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Gary Hamel on "Hacking Management 2.0"

November 16, 2011, Gary Hamel -

A guest post by Gary Hamel

Over the last decade, the Internet has had a profound impact on busi­ness.  It has spawned a slew of new business models and has helped make operating models vastly more efficient.  By contrast, the Web’s impact on management models has been relatively modest.

While blogs, Wikis, and online communities have made manage­ment more efficient (by reducing the costs of communication and coordina­tion), the Web hasn’t yet dramatically changed the way in which organizations are managed and led.  (See Table 1.)  Nevertheless, over the next few years the emerging “Social technologies” of Web 2.0 are likely to transform the work of management root and branch.

Table 1: The Work of Management

  • Setting Direction
  • Defining values
  • Creating strategy
  • Establishing priorities
  • Allocating resources
  • Deploying knowledge
  • Coordinating activities
  • Exercising control
  • Architecting systems
  • Defining roles
  • Apportioning authority
  • Assigning tasks
  • Building teams
  • Motivating effort
  • Developing talent
  • Assessing performance
  • Distributing rewards
  • Satisfying stakeholders

 

Why? Because organizations face a set of challenges that lie outside the performance envelope of management-as-usual.  These include a rapidly accelerating pace of change, a growing swarm of uncon­ventional rivals, crumbling entry barriers, a rapid transi­tion from the “knowledge economy” to the “creative economy,” intensifying compe­tition for talent and a profusion of new stakeholder demands.

To tackle these challenges, organizations will need to become far more adaptable, innovative, inspiring and accountable than they are right now.  This will require a fundamental re-tooling of traditional manage­ment practices—around Web-derived principles.

Unlike most businesses, the Internet is already adaptable, innova­tive and inspiring.  It is also a powerful tool for holding organizations accountable for their Social impact. While the typical corporation is based on a center-to-end architecture, in which decision-making authority is heavily concentrated at the top, the Web is built on an end-to-end architecture, where power is highly distributed.

The management model that predominates in most organizations has its roots in the early 20th century.  At that time, management innova­tors were focused on the challenge of achieving efficiency at scale.  Their solution was the bureaucratic organization, with its emphasis on standardiza­tion, specialization, hierarchy, conformance and control.  These principles comprise the philosophical foundations of Management 1.0, and are deeply baked into management mindsets and processes.  In virtually every organization, one finds that power cascades down, that strate­gies get set at the top, that tasks are assigned and not chosen, that supervi­sors review subordinates rather than the other way around, that control is imposed, and that senior executives allocate resources.

Before the Web, it was hard to imagine alternatives to manage­ment orthodoxy.  But the Internet has spawned a Cambrian explosion of new organizational life forms--where coordination occurs without centraliza­tion, where power is the product of contribution rather than posi­tion, where the wisdom of the many trumps the authority of the few, where novel viewpoints get amplified rather than squelched, where commu­nities form spontane­ously around shared interests, where opportuni­ties to “opt-in” blur the line between vocation and hobby, where titles and credentials count for less than value-added, where perfor­mance is judged by your peers, and where influence comes from sharing information, not from hoarding it.

Of course, the Web has its limits.  Online collaboration, in its current state, is not a very good substitute for the sort of unscripted, face-to-face interac­tions that are critical to producing genuine break­throughs.   And complex coordi­nation tasks, like those involved in the design of a new aircraft, still require a dense matrix of “strong ties” among critical contributors, rather than the “weak ties” that are typical of web-based communities.

Nevertheless, for the first time in a century, we have a viable alterna­tive to the status quo.   Thanks to the Web, we can imagine organiza­tions that are large but not bureaucratic, that are focused but not myopic, that are specialized but not balkanized, that are efficient but not inflexible and, best of all, that are disciplined but not disempowering.  Without doubt, we have cause to be hopeful. If we can find ways of trans­planting the Internet’s DNA into our organizations—the interwo­ven values of transparency, collaboration, meritocracy, open­ness, commu­nity and self-determination—we may have the chance, at last, to over­come the design limits of Management 1.0

To that end we are launching the Management 2.0 Hackthon in partner­ship with Saba and the Enterprise 2.0 Conference. We are seeking to generate innovative ideas that illustrate how the principles and tools of the Web can be used to make our organizations more adaptable, innovative, inspiring and account­able.

Now it’s up to you.  By joining the hackathon, you can help to reinvent management for a new age.  The ultimate prize?  Organizations that are as fully human as the people who work within them.

For more on the Management 2.0 Hackathon, see Bobby Yazdani's blog post.