisors don’t set limits on being
connected. Facilities manager Cherri Chiodo loves the convenience of her BlackBerry
but finds that it sometimes replaces face-to-face communication with family members.
Real estate broker Ted Helgans calls his BlackBerry a “traveling office” and a valuable tool for getting and sharing information. Helgans emphasizes that users can and
should decide when to turn the devices off.17 Jean Chatzkey, an editor for Money magazine, found that she constantly interrupted whatever she was doing to check e-mail
on her Palm Treo. Realizing that the device had become more of a distraction than a
help, Chatzkey began reminding
herself that the messages were not
Among people who work long hours in high-stress jobs, 59% said technology
emergencies; in fact, many came
lengthens rather than shortens their workday.16
from subscriptions that Chatzkey
Managing
Chapter 1
decided she could happily live without.18 Thus, using technology effectively is more than a matter of learning
new skills; it also involves making judgments about when and where to apply
the technology for maximum benefit.
Knowledge Management
Companies and managers face a growing need for good, new ideas. Because
companies in advanced economies have
become so efficient at producing physical goods, most workers have been
freed up to provide services or “abstract
goods” such as software, entertainment,
data, and advertising. Efficient factories
with fewer workers produce the cereals
and cell phones the market demands;
meanwhile, more and more workers create software and invent new goods and services.
These workers, whose primary contributions are ideas and problem-solving expertise,
are often referred to as knowledge workers. Managing these workers poses some particular challenges, which we will examine throughout this book. For example, determining
whether they are doing a good job can be difficult, because the manager cannot simply
count or measure a knowledge worker’s output. Also, these workers often are most
motivated to do their best when the work is interesting, not because of a carrot or stick
dangled by the manager.19
Because the success of modern businesses so often depends on the knowledge used
for innovation and the delivery of services, organizations need to manage that knowledge. Knowledge management is the set of practices aimed at discovering and harnessing an organization’s intellectual resources—fully utilizing the intellects of the
organization’s people. Knowledge management is about finding, unlocking, sharing,
and altogether capitalizing on the most precious resources of an organization: people’s
expertise, skills, wisdom, and relationships. Knowledge managers find these human
assets, help people collaborate and learn, help people generate new ideas, and harness
those ideas into successful innovations.
In hospitals, important knowledge includes patients’ histories, doctors’ orders,
billing information, dietary requirements, prescriptions administered, and much
more. With lives at stake, many hospitals have embraced knowledge management.
For example, at Virginia Commonwealth University (VCU) Health System, a single
information system lets doctors write prescriptions, look up patient information and
lab results, and consult with one another. Billing also is automated as part of VCU’s
knowledge management system, making the process more efficient and connecting with patient data so that it can remind the physician of all the conditions being
treated—and billed for.20 Hospitals may also give patients access to the knowledge
management system so that they can schedule appointments, request prescription
refills, and send questions to their doctors.
Collaboration across “Boundaries”
One of the most important processes of knowledge management is to ensure that people in different parts of the organization collaborate effectively with one another. This
requires productive communications among different departments, divisions, or other
subunits of the organization. For example, British Petroleum wants “T-shaped” managers who break out of the traditional corporate hierarchy to share knowledge freely
Will Wright, creator of “The
Sims” video games, poses with a
computer image of the game. His
newest creation, “Spore,” will
undoubtedly build on the success
of “The Sims.”
knowledge
management
Practices aimed at
discovering and harnessing
an organization’s intellectual
resources.
7
8
Part One
Innovation and collaboration are
the key factors in the phenomenal
success of Cranium. This board
game was the fastest selling
game in history when it was
released in 1998, with 100,000
units sold within seven months.
Creators Richard Tait, left, and
Whit Alexander are shown
here demonstrating their highly
successful board game.
Foundations of Management
across the organization (the horizontal part of the T) while remaining fiercely committed to the bottom-line performance of their individual business units (the vertical
part). This emphasis on dual responsibilities for performance and knowledge sharing
also occurs at pharmaceutical giant GlaxoSmithKline, large German industrial company Siemens, and London-based steelmaker Ispat International.21
For example, Toyota keeps its product development process efficient by bringing together design engineers and manufacturing employees from the very beginning.
Often, manufacturing employees can see ways to simplify a design so that it is easier to
make without defects or unnecessary costs. Toyota expects its employees to listen to
input from all areas of the organization, so this type of collaboration is a natural part
of the organization’s culture. Employees use the software to share their knowledge—
best practices they have developed for design and manufacturing.22 Thus, at Toyota,
knowledge management supports collaboration, and vice versa.
Collaboration across “boundaries” occurs even beyond the boundaries of the organization itself. Companies today must motivate and capitalize on the ideas of people
outside the organization. How can a company best use the services of its consultants,
ad agencies, and suppliers? To obtain the product development software that supports
collaboration between manufacturing and design, Toyota collaborated with a software
developer, PTC. Toyota and PTC together identified how software could support
the company’s strategy of “lean product development,” and they kept meeting regularly to continue improving the software. This collaboration not only helped Toyota
obtain a superior product but also helped PTC improve the value of the software it
offers to its other customers.23
Collaboration with investors helped a pair of entrepreneurs launch their company in the seriously risky business of making games. When Richard Tait and Whit
Alexander developed their unusual board game Cranium, they confidently ordered
20,000 units from a Chinese manufacturer before winning any orders from retailers.
But retailers generally are reluctant to take a chance on new products. The solution
was to collaborate with a different kind of distributor. Howard Schultz, chairman of
the Starbucks coffee chain, thought the game was great, so he let Tait and Alexander
place samples of Cranium in Starbucks outlets, where customers could try playing it.
Customers loved it. Thanks to its track record at Starbucks, Cranium became not only
the first game sold at Starbucks but also the first board game sold on Amazon.com,
which had earlier turned it down. That
success enabled Cranium the company
to launch a dozen more games, now
sold in 30 countries.24
Customers, too, can be collaborators. Companies must realize that
the need to serve the customer drives
everything else. Best serving the customer can start with involving the customer more in company decisions. For
example, companies like Procter &
Gamble are getting customers to think
creatively and talk with one another
online to come up with new product
and service ideas.25 Tapping into the
popularity of social networking Web
sites like Facebook and MySpace,
P&G has set up Web sites aimed at
bringing its customers together. One
site is a discussion group for women,
where they can discuss health and
other concerns. Although such sites
Managing
9
Chapter 1
offer advertising opportunities, P&G uses them primarily as a way to learn more
about consumers’ attitudes.26
Managing for Competitive Advantage
The rise of the Internet turned careers (and lives) upside down. Students dropped out
of school to join Internet start-ups or start their own. Managers in big corporations
quit their jobs to do the same. Investors salivated, and invested heavily. The risks were
often ignored, or downplayed—sometimes tragically, as the boom went bust. Or consider an earlier industry with similar transforming power: automobiles. There have
been at least 2,000 car makers, but now only three U.S. car companies are left in the
United States. In recent years, even these three have struggled to stay afloat as sales
declined. Despite plant closings, layoffs, and other belt-tightening, the financial status of General Motors and Chrysler remained so shaky that, with talk of bankruptcy,
President Obama tried to assure the country that the U.S.-based auto industry would
not “vanish.”27
What is the lesson to be learned from the failures in these important transformational industries? A key to understanding the success of a company—whether traditional, Internet-based, or a combination of both—is not how much the industry in
which it operates will affect society or how much it will grow. The key is the competitive advantage held by a particular company and how well it can sustain that advantage. Good managers know that they are in a competitive struggle to survive and win.
To survive and win, you have to gain advantage over your competitors and earn a
profit. You gain competitive advantage by being better than your competitors at doing
valuable things for your customers. But what does this mean, specifically? To succeed,
what must managers deliver? The fundamental success drivers are innovation, quality,
service, speed, and cost competitiveness.
