The question is: What is it about the way large organizations have been managed recently that is damaging their ability to thrive for decades to come; and if so, what fundamental changes in management principles, processes, and practices are needed?
First, “management” – the tools and methods we use to mobilize resources for ultimate effect – is one of the most important human social technologies.
Second, the “management model” that prevails in most large organizations is now effectively obsolete. It originated in the late 19th century and was designed to solve a fundamental problem: how to get workers to do the same things over and over again with perfect results and ever-increasing productivity.
This was and still is an important issue, but it is no longer the most difficult challenge facing organizations today.
Third, we must manage reinvestment in a way that makes large organizations fundamentally more adaptable, creative, and inspiring places to work. In short, as much of an organism as the individuals who work in them.
These challenges are described fully in the February 2009 issue of the Harvard Business Review:
1. Ensure that management serves a higher purpose. Management, both in theory and practice, must orient itself toward the achievement of socially important goals.
2. Embed the ideas of community and citizenship in the management system. There should be processes and activities that reflect the interactions between stakeholder groups.
3. Rebuilding the fundamentals of management theory. To build organizations that are more than just about efficiency, we need to draw lessons from fields like biology and theology and from concepts like democracy and markets.
4. Eliminate the absurdities of the old system. There are advantages to a natural hierarchy where power can flow from the bottom up and leaders emerge rather than being appointed.
5. Reduce fear and increase trust. Mistrust and fear are toxic to innovation and commitment and must be eliminated from future management systems.
6.Reinventing control and management methods. To overcome the balance of principles and freedom, the management system will have to encourage control from within instead of suppressing it.
7. Redefine leadership. The idea that leaders are exceptional decision makers is conservative. Leaders must be engineers who build social systems that support creative ideas and collaboration.
8. Expand and explore differences. We must create a management system that values difference, disagreement and division as well as harmony, unity and connection.
9. Reinvent strategy making as an emergent process. In a world of extraordinary change, strategy making must reflect biological principles of diversity, selection, and persistence.
10. Reduce organizational structure and division. To be more adaptable and innovative, large institutions must be divided into smaller, more manageable units.
11. Significantly reduce the inertia of the past. Current management systems often unconsciously reinforce the status quo. In the future, they must support innovation and change.
12. Share responsibility for setting direction. To bring about commitment, responsibility for setting goals must be distributed throughout a process where sharing ideas is a function of insight, not power.
13. Develop formal performance measures. The current operating system must be reorganized because it does not pay enough attention to the critical human capabilities that drive success in the creative economy.
14. Flexibility in management perspective and time frame. Explore different ways in which rewards and incentives can encourage managers to work for long-term goals rather than short-term gains.
15. Create information democracy. Companies need a cross-functional information system so that all employees can act for the benefit of the entire enterprise.
16. Empower the positive. Management systems must empower employees who are more future-oriented than past-oriented.
17. Expand employee autonomy. Management systems must be restructured to support creative ideas and experiences from the grassroots level.
18. Create an internal market for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and a company's resource allocation processes should reflect this.
19. Depoliticize decision making. Decision making must be free of hierarchical bias and must tap into the collective intelligence of the entire organization.
20. Optimize by balancing different factors to bring about the best combination. Management systems tend to force either/or choices. What is needed is a system that optimizes the different factors that are important to bring about the best results.
21. Expanding human imagination. This is mostly understood as something that encourages human creativity. This awareness needs to be better applied in the design of management systems.
22. Support communities of shared passion. To maximize employee engagement, management systems must support the creation of self-defined communities of passion.
23. Retooling management for a more open world. Value creation systems often transcend the boundaries of companies and render traditional power-based management tools ineffective. New management tools are needed to build a new complex system.
24. Humanize language and business. The management system of the future must believe in infinite humanistic ideas such as beauty, fairness, and community as much as it believes in the traditional goals of efficiency, advantage, and profit.
25. Retraining management thinking. Traditional analytical and deductive skills of managers must be supplemented with conceptual and systemic thinking skills.
Leader
