Social business and the changing theory of management

April 14, 2013

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A manager recently voiced his concerns: “Most employees prefer being told what to do. They are willing to accept being treated like children in exchange for reduced stress. They are also willing to obey authority in exchange for job security.” That is the way we have seen it: managers inspire, motivate, and control employees, who need to be inspired, motivated, and controlled. These dynamics create the system of management and justify its continuation.

If we want to meet the challenges of the post-industrial world, this relationship needs to change. The workers changing their role is often seen as a matter of the extent to which the managers are willing to allow it and give up responsibility. In reality it is as much a matter of how much the workers are willing to develop their (management) capacity and take more and wider responsibility.

The dysfunctional relationship between managers and employees creates a self-fulfilling prophecy and a systemic failure in creative, knowledge-based work. What is tragic is that neither side normally understands the predictability of what is going on. The pattern is a mutually reinforcing self-destructive process that manifests itself as a steady decline in the authority of management and productivity of work.

A few researchers have started to dispute the assumption that the present system of management is a fact of life that will always be with us. It may be time for us to question whether the recent problems created by bad management are isolated and should be tolerated. Or to ask whether the fault is in the system itself and not in individual managers?

Luckily, management theory and practice are slowly starting to catch up with the dramatic changes brought about by the loosely coupled, modular nature of creative work and the ideals of social business.

A social business does not behave in the way our dominant management thinking assumes. What is it, then, that has changed?

Organizations are always assemblies of interacting people. The reason for an organization to exist is to simplify, support, and enrich interaction.

At present, there are three types of organizational cultures depending on the type of management and the alternative mechanisms for the coordination of tasks. The different task interdependencies accordingly place different and increasing burdens on our communication practices .

I call these the administrative culture, the industrial culture and the creative, social culture.

G18The administrative culture, which is found in most governmental organizations is about function-specific independent activities. Two functions or tasks are independent if it is believed that they don’t affect each other. The most important communication exists between the employer and the employee, the manager and the worker. The principle is that the execution of two independent tasks does not require communication between the tasks. The architecture consists of black boxes that are not coupled directly, but in an indirect way by higher-level managers, who coordinate the work. Work as interaction is mainly communication between hierarchical levels.

The industrial culture of process-based organizations is about dependent and sequential activities. Manufacturing work is about dependent tasks. Being dependent means that the output of one task is the input of another. The reverse cannot normally take place. In sequential dependence, those performing the following task must comply with the constraints imposed by the execution of the preceding task. Since the process architecture is typically quite clear, management coordination is mostly about measuring and controlling whether the execution conforms to the planned requirements. The architecture consists of tightly coupled tasks and predetermined, repeating activities. Work as interaction is a sequential process with one-way signals.

A creative, social culture is different. It is about loose couplings and modularity, about interdependent people and interdependent tasks. Two people/tasks are interdependent if they affect each another mutually and in parallel. Interdependent tasks call for peer-level responsiveness and coordination by mutual adjustments, not coordination by an outside party such as a manager.

Most of the information that is relevant will be discovered and created during the execution of the task, not before. As a result it is not always possible for a manager and a worker to agree on a coherent approach in advance. Nor is it normally possible to follow a predetermined process map.

The basic unit of corporate information in creative, social work is not content in the form of documents but interaction in the form of conversations. Knowledge is perpetually constructed in interaction. Work as interaction is complex, situational communication between loosely connected nodes of the network! The structure of work resembles the structure of Internet.

The three cultures and corresponding architectures differ in the degree to which their components are loosely or tightly coupled. Coupling is a measure of the degree to which communication between the components is fixed or not. In most creative work, and always in a social business, any node in the network should be able to communicate with any other node on the basis of contextual interdependence and creative participative engagement.

As organizations want to be more creative and social, the focus of management theory should shift towards understanding participative, self-organizing responsibility and the equality of peers. It is a systemic change, much more than just kicking out the bad managers and inviting new, better managers in. It is not about hierarchies vs. networks, but about how all people want to be present and how all people want to communicate in a way that was earlier reserved only for the people we called managers.

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Eric Brynjolfsson video on TED. Steven Johnson video on peer networks. Gary Hamel interview.

