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Management's Control Problem

©  Fred Nickols 2012


Confirmation

The purpose of this brief paper is to define a problem I have labeled "the control problem." Peter Drucker concurs in this labeling of the problem, and his response to me in private correspondence when I shared with him its initial framing more than a decade ago was to say, "I think you are absolutely on the right track."

It is not my aim here to set forth a solution to the control problem. The control problem is not a problem that I, or anyone else, will solve alone. For now, my aim is simply to draw attention to it.

"The control problem" refers to a sudden and sharp loss of control where control once existed. In slightly more technical terms, there has been a shift in the locus of control. More specifically, since the end of World War II, there have been three groundswell shifts in the locus of control.

Three Shifts in the Locus of Control

The first shift is in the locus of control over work – from management to the worker. This is in turn the result of a shift from manual to knowledge work or, more precisely, a shift from materials to information and knowledge as the "stuff" on which people work. The shift to knowledge work has been steadfastly chronicled by Peter Drucker for more than 40 years. Appendix A contains a sampling of his more noteworthy observations regarding this shift.

The second shift is in the locus of control over political power – from individuals and the state to organizations. This shift has been taking place for a long time. Its observers, chroniclers, and critics include the likes of Thorstein Veblen, Adolph Berle and Gardner Means, John Kenneth Galbraith, and Peter Drucker. Drucker neatly summed it up in the title of a 1992 article: "The New Society of Organizations."  One of the more recent entries in this genre is David Korten’s book, When Corporations Rule the World.

The third shift is in the locus of control over the production and distribution of wealth – from many open-system national economies to a single closed-system global economy. In the long run, this shift may well turn out to be the most significant of the three. For years now, two of the chief paradigms of business, industry, and society have been those of (1) the open system and (2) the national economy (populated, of course, by companies tied to the nation in question. Our natural world may indeed be an open system but the new global economy is clearly a closed system and will remain so until interplanetary commerce becomes a reality. For an interesting discussion of the significance and implications of a global network of corporations with slender ties to any particular nation, see Robert Reich’s book, The Work of Nations.

These three shifts represent an evolutionary transition from repetitive to innovative systems, from systems intended and designed to produce high volumes of standardized products for mass markets to systems that must continuously innovate so as to provide specialized products and services to niche markets. The passage from one to the other occurs by way of adaptive systems. This transition from repetitive to innovative systems is rife with implications for all those with an interest in what Peter Drucker termed "the practice of management." These implications are captured in summary form in Table 1 below.

 

Table 1: The Shift from Repetitive to Innovative Work Systems

 

Repetitive

Systems

Adaptive

Systems

Innovative

Systems

Input Variability

Low

Moderate

High

Process Structure

Prefigured

Adjustable

Configured

Output Variability

Fixed

Varied

Custom

Control Principle

Compliance

Coordination

Commitment

Focus of Controls

Activities

Products

Results

Locus of Control

The Supervisor

The System

The Worker

Basis of Authority

Position

Reciprocity

Performance

Management Style

Directive

Participative

Collaborative

Worker's Role

Pawn

Player

Partner

Markets Served

Mass

Segments

Niches

Economic

Leverage

Deploying

Capital

Applying

Technology

Creating

Knowledge

Competitive Edge

Cost

Cost & Quality

Cost, Quality, Speed

Rate of Change

Low

Moderate

High

Degree of

Regulation

High

Moderate

Low

Nature of

Demand

Concentrated

Clustered

Dispersed

Skill Level

Low

Moderate

High

Judgment

Required

Low

Moderate

High

Risk Tolerance

Low

Moderate

High

 

All three kinds of systems exist and are likely to do so for the foreseeable future. Each, however, poses its own challenges to the practice of management and to its practitioners. One size does not fit all. We have learned a great deal about the first kind; we are learning about the second and we know next to nothing about the third.

References

  • Berle, A. Jr. and Means, G. (1933).  The Modern Corporation and Private Property. New York, NY: MacMillan.

  • Drucker, P. F. (1969).  The Age of Discontinuity.  New York, NY: Harper & Row.

  • ____________ (1992).  The New Society of Organizations, Harvard Business Review.  Cambridge, MA: Harvard Business School.

  • Galbraith, J. K. (1977). The Age of Uncertainty).  Boston, MA: Houghton-Mifflin.

  • David Korten (1995) When Corporations Rule the World .  San Francisco, CA: Berrett-Koehler Publishers.

  • Reich, R. B. (1991).  The Work of Nations.  New York, NY: Alfred A. Knopf.

  • Veblen, T. (1904). The Theory of Business Enterprise.  New York, NY: Charles Scribner’s Sons.

 

 

Appendix A

 

Peter Drucker's Chronicle of the Shift to Knowledge Work

 

"In the United States . . . the class of employees that has been growing most rapidly in numbers and proportion is that of skilled and trained people."

The Practice of Management: 1954

 

"Productive work in today’s society and economy is work that applies vision, knowledge and conceptsC work that is based on the mind rather than the hand."

Landmarks of Tomorrow: 1959

 

"Even the small business today consists increasingly of people who apply knowledge rather than manual skill and muscle to work."

Managing for Results: 1964

 

"Finally, these new industries differ from the traditional ‘modern’ industry in that they will employ predominantly knowledge workers rather than manual workers."

The Age of Discontinuity: 1969

 

" . . . the center of gravity of the work force is shifting from the manual worker to the knowledge worker."

Management: 1973

 

" . . . the center of gravity among ‘employees’ has sharply shifted to the educated, employed, middle class, that is, to people who see themselves as ‘technical’ and increasingly as ‘professional’."

Managing in Turbulent Times: 1980

 

"The more knowledge-based an institution becomes, the more it depends on the willingness of individuals to take responsibility for contribution to the whole, for understanding the objectives, the values, the performance of the whole, and for making themselves understood by the other professionals, the other knowledge people in the organization."

The New Realities: 1989

 

"The productivity of the newly dominant groups in the work force, knowledge workers and service workers, will be the biggest and toughest challenge facing managers in the developed countries for decades to come. And serious work on this daunting task has only begun."

Managing for the Future: 1992

 

"Instead of capitalists and proletarians, the classes of the post-capitalist society are knowledge workers and service workers."

Post-Capitalist Society: 1993

 

"This society in which knowledge workers dominate is in danger of a new ‘class conflict’; the conflict between the large minority of knowledge workers and the majority of people who will make their living through traditional ways, either by manual work, whether skilled or unskilled, or by services work, whether skilled or unskilled."

Managing in A Time of Great Change - 1995

 

"The most valuable assets of a 20th-century company were its production equipment.   The most valuable asset of a 21st-century institution, whether business or nonbusiness, will be its knowledge workers and their productivity."

Management Challenges for the 21st Century 1999

 

 

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This page last updated on August 24, 2012