In the September 2008 issue of CIO Magazine Australia, writer Sue Bussell referenced criticism that I provided about the pitfalls of “Management 2.0”. My quotation is in red.
In his book, The Future of Management, Gary Hamel suggests that organizations today face a new set of business challenges that the existing management model does not match. The drone worker of yesterday is giving way to the engaged and vocal employee of today who expects a company culture that replicates the collaborative nature of Web 2.0 — in other words Management 2.0
A CIO becomes aware that a member of staff has “gone around him” to get the information he needs from someone in another department the staffer located after some creative e-networking. As it happened, the source didn’t have the full story but the information sounded reasonable enough to the IT staffer, who happily acted on it with unfortunate results. The CIO’s reaction: “It was not only dumb but disloyal. If [the staffer] had only gone through his manager none of this would have happened.”
Another CIO tells the story of how 160 or so business analysts around the company took it upon themselves to create an online forum where they could find and get to know one another, share ideas and source help with problems from peers. No one asked permission. They just did it. The CIO’s reaction, “I was a little surprised to learn about it. But I think it’s interesting. We’re letting it continue and we’ll see what happens.”
There’s a lot of this sort of thing around as managers battle to continue managing in a Web 2.0 world, says New York-based Cognetics Corporation president Anne Pauker Kreitzberg. Managers have a general sense of what Web 2.0 tools are — especially when it comes to applications they’re familiar with like YouTube, Facebook, or Linkedin. But they still struggle to understand these technologies, discover their real business value, address the risks and figure out how to best use them.
“Only those companies that have been very early adopters — many of them in the tech business — have come to the realization that a critical success factor is having a culture that supports Web 2.0,” says Kreitzberg, who is in the process of building a community Web site for “folks interested in this topic”.
“To my mind, that’s the conclusion Gary Hamel, Andrew McAfee — in his Enterprise 2.0 work — and others are talking about.”
What they’re talking about, and many organizations and management strategists are grappling with, is the concept of Management 2.0, a new style of management supposedly better suited to the Web 2.0 age. With the growing maturity of the Internet and the arrival of Web 2.0 posing unprecedented challenges, Harvard Business Review says management — rather than technological — innovation has become the key driver of economic value worldwide.
And Hamel, visiting professor of strategic and international management at the London Business School who The Economist calls “the world’s reigning strategy guru”, is convinced traditional management has reached the end of the road. In his view the old management principles, with their focus on “incrementalism” (improving the same product or service with more efforts), are irrelevant. What matters today is strategic innovation. “The last decade was all about deal making and reducing costs. General Electric was a good example of this era. This approach doesn’t work any more,” Hamel has said.
“The efficiency-focused management model has run its course,” Hamel argues in his book The Future of Management. “To see the future of management, look to the Internet, open source, free markets and democratic institutions.”
Unprecedented competition and massive changes in business environment make it high time to usher in an entirely new set of management principles based on high-order innovation that breaks industry mores and achieves true engagement with human talent in the company. Hamel says the planning, organizing and controlling models, which have served us well for a century, won’t help companies solve 21st century problems. Instead, in an era marked by global competition and commoditization, adaptability, speed and creativity are essential for survival. Web 2.0, he says, empowers individuals with information; aggregates collective wisdom; links buyers and sellers and enables creative expression.
In Hamel’s view, the “future of management” is a world where:
- Decisions are peer-based
- Resources are free to follow opportunities
- Commitment is voluntary
- Power is generated from below
- Communities are self-defining
- Everyone has a voice
- The tools of creativity are distributed widely
- It’s easy and cheap to experiment
- Capability counts more than titles
- Just about everything is decentralized
Over the last decade, the Internet has dramatically transformed the world of business, Hamel says, and in future it is almost certain to change the work of management just as thoroughly as it’s changed every other facet of commercial life.
The first job of any manager is to amplify human capabilities, and the second is to aggregate individual efforts in ways that allow human beings to do together what they couldn’t do on their own. “Management innovation” entails getting better at both amplifying and aggregating human capability, Hamel argues in a recent blog post, and the Internet will facilitate both.
“In the years to come, progressive companies will use the Web to overcome the shortcomings of their antiquated, bureaucracy-based management models — flaws that today severely inhibit the capacity of these organizations to adapt, innovate and inspire . . .
“One hundred years ago, the railroad, the telephone and reliable electrical power paved the way for the emergence of the modern industrial company. Today, a new suite of “social technologies”, centered around the Web, is giving us the chance to reinvent management as we know it — an opportunity that is only open, though, to the companies and managers that can slough off a hundred years of management dogma. The potential pay-off for inventing Management 2.0? Organizations that are as adaptable, innovative and engaging as the people who work for them.”
Stuck in a 1.0 Mentality
While the next wave has been postulated for many years, very few managers or companies have made a success of it, says Telecom New Zealand program director Dave Stringer. That’s because the difference between managers, captains and leaders is not something that a 1.x manager wants to understand — they are still looking for Management 2.0, as opposed to “Organization Philosophy 2.0 (OP 2.0).”
