Author’s Note: This post moves from fun to management revolution in a hurry. Hold on!
One of the things that I absolutely love about this time that we are living through is the constant and accelerating rewriting of the rules. How much fun is it to be engaged in a set of activities where what used to define success now defines failure and where your experience may be your own worst enemy? Someone should charge admission to this surreal game we are living!
It’s like playing my favorite board game, Monopoly, where the long-established rules of buy, build, rent and bankrupt your opponent shift ahead of your turn. Thought that Boardwalk was a good investment? Not anymore…by the time you land on it, it’s been sold off to a foreign player to raise funds to support infrastructure. Driving the car around the board. Sorry, your car company went bankrupt and unless you can bail it out, you’ll need to walk. Draw a Chance card and expect to advance to the nearest railroad? Forget it. The government now owns 80% of this industry and they can’t get the trains running. Bankrupt your partner. Heck no, that would be anti-competitive, so your partner just pulled off an interest free loan under the “too big to fail” act. (Hey Parker Bros, I’ve got dibs on the new “Ever Shifting Rules” version of your board game.)
One of my favorite business writers, Gary Hamel is back this week with his very relevant message that it is high time that we reinvented management and shed some of the late 19th century practices that persist. His focus this week is: The Three Forces Disrupting Management.
Hamel’s Three Discontinuities:
1. A wildly accelerating pace of change, an onslaught of new, ultra low-cost competitors, the commoditization of knowledge, rapidly increasing customer power and an ever-lengthening menu of social demands.
2. The invention of new, Web-based collaboration tools
3. The mash-up of new expectations that Generation Facebook will bring to work in the years ahead.
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Yep. In this case, we didn’t need one of the world’s foremost management writers and thinkers to tell us what those of us running businesses have been painfully aware of for the past few years. Things are changing in front of us, even if our approaches are not changing to embrace and leverage the new dynamics.
Something’s gone horribly wrong with our pre-established convictions and our comfortable understanding of the old rules. There was no memo. The new rules are not written in stone anywhere, and in fact they are changing so quickly, that by the time you understand and write them down, they’ve changed yet again. Heck, a good number of firms and leaders never optimized under the old rules, and now look at what they are facing!
I work constantly with professionals and teams desperately trying to break free of the shackles of the old rules, the archaic premises and obsolete leadership practices that govern so many businesses. A good number of professionals get the fact that the game has shifted, yet organizations and leaders tend to hang onto the old premises. The obsolete and dangerous practices that still predominate, include:
- Rigid hierarchical leadership-it’s time to end the royal leadership model
- Silo structures-maybe the single most value destroying approach to organization
- Dysfunctional matrix approaches dominated by functional interests
- Ad hoc leadership identification and development practices (if any)
- Farenheit 451 type thinking about access to the internet and adoption of new methods of working and communicating
- Traditional strategic planning models that fail to take into account systems, constant change, the need to adapt, the difference between adapting and proacting etc.
- 1950’s HR practices (in many cases) that emphasize compliance and fail to focus on enabling performance
- An accountability paradox…those in charge are the least accountable
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The Bottom Line:
Instead of a more traditional passing of the baton from one generation of business leaders to the next, I get the feeling that this period will be characterized by social and cultural revolution in business. It’s needed and in my opinion, appropriate.
The current situation will see record numbers of firms fail, and in many cases, they should and must. This painful cleansing will be just that a cleansing. The only way it doesn’t create a better landscape is if we through our governmental institutions destroy the ability to regenerate. That is an unfortunate but real possibility.
Jefferson’s perspective on the appropriateness and need for the French revolution shocked many of his contemporaries. I am right there with him. Forward progress will require significant business casualties and some shocking restructuring of what we view as conventional approaches to business.
I like Hamel’s thinking on management innovation and even revolution. I do think that his message is too soft. It’s time to rise up against the tyranny of hubris and the post Civil War management approaches that many leaders still cling to as their hold on power. There are many great people inside of even the most dysfunctional organizations that have some valid ideas on embracing the new rules. If you are a leader, its time to listen or beware the march of time and the villagers lighting torches!
Art,
Thank you for your insights into the shifting patterns of management as the business landscape continues to change due to economic, cultural and generational influences. Your comments truly resonate with where my thoughts have been regarding the “seismic shift” as you put it. My personal perception is that these changes are coming (via demand of the employee and demands of th business) at a pace that is difficult to match without the knowledge or resources to understand how to develop or implement new approaches. These practices, in a rapidly changing economic and technological environment, pose a challenge to all members of the organizations. As I see it some of the strongest challenges lie in flexiblity, learning agility, and an openess to finding innovative ideas in non-traditional ways (outside of one’s department/sphere of influence). I would appreciate hearing some best practices of companies who are climbing this learning curve and the creative ways in which they are reaching this demand.
