For and Against: management styles

During the long era in business when expansion came from scaling up operations and planning outputs from assembly lines, it made perfect sense for leaders to drive their companies based on a command-and-control style. One central person (or team) had all of the facts, and was therefore in the best position to set the strategy. Workers were specialised. They didn’t have the big picture and could only be expected to conform to the requirements and execute the game plan. Recently we’ve been lured into a new way of thinking, brought about largely by the ubiquity of information where everyone is factored into decision making. So we see people encouraged to bring creativity to their jobs. Information is more accessible and everything from pricing to customer opinions are more transparent. “Empowerment” is a popular rallying cry.

The problem with this zealous embrace of informal networks over authority is that our new leadership model is often a bridge too far. We have swallowed some serious myths as we evolved from the rigour of strict hierarchy to a more relaxed, informal leadership approach.

• Myth No 1 - Entrepreneurial spirit outperforms a hierarchical structure. We have fallen in love with entrepreneurs, sometimes at our own peril. Look at the Facebook love affair, where a bit more rigour and scrutiny might have put the brakes on overvaluation. Compare with GE Ecomagination’s roots: Jeffrey Immelt proclaimed that sustainability was here to stay and pushed that vision forward. The company now generates billions of dollars in revenues.
• Myth No 2 - Groupthink is a better way to make decisions. Brainstorming is socially engaging, but the outcomes under perform more traditional problem-solving techniques. Informal networks are great for getting people connected, but not the best way to set a company on its course. Johnson & Johnson was looking for a new way to ship supplies. After months of brainstorming and discussion, it took one visionary leader to see that European waterways were an option. He challenged the team to make it work. It was one leader, brave enough to go out on a limb, who led the way.
• Myth No 3 - Consensus is the best way to devise new direction. Most companies need a healthy dose of singular vision. Allstate Insurance needed e-commerce and bought Esurance to leapfrog them into a new arena. A small team made the decision and the company had to execute with precision and clarity.

In each case, it took one leader to chart the course, and people had to make it work. It used to be that corporate leadership was based on a military model. One man sat at the top, commanding orders, based on his unique vantage point. If he were one of the industrialists toward the beginning of the 1900s, he might have been the only person with all of the facts. It doesn’t work for a football team to function without a coach, and I argue that it doesn’t work for our organisations to move forward without a hierarchical structure.

Antiquated, military-style command and control structures won’t work these days. But there is such a thing as making management too informal. We still need to have personal responsibility, an idea of who our gurus and mentors are. Informal networks are great for informal networking and their benefits are obvious, but the extent to which they can steer policy, long-term planning, business planning, hiring and marketing strategy is limited. It all depends what we mean by hierarchy and there is a good case to be made for the 21st century ‘benign hierarchy’. You don’t need to be Stalin to lead the way, but organisations need leaders.

Imagine Churchill’s famous “we shall fight them on the beaches” speech, where instead of placing a stake in the ground and inspiring others, he set up a brainstorming committee. Business is facing economic challenges and pressures that warrant a bit of good old-fashioned bold leadership.