It amazes me how much management has changed in the past three months of the COVID-19. More than half the world’s corporate workforce is working from home, and many companies are set to extend this well into a post-COVID world! As a management student, this got me thinking:
Are the traditional methods of management really fit for the rapidly changing world of today?
Think about this, the management theory of Koontz and O’Donnell (planning, organizing, staffing, direction, and control) came out in 1955! Most of the ‘management gurus’ wrote their theses for companies that faced very different problems from what we have today. I am not saying that they are redundant but it is becoming increasingly important for people to find alternatives or upgrades! Such new-age approaches need to be in our curriculum as well.
Fortunately, I found a great course online called ‘Managing the Company of the Future‘ by Prof. Julian Birkinshaw of the London School of Business. He has done a lot of research on modern management practices and this course, I believe, is a comprehensive introduction to his findings on the subject.
In this article, I will take you through (in my own words and understanding) four modern management practices that Prof. Birkinshaw introduced to me through his course and how they are different from the traditional forms of working! There is a short review of the course at the end as well.
Bureaucracy and Emergence – Coordination
In business, coordination is the process by which different activities come together for effective working. Almost all companies work with a traditional form of coordination known as ‘Bureaucracy‘. Here, formal rules and procedures are used to dictate- things must be done in a definite way, there are certain people you must meet and actions are guided by what is known from the previous instances.
If you search for ‘Bureaucracy’ in Google, it says ‘excessively complicated administrative procedure‘- this is not necessarily so. Bureaucracy gives a
- Sense of direction
- Logical processing
- Rational or legal authority
Some companies would definitely be well-off with bureaucratic coordination. However, for others, it could become slow, tedious, and monotonous. Any kind of creativity will be lacking and employees might feel disempowered.
At the other end of this process is Emergence. It is spontaneous coordination through the self-interested behavior of independent parties. Here, instead of looking at formal rules and regulations, employees use their own knowledge and caution. They are given the freedom to come together for projects that they value or have an interest in! This promotes creativity and energizes the workforce.
Features of Emergence:
- Agile development
- Self-organizing teams
- Organizational learning
- Simple and creative
Some companies which follow Emergent working: Valve, Oticon
Talking about Emergence, have you noticed that the T-shirts design of POD companies like Redbubble and Etsy are, arguably, much better than most established apparel brands!
Hierarchy vs Collective wisdom- Decision Making
Hierarchy is not Bureaucracy, although, it could be an element of it. In the context of this course, Hierarchy means the levels of decision-making. In most companies, you have a triangular level of management- starting with the CEO or similar high-level decision-maker at the top. This promotes power and stability, as well as confirmation to practices that have given results. There is a greater sense of accountability too.
However, traditional decision making is usually averse to change and innovation. It could be slow at times and, in a rapidly changing world, could miss out on breakthrough trends and ideas.
The alternate to this is a company that runs on a ‘collective wisdom‘ of all its stake-holders- a flat-structure as it is popularly called. Here, instead of a manager or CEO making all the decisions, the employees come to a consensus on what the company needs to do or adapt as they move forward. This explores the wisdom of all sections of the company (from lowest to the highest) and promotes:
- Uniform accountability
However, crowd Wisdom can lead to herd behavior and the promotion of low-success ‘over-the-top’ ideas. Therefore, a careful strategy is necessary before implementation.
Some companies that have a flat structure and promote collective wisdom: WL Gore, Zaapos, IBM JAM sections.
Extrinsic reward vs Intrinsic reward- Motivation
When people say that they are working 9-5, it almost always has a negative connotation. You can see a lot of videos on Youtube with the title ‘why I quit my 9-5 job!’. Why is this so? Did their jobs not pay well or is there some other reason?
Most of the time, it is not the lack of a good paycheck that pushes people to quit their job. In fact, a lot of them were working with big fat ones! What forced them, instead, was other factors like lack of creative freedom, growth, and recognition, or the need to do something bigger. In simple terms, money was not a big enough motivator for them!
Traditionally, motivation is achieved in companies by means of what we call ‘Extrinsic factors’. This includes
- High salary
Now I am not saying that these are not good motivating factors. They are easy to implement and gives a direct relationship between the employee input and result- which a lot of people like. However, studies show that they are not the best form of motivation either!