LO 2
Innovation
innovation
Google’s search engine quickly became a hit, and investors bid up the stock price of
the company when it went public. But now that the free search service is used around
the world, what can the company do next? Competitors are working hard to take away
some of Google’s share of the market. Google management knows that they need to
come up with the next big idea, so they require their engineers to devote one-fifth of
their time to special projects of their own.28
Innovation is the introduction of new goods and services. Your firm must adapt
to changes in consumer demands and to new competitors. Products don’t sell forever;
in fact, they don’t sell for nearly as long as they used to, because so many competitors
are introducing so many new products all the time. Your
firm must innovate, or it will die. Likewise, you have to
be ready with new ways to communicate with customers
and deliver the products to them. When the Net allowed
merchants to bypass traditional distribution channels and
reach buyers directly, traditional marketers had to learn
how to innovate to remain competitive.
Sometimes the most important innovation isn’t the
product itself but the way it is delivered. Borrowing an idea
that has proved popular in Europe, Opaque–Dining in the
Dark has collaborated with the Braille Institute of America
to present dining events at the Hyatt West Hollywood in
total darkness. Diners select gourmet meals from a menu
in a lighted lounge and then are led into a dark banquet
room by blind or visually impaired waiters. The attraction
The introduction of new
goods and services.
The bottom line
Innovation
Because it’s easy for managers
to get so caught up in being
busy, get distracted, and
lose sight of what really
drives performance, you
will periodically see icons
as “bottom-line” reminders
of the need for innovation,
quality, service, speed, and
cost competitiveness.
People entering the Dans le Noir
(In the Black) restaurant in Paris
where they will enjoy a dining
experience in complete darkness
as if they were blind. Blind waiters
serve as guides. The concept is an
innovative approach to fine dining,
and restaurants such as this are
spreading around the globe.
10
Part One
Foundations of Management
is that diners experience the meal in a completely new way because they are forced to
concentrate on their senses of taste, smell, and touch.29
The need for innovation is driven in part by globalization. One obvious reason is
that when facilities in other countries can manufacturer appliances or write software
code at a lower cost than facilities in the United States, U.S. facilities are operating at
a disadvantage. They have to deliver something that their foreign competitors don’t
offer—and often that means something new. Philips, which started out making light
bulbs in the Netherlands in the 1890s, later expanded into X-ray machines, record
albums, and then semiconductors (microchips), which have since become a highly
competitive, cost-driven business. Now Philips is moving into higher-end products
such as medical equipment and LED-based lighting systems. The company has set up
research as well as manufacturing operations of its own in China, because that country
is becoming a key source of technical know-how, not just cheap labor.30 The demand
for innovation will only intensify.
Innovation is today’s holy grail.31 Like the other sources of competitive advantage,
innovation comes from people, it must be a strategic goal, and it must be managed
properly. Later chapters will show you how great companies innovate.
Quality
quality
The excellence of your
product (goods or services).
When Spectrum Health, a hospital chain based in Grand Rapids, Michigan, asked
patients how well they were served, patients rated staff low on helpfulness and their
attitude toward visitors and said they didn’t get good information about procedures
or how to take care of themselves after being released to go home. Spectrum set up
an advisory council of patients and family members, making visiting hours more flexible, getting patient input into who was allowed to hear medical information and make
decisions about treatment, and calling discharged patients at home to make sure they
understood the directions they had received. Satisfaction scores of Spectrum patients
improved dramatically.32
Spectrum Health’s efforts reflect a commitment to quality. In general, quality is the
excellence of your product. The importance of quality and the standards for acceptable quality have increased dramatically in recent years. Customers now demand highquality goods and services, and often they will accept nothing less. In the hospital
industry, the government is contributing to that trend. To receive full reimbursement
from Medicare, hospitals must participate in a national program of patient satisfaction
surveys. Results of these surveys are posted on the Department of Health and Human
Service’s Medicare information Web site, hospitalcompare.hhs.gov, so that patients
can compare the rankings of hospitals in their area when choosing services.33
Historically, quality pertained primarily to the physical goods that customers
bought, and it referred to attractiveness, lack of defects, reliability, and long-term
dependability. The traditional approach to quality was to check work after it was completed and then eliminate defects, using inspection and statistical data to determine
whether products were up to standards. But then W. Edwards Deming, J. M. Juran,
and other quality gurus convinced managers to take a more complete approach to
achieving total quality. This includes preventing defects before they occur, achieving
zero defects in manufacturing, and designing products for quality. The goal is to solve
and eradicate from the beginning all quality-related problems and to live a philosophy
of continuous improvement in the way the company operates.34
Quality is further provided when companies customize goods and services to the
wishes of the individual consumer. Choices at Starbucks give consumers thousands
of variations on the drinks they can order, whether it’s half-caff or all caffeine, skim
milk or soy milk, or shots of espresso and any of a variety of flavored syrups. Car
buyers can go online to “build their own” Mini Cooper, down to the color of the
light for the speedometer. And for a premium price, candy lovers can select M&M’s
Managing
Chapter 1
11
candies bearing the message of their own creation.35 Similarly, Jones
Soda Company lets visitors to its Web site order a 12-pack of soda with
their photo on the bottles. They upload the photo to the myJones Web
site (www.myjones.com), choose a soda flavor, and pay by credit card.36
Providing world-class quality requires a thorough understanding of
what quality really is.37 Quality can be measured in terms of product
performance, customer service, reliability (avoidance of failure or breakdowns), conformance to standards, durability, and aesthetics. At the
beginning of this section, we mentioned how hospitals are using patient
surveys to measure quality and meet Medicare requirements. However,
a recent study conducted by the University of Pennsylvania School of
Medicine determined that a patient’s risk of dying was not significantly
less at hospitals that scored well on Medicare’s quality measures.38 But
certainly, quality care is more than staying alive! Only when you move
beyond broad, generic concepts such as “quality” and identify specific
quality requirements can you identify problems, target needs, set performance standards more precisely, and deliver world-class value.
Service
As noted, important quality measures often pertain to the level of service
received by customers. This dimension of quality is particularly important because the service sector has come to dominate the U.S. economy.
According to the federal government, the value of services produced in
the United States is much more than one and a half times the value of tangible goods
produced.39 The Bureau of Labor Statistics projects that the fastest-growing job categories will be almost entirely services and retailing jobs, and the jobs expected to
see the greatest declines are almost all in manufacturing.40 Services include intangible
products such as insurance, hotel accommodations, medical care, and haircuts.
In a competitive context, service means giving customers what they want or need,
when they want it. So service is focused on continually meeting the needs of customers to establish mutually beneficial long-term relationships. Software companies, in
addition to providing the actual programs, may help their customers identify requirements, set up computer systems, and perform maintenance. Best Buy adjusted its store
environment so that it would be more inviting to female shoppers. The chain’s loud
music and emphasis on high-tech features had been aimed at young men, but the
store found that women today influence 9 out of 10 consumer electronics purchases.
So Best Buy lowered the volume and the lighting, and it trained staff to discuss what
customers want the technology to do for them, rather than merely pointing out each
item’s bells and whistles. The chain is also trying to hire more female salespeople.41
An important dimension of service quality is making it easy and enjoyable for customers to experience a service or to buy and use products. The Detroit Institute of
Arts recently hired Sven Gierlinger, a manager from the Ritz-Carlton hotel chain,
noted for its exceptional level of service, to be its vice president of museum operations. As the art museum prepared for a grand reopening following a major renovation, Gierlinger analyzed the types of customer interactions that occur in a museum,
identifying ways to make the experience more pleasant. He also worked with his staff
to identify ways to customize services, such as offering tours tailored to the interests
of particular groups.42
Speed
Google constantly improves its search product at a rapid rate. In fact, its entire culture
is based on rapid innovation. Sheryl Sandberg, a Google vice president, once made a
mistake because she was moving too fast to plan carefully. Although the mistake cost
Every time you get a haircut at a
salon, you are contributing to the
employment of someone in one of
the fastest growing job categories,
the service sector.
service
The speed and dependability
with which an organization
delivers what customers
want.
12
Part One
speed
Fast and timely execution,
response, and delivery of
results.
Foundations of Management
the company a few million dollars, Google cofounder Larry Page responded to her
explanation and apology by saying he was actually glad she had made the mistake. It
showed that she appreciated the company’s values. Page told Sandberg, “I want to run
a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking
enough risks.”43
While it’s unlikely that Google actually favors mistakes over money-making ideas,
Page’s statement expressed an appreciation that in the modern business environment, speed—rapid execution, response, and delivery of results—often separates the
winners from the losers. How fast can you develop and get a new product to market?
How quickly can you respond to customer requests? You are far better off if you are
faster than the competition—and if you can respond quickly to your competitors’
actions.
Speed isn’t everything—you can’t get sloppy in your quest to be first. But other
things being equal, faster companies are more likely to be the winners, slow ones
the losers. Even pre-Internet, companies were getting products to market and in the
hands of customers faster than ever. Now the speed requirement has increased exponentially. Everything, it seems, is on fast-forward.
Speed is no longer just a goal of some companies; it is a strategic imperative. In the
auto industry, getting faster is essential just for keeping up with the competition. A
recent study found that the top assembly plant in the United States was Ford’s Atlanta
facility, where employees needed just 15.4 hours to assemble a vehicle. Compare that
with the 1980s, when GM employees needed 40 hours to assemble a vehicle.44 Another
important measure of speed in the auto industry is the time the company takes to
go from product concept to availability of the vehicle in the showroom. During the
1980s, that time was about 30 or 40 months. Today Toyota has cut the process to an
average of 24 months; it needed just 22 months to launch its Tundra pickup.45
Cost Competitiveness
cost competitiveness
Keeping costs low to achieve
profits and be able to offer
prices that are attractive to
consumers.
Wal-Mart keeps driving hard to find new ways to cut billions of dollars from its
already very low distribution costs. It leads the industry in efficient distribution, but
competitors are copying Wal-Mart’s methods, so the efficiency no longer gives it as
much of an advantage.46 Wal-Mart has sought to keep costs down by scheduling store
employees more efficiently. It recently introduced a computerized system that schedules employees based on each store’s sales, transactions, units sold, and customer traffic. The system is intended to schedule just enough workers, with full staffing only
at the busiest times of day and days of the week, so it requires more flexibility from
Wal-Mart’s employees.47
Wal-Mart’s efforts are aimed at cost competitiveness, which means keeping costs
low enough so that the company can realize profits and price its products (goods or
services) at levels that are attractive to consumers. Needless to say, if you can offer a
desirable product at a lower price, it is more likely to sell.
Start-up firms typically practice cost competitiveness out of necessity. Paul Graham’s company, Y Combinator, provides seed funding to start-ups, and he observes
how new companies keep their expenses down because they simply don’t have much
to spend. A start-up’s total information technology could be just a few laptops connected to the Internet and running free Web-based software. Graham says lean times
can remind managers to think about whether all their expenses are necessary: “You
may as well use [a slowdown] as an excuse to clean out all the expensive crap you have
lying around.”48
Managing your costs and keeping them down requires being efficient: accomplishing your goals by using your resources wisely and minimizing waste. Many top executives fly on private jets, which of course is more expensive than buying a ticket on
Managing
Chapter 1
13
a commercial airline. If the company can arrange to participate in a service such as
NetJets, where the company buys only shares in a jet with the rights to use it, this can
trim the price and make the arrangement more worthwhile.49
One manager with a reputation for meeting this challenge skillfully is Mark Hurd, chief
executive of Hewlett-Packard. For Hurd, operating efficiently is the main goal of a necessary and ongoing effort to look hard at all the company’s numbers and identify areas
where the company can get the job done with less. For example, HP improved the efficiency of its information technology (IT) group by reducing the number of data centers
from 85 to 6. Critics question whether HP under Hurd is investing enough in innovation for the future, but at least in the short term, the drive for efficiency has positioned
Hewlett-Packard to handle difficult times. In the recent recession, HP forecasted a sales
decline but expected its profits would actually rise. That’s not so strange when you consider that even as HP reduced staffing in support departments like IT, it was increasing its
sales force and helping sales people target HP’s most profitable goods and services.50
One reason every company must worry about cost is that consumers can easily
compare prices on the Internet from thousands of competitors. Consumers looking to
buy popular items, such as cameras, printers, and plane fares, can go online to research
the best models and the best deals. If you can’t cut costs and offer attractive prices, you
can’t compete.
Delivering All Five
Don’t assume that you can settle for delivering just one of the five competitive advantages: low cost alone, or quality alone, for example. The best managers and companies
deliver them all.
Virginia Mason Medical Center, like many hospitals, felt challenged in delivering low costs along with high quality and superior services. Virginia Mason has a
reputation for high-quality care, but it was losing money treating certain patients.
So Virginia Mason collaborated with Aetna, an insurer that pays for 10 percent
of the medical center’s business, and found ways to treat some of the most expensive conditions so that they became more economical to insure but were paid for at
higher rates that would be profitable for Virginia Mason. The medical center has
also improved quality through measures that enhance speed—in this case, cutting
waiting times for patients, such as a reduction in the 4-hour wait for chemotherapy
to 90 minutes.51
Trade-offs may occur among the five sources of competitive advantage, but
this doesn’t need to be a zero-sum game where one has to suffer at the expense of
another. Avon focused on cost savings when it contracted with IBM Global Services
to handle human resources tasks such as payroll and benefits management. Turning over those responsibilities to a company that specializes in performing them
efficiently also frees Avon to concentrate on innovating in areas it knows best: direct
selling cosmetics to new customers. Avon’s CEO, Andrea Jung, launched an effort
to sell cosmetics to Chinese consumers through hundreds of thousands of representatives who are licensed with the government.52 Avon also has tapped into the trend
toward customization by introducing the Hook Up Connector, a packaging product
that allows consumers to snap together items of their choice, such as a lipstick and
mascara.53
These sources of competitive advantage were behind BusinessWeek’s choices of best
and worst managers. By and large, “best” and “worst” are determined by results, as
indicated by the examples in the “From the pages of BusinessWeek” feature.
Don’t forget:
Don’t focus on one aspect
of performance and neglect
the others. You
might be better
at or more
interested in one
than the others,
but you should
strive for all five.
14
Part One
F R OM T H E P AG E S OF
Foundations of Management
The Best and Worst Managers of 2008
The best leaders have not only ridden out the crisis so far but also gleaned valuable,
often profitable, lessons from it. The worst? Well, some helped set the economic crisis
in motion; others became paragons of bad judgment in a time of trouble. Here are the
leaders of 2008 with all their successes and failures.
It’s not easy to measure excellence in a year like 2008. While some managers can be
judged by the bottom line, others merely had the good fortune to be running a food company instead of a financial firm. Then again, with volatile commodity prices, succeeding in
the food business wasn’t such an easy task.
BusinessWeek has singled out 12 executives who did a remarkable job of navigating
stormy waters. Some have posted stellar results. Others are struggling. But there are lessons to be learned from each of them.
David Axelrod, 53
Chief strategist, Obama campaign
The Chicago consultant may have described himself as the “keeper of the message,” but
he was more an architect. Credited with shaping Obama’s mission of hopeful change, he
drew campaign themes from the candidate’s life story, recruited potent supporters, and
made sure any attack on rivals was firm, but seldom angry or demeaning. The tightly run
campaign had few leaks and little infighting. And like any good right-hand man, Axelrod
stayed focused on the boss. “I see myself simply as helping disseminate the message of
Barack Obama,” he recently told NBC’s Meet the Press.
Frank Blake, 59
CEO, Home Depot, Atlanta
He simplified the company and boosted morale. Too bad Blake took over as the housing
market went bust.
His valued counselor? “Every year, I do a pilgrimage to go talk to Jack Welch. The first
time I sat down with him, he just talked to me about the people [at Home Depot]. Not a
number. Not ‘How are you going to get your gross margin rates up?’ ”
Great book: The War Within, on the Bush Administration, by Bob Woodward. “That’s
a good cautionary story. One of the first questions you have to ask as a leader is, to what
extent do people feel comfortable saying what’s on their minds?”
Jamie Dimon, 52
CEO, JPMorgan, New York
Dimon largely shunned the subprime bets and exotic financial instruments that brought
down rivals. As a result, JPMorgan was able to pick up the pieces of Bear Stearns when it
imploded in March and later absorb collapsed mortgage lender Washington Mutual.
http://images.businessweek.com/ss/09/01/0108_best_worst/1.htm
SOURCES: Excerpted from “The Best Managers,” BusinessWeek, January 19, 2009, p. 40; and “The Worst Managers,” BusinessWeek, January 19, 2009, p. 42.
