The Technology of Management - Time for a revolution, or more of the same?

In a world that is characterised by increasingly rapid change and disruption, within and beyond the organisational context, where the reputation of managers as a species is at an all-time low, it is time to ask the question: - whereto management and the technology of management? This question is also particularly relevant to South Africa as we are embarking on a journey to realise the South Africa 2030 vision (outlined in a previous post).

In forming an opinion and ultimately to try and answer the question, it is practical and prudent to analyse the views and perspectives of leading management thinkers, including Gary Hamel, Henry Mintzberg and the late Peter Drucker.

Hamel, currently recognised as one of the leading and most innovative business and strategy thinkers, argues that organisations need bold management innovation now more than ever. It is his view that the current management model, centred on control and efficiency, no longer suffices in a world where adaptability and creativity are key drivers of business success. Hamel believes companies should become serial management innovators to create and sustain competitiveness over time. He believes management is a maturing technology and is calling for a revolution in the way management is practiced.

By way of illustration he challenges readers to identify a dozen management innovations over the last 20 – 30 years on the scale of those that laid the foundation of modern management, which generally were individuals born in the 19^th century, not long after the end of the American Civil War. Those intrepid pioneers developed management technologies such as standardised job descriptions and work methods, invented protocols for production planning and scheduling, mastered the intricacies of cost accounting and profit analysis, instituted exception-based reporting and developed detailed financial controls, devised incentive-based remuneration schemes supported by personnel departments and created sophisticated tools for capital budgeting. In addition, by 1930 they had also designed the basic architecture of the multi-divisional organisation and articulated the principles of brand management (Hamel, G. 2007. The Future of Management, p. 6 -7).

Hamel (p.8 – 11) states that over the course of its development, modern management has wrestled many a problem and challenge into the ground by bringing structure, frameworks and rigour to the execution of work, as well as the structure and governance of the corporation. It is his position that these successes have come at a heavy price as the machinery of management forces fractious, opinionated and free-spirited human beings to conform to standards, rules and guidelines. In doing so this “mechanisation” has resulted in substantive quantities of human imagination and initiative being wasted. Modern management brings with it discipline to operations, but on the negative side restricts organisational adaptability, agility and flexibility, as well as enslaving employees in rigorous, quasi-feudal, top-down organisations.

Hamel also posits that while modern management has helped to make businesses dramatically more efficient, there is little evidence that it has made them more ethical. Based on this evidence Hamel comes to the conclusion that it is perhaps time to renegotiate the bargain – to reinvent the technology of management. This revolution should focus on enabling the corporation to coordinate the efforts of individuals without creating a burdensome hierarchy of overseers, to keep a tight rein on costs without strangling human imagination and to build organisations where discipline and freedom are not mutually exclusive. In effect Hamel envisions an organisational and management environment where seemingly unavoidable trade-offs that are the legacy of modern management are transcended.

The current reality is that modern management is not just a suite of useful tools and techniques – it is in fact a paradigm, a worldview and deeply held belief about what types of problems are worth solving, or are even solvable. All people are captives of their paradigms, with managers, at all levels, being captive of a paradigm that places the pursuit of efficiency ahead of every other goal. It has to be said that this is hardly a surprise as modern management was invented to solve the problem of inefficiency (Hamel, G. 2007: p10 – 14).

Even though the practice of management may not be evolving as fast as it once did, the business environment in the 21^st century is more volatile than ever with many daunting management challenges that are markedly different from historical challenges, taxing business leaders. Some of these challenges include:

• The pace of change is accelerating as evidenced by the fact that industry leadership is changing hands more frequently and competitive advantage is eroding more rapidly than ever before
• Deregulation, along with the de-scaling effects of new technologies, are substantively reducing the barriers to entry across a wide range of industries, resulting in long-standing oligopolies breaking and a significant increase in industry and inter-company competitiveness
• Increasingly companies are becoming part of “value webs” and “ecosystems” over which they have only partial control. Effective and creative negotiations are therefore becoming increasingly important in establishing a competitive position, as opposed to a the more traditional market power as the driver of competitiveness
• Industries structures are changing markedly with the move away from vertical integration, the increasing adoption of disintermediation and outsourcing, along with an increasing prevalence of co-development projects and industry consortia resulting in firms having less and less direct control over their destinies
• The increased effort to digitise anything and everything, along with the drive to make these digitised assets freely available is threatening companies that make their living out of creating intellectual property
• Increasingly the bargaining power is shifting from producers to customers as the latter have ever more access to key information and the luxury of unprecedented choice (often across traditional geographic boundaries) through the ever expanding influence of the internet
• Strategy lifecycles are shrinking as the availability of capital, the power of outsourcing and the global reach of the internet make it possible to ramp up new businesses faster than ever before. This ease of entry is however offset by the fact that the more rapidly a business grows, the sooner it fulfils the promise of its original business model, peaks and enters into decline, which then predicates the development of a new business to drive new revenue and profit generation
• Communication costs have been reducing rapidly over an extended period of time and in doing so industries are being opened up to new, extremely low cost competitors that are challenging the business models, built on legacy costs, of the incumbents.

It is Hamel’s (p. 14) belief that these 21^st century challenges that companies (and their managers) are facing are of such a nature that the paradigms and associated management practices are no longer appropriate – the journey to a 21^st century appropriate management paradigm is being constrained by the current efficiency-centric, bureaucracy-based managerial paradigm. These constraining forces lead managers to improvise, patch and retrofit management practices to address the new century’s challenges.

Hamel (p. 15) adds that most managers are partisans of the old paradigm and are therefore members of the bureaucratic class. He argues that executives, managers and supervisors have learnt how to use the technology of management – the planning conferences, the budget meetings and the performance management systems – to get things done and, even more importantly, these managers have learnt how to leverage positional prerogatives, access to power and polished professionalism to get ahead. Any talk of revolution, and in particular management revolution makes these manager most jittery and concerned.

Despite the recognition for a need to revisit the current (modern) management paradigm and the associated unease at what this review may entail, it is becoming increasingly clear that real progress demands a revolution in management thinking, approach and practice (Hamel, p15). Hamel (p16) firmly believes that the practice of management must change radically in the first two to three decades of this century – at least mirroring, but preferably exceeding, the innovation during the early years of the 20^th century. He believes that the challenges faced by the 21^st century business leaders are at least as intimidating, exciting and unprecedented as those that confronted the world’s industrial pioneers a hundred years ago. While driving for the recognition of the need for a management revolution, Hamel (p. 17) acknowledges that there is not much in the average MBA curriculum, management best sellers, or leadership development programmes that would suggest that there are radical alternatives to the way managers lead, plan, organise, motivate and manage right now. He does state that true innovators are never bound by what is – they dream of what could be.

Henry Mintzberg (2009. Managing, p.1), another leading management thinker embraces a somewhat different approach to the status quo of management. His view is that the concept of management has been eroded by the concept of leadership, resulting in some confusion, which in turn supports the issues and challenges that those in charge of companies and corporations, or sections of these entities facing (including that of a tainted position). Much as Hamel, Mintzberg calls for renewal of management’s role in the corporate world. He, however, takes a somewhat different approach to Hamel as his focus is on asserting what a manager should be doing, rather than focusing on management models. In essence then Mintzberg’s focus is on clearly establishing what a manager should be doing and how he ought to interact with peers, subordinates, stakeholders and shareholders alike – therefore a somewhat more fundamental view.

