In the relatively simple world of the eighteenth century individuals contracted directly and separately with each other to perform services or to deliver goods. That was sufficient to ensure economic progress then. Decades later, the industrial revolution rendered that model useless and a new means of organizing people and allocating resources for more complicated tasks was needed. This lead to the creation of the managed corporation which has served its purpose in the 20th century, it organized work, created jobs and contributed to the birth of the middle class. Business guru Peter Drucker considered management "the most important innovation of the 20th century." An inevitable side effect of management is bureaucracy. Towards the end of the 20th century it became obvious to many enlightened business leaders and gurus that bureaucracy is the corporation’s biggest enemy. We have all read stories about how successful leaders fought bureaucracy in a desperate effort to make the elephant dance again, so in a sense the enlightened elite have become enemies of the established corporate norms, they broke the hierarchies, encourages informal communications and created cross functional teams. But as we all know bureaucracies are by definition resistant to change.
Today, even the best-managed enterprises aren't protected from the intensifying competition, rapid globalization and innovations by young students who have the potential to change the competitive horizons. Managed corporations are finding it increasingly difficult to deal with the accelerating rate of change. Many corporations responded by intensifying their matrix structures thinking that this will enable management to have multiple points view and healthy competition for resources while balancing the various interests of the corporation. This in fact has created top heavy management structures and left the employee to deal with multiple competing managers in a highly political atmosphere that slowed decision making and subsequently the corporation’s ability to respond to market forces.
In the last decade of the 20th century the internet enabled human beings on different continents and with vastly different skills and interests to work collaboratively together and coordinate complex tasks. The creation of the Linux operating system and Wikipedia are two examples of extremely complex work that now can be accomplished with little or no corporate management structure at all. That's led some thinkers to coin the term "mass collaboration" as the new form of economic organization. Some believe that corporate hierarchies will disappear, as individuals are empowered to work together in creating "a new era, perhaps even a golden one. Clearly our traditional managed corporation will need to morph into something different, no one can really tell how that will look like but w know it will need to be flexible, agile, able to quickly adjust to market forces, and laser sharp in reallocating resources to new opportunities. Additionally the new model will have to be able to motivate and inspire workers, instill drive and innovation, something traditional management has evidently failed to achieve.
The past few decades have seen a vast amount of research in the area of leadership (as opposed to management); researchers developed many leadership theories and analyzed the behavior of successful leaders. Corporations enrolled their managers into leadership classes, retained leadership coaches and changed the job titles of many management positions. Yet the absolute majority of those of occupy the management hierarchy can’t be described as leaders.
Can the 20th-century corporation evolve into this new, 21st-century organization, or will we see the demise of many traditional corporations along with their traditional managers? While it is hard to imagine building the Bay Bridge as a collaborative effort over the internet, one can safely assume that traditional management with its love for bureaucracy and hate for change will have a less prominent place in the 21st century modern organization, but the question is whether today’s business schools are capable of developing and delivering true leadership.