What do the failures of Kodak or Nokia, the disengagement of employees in large organizations and the success of entrepreneurship have in common? Much more than one might think. In all three cases, it is a question of adherence to reality, and the future of management has a lot to do with this question.
Kodak and Nokia, among many others, failed because they found themselves in a different world from the one that had made them successful. Kodak dominated the world of film photography but was unable to move to a digital world, and it was not for lack of trying. Nokia dominated the world of electronic mobile telephony and failed to make the transition to software. The world was changing, but the models and practices on which Kodak and Nokia operated did not change.
Employee disengagement is a major problem in most large companies nowadays. This is a problem that CEOs take very seriously because they know that engagement (or commitment) is one of the main factors of long-term performance. What causes disengagement? For many it is the result of a loss of meaning in a world that is changing too quickly and suppressing the certainties that defined our lives. However, research shows that it is rather the way employees are treated that leads to disengagement. It is a rational reaction to senseless decisions. The world is changing, but the models and practices on which the management of these organizations is based are not, and the gap is becoming less and less bearable.
This explains the current success of entrepreneurship. Employees leave large companies to start or join startups. And there the engagement is reborn as if by miracle. Why? Perhaps because they get the feeling of contributing to something tangible, the ability to see a direct link between what you are doing and the impact it has; in short, they have a more direct contact with reality.
In all three examples, the notion of reality is the key: large companies fail when they have lost contact with reality, when their leaders live in a world of plans, numbers and visions and have not met a customer for ages. Their model isolates them from reality. Employees are disengaged because the management they face every day has lost touch with reality: chain production of slides, reporting and controlling, continuous managerial verbiage, absurd situations, senseless decisions, etc. The contrast between what management manipulates and the reality experienced by employees has become too great and unbearable. And entrepreneurs are winning because they are in contact with reality on a daily basis. That’s what they signed up for. On the one hand, a world that seeks at all costs to free itself from reality, and that is dying; on the other hand, a world that throws itself into reality, and that lives.
The German philosopher Hartmut Rosa provides a particularly interesting insight into this question. He explains that the relationship to the world is the combination of two things: the attitude to the world and the experience of the world. The attitude to the world is the result of our mental models. It is the way we see the world, the reality, with our assumptions, our beliefs and our values. The experience of the world is about how we act in the world, how we change reality. It is based on our principles of action. Attitude to the world and experience to the world are naturally closely linked.
When the “string” that connects us to the world begins to vibrate, Rosa speaks of resonance. We adhere to reality, we are fully in the world. When the string doesn’t vibrate, Rosa talks about alienation. In philosophy, alienation characterizes the separation of a person or a person’s affections from an object or position of former attachment. Alienation occurs when we act in a way that does not correspond to what we consider to be a good life.
This term of alienation provides an interesting perspective on all the situations mentioned at the beginning. Kodak and Nokia are alienated in the sense that these two companies lived through a model that was no longer relevant. They knew that the world had changed but were unable to live accordingly because they were prisoners of their model. Employees are alienated when the life they live at work has nothing to do with the life they live outside and they can no longer find their way around. They are led to behave in contradiction with what they consider they should do. Entrepreneurs, on the other hand, can constantly adjust their behavior to what they consider fair and good.
The future of management
The notion of relationship to the world allows us to better understand the problem of current management as it is conceived and practiced in many companies. In terms of attitude to the world, that is, the mental models, it is based on a model where man is outside Nature and seeks, in Descartes’ famous words, to become master and possessor of it. This model necessarily induces a distance from reality since one is not part of it. In terms of world experience, it was born at the end of the 19th century to implement the mass production allowed by the technological and industrial revolution. The key was to standardize the behavior of a mass of employees who were generally poorly educated. The labor revolution was led by Frederick Taylor and his scientific management which dictated that tasks be carefully divided. The principles on which this management was based are hierarchy, standardization, the division of tasks precisely defined, and their coordination by a mass of middle managers.
However, the environment has since changed considerably. Automation, first with machines (robots), and increasingly with data and symbols (IT, artificial intelligence), relegates the issue of mass production to the background. Capital is abundant and is no longer necessary to mass-produce something: for each product to be manufactured, there are several global subcontractors available on tap. What now determines competitive advantage is the capacity for innovation, i.e. the relationship with reality both to adapt to it and to transform it and give it new meanings. In addition, individuals are better educated and more autonomous. They are much less willing to accept working in hierarchical and authoritarian organizations. It is this growing gap between the current management models of many organizations and the internal and external reality on which they are supposed to enable action, which is problematic.
Developing a mental model and a relationship with the world that resonates with reality is therefore the crucial challenge for 21st century management. This is nothing new, however: historically, management has always evolved in response to the challenges of its environment. Situations such as those of Kodak or Nokia as well as the current disengagement only exist when management has not evolved with its environment and has stopped adhering to reality.
[French version of this article here]