A glossary of managerese. (management terms)
illustration cartoon
Summary:
A glossary of 'managerese' is provided to help the
layperson understand the sometimes seemingly
incomprehensible language of managers. It is easy for
outsiders to misunderstand management jargon, with terms
being used indiscriminately, new terms quickly replacing
the old, or old terms acquiring expanded meanings. The
glossary lists some of the most commonly used management
terms from A to Z and gives a brief definition of each.
Among the terms included are 'activity‑based costing,'
'best practices,' 'competitive advantage,' 'discontinuous
change,' 'empowerment,' 'fuzzy logic,' 'gainsharing,'
'hoshin kanri,' 'ISO 9000' and 'just‑in‑time.' The
definitions of such terms as 'kaizen,' 'learning
organization,' 'management by walking around,' 'nuke,'
'outsourcing,' 'quality circle,' 'time‑based competition,'
and Theories X, Y and Z are also included.
Across the Board p39(6) Nov‑Dec 1993 v30 n9
DESCRIPTORS:
Management_Terminology
FOR LANGUAGE MAVENS, management terms are a feast; for the poor blokes
who have to use them in business communication, they present a famine of
understanding. New terms replace old terms, old terms acquire new
dimensions or are used indiscriminately. The result: We may be talking
the same language, but our words hold different meanings. In an effort
to clear up some of the discrepancies, we've compiled a glossary of
managerese. However, due to the speed with which some definitions are
altered and added to, the definitions may, in some cases, be necessarily
incomplete.
A Activity‑Based Costing (ABC)
Traditional accounting sees a business as a huge machine made up of
departments, with employees as cogs who produce the product. The ABC
accounting method sees a business as individuals performing activities
to satisfy customer demands. ABC is subtle fine‑tuning that examines
processes and products to find out how they cause expenses, and then
sees that they bear the cost. Union Carbide Corp., Chrysler Corp., and
Hewlett‑Packard Co., to name a few, count themselves as ABC converts.
ABC was developed by Harvard University's Robert Kaplan and Robin
Cooper, who warn it should not be used to trigger automatic decisions.
The Adaptive Organization
Chameleon‑like organizations able to keep up with the fastest‑changing
global business climate in history are considered adaptive. One way
these organizations stay flexible is by entrusting more power and
decision‑making to workers. Adopting such a policy requires an
organization "that is very different from the hierarchical one that
exists today," Michael Beer, professor of organizational change at
Harvard's Graduate School of Business Administration, told Industry
Week. On the downside, the adaptive organization's quick reflexes cause
new programs to pile on top of each other more rapidly than before,
which may end up creating only "a new amount of cynicism," Beer said.
B Best Practices
Business practices, processes, or applications that are perceived as the
best‑in‑class by companies that feel they've successfully improved on a
particular process. Benchmarking is one of the many methods used to
determine Best Practices. General Electric Co. claims to have started it
all with a project it called "Best Practices," which asked companies
that had achieved faster productivity growth than GE had, "What's the
secret of your success?"
C Competitive Advantage
This enables a company to gain an edge on its rivals. According to
Harvard's Michael Porter, who popularized the concept, there are two
types of competitive advantage: low cost and differentiation.
"Competitive advantage is a function of either providing comparable
buyer value more efficiently than competitors (low cost), or performing
activities at comparable cost but in unique ways that create more buyer
value than competitors and, hence, command a premium price
(differentiation)," Porter says in Instant Management by Carol Kennedy.
Speaking of commanding a premium price, BusinessWeek called Porter "one
of the highest‑paid academics anywhere." Living proof of his strategy's
effectiveness? (see Value Chain Analysis).
Core Competence
In the '80s, top executives restructured and delayered; in the '90s,
they exploit core competencies‑‑or what a company does best and what
differentiates it from the competition. C.K. Prahalad and Gary Hamel
popularized the term. Honda Motor Co. Ltd., PepsiCo Inc., L.L. Bean
Inc., and CNN are part of the pack that put the concept into action.
Rather than basing their strategies on products or markets, these
companies focus on competencies that give their companies access to
multiple markets and are tough for competitors to imitate.
D Discontinuous Change
This concept can be seen as disrespectful, if not downright rebellious,
says futurist and philosopher Charles Handy in his book The Age of
Unreason. "To embrace discontinuous change means . . . completely
rethinking the way in which we learn things," according to Handy. "In a
world of incremental change it is sensible to ape your elders in order
to take over where they leave off." But he believes that under
conditions of discontinuity, we may all need new rules for a new ball
game. Discontinuous change threatens authority because it's the idea
that the best way to go about doing something may not be the way it's
currently done, or for that matter, the way that it's been done for
years.
