Limitations of Management

The purpose of this exercise is to understand the limitations of Management 1.0, and become aware of some of those new-age companies who are at the forefront in creating Management 2.0.

The Management 2.0 Challenge

by Gary Hamel, May 24, 2011

Organizations face a set of challenges that lie outside the performance envelope of management-as-usual. These include a rapidly accelerating pace of change, a growing swarm of unconventional rivals, crumbling entry barriers, a rapid transition from the “knowledge economy” to the “creative economy,” intensifying competition for talent and a profusion of new stakeholder demands.

To tackle these challenges, organizations will need to become far more adaptable, innovative, inspiring and accountable than they are right now. This will require a fundamental re-tooling of traditional management practices.

What are the limitations of Current Management 1.0?

The management model that predominates in most organizations has its roots in the early 20th century. At that time, management innovators were focused on the challenge of achieving efficiency at scale. Their solution was the bureaucratic organization, with its emphasis on standardization, specialization, hierarchy, conformance, and control. These principles comprise the philosophical foundations of Management 1.0, and are deeply baked into management mindsets and processes. In virtually every organization, one finds that power cascades down, that strategies get set at the top, that tasks are assigned and not chosen, that supervisors review subordinates rather than the other way around, that control is imposed, and that senior executives allocate resources.

Can current Management 1.0 evolve into Management 2.0?

For the first time in a century, we have a viable alternative to the status quo. Thanks to the Web, we can imagine organizations that are large but not bureaucratic, that are focused but not myopic, that are specialized but not balkanized, that are efficient but not inflexible and, best of all, that are disciplined but not disempowering. Without doubt, we have cause to be hopeful. If we can find ways of transplanting the Internet’s DNA into our organizations—the interwoven values of transparency, collaboration, meritocracy, openness, community, and self-determination—we may have the chance, at last, to overcome the design limits of Management 1.0.