12 Managing people and organizations in changing contexts as adaptive systems,in which they had to take into account what hap pened outside the organization,e.g.changes in market structure and customer preferences,and be able to respond quickly and flexibly to these changes.Such a mindset or metaphor is often described as the organic view,reflecting the biological origins of open systems thinking and the relationship between living systems and their environments. This organic metaphor has come to dominate much of managerial thinking and practice,especially in the economies of the developed countries,in which uncertainty and,often fundamental,change are the key characteristics.These changes have included the effects of dis ruptive technologies such as the Internet,which have effectively changed the rules of doing business in many industries.They have also included the effects on global competition from rapidly growing coun- tries such as China and India during the first decade of the twenty-first century. Explaining changing mindsets The key questions There are two key questions concerning the relationship between ideas and action that make it important for us to have some answers so that we can become more effective managers.The first question is: Why does a particular mindset,such as the mechanistic and organic one discussed previously,come to dominate managers'thinking at par- ticular points in time?Though you may think that much of what you read in management texts is new,most of the 'new'ideas have their origins in much earlier theories,and those of us who have been around for a long time often get a sense of 'old wine (or ven old snake oil)in new bottles.The second question arises from the first one and concerns the idea of progress in our thinking and practice Much of what we read in management textbooks implies progress involving a change from one mindset or model to another.more ideal. mindset or model.This is particularly evident in the example of the mechanistic and organic mindsets,where we have come to believe tha organizations (and their managers)that are 'fast,flexible and friend- ly'are inevitably superior to those of more traditionally mechanistic styles.Having an understanding of these questions is useful not mere ly to academics but also to practitioners because,as the famous British economist John Maynard Keynes once pointed out,everyone who claims to be practical is'a slave of some usually defunct theory'.More
as adaptive systems, in which they had to take into account what happened outside the organization, e.g. changes in market structure and customer preferences, and be able to respond quickly and flexibly to these changes. Such a mindset or metaphor is often described as the organic view, reflecting the biological origins of open systems thinking and the relationship between living systems and their environments. This organic metaphor has come to dominate much of managerial thinking and practice, especially in the economies of the developed countries, in which uncertainty and, often fundamental, change are the key characteristics. These changes have included the effects of disruptive technologies such as the Internet, which have effectively changed the rules of doing business in many industries. They have also included the effects on global competition from rapidly growing countries such as China and India during the first decade of the twenty-first century. Explaining changing mindsets The key questions There are two key questions concerning the relationship between ideas and action that make it important for us to have some answers so that we can become more effective managers. The first question is: Why does a particular mindset, such as the mechanistic and organic one discussed previously, come to dominate managers’ thinking at particular points in time? Though you may think that much of what you read in management texts is new, most of the ‘new’ ideas have their origins in much earlier theories, and those of us who have been around for a long time often get a sense of ‘old wine (or even old snake oil) in new bottles’. The second question arises from the first one and concerns the idea of progress in our thinking and practice. Much of what we read in management textbooks implies progress, involving a change from one mindset or model to another, more ideal, mindset or model. This is particularly evident in the example of the mechanistic and organic mindsets, where we have come to believe that organizations (and their managers) that are ‘fast, flexible and friendly’ are inevitably superior to those of more traditionally mechanistic styles. Having an understanding of these questions is useful not merely to academics but also to practitioners because, as the famous British economist John Maynard Keynes once pointed out, everyone who claims to be practical is ‘a slave of some usually defunct theory’. More 12 Managing people and organizations in changing contexts
