A new manifesto for management

The corporation has emerged as perhaps the most powerful social and economi c institution of modern society. Yet, corporations and their managers suffe r from a profound social ambivalence. Believing this to be symptomatic of t he unrealistically pessimistic assumptions that underlie current management doctrine, Ghoshal et ai, encourage managers to replace the narrow economic assumptions of the past and recognize that: Modern societies are not market economies; they are organizational economie s in which companies are the chief actors in creating value and advancing e conomic 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 employee s 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 improvi ng their operating efficiencies. They cut costs, eliminated waste, downsize d, and outsourced. They extracted value - as reflected in shareholder retur ns - hut at what price? In contrast, firms that seem to continuously proliferate new products and t echnologies (for example, HP, 3M, Disney, and Microsoft) have never accepte d this logic of auto-dismemberment. They have escaped what the authors term "the deadly pincer of dominant theory and practice": an almost exclusive f ocus on appropriation and control. A different management model is now taking shape, based on a better underst anding of individual and corporate motivation. As companies switch their fo cus from value appropriation to value creation, facilitating cooperation am ong people takes precedence over enforcing compliance, and initiative is va lued more than obedience. The manager's primary tasks become embedding trus t, leading change, and establishing a sense of purpose within the company t hat 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 compa nies in the past.