The Functions of Management
management
The process of working
with people and resources
to accomplish organizational
goals.
LO 3
Management is the process of working with people and resources to accomplish
organizational goals. Good managers do those things both effectively and efficiently.
To be effective is to achieve organizational goals. To be efficient is to achieve goals
with minimal waste of resources, that is, to make the best possible use of money, time,
materials, and people. Some managers fail on both criteria, or focus on one at the
expense of another. The best managers maintain a clear focus on both effectiveness
and efficiency. These definitions have been around for a long time. But as you know,
business is changing radically. The real issue is how to do these things.54
Managing
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15
Although the context of business and the specifics of doing business are changing,
there are still plenty of timeless principles that make great managers, and great companies, great. While fresh thinking and new approaches are required now more than
ever, much of what has already been learned about successful management practices
remains relevant, useful, and adaptable, with fresh thinking, to the 21st-century business environment.
In the business world today, the great executives not only adapt to changing conditions but also apply—fanatically, rigorously, consistently, and with discipline—the
fundamental management principles. These fundamentals include the four traditional
functions of management: planning, organizing, leading, and controlling. They remain as
relevant as ever, and they still provide the fundamentals that are needed in start-ups as
much as in established corporations. But their form has evolved.
Planning: Delivering Strategic Value
Planning is specifying the goals to be achieved and deciding in advance the appropriate actions needed to achieve those goals. Planning activities include analyzing current
situations, anticipating the future, determining objectives, deciding in what types of
activities the company will engage, choosing corporate and business strategies, and
determining the resources needed to achieve the organization’s goals. Plans set the
stage for action and for major achievements.
The planning function for the new business environment, discussed in Part 2 of
this book, is more dynamically described as delivering strategic value. Value is a complex concept.55 Fundamentally, it describes the monetary amount associated with how
well a job, task, good, or service meets users’ needs. Those users might be business
owners, customers, employees, society, and even nations. The better you meet those
needs (in terms of quality, speed, efficiency, and so on), the more value you deliver.
That value is “strategic” when it contributes to meeting the organization’s goals. On
a personal level, you will do well when you periodically ask yourself and your boss,
“How can I add value?” Answering that question will enhance your contributions,
your job performance, and your career.
Historically, planning described a top-down approach in which top executives
establish business plans and tell others to implement them. Now and in the future,
delivering strategic value is a continual process in which people throughout the organization use their brains and the brains of customers, suppliers, and other stakeholders
to identify opportunities to create, seize, strengthen, and sustain competitive advantage. This dynamic process swirls around the objective of creating more and more
value for the customer. Effectively creating value requires fully considering a new
and changing set of stakeholders and issues, including the government, the natural
environment, globalization, and the dynamic economy in which ideas are king and
entrepreneurs are both formidable competitors and potential collaborators. You will
learn about these and related topics in Chapter 4 (planning and strategic management), Chapter 5 (ethics and corporate social responsibility), Chapter 6 (international
management), and Chapter 7 (entrepreneurship).
planning
The management function
of systematically making
decisions about the goals and
activities that an individual,
a group, a work unit, or
the overall organization will
pursue.
value
The monetary amount
associated with how well a
job, task, good, or service
meets users’ needs.
Organizing: Building a Dynamic Organization
Organizing is assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals. Organizing activities include
attracting people to the organization, specifying job responsibilities, grouping jobs
into work units, marshaling and allocating resources, and creating conditions so that
people and things work together to achieve maximum success.
Part 3 of the book describes the organizing function as building a dynamic organization. Historically, organizing involved creating an organization chart by identifying business functions, establishing reporting relationships, and having a personnel
department that administered plans, programs, and paperwork. Now and in the future,
organizing
The management function of
assembling and coordinating
human, financial, physical,
informational, and other
resources needed to achieve
goals.
16
Part One
Foundations of Management
effective managers will be using new
forms of organizing and viewing their
people as perhaps their most valuable
resources. They will build organizations that are flexible and adaptive,
particularly in response to competitive
threats and customer needs. Progressive human resource practices that
attract and retain the very best of
a highly diverse population will be
essential aspects of the successful company. You will learn about these topics
in Chapter 8 (organization structure),
Chapter 9 (organizational agility),
Chapter 10 (human resources management), and Chapter 11 (managing the
diverse workforce).
Shona Brown of Google makes
decisions about organizing. She
says, “The company’s goal is to
determine precisely the amount of
management it needs—and then
use a little bit less.”
leading
The management function
that involves the manager’s
efforts to stimulate high
performance by employees.
controlling
The management function of
monitoring performance and
making needed changes.
Leading: Mobilizing People
Leading is stimulating people to be high performers. It includes motivating and communicating with employees, individually and in groups. Leading involves close dayto-day contact with people, helping to guide and inspire them toward achieving team
and organizational goals. Leading takes place in teams, departments, and divisions, as
well as at the tops of large organizations.
In earlier textbooks, the leading function described how managers motivate workers
to come to work and execute top management’s plans by doing their jobs. Today and
in the future, managers must be good at mobilizing people to contribute their ideas—to
use their brains in ways never needed or dreamed of in the past.
As described in Part 4, managers must rely on a very different kind of leadership
(Chapter 12) that empowers and motivates people (Chapter 13). Far more than in the
past, great work must be done via great teamwork (Chapter 14), both within work
groups and across group boundaries. Ideally, underlying these processes will be effective interpersonal and organizational communication (Chapter 15).
In a recent nationwide survey, employees had mixed reviews of their manager’s
leadership skills.56 As a result, a manager who excels in leadership is especially
valuable.
Percentage of employees who say . . .
They positively relate to
o
their bosss
77%
50%
nt
Their boss is competent
or
Their boss rewards them for
accomplishmentss
30%
Their boss is a good role
e
model and mentor
or
29%
They feel motivated byy
their bosss
22%
20%
40%
60%
80%
Controlling: Learning
and Changing
Planning, organizing, and leading do not guarantee success.
The fourth function, controlling,
monitors performance and implements necessary changes. By controlling, managers make sure the
organization’s resources are being
used as planned and that the organization is meeting its goals for
quality and safety.
Monitoring is an essential
aspect of control. If you have
any doubts that this function is
important, consider some control
breakdowns that caused serious
problems. After an explosion at
100% BP’s Texas oil refinery caused the
Managing
deaths of 15 people, investigations suggested that widespread failure to implement
safety measures was behind the tragedy. In spite of a year of record profits, BP’s chief
executive announced plans to retire early, and his bonus was cut almost in half.57 Other
lapses in controlling can hurt customers. A recent outbreak of salmonella infections—
which can cause fever, diarrhea, dehydration, and even death—was traced to Peter Pan
and Great Value peanut butter made by ConAgra Foods in its Sylvester, Georgia, factory. Processing the peanuts generally kills salmonella and other germs, so the likely
culprit was contamination of jars or equipment. ConAgra quickly announced a recall,
but more than 400 people in 44 states reported being infected, and 71 of them had to
be hospitalized. The recall alone was expected to cost ConAgra at least $50 million;
lawsuits, cleanup of the facility, and damage to the brands’ reputation are adding to
those costs.58 As you can see, control failures can take many forms.
When managers implement their plans, they often find that things are not working out as planned. The controlling function makes sure that goals are met. It asks
and answers the question, “Are our actual outcomes consistent with our goals?” It
then makes adjustments as needed. To learn how Elon Musk applied this function to
make needed adjustments at Tesla Motors, see the “Management Close-Up: Taking
Action” feature.
Successful organizations, large and small, pay close attention to the controlling
function. But Part 5 of the book makes it clear that today and for the future, the key
managerial challenges are far more dynamic than in the past; they involve continually
learning and changing. Controls must still be in place, as described in Chapter 16. But
new technologies and other innovations (Chapter 17) make it possible to achieve controls in more effective ways and to help all the people throughout the company, and
across company boundaries (including customers and suppliers), to use their brains,
learn, make a variety of new contributions, and help the organization change in ways
that forge a successful future (Chapter 18).