Chapter I An introduction to managing people in changing contexts 3 recently,organizations such as the UK Chartered Institute of Personnel and Development(CIPD)have begun to examine the rela- tionship between different kinds of knowledge,how we learn and what we do.Their research report on this issue (CIPD,2002)has pointed out that whatever theory of learning one adheres to,they all agree that 'theoretical knowledge',often in the form of mindsets,has an intimate relationship with practice.So,to provide an answer to these two ques- tions on changing mindsets,we can briefly examine two sources of explanation.These relate to changing models of national economic success and to sources of institutional pressure to adopt new ideas and practice,namely so-called'guru'theory. National economic success and business As has already been pointed out,for most of the last century and cer- tainly since the end of the First World War,models of business and management have been drawn from the success of the American econ- omy and from the teachings of the US business gurus and business schools.American models of management,based on mass production financial control and the M-form or multidivisional organizational structure,came to dominate (Goold and Campbell,2002).As we have seen,their principles were exported overseas by the US government as a condition of aid for reconstruction,by US multinational companies, and by the growing number of business schools,academic research and business gurus that began to influence European and Asian economies (Hoopes,2003). Interestingly,however,for a short period during the 1960s and 1970s,managers also began to look to Germany and Sweden for inspi ration,following the economic success of these two countries during the same period.This was best exemplified by the interest shown in newer forms of work reorganization developed in companies such as Volvo and Saab,which adopted autonomous group working and job satisfaction as guiding principles to produce their automobiles.Thes ideas of autonomous group working and more democratic forms of decision-making were offered as a contrast to the more top-down mod- els of low-skilled mass production associated with the US automobil industry. The best example,however,of just how powerful national economic success is in explaining the acceptance of ideas about management is the case of Japan in the 1980s and 1990s.During that period,Japanese
recently, organizations such as the UK Chartered Institute of Personnel and Development (CIPD) have begun to examine the relationship between different kinds of knowledge, how we learn and what we do. Their research report on this issue (CIPD, 2002) has pointed out that whatever theory of learning one adheres to, they all agree that ‘theoretical knowledge’, often in the form of mindsets, has an intimate relationship with practice. So, to provide an answer to these two questions on changing mindsets, we can briefly examine two sources of explanation. These relate to changing models of national economic success and to sources of institutional pressure to adopt new ideas and practice, namely so-called ‘guru’ theory. National economic success and business As has already been pointed out, for most of the last century and certainly since the end of the First World War, models of business and management have been drawn from the success of the American economy and from the teachings of the US business gurus and business schools. American models of management, based on mass production, financial control and the M-form or multidivisional organizational structure, came to dominate (Goold and Campbell, 2002). As we have seen, their principles were exported overseas by the US government as a condition of aid for reconstruction, by US multinational companies, and by the growing number of business schools, academic research and business gurus that began to influence European and Asian economies (Hoopes, 2003). Interestingly, however, for a short period during the 1960s and 1970s, managers also began to look to Germany and Sweden for inspiration, following the economic success of these two countries during the same period. This was best exemplified by the interest shown in newer forms of work reorganization developed in companies such as Volvo and Saab, which adopted autonomous group working and job satisfaction as guiding principles to produce their automobiles. These ideas of autonomous group working and more democratic forms of decision-making were offered as a contrast to the more top-down models of low-skilled mass production associated with the US automobile industry. The best example, however, of just how powerful national economic success is in explaining the acceptance of ideas about management is the case of Japan in the 1980s and 1990s. During that period, Japanese Chapter 1 An introduction to managing people in changing contexts 13
