A New Manifesto for Management

The corporation has emerged as perhaps the most powerful social and economic institution of modern society. Yet, corporations and their managers suffer from a profound social ambivalence. Believing this to be symptomatic of the unrealistically pessimistic assumptions that underlie current management doctrine, Ghoshal et al. encourage managers to replace the narrow economic assumptions of the past and recognize that:

-- Modern societies are not market economies; they are organizational economies in which companies are the chief actors in creating value and advancing economic progress.

-- The growth of firms and, therefore, economies is primarily dependent on the quality of their management.

-- The foundation of a firm's activity is a new "moral contract" with employees and society, replacing paternalistic exploitation and value appropriation with employability and value creation in a relationship of shared destiny.

In the 1980s, managers concentrated on enhancing competitiveness by improving their operating efficiencies. They cut costs, eliminated waste, downsized, and outsourced. They extracted value -- as reflected in shareholder returns -- but at what price?

In contrast, firms that seem to continuously proliferate new products and technologies (for example, HP, 3M, Disney, and Microsoft) have never accepted this logic of auto-dismemberment. They have escaped what the authors term "the deadly pincer of dominant theory and practice": an almost exclusive focus on appropriation and control.

A different management model is now taking shape, based on a better understanding of individual and corporate motivation. As companies switch their focus from value appropriation to value creation, facilitating cooperation among people takes precedence over enforcing compliance, and initiative is valued more than obedience. The manager's primary tasks become embedding trust, leading change, and establishing a sense of purpose within the company that allows strategy to emerge from within the organization, from the energy and alignment created by that sense of purpose. The core of the managerial role gives way to the "three Ps": purpose, process, and people -- replacing the traditional "strategy-structure-systems" trilogy that worked for companies in the past.