The four management functions apply to you personally, as well. You must find
ways to create value, organize for your own personal effectiveness, mobilize your own
Management Close-Up
TAKING ACTION
Like many start-ups, Tesla Motors has hit a few potholes along the way. Fundamental differences between Elon Musk and Tesla founder Martin Eberhard led to complications that
nearly halted the company’s progress. Technical problems during development pushed
back the launch of the company’s first car, the Roadster, by more than a year. In turn,
the production delays caused cash flow problems. Yet, to date Tesla has raised nearly
$150 million from investors; $55 million of that has come from Elon Musk.
The company burned through three CEOs before Musk took the reins in 2008. By
that time, the world economy had taken a serious downturn, and the United States found
itself in a deepening credit crisis. Musk ordered a layoff of nearly 25 percent of the workforce, closed one office in a Detroit suburb, and opened a smaller one nearby. Tesla is
also looking to its Roadster, now in full production, to enhance the revenue stream by
trimming manufacturing costs.
While Musk is confident Tesla will weather the storm and characterizes the moves as
needed belt-tightening, the recession couldn’t have come at a worse time for the firm.
Tesla was already in development mode on its next model, a four-door luxury sedan
called the Model S. Now, Musk has slowed the Model S program, pushing back production until mid-2011, and shelved plans to build an assembly plant.59
• What attributes does Elon Musk exhibit that make him an effective manager?
• How can Musk maintain Tesla’s momentum in spite of setbacks?
Chapter 1
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18
Part One
Foundations of Management
talents and skills as well as those of others, monitor performance, and constantly learn,
develop, and change for the future. As you proceed through this book and this course,
we encourage you to not merely do your “textbook learning” of an impersonal course
subject but to think about these issues from a personal perspective as well, using the
ideas for your own personal development.
Performing All Four Management Functions
As a manager, your typical day will not be neatly divided into the four functions. You
will be doing many things more or less simultaneously.60 Your days will be busy and
fractionated, spent dealing with interruptions, meetings, and firefighting. There will
be plenty to do that you wish you could be doing but can’t seem to get to. These
activities will include all four management functions.
Some managers are particularly interested in, devoted to, or skilled in one or two of
the four functions but not in the others. But you should devote adequate attention and
resources to all four functions. You can be a skilled planner and controller, but if you
organize your people improperly or fail to inspire them to perform at high levels, you
will not be realizing your potential as a manager. Likewise, it does no good to be the
kind of manager who loves to organize and lead, but who doesn’t really understand
where to go or how to determine whether you are on the right track. Good managers
don’t neglect any of the four management functions. Knowing what they are, you can
periodically ask yourself if you are devoting adequate attention to all of them.
Management Levels and Skills
LO 4
Organizations—particularly large organizations—have many levels. In this section,
you will learn about the types of managers found at three different organizational
levels: top level, middle level, and frontline.
Top-Level Managers
Top-level managers are the senior executives of an organization and are responsible
for its overall management. Top-level managers, often referred to as strategic managSenior executives responsible
ers, are supposed to focus on long-term issues and emphasize the survival, growth, and
for the overall management
overall effectiveness of the organization.
and effectiveness of the
organization.
Top managers are concerned not only with the organization as a whole but also
with the interaction between the organization and its external environment. This
interaction often requires managers to work extensively with outside individuals and
organizations.
The chief executive officer (CEO) is one type of top-level manager found in large
corporations. This individual is the primary strategic manager of the firm and has
authority over everyone else. Others include the chief operating officer (COO), company presidents, vice presidents, and members of the top management team. As companies are appreciating the potential of modern technology and knowledge management
to help them achieve and maintain a competitive advantage, more are creating the
position of chief information officer (CIO). At defense contractor Northrop Grumman, CIO Tom Shelman used to focus on managing the company’s computer systems.
But in the last few years, he has become directly involved with strategy; Shelman’s job
includes meeting with customers to help identify ways the company can use its technology to serve them better and
help the company grow.61
In a recent poll of chief information officers, half said their responsibilities extend
Traditionally, the role of topbeyond information technology to include top-level concerns such as developing the
level managers has been to set
company’s strategy.62
overall direction by formulating
top-level managers
Managing
Chapter 1
strategy and controlling resources. But now, top managers are more commonly called
on to be not only strategic architects but also true organizational leaders. As leaders,
they must create and articulate a broader corporate purpose with which people can
identify—and one to which people will enthusiastically commit.
Middle-Level Managers
As the name implies, middle-level managers are located in the organization’s hierarchy below top-level management and above the frontline managers. Sometimes called
tactical managers, they are responsible for translating the general goals and plans developed by strategic managers into more specific objectives and activities.
Traditionally, the role of the middle manager is to be an administrative controller
who bridges the gap between higher and lower levels. Middle-level managers take corporate objectives and break them down into business unit targets; put together separate business unit plans from the units below them for higher-level corporate review;
and serve as linchpins of internal communication, interpreting and broadcasting top
management’s priorities downward and channeling and translating information from
the front lines upward.
As a stereotype, the term middle manager connotes mediocrity: unimaginative people behaving like bureaucrats and defending the status quo. But middle managers are
closer than top managers to day-to-day operations, customers, and frontline managers
and employees—so they know the problems. They also have many creative ideas—
often better than their bosses’. Good middle managers provide the operating skills
and practical problem solving that keep the company working.63
middle-level
managers
Managers located in
the middle layers of the
organizational hierarchy,
reporting to top-level
executives.
Frontline Managers
Frontline managers, or operational managers, are lower-level managers who supervise
the operations of the organization. These managers often have titles such as supervisor
or sales manager. They are directly involved with nonmanagement employees, implementing the specific plans developed with middle managers. This role is critical in
the organization because operational managers are the link between management and
nonmanagement personnel. Your first management position probably will fit into this
category.
Traditionally, frontline managers have been directed and controlled from above,
to make sure that they successfully implement operations in support of company
strategy. But in leading companies, the role has expanded. Whereas the operational
execution aspect of the role remains vital, in leading companies frontline managers are
increasingly called on to be innovative and entrepreneurial, managing for growth and
new business development.
Managers on the front line—which usually means newer, younger managers—are
crucial to creating and sustaining quality, innovation, and other drivers of financial
performance.64 In outstanding organizations, talented frontline managers are not only
allowed to initiate new activities but are expected to by their top- and middle-level managers. And they are given freedom, incentives, and support to find ways to do so.65
Table 1.1 elaborates on the changing aspects of different management levels. You
will learn about each of these aspects of management throughout this course.
Working Leaders with Broad Responsibilities
In small firms—and in those large companies that have adapted to the times—managers
have strategic, tactical, and operational responsibilities. They are complete businesspeople; they have knowledge of all business functions, are accountable for results, and
focus on serving customers both inside and outside their firms. All of this requires the
ability to think strategically, translate strategies into specific objectives, coordinate
resources, and do real work with lower-level people.
frontline managers
Lower-level managers who
supervise the operational
activities of the organization.
19
20
Part One
Foundations of Management
TABLE 1.1
Transformation of
Management Roles and
Activities
Frontline
Managers
Middle-Level
Managers
Top-Level
Managers
Changing
Roles
• From operational
implementers
to aggressive
entrepreneurs
• From
administrative
controllers to
supportive
coaches
• From resource
allocators to
institutional
leaders
Key Activities
• Creating and
pursuing
new growth
opportunities for
the business
• Developing
individuals and
supporting their
activities
• Establishing high
performance
standards
• Attracting and
developing
resources
• Linking dispersed
knowledge and
skills across units
• Institutionalizing a
set of norms and
values to support
cooperation and
trust
• Managing
continuous
improvement
within the unit
• Creating an
• Managing the
overarching
tension between
corporate purpose
short-term
and ambition
purpose and longterm ambition
SOURCE: Adapted from C. Bartlett and S. Goshal, “The Myth of the Generic Manager: New Personal Competencies for New
Management Roles,” California Management Review 40, no. 1, Fall 1977, pp. 92–116.
In short, today’s best managers can do it all; they are “working leaders.”66 They
focus on relationships with other people and on achieving results. They don’t just
make decisions, give orders, wait for others to produce, and then evaluate results.
