The Management Revolution

Business and society are today in the midst of a revolution comparable to the Industrial Revolution in both scale and consequence. Today’s revolution has four components: the globalization of markets, the spread of the information technology and computer networks, the dismantling of traditional managerial hierarchies, and the creation of a new information economy. These four components are all occurring fast and at the same time, and are affected by and affect one another.

Globalization (the first component of today’s revolution) once meant simply exporting some goods and services to other nations and maybe setting up a few production facilities abroad. Today, globalization means that more and more managerial decisions must consider the world as whole, rather than the region or the nation, as the relevant marketplace. Because of the tremendous improvement in communications and transportation, tastes are converging internationally, many more products than in the past are now imported and most others parts of components made abroad, and domestic producers face ever growing competition from abroad.

The second component of today’s revolution is the spread of the information technology and computer networks. Practically every bank teller, post office worker, retail clerk, telephone operator, bill collector, and so on works with a computer today. This greatly speeds up the delivery of goods and services, cuts waste, reduces inventory, and generally increases productivity. The computer has also dismantled traditional managerial hierarchies and decimated the ranks of middle management (the third component of today’s revolution). In the past, middle managers were the transmission lines for information between top management and workers. Today, information can in most instances be transmitted from top management directly to workers and vice-versa by a simple tap of a computer key and without any need of middle management.

The fourth component of today’s revolution is the rapid spread of the information economy where the creation of value is increasingly based on knowledge and communications rather than as in the past on natural resources and physical labor. For example, many auto repairs will soon be made not by a mechanic with a wrench but by a technician who fixes an engine knock by reprogramming a computer chip, and goods and services will increasingly be marketed and distributed electronically. Today’s four-pronged revolution affects drastically not only how traditional products and services are produced and distributed but also the entire organization of production, consumption, and management in ways that are not yet fully evident or understood.