New technological eras invariably create new managerial eras. Enterprise 2.0 is no different. In this three-part series, I will argue that E 2.0 organizational technology leads to a management model I will call “Management For Opportunity,” a model that exposes managers to market risks in unprecedented ways. This model is contrary to the popular emerging idea that managers (especially the much hated middle managers) will become entirely obsolete.

But to get to this vision, we need to situate E 2.0 management and technology ideas within the evolutionary history of corporations.

I’ll start the story around 1954 rather than go all the way back to 1600. If you’re interested in earlier eras of management, check out my posts “A Brief History of the Corporation: 1600-2100″and “Hall’s Law: The Nineteenth Century Prequel to Moore’s Law”.

Let’s start by trying to characterize the job of the manager in the E 2.0 world. I assert that this job is to manage for opportunity (MFO), which is fundamentally a risk management role that requires E 2.0 tools to fulfill. It’s the newest layer of the functional organization of the evolving managerial mind, which I visualize like so:

Evolution of the managerial mind

I’ve tried to capture higher- and lower-level functions in a dependency stack. You need the lower layers before you can install the higher layers. There’s a chronological anomaly in that the second layer developed after the third one, but that was due to some historical peculiarities.

Let’s start by tracing the evolution of the managerial mind.

The Evolution Of The Manager

Skipping lightly over a couple of centuries of early evolution, the story gets interesting with Peter Drucker, at a time when the default management culture was a layer of owner-executives on top of what you could call glorified shop-floor supervisors, whose job was to steward well-defined processes to meet objectives set by owner-managers. Call this Management By Process, or MBP.

In 1954, in a world where people management was still synonymous with MBP but operations were growing more complex, large-scale, and specialized by the year, Drucker offered an abstract principle for managing the emerging breed of information workers differently: Management By Objectives (MBO).

It was a revolutionary idea: Employees should participate in setting and monitoring their own performance goals. It was a natural consequence of selling complex products and services in a growing global market. In a way, it was a return to the high autonomy enjoyed by managers in the sprawling, flat-hierarchy railroad empires but had been slowly eroded in newer vertically integrated industries such as oil and steel.

But whereas managers in the empire era were challenged to meet non-negotiable goals by any means necessary (Andrew Carnegie, for instance, was notorious for his tyrannical, hard-driving production targets), the Druckerian idea of autonomy was based on negotiated goals. This was a consequence of work becoming complex and specialized enough that senior executives simply didn’t know enough to set goals autocratically. They could predict demand to some extent (the 1950s to ’70s were characterized by unusually predictable growth in demand), and they used that knowledge to negotiate goals down a chain of command that collectively knew how to grow capacity.

Druckerism didn’t replace the process-oriented business management pioneered by Frederick Taylor. It created a layer of planning-oriented information workers above it. The Taylorist factory remained, creating steady-state baseline performance conditions. Druckerian managers were taught to drive the underlying Taylorist machine into new markets, guided by demand forecast maps.

By the early 1980s, as the business environment grew increasingly uncertain and competitive, and the maps started turning into nonsense, a refinement was added: Management By Exception (MBE).

I haven’t been able to trace the origins of the term, but I suspect it rose to prominence during the late 1980s and early ’90s, when business process re-engineering (BPR) was all the rage. BPR proved to be a fad, but it did achieve one thing: It forced a shift from a deliberative management orientation to a deliberative-plus-reactive one. It was able to do so because it dealt with end-to-end processes in a feedback loop, with the external world, rather than functional silos, as the fundamental unit of organization. The result was that a new feedback stream of information was added to the feedforward stream that emerges from the forecasting models and long-range plans of MBO.

MBE is best understood as a layer between MBP and MBO. Uncertain market conditions make operations messy, and exceptions start to become more frequent. At the bottom, the MBP layer requires frequent retuning as a result (an activity captured in late Taylorist models like Lean and TQM). At the top, frequent reassessment of objectives becomes necessary (the aspirational state of “agility” is about being able to do this well), since plans may suddenly become infeasible.

Old-school supervisor-managers used to fairly steady conditions can no longer keep the MBP machine humming smoothly as demand grows chaotic. On the other hand, the MBO managers who decide where to go can’t rely on the assumption that the machine is functioning and in control, or that forecasts will be accurate next month.

Tom Peters rose to prominence by talking about this regime of chaotic operations as thriving on chaos, so let’s call MBE the Petersian model. Peters had a bold vision that you could actually feed on chaos and turn it into competitive advantage by doing MBE well enough.

So at the dawn of the Internet era in 1993, we have a management stack that looks like this: MBO on top of MBE on top of MBP. Depending on environmental uncertainty, the manager does a better or worse job balancing MBO and MBE functions.

Usually, a worse job.

As a result, the word “manager” became a dirty word by the late ’80s, and a different archetype, the “leader,” began to rise.

In Part II of this series, we’ll look at the rise and impending fall of the idea of Leadership and how “manager” became a dirty word.

Source: Information Week

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