How The Enterprise 2.0 Managerial Model Was Born

But whereas managers in the empire era were challenged to meet non-negotiable goals by any means necessary (Andrew Carnegie, for instance, was notorious for his tyrannical, hard-driving production targets), the Druckerian idea of autonomy was based on negotiated goals. This was a consequence of work becoming complex and specialized enough that senior executives simply didn't know enough to set goals autocratically. They could predict demand to some extent (the 1950s to '70s were characterized by unusually predictable growth in demand), and they used that knowledge to negotiate goals down a chain of command that collectively knew how to grow capacity.

Druckerism didn't replace the process-oriented business management pioneered by Frederick Taylor. It created a layer of planning-oriented information workers above it. The Taylorist factory remained, creating steady-state baseline performance conditions. Druckerian managers were taught to drive the underlying Taylorist machine into new markets, guided by demand forecast maps.

By the early 1980s, as the business environment grew increasingly uncertain and competitive, and the maps started turning into nonsense, a refinement was added: Management By Exception (MBE).

I haven't been able to trace the origins of the term, but I suspect it rose to prominence during the late 1980s and early '90s, when business process re-engineering (BPR) was all the rage. BPR proved to be a fad, but it did achieve one thing: It forced a shift from a deliberative management orientation to a deliberative-plus-reactive one. It was able to do so because it dealt with end-to-end processes in a feedback loop, with the external world, rather than functional silos, as the fundamental unit of organization. The result was that a new feedback stream of information was added to the feedforward stream that emerges from the forecasting models and long-range plans of MBO.

MBE is best understood as a layer between MBP and MBO. Uncertain market conditions make operations messy, and exceptions start to become more frequent. At the bottom, the MBP layer requires frequent retuning as a result (an activity captured in late Taylorist models like Lean and TQM). At the top, frequent reassessment of objectives becomes necessary (the aspirational state of "agility" is about being able to do this well), since plans may suddenly become infeasible.

Old-school supervisor-managers used to fairly steady conditions can no longer keep the MBP machine humming smoothly as demand grows chaotic. On the other hand, the MBO managers who decide where to go can't rely on the assumption that the machine is functioning and in control, or that forecasts will be accurate next month.

Tom Peters rose to prominence by talking about this regime of chaotic operations as thriving on chaos, so let's call MBE the Petersian model. Peters had a bold vision that you could actually feed on chaos and turn it into competitive advantage by doing MBE well enough.

So at the dawn of the Internet era in 1993, we have a management stack that looks like this: MBO on top of MBE on top of MBP. Depending on environmental uncertainty, the manager does a better or worse job balancing MBO and MBE functions.

Usually, a worse job.

As a result, the word "manager" became a dirty word by the late '80s, and a different archetype, the "leader," began to rise.

In Part II of this series, we'll look at the rise and impending fall of the idea of Leadership and how "manager" became a dirty word.

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