Management's new paradigms

1. Albert Einstein once said “we cannot solve
our problems with the same thinking we used
when we created them”.

2.  Every theory is based on some basic assumptions about
the reality on which it is developed.
 Our management theories are at least 50 years old
whereas our realities have shifted dynamically.
 This essay attempts to re-examine the above mentioned
assumptions and practices.
 Writer Peter F. Drucker used the example of Mary Parker
Follet whose theory of understanding between employees
was ignored as it was not in the line with the Marxist-tainted
reality
 Therefore, it is important that we make old assumptions
explicit and replace them to fit today’s reality

3.  A social discipline such as management deals with behavior of
people and human institutions and is thus subject to
continuous change.
 Few of the assumptions that our leading management astray
are:
 one of the most common assumption
since Henry Fayola and Walter Rathenau is one right
organization.
 Top-down control – centralization
Example: Founder of Exxon John D.
Rockefeller used policy of centralization and
Exxon was considered “not a fun place to work”
while with a shift in management policy in later
days company’s like southwest airlines or Google
considered “fun as part of the job”.

4. Management as a discipline
 The word “management” is used synonymously with “business
management”.
 This was not the case before 1930s and “management” applied to any
kind of organization, not just business.
 Frederick Winslow Taylor, the inventor of “scientific management”, did not
cite business as the “perfect example of scientific management” and
instead cited the non-profit Mayo clinic.
 There are differences in management between different organizations but
the difference are mainly in application rather than in principles.
 Today it is important to differentiate business management from
management as the non-business firms have the major portion of the
growth sector of a developed society in 21st century

5.  Study of Organization started with an
assumption of “Single Right Form of
Organization”
 But, search for “One-Fits All” Continues
today.

6.  In 20th century job –shop manufacturing
shifted to mass production.
 Because of this, Henri Fayol determined
structure organization for greater productivity
and efficiency
 He invoked unity within chain-of command,
task specialization
 The “One best way “was new concept of era

7.  In 20th century job –shop manufacturing
shifted to mass production.
 Because of this, Henri Fayol determined
structure organization for greater productivity
and efficiency
 He invoked unity within chain-of command,
task specialization
 The “One best way “was new concept of era

8.  Post World war II, there was increase in
sales, employee.
 Problems in US business became apparent.
 The “One best way” to do job disappeared
 Structure of every organization is unique in
some aspects, but all focused to accomplish
its work

9.  In some cases, highly specialized staff may
divide their time among more than one project.
While at the same time working in project
groups with experts from other functions fosters
cross-fertilization of ideas.
 Similarly, in Catholic diocese, bishop is absolute
authority in certain areas, a constitutional
monarch in others and powerless in others.

10.  Functional Org Structure
1. Departmentalizes an organization based on
common job functions.
2. Each department will have its own department
head who will be responsible for the
performance of his section.
3. Example: Software development company has
Sales Department, Engineering Department
,Customer Relations Department ,Accounting
Department

11.  Divisional
1. Each division within the organization is
dedicated to a particular product line.
2. Separate divisions or groups are created
and placed under the divisional-level
management

12.  Matrix Structure
 Structure where people have to report to more than one
boss
 For a duration of project, specialist from different areas
form a team and report to a team member.
 Your organization gets a project and they need a
mechanical engineer to assist the project manager on
certain tasks. In this case, you may be assigned to the
project for a short time, or they may transfer you there
while your services are required. If you’re assigned there
for a short time, you may have to report to two bosses.

13. Theory X Theory Y

14. • Thebasic view that prevailed was that people
need to be managed .
• Abraham H Maslow showed in his Eupsychain
Management (1962) that both the author and
McGregor were wrong .
• He showed conclusively that different people
have to be managed differently .
• The assumption that there is only one right way
is actually flawed and all the other assumptions
rest on this assumption . Some of these
assumptions are listed below :

15. People who work
for an organization
are subordinates,
they are expected
to do what they are
told
People are
dependent
on their
organization
for their
livelihood
People who
work for an
organization
wish to work
full time

16. • None of these assumptions are now valid .
• A very large and steadily growing workforce are no
longer full time employee.
• They work for an outsourcing contractor , be it a
data processing unit or a cleaning service provider.
• Other member maybe individual contractor
working for a period or you can say on a
contractual basis.
• Even people who are employed full time , fewer
and fewer are subordinates. Increasingly they are
KNOWLEDGE WORKERS.