Mintzberg notes that Peter Drucker put management on the map a half century ago, but in the same breath contends that leadership has since pushed it off this selfsame map. It is Mintzberg’s belief that management needs to be restored to its rightful place: front and centre. His view is that we should be seeing managers as leaders and leadership as management practiced well. He states that the world is currently inundated with stories about grand successes and even grander failures of the great leaders. In contrast we have not yet come to grips with the simple realities of being a manager. It is Mintzberg’s (2009: p. 9) view that leadership cannot simply delegate management; instead of distinguishing managers from leaders, managers should be seen as leaders and leadership as management practiced well. Mintzberg believes that managing should be put ahead (of leadership), seeing it together with leadership as naturally embedded in what can be called communityship. He continues to state that after years of seeking the Holy Grails, it is time to recognise that managing is neither a science, nor a profession; it is a practice, learned primarily through experience, and rooted in context. In pursuing this train of thought, Mintzberg believes that when a good deal of craft is put together with the right touch of art alongside some use of science the result is a job that is above all a practice.

Mintzberg (p. 12) contends that a manager is someone responsible for a whole organisation, or some identifiable part of it. He adds that the manager has to help bring out the best in other people, so that they can know better, decide better and act better. Mintzberg continues by urging that management should be recognised as a calling and that efforts to professionalise it and turn it into a science are undermining the calling. He believes that too much emphasis is being put on the challenges of the here and now and that it in fact can actually get in the way of analysis and development. As a result there is a risk that we become mesmerised by the present and biased by the stories we “know too well”.

Mintzberg challenges the validity of statements such as “we are living in times of great change”. While he does not dispute the fact that there is indeed change, he does note that the reality is that only those things that are changing, or have changed, are noticed, while, conversely most things that are not changing, or have not changed, are not noted all, thus creating the perception that it is a time of change with little remaining the same. By implication Mintzberg is implying that everyone wrapped up in their current perspective (in each and every era, decade, or even century) has experienced tremendous change, with this change being accompanied by a majority of things that have not changed. In addition, it needs to be borne in mind that, upon reflection of the change in a previous period, from the current moment in time, the historical change, or rate of change appears to slower, of a lesser nature than the change the observer is experiencing at present.

Hales (2001:54) stated that “for all the fashionable hype about leadership, it is unfashionable management that is being practised and its fundamental characteristics have not changed”.

Managers deal with different issues as time moves forward, but not with different managing. The job of managing does not change (Mintzberg, p14). This position is illustrated by the following example: “we buy new gasoline all the time and new shirts from time to time - that does not mean that car engines and buttons have been changing”. Despite the fuss that is being made about change, the fact is that basic aspects of human behaviour – and what could be more basic than managing and leading? – remain rather stable. Mintzberg was struck during his own earlier study of management, published in 1973, that the behaviours he observed were probably indistinguishable from those of managers of earlier times. Much of the information they needed was different, but they sought this information in much the same way – by word of mouth. Their decisions may have concerned the latest technology, but their procedures to make those decisions used little of that technology. Mintzberg continues by asking whether any of that has changed in this day and age. He contends that, while many would like to think that much of it has changed in the current context, the evidence suggests the contrary.

Tengblad (2000, Continuity and Change in Managerial Work. p. 38) for example, probably the most active researcher on managerial work today, concluded from one of his studies that “managerial work appears to be a relatively stable and evolutionary phenomenon. Tengblad had identified that many striking similarities between the work behaviours of Swedish CEOs during the forties and those of the nineties indicate the importance of traditions, rather than modern technology or fashions in management for deciding the where, when, how and why of their work. Mintzberg continues by arguing that if management were a science, even a profession, it would change. He contends that management is neither and as a result, aside from the fads (with many of them being dysfunctional) that come and go, managing carries along merrily, with even the new information technologies actually reinforcing long-standing characteristics of managerial work.

