1999 management
tools & techniques
Annual survey of senior executives
Seven years of data separate fleeting
fads from enduring strategies
By Darrell K. Rigby
Over the past decade, executives have witnessed an explosion of
management tools and techniques such as One-to-One Marketing,
TQM, and Benchmarking. The term “management tool” now
encompasses a broad spectrum of approaches to management—from
simple planning software, to complex organizational designs, to
revised philosophies of the business world. (Figure 1)
Many of these tools offer conflicting advice. One may call for
keeping all your customers while another will advise you to
focus only on those who are most profitable.
But these management tools have one thing in common: They
promise to make their users more successful. And beleaguered
managers—struggling to demonstrate that they can adapt to
rapid change in an increasingly competitive world—have turned
to tools in unprecedented numbers.
Figure 1: Seven years of data and 5,164 respondents
South America: 80
Darrell K. Rigby is a Director
100
and Vice President of Bain &
Company. Bain & Company's
Techniques" survey profiles
Europe:
201
North America:
2,904
North America:
214
Percent of Survey
Respondents
40
The study, based on an analysis
of 25 management tools, found
that tool usage has declined
Europe:
1,742
60
the usage and effectiveness of
companies around the world.
South America: 40
Asia: 20
80
1999 "Management Tools &
management tools among 475
Asia: 438
20
overall, with an average of 10.9
tools used by each company
compared to 13.4 in 1998.
0
1993-1999
1999
• Firms worldwide are least satisfied with
The truth about tools
Tool usage declined in 1999. On average, worldwide
respondents used two fewer tools than they had in
Knowledge Management, Strategic Alliances,
and Activity-Based Management
1998 (11 versus 13). (Figure 2)
Tools utilization rates worldwide
The three most popular tools were used by at least
The utilization rates of individual tools vary widely.
three quarters of respondents.
(Figure 3) Some tools have been used by more than
80 percent of all managers, while other tools have
• Strategic Planning (81%)
been used by as few as 9 percent. Our research tested
• Mission and Vision Statements (79%)
the significance of these differences in two ways:
• Benchmarking (77%)
1 We applied statistical tests (at a 95 percent
Executives believe that companies using the right
confidence level) to identify those tools with
tools are more likely to succeed and that even the
scores significantly above or below average.
right tools need top-down management support.
2 We compared the 1999 survey results to those
of 1993-1998 to check the consistency of the
Satisfaction rates vary across the tools:
• Worldwide satisfaction is highest for Cycle
Time Reduction, One-to-One Marketing, Strategic
Planning, and Mission and Vision Statements
results over time. The numbers in parentheses
at the end of each bar indicate the percentage
of years that these tools have differed
significantly from the average.
For display purposes, we show only the tools that
are significantly above or below average. Tools with
Figure 2: Tool usage differs around the world
statistically “average” scores are left off the charts.
The four most commonly utilized tools are
Average Number of Tools Used in 1999
Strategic Planning, Mission and Vision Statements,
Benchmarking, and Customer Satisfaction Measurement.
15
Worldwide
average = 10.9
13.1*
11.6
11.4
11.3
11.5
9.5**
Some of the least-used tools, such as Virtual Teams
and One-to-One Marketing, are relatively new. But
other little-used tools such as Scenario Planning
10
and Shareholder Value Analysis have been around
much longer.
Top ten tools are highly utilized over time
5
The top ten tools of 1999 have all been used by
about half or more of the corporate population in
each of the years we have captured data on them.
0
Brazil Canada
Sample:
40
35
US
UK
France
Asia
179
145
54
20
*Significantly higher than the mean; **Significantly lower than the mean
Source: 1999 Worldwide Survey, n=475
B a i n & C o m p a n y, I n c .
Senior executive survey: management tools & techniques
2
Figure 3: Tools utilization rates worldwide
Major Effort
Limited Effort
Strategic Planning
Mission and Vision Statements
Benchmarking
Customer Satisfaction Meas.