E Empowerment
This term refers to increasing employee involvement with a view to
stimulating initiative and entrepreneurism. Who needs it? According to
management guru Rosabeth Moss Kanter, isolated top executives are as
susceptible to feeling powerless as front‑line supervisors. She feels
those who lack productive power may turn to using oppressive power. And
by empowering others, a leader may increase, not decrease, his own
power, Kanter says. Women managers, especially, experience power
failures, since companies are geared to employing them in routine,
low‑profile jobs.
Excellence
Sooo, even after the past decade's excellence frenzy, you are still, as
Tom Peters and Robert Waterman would say, "In search of excellence"?
Fine, here's a refresher pep talk straight from the excellence bible.
Work hard to keep things simple in this complex world. Insist on top
quality. Don't substitute tools for thinking. Don't let intellect
overpower wisdom. Analysis shouldn't impede wisdom. Fawn on your
customers. Listen to your employees and treat them like adults. Give
innovative product and service "champions" long tethers at your
organization. Allow for some chaos in return for quick action and
regular experimentation. Got that? Excellent]
F Fuzzy Logic
In contrast to the black and white of conventional logic, fuzzy‑logic
technology deals in shades of gray. A computer with fuzzy logic thinks
like a person, and if that doesn't excite you, consider cars that drive
themselves, software that predicts the stock market based on the daily
news, computers that understand and respond when you speak to them, etc.
Invented in the United States? Yes, by Professor Lotfi Zadeh at the
University of California at Berkeley in 1964. Appreciated in the United
States? Nope, ridiculed. But Japan saw the logic and now Matsushita
Electric Industrial Co. Ltd., Sony Corp., and other companies will earn
billions selling our own idea back to us.
G Gainsharing
Sharing financial gains with all employees in a single plant or location
recently has gained popularity, according to Edward Lawler in his book
The Ultimate Advantage. He notes that a 1987 survey of Fortune 1,000
companies found that 26 percent used gainsharing; three years later, the
number had jumped to 39 percent. Lawler says gainsharing plans are more
than pay‑incentive plans: They are a way to install or reinforce
participative management. In fact, he says, "In most situations . . . a
gainsharing plan will not produce an appreciable improvement in
performance without participative management."
H Hoshin Kanri (also known as Policy Deployment)
This Japanese methodology provides a step‑by‑step planning,
implementation, and review process for managed change. Multiple vision
statements are developed to encourage breakthrough thinking about the
organization. Company communication is increased, since core objectives
are negotiated by everyone involved in the planning process. American
companies that practice hoshin kanri include Hewlett‑Packard Co.,
Procter & Gamble Co., and Intel Corp.
I ISO 9000
Although this set of five standards for quality management and assurance
developed by the International Standards Organization is called
"voluntary," ISO 9000 is fast becoming mandatory for manufacturers
selling to multinationals, among others. Many predict that ISO 9000
consultants soon will outnumber Malcolm Baldrige National Quality Award
consultants. Advantages for manufacturers using the standard, aside from
the status and certification, include improvements in production,
productivity, and quality of management.
J Just‑in‑Time (JIT)
Just‑in‑time to speed up production and cut costs, it's a Japanese
inventory‑elimination system. Suppliers supply what is needed to their
customers when it is needed, which undoubtedly will be . . . (you
guessed it). Also known as kanban or continuous‑flow production.
K Kaizen
Ongoing improvement (however minute) is the essence of this Japanese
concept. Put another way, one might say Japanese companies favor the
gradualist approach to progress, while Western companies favor the
great‑leap‑forward or innovation approach. The kaizen philosophy assumes
that everyone's lifestyle, including work habits, deserves constant
improvement. In fact, kaizen comes so naturally to the Japanese that
many managers there don't realize they possess it. In Japan, Total
Quality Control, not to mention just‑in‑time and many other systems, are
part of kaizen.
Keiretsu (formerly called Zaibatsu)
Keiretsu translates as "headless combines" and it refers to large groups
of Japanese financial and industrial companies that are interlinked by
cross‑shareholdings and long‑term commercial connections. Mitsubishi
Corp., Sumitomo Corp., and Mitsui & Co. Ltd. all are examples of
keiretsu. However, Toyota Motor Corp., Sony Corp., and Canon Inc. are
not keiretsu. The debate continues over whether or not, or how much,
keiretsu is responsible for Japan's industrial success.
L Lateral Thinking
Talk about a brainstorm. Not only did Edward de Bono, Malta‑born and
Oxford‑educated in psychology and medicine, come up with the idea, but
he has spun 37 books off of it. The Oxford English Dictionary's
definition of lateral thinking: seeking to solve problems by unorthodox
or apparently illogical methods. Lateral thinking turns up an idea;
vertical (or traditional, logical) thinking develops it, says de Bono,
adding that lateral thinking alone is not a method for decision‑making.
