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Business sectors must share management ideas

Picture of Rob Paton

Rob Paton, Professor of Social Enterprise at The Open University Business School and chair of the MBA elective Management Beyond the Mainstream.

The public, private and non-profit spheres can learn more from each other than they realise…

Imagine you could compare the performance of private, public and non-profit providers in fields where they are all competing together – such as hospitals, nursery provision, schools, and residential care for the elderly. What would the results show?  Who is best at running human service organisations? The answer is… none of the above! That is, no sector is “best” – or worst. The overall pattern of the results is very consistent: the differences within a sector are much greater than the differences between sectors. Although a particular sector may come out on top in a particular comparison, all three always provide a wide range of performance, from the very well run to the badly run.

What sense can we make of this finding? One point is obvious: given the spread of performance in each sector, management and leadership matter hugely. But it raises some wider questions about management as a field. Put simply: at any time, mainstream management – in other words, the favoured books and the extensive common content of management programmes – is defined partly by the origins and development of the field, and partly by the dominant thinking of the time and place where it is being practiced. So originally, management codified what had been found to be effective in handling the challenges of business administration – we’re talking large, market-based, hierarchical organisations usually in manufacturing or heavy industry.

Then, with the restructuring of the state in the UK and the US, it broadened its remit to being, in effect, organisational management, apparently regardless of sector. And claims for private sector superiority are commonplace. But if we know anything for sure about management, it is that context is all; it’s about who you are, in your situation with your people. And nowadays, the contexts of management vary hugely: from digital start-ups to franchises, network organisations, partnerships and social enterprises to name but a few.

Much of mainstream management is still relevant in these contexts. The trouble is, it is incomplete or lopsided. It tends not to include approaches and practices that have arisen in these different settings. They may be highly relevant for others as well – but have often struggled to be acknowledged and accepted. Who says? Well, Peter Drucker, arguably the greatest American writer on management, for one. He recognised that management thinking trailed behind practice and was skewed towards the private sector; he repeatedly pointed to things that the private sector could learn from the non-profit sector – e.g., the management of professional staff, and governance practices.

Many of our Open University Business School students could also be called as witnesses: judging by what they say, ideas from beyond the mainstream – for example, adaptive leadership, which emerged in and for leaders in government – are often entirely appropriate in corporate settings, too. That’s not surprising: there, senior figures must also often lead in situations where they have little authority. Plus, they have to deal with large concentrations of knowledge workers, extensive regulation, outsourcing to specialist service providers (who display very different business cultures), and must work with customers, suppliers and staff from a variety of different cultures and countries.

Perhaps most of all, senior leaders in our complex, mixed economies have to be “multilingual” in their management approaches – able to embrace competing values and uphold conflicting logics. Handling incompatible expectations and pressures, and balancing multiple accountabilities, are both at the heart of senior leadership. This “soft complexity” is not some obstacle between us and the real, no-nonsense work we must do. It is the real work. And tackling it is not helped if we draw only on the ideas we found so useful at earlier points in our career. Indeed, loyalty to those ideas can become a liability. We need to carry our management thinking lightly, and be open to considering and trying out new practices for new circumstances. As a leader, you surely need to have management ideas. What is crucial is that they do not have you.