Management is Still Fighting the Industrial Revolution

Let’s think big picture today.

Ideas lead technology. Technology leads organizations. Organizations lead institutions. Then ideology brings up the rear, lagging all the rest—that’s when things really get set in concrete.

Doubtful? Think the Catholic church.

Or, think the history of capitalism. The Industrial Revolution, depending on who’s counting, ran roughly the 19th century. As sweepingly mapped in Alfred Chandler’s classic The Visible Hand, the development of management followed the development of industry.

In his view, by 1920 the major lines were laid down. From 1920 to 1960, the theory of management basically just caught up to reality.

From the 1960s to basically today, it hasn’t changed a whole lot more, except for new approaches to strategy and process engineering. Most approaches to ‘strategy’ just quantified and clarified pre-existing notions of corporations competing for dominance against each other. The advances were incremental, in the application of sharper theories, models, metrics and data-crunching.

Today, just like in 1920, the reigning ideology of business is competitive, linear, behavioral, measurable, and quantifiable. Set financial goals. Define organizations, processes and procedures in cognitive terms. Convert all resources to financially fungible terms. Define finer and finer levels of behavioral objectives. Put financial incentives in place. Install sensors to micro-measure results. Step back and watch the machine run, tweaking the cheese rations as necessary.

What this view of business is NOT is everything that’s happening at the front of the chain—the technology-to-organization reality that drives all else.

It does not recognize cross-corporate borders, fluidity, collaboration, transparency, humanism in any serious sense, community, ethics, politics and the economics of the commons. All of which are critical business issues today.

We are stuck with a belief system rooted in the late 19th century.

Segue-way to a most interesting article by Gary Hamel in the February 2009 Harvard Business Review, titled Moon Shots for Management. Hamel, when at his best, is arguably the most creative business strategist extant; and here he is very, very good.

He reports out the results of a 2008 group brainstorming exercise aimed at nothing less than re-inventing management. From Management 1.0 to Management 2.0.

The article lists the Top Ten ideas from the group, including the following:

• Ensure the work of management serves a higher purpose
• Reconstruct management’s philosophical foundations
• Reduce fear and increase trust
• Reinvent the means of control (less compliance, more shared values)
• De-structure and dis-aggregate the organization
• Create a democracy of information.

And so on.

These are indeed Big Ideas, and it’s about time. Our old ideology is not only behind the times, not only holding us back, it is positively destroying value going forward.

We cannot afford another Sarbanes-Oxley bill to prevent the next Madoff. We cannot afford billions to simply re-capitalize Detroit. We cannot afford to teach people competitive dogma in a world that demands collaboration. And we cannot enforce ethics through processes and controls.

People like Hamel (and me, in this regard) are trying to reform ideologies. That is not easy, since the very terms of discussion are of and from the reigning ideology. How do you talk about things that people cannot conceptualize, given the tainted nature of the very language we use?  (A simple example: how to free the word ‘strategy’ from the unconsciously inferred adjective ‘competitive’)? 

Say "higher purpose" and "philosophical foundations" and you get glazed looks in most companies.  That is not a meausre of its craziness, but a measure of the power of the reigning ideology.  Copernicus sounded crazy too; but he wasn’t.

These ideas are directionally very right. I won’t say they have to come true. But I suspect Hamel would agree with me that if they don’t, we will not progress very far, if at all.


8 replies
  1. peter vajda
    peter vajda says:

    Hi Charlie,

    IMHO, "efficiency" is one major obstacle to higher-level thinking, i.e., "higher purpose" and "philosophical foundations". Efficiency is what keeps us "earth-moored" and prevents folks from moving beyond existing ideologies. For many wedded to efficiency, short-term planning (strategizing? thinking?) means tomorrow and long-term planning means next Friday. Transcending is out of the question.

    There are basically two fundamental reasons folks won’t look beyond their eyes: (1) they can’t or (2) they can but are unwilling to do so.

    Einstein said we can’t solve problems at the same level of thinking that created them. What does that say about our "thinkers" today? – auto industry, banking, Washington (until now, but…that’s just me), etc.

    The "Top Ten" Mr. Hamel articulates requires a new level of thinking, a choice to move to a new (deeper and higher) level of thinking. The underlying question is why some folks refuse to make an attempt to move to those levels, to either learn how or to do so if they know how. It’s about control (ideology?), recognition and security and what they fear they may lose (hold of) should they move out of the box they’re in. 

    My experience says change for these folks can arise, but only when the pain becomes too severe. Many of them are in an emotionally fear-based response mode – fight, flight or freeze with fight and freeze the most common. Fight and/or stick to your guns. Their pain is not commanding enough for them to see the worthiness of another way out, a way forward, a new direction, a transcendent way.

    The operative words in the six ideas (Hamel’s) above are: higher purpose, reconstruct, trust, reinvent, de-structure, democracy. What do these have in common for those stuck in their ways? "I would have to change who I am and the lenses with which I view my self and the world." That’s just downright threatening to those insecure in their own skins and who gain their identity from their beliefs, ideas, etc., and the thought of even considering new beliefs or ideas sends theme into emotional and psychological free-fall….so, the need to hang on to conventional ways of be-ing and do-ing, that is, hang on to "me." It’s not as much "stuck in a belief system rooted in the 19th century" as it is a belief system (ego) rooted in  "me."



  2. Evan Leonard
    Evan Leonard says:

    I very much agree with your summarization of the depth we need to go to retool our thinking about organizations. Ideologies lay beneath the way we operate, and they are for the most part, very out-dated. In the last decade we finally built a consensus that there is a problem in that regard. Gary Hamel’s work is a good step toward a consensus of what the problems are. However there are still too few concrete solutions about how to change the status quo. It was for this reason that I learned as much as possible about Holacracy as soon as I discovered it in 2006.

    Holacracy is an organizational practice. Like weightlifting or meditation it offers concrete actions to follow and benefits for novices and experts alike.  It is surprisingly adaptable and scalable and can be practiced by any group of people working towards a shared aim – which gets at the higher purpose goal you mentioned earlier. 

    Here is an overview of some of the core parts of the practice. But like any other practice, reading about it is not the same as experiencing it. Until you’ve participated in your first integrative governance meeting its all just words.

    All the best,

    Evan Leonard




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