Why Managers Must Now Become Leaders

Management was a crucial skill in the industrial era. The most assured route to success required that those entrusted with responsibility organize resources and people in a way that optimized their ability to apply mass to opportunity in order to achieve scale and the excess returns that flowed from doing so before competitors.

The challenge is different now, as the following article explains. The benefits of strategic impact come from access and adaptation. Instead of assembling as much might as possible under one's span of control, enterprises must leverage their insights and whatever influence they can bring to bear, in order to achieve desired results. We are transitioning from an era of management to one of leadership.

This requires a different set of skills. Where the manager directed, the leader must convince and cooperate in order to inspire coalescence around an agreed-upon set of goals. Control is a museum-worthy concept in the age of innovation. Even money has become an digital construct both conveyed and represented by electronic means. Ownership? Control? Of who, or what? These platforms and channels are shared because it is more efficient and profitable to do so.

Managers must become leaders because many of the most valuable assets are intangible rather than weighty and physical. Deriving the greatest impact from them requires not additional mass nor enhanced energy, but the ability to build coalitions so that superior results can be achieved by spreading cost and risk in order to minimize the threat they represent in a world which no longer has much tolerance for failure. Leaders can manage and managers can lead, but to do so effectively requires that individuals and the organizations of which they are a part  understand the difference. JL



Greg Satell comments in Digital Tonto:

Successful managers today are no longer supervisors, nor are they deciders, but formulators of strategic intent and their function is not one of the enterprise’s operation—most of which is rapidly being automated—but its purpose.
Around the turn 20th century, Frederick Winslow Taylor introduced the practice of scientific management.  He studied various tasks with a stopwatch, devised more efficient ways of getting them done and developed standards to improve productivity.
In Taylor’s world, there was truly a “right way” and a “wrong way” of doing things and managers were there to supervise.  They ensured that rules were being followed, standards for work were being met and discipline was being enforced.
The rise of the knowledge economy brought a different kind of management.  Instead of supervising, managers had to excel at choosing the right kind of work to be done and motivating employees.  Now, as the information economy takes hold and creates pervasive change, managers will have to evolve once again.  Those who don’t adapt, will not survive.

The Age Of Organization

Generally, I’m not a fan of fast food.  It’s not that I’m a health nut, but I try to avoid greasy, unhealthy food when I can.  Nevertheless, when I first arrived arrived in Poland in 1997, I found myself going to places like McDonald’s, Taco Bell and KFC a lot.  It wasn’t that I didn’t try local restaurants, but the fast food chains were often a better choice.
Poland at the time was an emerging economy, just recovering from 50 years of communist rule and restaurants were relatively new and unregulated.  While I discovered some interesting new dishes, I also got food poisoning with alarming frequency.  At the fast food joints, I knew that there were consistent standards for taste and quality.
That, in essence, was what the Industrial Revolution was about.  It didn’t inspire genius, but it protected you from idiots and delivered a decent product at a low price.  I didn’t expect the cook at the local McDonalds to be a talented chef, but I could be confident that he was following procedures that were implemented worldwide.
That took an enormous amount of organization and corporations became quite good at it. Management techniques like Six Sigma and Total Quality Management ensured that variation would be kept to a minimum.  Every aspect of the process was supervised and tightly controlled.

The Rise of The Wise

President George W. Bush considered himself a “decider.”  He did not profess to know every detail of every aspect in his organization, but believed that his instincts, judgment and sense of the overall picture made him a capable leader.  In the knowledge economy, a good manager was a good strategist.
A successful entrepreneur I know works in much the same way.  He doesn’t pride himself on his skills—in fact he doesn’t even use Excel or PowerPoint—but on his ability to see opportunities and put the right resources in the right place.  Each good decision he makes will be leveraged across the efficient organization he built for the industrial age.
Of course, the opposite is also true.  While being right creates prosperity, being wrong can bring ruin.  The same qualities of efficiency and standardization go in reverse, multiplying mistakes made at the top all the way down the line.  That’s why managers of the past prided themselves on being risk takers.  Every decision had a consequence.
Yet in today’s semantic economy, those risks have become untenable.  We should no longer focus on being right, but on being less wrong over time.  The organization itself must learn to adapt.

Rewiring The Software In Our Organizations

In The Second Machine Age, Erik Brynjolfsson and Andrew McAfee describe how electricity required organizations to change.  In the steam age, factories needed to be organized so that the machines were near the power source and work was centered around them.  The first electric factories were set up the same way.
Yet it was only when managers realized that was no longer necessary that the true productive potential of the new technology was unleashed.  By capitalizing on electricity’s ability to distribute power, factories could be designed around workflow, doubling or even tripling productivity.  Unfortunately, this took 20 or 30 years to realize.
Today, we are several decades into a similar technological transformation.  Computers, original designed to do rote tasks, are now doing cognitive ones.  Yet, our enterprises are still set up for the earlier era of standardization and efficiency.  While our technology has evolved, our organizations still look very much the same.
Clearly, if we are to compete for the future, we need to change the software of our enterprises.  In a recent post, Aaron Dignan of Undercurrent describes three new approaches, including holacracy, agile squads and self organizing.  Surely there will be more to come.  It’s still early days.

The Mission Based Enterprise

In the old era of organizations, managers marshalled resources.  They needed to ensure that the enterprise had the right assets and the right skills in order to accomplish specific objectives.  Acquiring resources required significant investments, so managers needed to make good decisions and manage risk.
Yet open technology has made that approach a thing of the past.  Today, it doesn’t really matter what resources you own, but what you can access.  And today, everything from supercomputing to finance, marketing to production can be found in the cloud, very cheaply and on-demand.
We’re also entering a new era of talent, where you need to not only hire capable employees, but also leverage strategic partners, academic institutions and contract workers.  In effect, every enterprise needs to become an open platform for collaboration.
So successful managers today are no longer supervisors, nor are they deciders, but formulators of strategic intent and their function is not one of the enterprise’s operation—most of which is rapidly being automated—but its purpose.  It’s is no longer enough to organize work, we must facilitate belief.