The Cult Of The CEO Gene

I am not a fan of most management books. Perhaps I overdid it in the '80s and '90s, with Drucker, Porter, Davenport, Handy, Senge, and company. Or maybe I just lost my belief in the management game: the centralization of decision making in a cadre of professionally-trained business managers, being churned out by the business schools.

Gary Hamel, one of the most well-known management gurus (#7 according to Accenture), has broken ranks with the core premises of management theory in his newest book, according to William Holstein, writing in the New York Times today. His premise is that American companies need to respond to new challenges in the global economy by rethinking how they are organized, in essence, allowing -- or encouraging -- power to migrate from the center to the edge. Sound familiar? Hamel holds up Wholefoods, W.L. Gore (the folks behind Gore-Tex), and Google as examples of a new take on management, increasingly based on self-organization.

The result? A resounding thud in managementland, whose denizens are not too eager to accept this heresy:

[from The Future of Management - Gary Hamel by William Holstein]

[...]

The implication of all this is that we don’t need as many managers in organizations. Yes, we still need some managers and some centralized processes to prevent an organization from spinning wildly in all directions. But the best organizations will be those whose employees have the power to innovate, not just follow orders from on high, Mr. Hamel says. In such an environment, the notion of a whole class of managers evaluating and re-evaluating each action of those below them in a vertical hierarchy becomes nonsensical.

[...]

If American companies could achieve the right balance between grass-roots initiative and centralized control, between the pursuit of noble missions and quarterly profits, the results could be a management system that would be very hard for competitors to copy. Chinese companies, for example, would find it much harder, if not impossible, to adopt management models that challenge their own brand of top-down management, a cross between Confucius and Mao.

As insightful as Mr. Hamel’s book is, it’s surprising that it has attracted so little attention since being published in October. One part of the explanation is that it represents an assault on business schools, which obviously specialize in training managers who go on to enjoy rich salaries. Mr. Hamel has the audacity to point out that some of the best, most innovative ideas in business these days are not coming from business schools, but from people who never went to B-school. Every hierarchy, it seems, scorns fresh thinking.

Peter Drucker once asserted that management is a necessary evil, and the organization should have no more of it than absolutely necessary. But in our management-besotted time, when CEOs are being granted astronomical packages, the cult of the CEO gene has grown with the number of commas in their paychecks.

I don't believe in this collection of folklore. And yes, while I do believe that organizational DNA is partly inherited from CEOs -- Steve Jobs and Bill Gates leap to mind -- the successful companies of the future will be increasingly egalitarian, with more control shifting into the hands of individuals, starting with daily decisions about everyday work at a project or transactional level.

At the same time, we are living in strangely neo-conservative times. The cult of the CEO is going to take a long time to degrade, like plutonium released by weapons testing. We will have to wait for two things to happen: the toxic sludge to slowly be covered by silt, and a new belief system to take over within organizations.

I believe that our tools will play a big role in this, as we come to operate around a new mindset about networks, relationships, influence, and distributed action. Change will come from what the management-obsessed call the bottom, and which we, the edglings, think of as the edge.

Comments

[Mike Grishaver]

Stowe, very interesting post.

maybe I just lost my belief in the management game: the centralization of decision making in a cadre of professionally-trained business managers, being churned out by the business schools

Speaking of strangely neo-conservative times and centralized (and secretive) decision-making: let's note that George W Bush is the first MBA President. His highly centralized decision-making hasn't turned out that well. He even has a COO (Cheney) who makes most of the decisions, running the government from his centralized "4th Branch" and immune from any oversight. The results are obvious and disastrous.

Also, this sentence really popped out at me:

a whole class of managers evaluating and re-evaluating each action of those below them in a vertical hierarchy

I've seen this firsthand. As management ranks swell with layer upon layer "to better support the great teams we already have..." innovation grinds to a halt and meeting time grows. People spend time and energy on meetings and presentations to please management layers. People go home happy. Managers make big bucks. No new products launch.

At least here in tech-land we still have the ability to leave and start something fresh, innovating from the edge.

[kareem]

Stowe, you should take a look at www.WorldBlu.com/blog. They help companies build democratic workplaces (i.e. become transparent, decentralized, accountable, etc). They've been doing it for several years now, and last March released the Most Democratic Workplaces list, which was based on a survey that companies took: http://www.worldblu.com/scorecard/list2007.php.

(disclosure: I advise WorldBlu)

Cheers,

Kareem

[Stowe Boyd]

Mike - I have the same hopes you do.

Kareem - I will take a look.

[Jeane Goforth]

A disparate group of nonconformists is trying to copy Venezuela's El Sistema music program here in Birmingham. We are turned off by the formulas of the non-profit industry--the waste of precious resources on creating hierarchy and chasing money. We are green, naive, have no clue--but we are passionate about doing this. We've bought books on management, non-profits, and fund raising, then get a few chapters in and know that's not how we want to do it. We like Margaret Wheatley's ideas, but don't know how to implement them. Any suggestions on where to look for guidance?