Although much of what goes on at brainstorming sessions is lateral
thinking, they are not one and the same‑‑what happens during
brainstorming is only one expression of certain aspects of lateral
thinking. Riding out this lateral‑thinking brainwave, de Bono now runs
the world's largest program for teaching thinking in schools, and
companies including Exxon Corp., 3M Co., and Apple Computer Inc. have
given more than a penny for his thoughts.
The Learning Organization
(There will be a quiz at the end of this definition.) This term is the
brainchild of Peter Senge, director of the Organizational Learning
Center at the Massachusetts Institute of Technology, who has consulted
with Ford Motor Co., Federal Express Corp., and Herman Miller Inc.
Senge's philosophy is that learning is central to success. All
organizations learn; learning or innovating fast enough to survive is
the key.
Now, here's the quiz. Does your organization have: 1) A commitment to
knowledge? This includes research, seminars, discussions, and hiring
people the company can learn from (as opposed to hiring people with the
intent of training them). The knowledge gained through all of the means
mentioned should be incorporated into everyday procedures; 2) The
ability to avoid bureaucratic rigidity by constantly adapting and
learning internally?; and 3) An openness to what's occurring in the real
world? If you answered yes to all three, yours is a learning
organization.
M Management By Walking Around (MBWA)
This concept conveys the necessity of hands‑on, direct participation of
managers, as opposed to distant order‑giving. Managers literally walk
around making informal visits to work areas. This enables them to
collect data, form impressions, and generally keep their finger on the
company's pulse. Companies that subscribe to Management by Walking
Around like to say, "MBWA is our approach, not MBA." (Small joke, that.)
Used in Type‑Z organizations (see Theory Z).
N Nuke
As in to terminate, obliterate, kill, dissolve. One can nuke people,
companies, management programs, you name it. This concept is popular
among reengineering converts.
O Outsourcing
This is not a new idea, but one whose popularity has increased recently.
It's the use of services provided by external vendors for everything
from the food in the company cafeteria to claims administration. Top
reasons to outsource: to hold down unit costs and investment needed to
turn out new products rapidly, and to free your company to direct scarce
capital where you hold a competitive advantage. Usually, that means
shifting funds to such areas as market research and training sales or
service employees.
Companies that outsource noncore activities (see Core Competence) are
called modular corporations; the outsourced services can be added or
taken away as needed. While modular companies are most common in the
fast‑paced apparel and electronics businesses, the concept has spread
recently to such other industries as steel, chemicals, and photographic
equipment. Reebok International Ltd., Nike Inc., Dell Computer Corp.,
and Chrysler Corp. are just a few of the hottest outsourcers around.
P Portfolio Work
Charles Handy's view that lifetime careers soon will be a thing of the
past. The author of The Age of Unreason and other management books says
knowledge‑workers or brain‑workers will, in the future, design a range
of jobs for themselves to suit the way they want to spend their time. In
the past, most people have had only one item in their portfolio‑‑their
job or career. Pretty risky, not to mention boring, according to Handy.
Portfolio workers, on the other hand, may spend a total of one week a
month consulting, two weeks working part time for a major computer
manufacturer, four days a month working on a book they're writing, and
then another chunk of time studying. The result is a less secure but
more fulfilling career. Portfolio work is ideal for people in the Third
Age (when, for many, the kids are self‑sufficient, the house is most
paid for, some money is saved, and a pension will soon kick in), Handy
says.
Post‑Entrepreneurial Organization
As the title of Rosabeth Moss Kanter's book on the concept, When Giants
Learn to Dance, implies, this is like combining "the power of an
elephant with the agility of a dancer." Kanter, inventor of the term,
calls the post‑entrepreneurial organization a new model for the 1990s.
The idea: apply entrepreneurial principles to corporations. The result:
flexibility while maintaining a disciplined efficiency.
Post‑entrepreneurial companies do more with less, and that includes
fewer management levels. These globally competitive companies are open
to change and they achieve synergies where the whole is worth more than
the sum of its parts.
Q Quality Circle (QC)
Generally, QCs consist of a group of six to 12 employees from the same
work area who meet regularly to solve problems affecting them. QCs are
trained by management, and their typical objectives include suggesting
solutions for improving quality, productivity, and employee involvement.
However, they have no actual decision‑making power. In the early 1980s,
QCs were viewed as the solution to all labor‑relations problems by
some. Meanwhile, there were companies that encountered resistance from
employees. According to Personnel Journal, studies show that half of the
quality circles that U.S. companies eagerly tried failed.
