Why traditional management doesn’t work (anymore)?

Why companies that were doing well are going down?

Why workers who used to be content have become unhappy with their job?

Why do customers go somewhere else on a whim?

It’s easy to blame competition, unions, or the Chinese. The truth is infinitely more mundane. The way most organizations are managed – traditional management – can’t cope with the reality. The system doesn’t deliver as before because the assumptions under which it was effective have been challenged.

“Management was originally invented to solve two problems: the first—getting semiskilled employees to perform repetitive activities competently, diligently, and efficiently; the second—coordinating those efforts in ways that enabled complex goods and services to be produced in large quantities. In a nutshell, the problems were efficiency and scale, and the solution was bureaucracy, with its hierarchical structure, cascading goals, precise role definitions, and elaborate rules and procedures.” - Gary Hamel

The rules of the game have changed.

Focus on customers, not on shareholders. Enjoying many products and suppliers as well as full information and ease of comparison, customers need nothing short of being delighted in order to develop loyalty. This takes time and dedication. In contrast, shareholders want short-term profit. These two objectives are in conflict. Sustainable shareholder value comes from delighting the customer, not the other way around. As Peter Drucker said, “people make shoes, not money.” Shoes are real. Money is an end result.

Knowledge workers need autonomy, not supervision. There is no recipe to produce a solution that involves knowledge components such as innovation or creativity. Instead of telling workers what to do, managers have to take a supporting role by nurturing an environment where workers can excel in relative freedom.

Workers don’t just want a job, they want a meaningful job.  Workers want to feel that their contribution is valued by the customer and by the organization. In a traditional organization, bureaucratic segregation of functions forces workers to perform tasks that have little or no significance for the customer; the value added is absent or invisible. Workers need to have a clear line of sight with the customer and be exposed to the customer’s feedback.

Quick changes in market are the rule, not the exception. Cycles are so much shorter than before that organizations need a constant feedback from the market. They need the flexibility to change what they’re doing on short notice. Instead of detailed analysis and upfront planning, leaders have to proceed by small increments and manage uncertainties in order to adjust fast enough. Better, anticipate market changes. Even better, lead market changes.

Business agility and radical management (spearheaded by Steve Denning) are two emerging responses to the shortcomings of traditional management.

And no, this is not a revolution. It is, however, a deep change in values regarding what a business should be and its relationship with people, be they workers or customers. For the best.