Chapter 1. Traditional Management Process Are Obsolete

 

Change is inevitable in a progressive country. Change is constant.

 
 --Benjamin Disraeli

If anyone had any doubts that traditional management practices such as complex multiyear strategic plans, detailed annual budgets, quarterly forecasts, and monthly management reports were obsolete, they were blown away on September 15, 2008. Much as Netscape's initial public offering on August 9, 1995, marked the dawn of the Internet age, Lehman Brothers' bankruptcy filing put the final nail in the coffin of calendar-based, accounting-driven performance management. Managers must now operate in a world of unprecedented complexity, volatility, uncertainty, and risk. Static management processes based on historic data simply do not work anymore. The facts speak for themselves. How many strategies, plans, budgets, or forecasts that were crafted with such care in 2007 assumed that:

  • Oil prices would rise from $45 a barrel to a peak of $147 before collapsing to $35?

  • U.S. automotive sales would fall from an annualized rate of 16 million in 2007 to less than 10 million one year later?

  • The Dow Jones index would lose 54 percent of its value, from 14,164 on October 9, 2007 to 6,547 on March 9, 2009?

  • The $/£ exchange rate moved from $1.35 in March 2008 to $2.07 in January 2009 before falling back to $1.66 in July 2009?

  • The H1N1 virus would move from a minor flu outbreak in northern Mexico to a global pandemic in six weeks?

We live in an uncertain world and it ...

Get Best Practices in Planning and Performance Management: Radically Rethinking Management for a Volatile World, Third Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.