They get dirty, do hard work themselves, solve problems, and produce value.
What does all of this mean in practice? How do managers spend their time—what
do they actually do? A classic study of top executives found that they spend their time
engaging in 10 key activities or roles, falling into three categories: interpersonal,
informational, and decisional.67 Table 1.2 summarizes these roles. Even though the
study was done decades ago, it remains highly relevant as a description of what executives do. And even though the study focused on top executives, managers at all levels
engage in all these activities. As you study the table, you might ask yourself, “Which of
these activities do I enjoy most (and least)? Where do I excel (and not excel)? Which
would I like to improve?” Whatever your answers, you will be learning more about
these activities throughout this course.
Management Skills
LO 5
Performing management functions and roles, and achieving competitive advantage,
are the cornerstones of a manager’s job. However, understanding this fact does not
ensure success. Managers need a variety of skills to do these things well. Skills are
specific abilities that result from knowledge, information, practice, and aptitude.
Although managers need many individual skills, which you will learn about throughout this textbook, there are three essential categories: technical skills, interpersonal
and communication skills, and conceptual and decision skills.68
First-timers can underestimate the challenges of the many technical, human, and
conceptual competencies required.69 But when the key management functions are
performed by managers who have these critical management skills, the result is high
performance.
Managing
Interpersonal
Roles
Chapter 1
Leader: Staffing, training, and motivating people
TABLE 1.2
TA
Liaison: Maintaining a network of outside contacts who provide
information and favors
Man
Managerial
Roles: What
Managers Do
Man
21
Figurehead: Performing symbolic duties (ceremonies and serving
other social and legal demands)
Informational
Roles
Monitor: Seeking and receiving information to develop a thorough
understanding of the organization and its environment; serving as
the “nerve center” of communication
Disseminator: Transmitting information from source to source,
sometimes interpreting and integrating diverse perspectives
Spokesperson: Speaking on behalf of the organization about
plans, policies, actions, and results
Decisional
Roles
Entrepreneur: Searching for new business opportunities and
initiating new projects to create change
Disturbance handler: Taking corrective action during crises or
other conflicts
Resource allocator: Providing funding and other resources to
units or people; includes making or approving significant
organizational decisions
Negotiator: Engaging in negotiations with parties outside the
organization as well as inside (e.g., resource exchanges)
SOURCE: Adapted from H. Mintzberg, The Nature of Managerial Work (New York: Harper & Row, 1973), pp. 92–93.
A technical skill is the ability to perform a specialized task that involves a certain method or process. Most people develop a set of technical skills to complete the
activities that are part of their daily work lives. The technical skills you learn in school
will provide you with the opportunity to get an entry-level position; they will also
help you as a manager. For example, your accounting and finance courses will develop
the technical skills you need to understand and manage the financial resources of an
organization.
Conceptual and decision skills involve the ability to identify and resolve problems
for the benefit of the organization and everyone concerned. Managers use these skills
when they consider the overall objectives and strategy of the firm, the interactions
among different parts of the organization, and the role of the business in its external
environment. As you acquire greater responsibility, you must exercise your conceptual
and decision skills with increasing frequency. You will confront issues that involve all
aspects of the organization and must consider a larger and more interrelated set of
decision factors. Much of this book is devoted to enhancing your conceptual and decision skills, but experience also plays an important part in their development.
Interpersonal and communication skills influence the manager’s ability to work
well with people. These skills are often called people skills. Managers spend the great
majority of their time interacting with people,70 and they must develop their abilities
to lead, motivate, and communicate effectively with those around them. Your people
skills often make the difference in how high you go. Management professor Michael
Morris explains, “At a certain level in business, you’re living and dying on your social
abilities. . . . [Knowledge of a particular field] gets you in the door, but social intelligence gets you to the top.”71 Supporting this view, a survey of senior executives and
managers found that more than 6 out of 10 say they base hiring and promotion decisions on a candidate’s “likability.” Almost as many (62 versus 63 percent) said they
base these decisions on skills, presumably referring to technical skills.72
technical skill
The ability to perform a
specialized task involving
a particular method or
process.
conceptual and
decision skills
Skills pertaining to the ability
to identify and resolve
problems for the benefit
of the organization and its
members.
interpersonal and
communication skills
People skills; the ability
to lead, motivate, and
communicate effectively with
others.
22
Part One
Foundations of Management
Professor Morris, quoted in the previous paragraph, has helped to teach people skills
to MBA candidates at Columbia Business School. He emphasizes that it is vital for
future managers to realize the importance of these skills in getting a job, keeping it, and
performing well in it, especially in the 21st century, where managers tend to be supervisors of independent-minded knowledge workers. He explains, “You have to get high
performance out of people in your organization who you don’t have any authority over.
You need to read other people, know their motivators, know how you affect them.”73
The importance of these skills varies by managerial level. Technical skills are most
important early in your career. Conceptual and decision skills become more important than technical skills as you rise higher in the company. But interpersonal skills are
important throughout your career, at every level of management. Several biomedical
companies in California’s Orange County collaborated to provide training because they
observed that managers originally hired for their technical expertise needed to develop
their people skills so that they could handle higher-level assignments successfully.74
You and Your Career
LO 6
emotional
intelligence
The skills of understanding
yourself, managing yourself,
and dealing effectively with
others.
At the beginning of your career, your contribution to your employer depends on your
own performance; that’s all you’re responsible for. But on becoming a manager, you
are responsible for a whole group. To use an orchestra analogy, instead of playing an
instrument, you’re a conductor, coordinating others’ efforts.75 The challenge is much
greater than most first-time managers expect it to be.
Throughout your career you’ll need to lead teams effectively, as well as influence
people over whom you have no authority; thus, the human skills are especially important. Businesspeople often talk about emotional intelligence,76 or “EQ”—the skills
of understanding yourself (including strengths and limitations), managing yourself
(dealing with emotions, making good decisions, seeking and using feedback, exercising self-control), and dealing effectively with others (listening, showing empathy,
motivating, leading, and so on).
An example of a manager with these skills is Rita Burns, vice president of communications and marketing at Memorial Health System in Colorado Springs. Selfknowledge led Burns to pursue a career that brings together her talent at listening
and her love of health care. Burns says she finds it easy to appreciate other points of
view: “No matter where I am or what the situation is, I can find something to have a
conversation about.” Her boss, senior vice president Ron Burnside, describes her as a
talented communicator, and a colleague at the American Heart Association says Burns
possesses a “collaborative spirit,” which helps her see how Memorial Health System
can cooperate with the association on joint projects.77
A common complaint about leaders, especially newly promoted ones who had been
outstanding individual performers, is that they lack what is perhaps the most fundamental of EQ skills: empathy. The issue is not lack of ability to change (you can),
but the lack of motivation to change.78 William George, former chair and CEO of
Medtronic, says some people can go a long way in their careers based on sheer determination and aggressiveness, but personal development—including EQ—ultimately
becomes essential.79 Executives who score low on EQ are less likely to be rated as
excellent on their performance reviews, and their divisions tend not to perform as
well.80 A vice president at an aerospace company underwent a program to improve
her EQ after colleagues kept complaining that she was overly demanding and inclined
to put people down. An assessment found that she lacked social awareness. The vice
president eventually learned to respond after calming herself, as well as to explore
colleagues’ ideas rather than demeaning them. Before long, her colleagues began to
appreciate the change, and her career took a more successful path.81
What should you do to forge a successful, gratifying career? You are well advised
to be both a specialist and a generalist, to be self-reliant and connected, to actively
Managing
manage your relationship with your organization, and to know what is required not
only to survive but also to thrive in today’s world.
Be Both a Specialist and a Generalist
If you think your career will be as a specialist, think again. Chances are, you will
not want to stay forever in strictly technical jobs with no managerial responsibilities.
Accountants are promoted to accounting department heads and team leaders, sales
representatives become sales managers, writers become editors, and nurses become
nursing directors. As your responsibilities increase, you must deal with more people,
understand more about other aspects of the organization, and make bigger and more
complex decisions. Beginning to learn now about these managerial challenges may
yield benefits sooner than you think.
