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FreshMIX

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julian-birkinshaw's picture

The Future of Management: Is it Deja vu all over again?

If you are a regular reader of the MIX, you probably already have a point of view on the future of management. Indeed, the MIX was created to help accelerate the evolution of management, so chances are you have already bought into the argument that we are going through a period of upheaval that will transform the way we work in organizations in the years ahead.

I hope and believe this argument is right. And in future blog posts on this site I will discuss examples of some of the changes in management that are currently underway. But let me develop a contrarian line of argument first, before offering a synthesis.

Here's the problem with all this talk of virtual and networked organizations, and this vision of empowered and engaged employees. We see the massive changes underway in technology and connectivity, and we assume that these changes will drive change in how we work. The trouble is, previous generations went through the same process. In the late 1990s, commentators talked about the emergence of the ICE age, where ICE was an acronym for "the Internet Changes Everything." In the early 1980s, the business world was abuzz with talk of employee empowerment, and with the idea that computers would herald the end of middle management. Go back further still, to the 1960s or 1930s, and it's the same story--the bad-old, machine-like organisations of the past were being overthrown, and replaced with enlightened and humane companies that put their employees first.

So there is an enduring puzzle that we need to come to grips with. Every generation predicts that the nature of management work is changing before our eyes, and that the future will be more democratic, flat and employee-centric. Every generation has evidence that the emerging model is better. But while some things do indeed change (for example, the use of IT systems for managing our business process, the offshoring and outsourcing of work, the cycle-time for new product development), the vast majority of management work--by which I mean how we motivate people, make decisions, set objectives and allocate resources--seems almost impervious to change.

Why is this? Remember, we have pretty solid evidence that companies that put their employees first outperform others over the long term. And yet, despite the conscious efforts of some management innovators (and many commentators), we are still stuck with an industrial-revolution era approach to management built on concepts like hierarchy, bureaucracy, planning and control.

I see four interlinked reasons:

First, the traditional model of management is so pervasive that it is still the safe way of doing things. Nobody ever got fired for hiring IBM, and nobody ever got fired for using an enterprise resource planning system either. When you are proposing a new way of doing things, the first question you get is: who else has done this? What are our competitors doing in this area? Following the herd gives no opportunity for competitive advantage, but it is still a very safe and defensible place to be. What we need are more "alternative" role models--companies with unusual and successful management models. Unfortunately, these are few and far between, and they often get built up so much that they lose their luster. Companies such as Gore, Semco, Oticon, and HCL Technologies all have valuable lessons to offer other companies, but their popularity and their novelty can also diminish their impact.

Second, the traditional model has a very explicit power structure that makes life very comfortable for those at the top of the tree. Anyone who has been promoted into a senior position has had to work hard to get there, and has likely been socialised into a worldview that says he or she deserves the trappings of success. It's a rare individual who willingly gives up power (just ask Hosni Mubarak or Colonel Qaddafi), so the hierarchy-oriented status quo persists.

Third, new approaches to management are initially pretty fragile--they require people to work in ways that are unfamiliar, they require more skill, and they need different types of incentive. They often work fine on a temporary basis, but as soon as there are problems--a recession, a change in personnel, a new set of regulations--those who are responsible revert to type, and pull control back to the centre. Such events also have a deleterious effect on the image of the new management practice, and make it unlikely they will be tried again.

Finally, many of the problems of the old model are so systemic they are impossible for even a large company to challenge. Everyone agrees that banking bonuses are out of line, but if one bank changes its approach unilaterally, it will quickly lose its best people to its competitors. We need system-wide change, but we lack the collaborative bodies to make such change happen. The same is true within a large organisation--if one department wants to make meaningful changes, it often needs buy-in from other departments with less enthusiasm for the whole idea.

All of which explains, to a large degree, why management has been so impervious to change for the last few decades.

But this analysis also helps us think about a route forward for a potential management innovator:

  • Find exemplary practices in other places and evidence to support them
  • Look for ways of co-opting the existing power bases of the firm--make it win-win
  • Try to isolate the experiment--give it time to work before it gets fully tested
  • Seek partners across the organisation, once you have a working model; or look for catalytic mechanisms that you can control and will have a big impact.

So what does the future look like? Well, the good news is that we are starting to see some new role models, thanks to the interactive, community-based version of the Internet we often call Web 2.0. The likes of Linux, Mozilla, Google, Amazon, Netflix and eBay all grew up in an online world, and with a majority of Gen Y employees. As a result, they are managed in much more enlightened way than their traditional competitors. And this provides inspiration to others.

But in all honesty, these new ways of working are not going to transform the BPs and the Toyotas and the General Electrics of this world. Rather, they provide the insights that let traditional companies capture some of the benefits of the "new economy" without sacrificing the benefits of scale, efficiency and control that their "old economy" models currently offer. I believe smart management is about making conscious choices--when to use top-down decision making, and when to use the collective wisdom of my employees--rather than following the crowd. And when armed with a good understanding of the old and the new worlds, executives are better positioned to make those choices.

