Saturday, January 5, 2008

Intellectual Flaw of the Business Graduate School

Research and development is of vital significance to the development of national competitiveness. R&D activities in both business and educational system are fueling growth in all areas. Surprisingly although academic institutions in Bangkok and upcountry race to provide new curriculums for the new intakes, mushrooming just like the number of job vacancies, companies find it more difficult than ever to find appropriate recruit.

From my experience in assisting several clients on personnel recruitment, I found many support evidences that pointed to poorer quality of the applicants. I appreciate to know that many efforts have now been spent to transform the educational system, all under a close supervision of the “Office of Education Transformation”.

Over the past many years, I have been providing counselling to many local and multinational businesses on the creation and development of performance measurement tool or the strategic measurement system, which is a management idea based on the Balanced Scorecard. In Thailand, I have conducted many action researches on the subject and developed what I called the KPIs or Key Performance Indicators. After four years of actual business application, I wrote a book and it sold out. The book is still in high demand because the KPIs offers a useful tool that allows management to achieve a real and tangible performance measurement system. It also assists many businesses to compete in a higher league that they have never thought of before.

Coincidentally, I came across an academic article, which was a research study of some MBA students from the Faculty of Commerce and Accounting, Chulalongkorn University, under the topic of “Organizational measurement system” (from MBA, magazine, vol.19, 2000 p.25-29). The article reports that the performance measurement tool will
- provide management multiple aspects of the business operations all at the same time,
- prevent management from an information overload by limiting the information to the prespecified measurement criterion,
- allow management to see the effect of unbalanced emphasis on any single aspect of business operations,- allow management to integrate several measurement criterions and lead to continuous organizational development.

The article also mentioned the limitations of the Balanced Scorecard or KPIs that
- It is only suitable to large-scale business organization that already hasefficient management system in place because this system requires a completed and suitable set of measurement indicators from every aspect of business operations,
- It takes considerable amount of time and expenses to identify and set up the measurement indicators, which might outweigh the expected benefits, especially when business lacks an effective planning on the measurement indicators,
- For some businesses, limiting the Balanced Scorecard to only five perspectives (customer, process, learning & growth. Finance, social and environment) may not provide an adequate performance measurement system to the business operations. Some other perspectives may be required.

I have several points to address about the above research findings.
(1) Knowledge of the researcher, the counsellor, and the group of business samples greatly affects the validity of the research findings. The degree of accuracy of the above research findings depends on the comprehension of the idea, principle, and implementation of the KPIs (KPIs and BSC have the same meaning).
(2) Many points in this research findings are applicable to some of the business conditions in Thailand although some of the above limitations seem inappropriate, perhaps because of an inadequate information or a misunderstanding as mentioned in number (1).
(3) Sometime the quality of the post graduate research is similar to the “Baby Thesis” which is far from adequate to create any body of knowledge. However there are great number of post graduate researches that are very valuable.

Consequently, one has to recognise these points when reading, studying, and applying any research findings, at the same time to exercising one’s consideration & Judgement. A knowledge of the principle or theory behind the subject is necessary. The research methodology must also be highly reliable and be accurately carries out. The truth is the real business world is more cruel than any classroom environment. There is no way that educational institution could match the idea or new theory that are taking place in the market. This is especially true for Thailand.

I had a chance to apply KPIs/BSC ot many SMEs businesses, which are characteristic operations. These businesses are not large organization. And the sample group of more than 300 independent SMEs who participated in the test is large enough to represent the universe. All of them are in the distribution business and owned by Thai. After the test, I further developed the KPIs into a universal model that can be applied to business of all type and size. This is in contradiction to the limitation as reported in the above research.

I would like to remind the executive on the following points.
• Every business has the strategy especially the big ones like the bank, finance, telecommunications, construction, large manufacturing company, why then these businesses don’t survive?
• Regarding the business strategic tools or processes such as TQM, every version of ISO, MRP II, ERP etc., are there any business that succeed after a shot period of implementation?
• Why the training on leadership, EQ teamwork, or WALK RALLY that create good habits to the trainees do not work outside the training room? For all the pros and cons are there, which probably could be answered by the research that no one has ever taken or care to do at all.
• There is no limit as to the number of business aspects to be measured by the KPIs or BSC model. Instead, Kaplan and Norton suggested that the measurement should be in balance, that is, measurement should include both financial and non-financial perspectives.

All these answer why the right candidate is harder to find. Moreover, our lack of research & development that is adequate to create a new body of knowledge would undoubtedly affect our long-term competitiveness. With such a constraint, how could we possible compete in the intellectual war of the 21st century.

Dr.Danai Thieanphut
Managing Director
DNT Consultants Co.,Ltd.