A Revolution in Management

The goal of the firm, as put forth by many business schools that still ascribe to the Friedman Doctrine lauded by Michael Porter and the like in the 1980s, is to maximize short-term stakeholder value. This is “the biggest idea in business” and has defined not only the way organizations are built, but the way leaders are also incentivized, and the way work works in many companies today.

It is also the worst idea and has led to some very bad behavior. With executive compensation tied to stock market performance, corporations make incredibly short-sighted decisions and act only in the interest of profit as fast as possible. Thus we see cyclic layoffs, sporadic cost-cutting measures, and unethical and unsustainable business practices.

Yet, many forward-thinking CEOs and management thought leaders have come to denounce the primacy of maximizing shareholder value. Stephen Denning, in his inspiring 2013 article in Forbes describes a Revolution in Management in which many adaptive, responsive, and agile firms fundamentally think differently about their approach to customers, the concept of value, and how they design and support organizations. 

I recently gave a lightning talk in a private setting to some colleagues in which I presented the basic concepts detailed herein. In this five minute presentation, I framed a call to action for all of us working in organizations looking to make the leadership changes needed to be adaptable and thrive in the 21st century.

A History Lesson

What was this revolution in management that Denning talked about? He makes a connection to Copernicus’ theory of the solar system. In an era where the earth was thought to be the center of the solar system, Copernicus’ idea was initially seen as only a mathematical and model for scientists to calculate the paths of the planets. Even Pope Clement VII in 1533 thought it was interesting.

This fundamental change in thinking about our solar system set in motion centuries of revolutionary shifts in long-held beliefs in society. What many did not realize at the time was that it ushered in a radical worldview that implicitly undermined the plausibility of established religion in general. From here we saw a decline in the primacy of the Roman Catholic Church and the Divine Right of Kings, on which most existing governments in Europe rested their claim to legitimacy, began to erode. People started to question what social value monarchies held for society, and their importance in the structure of society diminished over time.

The Revolution

So, take that concept (a revolutionary worldview where a well-accepted paradigm is flipped on its head), and apply it to management theory. This is what we see in our modern world of work: the Copernican revolution in management. We are fundamentally thinking differently about our approach to customers, the concept of value, and how we design and support organizations. We see a focus on delighting customers profitably, enabling self-organized teams and networks, collaboration and interactive communication, and iterative and incremental work.

The old model of management went something like this:

1) Information comes up, decisions come down. The manager is the person in the middle who transfers that information from those higher in the corporate pecking order to those lower in that order, the workers. This is a regrettable and dysfunctional aftereffect of scientific management championed by Frederick Winslow Taylor as a hallmark of factory work in the industrialized era. This comes replete with all the metaphors you can imagine about humans as machines, laborers as a pair of unthinking hands executing orders from a manager, etc.  The industrial era and its management models have come to their logical conclusion

2) The goal at work is to be like my boss. Or, for the really savvy, be like my boss’s boss. The common thought was that if I emulate their managerial style I will be promoted, get more pay, and a bigger title, and that is my motivation. I can do that making myself look as good as possible, sometimes at the expense of others. This is a learned and very natural behavior. Assimilate always, and “go along to get along.”

This old model of management is a vestige of a bygone era, and many of you reading this may find your progressive company looks nothing like this. I promise there are still many firms out their operating this way, though. Hopefully not for long. We have entered a new era of organizations.

This new type of organization demands a new type of leader. As Denning so aptly puts it “We no longer take it on faith that the people presiding over organizations are by definition value-creating entrepreneurs worthy of extraordinary compensation. We expect them to lead.” Yet, that change is not going to happen overnight. We need to nurture and support the growth of new leaders, who can leverage these emerging realities.

A Call to Action

So, for all of you agile practitioners, change makers, boat rockers, and future-forward thinkers, I have a call to action for you. As you work with leaders and teams, recognize that this is very intuitive to you, and just seems to make sense. But for others it runs counter to decades of training and indoctrination in the corporate world -- they are presented with something as revolutionary and unbelievable as being told the solar system as they know functions upside down.

I encourage you to challenge and support and be patient and kind. Those around you are on their own journey and may neither be ready for this change nor be in an organization that would support it (yet!)

What should you do in the meantime? Be willing to try new things and experiment! Technology innovation is a very crowded place, but management innovation is not. (I have read somewhere that this is termed the innovation paradox). If you want a great list of ideas to get started, check out these Agile Workouts from Frank Thun.

Learn from those around you, but recognize that best practices are best used someplace else. Try what works for you and those around you, and be open to the evolutionary possibility that can only be gained from experimentation. Good luck!

I will be sharing more of my latest thoughts on this topic at Zenposium 2019. See you there!

You can check out this post on my blog, iterationsofjason.com, as well as all my other musings.  

Until the Next Iteration . . .

Jason