Are We Entering an Era of European Management Leadership?
Readers of this month's column agree that there are marked differences in the social environment for management in Europe and the United States. In some parts of Europe, at least, they foster management policies that may encourage more balance in a manager's life. Whether this will produce sustained economic superiority or a model to be emulated in the U.S. is debatable. While some would like to see a convergence around the best features of the European and U.S. approach to management, there was limited confidence that it would happen.
Antonio De Luca describes important differences this way: "If one has to generalize, it is fair to say that Americans pursue risk and Europeans seek stability ... (leading) to fewer opportunities with more limited financial rewards, but possibly more balance for Europeans. The solution, as usual, is a sensible convergence of these two nuanced cultural approaches."
Whether this will produce sustained economic superiority or a model to be emulated in the U.S. is debatable.
Roy Bingham points out that "American management seems to work best when the key needs are speed, aggression, last-minute genius, and take-chance, inspiring leadership. In boom times when it's 'expand at all costs'--pick the American style. At other times the more deliberate, consultative European approach is your ally. Maybe this is why we are hearing more from the Europeans these days."
Jose Pedro Goncalves takes issue with the idea of a "European" style of management, pointing out that there is no one style. In some parts of Europe "(As a manager) I'm a human being." In others, "I'm just a number." In general "we (Europeans) are more human, but less flexible, and this 'leadership' is only temporary."
Dr. B. V. Krishnamurthy picks up this theme by commenting "to argue that Europe might be snatching the lead in management is a little far-fetched. When one looks at the very successful organizations anywhere in the world, one discerns striking similarities—emphasis on efficiency, innovation, quality, and responsiveness to customers—even as one also finds adaptations to cultural differences."
These comments tend to question whether management leadership has a "geographic home" as opposed to a winning set of behaviors in part fostered by the competitive, social, cultural, and legal environment. Given the prospect for continued movement toward competition and the propagation of "best practice" management ideas on a global scale, is the question largely academic? What do you think?
In recent weeks, I have sat in on several meetings with heads of major European companies in which questions about American leadership have been raised. What's new, at least in my experience, is that the questions aren't confined to political leadership; those are perennial favorites among our European counterparts. Instead, the questions deal with issues of business leadership. They prompt the question of whether the highly-touted American style of management of the 90s is giving way to a new and different European style, just as Americans replaced Japanese management style as the sine qua non among the world's managers just a little more than a decade ago. In a word, the Europeans are acting as if they know something we in the U.S. don't.
If one has to generalize, it is fair to say thatAmericans pursue risk and Europeans seek stability.
— Antonio De Luca, Warner International NV
What is it they claim to know and practice? Much of it is described in a new book by Will Hutton, titled The World We're In (Little, Brown, 2002), from which excerpts (emailed to me by a U.K. manager) were published in England's Guardian newspaper last month.
First, work less but work smarter. It's well known that the official workweek has been shortened to thirty-five hours. What has happened? Take France, for example. French productivity is up; some would claim it is now higher than the U.S., just as is productivity in The Netherlands, Belgium, and the former West Germany. For example, Volkswagen's market share is climbing even though its highly unionized, highly paid work force puts in an average workweek of 28.8 hours.
To this we could add a second and related practice: Balance work and personal life. Many would claim that the quality of life (bolstered even by traditional measures of standard of living) in Europe is much higher than in the U.S.
Third, to paraphrase Hutton, divert money that would otherwise be paid for management mega-salaries and mega-incentives to investments in technology. Of course, tax laws generally discourage the former in Europe anyway. But they seem to be providing the fuel to help Europeans work smarter.
Fourth, rely more heavily on operational improvements and the contributions of employees rather than mergers and acquisitions to build value. This philosophy seems to be gaining some credence in the U.S. as well, with recent research on the high proportion of U.S. merger and acquisition activity that has actually destroyed value.
Some of Hutton's examples, such as the ascendancy of Airbus vs. Boeing, will rekindle the controversy about the importance of state subsidies to each. But his arguments raise a number of useful questions. Do the Europeans have it right? In the long run, will their management philosophy produce superior results? Combining all this with what is now the world's second currency, the Euro, is the baton being passed from American to European management? What do you think?