Empower the renegades and disarm the reactionaries.

Sitting monarchs don’t usually lead revolutions. Yet most management systems give a disproportionate share of influence over strategy and policy to a small number of senior executives. Ironically, these are the people most vested in the status quo and most likely to defend it. That’s why incumbents often surrender the future to upstarts. The only solution is to develop management systems that redistribute power to those who have most of their emotional equity invested in the future and have the least to lose from change.

Expand the scope of employee autonomy.

People at the bottom and middle of organization pyramids often feel powerless to initiate change. Rigid policy guidelines, tight spending limits, and a lack of self-directed time limit their autonomy. Companies must redesign management systems so they facilitate local experimentation and bottom-up initiatives.

Create internal markets for ideas, talent, and resources.

Funding decisions in corporations are usually made at the top and are heavily influenced by political factors. That’s why companies overinvest in the past and underfund the future. By contrast, resource allocation in a market-based system like the New York Stock Exchange is decentralized and apolitical. While markets are obviously vulnerable to short-term distortions, they’re better in the long run than big organizations at getting the right resources behind the right opportunities. To make resource allocation more flexible and dynamic, companies must create internal markets where legacy programs and new projects compete on an equal footing for talent and cash.

Depoliticize decision making.

The quality of top-level decision making is often compromised by executive hubris, unstated biases, and incomplete data. Moreover, the number of variables that must be factored into key decisions keeps growing. In deciding to spend millions of dollars to enter a new market or back a new technology, senior leaders seldom seek the advice of rank-and-file employees. However, those on the ground are often best placed to evaluate the issues that will make or break a new strategy. Companies need new decision-making processes that capture a variety of views, exploit the organization’s collective wisdom, and are free of position-influenced biases.

Better optimize trade-offs.

Organizational success in the years ahead will hinge on the ability of employees at all levels to manage seemingly irreconcilable trade-offs—between short-term earnings and long-term growth, competition and collaboration, structure and emergence, discipline and freedom, and individual and team success. Traditional systems rely on crude, universal policies that favor certain goals at the expense of others. Tomorrow’s systems must encourage healthy competition between opposing objectives and enable frontline employees to dynamically optimize key trade-offs. The aim is to create organizations that combine the exploration and learning capabilities of decentralized networks with the decision-making efficiency and focus of hierarchies.

Further unleash human imagination.

We know a lot about how to engender human creativity: Equip people with innovation tools, allow them to set aside time for thinking, destigmatize failure, create opportunities for serendipitous learning, and so on. However, little of this knowledge has infiltrated management systems. Worse, many companies institutionalize a sort of creative apartheid. They give a few individuals creative roles and the time to pursue their interests while assuming that most other employees are unimaginative. Tomorrow’s management processes must nurture innovation in every corner of the organization.

Enable communities of passion.

Passion is a significant multiplier of human accomplishment, particularly when like-minded individuals converge around a worthy cause. Yet a wealth of data indicates that most employees are emotionally disengaged at work. They are unfulfilled, and consequently their organizations underperform. Companies must encourage communities of passion by allowing individuals to find a higher calling within their work lives, by helping to connect employees who share similar passions, and by better aligning the organization’s objectives with the natural interests of its people.

Retool management for an open world.

Emerging business models increasingly rely on value-creating networks and forms of social production that transcend organizational boundaries. In these environments, management tools that rely on the use of positional power are likely to be ineffective or counterproductive. In a network of volunteers or legally independent agents, the “leader” has to energize and enlarge the community rather than manage it from above. Success therefore requires developing new approaches to mobilizing and coordinating human efforts.

Humanize the language and practice of business.

The goals of management are usually described in words like “efficiency,” “advantage,” “value,” “superiority,” “focus,” and “differentiation.” Important as these objectives are, they lack the power to rouse human hearts. To create organizations that are almost human in their capacity to adapt, innovate, and engage, management pioneers must find ways to infuse mundane business activities with deeper, soul-stirring ideals, such as honor, truth, love, justice, and beauty. These timeless virtues have long inspired human beings to extraordinary accomplishment and can no longer be relegated to the fringes of management.

Retrain managerial minds.

Management training has traditionally focused on helping leaders develop a particular portfolio of cognitive skills: left-brain thinking, deductive reasoning, analytical problem solving, and solutions engineering. Tomorrow’s managers will require new skills, among them reflective or double-loop learning, systems-based thinking, creative problem solving, and values-driven thinking. Business schools and companies must redesign training programs to help executives develop such skills and reorient management systems to encourage their application.

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