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Do We Need New Management Models?
In his recent book, The Future of Management, strategic management scholar Gary Hamel calls for innovation to our existing management models.1 Specifically, with business life cycles getting shorter and global competition more keen, companies structured hierarchically are unable to meet today's competitive challenges.
According to Hamel, 20th Century models of "father knows best" where innovation — related to products, processes or business models — is stifled are outdated and need thorough renovation. We challenge the notion that only new manage-ment models can be effective in today's business environments.
In our LeaderPoint sessions, MacGregor is introduced — a refinery plant manager who gets exceptional results with his "old" management system.2 Briefly, MacGregor's division routinely achieved the best results of all those in the company, while his people grew and were frequently promoted. Let's review the principles of MacGregor's system and see how they map to the "new" initiatives Hamel calls for.
Hamel's critique indicates that current management models are outdated. Among the problems he cites: 1) they stifle initiative and creativity, 2) they create bottlenecks due to bureaucracy, and 3) they enslave workers to existing customers at the expense of new opportunities. While many companies suffer from these problems, MacGregor's "old paradigm" was consistent with much of the "revolutionary" changes Hamel calls for. MacGregor did this by adopting some relatively uncomplicated and durable principles.
Principle #1: Accountability. MacGregor's system created clear expectations for results. He negotiated these results so that his subordinates could accept the responsibility. Hamel refers to accountability quite often as a key way to drive decision-making down to people doing the work. He describes "management innovation" at Whole Foods Company where employees are given great autonomy, saying, "The fact that this freedom is matched by a high level of accountability ensures that associates use their discretionary decision-making power in ways that drive the business forward" (p. 73).
In order for accountability to work, management at some level has to determine appropriate outcomes. MacGregor's management system was quite efficient at setting clear expectations for results. Any management 2.0 model will still need to be uncompromising on achieving results and setting clear expectations.
Principle #2: Peer Support. One way MacGregor removed himself from being a decision bottleneck was to create processes where peers would support each other. The genius of his Thursday meeting was not so much the content of the meeting itself but the inevitable sharing it created. A lot is made of so-called learning organizations; MacGregor's Thursday meetings created learning opportunities quite well. Within a clear structure, MacGregor was easily able to create the team collaboration that Hamel touts as essential. Many managers today, operating very different businesses, adopt some version of the Thursday meeting for their units.
Principle #3: Feedback on Results. The Wednesday reports were a way for MacGregor to let his subordinates know how they were doing and have time to correct — in some cases using their peers for help. A critical part of MacGregor's system is that it was thoroughly thought out and planned. That is, MacGregor had to think through what outcomes needed to be achieved in order to determine the metrics to report. This is the manager's job. Hamel notes that a key condition for giving lots of authority to those doing the work is that "Team members have access to real-time performance data [results]" (p. 136). The manager MUST PLAN what to report back and how to do it in a timely, meaningful way.
Principle #4: Planning is the manager's job. By delegating authority effectively and creating cooperative processes, MacGregor freed time to focus on future contingencies, to anticipate barriers, and to look at new opportunities. Among Hamel's critiques of hierarchy is that strategic thinking should bubble up. Interestingly, because of MacGregor's system his subordinates were much more capable of solving problems and approaching issues strategically.
Too often existing management models are judged by how they are practiced. The principles of MacGregor's system are time tested and proven. He planned, he organized people, he monitored and provided feedback, and he developed his people (who grew as a result of his system). MacGregor did not solve his subordinates' problems, did not withhold information, and did not tell other people what to do — all behaviors practiced by too many managers. MacGregor provides a good model for Hamel's Future of Management.
1Gary Hamel, The Future of Management, 2007.
2"Arthur Elliott Carlisle, Organizational Dynamics, 5, pg. 50-62, Summer, 1976.
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