Business Brains

Why management is so 20th century, and what we can do about it

Why management is so 20th century, and what we can do about it

Posting in Sustainability

Edward Lawler, renowned management expert, explains why current management styles aren't working, and calls for re-thinking the way we work together

"We still see managers doing terrible basic management – like performance reviews are done just awfully and the answer seems to be, 'Well, let's just eliminate them.' Well, to me, that is just insane. How are you going to direct and control behavior if you do not have some kind of accountability and some sort of reviews that look at people and give them feedback and give them a sense of direction?"

- Edward Lawler, professor at the Marshall School of Business at University of Southern California and director of the Center for Effective Organizations

If performance appraisals and other stock management methods are not delivering, is there a better alternative?  Yes, says Lawler, who is also working on an upcoming book titled Management 3.0.

My colleague Jon Husband, of Wirearchy fame, surfaced an interview with Lawler, conducted by McGill University's Karl Moore and published in The Globe and Mail, in which he talks about what to expect in Management 3.0.

Lawler says the traditional management models we have learned and practiced over the decades just don't work for today's large, complex organizations. He says it's time for a drastic change for management as we know it. His new paradigm, "Management 3.0," provides for a new approach that emphasizes individual initiative.

Why Management 3.0?  What are the previous two models?  Lawler described the evolution thus far:

Management 1.0: command and control production: This era "started way back with scientific management, and progressed over decades, really, to greater and greater levels of sophistication and expertise in how to make it run. That seemed to fit a certain kind of production-driven economy."

Management 2.0: employee involvement: "Starting in the 1950s, we began to say [command and control] has its limits, we have to use our workers differently, our employees differently, and I think that generated Management 2.0, which was around employee involvement, participation and moving more knowledge and information and power downward in the organization so people could add more value."

Management 3.0: leadership that inspires a sense of mission, sustainability, and accountability: This new approach recognizes the impact of information technology, different work forces, and diversity in the workplace, Lawler explains. At the core is the principle of "self organizing, much more use of information technology, social networks, and perhaps even internal markets to create the forum and allocate financial resources within organizations."

It's hard to draw conclusions from this interview about what, exactly, Management 3.0 is supposed to look like, but Lawler appears to be talking about a very loosely confederated or networked style of organization that emphasizes greater entrepreneurial values and localized decision making. But one thing is clear -- to compete in the new economy that is emerging, companies need greater flexibility and innovation than ever before. The rigid practices of "1.0" and "2.0" will not accomplish this. There are still plenty of companies, unfortunately, still practicing Management 1.0 -- and they may have the toughest time of all in this new era.

As Lawler puts it: "If there is a new normal coming out of the recession, I think it is one of change and one of innovation that companies have to be able to do that. Particularly if they are in knowledge work or situations where intellectual property and technology is the key to their business."

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure