Some criteria for new models.

There are three reasons why the practice of management will change as radically over the first decades of this century as it did during the beginning of the last one.
- First, the impact of new technology, which is providing powerful new tools for coordinating people’s efforts.
- Second, there’s the increasing demand for companies to be adaptable, innovative, and exciting places to work.
- The third force for change is the revolution in expectations. People entering the workforce today are the first generation that’s grown up on the Web. Their basic assumption is that their contribution should be judged simply on the merits of what they do rather than on the basis of their title or credentials or anything else. This is a lesson they’ve learned from their experience in cyberspace (remember the famous cartoon, "on the internet, no one knows you're a dog").

Lowell Bryan, a director at McKinsey & Company, believes that new models for thinking about organizing are needed in all industries because today every company is engaged in thinking-intensive work. The traditional, hierarchically-based 20th-century model isn’t effective at organizing the work of self-directed employees who need to make subjective judgments based on their own special knowledge. And in the digital age, they’re the ones who create the most wealth.

Bryan says we should use hierarchical decision-making only for activities such as allocating resources, appointing people to jobs, and holding people accountable. At the same time, a new model should help self-directed employees collaborate with their peers on a continuous basis, using new mechanisms that enable horizontal transactions to be as efficient as vertical ones. Every large company has significant numbers of thinking-intensive employees who need to collaborate with one another. The winners will be those firms that enable these employees to create more profits by putting their collective mind-power to better use.

We’re in the early stages of a long process of innovation in how we design organizations that will eventually go to places we can’t see yet. But I believe we can already see enough to identify huge opportunities for companies who take advantage of what’s currently known. Innovation is taking place all over the place, but organizational barriers prevent successful innovations from being adopted throughout the rest of the company or the industry. I'll illustrate this with case studies in the weeks to come.

Today, too many executives believe that while a few people in the company may be really clever and creative, most are not. If you study companies like Toyota, you'll see how they’ve benefited by mobilizing the intelligence of so-called ordinary workers. Going forward, no company will be able to afford to waste a single iota of human imagination and intellectual power.