14 Managing people and organizations in changing contexts organizations came to dominate in industries that the USA had once 'owned',including automobiles,consumer electronics and business machines,such as electronic cash registers and photocopiers.They also became major players in other forms of manufacturing,including ship building,heavy engineering,construction and financial services.This was often explained by the quality 'revolution'initiated in Japan by Edward Deming,a US civil servant and academic who was neglected by senior US business leaders but idealized by Japanese senior managers after his lengthy visit following the Second World War.Japan was also noticeable for exporting ideas in labour relations,group working and new forms of organization to the USA and Europe,most noticeably the 'lean production'system,during the 1980s and 1990s. However,during the 1990s,America experienced eight years of unprecedented economic success under the Clinton administration, which,coupled with the relative decline of Japan and Germany during that same period,left the USA as the dominant world economic super- power.By the beginning of the current century the wheel had turned full circle,with the American model of business being the only one to show sustained success,apart from the developing economies such as China and India.as a consequence.there have been many attempts to attribute such exceptional US economic and industrial success to the American way of managing and to American values and institutions (Collins and Porras,1994;Collins,2001),which,in turn,has pressured countries such as Germany and Japan to accept US ideas,especially in respect of the virtues of flexible labour markets and freedom from vernment intervention.During this same period,the influence of Us buines gunsad the mjor Us businescho hbecn exceptional (Mintzberg,2004),with the Master of Business Administration degree(MBA)becoming one of the world's major edu cational brands,especially when gained from prestigious universities in the developed world. Just as in the 1960s,however,there have been limits to US dominance over ideas on effective business and management,especially following the problems of the collapse of major international companies such as Enron,WorldCom and Tyco in the early part of this decade and th 'fall-out'from the Iraq war in 2003.For example,during that year a major study by DDB,a US consulting company,was initiated to exam- ine the brand image of America and American companies among 17 countries.This work showed that America and American business were 'viewed as arrogant and indifferent to others'cultures;exploitative,in the sense that it extracted more than it provided;corrupting,in that it valued materialism above all else:and willing to sacrifice almost
organizations came to dominate in industries that the USA had once ‘owned’, including automobiles, consumer electronics and business machines, such as electronic cash registers and photocopiers. They also became major players in other forms of manufacturing, including shipbuilding, heavy engineering, construction and financial services. This was often explained by the quality ‘revolution’ initiated in Japan by Edward Deming, a US civil servant and academic who was neglected by senior US business leaders but idealized by Japanese senior managers after his lengthy visit following the Second World War. Japan was also noticeable for exporting ideas in labour relations, group working and new forms of organization to the USA and Europe, most noticeably the ‘lean production’ system, during the 1980s and 1990s. However, during the 1990s, America experienced eight years of unprecedented economic success under the Clinton administration, which, coupled with the relative decline of Japan and Germany during that same period, left the USA as the dominant world economic superpower. By the beginning of the current century the wheel had turned full circle, with the American model of business being the only one to show sustained success, apart from the developing economies such as China and India. As a consequence, there have been many attempts to attribute such exceptional US economic and industrial success to the American way of managing and to American values and institutions (Collins and Porras, 1994; Collins, 2001), which, in turn, has pressured countries such as Germany and Japan to accept US ideas, especially in respect of the virtues of flexible labour markets and freedom from government intervention. During this same period, the influence of US business gurus and the major US business schools has also been exceptional (Mintzberg, 2004), with the Master of Business Administration degree (MBA) becoming one of the world’s major educational brands, especially when gained from prestigious universities in the developed world. Just as in the 1960s, however, there have been limits to US dominance over ideas on effective business and management, especially following the problems of the collapse of major international companies such as Enron, WorldCom and Tyco in the early part of this decade and the ‘fall-out’ from the Iraq war in 2003. For example, during that year a major study by DDB, a US consulting company, was initiated to examine the brand image of America and American companies among 17 countries. This work showed that America and American business were ‘viewed as arrogant and indifferent to others’ cultures; exploitative, in the sense that it extracted more than it provided; corrupting, in that it valued materialism above all else; and willing to sacrifice almost 14 Managing people and organizations in changing contexts