So, it will help if you can become both a specialist and a generalist.82 Seek to become
a specialist: you should be an expert in something. This will give you specific skills that
help you provide concrete, identifiable value to your firm and to customers. And over
time, you should learn to be a generalist, knowing enough about a variety of business
disciplines so that you can think strategically and work with different perspectives.
Patricia Calkins broadened her focus gradually and ambitiously from specialties in the
sciences, expanding first to engineering and
then to management. She started her career
with AT&T’s Western Electric subsidiary
as a chemist; when she was considering a
master’s degree in chemistry, she heeded
advice to develop her career opportunities by studying engineering. Once Calkins
had her master’s in civil and environmental
engineering, the company saw her management talent and wanted to promote her, so
she returned to school for another master’s
degree, this time in business administration. She developed her generalist skills by
consulting, and from that work moved to
her current—and favorite—position as vice
president of environment, health, and safety
at Xerox.83
There’s another advantage to being both
a specialist and a generalist: it can give you
the opportunity to indulge in the causes or Patricia Calkins, VP of Environment, Health, and
activities about which you are most passion- Safety at Xerox, became successful by being both
a specialist and a generalist. She developed her
ate. For example, Josh Ruxin, a professor specialty skills in the sciences and in business
and founder of Access Project, a program administration, and then acquired her generalist skills
that applies American management systems as a business consultant. What steps do you need to
take to become a specialist and a generalist?
to hospitals in Rwanda, got started on his
career path when he traveled to Ethiopia
as a teenager. “That changed the rest of my life,” Ruxin recalls. “I couldn’t believe that
people so desperately poor were living on the same planet as we were.” So Ruxin earned
a doctorate in medical history and joined a management consulting firm, where he honed
his management skills. When he got the opportunity to follow a spin-off venture focusing
on economic development in underdeveloped regions, he took it.
In Africa, “I realized health care there had to get fixed before these economies had a
chance,” says Ruxin. So he formed Access Project. Now he uses both his general and his
specialized skills to help improve the health care system in Rwanda.84
Chapter 1
23
24
Part One
Foundations of Management
Be Self-Reliant
To be self-reliant means to take full responsibility for yourself, your actions, and your
career, as Patricia Calkins did when she furthered her education and tackled consulting assignments that applied her technical knowledge to the business world. You
cannot count on your boss or your company to take care of you. A useful metaphor is
to think of yourself as a business, with you as president and sole employee. Table 1.3
gives some specific advice about what this means in practice.
Jordan Edelstein took ownership of his career; for him, that meant taking a leap
into an industry he loved. General Mills hired him as an assistant marketing manager.
He was successful, but during a business trip, as he read about Electronic Arts and
its game Sims Online, Edelstein realized that this was an industry he felt passionate
about. Edelstein began researching jobs in the industry. When an opening came at
Electronic Arts, Edelstein prepared for extensive interviews in which he had to persuade dozens of people that his marketing expertise made up for his lack of experience
with high-tech products. Evidently, Edelstein has real marketing talent: he landed
what he identified as his dream job.85
To be self-reliant, find new ways to make your overall performance better. Take
responsibility for change; be an innovator.86 Don’t just do your work and wait for
orders; look for opportunities to contribute in new ways, to develop new products
and processes, and to generate constructive change that strengthens the company and
benefits customers and colleagues. As in Jordan Edelstein’s career, success requires
more than talent; you also have to be willing to work hard. The elite, world-class
performers in many fields reach the top tier only after ten years or more of hard
work.87 The key is to engage in consistent practice, looking at the results and identifying where to improve.
It’s easy to see how this works for violinists or basketball players, but what about
business managers? The answer is to focus on getting better results each time you try
any business task, whether it’s writing a report, chairing a meeting, or interpreting a
financial statement. To know whether you’re getting better, make a point of asking
for feedback from customers, colleagues, and bosses.
To develop your full potential, assess yourself, including your interests, aptitudes,
and personal character strengths. Think about it, ask others who know you well,
conduct a formal exercise in which you learn what others consider to be your “best
self,”88 and use the resources of recent advances in psychology to identify your signature strengths.89 Consider the professional image and reputation you would like to
develop,90 and continue building your capabilities. Consider the suggestions found
throughout this book, and your courses, as you pursue these objectives.
TABLE 1.3
Keys to Career
Management
Vicky Farrow of Sun Microsystems gave the following advice to help people assume
responsibility for their own careers:
1. Think of yourself as a business.
2. Define your product: What is your area of expertise?
3. Know your target market: To whom are you going to sell this?
4. Be clear on why your customer buys from you. What is your “value proposition”—
what are you offering that causes him to use you?
5. As in any business, strive for quality and customer satisfaction, even if your
customer is just someone else in your organization—like your boss.
6. Know your profession or field and what’s going on there.
7. Invest in your own growth and development, the way a company invests in
research and development. What new products will you be able to provide?
8. Be willing to consider changing your career.
SOURCE: W. Kiechel III, “Eight Keys to Career Self-Reliance,” Fortune, April 4, 1994, pp. 68–72. Copyright © 1994 Times, Inc.
All rights reserved. Reprinted by permission.
Managing
Chapter 1
25
Be Connected
Being connected means having many good working relationships and interpersonal
contacts and being a team player with strong interpersonal skills. For example, those
who want to become partners in professional service organizations like accounting,
advertising, and consulting firms strive constantly to build a network of contacts.
Their “connectedness” goal is to work not only with lots of clients but also with a half
dozen or more senior partners, including several from outside their home offices and
some from outside their country. A study of new auditors showed that social relationships improved newcomers’ knowledge of the organization and their jobs, their social
integration into the firm, and their commitment to the organization.91
Social capital is the goodwill stemming from your social relationships, and it can
be mobilized on your behalf. It aids career success, compensation, employment, team
effectiveness, successful entrepreneurship, and relationships with suppliers and other
outsiders.92 Today much of that social capital can be tapped online, at social networking Web sites. Besides the purely social sites like MySpace and Facebook, some of
these sites are aimed at helping people tap business networks. For example, LinkedIn
has more than 8 million registered users, with membership growing rapidly. Even busy executives are willing to
give LinkedIn a try because it allows sharing only among
people who agree to be connected; acquaintances can
introduce others only with permission.93
Look at this another way: All business is a function of
human relationships.94 Building competitive advantage
depends not only on you but on other people. Management is personal. Commercial dealings are personal. Purchase decisions, repurchase decisions, and contracts all
hinge on relationships. Even the biggest business deals—
takeovers—are intensely personal and emotional. Without good work relationships, you are an outsider, not an
effective manager and leader.
social capital
Goodwill stemming from
your social relationships.
Actively Manage Your Relationship with
Your Organization
Many of the previous comments suggest the importance
of taking responsibility for your own actions and your
own career. Unless you are self-employed and your own
boss, one way to do this is to think about the nature of the
relationship between you and your employer. Figure 1.1
shows two possible relationships—and you have some
control over which relationship you will be in.
Relationship #1 is one in which you view yourself as
an employee and passively expect your employer to tell
you what to do and give you pay and benefits. Your
employer is in charge, and you are a passive recipient of its
actions. Your contributions are likely to be adequate but
minimal—you won’t make the added contributions that
strengthen your organization, and if all organizational
members take this perspective, the organization is not likely to be strong for the long
run. Personally, you may lose your job, or keep your job in a declining organization,
or receive few positive benefits from working there and either quit or become cynical
and unhappy in your work.
In contrast, relationship #2 is a two-way relationship in which you and your organization both benefit from one another. The mind-set is different: Instead of doing what
you are told, you think about how you can contribute—and you act accordingly. To
the extent that your organization values your contributions, you are likely to benefit
This young professional is
“connecting” with her former
co-workers through Facebook, a
popular social networking tool.
Social networking is an important
way to stay “connected” and
build social relationships within
and outside of the workplace.
Increasingly, social networking
takes place through the use of
technology and the Internet.
26
Part One
Foundations of Management
#1
You as a passive
employee
#2
You as an active contributor
in a productive relationship
Employer
You
FIGURE 1.1
Two Relationships: Which
Will You Choose?
