MLab

Three Forces Disrupting Management

Posted by Gary Hamel on March 19, 2009

Most of the industrial pioneers who created “modern” management—individuals like Frederick Taylor, Frank Gilbreth, Henry Ford, Alfred Sloan, and Donaldson Brown—were born in the 19th century. These bold thinkers would no doubt be surprised to learn that their inventions, which included workflow optimization, variance analysis, capital budgeting, functional specialization, divisionalization, and project management, are still the cornerstones of large-scale management systems.

It is difficult for contemporary observers to appreciate the profound impact these revolutionary breakthroughs had on the organization of economic life in the early decades of America’s industrial revolution. In 1890, nine out of ten white males worked for themselves, and the ones who didn’t were referred to disparagingly as “wage slaves.” At the time, the average manufacturing company had four employees, and few factories had more than 100 laborers. Yet within a generation, Ford Motor Company would be making half a million cars a year, Sears, Roebuck & Company would be operating a continental-scale distribution system, and US Steel would be able to boast of a billion-dollar market value.

This transition from an agrarian and craft-based society to an industrial economy required an epical re-socialization of the work force. Unruly and independent-minded farmers, artisans and day laborers had to be transformed into rule-following, forelock-tugging employees. And 100 years on, this work continues, with organizations around the world still working hard to strap rancorous and free-thinking human beings into the strait-jacket of institutionalized obedience, conformance, and discipline.

But now, for the first time since the early 20th century, we may be on the verge of another management revolution, and it may turn out to be just as unsettling as the one that spawned the industrial age. There are three forces at work that make such a metamorphosis likely; three discontinuities that may end management as we know it.

The first of these is a bundle of dramatic changes that have made the business environment substantially less forgiving. Companies around the world are struggling to cope with a wildly accelerating pace of change, an onslaught of new, ultra-low-cost competitors, the commoditization of knowledge, rapidly increasing customer power, and an ever-lengthening menu of social demands. Traditional management models that emphasize optimization over innovation and continuity over change simply can’t cope with these unprecedented challenges.

The second driver is the invention of new, Web-based collaboration tools. For the first time in centuries, human beings have a new way of organizing themselves, via online, distributed networks. Markets and hierarchies, heretofore the two principle technologies for coordinating human effort, finally have a robust new competitor. In the coming decades, we can expect the Web to transform organizational life every bit as dramatically as it has already transformed life outside the workplace.

The third driver is the mash-up of new expectations that Generation Facebook will bring to work in the years ahead. If you’re part of the first generation in history to have grown up on the Web, you don’t think of the Internet as something “out there”—a tool you employ to reserve a hotel room, buy a book, or send a note to grandma. Rather, the Web is something you’re perpetually in—as ubiquitous and transparent as water is to fish. As a child of the digital age, the Web is the operating system for your life, the indispensable and unremarkable means by which you learn, play, share, flirt, and connect.

Over the coming decades, these forces will mostly destroy management as we know it. In my next posting, I’ll outline some of the ways this might happen.

Readers, for now, are there any other big trends that you think might compel a comprehensive overhaul of our legacy management practices? If so, please briefly describe these forces and the impact you believe they’ll have on the way we lead, manage and structure our companies.

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