Management Is Shifting From Leadership to Authorship

It’s not that management is about to change at a fundamental level. What I’d propose is that it already has changed, but we just haven’t noticed it yet.

I predict that we will start noticing dramatic change in management practices within the next 10 years, because Covid-19 accelerated two trends that have been brewing for the previous quarter century: the digitization of internal firm communications, and, the adoption of Agile management practices.

What’s the fundamental change that’s happened in management?

In a sentence, the way I think about this fundamental change is that management is shifting its primary paradigm from “leadership” to “authorship”.

The paradigm of leadership is that there are leaders and followers. In a world oriented toward leadership, the manager is responsible for delivering results, making the efforts of the team exceed the sum of its parts, and aligning the team’s efforts so they contribute to the goals of the larger enterprise. The leader-manager takes on the role of structuring the vision, process, and the management structures for the team to hit its goals. The leader is directly responsible for their direct reports and accountable for their results. The leader-manager paradigm is effective in environments that call for centralization, control, consistency, and accountability.

The paradigm of authorship is that there are customers and needs to fulfill, that everyone is ultimately responsible for in their own way. In a world oriented toward authorship the manager is responsible for understanding a valuable need, setting a clear and compelling objective, and creating clear lanes for others to contribute. The author-manager takes on the role of finding the right objectives, communicating a simple and compelling story about them, and creating a platform for shared accountability rather than scripting how coordination will occur. The author-manager paradigm is effective in environments that call for dynamism, responsiveness, and multi-disciplinary problem solving.

This distinction really becomes clearer when thinking about the skills and capabilities critical to authorship. To be successful as an author-manager one must be incredibly good at really understanding a customer, and articulating how to serve them in an inspiring and compelling way. The author-manager has to create simple, cohesive narratives and share them. The author-manager needs to build relationships across an entire enterprise (and perhaps outside the firm) to bring skills and talents to a compelling problem, much as a lighting rod attracts lighting. The author-manager needs to create systems and platforms for teams to manage themselves and then step out of the way of progress. This set of capabilities is very different than the core MBA curriculum of strategy, marketing, operations, accounting, statistics, and finance.

In both paradigms, management fundamentals still matter. Both postures of management - leadership and authorship - require great skill, are important, and are difficult to do well. I don’t mean to imply that “leadership” is without value. The relative value of each, however, depends on the context in which they are being used. And for us, here in 2022, the context has definitely shifted.

How has the context related to the internal organizations of firms shifted?

In a sentence, firms are shifting from hierarchies to networks.

I’d note before any further discussion that this is idea of shifting from hierarchies to networks is not a new idea. General Stanley McChrystal saw this shift happening while fighting terrorist networks. Marc Andreessen and other guests on the Farnam Street Knowledge Project podcast also hint at this shift directly or indirectly. So do progressive thinkers on management, like Steven Denning. I’m not the first to the party here, but there’s some context I would add to help explain the shift in a bit more detail.

After the industrial revolution, as economies and global markets began to liberalize in the 20th Century, companies got big. Economies of scale and fixed cost leverage started to matter a lot. Multinationals started popping up. Globalization happened. Lots of forces converged and all these large corporations and institutions came into existence and needed to be managed effectively.

Hierarchical bureaucracies filled this need. In these hierarchical bureaucracies, tiers of leader-managers worked at the behest of a firm’s senior management team, to help them exert their vision and influence on a global scale. The vision and strategy were set at the top, and the layers of managers implemented this vision.

I think of it like water moving through a system of pipes In a hierarchy, it is the job of the executive team to create pressure, urgency, and direction and push that “water” down to the next layer. Then the next layer down added their own pressure and pushed the water down to the next layer, and so on, until the employees on the front line were coordinated and in line with the vision of the executive team. This was the MO in the 20th and early 21st Century.

A network operates quite differently, it functions on objectives, stories, and clearly articulated roles. In a network an author-manager sees a need that a customer or stakeholder has. Then, they figure out how to communicate it as an objective - with a clear purpose, intended outcome, measure for success, and rules of engagement for working together. This exercise is not like that of the hierarchy where the manager exerts pressure downward and aims for compliance to the vision. In a network what matters is putting out a clear and compelling bat signal, and then giving the people who engage the principles and parameters to self-organize and execute.

Both approaches - hierarchies and networks - are effective in the right circumstances. But a trade off surely exists: put briefly, the trade-off between hierarchies and networks is a trade-off between control and dynamism.

Why is this change happening?

In the 20th century, control mattered a lot. These were large, global companies that needed to deliver results. But then, digital infrastructures (i.e., internet and computing) started to make information to flow faster. Economic policies become more liberal so goods and people also started to flow faster. And all these changes led to consumers having more choice, information, and therefore more power. Again, this was not my idea, John Hagel, John Seeley Brown, Lang Davison, and Deloitte’s Center for the Edge articulated “The Big Shift” in a monumental report almost 15 years ago.

Here’s the top-level punchline: the internet showed up, consumers got a lot more power because of it, the global marketplace was disrupted, and firms started to have to be much more responsive to consumers’ needs. The trade-off between control and dynamism tilted toward dynamism.

What I’d suggest is that these same force that affected the global market also affected the inner world of firms. That influence on the firm is what’s tilting the balance from leadership and hierarchy to authorship and networks.

To start, digital infrastructures like the internet didn’t just change information flows in the market, it changed information flows inside the firm. Before, information had to flow through cascades of people and analog communication channels. The leader-manager layer of the organization was the mediator of internal firm communications. In the pre-digital world, there was no other way to transmit information from senior executives to the front-line - the only option was playing telephone, figuratively and literally.

