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August 24, 2010

Is Management Obsolete?

Filed under: Growth Management — Tags: , , — Mike Van Horn @ 4:01 pm

In “The End of Management” (, 8.21.10) Alan Murray says that “managed corporations” are incapable of thriving in today’s accelerating change. He contends, “Traditional bureaucratic structures will have to be replaced with something more like ad-hoc teams of peers, who come together to tackle individual projects, and then disband.”

I reacted strongly to this, since I’m always advising small, growing companies that they need more management, not less.

My response: Okay, so this “ad hoc band of peers” comes together, builds and commercializes a whizbang disruptive new gadget like the iPad, puts it on the market, and I buy one. Wow, it’s great!

Then they disband. But wait. Who provides warranty service if they’ve disbanded? I sure hope there’s some big corporation behind them, interested in self-perpetuation and continuity enough to provide good customer service.

No venture capitalist I’ve ever met would back such a venture. A VC’s first question is, “How will you perpetuate this long enough for me to get my money out?” And nobody will cash out the VC unless they in turn are convinced that the endeavor they’re investing in has longevity and strong management.

A corporation’s biggest stakeholders are its customers, and customers want longevity and continuity. I’ve been buying Dial Soap for decades, and I hope some bureaucratic corporation will keep it available for the rest of my life, with as little innovation as possible.

So Mr. Murray, I think it’s way too soon to talk about corporate management becoming obsolete. For every bumbling bureaucratic corporate dinosaur you name, I can name a company like Google or Facebook or Apple where top management strives to find the balance between creative destruction, disruptive innovation, and profit-generating continuity. The only reason Google can afford to give its engineers this 20% time for new exploration is that its “regular business” is profitable enough to support this workstyle–that is all overhead.

If anything, managing a company like Apple or Google is tougher than managing a staid bureaucratic corporation. But both types have strong corporate management styles and systems and cultures. They’re just different.

I contend that your “ad-hoc teams of peers, who come together to tackle individual projects, and then disband” can only be effective within a larger milieu where strong policies and systems for continuity are paramount. And that requires dang good management.

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