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Out of Our Minds
Wednesday, January 18, 2006 3:01 AM
Six Management Fallacies for the Future
David Batstone on Business

I have written extensively about how the organization is undergoing a radical transformation that challenges traditional command-and-control structures. The network enterprise does not follow the same rules as the classic corporate model. In order to adapt to this Next Reality, the leaders of an organization must dispense with six fallacies that once upon time made perfect sense.

Fallacy #1: Management must focus on the internal operations of the enterprise.

Next Reality : Every dimension of the network enterprise must be client-facing. Even senior executives can ill afford to manage the firm's resources apart from their impact on the end customer. Consider it managing from the outside in. If a process limits the organization's capacity to take advantage of new market opportunities or suppresses innovation, it must be changed.

Fallacy #2: Geography defines the ecology of the enterprise

Next Reality: Last week I was in Europe advising a client, an enterprise in the financial services sector that operates independent business units in countries around the globe. Until recently, my client did not take advantage of its network opportunities. Each national business unit functioned as a silo, and as a result each one carried out a needless replication of tasks. The global company also failed to pick up on successful experiments that were taking place in parallel universes, that is, initiated by sister business units. My client is now developing creative ways to take advantage of its network, leveraging resources and brand across business units. The company is now thinking horizontally instead of vertically.

Fallacy #3: Technology drives business operations [Ed. note: Bold subtitle]\n\nNext Reality: Technology does not drive organizational change; it is only a tool for change. I have witnessed far too many enterprises implode once they became seduced by a new software system. It is much more critical for an enterprise to build around its relationship capital. People still matter most. Managers would be wise to map out the flow of knowledge and relationships that truly create value in their organization, and then find the right technology to enhance that process. Knowledge management applied in a vacuum is a waste of resources.\n \nFallacy #4: Hire for specialized knowledge \n\nNext Reality: Generalists are a dime a dozen. Narrow specialists, on the other hand, risk isolation and inaccessibility. Really valuable employees provide specialized knowledge that adds to the core competency of the enterprise. Strong managers aim to create a culture where unique knowledge will be produced and is made accessible to the network. It is easy to underestimate the importance of trust. Without trust, access remains stunted.\n\nFallacy #5: Performance management is most effective when it rewards individual effort\n\nNext Reality: The individual was the primary productive unit of the classic corporate enterprise. In the network enterprise, the team moves to the fore. Employee evaluation and compensation therefore must incorporate team performance measures. Individual employees should expect to shift between organizational structures and adapt to new functions as needed. Job descriptions are at best provisional.\n\nFallacy #6 Employees who demonstrate exceptional competency should be groomed as future leaders. \n\nNext Reality: The move from command-and-control structures to a network enterprise does not imply the decline of leadership. A new style of leadership emerges. As strange as it sounds, the manager ceases to be the expert. If you think about it, we should expect knowledge workers within their competency area to know more than their boss. The right metaphor for leadership is the conductor of an orchestra. Each individual musician knows her instrument better than the conductor, but it takes a special kind of talent to arrange and harmonize the full range of instruments. Here's another sure sign of a network leader: A willingness and capacity to be in constant learning mode. \n\nIn summary, the network enterprise feeds off effective collaboration across fixed boundaries. A new generation of leaders will excel in taking advantage of the peculiarity of their organizations to energize and support valuable networks.\n

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