The Nature of Management Is Changing. Here’s What You Need to Know
21st century companies are doing things differently.
PHOTO CREDIT: Getty Images
Organizations today are surfing on the edge of chaos. Markets change faster and faster, unforeseen influences require quick adaptation, and organizations constantly need to be one step ahead and reinvent themselves. Many businesses, including small and medium-sized businesses, are becoming global, helped by advances in connectivity and digitization. This means that competitor profiles are constantly shifting and there is an increasing emphasis on innovation, cooperation and collaboration. Other challenges include accelerating pace of change, complexity, uncertainty and fast transition towards creativity economy. The management dogmas of the past do not serve their purpose anymore; it is time to adopt new thinking, take a different type of actions in organizations worldwide and make them more human and fit for purpose. Organizations and societies are better able to adapt by taking a path based on values, integrity, purpose, compassion, continuous innovation and the commitment to make a positive difference and safeguard the future for the young generations.
Many organizations, both in public and private sectors, need to make profound systemic changes not just to management practices, but to organizational cultures, business processes, regulatory frameworks, work arrangements and work ethics. Traditionally managed organizations resemble supertankers, difficult to respond to any sudden changes in their environment and difficult to change the course. Modern organizations should be managed and led as sailing boats - a general direction is to be determined, but the journey towards the destination should be flexible depending on the environmental conditions.
Management thinking has been traditionally influenced by scientific discoveries. Conventional management approaches have been based on the Newtonian machine model that focuses on hierarchical linearity, a culture based on rules, command and control and formal relationships. It is no more than a metaphor, and while such an approach might have worked well in predictable and stable environments when the objective was efficiency in the production economy, there is ample research evidence that in dynamic and complex business environments this traditional approach inhibits creativity and innovation and decreases motivation and productivity. In traditionally managed organizations, structures distribute power and processes distribute tasks. Structures and process are about creating stability, repeatability and predictability, and this is happening in an unstable, chaotic world, which demands innovation. So we ask people to innovate in a system that is designed to produce the reverse. We cannot then be surprised that many organizations are not utilizing their potential for innovation.
Management innovation is a greater potential source of competitive advantage than traditional innovations of products, services or technology. Einstein's insights into relativity have influenced other disciplines such as art, music, religion or literature at the beginning of the last century. The main paradigm was that rational and analytical were inseparable from emotional and intuitive, but this has not affected management thinking until recently. The main reason was 'if it is not broken, do not fix it' mantra. From 1950s traditional management model flourished with the wealth creation for industrial nations based on increasing productivity. Then, with all technological changes and increasing importance of knowledge, new business models emerged (such as