Why Does Our Management System Need To Change?

_NAT4928-EditHumankind has witnessed many positive changes over the last 100 years. People are living longer, essential utilities are standard in most homes, literacy has increased from 20 percent to 88 percent, and technology has made communication around the world faster and easier. In addition, minority populations are gaining more traction in the quest for equal rights (albeit not as quickly as they may like) and communities are experiencing fewer instances of violence and war than ever before (“The Better Angels of Our Nature: Why Violence Has Declined” by Steven Pinker). There is one element of modern life, however, that hasn’t changed much: the way that we manage, organize and motivate people in the workplace.


The concept of management as we know it today was introduced in 1911 by American inventor and mechanical engineer Frederick Winslow Taylor in his book, “The Principles of Scientific Management.” In summary, Taylor’s concept separated employees into two categories—thinkers and workers—within the workplace. In the factory environments that were common at the time, thinkers used scientific methods to manage workers on production lines.


Taylor’s concept of scientific management is based on four main principles: 1) Assigning work based on scientific study of the tasks to be carried out, 2) Selecting and training individuals to perform specific tasks, 3) Providing individuals with clear instructions so they know exactly what to do and then supervising them while they do it, and 4) Separating managers’ and workers’ job functions so that managers are able to “scientifically” plan what needs to be done and workers can perform the actions assigned. While these principles have changed somewhat since Taylor’s time, the basic idea of separating thinkers from workers has remained the same.


Complicated Versus Complex Worlds


Taylor’s notion of scientific management began as a noble idea that ultimately contributed to the success of the second industrial revolution. In today’s world, however, this system has become a problematic structure with the potential to negatively impact the success and survival of modern businesses.


Why has “Taylorism” become such a problem? The reason can be explained scientifically in two words: “complicated” and “complex.” In science, these words refer to types of systems and the difference between their elements is defined as follows:

  • The behavior and reactions of complicated elements in a system are predictable. A smartphone, for example, is a complicated element: Tap its screen and it behaves predictably.
  • The behavior and reactions of complex elements in a system are unexpected. People are complex elements: If you ask a group of people a question, their responses are unpredictable.


Using these definitions, it’s easy to comprehend that the economic market was “complicated” a century ago. Back then, the market had hard geographical boundaries, few industry competitors and even fewer surprises, making it feasible to foresee what might happen within an industry. That consistency made it possible for business owners to focus their attention on what was happening inside their factories and devise ways to optimize production. Taylor’s management system was created to help simplify this complicated world and his method was a huge success due to the world’s predictability.


In contrast, the current economic market is “complex”: It is global, has no geographic boundaries, and is packed with worldwide competitors that have the potential to create new and unexpected realities for other businesses within their sphere. In other words, the pace of innovation has increased, and companies can no longer complacently and exclusively focus on the technologies that led to the success they have today. Through innovation, giants can be toppled by smaller players (Think Kodak, Nokia, and Research in Motion).


As a result, humans are now living in a volatile, uncertain, complex and ambiguous (VUCA) world. The processes that were created for the previous, complicated world no longer fit the current environment. To thrive, humans must devise different methods for dealing with the complexities of a VUCA world.


Surviving in a Complex World


In the years following the second industrial revolution, complexities in the economic market grew exponentially with the introduction of new occupations based on data manipulation and collaboration (which created new business values), virtual commodities (from data to currency), the development of virtual infrastructures to support such commodities, and the expansion of labor resources to include robotics and artificial intelligence. With the addition of new, Internet-educated generations into the workforce (generations that recognize the value that organizations based on decentralized, distributed and autonomous principles can provide), complexity is poised to gain further momentum.


As mentioned earlier, in the complicated world that inspired Taylorism, factory employees were divided into two groups: workers and thinkers. In today’s complex world, however, that division no longer exists. Now, workers (that is, anyone interacting within or around a company’s environment including its customers, stockholders, and suppliers; and even city and state officials, etc.) must be “thinkers” as well, often working in silos created by their areas of specialization, further constraining the company’s ability to be successful.


Suffice it to say, companies trying to run twenty-first-century businesses using twentieth-century workplace practices are cracking under the pressure (2012 Global Workforce Study, Towers Watson, July 2012)[1]. For evidence that management systems based on Taylor’s century-old theory are failing, look no further than the Internet for articles highlighting the decline of employee engagement (“Employee Engagement is Declining Worldwide,” Forbes, June 1, 2017)[2], the rise of the freelance workforce (“Are We Ready For A Workforce That Is 50% Freelance?,” Forbes, October 17, 2017)[3], the number of companies disappearing from the Fortune 500 list (Fortune 500 Firms 1955 v. 2017: Only 60 Remain, Thanks to the Creative Destruction that Fuels Economic Prosperity,” American Enterprise Institute, October 17, 2017)[4], and the negative exponential growth in the lifespan of companies (“Why Half of the S&P 500 Companies Will Be Replaced in the Next Decade,” Inc., March 23, 2016)[5]. For further insights, author Richard Ronald Nason’s book, “It’s Not Complicated: The Art and Science of Complexity for Business Success”[6] details the impacts of conducting business in a complex world as well.


To live and operate in a complex world, it’s only logical that humans use complex systems (such as the human brain, the economic market, and even the universe) principles to run business and organization that need to operate in a complex world. To survive and thrive into the next century and beyond, companies need to modify their organizational structures based on these concepts. Only then will businesses be able to do the things they need to do—motivate people, increase performance, and spark innovation—to withstand the demands of a complex world.  The ideas of a brilliant founder can build a highly successful company, but their ideas alone cannot sustain it. To stand the test of time in a VUCA marketplace, a company must leverage all of its intellectual capital. Decades of research show that the level of employee engagement and proactivity required to support this level of innovation is achieved through employee autonomy[7][8].

[1]  https://www.towerswatson.com/Insights/IC-Types/Survey-Research-Results/2012/07/2012-Towers-Watson-Global-Workforce-Study

[2] https://www.forbes.com/sites/causeintegration/2017/06/01/employee-engagement-is-declining-worldwide/#bb7477634e2f

[3] https://www.forbes.com/sites/elainepofeldt/2017/10/17/are-we-ready-for-a-workforce-that-is-50-freelance/#7d211d5b3f82

[4] http://www.aei.org/publication/fortune-500-firms-1955-v-2017-only-12-remain-thanks-to-the-creative-destruction-that-fuels-economic-prosperity/

[5] https://www.inc.com/ilan-mochari/innosight-sp-500-new-companies.html

[6] https://www.amazon.com/s/ref=dp_byline_sr_ebooks_1?ie=UTF8&text=Richard++Ronald+Nason&search-alias=digital-text&field-author=Richard++Ronald+Nason&sort=relevancerank

[7] Schmitt, A., Den Hartog, D. N., & Belschak, F. D. (2016). Transformational leadership and proactive work behaviour: A moderated mediation model including work engagement and job strain. Journal Of Occupational And Organizational Psychology, 89(3), 588-610. doi:10.1111/joop.12143

[8] Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal Of Applied Psychology, 87(2), 268-279. doi:10.1037/0021-9010.87.2.268


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