Managing in the New Economy

Citation

Cassell, K.A. and Mercado, M.I. (2000), "Managing in the New Economy", The Bottom Line, Vol. 13 No. 4. https://doi.org/10.1108/bl.2000.17013dae.002

Managing in the New Economy

Magretta, J. (Ed.)Harvard Business SchoolBoston1999

Keywords Management theory, Management techniques, Strategy, Economy

Applicable to both library and information professionals and managers, this book is from the Strategy Editor of the Harvard Business Review. The book is what is considered to be some of the best thinking in print concerning managing in the new economy. This collection of readings, most of which was edited for the "Review," is intended to assist the reader in making sense out of the nuances of the new managerial agenda. The underlying assumption is that the basic principles of business economics and the enduring realities of human nature are more relevant today than ever before. True, because anyone struggling to lead an organization through the maze of technological changes needs to know "where the ground is solid." Yet, as Magretta points out, although there are significantly new sets of issues and priorities which did not exist 15 years ago, there is a great deal more continuity and coherence to the new role of managing than would appear on the surface. Therefore, the analysis and the readings seek to analyze the impact of the new economy's changes on managing.

For Magretta, the new economy is characterized by three major changes. First, the rise of networks resulting from the presence and the expansion of information technology has broken the tradeoff between richness and reach by changing the economies that underlie industry and organizational structures. This means the scope of an organization's activities is one of devising fundamental strategies about doing business, which will cause changes in relationships within the organization.

Second, there is the issue of the growth of knowledge work. Because value creation is a function of information and ideas, knowledge can turn products into services or it can make physical products more valuable. As a result of the fundamental shift in how value is created, management will face a new challenge: managing knowledge work and innovation.

Third, because the globalization of trade and the competition engendered has caused political and logistical barriers to drop, the situation has made it imperative for every organization to reexamine its own economic landscape. According to the author, every organization is feeling the impact of the aforementioned factors. The direction is always the same: toward more dynamic, faster paced competition and change. And given this dynamism, uncertainty and business competition is constantly on the rise.

The authors of the various articles in Part I of this book discuss the strategic issues of the new economy, such as how information technology alters the familiar structures of organizations and industries. How do companies create value and effective strategies in a knowledge-based economy where globalization is changing the way in which organizations and businesses compete? This section's articles are written by authors such as Philip B. Evans and Thomas S. Wurster of the Boston Consulting Group, who analyze the principles underlying the "deep structure" of the network economy. Michael E. Porter's article challenges the conventional wisdom about how companies should be configured, how institutions, such as universities can contribute to competitive success and how governments can promote economic development and prosperity.

Part II discusses the role of leadership and organization in the new economy. W. Chan Kim and Renee Mauborgne discuss the idea of "fair process," which is a way to approach decision-making involving three principles:

1. 1.

   Engaging people in the decisions that effect them.

2. 2.

   Explaining the thinking underlying decisions once they have been taken.

3. 3.

   Setting clear expectations about the rules of the game.

In an interview article with Peter Drucker, he states how in the knowledge economy, it is self-awareness, i.e. the discipline of thinking about who you are and what you do best, that is necessary for survival. Since values are an important part of self-management, Thomas Donaldson, in his article, "Values in tension ethics away from home," discusses the issues and problems inherent in managing in foreign settings. He raises the following question. When is different just different? And when is different wrong?

In Part III, effective ideas in business are examined. Michael Dell of Dell Computer is interviewed about his business insight to sell his product directly to the consumer, thus eliminating the reseller's markup. What Dell has done is harness the tools of the knowledge economy – information and technology – to bring new levels of efficiency and productivity to the "old economy" of tangible goods. Magretta contributes an article concerning an interview with Victor Fung, of the Hong Kong-based export trading company. Victor Fung shares Michael Dell's obsession with serving customers with his ever-expanding network of thousands of suppliers in a supply chain where he buys the right products and shortens the delivery cycle. Fung's goal is to deliver a new type of value added product on a global scale. Thus, in effect, Fung creates a customized value chain for every customer order.

Magretta's edited book is certainly a contribution to the ideas inherent in managing in the new technological information economy. Since many organizations and businesses struggle with the stresses of innovation and creativity, the articles in this book clearly discuss the innovative strategies and techniques of management, which should be used to successfully compete and survive in the knowledge economy. Because this book not only compiles in one volume ideas concerning how to do it, we think that this book should be on every top manager's desk. We highly recommend it.

Kay A. CassellAssociate Director, Programs and Services for the New York Public Library's Branch Libraries

Marina I. MercadoAdjunct Faculty Member at Mercy College, New York, and a consultant in international business