Ever since the 1890s, when Frederick Winslow Taylor first wandered around the Midvale steelworks in Philadelphia with a stopwatch and a notepad, managers have searched for tools to improve the performance of their organizations. In recent years there has been a sharp increase in the use and number of such tools. Taylor's 'scientific management' now sits alongside more recent inventions such as benchmarking, business process re-engineering and scenario planning.
For the past 12 years, Bain & Company, a firm of consultants, has asked companies around the world how much they use such tools, and how satisfied they are with them. Its latest analysis, out this week, shows that strategic planning, used by almost four out of every five companies, is currently the most popular.
Bain's Darrell Rigby, founder of the survey, says managers are now particularly keen on anything that helps them get closer to their customers. Two-thirds say that 'insufficient customer insight' is hurting their performance. Hence the steep rise in Customer Relationship Management (CRM)—from seventh last time to second.
Since the excessive spending at the turn of the century, executives have focused on cutting costs. Now, says Mr. Rigby, they see a limit to that process and are seeking other ways to deliver the value investors have built into their share prices.
Despite the impression that managers vacillate wildly from one trendy technique to another— mission statements one year, Six Sigma the next—most of the top slots are filled by hardy perennials. Strategic planning has been top since 1996. The current hot new tool—RFID, radio frequency identification, a tagging system that shot to fame in 2003 when Wal-Mart demanded that its 100 biggest suppliers adopt it—is way down Bain's list, used by a mere 13% of firms, mostly American.
The biggest change in the past decade is the rise of tools that rely heavily on the use of information technology. IT—intensive techniques such as CRM, supply-chain management and knowledge management are each now used by more than half of all corporations. Executives told Bain that they are more satisfied with their supply-chain management systems than with any tool other than strategic planning.
Given that managers are looking more to IT-based techniques to improve performance, why are corporate IT departments so often seen as mere back-office fixers? In 'Why Today's IT Organization Won't Work Tomorrow', a new study, by Dan Starta of A. T. Kearney, a consultancy, the author Claims that IT departments are so focused on fixing the nuts and bolts of everyday problems that they have no time to think about wider business issues. 'The best IT ideas are not coming from IT, but from the business side,' says Mr. Starta.
His study's findings 'shatter the notion' that IT departments are the early adopters of technology, and that general managers slow the process down. RFID is a case in point. AMR Research, a Boston-based firm, reckons that Wal-Mart's suppliers have so far invested $ 250m in the tags and readers required by the system. Few of them, however, have yet seen a business case for the investment beyond a desire not to lose Wal-Mart as a customer.
Doing things this way round, with the management horse pulling the IT cart, need not end in disaster. Although few of Bain's sample companies have yet adopted RFID, a significant proportion of those which have are extremely satisfied with the results, says Mr. Rigby. He expects RFID to rise rapidly up the list.
Nor are managers losing faith in IT: 90% of Bain's sample said they think IT can still create significant competitive advantages for them. Corporate IT budgets are slated to rise again this year. Who will determine where that money is to be spent—the general managers or the geeks? In a book published at the end of last year ('The New CIO Leader', Harvard Business School Press), two Gartne