Management 3.0

May 24th, 2010 § 0

When Detroit is criticized for falling behind the competition, besides closed culture, provincialism, unions, short sight and others, two words are always mentioned: poor management.

The fact that the “Detroit 3” had a poor management is very well known and the very situation the three corporations find themselves in is an undeniable proof of that. In the last 3-4 decades poor management became practically part of their brand image.

If they had a better management, would that have helped them? My answer is yes, but it would have helped just slightly, not enough to be competitive. The problem with all three corporations is that they still have in place a management at the 1.0 level. When most of everybody else is at 2.0 that shows that they have no chance to compete even if all the other problems are fixed.

Management 1.0 is very rigid, old and outdated. It’s also known as Taylorism Management and is about command and control. In the 50s and 60s it fit Detroit very well. The ex-Big Three didn’t have real competition and a lot of employees, at all levels, were returning from the military at the end of the war, used to the command and control system.
The assignments come always from the Top and they cannot be discussed, improved or changed. Doing that is like saying the Top is not perfect or the Top is wrong. The middle-management is like a conveyor belt. It takes the package from one place, the Top, and it delivers it to the other end, their teams. When the work is done the belt just changes direction. It’s a process of observation but not involvement. Individuals work independently and, at the end, the best idea of one individual is selected. That’s the reason Detroit always looked for stars, they looked for that one individual who can come up with the break-through idea.

Management 2.0 is a more dynamic system. It is based on the 1.0, then is still a hierarchy, but is about quality and process improvement. Managers get involved with their team. They channel the work such that the project goes, from the moment it is assigned to the delivery day, through the shortest path, using the time effectively for creativity and innovation. Here the managers, using their experience, eliminate from the very beginning scenarios which are not appropriate for that specific task. In a very competitive industry, like the automotive one, there is no time to go back and forth, trying everything. The time saved is used to innovate and refine.
In management 2.0 there is an open dialog at all levels. Ideas could come from any level and they are analyzed and, if viable, implemented, giving a great deal of satisfaction to its creator(s). And satisfaction is such a strong catalyzer for creativity.
The team’s individuals communicate constantly and they build on each other’s ideas, the result being a team work not the best individual’s work.

If the “Detroit 3” want to win they need to look much farther than 2.0. They need to look at management 3.0. Going up one step instead of two, means they would be barely catching up with the competition, and they will be just playing “me to”.

What is management 3.0? Does it exist?

Management 3.0 is still in its infancy and this is probably the best time for Detroit to act. It is the transition from command and control to coach and engage, unleashing people from rigid hierarchies and transforming their organizations in networks. Networks are the opposite of the silos, the ex-Big Three built during the last few decades, keeping people isolated within the organization, and also isolated from the rest of the country and the world. This isolation was, and perhaps still is, the biggest obstacle for these cultures to understand where they are and where they need to go.
Is there any car company out there at the level of Management 3.0, or at least close to it? I doubt. Even outside the car industry, the only place I could think of somebody approaching, or being at this level is Silicon Valley. Hopefully new startups, like Tesla in Palo Alto and Coda in Santa Monica, will take advantage of their position.

Will the “Detroit 3” be able to go through these changes? Or are they passed the edge of the cliff?
Ford is currently doing an excellent job in getting rid of the old structure and its image is improving constantly. The Ford brand made giant steps under Mullaly and hopefully will become again a leader in the auto industry .At the opposite end there is Chrysler, today in the hands of Fiat, the future of this old American icon being, for now, a big question mark.

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