Most of the management theory and business architecture is based on the work perfected by Alfred Sloan, who introduced middle management at General Motors in the 1920s as a means of processing information and implementing decisions effectively.
Mr. Sloan's invention - in response to the changes in the business environment of his time - was a brilliant one. And while the business environment stayed pretty much the same, GM enjoyed world leadership and enormous financial success.
As we all know, the business environment has changed dramatically since Mr. Sloan's time. Those still using his once-effective methods cannot compete effectively in the new global, high-speed economy. Most banks (and other businesses) are thinking and talking about new business models, adding the latest flavor-of-the-month change program, and trying harder.
It is not enough.
Consider a dog who in response to changes in the environment, needs to learn how to fly in order to survive. No matter how fit, no matter how focused or determined, no matter how well positioned, no matter how much he watches and practices flapping his legs, the dog won't be able to fly.
Even if he pastes feathers on his legs, he doesn't have the skeleton to support the process of wing flapping. His nervous system doesn't have receptors that enable him to sense and make instant use of updrafts - and he doesn't understand the factors most important for successful flying.
It is not enough to change the words we use or even the ideas we have. Competitive fitness requires more.
To respond successfully to the rapid changes in customer demands, the development of e-commerce, the global economy, and the shifts in relative power from management to employees, banks must fundamentally restructure themselves.
Fortunately, unlike the dog, which can't grow a new skeleton during his lifetime, banks can do this.
Here are some questions to help you consider, whether you are stuck in Mr. Sloan's outdated approach to management or are fundamentally restructuring for competitive fitness:
Architecture. Do you have task forces and matrix management ineffectively overlaying silos of internal competition and old-style hierarchies? Do you find it necessary to reorganize frequently? Do your reorganizations disrupt your business effectiveness? Do your employees look over their shoulders, fearful of layoffs or resenting the effects of multiple mergers and acquisitions?
Allocation of resources. Do you spend a quarter of a billion dollars (as Bill Harrison is doing at Chase) mobilizing for your e-strategy, yet wince when considering increasing investments in employee efficiency from 1.5% of expenses to 2%? Do you have a rigorous way of accounting for the return on your human capital, for assessing investments in productivity improvement, or for deciding when the cost of bringing together widely disparate staffs in a potential acquisition is too high?
Roles. Are your managers evaluated on whether they know the "right" answer and on how well they control people and results, rather than on how well they set overall purpose and governing principles, provide tools, connections, and usable information, and fuel the system (with human capital, attention, funding, and feedback)?
Are employees expected to be predictable "parts" in a factory, or engaged as partners to create the "ways in which we do things," and then to implement according to changing local conditions?
Use of information. We all know that information overload makes us ineffective. Almost certainly you have network software in place that regulates the amount of information passing through your network among your various computers and terminals.
Do you have a similarly effective program in place to insure every employee not only gets the information he or she needs to be most effective, but also doesn't suffer from information overload? Is it easy for employees to relate the information they receive to the organization's current performance challenges and the local environment?
Tools. Do you and your employees have the tools you need to be effective? How do you know? Do you update this information every week? Does everyone in your organization know how he or she learns most effectively and how he or she prefers to work in a group? Do your management, communications, and training programs take these differences into account?
Nervous system. Do you survey employees once a year, develop a plan and implement it over the next six to nine months, and then resurvey the next year? What happens if something changes during the year? Does everyone in your institution share an understanding of the key indicators relating to your current performance challenges? Do you have a weekly mechanism for understanding customer reactions to your products and services?
Communications. Do you really mean what you say? Can your employees use your mission statement to make daily decisions? Is the purpose of your communications program to tell everyone the decisions that have been made and insure compliance with the direction chosen, or is it to present critical performance challenges so that everyone may contribute to the solutions?
Obviously, you cannot restructure overnight. But the bank of the future is one that, for example, will make robust use of networks inside and outside the organization, make investments in human capital in anticipation of a clear rate of return, and ensure that employees understand how successes and failures change the environment and their responsibilities.
Lest you say, "Bah! Humbug!" let me conclude by noting that new research shows selected businesses that are using these concepts outperform the market in profit margin, returns on assets and R&D, and market value. Those that achieve preferred-employer status, such as Southwest Airlines, also have dramatically lower turnover and receive almost double the number of applications for each advertised position.
Ms. Allison is chairman and co-founder of Allison-LoBue Group LLC, a consulting firm that specializes in organizational effectiveness. It is a member of the LoBue Group of consulting firms in Northbrook, Ill.
