Halal argues that the transition to a New Management is almost inevitable because it is being driven not by altruism or even good leadership, but by the relentless advance of the Information Revolution. Only small entrepreneurial teams operating from the bottom-up can master today's exploding complexity, and gaining stakeholder support is now essential because a knowledge-based economy has made cooperation a competitive advantage.
Rather than fussing over quick fixes, The New Management points the way toward more fundamental solutions to the massive changes that will confront all institutions as the transition to a knowledge society rolls on into the 21st century.
Redefining the Foundation of Management. Building an Entrepreneurial Community. The second objective is to propose that the widespread ideas about theory and research methods that scholars use, when implemented correctly, will inhibit the progress to achieving this objective.
I plan to focus on the defensive routines of the scholarly community of practice.
Double-Loop Learning and Implementable Validity
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Ackoff, Russell L. New York: Oxford University Press. Google Scholar. Argyris, C.
Boston, MA: Putnam. Argyris, Chris Reasoning, action strategies and defensive routines: the case of organizational dynamics practitioners, in R. Woodman and W. The neat concepts of classical management were challenged in the s when Abraham Maslow, Elton Mayo, and Douglas McGregor showed that the field was expanding to include human and social factors. Later, in the sixties and seventies, bolder insights burst the boundaries of the old management altogether. Paul Lawrence and Jay Lorsch discovered that effective organizations consist of diverse parts united into a coherent whole.
Leading the democratic enterprise | London Business School
Warren Bennis foresaw the need to replace authoritarian control with democracy. And Henry Mintzberg found that managers are engaged in an action-oriented flow of people and information rather than sterile problem solving. Although these were radical ideas at the time, they can now be understood more clearly as the first wave in a flood of organic concepts that swept through the s and s. Edwards Demming and J. Juran pioneered the quality revolution. Ray Miles and Charles Snow showed that modern organizations consisted of networks.
Gifford Pinchot and Russell Ackoff brought free enterprise inside the firm. Peter Senge outlined the principles of organizational learning. And my book The New Capitalism showed that all this change flows from traditional Western ideals of enterprise and democracy. While it is clear that a new stream of management has appeared, there is great confusion over what this New Management will consist of when it matures.
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This confusion is particularly severe because it often rages across a great divide separating the past from the future. The economic history of our time will likely be told as a tugging and pulling between the old versus the new: power versus participation, hierarchical control versus market freedom, profit versus society, growth versus the environment, and so on. Serious change is going to require more than lofty sentiments. For instance, it is refreshing to see attempts to empower employees sweep across the land, but these innovations often fail because of unrealistic expectations.
The road to a New Management is littered with the ruins of such noble failures, so it would be wise to acknowledge their cause honestly if we want to avoid them. The same fatal flaw is damaging employee governance in Europe. These forms of worker participation have been a beacon for enlightened management, but they accorded employees dominant control over their enterprises without ensuring that this power was used responsibly, allowing workers to reward themselves without commensurate gains in performance.
The most brilliant management innovations cannot repeal the iron laws of economic reality that require us to live within our means. A New Management can offer people the power to control their lives, but it must also hold them accountable for performance as well—just as the Old Management did. The use of downsizing and other attempts to reduce costs are often disappointing because they are usually imposed from the top down in a rather arbitrary way, causing fear, stress, and resentment at being treated unfairly.
Top-down change disempowers people and prevents local solutions that are usually superior—hallmarks of the New Management.
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These confusing conflicts between outmoded practices and untested promises are the principal obstacle to economic progress. How can organizations be productive when managers seem confused over what they expect from their employees? Will American companies lose the product markets of the future to global competitors as they did before in electronics and automobiles? Most importantly, the full impact of this upheaval will hit when the next wave of information systems arrives about the year Will we be ready to handle this enormous untamed power of the Information Revolution?
The question can no longer be avoided: What really is the New Management? I believe a new foundation of management is emerging that can bridge this divide between the old and the new. Not only can this conflict be resolved, the New Management absorbs the Old Management into a broader, more powerful framework that makes sense of all the concepts, problems, and innovations that confuse managers today.
The key to understanding this crucial resolution is to see that the two complementary principles of democracy and enterprise are now transforming organizations into a balanced whole. Managers have always worked in a market economy, of course, and we all live in a democratic society, so what is really new? There has been precious little entrepreneurial freedom inside corporations or governments because they were traditionally managed as centrally planned hierarchies, and the mere thought of democracy was anathema in business.
Even the Catholic Church acknowledges that it is not democratic. But within the past few years, these two principles have been bringing a fresh new vitality into corporate life. The power of free enterprise is introducing some aspects of market behavior in organizations, but it is hard to envision hostile takeovers of corporate divisions. So organizations are unlikely to become completely free markets. Likewise, the ideals of democracy are moving into organizations, but this is not likely to be a legal system of representative government.
As we will see in Chapter 3 , the application of democracy in organizations usually takes the practical form of collaborative working relations that form a corporate community. If this view is valid, the union of democratic and entrepreneurial principles should resolve the clash between the Old and the New Management noted above. Spirituality has become a powerful new entry in management recently, as we will see later. Some of my most disappointing experiences have occurred in organizations that profess spiritual values. After all, the history of religion abounds with war. It seems to me that spirituality is destined to become part of the New Management, but it will be more broadly conceived.
As we will see later, the spirit is both the source of our highest ideals and a practical discipline that leaders use to resolve intense differences among demanding clients, empowered workers, and tough business partners.
Curse or Blessing for Developing Economies?
Our approach to the spirit cannot be limited to traditional dogma nor New Age mysticism. As Walt Whitman told us, life is a sacred whole that encompasses all. Institutions are no less an integral part of life, ablaze with endless meaning that encompasses the messy, disturbing realities as well. The spirit that animates life permeates all life, not just those aspects we prefer.