R Reengineering
No, this is not another name for downsizing or automation. It's starting
over and reinventing the way a company gets its work done, according to
Michael Hammer and James Champy, who recently popularized the idea (see
"The Age of Reengineering," Across the Board, June 1993). Their formal
definition: Business reengineering involves the fundamental rethinking
and radical redesign of business processes to achieve dramatic
improvements in critical measures of performance such as cost, service,
and speed. Work throughout the ranks should be organized around outcomes
rather than around tasks or functions.
S Sell One, Make One (SOMO)
This term was first used by two consultants for Andersen Consulting to
describe Nissan Motor Co. Ltd.'s operating mode. "When you buy a car
from Nissan in Japan and the salesman hits the enter button on his
computer for your order, it not only arranges financing and a parking
space, but it triggers transactions that call in the material to build
your car. In fact, the customer can schedule his car on the production
line," says Bill Stoddard, the term's co‑creator and an Andersen
partner. Naturally, a company needs quick reflexes that don't sacrifice
quality to succeed. SOMO companies enjoy increased efficiency: no
inventory pileups, no excess paperwork.
The Seven S Model
Seven "S" factors are featured in this measure of the quality of a
company's performance. They are divided into three "hard" factors
(strategy, structure, and systems) and four "soft" (style, shared
values, skills, and staff). Richard Pascale, Tom Peters, and Robert
Waterman are the s‑s‑s‑s‑s‑s‑sires of this now‑famous formula, developed
when they were McKinsey & Co. Inc. consultants.
T Time‑Based Competition
Otherwise known as "time is money"‑‑not to mention productivity,
quality, and innovation. Faster than a nanosecond, George Stalk Jr.,
vice president of The Boston Consulting Group, coined (and dollared) the
term. To the point: Time is as manageable as costs and can give you a
competitive edge. The goal is competitive costs, quality, and
responsiveness. If his concept seems obvious, "why," Stalk asks in his
book Competing Against Time, "don't more managers talk and act as if it
were? Almost none of the Fortune 500 companies' annual reports emphasize
the importance of time to the corporation's shareholders" (see
Just‑in‑Time).
U Unity of Command
Or, two bosses are not better than one. This organizational principle
states that no subordinate should report to more than one supervisor.
V Value‑Chain Analysis
Examining a company's value chain‑‑or all the activities it performs and
how they interact‑‑is one way to determine its competitiveness. It
shows existing and potential sources of differentiation, plus roots of
costs and how they behave. A Michael Porter preferred method (see
Competitive Advantage).
W Work‑in‑Process (WIP)
In most cases, the idea is to keep expensive WIP‑‑or semifinished goods
and services‑‑to a minimum. How? Hewlett‑Packard Co. cut its WIP at one
factory from 22 days' worth to one day's worth by introducing the
just‑in‑time system. However, some companies, like contractors, value
WIP since it accounts for almost all of their assets (see Just‑in‑Time).
But it's tough to put a value on the likes of a half‑built hotel.
Work‑Outs
Devised in 1988 by James Baughman, director of General Electric Co.'s
Management Development Institute in Crotonville, N.Y. Work‑Outs usually
take place in a conference center or hotel and include employees from
all ranks and functions. After the boss tells everyone the general
agenda, he leaves. The highlight of the three‑day Work‑Out is the final
day, when the boss returns and employees fire their problem‑solving
proposals at him. Work‑Out rules say he must respond immediately, and in
one of three ways: 1) saying yes, 2) saying no, or 3) asking for more
information and chartering a team that will get the information by a set
date.
X Theory X
American social psychologist Douglas McGregor is famous for Theories X
and Y. (He admitted the research behind the theories was not original,
but formulated from others' ideas.) X assumes that most people need a
mixture of carrot and stick to perform, since they are lazy, immature,
and dislike work and responsibility. McGregor believed the banishment of
Adam and Eve from Eden into a world where they were forced to work to
survive was where Theory X began.
Y Theory Y
Employees should actively be allowed more self‑direction in their jobs
because they have a psychological need to work, want achievement and
responsibility, can help solve organizational problems, and are, in
fact, adult.
Z Theory Z
McGregor was refining this theory before his death in 1964. After his
death, William Ouchi adapted Theory Z in his book of the same name. It's
a combination of Theory Y and the Japanese consensus‑management style.
In Theory Y, employees are consulted for their opinions, but do not make
the final decision. In Theory Z, everyone actually signs off on the
final decision. A Theory Z culture features long‑term employment, trust,
teams (not part of Theory Y), and close personal relationships,
according to Ouchi. The defining value, however, is commitment to
workers, whom the Z company does not treat like 9‑to‑5 machines.
DAWN CHIPMAN is an assistant editor of Across the Board.