Over the past decade or so, the central theme being discussed in the field of management has been the pervasive changes. Rapid environmental shifts are causing fundamental trans- formations that have a dramatic impact on the manager’s job. These transformations are reflected in the transition to a new workplace, as illustrated in Exhibit 1.5. The primary characteristic of the new workplace is that it centers on bits rather than atoms—information and ideas rather than machines and physical assets. Low-cost computing power means that ideas, documents, movies, music, and all sorts of other data can be zapped around the world at the speed of light. The digitization of business has radically altered the nature of work, employees, and the workplace itself.34
The old workplace is characterized by routine, specialized tasks, and standardized control procedures. Employees typically perform their jobs in one company facility, such as an automobile factory in Detroit or an insurance agency in Des Moines. The organization is coordinated and controlled through the vertical hierarchy, and decision-making authority resides with upper-level managers.
In the new workplace, by contrast, work is free-flowing and flexible. The shift is most obvi- ous in e-commerce and high-tech organizations, which have to respond to changing markets and competition at a second’s notice. Numerous other organizations, such as McKinsey & Company, Canada Life, and Nokia, are also incorporating mechanisms to enhance speed and flexibility. Empowered employees are expected to seize opportunities and solve problems as they emerge. Structures are flatter, and lower-level employees make decisions based on widespread information and guided by the organization’s mission and values.35
Knowledge is shared widely rather than hoarded by managers, and people throughout the company keep in touch with a broader range of colleagues via advanced technology. Some organizations, such as Tenary Software, are trying these new models.
The workplace is organized around networks rather than rigid hierarchies, and work is often virtual, with managers having to supervise and coordinate people who never actually “come to work” in the traditional sense. Thanks to modern informa- tion and communications technology, employees can perform their jobs from home or another remote location, at any time of the day or night.36 Flexible hours, tele- commuting, and virtual teams are increasingly popular ways of working that require new skills from managers. Using virtual teams allows organizations to use the best peo- ple for specific jobs, no matter where they are located, which enables a fast, innovative response to competitive pressures. Teams also may include outside contractors, suppli- ers, customers, competitors, and interim managers who are not affiliated with a specific organization but, instead, work on a project-by-project basis. The valued worker is one who learns quickly, shares knowledge, and is comfortable with risk, change, and ambiguity.
1. FORCES ON ORGANIZATIONS
The most striking change affecting organizations and management is technology. Consider that computing power has roughly doubled every 18 months over the past 30 years while the cost has declined by half or more every 18 months.37 In addition, the Internet, which was little more than a curiosity to many managers as recently as a decade ago, has trans- formed the way business is done. Many organizations use digital networking technologies to tie together employees and company partners in far-flung operations. Organizations are increasingly shifting significant chunks of what once were considered core functions to outsiders via outsourcing, joint ventures, and other complex alliances. Companies are becoming interconnected, and managers have to learn how to coordinate relationships with other organizations and influence people who can’t be managed and commanded in tradi- tional ways.
The Internet and other new technologies also are tied closely to globalization. Although global interconnections bring many opportunities, they also bring new threats, raise new risks, and accelerate complexity and competitiveness. Think about the trend toward outsourcing to low-cost providers in other countries. To cut costs, U.S. companies have been sending manufacturing work to other countries for years. Now, work involving high-level knowledge is also being outsourced to countries such as India, Malaysia, and South Africa. India’s Wipro Ltd., for example, writes software, performs consulting work, integrates back-office solutions, undertakes systems integration, and handles technical support for some of the biggest corporations in the United States—and does this for 40 percent less than comparable U.S. companies can do the work.38
Diversity of the population and the workforce in the United States is another fact of life for organizations. The general population of the United States, and thus of the workforce, is growing more ethnically and racially diverse. In addition, generational diversity is a pow- erful force in today’s workplace, with employees of all ages working together on teams and projects in a way rarely seen in the past. In the face of these transformations, organizations are learning to value change, innovation, and speed over stability and efficiency.
The fundamental paradigm during much of the twentieth century was a belief that things can be stable. In contrast, the new paradigm recognizes change and chaos as the natural order of things.39 Events in today’s world are turbulent and unpredictable, with small and large crises occurring frequently. Rock star David Bowie has staked the newest phase of his career on that turbulence (see Bowie Bonds feature on next page).