The asserting of old money over the new economy eight years ago got us where we are today, particularly in respect to innovation, but it was the adoption of the MBA that got businesses treated like batteries to be drained. Sure, there were other causes like the disavowing of basic research and later applied research within corporations. This going back to the 80’s or earlier. But, even as much of a mess things are today, some things still work, and some things never worked.
Garrick brings up one, best practices kill, or so says Tom Peters. They commoditize by removing difference. In a recession, offers expand beyond product and services reaching into accounts payable and other operations aspects of the firm. So it’s not as simple as standardizing everything, or cutting all costs.
It will be interesting to see how the B-schools try to fix how we got here. It’s nice to see some of them looking in the mirror and taking some of the blame. Still blame doesn’t fix the problem.
Globalism has brought us an economics of plenty, of surplus. Other factors have brought us a surplus of labor locally, not just globally. Somewhere along the way, the outsourcers have forgotten that it wasn’t supposed to be a zero-sum game, but we’ve gone down that path. We have systems that can win, but we don’t know how to define the win. Squeezing out all the costs just eliminates the consumers, and the consumers still have mortgages that lock in their cost of living for a long time, misery ensues. And, globalism is said to be a win, but in the long term and for whom? Economics as the study of wealth, rather than the study of the economic systems hints at the answer to that question and leaves misery to ensue. We need to find a new economics. It won’t be anything we’ve seen.
There was that Star Trek show where Picard and crew pick a businessman that had been frozen, so he could be thawed out later and cured of his ills, who wakes up and wants to call his broker. Sorry, but that economics no longer exists. Well, we are there, so where is the economics fictions that explore the possible futures. Oh, they should have been written long ago. It’s time to apply some imagination, some vision, some leadership. We need to quit looking back. It’s gone. Move along folks!
Yes, we learned the old rules so well. Felling like an Okie headed out on Route 66 before the song was written.
Garrick and David, thanks for sharing your insights. Garrick, I agree on the need to hear from some that are getting it right. And David, aside from your many thoughtful comments and I like any post that cites Picard and Star Trek! -Art
Art,
I look forward to reading your writing. I hope you are right, but I fear the “cleansing” as you call it, will be far more painful. From an observers perspective, revolutions might be “interesting” and maybe even “appropriate”, but from the perspective of someone running a business or the multitude of people caught up in the “revolution”, I don’t think “interesting” or “appropriate” are the right adjectives to use. Consider this fact:
Nationwide, according to data from the FBI and the National Instant Criminal Background Check System, November gun background checks increased 42 percent from the year before. In December, background checks were up 24 percent, 29 percent in January, and 23 percent in February. Background checks are considered an indication of retail sale activity.
http://www.seacoastonline.com/articles/20090315-NEWS-903150345
Whatever you think of the AIG Financial Products division, death threats have been sent to AIG executives, increased security has been recommended and put in place for banking executives and as the economic situation continues to worsen, the “mash-up expectations of generation Facebook” will be the over riding concern of business leaders.
There are many real problems:
It will be 2012 before the cancer of adjustable rate mortgages work their way out of the system, and this is only a single element driving a housing crisis that will lead to additional foreclosures and destruction of asset wealth.
There is a banking/credit crisis that still holds much of the business activity in the world hostage.
The is a demographic shift as baby-boomers (45-65) move out of their peak spending years (40 to 60) into the much lower spending patterns of retirement. This does not count the tremendous destruction of their assets in stocks and home values.
These factors have caused a demand crisis. I live in California where unemployment is 10.5%. Nationwide, unemployment may only be 8.5%, but under employment (those wanting to work more than they are currently able) is running over 14%. Of those employed, over 20% fear they will lose their job in the next year. The Grinch not only stole Christmas, he has taken huge amounts of demand out of the market at the same time business are sitting with excess supplies of everything from flat-screen televisions to Starbucks locations.
There is also a crisis in corporate governance and management. From ENRON to Wall St to AIG, there is a separation of executive management from the workings of a business and a lack of faith in executive management’s interest in anything other than their own personal gain.
I have no idea how the next five years are going to turn out. Last summer there were food riots in Greece, Spain is on the brink of disaster, France is encountering rioting before the summer even begins, Iceland has financially imploded, Switzerland and England have insolvent banks that it is not economically for the country’s to make whole and if China truly has sent 30 M people back to the provinces without jobs, given that countries history, it’s difficult to see how their situation will be resolved without blood literally running in the streets.
America is much better off than those countries, but with more people unemployed than every before in the history of America, maybe it would be worth reading Studs Terkel’s “Hard Times” rather than watching Star Trek fiction.
“mash-up expectations of generation Facebook” will not be the over riding concern of business leaders.
I’ve got to get better at proof reading…
I only saw this after publishing my little rant. An article in this weeks Economist about Bosses being taken hostage: http://www.economist.com/business/displaystory.cfm?story_id=13331318&fsrc=rss