Managing Differences: The Critical 21st-Century Management Skill

Rob Austin

Creating the conditions in which people of widely varying backgrounds, behaviors, and inclinations can maximize their particular contributions to economic value will inevitably transcend the 20th-century management style of making things and people fit into systems that execute efficiently, states Cutter Fellow Dr. Robert Austin.

Financial crises notwithstanding, the 20th-century virtues of cost reduction and efficiency have lost some of their competitive value for firms in developed economies. Says Austin, "These virtues remain very important, of course; but no matter how well firms in developed economies do at lowering costs and promoting efficiencies, competitors within emerging economies, especially China and India where there is access to a nearly infinite labor supply, have a structural advantage. The playing field has shifted, and it's not a fair fight, no matter how good you are at efficiency. Sooner or later you'll have to compete differently: by convincing buyers that what you can provide is better, and more valuable -even if it does cost more (and it will) than what can be obtained elsewhere."

In this kind of competition, it's not the 90% you do right, or even the 99%, that counts most, according to Austin; it's that extra 10% or 1% that differentiates you from the crowd.

"In the 21st century, one of the best sources of the differentiators that might be valuable is the difference between people -- and their points of view," says Austin. "Without those, we aren't creative, we don't innovate, and we don't differentiate ourselves, or our products, or our services enough to survive in business. To get that 10% or 1% consistently and reliably, the most important job of a 21st-century manager is to create conditions in which people can work at the limits of their abilities, at the edge of their capabilities."

Austin admits this will be hard because those conditions are likely different for each individual. "It also makes you less of a 'boss' and more of a 'servant with a nice title'. For some managers, serving might be a lot less fun than bossing. Nevertheless, in the future, the competitive prizes will go to those firms and those managers who can best harvest value from their human capital assets, despite the tremendous and essential variety of those assets."

Dr. Austin offers these recommendations to managers seeking to "manage the differences":

1. Start thinking about your "differentiated" value proposition. What makes your own personal "services" better, even if they do cost more? Same question for the products and services provided by your organization, and your company.
2. Take a systematic look at the working conditions in your firm. Are there ways to put people in more productive settings?
3. Examine the different components of work done within your organization to see whether there are potential additional gains from specializing. Is there a way you can redesign work to improve outcomes (and make people in your organization happier)?
4. Seek more diversity in educational background, behavioral inclinations, and personality types within your organization. In an innovation economy, variation matters a lot, and variation often arises from diversity of perspectives. Make sure you have diverse perspectives to draw on in your company.

For a copy of the complete Business Technology Trends & Impacts Council Opinion (Vol. 10, No. 6) where Dr. Austin made his remarks, or to schedule an interview with Dr. Austin, contact Anne Mullaney (+1 781 641 5101 or amullaney@cutter.com). For biographical information, visit www.cutter.com/meet-our-experts/austinr.html.

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