Sunday, August 22, 2010

Overinvesting In What Is

A great article in The Wall Street Journal this past Saturday - - written by Alan Murray, entitled The End of Management. The article looks at two fundamental weaknesses that impact modern management - - the weakness of the structural inability in dealing with accelerating economic and cultural change and the weakness from the erosion of the basic justification for corporations themselves. Highlights of the article included the following:
  • Corporations are bureaucracies and managers are bureaucrats. Their fundamental tendency is toward self-perception. They are almost by definition, resistant to change. They were designed and tasked, not with reinforcing markets forces, but with supplanting and even resisting the market.
  • It took the radio 38 years to reach 50 million people - - 13 years for television, four years for the Internet, three years for the iPod, and two years for Facebook. These are examples of a world marked by rapid globalization, accelerating innovation, relentless competition, and creative destruction. Management has not fundamentally changed by adapting to these market forces.
  • Companies can fail from "good" management - - organizations that listened closely to their customers, carefully studied trends, and allocated capital to the innovation the promised the largest returns. Many saw all the trees and missed the forest - - they missed the disruptive innovations that opened up new customers and markets.
  • Corporations exist because they historically have lowered "transaction costs" - - the complicated and costly tasks of finding the right person to do the right job at the right time. But the Internet and mass collaboration are producing a new and less costly economic order. Maybe the world of the un-corporation organized with little structure is a dream for Boeing or Bechtel - - but "Wilkenomics" will even impact these types of organizations. Look for a continued lowering of "transaction costs" to be a principle driver of how and why we organize - - a new science of management.
  • As strategy consultant Gary Hamel stated in the article - - "The thing that limits us is that we are extraordinarily familiar with the old model, but the new model, we haven't even seen yet." He further points out - - "The single biggest reason companies fail is that they overinvest in what is, as opposed to what might be."
  • There's plenty of evidence that most workers in today's complex organizations are simply not engaged in their work - - it all begins to look like "The Office." The new model needs to have the following attributes - - drive, creativity, innovative spirit, decision-making lower in the organizational structure, more ad-hoc than permanent, and information gathering needs to be broader and more inclusive. Look for more "Wisdom of the Crowds" combined with a constant need to engage and evaluate social networking feedback loops.

Change, innovation, adaptability - - the new order of management, and don't look for this to be easy!!

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