Outsourcing
Pay-for-Performance
Growth Strategies
Strategic Alliances
Customer Segmentation
Core Competencies
Total Quality Management
81% (100%)*
79% (100%)
77% (100%)
71% (100%)
62% (100%)**
58% (100%)
55% (100%)*
53% (100%)
52% (100%)**
50% (100%)
49% (100%)
Average utilization = 44%
Activity-Based Management
Cycle Time Reduction
Supply Chain Integration
Knowledge Management
Merger Integration Teams
Scenario Planning
Shareholder Value Analysis
One-to-One Marketing
Virtual Teams
Real Options Analysis
Market Disruption Analysis
37% (33%)
32% (17%)
31% (100%)***
30% (100%)*
29% (100%)**
28% (100%)
27% (100%)
24% (100%)***
19% (100%)***
10% (100%)***
9% (100%)***
0
20
40
60
80
100%
Percent of Respondents
( ) Signify the percentage of years this tool has been significantly above/below the mean; *Tool introduced in 1996; **Tool introduced
in 1998; ***Tool introduced in 1999 Note: Only tools significantly above/below the average utilization (95% confidence) are listed;
Dark shadowing indicates major efforts; Light shadow indicates limited efforts Source: 1999 Worldwide Survey n= 475
Loyalty to tools varies greatly
We analyzed respondents’ loyalty to each tool by
calculating the percentage of those who stopped
using the tool in 1999 after using it at least once in
the previous five years. (Figure 4)
Personal interviews also indicate that a tool was
most often dropped because its cost was considered
greater than its benefits (with the exception of Merger
Integration Teams, which was often discontinued because
there was no acquisition to integrate), or the tool
didn’t have management and/or employee support.
Of course, managers might stop using a tool for
Worldwide perspectives of survey respondents
many reasons:
• The tool may have served its purpose, and
no longer be required
We asked survey respondents to share their attitudes
about behaviors with management techniques in the
context of their individual organizations. (Figure 5)
• The company’s needs may have changed
• The management team may be dissatisfied
with the value of the tool.
Ninety-five percent of respondents agree that tools
require top-down support to succeed; and 82
percent say that companies using the right tools
are more likely to succeed.
B a i n & C o m p a n y, I n c .
Senior executive survey: management tools & techniques
3
Several important insights also emerged on the
Figure 4: Loyalty to tools varies greatly
Perecent
Defections
(Highest Percent
= Low Loyalty)
Real Options
Analysis
Market Disruption
Analysis
Merger Integration
Teams
Scenario
Planning
Reengineering
Knowledge
Management
Activity-Based
Management
strategy process. For example:
Overall
Satisfaction
Score**
Percent Defected*
3.83
• 80 percent say that they tend to use tools that
work over and over again
• 77 percent say that better strategizing would
3.78
improve their company’s performance
3.84
• 73 percent report that their managers do
3.90
more operations than strategy
3.75
3.43
• 64 percent say they are aggressively expanding
3.73
e-commerce opportunities
(Lowest Percent
= High Loyalty)
One belief has changed, only 19 percent of
Strategic
Planning
Supply Chain
Integration
Customer
Segmentation
Benchmarking
Virtual
Teams
4.02
respondents report feeling quite concerned
3.88
about an economic slowdown in 2000, compared
3.94
to 55 percent who reported concern in 1998.
3.89
3.73
0
5
10
15
20
25
30
*Used tool in past 5 years but not in 1999; **Satisfaction scale
from 1-5 Source: 1999 Worldwide Survey, n=475
Figure 5: Worldwide perspectives of survey respondents
Tools require top-down support to succeed
Companies using the right tools are more likely to succeed
We use tools that work over and over again
Better strategizing would improve our performance
Most management tools promise more than they deliver
Our managers do more operations than strategy
There is already a tool for every business problem
It is important to stay on the cutting edge of tools
We’re aggressively expanding e-commerce capabilities
We need new tools for coping with turbulence
Our decisions are driven by short-term financials
In 2000, we’ll focus on revenue growth, not cost reduction
We like to develop our own tools
Recent acquisitions have not yet delivered synergies
We’re likely to have layoffs/hiring freeze in 2000
We’re spending too much on information technology
Most tools we’ve used have not been successful
We’re usually among the first to try new tools
We’re quite concerned about economic slowdown in 2000
95%
82%
80%
77%
77%
73%
69%
65%
64%
47%
42%
40%
39%
34%
28%
25%
23%
22%
19%
0
20
40
60
80
100%
*Significantly different (95% confidence) from worldwide mean Note: Chart displays Percent of Respondents who agree with statement
Source: 1999 Worldwide Survey, n = 475
B a i n & C o m p a n y, I n c .
Senior executive survey: management tools & techniques
4
Figure 6: Satisfaction levels vary by tool
Cycle Time Reduction
One-to-one Marketing
Strategic Planning
Mission and Vision Statements
Customer Satisfaction Measurement
Pay-for-Performance
Total Quality Mgmt
Customer Segmentation
Shareholder Value Analysis
Scenario Planning
Benchmarking
Supply Chain Integration
4.09
4.03
4.02
3.99
3.96
3.95
3.95
3.94
3.92
3.90
3.89
3.88
Overall Mean = 3.87
Merger Integration Teams
Real Options Analysis
Growth Strategies
Core Competencies
Outsourcing
Market Disruption Analysis
Strategic Alliances
Activity-Based Management
Virtual Teams
Knowledge Management
3.84
3.83
3.82
3.79
3.79
3.78
3.73
3.73
3.73
3.43
3
3.3
3.6
3.9
4.2
Percent of Respondents
( ) Signify the percentage of years this tool has been significantly above/below the mean; *Tool introduced in 1996; **Tool introduced
in 1998; ***Tool introduced in 1999 Note: Only tools significantly above/below the average utilization (95% confidence) are listed;
Dark shadowing indicates major efforts; Light shadow indicates limited efforts Source: 1999 Worldwide Survey n= 475
Satisfaction levels vary by tool
The odds of success vary widely
Overall satisfaction with tools is mildly positive.
However, the odds of success vary widely for
(Figure 6) The average score is a 3.87 (out of 5.0),
different tools. (Figure 7) Some tools receive far
or a marginal “B” (1 = highly dissatisfied, an “F”;
higher marks than others. For example, 33 percent
5 = highly satisfied, an “A”).
of those who use Cycle Time Reduction reported that
• One-to-One Marketing has debuted with
a very high level of satisfaction
• Strategic Planning has been a top performer
since its inclusion in 1996
• Cycle Time Reduction has its highest rate
of satisfaction ever
a positive “satisfaction spread” of 28 points (33
minus 5).
In some cases, users were dissatisfied as often or
more often than they were extremely satisfied.
companies were dissatisfied than extremely satisfied.
The odds of a successful outcome for tools at the
satisfaction rates
• Knowledge Management has an extremely low
B a i n & C o m p a n y, I n c .
only 5 percent said they were dissatisfied, creating
With Knowledge Management, for example, more
• Mission and Vision Statements also have high
level of satisfaction
they were extremely satisfied with the tool, while
bottom of figure 7 are significantly lower than
for those at the top.
Senior executive survey: management tools & techniques
5
Figure 7: The odds of satisfaction vary widely
Spread
Cycle Time Reduction
Shareholder Value Analysis
Strategic Planning
Mission and Vision Statements
TQM
Pay-for-Performance
One-to-One Marketing
Customer Segmentation
Supply Chain Integration
Customer Satisfaction Meas.
Merger Integration Teams
Real Options Analysis
Market Disruption Analysis
Growth Strategies
Scenario Planning
Core Competencies
Balanced Scorecard
Benchmarking
Strategic Alliances
Customer Retention
Virtual Teams
Outsourcing
Reengineering
Activity-Based Management
28
24
24
24
21
21
20
20
19
18
15
14
14
13
13
12
12
12
11
11
9
8
6
3
Knowledge Management
(4)
Dissatisfied
-15
-10
Spread= difference between extremely satisfied and dissatisfied
-5
Extremely Satisfied
0
5
10
15
20
25
30
35
Source: 1999 Worldwide Survey, n = 475
Major efforts achieve higher satisfaction scores
For all tools, major efforts achieve better satisfaction
In 1993, Bain & Company launched a multi-year
scores than limited efforts do. Perhaps some tools
research project into the usage of and satisfaction
should not be used on a limited basis at all.
with management tools and techniques.
For some tools, the differences are enormous.
Market Disruption Analysis achieves a fairly high
The top ten tools of successful companies
satisfaction score when it is implemented as part
Although successful and less successful companies
of a major organizational effort. However, Market
use primarily the same tools, successful companies
Disruption Analysis is less satisfying than most
are generally more satisfied with individual tool
other tools when implemented as a limited effort.
usage than are less successful companies.
