In amongst all the many enthusiastic comments and twitterings about my article, Shhhh! The Next Really, Really, Really Big Thing is… which was prompted by Greg Satell and which suggested that the next big new thing is the REINVENTION OF MANAGEMENT, Tim Carroway commented”
“Hasn't this happened before? Aren't there already groups of smart people doing great things?”
And Keith Decie commented:
“Why fantastic? Any of us would probably make pretty much the same list if we read HBR. What am I missing?”
Some wonderful articles
Interesting points. In fact, if you read Harvard Business Review, as I do, you do indeed find some absolutely wonderful articles which point in the direction of the reinventing management. Several in particular stand out for me:
- Gary Hamel’s classic article, “Moonshots for Management” (HBR, February 2009) which sounded the alarm that there was something fundamentally wrong with the way many organizations were being managed and called for a wholesale reinvention.
- Roger Martin’s landmark article, “The Age of Customer Capitalism” (HBR, January 2010) which signaled a fundamental shift from shareholder capitalism (an inside-out focus on making money for shareholders) to customer capitalism (an outside-in focus on providing value for customers).
- Umair Haque’s wonderful HBR blog, which has a wealth of material about what’s involved in the fundamental reinvention of economics and capitalism.
A march into the past
At the same time, I also find in HBR quite a few articles that purport to be forward progress, but in fact represent a determined march back into the past. Notorious examples include:
- The headline article, How To Fix Capitalism (HBR, January 2011)
- The article on the real lessons of Robert McNamara (HBR, December 2010)
- The article, Stop Trying to Delight Your Customers (HBR, July-August 2010)
- Looking back further, one can even trace the birth of the Dilbert-style manager to the famous HBR article Abraham Zaleznik’s “Managers and Leaders Are They Different?” (HBR, January 1977)
Management is in decline
If we look back over the last fifty years, the reality is that management hasn’t advanced much. Gains in one area are wiped out by backsliding in another.
Statistics confirm that management as a whole is in sharp decline. The return on the assets of U.S. firms is only a quarter of what it was in 1965. The life expectancy of firms in the Fortune 500 is already startlingly brief—now less than fifteen years and heading towards five years, unless something changes. Executive turnover is accelerating. Only one in five workers is fully engaged in his or her work. Firms older than five years contributed zero net new jobs for the U.S. economy in the period from 1980 to 2005. By and large, the private sector is no longer providing a good livelihood for all the country’s citizens. This is not a record of success.[i]
Three debilitating syndromes
Three factors in particular play an important role in this failure of management to advance:
a. The Amnesia/Eureka! Syndrome
One of the problems in management writing is a tendency to forget the past, and then rediscover it with shrieks of “Eureka!” Thus ever since Mary Parker Follett was talking about teams and the human factor at Harvard and Oxford in the 1920s, successive writers have “re-discovered” teams and the human factor with great fanfare. This includes Elton Mayo and Chester Barnard in 1930s, Abraham Maslow in the 1940s, Douglas McGregor in the 1960s, Tom Peters and Robert Waterman in the 1980s, and Smith and Katzenbach in the 1990s. There is a lack of historical perspective in the writing. “Teams and the human factor” are presented as “the big new thing”, when the idea has been around for close to a century.
b. Old wine in new bottles
The second phenomenon is that minor tweaks are hyped as major changes. It is only after a number of years of excited but troubled implementation, many consulting dollars spent and millions of books sold, that it becomes apparent that “the big new thing” is largely a relabeling of existing management thought. “Business process reengineering” is a notorious example in the early 1990s, while in 2011, “shared value” shows all the signs of following in its footsteps.
c. The virgin birth of management articles
Intellectual disciplines that advance systematically keep track of the evolution of the subject. Writers are careful to give credit to predecessors, signal alternative viewpoints and demonstrate sensitivity to the evolution of the subject as a whole. By contrast, journals such as Harvard Business Review systematically eliminate traces of earlier thinking about the subject at hand. It is as though the articles have “a virgin birth” and emerge into the world without any legitimate parentage. Thus you could read the January article on “shared value” entitled “How to Fix Capitalism” by Michael Porter and Mark Kramer without getting any hint that a similar argument was put forward some five years earlier by C.K. Prahalad in his book, The Fortune at the Bottom of the Pyramid. Any such reference would of course have undermined the hype that “shared value” is the “next big new thing” that will “fix capitalism”. The reality is that shared value was worthwhile idea in 2006 when C.K. Prahalad proposed it in 2006 but it didn’t “fix capitalism” then. It is highly unlikely, by itself, to “fix capitalism in 2011. This is not the fault of the individual writers, but rather the “house style” that eliminates historical references. (Thus when my own article, “Telling Tales”, was published HBR in May 2004, it was also shorn of any reference of prior writing on the subject, mine or anyone else’s.) The problem is not the individual writers. It is the house style of presenting ideas as though they have a virgin birth.
Distinguishing real and counterfeit change
Is then the REINVENTION OF MANAGEMENT simply another instance of the Amnesia/Eureka syndrome, or Old Wine in New Bottles, and the Virgin Birth syndrome?
I think not, at least when it comes to the collection of books and articles that include: The New Capitalist Manifesto by Umair Haque, The Power of Pull by John Hagel, John Seely Brown and Lang Davison, Reorganize for Resilience by Ranjay Gulati, Leadership in a Wiki World by Rod Collins and The Responsible Business by Carol Sanford.
What all these books are saying is synthesized in a series of short articles that began with The Reinvention of Management and identified five big shifts:
- Shift #1: Delighting the client
- Shift #2: From controller to enabler
- Shift #3: From bureaucracy to dynamic linking
- Shift #4: From value to values.
- Shift #5: From command to conversation
In my book, The Leader's Guide to Radical Management, I offer a detailed history of the evolution of this thinking and an analysis of the respects in which these shifts resemble or differ from management practices in the past.
I believe that there are two main respects in which the new thinking is genuinely new and different.
One is the shift from an inside-out perspective to an outside-in perspective, so as to focus the entire organization on delighting the client, rather than on making money for the shareholders. This shift is fundamental because it reflects the fundamental shift in the balance of power in the marketplace from seller to buyer. Books and articles that purport to reinvent management without reflecting this shift are, I believe, committing the sin of “old wine in new bottles”. (For example, this is the major weakness of the Porter/Kramer article entitled “How to Fix Capitalism” on "shared value": it is written from an inside-out perspective of making money for shareholders.)
The second respect in which the reinvention of management is genuinely new is not that any single one of the five shifts is new. What is new is doing all of the five shifts simultaneously. Thus the shift from inside-out to outside-in has deep historical roots in marketing thinking for many years. So one might be tempted to say: “Nothing new here!” What is different is combining marketing thinking with the other four shifts so that you get disciplined execution and continuous innovation. That is something genuinely new.
By contrast, books and articles that focus on only one or two of these five shifts may help generate some gains in some areas, but the gains will not be sufficient to reverse the sharp decline in management performance noted above. The major gains come from doing all five shifts simultaneously. It is then that we get a genuine reinvention of management.