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palle-ellemann's picture
Thanks for a great analysis. There is certainly a lot of deja vu in how "the new way of management" is changing everything. I fully understand the scepticism of business leaders, when hordes of consultants and book writers announce the future of management. Most of the preaching is essentially old wine on new bottles or change for the sake of change. There is a lot of noise that makes business leaders lock themselves in the corner office and play it safe.

Business leaders are either driven by fear or opportunity and unfortunately most of them are still driven by fear. When you are driven by fear, you are reactively looking to what the competitors do and doesn't make substantial change until external factors force you to. So, as long as the industry is working on the traditional terms, nothing happens. 

Business leaders driven by opportunity will look into the future and see what it holds for them to improve their business. They will trust their employees to make sound and capable decisions on all levels of the organization. They will prefer making a mistake than not taking an initiative.

To be driven by opportunity is a mindset that you can decide to have and the more you focus on opportunities, it will help you control the fear and avoid taking decisions based on fear. It all starts with leaders having leadership to change management and organizations.

alan-arnett's picture
Palle.  I agree that there is a degree of fear involved, but I don't think its only on the part of the 'play it safe' leaders, its also on the part of the entrepreneurs and commentators (like us) who prefer innovation and radical change.

The reason change doesn't happen as fast as it could is down to a simple fact of human diversity.  Some people have a preference for "if it ain't broke don't fix it" - maintain the status quo, and some people have a preference that says "that's boring, or even dangerous - lets try something new".  Lots of the former end up inside organisations, because they like the stability.  Lots of the latter end up as consultants, academics and entrepreneurs, because they like the variety.

Both sides are uncomfortable with the notion of having to work like the other side, and they find it hard to work together effectviely.  And the reality is that for organisations to be successful, you need both.  The actual organisational structure is not the issue.  The issue is whether the people who have the maverick wild ideas and the people who like detail and repetition can talk to each other for long enough to turn the original concept into a stunning design that can be built and operate reliably for customers.

In the world of management theory, I have never met a consultant who wants less change to happen than their clients.  And most of the change practitioners know that telling people what's wrong with their behaviours and so criticising them as individuals is not a good way to engage them in change.  Hardly surprising that even with armies of expert consultants and fortunes being spent on change programmes, progress is slow.

A challenge to the MIX community (which I've only just joined!).  If we're serious about really reinventing management, are we ready to do a bit less of our natural instincts (to tell the laggards what's wrong with their methods and how wonderful our ideas are) and to deliver on our propositions in the world as it is, not how we'd like it to be?

15 years ago I worked for what was then Coopers & Lybrand, the consulting firm.  We did some research with CEO's as to what it would take to get on their agenda.  They were talking then about 3 things.
- the internet - how to understand it and use it
- the Millennium bug - was it real and would it be a problem
- transforming the way their organisations worked

One guy in particular was very specific.  "I've got people from all the big consulting firms crawling all over my organisation promising to transform its performance.  They are changing everything aound, costing me a fortune, and delivering **** *** (nothing) in terms of improvements.  Explain that to me."

It seems that it is deja vue all over again.

People are still trying to work out how to deal successfully with the complexity of all this connectivity
Consultants and commentators still over hype threats and opportunities
And things haven't changed so much ....

marc-buyens's picture

I think your analysis is very correct and much of this is indeed, a déjà vu. The MIX is a great initiative, but unfortunately, it is a futile attempt. The fundamental reason for this is that management is not a driver for change. Management is a consequence of the type of companies we want to have. And today, we still want growth-focused companies.

 Why growth? Well, the official reason is that it allows for economies of scale, resulting in lower costs and greater efficiency. The real reason is that it allows for disproportionate rewards for those who are in control. Remember the banking bonuses.

 So, that's the real question we have to answer: do we want companies that serve the meaningless profit of the few or do we want companies that serve the 'greater purpose'?

 In the interconnected world of today, scale is no longer an issue. What can be done by a 100K employees company can now as well be done by a geographically dispersed network of small companies. For most aspects of the business, the network has the ability to outperform the giant.

 However, let’s be real. Opting for an economy that is based upon networks of collaborating (smaller) organisations that are spread over the globe, it is clear that this will not deliver the same outcome. There will be other priorities that will deliver different results. Most likely, we will not have iPads.

 These are the choices we have to make. Our life, our society, our economy are all systems. And a system cannot be any combination of wishes and wants. There are trade-offs. It really doesn’t make sense improving a certain aspect of the system without taking into account the impact it has on other aspects of the system.

 The right choices are obvious. But do we really want? Really?

 I don’t think so. Personally, I think most people prefer the déjà vu.