Management in a new global economy

The 2011 Stuttgart Competence Day

IBM’s 2010 Global CEO Study looked at the challenges to managers “Growing up in a Complex World.” For the study, IBM interviewed over 1500 CEOs worldwide on the future challenges facing companies and their managers. Almost unanimously, the CEOs pointed to the fact that the new global economy will be more dynamic, uncertain, complex and structurally different. They also generally agreed that in a world that’s constantly on the move – and sometimes even verges on chaos – companies have to be permanently prepared to make evolutionary or even revolutionary steps forward. Ultimately, managers will need a feel for their creative capabilities, much more than in the past. And more than anything else, they will need the ability to create the new or the different, or at least allow it to happen.

In other words: to survive in a continuously changing world, the categorical imperative, the primary principle of entrepreneurship, lies in the ability and the willingness to innovate – not just continually thinking differently, but also allowing value creation and value adding to become a reality. It’s this that will decide the fate not just of economies but also companies.

This being the case, the thoughts of Schumpeter, one of the greatest economists of the 20th century, are as valid now as they have always been. It was Schumpeter who introduced the German language to the concept of “innovation” and this shaped our understanding of the term today. An innovation refers to the sometimes radical (re)designing of the existing, creating the new by doing away with the old, what Schumpeter called the process of “creative destruction.” It was also Schumpeter who stated that gain is the reward for seizing the advantage when things change.

Many associate the term innovation with technical inventions. But when Schumpeter wrote about innovation he did not just mean these. Instead he explained that there are many ways to innovate:

  • Develop and launch a new product, develop and provide a new service
  • Develop and introduce new production methods or new business processes
  • Enter new customer markets or purchasing markets
  • Develop and launch new organizational structures.

Schumpeter already emphasized that such developments and launches, or entering new or other markets, will not come to us like “manna from heaven.” They are the result of people systematically translating ideas into reality – they are initiated, planned, implemented and monitored. To plan and implement such undertakings in the first place – activities that culminate in innovations – people are needed with the ability to react to the unknown or the new, by (re)designing them and translating them into the as-yet non-existent.

But how can we ensure that such highly qualified and highly skilled specialists – as well as highly qualified and highly skilled entrepreneurs and managers, a group often forgotten – are in a position to make their knowledge, abilities and motivation available to society? The simple answer is education. But what should education in general – or more specifically, studies – be like for innovative workers, especially managers, to flourish? Education would involve study, going back to the original Latin meaning: diligent application. Wilhelm von Humboldt’s humanistic interpretation of diligent application: Man should work on a better world and change so much about mankind as he is able to in his lifetime. So in humanistic terms, two principles define study. The first principle, working on a better world, implies that we should strive to gain as much variety of experience in, through and with the world as possible. The second principle, changing ourselves in light of this experience, means that the outcome of a better world should not just constitute an expansion or change in our body of knowledge about the world.

Instead, the deeper layers of our own personality – skills, character, values – should be affected by the change process, so we should be shaped on a holistic level by our experience in, through and with the world. Putting everything in place – so these principles can be realized by students – is the job of the universities. But this task can only be completed uno actu with students. So there is also an onus on students. The theologist Ignaz von Döllinger believed that there are two “crags” that we would wish people to circumnavigate in study. The first crag is limiting study to what is needed to pass exams. The second: dilettantism during studies, when predilection and intellectual convenience take over, when the only thing that is extracted and pursued from “organically structured materials” is that which is “conveyed as easier,” or that which speaks merely to the students “intellectual curiosity.” He believed that both “aberrations” are as common as they are “deleterious.”

So potentially, two hurdles can condemn study to failure. And in principle, both have one and the same origin: “Indolence of the heart” (Erich Kästner). In the first scenario, indolence is only working on the things one considers necessary to pass an exam or meet a challenge set by others In the second scenario, indolence is only working on things one already finds easy or what seems opportune in a given situation.

Study should thus fulfill a purpose on two fronts. Firstly, it should stimulate people to think about fundamental principles like specialist knowledge and ability, aspects supposedly at the periphery, or even beyond the Study indicated that businesses will have to deal with more and more complexity in the future, stating that companies that cherish CEO creativity as the most important leadership quality will be the ones to establish themselves. This concept was also central to the talk given by Prof. John Erpenbeck (School of International Business and Entrepreneurship at SHB). He described leadership competence as the ability to react creatively to new management situations. Jens Mergenthaler (School of International Business and Entrepreneurship at SHB) approached leadership from a different angle, looking at the term from a linguistic standpoint. Prof. Dr. Rudolf Tippelt (LMU, Munich) demonstrated the close connections between management training and personality development, prosanction of specialty or examination requirements. Secondly, study should stimulate people to work on things beyond the esoteric, exotic and uncomfortable – and not just engage in further education but to further their education.

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