There were so far three stages of management:
— Management 1.0, which was all about hierarchies and the chain of command that comes along with them. The few people on the top are in control and as we gradually descend on the company ladder there is less power and less control. To motivate the top commanders there were bonuses, which served as an incentive to seek for company’s well being. The side effect was that bonuses became more important than strategies and decisions and this led also to financial implosion.
— Management 2.0, which was not really a different approach, but a series of add-ons plugged in to Management 1.0, such as Balanced Scorecard, Six Sigma, Theory of Constraints and Total Quality Management. Some of them worked, some of them didn’t. To increase the confusion, many of these add-ons are contradicting each other, each one pretending to be the real solution.
— Management 3.0, which is a real step forward, introducing the theory of complexity as a response to the Age of Complexity, as Stephen Hawkins called the 21st century. Leadership is introduced along with management. And organizations are perceived as networks, despite their outer look as hierarchies.
Taking about leadership, the author differentiates among three type of approaches:
— Leadership princess, the ones that claim that “leadership is different from management”, that is taking place at a “higher” level. They see leadership being about inspiration, while management is about execution. But by definition leaders have no power of authority over others. Why would a shareholder give money to someone that has no authority? And how about other people in the organization that are not managers, but could be true leaders?
— Leadership priests, the ones that claim that “management is not needed”. They refer to social media, to organizations such as Wikipedia, Linux and others that are functioning based on a shared purpose, suggesting that self-organized teams do not need management, only leaders with visions. But business have assets. And shareholders expect that those assets are not managed properly. So it is not the teams that need management, but the shareholders.
— Leadership pragmatists, are the ones introduced by this book. Managers are needed to take care of the business on behalf of the owners. And managers need to have leadership skills. But leadership can arise also from other layers of the organization, from non-managers. These informal leader must understand that the self-organizing teams must accept some directions from the owners, which passes through the managers.