Information systems will help break down company silos and better inform strategy
The future of work is high on chief executives’ agendas. But, at a recent forum where senior managers from major companies agreed that changes, such as automation, artificial intelligence, the rise of non-traditional competitors and advances in manufacturing, were imminent, few had conceived strategies for how their organisations might respond.
It is surprising because mainstream management thinking assumes that managers reign supreme in determining the affairs of their company. The manager, as homo economicus — the “rational agent” beloved of economists and finance theorists — chooses the most preferential strategic option from a range of scenarios based on rational calculation of what will achieve the optimal economic outcome. And MBA courses are part of the problem.
Choice equals control, and the more information we have at our disposal, so the theory goes, the better we can exercise choice. Data are ever more abundant and accessible, so surely managers are increasingly capable of exercising choice and controlling the conditions necessary for success? Unfortunately they are not.
It seems the uncertainty associated with the future of work prevents executives from feeling in control, or even attempting to shape the future into something more predictable. Work is being disrupted everywhere and all the time — robots are replacing workers on factory floors and AI is hoovering up the paper work in the law sector. Managers are not leading the disruption (primarily from technological innovation), but merely responding to it as best as they can.
Herbert Simon, winner of the 1978 Nobel Prize for economics, challenged the notion of homo economicus by recognising the cognitive limitations of managers: we can only partially know our options or their outcomes in any given situation. The complexity, turbulence and uncertainty of the contemporary business environment, fuelled in large part by more and better information (and therefore transparency), is defeating the contemporary manager because the 20th century model of how we govern organisations has not changed to reflect the realities of the 21st century.
Relying on the wisdom of a few individual leaders to manage the many, ranked in a hierarchy according to seniority, is increasingly outmoded and damaging. In future, collective decision-making and harnessing the wisdom of the crowd to help solve 21st-century business problems offers far more potential for value creation and the avoidance of organisational dysfunction. Companies need urgently to develop information systems that tap into the wisdom of their employees, partners or customers, so that their knowledge can be shared across departments and used to develop meaningful strategies.
To meet these challenges, of course, how we educate our future business leaders needs to change. Today’s MBA programmes by and large resemble those first conceived in the early 20th century. It is no coincidence that the separation of business and management subjects, such as strategy, organisation and operations, into disciplinary “silos” on most MBA programme curriculums echoes the compartmentalised structure of the 20th-century corporation, with its specialist functions and separate departments, divisions and business units.
If the future structure of the organisation is that of a network more than a hierarchy, then shouldn’t the educational experience of high potential future talent be delivered similarly through a highly connected, collaborative and agile academic and practitioner network? Never has the capability of managers been under such sustained (but discreet) attack by the uncertainty of our times. A central question that should be front of mind for every enterprise is: what shape should the future of work take for us, and who decides? If managers are unable to answer this question, then who should?
Perhaps it is best left to a capable artificial intelligence. A cursory survey of our own MBA students — all so-called millennials — would suggest much sympathy for this view. Alongside choice, chance has always played a part in the affairs of business (as in other areas of life). But is deciding our work future too important and too difficult to be left just to managers?
BY Jonathan Trevor
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)