The reinvention of management
While the economic crisis has been explained as a failure of governance, a failure of regulation, and even a failure of our free-market system, the prosaic truth is that it was a failure of management – a story of awful risk management decisions, perverse incentives systems, and amoral behaviour. Management needs to be reinvented if it is to take its rightful place as a profession and as a means of delivering economic recovery. Julian Birkinshaw tells how.
The managerial failures of the big investment banks are only the tip of the iceberg. Surveys show decreasing levels of trust in business leaders. Fewer than 20 per cent of employees are truly "engaged" in the workplace. Managers are portrayed as aloof, vain, or just plain stupid by cartoonist Scott Adams, columnist Lucy Kellaway and comedian Ricky Gervais.
But, while the credibility of "management" as a profession sinks deeper into the mire, its importance as the driver of economic recovery and long-term prosperity is as great as ever. Management needs to be reinvented; but first we need to understand how we got into this mess in the first place.
I believe we need to go back to the origins of the term "manager" because a large part of the problem is that its meaning has been corrupted.
First, the emergence of the large, bureaucratic, industrialised firm a century ago, and its increasing hegemony in society, led many to equate the term manager with a narrow, hierarchical, formalised way of functioning. But management simply means "getting work done through others". A community organiser, a scout leader, and an entrepreneur are all managers as well, but the way they get work done doesn't feature in our business school textbooks.
The second blow to the credibility of management came from the leadership movement. In order to build up "leadership" as an art, gurus such as Warren Bennis and John Kotter put management into a small box. Managers, they suggested, were concerned with efficiency and the status quo; leaders were concerned with effectiveness and change. Managers supervised and coordinated; leaders motivated and inspired people.
I am all in favour of effective leadership, but let's not create artificial distinctions. Leadership is about influencing others - it is about the characteristics of a person that makes them worthy of being followed. Management is about getting work done through others - which includes making decisions, coordinating activities, motivating people, and setting direction. Barack Obama was elected in large part through his vision and his charisma, that is, his qualities as a leader. His ability to deliver will now come down in large to his qualities as a manager. Leadership and management are simply two sides of the same coin: effective executives need to be able to do both.
So what is the future of management? The first essential step is to get management back on the same footing as leadership - as an essential, value-adding, and productive activity. The second step is to rethink our narrow assumptions about the nature of effective management. Management can be done through traditional hierarchical, bureaucratic mechanisms, but it can also be done in a more spontaneous and bottom-up way. Look at online social communities, open-source software organisations, and voluntary-sector firms: these are all managed, but through a completely different set of principles to the ones we are accustomed to in large bureaucracies.
I don't believe we need to completely reinvent management. Yes, there are changes afoot, made possible in part by the emergence of Web 2.0 technologies. But a lot of these putative changes - towards empowered, flat, emergent, and virtual structures - have been promised for decades. Rather than reinventing management in toto, we need at least to rethink the choices we make about how we manage. Every organisation has an implicit management model - a set of choices about how direction is set, how workers are motivated, how decisions are made, and how activities are coordinated. Sometimes the traditional top-down approach works fine, sometimes a more organic, community-based model is more appropriate. The best managed companies - the ones that can potentially derive competitive advantage from their management model - will in the future be the ones that make conscious choices that suit their circumstances, rather than falling back on the default model invented by Frederick Taylor and Alfred P Sloan in the 1920s and 1930s.
Julian Birkinshaw (jbirkinshaw@london.edu)is a Professor of Strategic and International Management at London Business School and is also the co-founder of the Management Innovation Lab (MLab).
His new book, Reinventing Management, will be published by Jossey-Bass in 2010.