Chapter I An introduction to managing people in changing contexts 父 anything to generate profits'(The Economist,28 February 2004,p.76) A further study was conducted one year later,showing little improve. ment in overseas perceptions of America's image.In the field of human resource management(HRM),this problem with the American model has been especially true for some considerable period of time.For example,many Europeans have questioned the appropriateness of much of US employee relations practice,with its focus on individualism and 'short-termism',its morality in laying off employees without warn- ing,and its appropriateness to social market economies that are based on employee participation in business decision-making.As a result, there have been various attempts to develop an alternative European way of managing people (Brewster and Harris,1999).Similarly. Australians have sought to develop their own models of leadership and management,and the rapidly growing Chinese economy and indige nous industry have attempted to embed mainly American ideas into their own culturally and institutionally specific ways of doing things (Zhang and Martin,2003).Consequently,it is sometimes argued tha we may be witnessing a fragmentation of models,with no single set of ideas dominating the management agenda(Clarke and Clegg,1998) We also seem to be witnessing a major debate on the appropriateness of the appeal of the US business and management model to the rest of the world.Some writers have described this debate as being between the forces of global convergence (largely those of American multina tional corporations and consultants)and those of divergence,with its emphasis on the importance of national mindsets (local cultural and institutional ways of seeing and working)(Sparrow and Hiltrop,1997) Dominant ideas and'guru theory' As we have noted,paradigms also appear to change because certain influential theorists or practitioners who make up the so-called manage ment 'guru'industry develop new ways of working and thinking (Collins,2001).Acceptance of these new ideas occurs not only because these ideas are in and of themselves somehow better than previous ones but also because you need willing consumers as well as willing producers in the rapidly growing marketplace for knowledge.And,as many critics of management consultancy have noted,willing consumption is often associated with serving the career interests of particular groups of peo ple in organizations or for non-rational institutional reasons such as the pressures to imitate other organizations because of what is expected by institutional shareholders or government officials,or adopt practices to
anything to generate profits’ (The Economist, 28 February 2004, p. 76). A further study was conducted one year later, showing little improvement in overseas perceptions of America’s image. In the field of human resource management (HRM), this problem with the American model has been especially true for some considerable period of time. For example, many Europeans have questioned the appropriateness of much of US employee relations practice, with its focus on individualism and ‘short-termism’, its morality in laying off employees without warning, and its appropriateness to social market economies that are based on employee participation in business decision-making. As a result, there have been various attempts to develop an alternative European way of managing people (Brewster and Harris, 1999). Similarly, Australians have sought to develop their own models of leadership and management, and the rapidly growing Chinese economy and indigenous industry have attempted to embed mainly American ideas into their own culturally and institutionally specific ways of doing things (Zhang and Martin, 2003). Consequently, it is sometimes argued that we may be witnessing a fragmentation of models, with no single set of ideas dominating the management agenda (Clarke and Clegg, 1998). We also seem to be witnessing a major debate on the appropriateness of the appeal of the US business and management model to the rest of the world. Some writers have described this debate as being between the forces of global convergence (largely those of American multinational corporations and consultants) and those of divergence, with its emphasis on the importance of national mindsets (local cultural and institutional ways of seeing and working) (Sparrow and Hiltrop, 1997). Dominant ideas and ‘guru theory’ As we have noted, paradigms also appear to change because certain influential theorists or practitioners who make up the so-called management ‘guru’ industry develop new ways of working and thinking (Collins, 2001). Acceptance of these new ideas occurs not only because these ideas are in and of themselves somehow better than previous ones, but also because you need willing consumers as well as willing producers in the rapidly growing marketplace for knowledge. And, as many critics of management consultancy have noted, willing consumption is often associated with serving the career interests of particular groups of people in organizations or for non-rational institutional reasons such as the pressures to imitate other organizations because of what is expected by institutional shareholders or government officials, or adopt practices to Chapter 1 An introduction to managing people in changing contexts 15
