The event lasted two days. There was a coincidence in the diagnosis: the administration model that predominates the larger organisations is seriously outdated. This model stemmed in the 19th century and was invented to solve a problem: how to make semi-qualified human beings do the same thing over and over again becoming more effective with time and with the same perfection. This problem had to be solved at that time, but that is not the most important challenge for companies today.
Gary Hamel, one of the critics in 1994 (together with Prahalad) and one of the experts that went to Half Moon Bay sums it up in this way in “Moon Shots for Management” (Harvard Business Review, February, 2009).
“Managers today face a new set of problems, products of a volatile and unforgiving environment. Some of the most critical (….) To successfully address these problems, executives and experts must first admit that they’ve reached the limits of Management —the industrial age paradigm built atop the principles of standardization, specialization, hierarchy, control, and primacy of shareholder interests. They must face the fact that tomorrow’s business imperatives lie outside the performance envelope of today’s bureaucracy-infused management practices.”
But if they reached an agreement on the diagnosis, this did not mean that there was no debate with regards to the new Management model. In a disciplined manner the participants were subject to the methodology that the American National Academy of Engineering had recently used to propose “the 14 Grand Challenges for Engineering” in the 21st century. In this way they reached the conclusion that:
It is necessary to reinvent company administration so that organisations become more inspiring places of work, making them as humane as the employees that work in them. 21st century Management must provide more adaptable and innovative organisations that inspire those who work in them. It must recover horizontal communication, diversity, imagination and passion. This requires drawing inspiration from concepts in other fields such as biology or theology.
A philosophy that they pinned down in 25 conclusions that the Harvard Business Review has just published.
1 – Ensure that management’s work serves a higher purpose. Management, both in theory and practice, must orient itself to the achievement of noble, socially significant goals.
2 – Fully embed the ideas of community and citizenship in management systems. There’s a need for processes and practices that reflect the interdependence of all stakeholder groups.
3 – Reconstruct management’s philosophical foundations. To build organizations that are more than merely efficient, we will need to draw lessons from such fields as biology and theology, and from such concepts as democracies and markets.
4 – Eliminate the pathologies of formal hierarchy. There are advantages to natural hierarchies. Where power flows up from the bottom and leaders emerge instead of being appointed.
5 – Reduce fear and increase trust. Mistrust and fear are toxic to innovation and engagement and must be wrung out of tomorrow’s management systems.
6 – Reinvent the means of control. To transcend the discipline-versus-freedom trade-off, control systems will have to encourage control from within rather than constraints from without.
7 – Redefine the work of leadership. The notion of the leader as a heroic decision maker is untenable. Leaders must be recast as social-systems architects who enable innovation and collaboration.
8 – Expand and exploit diversity. We must create a management system that values diversity, disagreement, and divergence as much as conformance, consensus, and cohesion.
9 – Reinvent strategy-making as an emergent process. In a turbulent world, strategy making must reflect the biological principles of variety, selection, and retention.
10 – De-structure and disaggregate the organization. To become more adaptable and innovative, large entities must be disaggregated into smaller, more malleable units.
11 – Dramatically reduce the pull of the past. Existing management systems often mindlessly reinforce the status quo. In the future, they must facilitate innovation and change.
12 – Develop holistic performance measures. Existing performance metrics must be recast, since they give inadequate attention to the critical human capabilities that drive success in the creative economy.
13 – Stretch executive time frames and perspectives. Discover alternatives to compensation and reward systems that encourage managers to sacrifice long-term goals for short-term gains.
14 – Create a democracy of information. Companies need holographic information systems that equip every employee to act in the interests of the entire enterprise.
15 – Empower the renegades and disarm the reactionaries. Management systems must give more power to employees whose emotional equity is invested in the future rather than in the past.
16 – Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.
17 – Create internal markets for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and companies’ resource allocation processes need to reflect this fact.
18 – Depoliticize decision-making. Decision processes must be free of positional biases and should exploit the collective wisdom of the entire organization.
19 – Enable communities of passion. To maximize employee engagement, management systems must facilitate the formation of self-defining communities of passion.
20 – Further unleash human imagination. Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.
21 – Humanize the language and practice of business. Tomorrow’s management systems must give as much credence to such timeless human ideals as beauty, justice and community as they do to the traditional goals of efficiency, advantage, and profit.
22 – Better optimize trade-offs. Management systems tend to force either-or choices. What’s needed are hybrid systems that subtly optimize key trade-offs.
23 – Retool management for an open world. Value-creating networks often transcend the company’s boundaries and render traditional power-based management tools ineffective. New management tools are needed for building complex ecosystems.
24 – Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.
25 – Retrain managerial minds. Managers’ traditional deductive and analytical skills must be complemented by conceptual and systems-thinking skills.
25 conclusions that sum up 15 years (1994-2009) of critical reflection on “the future of Management” and that under no circumstances should go unnoticed, but, to the contrary, we think they should be a guide to reinvent a more human company and, as such, a more innovative one. At least we will reflect on them. But before this, in the IVI issue of this miniseries we will see the proposals that FISEC has been elaborating for the last 8 years on “the future of Strategy”. And, in the IV and last issue, we will try and see to what extent both proposals coincide and if they are of use to us or not as a joint platform to address the changes that 21st century companies and society are claiming.