In The Essential Drucker, Harper Collins Publishers, 2001, Drucker’s key principles of management were summarised as follows:

• Management is about human beings. Its task is to make people capable of joint performance, to make their strengths effective and their weaknesses irrelevant;
• Because management deals with the integration of people in a common venture, it is deeply embedded in culture. What managers do in Germany, the United Kingdom, the USA, Japan or in Brazil, is exactly the same. How they do it may be quite different;
• Every enterprise is a learning and teaching institution. Training and development must be built into it on all levels – training and development that never stops;
• Profitability is not the purpose of, but a limiting factor on business enterprise and business activity. Profit is not the explanation, cause or rational of business behaviour and business decisions, but rather the test of their validity;
• True marketing starts out...with the customer, his demographics, his realities, his needs, his values. It does not ask: What do we want to sell? It asks: What does the customer want to buy?
• In every single business failure of a large company in the last few decades, the board was the last to realise that things were going wrong. To find a truly effective board, you are better advised to look in the non-profit sector, than in our public corporations

David A. Jones, co-founder and retired chairman and chief executive of Humana Inc., a Louisville, Ky., health insurer, recalls the core of Drucker's advice this way: "Successful enterprises create the conditions to allow their employees to do their best work." In addition Drucker was a firm believer that organisations should articulate a clear purpose, with specific, measurable goals. To him however the clearly articulated sense of purpose was not enough – implementation should enable the vision realisation. He therefore developed the concept of "management by objective," to keep managers in step with those goals. In addition he continuously encouraged managers to ask unspoken questions and consider ignored issues. In taking principle of employees being the most valuable resources in a company, Drucker also proposed that employees should be treated as such and that pushing decision-making to the lowest levels is crucial. While he did specifically talk of the “learning organisation” or “workplace empowerment” these would certainly be the outcome with decision-making being pushed to the lowest level – without skilled, capable and informed employees at the lowest levels, such devolved decision-making would more than likely prove disastrous.

We have now outlined three, somewhat different perspectives of management and the journey ahead. Hamel argues that a radical transformation of management technology/practise is required, while Mintzberg seems to suggest that the basic practices of management have remained firm over time. He does, however, posit that ways and means should be found to reinforce these practices in what appears to be a period of unprecedented change. In addition Drucker’s principles, as outlined above, are also quite enduring and change resistant and seem to be as valid today as when he first publicised them.

Based on the positions outlined above, and adding to that my practical experience from working with clients across numerous industries, I would tend to agree that the principles of management remain key to successful management practice and would, therefore, given the recent deterioration of management’s reputation, argue that the application of these principles can be faulted, rather than the principles themselves. I also tend to concur with Mintzberg’s view that the practice of management needs to be reinforced. I therefore subscribe to views of both Drucker and Mintzberg that argue management principles and basic practice do not requires a fundamental overhaul, or transformation, but rather that the emphasis should be on the more effective application of these principles and practices.

That does, however, not mean I disagree with Hamel’s view that a revolution in management technology is required. On the contrary, I would support his position fully. His thinking revolves less around the principles and practice of management, which are what Drucker and Mintzberg address, and more on how the technology of management can be harnessed to help create organisations that are more capable of adapting to an uncertain operating environment and flexible enough to create competitive advantage by harnessing all the resources available to the organisation in a unique, creative, novel way – akin to the Toyota management system that has been around for nearly forty years, or the divisional organisation of work initiated by General Motors.

To me, it is fundamental to include the principles and practices (as they have stood the test of time) and apply them to the revolutionised technology of management that Hamel is striving for.

In summary then, I would concur with Hamel that there is a need for management technology innovation, with minimal emphasis on reinventing the principles and basic practice of management. The transformation focus should be on the innovative reconfiguring, harnessing of these principles and practices in such a way that it fosters the creation of a more fundamental and enduring competitive advantage than is generally the case in the current state. To underpin this drive towards greater innovation, however, it is imperative that an organisation culture that supports such a drive is established.

Having reviewed the different perspectives, and finally forming an opinion on the status quo and the need for innovation, I would like to pose the following questions:

• What is your opinion? – do we need more of the same with regards management technology, practice and principle, or are we in need of a transformation?
• What innovation do you think can and should take place?
• Do you have examples of management transformation/innovation? – if so, please respond and share
• What are the management technology innovations that you have observed in the South African context and
• Would you like to become part of a broader discussion group on this topic? – if so, please contact me

I look forward to engaging you on this topic. Join us in our quest to improve the competitiveness of companies.