“The concept of teams has been around for many years,” Stringer says. “The issue is not the basic concept, but the stuff underneath it. In the 1.0 world, the philosophy evolved from a simple base premise, which was that a ratio of one leader to 10 followers allowed for rapid and effective communication — the Caesar approach to managing armies. Teams, though, are a different kettle of fish. There are directed teams: think of a gridiron team, where the coach sends every play to the quarterback with a player exchange. There are managed teams: think of a basketball team, where the plays are worked out off-court and the centre decides which one to use. There are led or captained teams: think of a rugby team, where the captain takes all the key decisions on the field. There are self-managing teams: think of an equestrian team that has to work out and agree together their strategy and tactics for an event. There are self-directing teams, who are given no goals, but are sent out to add value as they see fit.
“There are so many types of team that can be employed in business, but they almost all share the characteristic that, if there is a manager it is that person’s job is to ensure the logistics and the sourcing are fit for purpose. That is the challenge, and that is the reason it’s taking time to make the transition. When the Hay System, and all those other approaches to managing income relativities, is based on the skills brought to the talent pool, and take no cognizance of the number of people ‘reporting to’ someone, then we will know we are on our way to 2.0 — not just in organization structure, but also in enterprise.”
“In my view, Management 2.0 will be less about ‘managing’ than ‘facilitating’,” says Gautam Ghosh, senior consultant at India-based Tvarita Consulting. Managers must adapt to an interconnected world where every employee has access to tools, and the screen between the organization and the outside world is a porous system.
“The days of command and control are done and dusted,” Ghosh says. “Management 2.0 would call for a new mind-set and culture of inspiring people and helping them find their calling. CIOs can help by also moving to this model, by challenging the top down IT models and moving to open communication systems that break down silos between organizational boundaries.”
Noel Posus, global director of Incredible Awareness, is willing to bet that Management 2.0 is going to look a lot like Web 2.0.
Most of us grew up in a “post-industrial” society, Posus says. We are now on the verge of a post-managerial society, perhaps even a post-organizational society. This is not to imply a future without managers, he says. Just as the coming of the knowledge economy didn’t wipe out heavy industry, so the dawning of a post-managerial society won’t produce a world free of executives and administrators. Yet it does herald a future in which the work of managing will be performed less and less by “managers”.
“To be sure, activities will still need to be coordinated, individual efforts aligned, objectives decided upon, knowledge disseminated, and resources allocated, but increasingly this work will be distributed out to the periphery,” Posus says.
“While Management 2.0 won’t completely supplant Management 1.0, the two versions aren’t entirely compatible. There are going to be conflicts. Indeed, I think the most bruising contests in the new millennium won’t be fought along the lines that separate one competitor or business ecosystem from another, but will be fought along the lines that separate those who wish to preserve the privileges and power of the bureaucratic class from those who hope to build less structured and less tightly managed organizations. Richard Florida sees the same battle shaping up. In The Rise of the Creative Class, he puts it bluntly: ‘The biggest issue at stake in this emerging age is the ongoing tension between creativity and organization.’ This is, perhaps, the most critical and intractable management trade-off of all, and therefore, the one most worthy of inspired innovation.
“It will take more than advances in technology to usher in the post-managerial age. As I noted earlier, management and organizational innovation often lags far behind technological innovation. Right now, your company has 21st-century Internet-enabled business processes, mid-20th-century management processes, all built atop 19th-century management principles.”
But while Posus says Management 2.0 will be the model for the future, implementing it will bring multiple challenges, including the realities of the multi-generational workforce.
Baby Boomers who don’t really want to retire are coming back into the workforce as free agents, often in consulting and mentoring roles. They may find the Management 2.0 style more than a bit foreign to them and possibly not cope well. Gen X is likely to really embrace this model but may also find it difficult to “sell” to others.
Gen Y may find it conceptually interesting, but is likely to side with Baby Boomers in wanting more structure. On one hand, they may really like the freedom this model provides, while on the other hand may not cope well with the individual responsibility such a model requires to work. “Gen Y’s may want more ‘telling’ in their environments and may find it difficult to adapt.” Posus says.
Still, there will be numerous benefits to all generations, including making it easier for them to all work together. To reap these benefits, Posus says, organizations must institute strategic learning and development inputs to develop the culture to work within this model. Some of the cultural set-up components from self-managed and/or self-directed teams may be helpful here.
Posus says formal and informal mentoring at every level of the organization will be required to make the model succeed and prove easy to grow organically. Those coaches and mentors must be fully versed in the model and become “trainers” and “consultants” to assist the organization, and the people within, with the necessary cultural development. And the coaches and mentors will most likely need to understand the multi-generational workforce dynamics and be both flexible and adaptable in their coaching/mentoring styles, he says.
Spell It Out
IT executives need to clearly articulate in business terms how technologies like Web 2.0 can be exploited to improve capital growth, organic growth, and cut operating costs, which in turn flow on to improvements in total shareholder return for investors, says Peter Hassall, IT executive management consultant at Peter Hassall & Associates.