Your
Organization
You
in return by receiving full and fair rewards, support for further personal development,
and a more gratifying work environment. If you think in broad terms about how you
can help your company, and if others think like this as well, there is likely to be continuous improvement in the company’s ability to innovate, cut costs, and deliver quality products quickly to an expanding customer base. As the company’s bottom line
strengthens, benefits accrue to shareholders as well as to you and other employees.
What contributions can you make? You can do your basic work. But you can, and
should, go further. You can also figure out new ways to add value—by thinking of and
implementing new ideas that improve processes and results. You can do this by using
your technical knowledge and skills, as in developing a better information system,
accounting technique, or sales technique.
You also can contribute with your conceptual and human skills and your managerial actions (see Figure 1.2). You can execute the essential management functions and
deliver competitive advantage. You can deliver strategic value (Part 2 of this book).
You can take actions that help build a more dynamic organization (Part 3). You can
mobilize people to contribute to their fullest potential (Part 4). And you can learn
and change—and help your colleagues and company learn and change—to adapt to
changing realities and forge a successful future (Part 5).
Survive and Thrive
Now—far more than ever—you will be accountable for your actions and for results.
In the past, people at many companies could show up, do an OK job, get a decent
You
Your
Organization
Managerial Actions
1. Delivering Strategic Value
2. Building a Dynamic
Organization
3. Mobilizing People
4. Learning and Changing
FIGURE 1.2
Managerial Action Is Your
Opportunity to Contribute
Managing
Chapter 1
27
evaluation, and get a raise equal to the cost of living and maybe higher. Today, managers must do more, better. Eminent management scholar Peter Drucker, in considering what makes managers effective, notes that some are charismatic while some are
not, and some are visionary while others are more numbers-oriented.95 But successful
executives do share some common practices:
• They ask “What needs to be done?” rather than “What do I want to do?”
• They write an action plan. They don’t just think, they do, based on a sound,
ethical plan.
• They take responsibility for decisions. This requires checking up, revisiting,
and changing if necessary.
• They focus on opportunities rather than problems. Problems have to be solved,
and problem solving prevents more damage. But exploiting opportunities is
what creates great results.
This creative approach can make each employee a standout in some unique way.
Career adviser Rachelle Canter advises identifying where you deliver superior results
and thinking of that as your “brand.” For instance, an executive might develop a track
record of consistently improving productivity in various organizations, and an entrylevel customer service worker might become the company’s go-to employee for handling the toughest customers.96
Career success is most likely if you are flexible, creative, and ambitious. You will
need to learn how to think strategically, discern and convey your business vision, make
decisions, and work in teams. You will need to deliver competitive advantage and thrive
on change, just as Elon Musk does at Tesla Motors, as discussed in the “Management
Close-Up: Assessing Outcomes and Seizing Opportunities” feature. These and other
topics, essential to your successful career, provide the focus for the following chapters.
Management Close-Up
ASSESSING OUTCOMES AND SEIZING
OPPORTUNITIES
With Elon Musk’s cost-cutting initiatives, Tesla Motors was able
to withstand its financial crunch. Musk drew on relationships he
formed in the computer industry—with investors ranging from
eBay’s cofounder to Google’s founders to Silicon Valley venture
capitalists—to help fund Tesla. Meanwhile, the company focused
on filling its backlog of orders for its Roadster sports car to generate needed cash. Musk says, “The reason we started off with
a sports car is because initially any new technology’s expensive.”
Sports cars, even with their hefty price tags, do not suffer sales
slumps the way an average mom-and-pop car would—buyers
still want the latest technology. But their smaller market limits
the growth that Tesla can expect. To realize his vision of bringing electric cars to the masses, Musk needs to produce a more
mainstream, less expensive model.
So Musk is now working to get his sedan project rolling. In
2009 Tesla previewed its luxury Model S sedan. Designed to
travel up to 300 miles on a single charge, the Model S can seat
seven passengers. Cars will be assembled in the United States,
with full production of up to 20,000 units a year. Though priced
at $57,400, the Model S qualifies buyers for a $7,500 federal
tax credit through the government’s economic stimulus package.
That price puts the car in the range of more mainstream buyers.
If it is successful, the Model S could catapult Tesla into industry
leadership and allow the company to expand into its planned
company-owned dealerships.
Musk has applied for a $350 million loan from the U.S. Department of Energy to help produce the Model S. He also hopes to
receive some funding from the government’s $25 billion autoindustry bailout package, 10 percent of which is set aside for
small business. In addition, Musk has expressed interest in taking
Tesla Motors public in the next few years. Of his efforts to bring
electric cars to the masses, Musk said, “In all frankness, I don’t
really need the stress of building a car company. . . . If I didn’t
think it was extremely important, I wouldn’t have done it . . . We
need to change the world. There’s no choice.”97
• Consider Elon Musk’s background in the computer industry
and the difficulty of starting a revolutionary car company. Do
you think California is a good place from which to base Tesla
Motors? What are some advantages and disadvantages to this
strategy?
• Musk has drawn on his background in both physics and
finance to get Tesla off the ground. But he has also used his
managerial skills to keep the company moving ahead. Which
skills has he used? Do you think Musk is more of a specialist
or a generalist? Why?
28
Part One
Foundations of Management
KEY TERMS
Conceptual and decision skills,
Controlling,
p. 21
p. 16
Knowledge management,
Leading,
p. 12
Management,
Emotional intelligence,
p. 22
Middle-level managers,
Innovation,
p. 19
p. 9
Interpersonal and communication
skills, p. 21
Organizing,
Planning,
Quality,
Service,
p. 11
Social capital,
Cost competitiveness,
Frontline managers,
p. 7
p. 16
p. 14
Speed,
p. 19
p. 15
p. 25
p. 12
Technical skill,
p. 21
Top-level managers,
p. 15
Value,
p. 18
p. 15
p. 10
SUMMARY OF LEARNING OBJECTIVES
Now that you have studied Chapter 1, you should be able to:
LO 1
Summarize the major challenges of managing
in the new competitive landscape.
Managers today must deal with dynamic forces that create
greater change than ever before. Among many forces that are
creating a need for managers to rethink their approaches, there
have recently been four major waves of change: globalization,
technological change including the development and applications of the Internet, knowledge management, and collaboration
across organizational boundaries.
LO 2
Explain how the functions of management are
evolving in today’s business environment.
Despite massive change, management retains certain foundations
that will not disappear. The primary functions of management
are planning, organizing, leading, and controlling. Planning is analyzing a situation, determining the goals that will be pursued, and
deciding in advance the actions needed to pursue these goals.
Organizing is assembling the resources needed to complete the
job and coordinating employees and tasks for maximum success.
Leading is motivating people and stimulating high performance.
Controlling is monitoring the progress of the organization or
the work unit toward goals and then taking corrective action,
as necessary. In today’s business environment, these functions
more broadly require creating strategic value, building a dynamic
organization, mobilizing people, and learning and changing.
Compare how the nature of management
varies at different organizational levels.
Top-level, strategic managers are the senior executives responsible for the organization’s overall management. Middle-level, tactical managers translate general goals and plans into more specific
objectives and activities. Frontline, operational managers are
lower-level managers who supervise operations. Today, managers
at all levels must perform a variety of interpersonal, informational,
and decisional roles. Even at the operational level, the best managers think strategically and operate like complete businesspeople.
LO 5
Describe the sources of competitive advantage
for a company.
Because business is a competitive arena, you need to deliver
value to customers in ways that are superior to what your competitors do. Competitive advantages result from innovation,
quality, service, speed, and cost.
LO 3
LO 4
Define the skills you need to be an effective
manager.
To execute management functions successfully, managers need
technical skills, conceptual and decision skills, and interpersonal
and communication skills. A technical skill is the ability to perform a specialized task involving certain methods or processes.
Conceptual and decision skills help the manager recognize complex and dynamic issues, analyze the factors that influence those
issues or problems, and make appropriate decisions. Interpersonal and communication skills enable the manager to interact
and work well with people. As you rise to higher organizational
levels, technical skills tend to become less important and conceptual skills become more important, while human skills remain
extremely important at every level.
LO 6
Understand the principles that will help you
manage your career.
You are more likely to succeed in your career if you become
both a specialist and a generalist. You should be self-reliant but
also conn...
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