Don't Blame the Tools

The adoption and implementation of managerial innovations

Elizabeth Daniel, Andrew Myers, Keith Dixon

• Publisher: CIMA Publishing
• Year: 2009
• eBook ISBN: 9780080963716
• Topic: Business
• Subtopic: Accounting
• Index: Business

Those managing organisations are often criticised for being 'faddish' in their use of new management ideas or innovations, too easily falling into the trap of adopting the latest new idea or concept because it is 'flavour of the month'. This research-based report presents an in-depth account and analysis of the adoption and implementation of two popular large-scale managerial innovations in four different organisations. It provides case studies of actual adoption and implementation of the balanced scorecard and programme/project management offices. The study explores the reasons for the adoption of the innovations and how these reasons shape implementation success. The report also provides examples of good practice that practising managers use to improve the implementation of new management practices in their own organisations. - Presents an original research-based study that explores the reasons why organisations adopt new management practices (e.g. balanced scorecard and programme/project management offices) - Links the reasons for adoption with the success of implementation - Provides examples of good practice that can improve the implementation of new management practices in organisations

Chapter Don't Blame the Tools - The Adoption and Implementation of Managerial Innovations

1. Executive Summary

The people governing and managing organisations are often criticised for being ‘faddish’ in their use of new management ideas or innovations. Many have been seen to easily fall into the trap of adopting the latest new idea or concept that is ‘flavour of the month’. It is not always obvious, however, that this new idea will be of value to the organisation. This is particularly the case when many of the new ideas often involve considerable time and capital investment for implementation. Many ideas seem to be just a re-labelling of old ideas that were tried in the past and were often seen to fail to deliver. What is perhaps more troubling is that the development of new management ideas seems to be on the increase and that these newer ideas are often aimed organisation-wide, making them potentially even more costly and time consuming for implementation.

A concern over the issue of management fashions or fads led CIMA to launch a research initiative in 2005 entitled ‘The Organisation and Adoption of Management Ideas, Tools and Practices’. This report presents the findings of one of the three projects funded under this initiative. The project commenced in April 2006 and completed in July 2007.

The project sought to look at the link between the decision to adopt a new idea or tool and its subsequent implementation. To our knowledge this link has not been studied previously and hence our project was exploratory in nature. In particular, it explored factors that could potentially influence the decision to adopt and the impact these would have on implementation. It also sought to identify practices that could help the newer organisation-wide innovations be successfully embedded in an organisation.

1.1. Research Approach

The well-established balanced scorecard (BSC) was selected as one idea or innovation to study. To provide a comparison, the relatively newer idea of a programme management office (PMO) was also selected. As organisations carry out more, and increasingly complex, projects, such offices are being established to coordinate and centrally manage these projects.

The exploratory nature of the study suggested a case study approach, and four in-depth case studies of organisations were undertaken. Three organisations adopted a BSC and one organisation had adopted a PMO. The three organisations that had decided to adopt the scorecard provided an in-depth range of experiences: one organisation was still in the process of implementing the scorecard, one had implemented it and was using it, whilst the third organisation had implemented the scorecard, used it for a number of years and had ceased using it and moved on to a new idea.

1.2. Findings and Recommendations

Other approaches that appear to aid implementation include

• Managerial innovations are a natural consequence of a dynamic business environment. The findings of this research show that rather than simply following fashions, the adoption of managerial innovations is a response to an external or internal trigger. The adoption of such innovations should not therefore be seen as a weakness to be addressed, but as a natural consequence of a dynamic business environment. However, it is also recognised that the introduction of organisation-wide innovations, in particular, can be very costly and disruptive; and hence, organisations should select innovations carefully and test their usefulness before adoption, as discussed later.
• The need for the innovation should be separated from the chosen solution.The people governing and managing organisations should seek to separate the event or problem that triggers the need, or perceived need, for the adoption of an innovation and the actual adoption decision. Whilst there is likely to be strong support for addressing the trigger, there may not be such strong support for the solution.
• A champion is vital. This research underlines the importance of an influential individual or group in supporting implementation and following it through. However, it also finds that in the cases studied, hiring an individual from outside to champion the innovation may be less effective than finding a senior level champion from within the organisation.
• A robust business case is needed and the innovation should be tested before adoption. Whilst the influence of a significant individual or group is important, preparing a robust business case for the innovation, including forecast benefits and costs and pilot testing the innovation are equally important. Preparing a business case that is open to review will encourage the evaluation of alternative innovations and will also prevent the adoption appearing like a ‘pet project’ of an individual or a knee-jerk reaction to the recommendation of management consultants or other groups. Accounting specialists have an important role to play in preparing and scrutinising such business cases, alongside business managers and other specialist staff.
• If possible, include the innovation in a wider programme of change. Linking the introduction of the innovation to a wider programme of change was also shown to be effective. The rationale for such wider programmes may be more easily understood and supported by staff, for example a ‘customer focus programme’, can be more easily understood and adopted by staff than the less obvious ‘need to improve performance management’.
• Actively manage the end game. The discontinuation of innovations should be actively managed, rather than simply letting them dissipate or fall into disuse. The transition in moving away from an innovation that was used in the past to the adoption of a new management innovation should be communicated throughout the organisation, highlighting that the organisation faces new events or challenges and that the previous innovation was no longer suitable to meet these challenges. The process identifying a true champion of the next innovation, developing a robust business case and piloting or testing that next innovation should then be undertaken.

Approaches that slow implementation include

• adapting the innovation to fit the organisation,
• training tailored to the needs of individuals or groups.

• allowing a phased approach to be slowed by different factions within the organisation,
• introducing an innovation where existing ways of working are adequate,
• providing benefits to the organisation but not to the individuals that must use the innovation.

Whilst the case study method employed has provided a rich picture of the adoption and implementation process within the organisations studied, the findings are recognised as exploratory in nature. Further studies that can confirm and extend the study findings are suggested.

2. Introduction

…management fashions are not cosmetic and trivial …[they] shape the management techniques that thousands of managers look to in order to cope with extremely important and complex managerial problems. (Abrahamson, 1996, p. 279)Implementation and use of most management tools is expensive, sometimes costing firms tens of millions of dollars to implement. (Rigby, 2001, p. 139)

2.1. Managerial Innovations

A prominent responsibility of managers in all types of organisations is to seek continually to improve the profitability, service or other performance criteria of their own organisations, or the parts of organisations in which they are particularly active or at least being seen to be doing so. New challenges such as decreasing product life-cycles, global competition, customers becoming more demanding and greater technological progress will present new issues for such managers and hence lead them to try to find innovative managerial approaches to address these issues.

All areas of management practice have seen a wide range of these innovative managerial approaches, including management accounting. Dugdale et al. (2006, p. 3) describe how, following Johnson and Kaplan's (1987) observation that management accounting had lost its relevance for management decision-making, ‘there was considerable interest in new management accounting theories and practices’. They cite as examples of these innovations, the rise in interest and adoption of activity-based costing and management, economic value added and throughput analysis. However, they also note that many of these so-called innovations do not seem to be new at all, but are re-work of earlier approaches. For example, activity-based costing (ABC) could be seen as a re-working and re-labelling of functional costing, which had appeared in the 1950s. Such experiences give the impression of volatile fluctuations in the popularity of managerial innovations. The results are often described collectively as management fashions or fads, invariably in a pejorative sense, and their individual importance being downplayed. The description usually implies that implementing, or trying to implement, these new management approaches absorbs much time of employees, diverting them from more important, well-established matters of importance, implicit in which is a recognition of the considerable investment costs that innovations entail.

Much conventional extant research suggests that the rate of production and adoption of managerial innovations is increasing and the life-cycle of each innovation is decreasing (Carson et al., 2000). Moreover, recent innovations are tending to be broadly based, often organisation-wide, making them increasingly costly and disruptive to implement (Rigby, 2001). As managers are faced with an increasing choice of innovative tools and techniques, it is important that they can select those that best suit their needs within the organisational context. Equally importantly, as managers gradually identify a new approach relevant to their needs, they need to implement it using ways that increase how effective the approach is and with as little disruption as possible to those operations of the organisation that are to be retained.

2.2. Purpose of the Research

This report presents the findings of a study undertaken for the Chartered Institute of Management Accountants (CIMA) as part of their 2005 research initiative – ‘The Organisation and Adoption of Management Ideas, Tools and Practices’. The objective of this initiative was to ‘consider the origins of management ideas and practices, motives for their adoption, longevity, process of legitimacy, recognition and success’.

Pursuant to this CIMA objective, the literature review undertaken for this study identified that, whilst earlier studies characterised a life-cycle for management innovations, no work seems to have been undertaken to explore how factors or influences at one stage of the life-cycle could affect later stages. Thus, this study addresses this gap in the literature, focusing on the adoption and implementation stages of the innovation life-cycle. Since there are no previous studies that have sought to explore this relationship between life-cycle stages, this s...

Table of contents

• Brief Table of Contents
• Table of Contents
• Copyright
• Case study interviewee
• Researchers' Contact Details
• Acknowledgements
• Chapter . Don't Blame the Tools
• BibliographyReferences
• Index