Why do TRADITIONAL MANAGEMENT fails when it comes to Modernizing their Management Strategy?

A young startup company and traditional company decided to have a boat race in Pasig River. Both Teams practices hard to reach their optimal performance before the race.

On the BIG day of the race, the startup company won by a kilometers. The traditional company was very upset and dishonored; they could not believe that their seasoned executives did not win the race. And also their tradition and decades old company failed to won the race.

They decided to investigate the reason for the humiliating defeat.

A management team made up C level executive was formed to investigate by the board of directors and recommend appropriate action.
Failure of Controls
to control or to guide?

Their conclusion was the startup company had 10 people rowing and 1 person steering, while their traditional company had 10 people steering and 1 person rowing. The C level management task the senior management to hire a consulting company and paid them a large amount for a second opinion.

They advised that too many people are steering the boat, while not enough people were rowing.
But the Board of director was not happy with the consultant that the C level hired; they bypass the C level and ask the senior management to hire another consultant but this time the board wants some consultant that they trust.

To avoid another humiliating defeat to the startup company, the boat team’s management structure was totally reorganized to 4 steering manager, 3 area assistant manager, 2 supervisor, and 1 rank and file rower. They also implemented new performance systems that would give the 1 person rowing the boat greater incentive to work and perform harder.

The program was called the “Chairman’s Quality First Program” with meetings, dinners and free pens and papers for the rower. There was discussion of getting new paddles, boat and other equipment, extra vacation days for practices and bonuses.

The discussion of getting new equipment invigorates the team, but as the big race day are coming the team spirit are slowing down because the discussion for the new equipment are still pending discussion to the senior management, C level and board of directors. The middle management does not know now how to answer queries from the team, as they are left uninformed.

The next year comes and the startup company won again the big race but this time by two kilometers.

Humiliated, the traditional company implemented mass layoff; they started to layoff the rank and file rower for poor performance, and then followed by the middle management. They also halted acquisition of new equipment, slow down the upgrade of the existing assets; they decided to sell the paddles and other assets. And worst cancelled all capital investment in new assets and equipment.

The money saved was distributed to all senior executives and directors as bonuses. The next year race team was outsourced to contractual and project company outside the country.

What is more important? The process efficiency and guiding confidence or the decision to hire more and more consultants just to validate what is already known.

To control or to guide which one are you? 

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