Why Managers Still Matter
In today’s knowledge-based economy, managerial authority is supposedly in decline. But there is still a strong need for someone to define and implement the organizational rules of the game.
The Lego Group, the Danish toy company, reduced its number of management layers in recent years but also expanded its layer of top management.
Image courtesy of The Lego Group.
We live in a knowledge-based, rapidly changing, networked world. A supposed hallmark of the new economy has been the decline of managerial authority. Modern organizations such as online retailer Zappos have come to favor flat hierarchies with widely distributed authority. We call such businesses “wikified companies,” using the wiki– prefix to denote the loosely structured, bottom-up, egalitarian structure popularized by the Wikipedia encyclopedia project and touted by management thinkers and consultants.1
“Wikifying” the modern business has become a call to arms for some management scholars and pundits. As Tim Kastelle, a leading scholar on innovation management at the University of Queensland Business School in Australia, wrote: “It’s time to start reimagining management. Making everyone a chief is a good place to start.”2
Companies, some of which operate in very traditional market sectors, have been crowing for years about their systems for “managing without managers”3 and how market forces and well-designed incentives can help decentralize management and motivate employees to take the initiative.4 For example, in the 1980s, Johnsonville Sausage, based in Sheboygan Falls, Wisconsin, made a big point of slashing managerial oversight and putting quality control, personnel management, customer relations and even business expansion in the hands of worker-managed teams. As CEO Ralph Stayer explained, “My job … was to put myself out of a job.”5
The Industrial Revolution brought the decline of small-scale, cottage production and the rise of large, integrated businesses; Adam Smith’s invisible hand was replaced with what business historian Alfred D. Chandler Jr. famously described as the “visible hand” of management.6 But now that pendulum appears to be swinging in another direction. What Frederick W. Taylor, a pioneer in the field of scientific management in the late 19th century, saw as rigidly organized factories of docile and obedient workers has been eclipsed by loosely structured teams of highly trained and empowered knowledge workers.7 Indeed, the “visible hand” of management has morphed into a system of loose networks, virtual businesses and peer-to-peer interactions.8
This isn’t to say that strong-minded managers have become extinct.
References (27)
1. See, for example, D. Tapscott and A.D. Williams, “Wikinomics: How Mass Collaboration Changes Everything” (New York: Penguin, 2006).
2. T. Kastelle, “Hierarchy Is Overrated,” November 20, 2013, http://blogs.hbr.org.
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Norris Krueger