Other tools, such as Cycle Time Reduction, achieve
Several tools, Pay-for-Performance, Strategic
reasonably satisfying results even when implemented
Planning, Customer Satisfaction Measurement,
on a limited or trial basis.
Growth Strategies, and Scenario Planning, achieve
Before deciding which tools to use and how much
effort will be devoted to their implementation, it is
a significantly higher satisfaction score at successful
companies than at less successful companies.
important to understand the incremental benefits
Growth Strategies is the only tool in the “top 10
of pursuing a major versus minor effort with each
tools” of successful companies that never appear
of these tools.
in the “top 10 tools” list of less successful
companies. (Figure 8)
B a i n & C o m p a n y, I n c .
Senior executive survey: management tools & techniques
6
The best tools for the job
Figure 8: Top ten tools of successful companies
Satisfaction at
Successful
Companies
Satisfaction at
Less Successful
Companies
In summary, it appears that very few tools are good
at “doing it all”—the tools in Figure 9 featuring a
shaded circle have achieved satisfaction scores
significantly above average.
4.32
Pay-for-Performance*
3.54
4.22
Cycle Time Reduction
4.06
In fact, most tools achieved high ratings in only
4.17
Strategic Planning*
3.47
one or two performance categories. The most
4.12
Mission and Vision Statements
3.84
notable exception is Strategic Planning, which
4.11
Customer Satisfaction Measurement*
3.57
received strong marks in four out of the five
4.02
Growth Strategies*
3.32
performance dimensions. Supply Chain Integration,
4.02
Customer Segmentation
3.65
a relatively new tool, is also currently considered
4.00
Total Quality Management
3.59
strong in four areas.
4.00
One-to-One Marketing
4.00
3.97
Scenario Planning*
3.10
*Statistically significant (95% confidence) difference between successful and less
successful companies;
Indicates tool not in top ten of less successful
companies Source: 1999 Worldwide Survey n = 475
In North America, the Internet was cited as the
key reason for the decline in the usage of tools.
Figure 9: The Best Tools for the Job
= consistently the best tool
for the job
= often the best tool
for the job
Financial
Results
Customer
Equity
Performance
Capabilities
Competitive
Positioning
Organizational
Integration
Balanced Scorecard*
Core Competencies
Customer Retention
Customer Satisfaction Meas.
Customer Segmentation**
Cycle Time Reduction
Growth Strategies*
Mission and Vision Statements
One-to-one Marketing***
Outsourcing**
Pay-for-Performance
Shareholder Value Analysis
Strategic Alliances
Strategic Planning*
Supply Chain Integration***
Total Quality Management
Virtual Teams***
B a i n & C o m p a n y, I n c .
Senior executive survey: management tools & techniques
*Tool introduced in 1996; **Tool introduced in 1998; ***Tool introduced in 1999 Source: 1994-1999 Worldwide survey
7
3 Choose the best tools for the job: Managers
Based on our research to date, we offer four
need a rational system for selecting,
suggestions for using tools:
implementing, and integrating the tools and
1 Get the facts: Every tool carries a set of
techniques appropriate for their companies.
strengths and weaknesses. Success requires
A management tool will only improve results
understanding the full effects—and side
to the extent that it:
effects—of each tool and then creatively
• Discovers unmet customer needs
combining the right ones in the right ways
at the right times. Use the research. Talk
• Builds distinctive capabilities
to other tool users. Don’t naively accept
• Exploits competitor vulnerabilities
hyperbole and simplistic solutions.
• Develops breakthrough strategies by effectively
2 Champion enduring strategies, not fleeting
integrating these accomplishments
fads: Line managers and tool gurus don’t
always have perfectly aligned agendas. Tool
4 Adapt tools to your business system
gurus may provoke stimulating discussions,
(not vice versa).
but managers must manage. Managers
who promote fleeting fads lose their
employees’ confidence and face increasing
skepticism. Executives would be better
served by championing realistic and strategic
directions, while regarding the specific
techniques for achieving them as expendable.
BAIN & COMPANY, INC.
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Boston, Massachusetts 02116
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