The alternative to autonomous institutions that function and perform is not freedom. It is totalitarian tyranny.
If the institutions of our pluralist society of institutions do not perform in responsible autonomy, we will not have individualism and a society in which there is a chance for people to fulfill themselves. We will, instead, impose on ourselves complete regimentation in which no one will be allowed autonomy. We will have Stalinism rather than participatory democracy, let alone the joyful spontaneity of doing one’s own thing. Tyranny is the only alternative to strong, performing autonomous institutions.
Tyranny substitutes one absolute boss for the pluralism of competing institutions. It substitutes terror for responsibility. It does indeed do away with the institutions, but only by submerging all of them in the one all-embracing bureaucracy of the apparat. It does produce goods and services, though only fitfully, wastefully, at a low level, and at an enormous cost in suffering, humiliation, and frustration. To make our institutions perform responsibly, autonomously, and on a high level of achievement is thus the only safeguard of freedom and dignity in the pluralist society of institutions. Performing, responsible management is the alternative to tyranny and our only protection against it.
In the Next Society’s corporation, top management will be the company. Everything else can be outsourced.
Increasingly, in the Next Society’s corporation, top management will, in fact, be the company. This top management’s responsibilities will cover the entire organization’s direction, planning, strategy, values, and principles; its structure and relationships between its various members; its alliances, partnerships, and joint ventures; and its research, design, and innovation.
Establishing a new corporate persona calls for a change in the corporation’s values. And that may well be the most important task for top management. In the half century after the Second World War, the business corporation has brilliantly proven itself as an economic organization, as a creator of wealth and jobs. In the Next Society, the biggest challenge for the large company and especially for the multinational may be its social legitimacy—its values, its mission, its vision. Everything else can be outsourced.
Knowledge work requires both autonomy and accountability.
Demanding of knowledge workers that they define their own task and its results is necessary because knowledge workers must be autonomous. As knowledge varies among different people, even in the same field, each knowledge worker carries his or her own unique set of knowledge. With this specialized, unique knowledge, each worker should know more about his or her specific area than anyone else in the organization. Indeed, knowledge workers must know more about their areas than anyone else; they are paid to be knowledgeable in their fields. What this means is that once each knowledge worker has defined his or her own task and once the work has been appropriately restructured, each worker should be expected to work out his or her own course and to take responsibility for it. Knowledge workers should be asked to think through their own work plans and then to submit them. What am I going to focus on? What results can be expected for which I should be held accountable? By what deadline? Knowledge work requires both autonomy and accountability.
Management’s duty is to preserve the assets of the institution in its care.
Knowledge workers own the means of production. It is the knowledge between their ears. And it is a totally portable and enormous capital asset. Because knowledge workers own their means of production, they are mobile. Manual workers need the job much more than the job needs them. It may still not be true for all knowledge workers that the organization needs them more than they need the organization. But for most of them it is a symbiotic relationship in which the two need each other in equal measure.
Management’s duty is to preserve the assets of the institution in its care. What does this mean when the knowledge of the individual knowledge worker becomes an asset and, in more and more cases, the main asset of an institution? What does this mean for personnel policy? What is needed to attract and to hold the highest-producing knowledge workers? What is needed to increase their productivity and to convert their increased productivity into performance capacity for the organization?
If we did not do this already, would we go into it now?
The question has to be asked—and asked seriously—“If we did not do this already, would we, knowing what we know, go into it now?” If the answer is no, the reaction must be “What do we do now?”
In three cases the right action is always outright abandonment. Abandonment is the right action if a product, service, market, or process “still has a few years of life.” It is these dying products, services, or processes that always demand the greatest care and the greatest efforts. They tie down the most productive and ablest people. But equally, a product, service, market, or process should be abandoned if the only argument for keeping it is “It is fully written off.” For management purposes there are no “cost-less assets.” There are only “sunk costs.” The third case where abandonment is the right policy—and the most important one—is the one where, for the sake of maintaining the old or declining product, service, market, or process the new and growing product, service, or process is being stunted or neglected.
There is nothing as difficult and as expensive, but also nothing as futile, as trying to keep a corpse from stinking.
Effective executives know that they have to get many things done effectively. Therefore, they concentrate. And the first rule for the concentration of executive efforts is to slough off the past that has ceased to be productive. The first-class resources, especially those scarce resources of human strength, are immediately pulled out and put to work on the opportunities of tomorrow. If leaders are unable to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow.
Without systematic and purposeful abandonment, an organization will be overtaken by events. It will squander its best resources on things it should never have been doing or should no longer do. As a result, it will lack the resources, especially capable people, needed to exploit the opportunities that arise. Far too few businesses are willing to slough off yesterday, and as a result, far too few have resources available for tomorrow.
All organizations need a discipline that makes them face up to reality.
All organizations need to know that virtually no program or activity will perform effectively for a long time without modification and redesign. Eventually every activity becomes obsolete. Among organizations that ignore this fact, the worst offender is government. Indeed, the inability to stop doing anything is the central disease of government and a major reason why government today is sick. Hospitals and universities are only a little better than government in getting rid of yesterday.
Businessmen are just as sentimental about yesterday as bureaucrats. They are just as likely to respond to the failure of a product or program by doubling the efforts invested in it. But they are, fortunately, unable to indulge freely in their predilections. They stand under an objective discipline, the discipline of the market. They have an objective outside measurement, profitability. And so they are forced to slough off the unsuccessful and unproductive sooner or later. In other organizations—government, hospitals, the military, and so on—economics is only a restraint.
All organizations must be capable of change. We need concepts and measurements that give to other kinds of organizations what the market test and profitability yardstick give to business. Those tests and yardsticks will be quite different.
Whoever makes two blades of grass grow where only one grew before deserves better of mankind than any speculative philosopher or metaphysical system builder.
Management will remain a basic and dominant institution perhaps as long as Western civilization itself survives. For management is not only grounded in the nature of the modern industrial system and in the needs of modern business enterprise, to which an industrial system must entrust its productive resources, both human and material. Management also expresses the basic beliefs of modern Western society. It expresses the belief in the possibility of controlling man’s livelihood through the systematic organization of economic resources. It expresses the belief that economic change can be made into the most powerful engine for human betterment and social justice—that, as Jonathan Swift first overstated it three hundred years ago, whoever makes two blades of grass grow where only one grew before deserves better of mankind than any speculative philosopher or metaphysical system builder.
Management—which is the organ of society specifically charged with making resources productive, that is, with the responsibility for organized economic advance—therefore reflects the basic spirit of the modern age. It is, in fact, indispensable, and this explains why, once begotten, it grew so fast and with so little opposition.
