Over the past month (October/November 2021) several major companies have announced internal restructuring opting to reorganize from their current status by splitting to form separate firms. This movement is international in nature including both United States and Japanese companies. Toshiba by March 2024 it will split into three responsing to shareholder pressure. This is similar to the move by General Electric and Johnson and Johnson. Each of the later are restructuring stating reasons as: better marketing focus, improved logistics and enabling a focus by each company not hindered by other company distractions. It seems that like locus, management returns every twenty years to reinvent ideas of the past. One cannot have lived through the 1980s without having taught the Matrix organizational structure as an innovative response to internationalization. The firm was not quite “with it” if they had not initially organized into an international structure, then the Matrix where teams reported to multiple leaders followed by a restructuring back in to one of the firm’s original structures finding the Matrix overwhelming complex and unwieldy. This is not the first time that GE has sought out greatness through restructuring. One need recall Jack Welch’s 1990 star rise and set. The Welch reputation took its first hit when Suzy Wetlufer, the editor of the Harvard Review who had been exalting Welch in numerous Review articles, was found to be having an affair with him resulting in numerous conflicts of interest and ethics issues. By 2008 many of the structuring and strategy moves that Welch had been praised for in business articles and classes had become unraveled. As noted by Belludi (2020), “Welch’s business model became overly complicated, and many of the mistakes of his strategic deals manifested years later. The most consequential case in point was GE Capital, the finance division that delivered the parent company a near-fatal blow during the 2008 financial crisis.” His back to basics strategy of selling off the lessor profitable companies (such as small appliances to Black and Decker) seemed to many to be a form of surrendering to firms with better products and marketing rather than an international comprehensive business strategy. Whatever one may take away from GE it appears to be back to the game of organizing the way to success. For business students and professors, the take a way of GE and some other firm’s that see structure as the key to success could be “beware the zeitgeist.” Consider the powerful multinational DuPont who in the 80 s restructured to incorporate a new division of biotech, failed miserably and become within a decade, in spite of the number of business cases produced, a lost entity both in terms of products, prestige and financial balance sheet.
Business schools often act as rather blind followers of company gurus seeking the latest trends for the new semester’s classroom presentation. Few business school, however, go back and admit that these cutting edge classes ultimately promoted failed approaches. Management strategy too often seeks a twist to offer rather than recognizing a need to toss the baby with the bath water. A clear example of this is the current stagnation of business due to supply chain problems. Calling the situation a supply problem does not recognize that low cost strategies, or ones focused on scale, placed plants in locations away from markets and in some cases in harm’s way set the stage for future problems. Oligopolies tend to act like lemmings herding together off the ledge as one preceves an advantage the rest are sure to follow
Business schools act like oligopolies and most seem restrained by their similar characteristics and the difficulties the issue of academic silos create. A lack of forcasting what the business of education will look like decades ahead fosters a clinging to current models of instruction. Consider Lands’ End, an American clothing and home decore retailer founded in 1963, who as a major consumer retailer divided out their ecommerce section citing it freed the company to pursue separate business models.This was at a time when many forward looking firms, as well as new startups such as Ubere and Expedia, were seeking novel ways to unite ecommerce operations with physical activity. The company failed to secure a future in either area losing significant market share and finally being sold to Sears. Sears, once the retailing leader powerhouse, stumbled holding on to their way of business (which had served them through at least four decades). In November, 2021 Macy announced that it was considering spinnin off its digital unit from its physical stores studying if a separation would yield additional shareholder value beyond Macy’s current strategy (2). This looking at company evaluaton over long term operations and success comes thirty years after the Lands’ End debacle. It seems that when one cannot envision the future, or worse envisions it but is unable to preval over resistance to change, that the future will, at an increasing rate, not includ them.
Academic resistance to change is woven into the very structure of the beast. The resistance is both passive and active including, to mention a few, faculty committees, publishing over internal operations, teachers that are rewared for status quo over innovation and lengthy school curriculum or class review processes that can last longer than it takes Toyota to design and introduce a new car. Most major institutions refused to consider online education citing many viable, but surmountabe, problems. When on campus enrollments began to decline over the last decade acerbated by COVID restrictions, these same institutions that had been ignoring students seeking alternative learning options, or the calls for the few academics to considr new approaches, became believers embracing the technologies so previously scorned in an attempt to hold on to market share and income. As few have actual significant business experience assistant professors tend to pass on what they were taught using books whose first copyright was, in some cases, not significantly differnent in age than the professor. Strategy tends not to intersect with ecommerce, supply chain classes (which too often still teach outdated forecasting operations management inventory models) or the raising importance of business continuity. Assistant professors teach what they were taught since few have significant business experience and use books whose first copyright was, in many cases, twenty years (or more) ago. Schools tend not to reinforce or reward the hard work it takes to redo a course, design a new course or at a higher level rethink the curriculum. The curriculum of most business schools internationally reflects a design that was put into place to get smokestack America moving after the second world war. It as a demand economy, later marketing driven and product related. The silos of extant.
On one hand we see companies that view change and restructuring as the key to the future and on the other business schools, with their committees and several year approval processes, that resist change. Where the appropriate middle ground is can be an appropriate and necessary discussion. In some cases breaking up, such as in Johnson and Johnson’s case, to provide a different orientation for consumer goods from drug and devices could be viewed as strategically sound in others, such as GEs frequent structure, changes perhaps not. For business schools whose structure has not changed since MBA inception it may be time for some to rethink their way of business. Few companies have remained with the same product (OK, maybe Ivory soap) for fifty years or even the same process of manufacturing. Adding a few technology classes to the growing number of classes in a program does not solve the relevancy across the board problem. It has, however, certainly created difficulties in securing students as programs grew from one year to two. The most that can be said in the latest and fashionable phase of business school restructuring to one year is, like companies from the Matrix back to their original structure, while attempting to solve the decreasing enrollment issue, it does little to reflect a true change in thinking.
The Checkered Legacy of Jack Welch, Captain of Wall Street-Oriented Capitalism. Right Attitudes, Ideas for Impact, March 16, 2020 By Nagesh Belludi https://www.rightattitudes.com/2020/03/16/the-legacy-of-jack-welch/
Macy’s Mulls Spinning Off Digital Unit (November 19, 2021). Wall Street Journal, pB2.
The Journal of Transnational Management
The Journal of Transnational Management seeks the interesting balance in maintaining itself as a high quality professional publication while continuing to distinguish itself as a leader in providing authors from developing nation’s editorial assistance. This is deemed essential to optimize the opportunity for these authors to present their management articles to an international audience. The journal has a dedicated editorial board that is multinational in scope and prepared to provide the assistance needed to encourage authors from nations that are not the traditional contributors with their submissions. The journal, in addition to research publications, is interested in receiving media/book reviews. Information concerning the JTM relating to past volumes and submission information is available on the web site of the IMDA www.imda-usa.org