14 Responses to “Social business and the changing theory of management”

  1. Riel Miller Says:

    Great stuff Esko. One of the key questions though from the point of view of the dynamics of changing roles and power is how to allocate time, attention, resources amongst the different ways of doing things. Making our strategic choices with respect to these different ways of doing things. When and how do we choose to defend, improve, ignore or attack the old managerial methods? How will the old dominant approaches react to becoming less dominant, less all encompassing? Is there a managerial approach to the contradictions, conflicts and destruction that are part of what is going on as reallocation occurs across these different ways of doing things?
    Best regards, Riel


  2. “It is a much larger systemic change than just kicking out the bad managers and inviting new, better managers in. It is not about hierarchies vs. networks, but about how all people want to be present and how all people want to communicate in a way that was earlier reserved only to the people we called managers.”

    Wise words. The social dynamics are repetitive patterns, which means that new managers – even “better” ones – are quickly caught in the same social patterns. Even if they are powerful and creative individuals they can’t control the dynamic process they are part of.

    The change needs to be holistic and no individual can “do” it. It needs to be a new pattern of interdependent individuals starting to interact in a different way. How would that pattern emerge? There’s no answer.

  3. Amar Trivedi Says:

    Hats off Esko, on writing what is easily the best article on Social Business I’ve read in 2013. I’m thrice impressed…
    1) For your jargon-free, easy writing style
    2) For your depth of understanding of business, management, marcomms, culture… and most importantly, how the dots connect and interact to form a holistic, cohesive system, and
    3) For your lucid and beautifully presented explanation of social business. Thank You, Esko for a great piece. Learnt lots from it.


  4. [...] Social business and the changing theory of management [...]


  5. [...] Monday morning – or ate Sunday night – and the Google+ stream led me to Esko Kilpi’s blog post about three different paradigms for relationships in an organization, which Kilpi calls [...]

  6. Jon Husband Says:

    As organizations want to be more creative and social, the focus of management theory should shift towards understanding participative, self-organizing responsibility and equality of peers. It is a systemic change, much more than just kicking out the bad managers and inviting new, better managers in. It is not about hierarchies vs. networks, but about how all people want to be present and how all people want to communicate in a way that was earlier reserved only to the people we called managers.

    Really well said, Esko.

    This paragraph is a significant reminder (and makes the same point) as the last section (Titled “Bribing the Knowledge Worker”) of P. Drucker’s 1999 article “Beyond the Information Revolution”.

    In that section he states (paraphrasing) that “knowledge workers now own the means of production” (it’s in their heads and exchanges) and that as the become more and more aware of that, they will increasingly want to share in the power and social / organizational status of executives.

    Inclusion, participation, sharing of power .. are significant keys to the way forward, imo.

  7. Ari Manninen Says:

    Great Esko. Also posted comments have wisely picked up excellent ideas from the text. On my part I would praise the idea that we all need to develop the managerial quality in ourselves. Very important point. I would assume that in many organization there is room to take responsibility and build new things for the whole organization. Let us grow to the role to which we are capable to grow.


  8. [...] Social business and the changing theory of management, Esko Kilpi, 14 April 2013 [...]

  9. stefan Says:

    It should be a target to achieve selfsteering teams, maximize proactiveness and reduce the ‘tell me what to do attitide’ but seen from a different perspective, in a fast changing world, where job security seems to vanish, where targets are put high and where priorities change constantly, one can understand that people / teams / departments are looking back to the ‘old’ days or simply say: tell me what i/we need to do in order to fulfill the targets as currently, on our own, we lack the visibility or transparency in order to make proper decisions and focus properly… Therefor, a warm call for action: please give the individuals and teams visibility on where they need to head for, stabilize the targets so they become meaningful and ensure the employees get a frame to work in where they can grow and succeed.


  10. It feels like there is at least one more culture what about the services industry – not exactly creative because there are processes that can apply – not really industrial often non sequential and certainly not administrative.

    Your social business thinking is certainly spot on and increasing necessary in a world where smart devices are increasingly prevalent driving higher consumer expectations for a business that behaves socially. I like what Stefan says about the self steering teams that makes a lot of sense.


  11. [...] about studying and work. The Web is challenging us to see that most innovative and productive organizations and people are no more managed by “order and discipline”. The organizations are becoming networks of [...]


  12. [...] QUI una riflessione interessante di Eric Brynjolfsson e Steven Johnson, di cui riporto solo un piccolo estratto: The dysfunctional relationship between managers and employees creates a self-fulfilling prophecy and a systemic failure in creative, knowledge-based work.” [...]


  13. […] Social business and the changing theory of management, Esko Kilpi, 14 April 2013 […]


  14. […] truth is, in the modern economy the scarce thing – the resource that is most difficult to find, keep and grow – is people. […]


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