17. Knowledge
Workers
Cannot be
managed as
subordinate
One who
knows more
than their
job than
anyone else
They
should be
referred as
an
Associate
Knowledge
Workers own
their means of
production,
their
knowledge
They above all
need
challenge

20. The End of Command & Control
•Traditional concept of management is based on this concept which are legally
defined.
• Keiretsu - Management concept (Japanese) in which suppliers are tied
together with their main customer for planning, product development,
cost&control and research. (example- Toyota)
Much older concept by William C.
Durant(1910)- created General Motors by
bringing together small successful
automobile manufacturers(Buick).
In 1920, he realized the need to bring
main suppliers into corporation-
Fisher Body(country’s largest
automobile manufacturer)

21. MISTAKE: They brought supplier-partners into his command
and control orbit.
Lead GM to own 70% of
manufacturers. For 20 years, GM
enjoyed 30% cost advantage over its
competitors( Ford and Chrysler).
Durant involved suppliers within legal
framework (command & control). They
were required to sell 50% of output to
Packard, Studebaker and Nash. This
didn’t guaranteed market => focused on
cost and quality.
In 1936-37, with unionization of
automobile industry, high labor costs were
imposed => cost disadvantage.

22. • Marks and Spencer in England – next keiretsu builder- most
successful so far – began in early 1930s.
• Integrated practically by all its suppliers into its own
management but through contracts and not ownership.
• Keiretsu is based on Power and not partnership of equals.
• Companies can become genuine partners today and not merely
dependents.
• The HMO( Health Maintenance Org.), America , is an attempt
to bring process health care delivery under partnership
management.
• Conclusion: Management will have to be operational in its
scope and not merely legal.

23. Taking National out of Multinational
• Assumption: the national boundaries still define the
environment in which business operates.(engines may be
made in one country, bodies on another).
• After World War II, pharma & information industries weren’t
even organized in domestic- run individual tasks- each
organized transnationally.

24. New reality:
•Management and national boundaries are no longer
congruent.
•The scope of management can no longer be politically defined.
•National boundaries will continue to be important but as
restraints on practice of management, not in defining the
practice.

25. BRINGING THE WORLD INTO THE ORGANISATION
2 DIMENSIONS OF THE SAME TASK
ENTREPRENEURSHIP
*INNOVATION*
MANAGEMENT
*MANAGING*
• Innovation is in response to
social change
• Management does not
need more information
about what is happening
inside . It needs more
information on what is
happening outside.

26. Marketing
• Emphasizes the purpose and results of a business lie
entirely outside of itself.
• Organised efforts are needed to bring an
understanding of the outside (society , economy ,
customer ) to the inside of the organisation to make
it the foundation for stratergy and policy.
• Tool to support selling.
• Getting people to buy the things that you want to
make.

27. Information Technology
• Getting additional information of the wrong kind.
• Produces more data about the inside.
• Produces practically no information about anything
that goes on outside of the entreprise.

28. ROLE OF AN OUTWARD DIRECTED MANAGEMENT
 Organize the resources of the organisation for results
outside of the organisation.
 Management must define the results it expects to
attain and then organise the resources of the
institution to obtain them.
KYOCERA
Results mean
leadership in
management.
METALLGESELLSCH
AFT
KYOCERA
RESULTS MEAN LEADERSHIP
IN MANAGEMENT.
METALLGESELLSHAFT
RESULTS ARE DEFINED IN
TERMS OF MARKET
STANDING.

29. WHY MANAGEMENT MATTERS??
• CENTRE OF A MODERN SOCIETY / ECONOMY /
COMMUNITY IS NOT TECHNOLOGY ,
INFORMATION OR PRODUCTIVITY BUT THE
MANAGED INSTITUTION . THIS INSTITUTION
DOES NOT SIMPLY EXIST . IT EXISTS TO
PRODUCE RESULTS ON AND IN SOCIETY.