On the other hand, Intrinisic motivation is not dependent on material drivers. It comes from an inherent liking for the job due to a wide variety of factors. For example, the work might be positively challenging, there are better opportunities to learn, your efforts are recognized or even simple things like great colleagues or short (or long) work-home distance!
Have you heard about a company called Topcoder? They organize open tournaments on a variety of programming challenges that are usually commissioned by a different company. Many top professional and freelance programmers work to solve these challenges/problems. The winning team could potentially get a quarter of a million dollars or more, but the rest, usually return empty-handed. Even then, thousands of teams attend the event each year, and the ‘services’ delivered are usually rated ‘highest in quality’
Why do crowdsourcing companies like Topcoder, which have virtually zero people directly working for them, constantly return high-quality service in the shortest amount of time?
Well, great programmers already know that they can make a lot of money! What they rather have is a challenging platform to showcase their skills. Topcoder provides them with the challenging work, high competition, and the peer-acclaim that they might not receive at a top-level MNC. Above money, these kinds of intrinsic drivers are what push them to go the extra mile!
Linear vs Obliquity- Setting objectives
Obliquity is perhaps the least discussed modern management practice of today. In MBA, we’ve all been taught of a linear arrangement for objective setting. There is one objective or a quarterly ‘target’ towards which the entire company is working. This is almost always quantifiable- like a financial or sales target. While simple and easy, what this kind of arrangement promotes is a short-term goal that lacks any kind of room for creativity and flexibility. People are forced to meet a target regardless of whether it provides any long-term benefit or longevity.
Jeffrey Pfeffer- considered one of today’s most influential management thinkers, put this aspect of companies in simple words. He says that decision-makers often measure for the:
- Wrong time period (long-term vs short-term)
- Wrong things (Quantifiable cost vs cost of benefit)
- Wrong purpose (controlling people vs inspiring people)
Need proof? According to a 2017 report by McKinsey, the average life-span of companies listed in Standard & Poor’s 500 was 90 years in 1935. Today, it is less than 15 years. This means that by 2027, 75% of the companies currently quoted on the S&P 500 will have disappeared! The debacle of Enron, Kodak, and Lehman Brothers shows us just how destructive the market has become.
Now take the example of Tata, IBM and Samsung. These companies stood the test of time by constantly innovating, expanding, diversifying, and most of all, giving positive returns to the lives of all their stakeholders. Such kind of wide-reaching vision and mission is pivotal for any company to tide over or even thrive through adverse circumstances.
Read the five core values of Tata:
Tata has always been a values-driven organisation. These values continue to direct the growth and business of Tata companies.
The five core Tata values underpinning the way we do business are:
We will be fair, honest, transparent and ethical in our conduct; everything we do must stand the test of public scrutiny.
We will integrate environmental and social principles in our businesses, ensuring that what comes from the people goes back to the people many times over.
We will be passionate about achieving the highest standards of quality, always promoting meritocracy.
We will be bold and agile, courageously taking on challenges, using deep customer insight to develop innovative solutions.
We will invest in our people and partners, enable continuous learning, and build caring and collaborative relationships based on trust and mutual respect.Tata Group
Tata has clearly underlined that they are a company working for the people, to enrich their lives multi-fold, with values hinged on trust and mutual respect. This might not be a ‘pin-point’ goal but tells a lot about what the company is and strive to be.
Now, obliquity has its own problems like uncertainty to the shareholders and vague direction for its employees. It needs the backing of a strong support system to work out. Not everyone will understand the concept before its ripe fruits, slowly but surely, begin to fall!
Managing the Company of the Future Review
The course ‘Managing the company of the future’ has been a revelation of sorts for me. Prof. Berkinshaw is a good instructor and through a series of short videos and exhaustive reading material, he explains the topics perfectly. I’ve also read a few of his research papers (outside the course) and might even pick up some books too. As someone pursuing a future in management consulting, I believe these will be extremely beneficial!
Overall a great course for anyone who has ambitions in management or is currently managing a company and want to improve.
Wishing all the best to you!
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