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15 APRIL 2011
Inventing Management 2.0

by Gary Hamel: Visiting Professor of Strategic & International Management at London Business School, and co-founder of the Management Lab. Has written various articles for Harvard Business Review, Wall Street Journal & Financial Times.

Have you ever met a 10-year-old who dreams of growing up to be a manager? Neither have I. Chances are, though, if you’re reading this post you are one — a manager, not a 10-year-old. Somewhere along the highway of life you missed a turnoff — you sailed right by the exit for “smoke jumper,” never saw the sign for “ocean explorer,” and somehow forgot to put “fighter pilot” into your career GPS. So now you’re a manager.

To mask the regret of the road not taken, you tell yourself you’re a leader. Yet all too often, you find your inner Joan of Arc assailed by the guardians of the status quo, your inner Patton ensnarled in bureaucratic barbed wire and your inner Shackleton trapped in an ice jam of cynicism and indifference.

Like millions of other would-be leaders around the world, you are being held hostage by Management 1.0 — a dense matrix of bureaucratic practices that were invented to minimise variances from plan by maximising adherence to policy. Despite a lot of high-minded rhetoric to the contrary (often found on laminated cards that begin with “Our Values”), the management model found in your organisation most likely over-weights the views of senior executives, undervalues unconventional thinking, discourages full transparency, deters initiative, frustrates experimentation and encourages an entirely unwarranted reverence for precedence. In so doing, Management 1.0 squanders the leadership talents of just about everyone apart from the CEO.

Every year, thousands of managers get sent off to “leadership development” programmes of one sort or another. Typically, these sheep-dipping exercises are designed to help budding executives get better at managing their teams or business units. While words like “collaboration,” “engagement” and “entrepreneurship” always get plenty of play, there is seldom any concerted attempt to challenge the the fundamental conventions of Management 1.0 — the notion that authority trickles down, that tasks are assigned, that strategy gets created at the top, that control must be imposed and so on.

In other words, leadership development almost always happens within the context of Management 1.0, and thus fails to equip prospective leaders for the most important leadership task of all — to change that context.

To use a military analogy, we train leaders to “take the hill,” but we don’t involve them in rethinking war-fighting doctrine. This would be of no consequence if that doctrine were well-suited to the realities on the battlefield; but it’s not. And there’s the problem: Management 1.0 is no longer fit for purpose — not in a world where the winds of creative destruction are howling at gale force, where knowledge is fast becoming a commodity, where customers are omnipotent and where right-brain thinking drives value creation.

To create organisations that are fit for the future, we need to dramatically retool the management systems and processes that govern:

  • How strategies get created
  • How opportunities get identified
  • How decisions get made
  • How resources get allocated
  • How activities get coordinated
  • How power gets exercised
  • How teams get built
  • How tasks and talent get matched up
  • How performance gets measured
  • How rewards get shared.

Management 1.0 was built to encourage reliability, predictability, discipline, alignment and control. These will always be important organisational virtues, but in most industries, getting better at these things won’t yield much of an upside. That’s why our management systems need to be re-engineered around the goals of adaptability, innovation, engagement and accountability — which brings us back to the issue of leadership.

The apex of leadership is to proactively change the “system” in ways that help an organisation tackle new and unprecedented challenges. But all too often, we assume that only leaders at the apex can lead this sort of architectural remodeling. This is, perhaps, the most debilitating assumption of Management 1.0.

But even that is starting to change: Around the world, “ordinary” managers of all sorts are starting to resist their captors. Most of these renegades aren’t HR directors, CFOs or even EVPs. Yet they are experimenting boldly with new ways of motivating, organising, compensating and goal setting. They are reaching out to peers, taking risks, and running small-scale pilots. They are acting first and asking permission later. Even more remarkable is the scope of their aspirations. They are not just hoping to become better leaders; they are hoping to build better organisations. They are the harbingers of Management 2.0.

Dear reader, a question: What holds you back from becoming a management rebel in your company? What limits your ability to initiate change in your organisation’s management model?


With offices in Silicon Valley and London, the Management Lab works with leading-edge firms to help them create tomorrow’s new practices today. Visit our InfoCentre or website.

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