“Putting ourselves into the shoes of our business partners, we need to ask ourselves: What will Web 2.0 technologies do for our businesses?,” Hassall says. CIOs need to determine how Web 2.0 applications will either directly or indirectly:
- Improve organic growth through product and service innovations
- Help reduce cost of operating the business
- Enable new product distribution channels thereby increasing market share
- Prove an enabler for opening up more merger and acquisition (M&A) opportunities, and therefore increase capital growth
“Additionally, we need to clearly demonstrate how we can protect sensitive corporate data and comply with listing requirements in the open and collaborative environments encouraged by Web 2.0 environments. At the same time we encourage the free flow of ideas and innovative thought through the use of these technologies,” he says.
“Our challenge is not to promote a “techo” concept of Management 2.0 but to ensure that management understands how Web 2.0 can add value to their business unit — either directly or indirectly — and more specifically provide some idea on how investment in the technologies will improve the bottom line, dividends and share value over time.
“In this and every case of considering technology investments for business benefit, Management 2.0 looks no different to what Management 1.0 should look like now,” Hassall says.
Unaware of Potential
Some companies will face serious barriers to moving towards a new Web 2.0-enabled paradigm of management.
Corporate behaviour specialist Colin Chodos, managing director at Sydney-based CCS, says he recently informally surveyed some 1200 CEOs of Australian SMEs about their experience using Web 2.0 products and services. He found less than 10 per cent had any real experience with the tools or techniques. Most were unaware of the potential these new technologies might bring to their businesses. “The current business barriers to Management 2.0 could therefore lie in the generational issue of leaders who are unfamiliar with trends and solutions championed by their CIOs,” Chodos says.
“Significant education strategies need to be explored that will enable business leaders to understand the changing skills required to take advantage of Management 2.0. For example: ‘How do I as a new-age manager find time to sift through massive loads of content and opinion to extract trends that will help key business decision making?’ In the past this skill has been the domain of the professional researcher. Today a possible barrier, but in the future this ability to process information at a corporate level will be a competitive advantage,” Chodos says.
Managers also must have the desire to move towards a new style of management — by no means a given says US business coach Alan Hill, president of Minneapolis-based DMZ Properties.
“Currently belief in the pyramid system tells managers that to give up control is to give up power, something any sane manager would be loath to do after having worked and ‘schemed’ so hard to get where they are. Their view would be: ‘I played by the rules, why shouldn’t everyone else have to?’,” Hall says.
Then again, Management 2.0 is all about breaking those rules.
Not Too Sure About 2.0
For many seasoned IT professionals, the whole idea of a new era of management ushered in by the Internet generates only cynicism
US-based IT business strategist John Doughtry thinks that Gary Hamel’s bullet list (see main story) sounds a lot like the ideals of a democracy, but doubts how long any such democratic environment is likely to last before some power play occurs.
“We may cry for a radical change as did the 18th century French, but it won’t take long before a Napoleon will come along and gather all the power he or she can muster,” Doughtry says. “This is the problem, isn’t it? Democratic structures can only survive when there are ethical authorities who do not abuse their power.”
Doughtry says he’s been running IT/IS departments in a very “peer-to-peer” manner — what used to be known as “team-oriented management” — for decades. Done correctly, he says, it empowers everyone on the team, increases motivation, improves morale, improves productivity, and builds a more trusting relationship between everyone.
The dark side, though, is that it only takes one “Judas” to undo the entire structure unless the higher authorities understand and advocate this form of organization. Very few do, in his experience: most CEOs prefer a more authoritarian approach.
“I even had one CEO call me into his office and tell me: ‘I do not believe in this so-called team-oriented concept, so don’t talk about it, and don’t utilize it.’ He was practically red in the face in his anger at the entire style,” Doughtry says. “Another CEO I knew continually wanted to ‘see heads roll’ anytime there was a human error of some type.
“In both these examples, a strong authoritarian, nearly totalitarian rule was preferred. How does one roll in any new style of management when the former style of management still maintains the power? The answer is simple: you can’t. Such change and advocacy of change has to occur from the top-down.”
On the Precipice?
While we’re still trying to reconcile Management 1.0 and 2.0, one observer says it’s three times lucky
Forget Management 2.0, says Terrence Seamon, portfolio manager at American Management Association. We are actually on the precipice of Management 3.0.
According to Seamon, Management 1.0 was Taylorism Management, which focused on efficiency. Management 2.0 was Participative Management which accompanied the quality movement and focused on customer and process. Now, he says, we are entering a new era of management that recognizes the individuality of each employee, their strengths and their aspirations.
“Management 3.0 is about engaging and unleashing people and trusting that they will do what the organization needs to have,” Seamon says. He believes we are witnessing a paradigm shift in organizations worldwide:
- from focus on weaknesses to focus on strengths
- from appraisal to appreciation
- from “our way or the highway” to flexibility
- from “one size fits all” to customization
- from “command and control” to engage and energize
“Call it the positive workplace movement, or the employee engagement movement, or the strengths-based movement, or the appreciative Inquiry movement, or whatever. It is happening,” Seamon says. “It is a very good thing, destined to awaken joy, meaning and commitment in the workplace.”
“Somebody once said that it’s a curse to live in interesting times. I disagree. To me, it’s a gift . . . and an opportunity,” Seamon say.
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