YOU WAIT years for a chink of light in the management gloom, and suddenly flashes of illumination go off all over the place. After From Higher Aims to Hired Hands (reviewed last week), Rakesh Khurana’s magisterial survey of how management drove itself into its gloomy cul-de-sac, strategy guru Gary Hamel starts waving a sat-nav showing the way out.
As one of the most influential of today’s globetrotting academic consultant-thinkers, Hamel is a guide who commands respect. He describes his new book, The Future of Management , as an attempt to ‘speed up’ the discipline’s snail-like evolution, and, not coincidentally, he is also a leading light in London Business School’s pioneering ‘M Lab’, or management labs, a kind of incubator for new management breakthroughs.
Direct action of this kind is a novel ploy for management researchers. They generally think of their job as firstly describing what currently passes for best practice and then teaching it to executives. ‘We rarely challenge the underlying paradigm or world view, and we don’t do practice either. Too often we’re stuck in the middle, neither profound nor practical,’ Hamel notes. His book is, therefore, to be seen as ‘a call to arms’: a double challenge to managers to dispense with the obstructive baggage of the past, and to the research community to engage with something that matters: devising methods of amplifying and aggregating effort for the internet age.
Hamel’s core contention is that ‘you can’t solve new problems with old principles’. Industrial-age management, designed 100 years ago to socialise docile employees and tame problems of repeatability and control, doesn’t cut it with today’s issues of resilience and adaptability: in short, innovation.
The achievements of ‘management 1.0’ are considerable but, Hamel points out, its cost is high and getting higher. The overhead of control, planning, specification, standardisation, and motivation by material reward is not just an increasing financial burden. Far more serious is the cost in terms of demotivation and disengagement, critical disablers of innovation and creativity. Equally crippling is the deficit in resilience and adaptability. The more decision-making power is concentrated, the less adaptable the organisation. This explains why corporate change can often only be accomplished by crisis and palace coup, as in a dictatorship – which most companies are.
In short: attempts to make today’s management paradigm work better are just ‘putting lipstick on the pig’. Management is a drag on success – the problem, not the solution. But ‘management’ in itself is not inevitable. It is a creation of the industrial age, engendered by the need to control the new class of employees who made scale possible. Yet ‘human beings weren’t born to be employees’, Hamel reasons. ‘If we invented management, we can reinvent it’.
This is a profoundly liberating thought. And Hamel’s book suggests that a new technology of co-ordination is out there. In conventional theory, there are two means of achieving co-ordination: hierarchies and markets. Markets are good at competition and resource allocation but don’t do innovation; hierarchies are fine for control and planning but poor at nimble adaptation.
But internet-enabled networks offer a credible third way, Hamel believes. The prime exemplar is Linux, the open-source operating system developed by a self-selecting band of volunteers linked only by the web and their motivation to contribute. There are now 150,000 open-source projects using the freely given energy and initia tive of 1.6 million people, according to estimates. While many of these are not-for-profit enterprises, the lessons that they embody have wide application, Hamel argues. They use peer review by many rather than control of the few, the intrinsic motivation of work rather than monetary reward, self-selection rather than fiat for resource allocation, and perpetual, continuous improvement. ‘The internet is the most important new social technology since writing, perhaps ever,’ he says. ‘The idea that it will change everything else but not management is simply naive.’
Even if the shortcomings of management 1.0 are glaring, however, getting to version 2.0 will be anything but easy. The inertia of today’s vested interests is huge. And the consequences will be momentous – particularly for those in power. ‘It’s hard to stand up and say that ideas can come from anywhere, that leadership must be distributed, that accountability flows downward, and then justify paying one person 400 times more than another,’ Hamel points out.
Yet while the full paradigm will take time to configure, companies like W L Gore, Whole Foods, Semco and Google, as described in the book, are already successfully trying parts of it. And the agenda for action is clear, as laid out in this essential and timely manifesto. So what are we waiting for?
The Observer, 14 October 2007