One way that managers are addressing the complexity of today’s world is by renewing their emphasis on innovation. With the power of the Internet, for example, companies have lost much of their ability to control information to consumers and the public, so they are forced to innovate with increasingly better products and services to remain competitive. The intense competition brought about by globalization also spurs compa- nies to keep pace with new technologies and innovative management practices.40 A re- port from a group of leading scientists, executives, and educators points to the growing innovation strength of countries such as China and India, which are poised to usurp America’s position as an innovation leader. Between the years of 1991 and 2003, research and development spending in China exceeded that in the United States by bil- lions of dollars.41
Over the past few years, though, an explosion of attention to innovation roared through U.S. firms. For example, Motorola, which seemed to be on the has-been list in the opening years of the twenty-first century, roared back to life with hot new products such as the RAZR phone, the ROKR, the first combination cell phone and iPod, and the Q phone and e-mail device, designed to compete with the BlackBerry. Motorola CEO Ed Zander is implementing management and cultural changes that support an ongoing process of innovation.42
Motorola’s changes reflect a broader movement in U.S. firms, seen in companies from General Electric to IBM to Procter & Gamble, as managers are emphasizing creativity and innovation to compete in a new era. General Electric CEO Jeff Immelt, for example, shifted from emphasizing growth through acquisition to pushing growth through technological in- novation and providing additional resources for GE’s scientific research labs. Procter & Gamble collaborates widely with individual entrepreneurs and other firms, even competitors, to crank out innovative products.43
2. NEW MANAGEMENT COMPETENCIES
In the face of these transitions, managers must rethink their approach to organizing, di- recting, and motivating employees. Today’s best managers give up their command-and- control mind-set to focus on coaching and providing guidance, creating organizations that are fast, flexible, innovative, and relationship-oriented. In many of today’s best companies, leadership is dispersed throughout the organization, and managers empower others to gain the benefit of their ideas and creativity.
Success in the new workplace depends on the strength and quality of collaborative relationships. Rather than a single- minded focus on profits, today’s managers recognize the critical importance of staying connected to employees and customers. New ways of working emphasize collaboration across functions and hierarchical levels as well as with other companies. Team- building skills are crucial. Instead of managing a department of employees, many managers act as team leaders of ever-shifting, temporary projects.
At SEI Investments, the work is distributed among 140 teams. Some are permanent, such as those that serve major cus- tomers or focus on specific markets, but many are designed to work on short-term projects or problems. Computer linkups, called pythons, drop from the ceiling. As people change assign- ments, they just unplug their pythons, move their desks and chairs to a new location, plug into a new python, and get to work on the next project.44
An important management challenge in the new workplace is to build a learning organization by creating an organiza- tional climate that values experimentation and risk taking, ap- plies current technology, tolerates mistakes and failure, and re- wards nontraditional thinking and the sharing of knowledge.
Everyone in the organization participates in identifying and solving problems, which enables the organization to continu- ously experiment, improve, and increase its capability. The role of managers is not to make decisions but, instead, to create learning capability, in which everyone is free to experiment and learn what works best.
3. TURBULENT TIMES: MANAGING CRISES AND UNEXPECTED EVENTS
Many managers dream of working in an organization and a world in which life seems rela- tively calm, orderly, and predictable, but their reality is one of increasing turbulence and disorder. Today’s managers and organizations face various levels of crisis every day—from the loss of computer data, to charges of racial discrimination, to a factory fire, to workplace violence. These organizational crises are compounded by crises on a more global level.
Consider a few of the major events that affected U.S. companies within the last few years: the bursting of the dot-com bubble, which led to the failure of thousands of compa- nies and the rapid decline of technology stocks; the crash of Enron as a result of a complex series of unethical and illegal accounting gimmicks, the subsequent investigations of nu- merous other corporations, and implementation of new corporate governance laws; terror- ist attacks in New York City and Washington, DC, that destroyed the World Trade Center, seriously damaged the Pentagon, killed thousands of people, and interrupted busi-ness around the world; the crash of the space shuttle Columbia and the ensuing investiga- tion that revealed serious cultural and management problems at NASA; Hurricane Katrina’s devastating impact on organizations in New Orleans and the Gulf Coast, as well as numer- ous companies that do business with them; the removal of spinach from supermarkets because of e-coli; and continuing terrorist threats against the United States and its allies— causing companies to hire experts to manage potential crises. Even the Hilton family, Paris’s parents, hired a crisis manager after she got arrested and sent to jail.45 These and other events brought the uncertainty and turbulence of today’s world clearly to the fore- front of everyone’s mind and made crisis management a critical skill for every manager.
Dealing with the unexpected has always been part of the manager’s job, but our world has become so fast, interconnected, and complex that unexpected events happen more frequently and more often with greater and more painful consequences. All of the new management skills and competencies we discussed are important to managers in such an environment. Crisis management places further demands on today’s managers. Some of the most recent thinking on crisis management suggests the importance of five leadership skills.
- Stay calm.
- Be visible.
- Put people before business.
- Tell the truth.
- Know when to get back to business.
Stay calm. A leader’s emotions are contagious, so leaders have to stay calm, focused, and optimistic about the future. Perhaps the most important part of a manager’s job in a crisis situation is to absorb people’s fears and uncertainties. Although managers acknowl- edge the difficulties, they remain rock-steady and hopeful, which gives comfort, inspira- tion, and hope to others.