But now, that’s different. Anyone in a company can now communicate with anyone else if they choose to. We don’t even just have email anymore. Thanks to Covid-19, the use of digital communication channels like Zoom, Slack, and MS Teams are widely adopted. We now have internal company social networks and apps that work on any smartphone and actually reach front-line employees. We have easy and cheap ways to make videos and other visualizations of complex messages and share them with anyone, in any language, across the world. Just like eCommerce retailers can circumvent traditional distribution channels and sell directly to consumers, people inside companies can circumvent middle managers and talk directly to the colleagues they most want to engage.

Now, more than ever, putting out a bat signal that attracts people with diverse skills and experience from across a firm to solve a problem actually can happen. Before, there was no other choice but to operate as a hierarchy - middle level managers were needed as go-between because direct communication was not possible or cheap. But now that’s different, any person - whether it’s the CEO or a front-line customer service rep - can use digital communication channels to interact with any other node in the firm’s network if they choose to.

I’ve lived this change personally. When I started as a Human Capital Consultant in 2009, we used to think about communicating through cascaded emails from executives, to directors, to managers, to front-line employees. Now, when I work on communicating strategy and vision across global enterprises, our small but mighty communications team works directly with front-line mangers who run plants and stores. We might actually avoid working through layers of hierarchy because it slow and our message ends up getting diluted anyway. Working through a network is better and faster than depending on a hierarchy to “cascade the message down.”

Agile management practices have also enabled the shift from hierarchies to network occur. Agile was formally introduced shortly after the turn of the 21st century as a set of principles to use in software development and project management. There’s lots of experts on Agile, SCRUM and other related methodologies, but what I find relevant to this discussion is that Agile practices allow teams to work more modularly and therefore more dynamically than typical teams. Working in two week sprints with a clear output scoped out, for example, makes it so that new people can more easily plug in and out of a team’s workflow.

What that means in practice is that the guidance, direction, accountability, and pressure of a hierarchy is no longer necessary to get work done. Teams with clarity on their customer, their intended outcome, and their objectives can manage work themselves without the need for centralized leadership from the focal point of a hierarchy. Agile practices allow networks of people to form, work, and dissolve fluidly around objectives instead of rigid functional responsibilities. Especially when you add in the influence of Peter Drucker’s Management by Objective in the 1950s and the OKR framework developed at Intel in the 1970’s, working in networks is now possible in ways that weren’t even 25 years ago. For the first time, maybe ever, large enterprises don’t absolutely need hierarchical management.

I lived this reality out when our team hosted an intern this summer. I was part of a team which was using Agile principles to manage itself. Our team’s intern was able to integrate into a bi-weekly sprint and start contributing within hours, rather than after days or weeks of orientation. Instead of needing a long ramp up and searching for a role, he just took a few analytical tasks at a sprint review and started running. Even though I’m biased as a true-believer of Agile, I was shocked at how easily he was able to plug in and out of our team over the course of his summer internship, and how quickly he was able to contribute something meaningful.

Even 20 years ago, this modular, networked way of working was much harder because nobody had invented it yet, or at a minimum these practices weren’t widely adopted. Now, these two ideas of Agile and OKR are baked into dozens, maybe hundreds, of software tools used by teams and enterprises all around the world. It’s not that these new, more network-oriented ways of working are going to hit the mainstream, they already have.

The adoption of digital communication tools and Agile practices inside firms has been stewing for a long time. Covid merely accelerated the adoption and the culture change that was already occurring.

And as if that wasn’t enough, the landscape could be entirely different a decade from now if and when blockchain and smart contracts emerge, further blurring the boundaries of the firm and it’s ecosystem. It’s not that management is going to shift, it already has, and it will continue to.

Why does it all matter?

I wrote and thought about this piece because I’ve observed some firms become more successful than their competitors, and I’ve observed some managers become more successful than their peers. I’ve been trying to explain why so I could share my observations with others.

And the simple reason is, some firms and some managers are embracing authorship and networks, while their less successful peers are holding tight to traditional leadership and hierarchy.

Managers who want to be successful act differently. If the world has become more dynamic, managers can’t stick with the same old posture of leadership and clutching the remnants of a hierarchical world. What managers have to do instead is lean into authorship and learn to operate effectively in networked ecosystems.

But I think the stakes are much larger than the career advancement and professional success of managers. What’s more significant to appreciate is the huge mismatch many organizations have between their management paradigm and their operating environment.

The way I see it, enterprises that are stuck in the 20th Century mindset of leadership and hierarchy rather than authorship and networks are missing huge opportunities to create value for their stakeholders. If you’re part of an organization that’s stuck in the past, prepare to be beat by those who’ve embraced authorship, networks, and agility.

But more than that, this mismatch prevents forward progress, not just for individual enterprises, but for our entire society. Management scholar Gary Hamel estimates this bureaucracy tax to be three trillion dollars.

For most people, thinking about management structure is burning and pedantic, but I disagree. Modernizing the practice of management is just as important as upgrading an enterprise’s information technology and doing so successfully leads to a huge windfall gain of value. To progress our society, we have to fix this mismatch so that the management practices deployed widely in the organizational world are the best possible approaches for solving the most critical challenges our teams, companies, NGOs, and governments face. I honestly don’t think it’s hyperbolic to say this: the welfare of future generations depends, in part, on us shifting management from leadership and hierarchy to authorship and networks.

To make faster progress - whether at the level of a team, a firm, or an institution - embracing this fundamental shift in management from leadership and hierarchy to authorship and networks is non-negotiable. Remember, it’s not that this shift is going to happen, it already has.

Photo from Unsplash, by @deepmind