Managing with 'gurus'

Many economists — especially economic theorists — are not particularly enamoured of the so-called ‘management gurus.’ To them, many of the ‘insights’ propagated by the gurus are nothing but common sense nicely packaged in jargons or catchy phrases.
In order to generalise and sell their ideas, they oversimplify the complexities and pick and choose only those cases/experiences which support their ‘insights,’ while sweeping under the carpet any contrary evidence.

Practical business people — who are otherwise very good in doing things but are not that good in conceptualising ideas or experiences — love to speak in jargons to sound ‘professional’ and appear in sync with the ongoing fashions in management theories. Hearing management gurus (specially the most expensive ones) is a short cut to achieve their objective.

I, for one, strongly differ from some of my economist friends on this issue. Here, I would take the example of Professor C K Prahalad (CKP). Here was a man with impeccable academic credentials — an MBA from IIM-A, a PhD from Harvard Business School and a distinguished chair professor in business strategy at the University of Michigan Business School — in addition to authoring several best-selling and highly regarded books in the field of business strategy.

Among the many ideas associated with his name the two best known and the most popular are ‘core competence’, and ‘wealth at the bottom of the pyramid’.
Practical business people are often faced with a dilemma. For example, whether to go for diversification in a number of areas or consolidation of business in its established area of strength (‘core competence’). There are pros and cons either way. The company boss sees only a very small part of the reality through his business interactions.

On his own, he does not have the time or the ability to see the broader picture and the emerging trends in different parts of the world. At best, he has some hunches born out of his own (limited) experiences with the external world. But he is not sure to what extent his feelings are supported or validated by experiences of a lot of other people.
Here comes the role of a true management guru. He has the time, the training and the intellectual ability to make sense out a wide variety of diverse experiences and to move from particulars to the general. He can support his insights with data and experiences drawn from many sources. Being a consultant to many organisations is an added strength. He has access to inside information on the inner working (both successes and failures) of many organisations which individual firms are not aware of.

Higher chances of success
For instance, he has studied cases of companies going for diversification and others going for consolidation in the area of core competence. Even when he finds that firms following the core competence strategy has a greater chance of success than others, he has to understand the reasons and the mechanisms why a particular strategy works or not.

He thus transcends isolated experiences and comes up with a more general theory complete with the conditions (and how they interact) for success or failure. That makes him a ‘guru’ — not just a consultant.

Take another example. Inclusive growth has become the new buzzword in development economics. The idea that the demand constraint on the overall growth rate of an economy can be removed by making use of the huge latent market among the poor people has long been established by economists.

But the next question is: how to operationalise this growth strategy? Only the government cannot do this job. So, how to harness the power of the private sector? Economists would say that a good investment-friendly climate needs to be created. But even when such a climate exists, why and how would businesses dig the wealth lying hidden under ‘the bottom of the pyramid’?
Here people like CKP step in and convince the company bosses that it is in their self interest to rethink their conventional business models and go for a different type of model focusing on innovating new products, services, processes, distribution channels and marketing methods specifically targeted to the poor consumers, without compromising on quality.

CKP produces evidence, drawing upon his experiences and case studies from all over the world (like innovating detergents that use less water, selling shampoo/cooking oil in small sachets, Rs 10 calling card, sewing machine at Rs 200 monthly installment, cataract operations for $30 or a prosthetic limb for $25, compared with $10,000 in the US). That it has worked and offers practical guidelines on how to go about doing this in specific cases.
Inclusive growth —which was just an idea for the economists and an ideal or slogan for politicians — comes closer to being a realty, thanks to management gurus like CKP.
(The writer is a former professor of economics at IIM, Calcutta)

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