The efficiency-focused management model has run its course, says strategist Gary Hamel. To see the future of management, look to the Internet, open source, free markets and democratic institutions.
Has management as we know it reached the end of the road? Strategy expert Gary Hamel thinks so. Yes, traditional management approaches have led us to achieve great things. "If you have a couple of cars in the garage, a television in every room and a digital device in every pocket, you can thank the inventors of modern management," he writes in his upcoming book The Future of Management (Harvard Business School Press, October 2007; $26.95). But our century-old emphasis on planning, organizing and controlling won't help companies solve their 21st century problems. In an era marked by global competition and commoditization, adaptability, speed and creativity are essential for survival, says Hamel, whose previous books, "Leading the Revolution" and "Competing for the Future" (with C.K. Prahalad), earned him a reputation as one of the great strategic thinkers of our time. "The old management model is simply not good enough."
The future management model is taking shape, but some aspects are already evident, Hamel told CIO Insight executive editor Allan Alter. Companies will finally begin to be as open and democratic inside their doors as societies are outside those doors. Go/no-go decisions on projects and investments now made by a handful of executives will be made collectively by hundreds of employees.
Talent will matter far more than titles. And one of the most important catalysts and models for 21st century management will be the Internet. "Technology makes it possible to organize and manage in new ways," says Hamel, a visiting professor of strategic and international management at the London Business School and co-founder of the school's Management Innovation Lab. An edited version of Hamel's conversation with CIO Insight follows.
CIO Insight: Are we on the verge of a major change in how companies will be managed?
Hamel: We are. Companies today face a new set of business challenges for which the old management model is simply not good enough.
The world is not only becoming less predictable, but it is also becoming less benign. In a world of accelerating change, we have to accelerate the pace at which companies are able to reinvent themselves, and that doesn't mean simply a superficial reinvention, such as new products and new services. It means organizations must really challenge their business model, the very reason for being. The only antidote against irrelevance in the world are business' capacity for fast-paced adaptation and change, and the reality is that most organizations are pretty inflexible. Too often innovation is something that happens at the margins, something that has yet to be made everyone's job. Not only are products and services becoming commoditized, knowledge itself is becoming commoditized. The impact of the Web has made it much easier to access information and harder to keep any information or knowledge proprietary.
Companies are going to have to figure out new ways of extracting more value, more inspiration, more creativity out of the people who work for them. Because in the end, the only way any company can protect its position within the industry ecosystem is adding more value per capita than any of its competitors.