The New Ecology of Leadership: Revisiting the Foundations of Management

By Hurst, David | Ivey Business Journal Online, May/June 2012 | Go to article overview

The New Ecology of Leadership: Revisiting the Foundations of Management


Hurst, David, Ivey Business Journal Online


This management thinker and author writes that "the central challenge in the Western World now is not to make existing organizations more efficient and to allocate resources. That struggle has moved to the East. The challenge here is to reinvent our economies, to innovate and create wealth." Readers will learn which tactics and tools they can use to achieve these extremely important goals.

Many of the comfortable truths about management thought and practice are based on certain, specific assumptions about human nature. In The New Ecology of Leadership: Mastering Business in a Chaotic World, I suggest that we revisit these assumptions and advance a new mental model that effectively turns the world of management thought and practice as we know it on its head. This article outlines the mental model developed in the book and looks at its implications for reflective practitioners. Before doing this, however, a little historical context is required.

THE PROFESSIONALIZATION OF MANAGEMENT

Ever since the attempt to professionalize management in the late 1950s, management theorists have assumed that if humans aren't rational in a logical way, then they ought to be. Economists, who played such a prominent role in the development of the management field, described this version of rationality best.[1] People are seen as "resourceful, evaluative, and maximizing" to use a more recent formulation.[2]

As far as the management scientists were concerned, emotion was the enemy of reason and their vision of the ideal manager's mind resembled that of the hyper-logical Mr. Spock of Star Trek. The fact that managers' minds seemed to resemble that of Homer Simpson, simply added grist to the academics' mills![3]

Initially, this view of managers as rational agents served the business schools and their clients well. America was the only significant industrial power to come out of World War II with its infrastructure intact; its corporations were preoccupied with responding to a baby boom and worldwide growth. This applied to Canada too, but on a much smaller scale. The war had demonstrated the benefits of mass manufacturing and the strategy was more of the same, with organizations organized in functions and forming elaborate divisional hierarchies to manage the growth. The ideal model was General Motors and the iconic managers were the great rationalizers, like GM's Alfred P. Sloan and General Robert E. Woods of Sears, Roebuck.

The business schools mimicked these functional structures, forming departments of marketing, production, finance and business policy that still exist in most of them today. Because of the inability to run controlled experiments, research took the form of identifying context-free "principles" abstracted from the past and usually from the examination of apparently high-performing organizations. Teaching took the form of delivering the principles embedded in conceptual frameworks so that students could "apply" them once they got into the workplace.

TROUBLE EMERGES IN THE 1970S

Things began to go awry in the seventies. Growth faded as Germany, Japan, and other industrialized economies recreated their infrastructures, usually with much more advanced technology. The oil crisis undermined the foundation of cheap energy on which the American economy had been built. A fight for control of corporate America broke out. Critics charged that "fat cat" business managers had become complacent and were no longer acting in the best interests of the most important suppliers of resources - the shareholders. A seminal article appeared in Harvard Business Review in 1980, entitled "Managing Our Way to Economic Decline".[4]

We now know that the shareholders and the financial industry won that battle for corporate control. In the business schools, the finance function emerged as top dog and the economists began to apply the teachings of their discipline to the firm via organizational economics (agency theory and transaction cost economics). …

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