Management’s Second Curve

Richard Straub

Richard Straub is Associate Director Corporate Services EFMD and President of the Peter Drucker Society Europe.

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Management has served us well. Since the Industrial Revolution it has paved the way for a sustained and accelerating rise in living standards unheard of and unforeseen. But with the ‘digital revolution’, we are entering a new era where the logic of industrial-age organisation has lost its purchase. It is time to reinvent it, says Richard Straub.

It could be said that what previous great innovations, based on steam, electricity and the internal combustion engine, did for human muscle, computers and sensors linked by the internet are promising to do for the human brain.

Indeed, this has led some in Silicon Valley to talk seriously of the “singularity”, the talismanic moment when the computer power of the machine brain equals or outstrips that of the human variety.

And just as dramatic changes in the human condition brought about in previous revolutions – such as urbanisation, large-scale employment, mass literacy and generalised healthcare – swept away much of the pre-industrial past, the accelerating cycles of digital technologies will, for good or ill, upend much of the socio-economic and mental structures that we have inhabited for the past two centuries.

As Charles Handy notes: “The internet and its corollaries are revolutionising much of our lives, but taking the guts out of many of our institutions as they do so”.

Tumbling transaction costs alter the economics of organisation and, at a stroke, invalidate old business models while enabling unimagined new ones.

New giants such as Amazon, Google, Apple and Facebook, along with emerging upstarts such asUber and Airbnb, are borne by waves of “winner takes all” network effects that dramatically speed up corporate, and leadership, life cycles. Michael Porter sees the advent of smart connected products as signalling a new spurt of growth and change. And beyond that, the implications for further innovations are simply incalculable. But we can say that no aspect of working or private life will be unaffected.

A foretaste of what is to come is the rapid progress of automation not just in routine manufacturing and service work but also increasingly in knowledge jobs.

In a much-quoted report, the Oxford Martin School in the UK has predicted that over the next 20 years 45% of US jobs are at “high risk” of being automated.

As artificial intelligence improves, it will not just be “workers in construction sales and logistics” who feel the employment pinch; managers, scientists, engineers, journalists and others in the “creative industries” will be affected too.

If we continue to take the idea of automation literally (we don’t have to) the “job” in the sense that generations of employees have understood it may be over. At the very least, “we can no longer rely on the institutions of education and the workplace to prepare us for life and look after us during it,” Handy observes.

For the full article, you can view the PDF or listen to the podcast.

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