We live in dangerous times, not just financially and economically, but also in the way we manage our businesses, our employees and, most of all, ourselves.
Management has been derailed in too many companies and too few people seem prepared to fix it. Institutional corruption has been a facet of business probably as long as business has existed. Every era has its rogues’ gallery: its Enrons and BCCIs. Much of the wrongdoing in such companies could be put down to deliberate intent.
Today, however, business is threatened by its very success. Disproportionate rewards for senior executives have created a sense of detachment for some and a gilded cage for others, trapping them in a culture of entitlement.
Management systems and processes have been refined to the nth degree, removing discretion from lower tiers while standardising and commoditising jobs. Companies are going in to battle rather like Napoleonic armies, with rehearsed strategies and formations designed to grind down the opposition.
But the battlefield has changed immeasurably. When a company such as the Royal Bank of Scotland, which has world-class management systems, is brought to its knees in an unstable market, board members everywhere should be asking themselves: “Could we be next?”
Layered over the old battlefield, like smoke hiding guns, is the cloud and all who nestle within it, trying to make sense of networked communications technologies and services that are not only reshaping business, but also management.
In the past, we were handed the tools of business when we entered our clean new office – the desk, the landline telephone, the pager, the Rolodex and the desk-top terminal supported by the in-house server and IT department. These were the chains of office in every sense of the phrase.
Those chains have been severed by mobile tools and services such as the BlackBerry, the internet, LinkedIn and Twitter. Managers are uneasy, like actors in silent movies suddenly introduced to sound.
The internet free-for-all, introducing services with complex revenue models or free-to-use offerings, has been unsettling for conventional management. Once we made a call abroad and paid for it. Today we can do the same on Skype at little or no cost. We can build our networks (if not relationships) online and, if we dare to use it strategically, we can tweet to the world or to our teams.
But there are obstacles for executives in this more open world. How do you lead a team on Facebook when you might have to fire a “Facebook friend” colleague? How do you build a Twitter following when few people outside the head-hunting firms and executive suites know you?
Such dilemmas are creating a divided marketplace. Traditional business continues to rely on tried and tested systems, while internet interlopers tear up the management rule books in their search for revenue online.
Just 10 years ago, executives would sit at the feet of Jack Welch, the influential former chief executive of General Electric, the US industrial conglomerate, absorbing lessons on Six Sigma and his Session C forced-ranking appraisals to weed out the poorest performing managers.
Today, such has been the change in management direction, that a new generation of business leaders are feeding off the wisdom of Jeff Bezos, chief executive of Amazon, the internet retailer; Sergey Brin and Larry Page, co-founders of Google, the internet search business; Biz Stone, co-founder of Twitter, the microblogging service; and, somewhat reluctantly perhaps, Mark Zuckerberg, the founder of Facebook, the social network. At the same time, disciples of this nascent internet aristocracy are holding their noses in disgust at the tarnished regime of News of the World, the newspaper that was part of Rupert Murdoch’s News Corporation, the international media group.
But what do the internet wunderkinder have to say about the teachings of management theorists such as F.W. Taylor, Peter Drucker and Douglas McGregor? The answer is very little. Their world rests on the collaborative powers of the internet, the fundamentals of coding, the potential of mathematical algorithms, a pragmatic pioneering spirit and the seduction of the cult. The formative phases of their enterprises have pulled in the best and the finest through networks of talent, rather than traditional methods such as graduate entry schemes.
These new gurus are practitioners – hands-on innovator-entrepreneurs who have more in common with Thomas Edison than Alfred Sloan. Are we, then, witnessing the death of management as we know it? Not quite.
So long as Warren Buffett and Charlie Munger, the legendary pairing at the helm of Berkshire Hathaway, the investment company, can continue to prosper from concentrating on the fundamentals that characterise profitable, well-organised and well-managed companies, the management disciplines that have underpinned structured organisations for decades are going to retain their value.
As we enter the second decade of the 21st century, management has diverged, moving forward on parallel paths – one structured and grounded in the culture of the organisation; the other, a laissez-faire, learn-as-you-go approach.
The first belongs to a commercially protective society – controlling, relying on in-house systems, profit-driven and guarded in its dealings. The second is feeding a distributed society – networked, wired, open and willing to share information. Neither culture delivers perfection.
Indeed, there are perils in both directions. The new management can rely too readily on off-the-shelf, bought-in systems, while old management can shirk its responsibilities, leaving the vital issue of people management to dour, process-obsessed regimes residing in human resources management. As sporadic working hours and arrangements become the norm rather than the exception, both camps will need to manage by results, mastering the demands and subtleties of remote management.
Managing in a digital world demands policies to stamp out the worst habits of the new communications – an over-reliance on management by email, BlackBerry ping-pong, and overwhelming internet distraction – while developing an ability to sift out the best of the collaborative and levelling opportunities of the internet.
The game is the same, but the rules have changed. And some of those, even now, we are making up on the hoof.
The writer is the author of The Future of Work (Palgrave MacMillan)
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