Be visible. When the world becomes ambiguous and frightening to people, they need to feel that someone is in control. After Hurricane Katrina hit New Orleans, Scott Cowen, president of Tulane University, stayed on campus until he was sure that everyone was evac- uated and everything that possibly could be done to control the damage was in place.47 In times of crisis, leadership cannot be delegated. When Russian president Vladimir Putin continued his holiday after the sinking of the submarine Kursk in August 2000, his reputa- tion diminished worldwide.48
By contrast, Melvin Wilson of Mississippi Power stayed visible and maintained impor- tant networks to deal with a real catastrophe. Imagine that you are a mid-level marketing manager at a public utilities company. One day you’re reviewing next year’s advertising campaign. A day later you’re responsible for coordinating the feeding, housing, and health care of 11,000 repair workers from around the country. That’s the situation that Melvin Wilson, a marketing manager for Mississippi Power, found himself in when Hurricane Katrina hit the state in August 2005, wiping out 1,000 miles of power lines, destroying
65 percent of the company’s transmission and distribution facilities, damaging 300 trans- mission towers, and knocking out power for all 195,000 customers. The company had a disaster recovery plan in place, but managers were suddenly thrust into a situation that was twice as bad as the worst-case scenario.
Mississippi Power’s corporate headquarters was totally destroyed, its disaster response center flooded and useless. Early recovery work had to be done without access to computers, phones, or basic sanitary facilities. Confusion and chaos reigned. “My day job didn’t prepare me for this,” Wilson told a reporter in a choked voice as he struggled to find nurses, beds, tetanus shots, laundry service, showers, security services, and food for repair workers.
Other managers, from all levels and divisions, have dealt with similar predicaments. One manager compared the process to managing an Army division at war! Amazingly, Mississippi Power employees got the job done smoothly and efficiently, restoring power in just 12 days, thus meeting the bold target of restoring power by the symbolic date of September 11. The tale of how this was done is one of the great crisis-management stories of modern times, and a lesson for managers in how much can be accomplished quickly when it’s managed right.49
The managers at Mississippi Power illustrate many of these new management com- petencies, which enabled the company to execute a swift, ambitious disaster plan and restore power in only 12 days following Hurricane Katrina. Two decades ago, hurricane response was run from the top down, but managers learned that setting priorities from headquarters was ineffective during times of chaos and confusion. Today, decision making has been pushed far down to the level of the substation, and employees are empowered to act within certain guidelines to accomplish a basic mission: “Get the power on.”
The corporate culture, based on values of unquestionable trust, superior performance, and total commitment, supports individual initiative and the confidence of management that employees will respond with quick action and on-the-spot innovation. During the disaster recovery, even out-of-state crews working unsupervised were empowered to engineer their own solutions to problems in the field. Networking and team-building skills also are highly valued at Mississippi Power. Middle managers like Melvin Wilson forged networks of relationships throughout the company, with other organizations, and with power company managers in other states, which enabled them to quickly gain access to critical resources and build teams with the right combination of skills. Overall, Missis- sippi Power reflects the qualities of a learning organization in which employees, from line workers to accountants, are encouraged to experiment, innovate, share knowledge, and solve problems.
Melvin Wilson also illustrates some of the qualities needed for effective crisis manage- ment. When he took on the role of “director of storm logistics,” he suppressed his own emotions to present a calm and focused persona, which kept employees’ emotions directed in a positive way on the job to be done. At the same time, he and other managers made sure that plans were in place to assist employees whose homes were damaged (fortunately, no employees were killed in the storm). Wilson was a highly visible leader throughout the re- covery, working 20-hour days and sleeping on the floor. Top leaders were visible as well, meeting with storm directors every day and helping boost the morale of recovery workers.
Leadership during crises and unexpected events is becoming important for all organiza- tions in today’s complex world. Managers in crisis situations should stay calm, be visible, put people before business, tell the truth, and know when to get back to business. Human skills become critical during times of turbulence and crisis.
Put people before business. The companies that weather a crisis best, whether the crisis is large or small, are those in which managers make people and human feelings their top priority. Ray O’Rourke, managing director for global corporate affairs at Morgan Stanley, put it this way following September 11: “Even though we are a financial services company, we didn’t have a financial crisis on our hands; we had a human crisis. After that point, everything was focused on our people.”50
Tell the truth. Managers should get as much information from as many diverse sources as they can, do their best to determine the facts, and then be open and straightfor- ward about what’s going on. After a 17-year-old patient at Duke University Hospital died following a botched organ transplant, hospital managers compounded the organizational crisis by failing to communicate with the media and community for nine full days after the tragedy was reported in the press.51
Know when to get back to business. Although managers should first deal with the physical and emotional needs of people, they should get back to business as soon as possible. The company has to keep going, and a natural human tendency makes us want to rebuild and move forward. Rejuvenation of the business is a sign of hope and an inspiration to employees. Moments of crisis also present excellent opportunities for looking forward and using the emotional energy that has emerged to build a better company.
This is a challenging time to be entering the field of management. Throughout this book, you will learn much more about the new workplace, about the new and dynamic roles that managers are playing in the twenty-first century, and about how you can be an effec- tive manager in a complex, ever-changing world.
Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.