16 Managing people and organizations in changing contexts conform to social network pressures-the fear of being 'left out (Wheen.2004). James Hoopes(2003)has described the role played by 'guru'aca- demics,consultants and reflective practitioners who have had a major influence on new ideas and examples of so-called best practice in man- agement during the last 100 years.Hoopes emphasized the two,recur rent big ideas in management and showed how interest in these two ideas has ebbed and flowed in popularity over time.These two ideas are top-down control and bottom-upn anagement.Top-down control is best exemplified by Frederick Taylor and his school of scientific manage. ment in the late 1800s and early 1900s,which emphasized the impor- tance and power of a new managerial 'cadre'in convincing or forcin workers to do what these managers wanted them to do.Usually,this involved heavy doses of close and direct supervision,and payment-by- results systems to motivate workers.Taylor and his followers,including Henry Gantt and Frank and Lilian Gilbreth,were important in spread- ing the gospel of scientific management.However,it took Henry Ford, the founder of the Ford Motor Company,to apply Taylor's ideas by linking them to technological control embodied in the moving assem- bly line,before they became practically important.As a result,Fordism became the dominant mode of organizing and managing during the twentieth century.It is usual in academic texts to trace some of the modern management techniques that we shall discuss during this course to Taylor and Ford's ideas of top-down control,including 'busi- ness process re-engineering'and 'lean production'. By contrast,bottom-up management,according to Hoopes,is asso ciated with a more humanistic or,some would argue,realistic belief that such top-down control is ultimately self-defeating.At least two arguments have been used to explain the negative side to top-down management.The first of these.the alienation thesis.became fashion- able in the 1930s,and is still an important argument by many com- mentators on work and employment relations.It concerns the nature and scale of opposition by employees during the twentieth century to having their work 'Taylor-made.Indeed,this kind of thinking was used to explain the rise of trade unionism during that period and much of the industrial unrest that characterized industrial and labour relations in many advanced economies.The second argument,the changing nature of work thesis,has two variants,according to which sec- tor of advanced industrialized economies is being put under the spot- light.The slightly older variant has focused on the nature of work in the growing service sector of most developed and developing economies. Jobs in this sector,it is argued,are characterized by employees having
conform to social network pressures – the fear of being ‘left out’ (Wheen, 2004). James Hoopes (2003) has described the role played by ‘guru’ academics, consultants and reflective practitioners who have had a major influence on new ideas and examples of so-called best practice in management during the last 100 years. Hoopes emphasized the two, recurrent big ideas in management and showed how interest in these two ideas has ebbed and flowed in popularity over time. These two ideas are top-down control and bottom-up management. Top-down control is best exemplified by Frederick Taylor and his school of scientific management in the late 1800s and early 1900s, which emphasized the importance and power of a new managerial ‘cadre’ in convincing or forcing workers to do what these managers wanted them to do. Usually, this involved heavy doses of close and direct supervision, and payment-byresults systems to motivate workers. Taylor and his followers, including Henry Gantt and Frank and Lilian Gilbreth, were important in spreading the gospel of scientific management. However, it took Henry Ford, the founder of the Ford Motor Company, to apply Taylor’s ideas by linking them to technological control embodied in the moving assembly line, before they became practically important. As a result, Fordism became the dominant mode of organizing and managing during the twentieth century. It is usual in academic texts to trace some of the modern management techniques that we shall discuss during this course to Taylor and Ford’s ideas of top-down control, including ‘business process re-engineering’ and ‘lean production’. By contrast, bottom-up management, according to Hoopes, is associated with a more humanistic or, some would argue, realistic belief that such top-down control is ultimately self-defeating. At least two arguments have been used to explain the negative side to top-down management. The first of these, the alienation thesis, became fashionable in the 1930s, and is still an important argument by many commentators on work and employment relations. It concerns the nature and scale of opposition by employees during the twentieth century to having their work ‘Taylor-made’. Indeed, this kind of thinking was used to explain the rise of trade unionism during that period and much of the industrial unrest that characterized industrial and labour relations in many advanced economies. The second argument, the changing nature of work thesis, has two variants, according to which sector of advanced industrialized economies is being put under the spotlight. The slightly older variant has focused on the nature of work in the growing service sector of most developed and developing economies. Jobs in this sector, it is argued, are characterized by employees having 16 Managing people and organizations in changing contexts