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Consumerization compliments and completes the other forms of management

by Mark P. McDonald  |  June 29, 2012  |  1 Comment

The modern organization is a complex adaptive system.  We have managed that complexity through different combinations of organizational decomposition, process standardization and functional specialization.  A strategy based on managing big things by breaking them down into little things that are all the same and assigning specialized jobs has served organizations well from the time of the Roman Army to the modern multinational.  It’s a process that works in nature, in economic theory and in organizations.  It’s a process that is adaptive so long as the pace of change is slower than the natural life of the organism.

Step up the change and you have to either change the organization or embrace a faster pace of creative destruction.  Start-ups know this, but established organizations seek to manage change with the illusion of controlling it, redefining it and moving the organization into markets and areas where there is a better balance between how fast we move and how fast the market moves.  Spasmodic transformations happen, and they get all the press, but from what I have seen an organization that has gone through transformation just never seems the same.

What is an executive to do? — Please note that this is a long blog post

Recognize the need to diversify their management approach.  You see management, organization, strategy, the nature of work are all within the organization’s control.  There are many themes on management, theories or ideas that represent variations of the idea of decomposition, standardization and specialization.  The result is management techniques, tools, etc. that drive business books and executive seminars.  I think that we can go deeper than competing theories about the same principle.  We need to otherwise we swing for self defined management extremes like centralized – decentralized, etc.

That means we can choose how we manage ourselves.  This creates a diversity of management models and types and the potential to innovate the way we work and achieve results.   Here are some thoughts about the different styles of work and management, what they are and how they compliment each other.

  • Process, precision and product – management as coordination and control
  • Knowledge, service and decision – management of knowledge and information
  • Judgment, outcome, engagement – management influenced by consumerism and technology

There is no easy way to describe different ways or types of management that capture all the nuances and applications.  I have opted in this post to try to be simple.  The descriptions above capture three aspects of management.  The first word in the description describes the nature of the work: Process, Knowledge or Judgment.  Second is the goal of the work: Precision, Service or Outcome.  Finally is the overall outcome of the work: a Product, a Decision or Engagement.

Organizations need all three of these activities, results and outcomes.  The challenge is where each of these exist, how they work in combination and how they create a successful, engaging and sustainable organization.

Here is a brief introduction into each one.

Product, precision and process

Manufacturing, operational and infrastructure practices that have a low tolerance for variance and value flows from conformance to standards.   This was the dominate source of value when leaders, such as Sloan at GM laid the foundations for the modern organization on principles of divisionalization, functional specialization, and central coordination replaced an economy dominated by small, local family run firms.

At the turn of the 20th century, communications technologies like the telephone and telegraph were the disruptive high tech of the age.  Forward thinking executives recognized the potential of these technologies to support larger and more complex organizations and built their management systems around grow in size and complexity.   Communications supported the decomposition of complex tasks into specialized organizations linked together via a professional bureaucracy called ‘management’.  Alfred P. Sloan described good management in these terms, “good management rests on the reconciliation of centralization and decentralization — or decentralization with coordinated control.”

This is the dominant form of management in most organization.  This form of work and value creation remains at the core of every economy and the management practices associated with it remain a significant part of economic activity and will so into the future.

Knowledge, service and decision

As industrial organizations grew and industrial practices expanded they generated information, complex issues and increasing requirements for greater degrees of coordination.  As complexity grew, the management hierarchy generated the information required to manage its processes through new information and communications technologies, known as ICT or IT.  Information and communications demands grew exponentially and with it information became a source of value in is own right.  This led to the birth of knowledge work and the knowledge worker.

Identified by Peter Drucker among others in the 1960’s, the knowledge worker was a white-collar professional using information, aka knowledge, to make decisions, deliver contextualized services and improve organizational efficiency.   Knowledge work was the work of senior executives, but as information requirements and resources grew as we created a specialized class of workers – unfortunately called managers – whose job it was to manage information and use it to implement decisions and strategies.

As IT grew, so too did knowledge work which soon expanded outside of positions of authority to describe a workforce that provided services or created specialized information rather than producing products or services.   Call center employees, scientists, customer service, IT, Finance, HR describe some of the specialized groups doing knowledge work.

Drucker and others recognizes that the different nature of knowledge work should require different forms of management and styles of organization.  Management innovators developed cross-functional teams, management by objective, and process management as new structures for this new type of work.   The development of these approaches had a more profound impact on the factor floor as the quality movement drove knowledge activities onto the shop floor.

Despite these new structures, managing of the practices and mindset found on the factory floor migrated into the offices of knowledge workers.  So while knowledge work was different, it was organized, funded and measures along the same lines as factory flows but with information flows.

Industrializing knowledge and the application of ICT makes organizations more intelligent, adaptable and complex.   The modern global corporation would be impossible without managing knowledge, providing services and supporting better decisions.  The knowledge work fueled by information and communications technologies raises the efficiency and effectiveness of operational decisions and providing valued service.

Judgment, outcomes and engagement

Judgment becomes more important in an organization where day-to-day management concentrates on optimizing products, processes, knowledge and services.   Think of judgment in terms of how your organization handles complex and conflicting information in deciding how best to create valued outcomes and engage customers and associates alike.

It is a rather wordy description, but it seeks to capture the essence of a different type of management.  It is a type of management based less on defining, applying and improving rules and more on making sense of a dynamic world that is changing too fast for any one person to know all or one team to do much about.  This one of the reasons why this type of management is consumer oriented.

In an environment of constant and unpredictable change, organization need all the insight, experience and engagement they can get to understand, formulate and execute successful strategies.  It is a world where command and control is replaced with engagement and execution.  One organized around all of us as consumers of information and producers of change.

Extending the portfolio of management practices and technques

This form of management, a consumerized management compliments the other types of management.  It forms part of a portfolio of management approaches and practices that give organizations a broader range of tools required to drive intelligence, speed and adaptability.

Every organization needs all three types of management.  I imagine the propotion of each type of management is different based on industry, maturity, geography and time.  The figure below provides an idea of the different relative mixes.

Organizations are complex systems.  Part of their work requires precision, prescription and process.  Part of their work relies on services, knowledge and day-to-day decisions.  And an increasingly important part of that work requires navigating a complex world by bringing us all together making each of use consumers of management information and conductors of management functions.

Every organization has process work and therefore requires a form of process management.  Every organization has knowledge work and requires that form of management.  Every organization makes judgments that often are hidden inside traditional top down strategy, planning and bureacratic functions.  This type of work, judgment work, is increasing in response to create organizations that need to be  more adaptive, intelligent and engaging.  Describing and defining these practices represents a significant part of management innovation in the context of the rest of the work of management that does not go away.

Thanks for reading to the end of this long post.  Welcome your comments and thoughts.

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Category: innovation  leadership  management  

Tags: business-leadership  consumerization  leadership  management  

Mark McDonald, Ph.D., is a Vice President and Fellow Emeritus in Gartner for General Managers Program.

Thoughts on Consumerization compliments and completes the other forms of management

  1. Steve Davis says:

    I have been thinking in a similar fashion and appreciate your articulation. In my mind the ability to apply strategic insight in an engaged manner is key to the adaptive organization. I’ve envisioned it as having “sensors” in place to monitor in real time rather than the traditional reactive metrics. It’s a akin to neuro feedback…something that brings the observations in the conscious realm. Twitter comes to mind and for internal organizations Yammer. Thanks for the insights.

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