The Dominant Model Of 20th Century Organizations: Bureaucracy
If we look at 20th Century organisations, we can see that a bureaucratic mindset was dominant. The organizational world was seen as vertical. Its natural habitat was the tall buildings in places like New York. Strategy gets set at the top, as Gary Hamel often explains. Power trickles down. Big leaders appoint little leaders. Individuals compete for promotion. Compensation correlates with rank. Tasks are assigned. Managers assess performance. Rules tightly circumscribe discretion.
The purpose of this vertical world was self-evident: to make money for the shareholders, including the top executives. The communications were top-down. The values were efficiency and predictability. The key to succeeding was tight control. The dynamic was conservative: to preserve the gains of the past. The workforce tended to be dispirited. The firms had a hard time with innovation. They are still being systemically disrupted. The economy—the Traditional Economy—is in decline.
The Emerging 21st Century Model Of Post-Bureaucratic Management
In the 21st Century, by contrast, this vertical bureaucratic model is giving way to a post-bureaucratic mindset that is horizontal in orientation. Its natural habitat is the low flat buildings in places like California, although it also spreading rapidly like a virus and has already established footholds in most of the tall vertical organizations.
The purpose of the post-bureaucratic organization is to delight customers. Making money is the result, not the goal of its activities. Its focus is on continuous innovation. Its dynamic is enablement, rather than control. Its communications tend to be horizontal conversations. It aspires to liberate the full talents and capacities of those doing the work. It is oriented to understanding and creating the future. It believes in banking, not necessarily banks. It believes in accommodation, not necessarily hotels. It believes in transport, not necessarily cars. It believes in health, not necessarily hospitals. It believes in education, not necessarily schools. Its economy—the Creative Economy—is thriving. It is notable in the five largest and fastest growing firms on the planet: Amazon, Apple, Facebook, Google, and Microsoft. In effect, Agile is eating the world.
There are three common features or “laws” of the emerging post-bureaucratic mindset:
- Small is beautiful
- The importance of networks