The hierarchical organization based on the strategy-structure-systems doctrine of management no longer delivers competitive results. While a top-down structure of corporate divisions gives managers tight control and allows companies to grow, it also fragments resources and creates a vertical organization that prevents small units from sharing their strengths with one another. Structural fixes, such as skunk works, alliances, and acquisitions, have not solved the problem. Based on a study of 20 companies with vanguard management styles, the authors predict a managerial revolution that will focus on horizontal processes rather than vertical structures. The job of management will be to promote three core organizational processes: frontline entrepreneurship, competence building, and renewal. Companies must shift from top-down direction by managers who set the company vision and instead should encourage bottom-up initiatives from operating units, which are closest to customers. Managers must balance discipline and support to create a self-disciplined organization. Similarly, managers must trust operating units with creating competencies and limit their own role to seeing that those strengths are shared throughout the company. In addition to providing direction, managers must sometimes disrupt organizational equilibrium - for example, by stretching the company with increasingly challenging goals, using contingency-planning exercises, or allowing parallel product development. To prevent their companies from becoming too rigid, they must create an environment that asks employees to challenge conventional wisdom.
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