Management in the 1980'S by Harold J

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Management in the 1980's by Harold J. Leavitt and Thomas L. Whisler

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Management in the 1980's

1 By HAROLD J. LEAVITT and THOMAS L. WHISLER i

REPRINTED FROM « HARVARD BUSINESS REVIEW NOVEMBER-DECEMBER 1958

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( Single reprint $1.00 Four to 99 $ 0.40 each ( Two reprints 1.30 First 100 39-7° ( Three reprints 1.50 Additional 10o's 10.00 each ( Harvard Business Review ( SOLDIERS FIELD, BOSTON 63, MASSACHUSETTS Edited under the direction of the Faculty of The Graduate School of Business HARVARD Administration,Harvard University BUSINESS REVIEW BOARD Stanley F. Ex Officio Neil H. Chairman Vernon R. Alden Stephen H. Fuller Business Robert W. Austin Lincoln Gordon James R. Bright Leonard C. R. Langer Edward C Bursk Ralph W. Hidy J. Keith Butters Thomas J. Raymond E. Raymond Corey Robert O. Schlaifer Bertrand Fox Ross G. Walker Review EDITOR November December 1958 Vol. 36, No. 6 Edward C. Bursk - Associate Editor: John F. Chapman Assistant Editor: David W. Ewing ARTICLES \ Assistant Editor: Dan H. Fenn, Jr. Management in the 1980's 41 Assistant Editor: Rollie Tillman, Jr. Harold J. Leavitt and Thomas L. Whisler Managing Editor: Virginia B. Fales Advertising Director: John Nimmo Sharper Focus for the Corporate Image 49 Industrial Programs: Jacob F. Weintz Pierre Martineau Business Manager: T. K. Worthington Circulation Director: Ernest D. Frawley How to Evaluate New Capital Investments 59 Circulation Manager: Agnes M. Jordan John G. McLean Address all communications, including manu- Let's Export Marketing Know-How 70 scripts and change of address, to Harvard Emlen Business Review, Soldiers Field, Boston 63, Woodruff J. Mass. Telephone: Klrkland 7-9800. New Threat in State Business Taxation 77 Reprints of all articles and features in this Paul Studenski and Gerald J. Glasser are issue, as well as most previous issues, and Fund Investing available. Information on request from Busi- Common Stocks Pension 92 L. Howell ness Office at above address. Paul A Volume Index to the Review is published The Organization : What Makes It Healthy? 107 annually with the November-December issue. Chris Argyris The contents are currently indexed in The Tougher Program for Management Training 117 Industrial Arts Index and in the Bulletin of F. Gordon Barry and C. G. Coleman, Jr. the Public Affairs Information Service. Fashion Theory and Product Design 126 Dwight E. Robinson

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Harold J. Leavitt and "Our interest in the new tech- Thomas L. nology, however, is not purely a Whisler by-product of this other interest. The alert manager likes to plan Leavitt's research interests have long i ahead. While sharing the univer- centered around experimental stud- sal curiosity of man regarding the ies of communication and organiza- future, the action-oriented execu- tional design, and Whisler has been interested in the wants to know, "What larger implication tive also and also in mean in of of job specialization does all this terms therole of the 'odd' characters in the practical application?" Mindful organization." of swift advances in technology, management can ignore only at Harold J. Leavitt is Professor peril to itself the implications of of Industrial Administration and theresulting pressures on its func- Psychology in the Graduate School tion. Of particular importance is of Industrial Administration at what Harold J. Leavitt and Thom- Carnegie Institute of Technology. as L. Whisler call the new "in- He has served as Consultant to formation technology." the European Productivity Agen- No Orwellian fantasy on life cy, and was Vice President of in the 1980*5, Management in the Nejelski & Company. His latest 19 80s is a reasoned prediction of book is entitled Managerial Psy- the adjustments business organi- chology (Chicago, University of zation must make in the coming Chicago Press, 1958). era. When asked how they came Thomas L. Whisler has been a tobe interested in this subject, the contributor to several professional authors told the Editors: journals and to the Encyclopaedia "We had heard so much recent- Britannica. He is active in indus- ly of the bankruptcy of personnel trial consulting and is Associate managementas a staff function that Professor of Industrial Relations, to School of Business, University of we started explore further. From 1 there we passed quickly to the more Chicago. exciting problem of the changing nature of management in general. — The Editors Harvard Business Review November-December 1958

New information flows cut new organization channels.

MANAGEMENT I in the 1980's

By Harold J. Leavitt and in the offing, though its applications have not yet Thomas L. Whisler emerged very clearly; it consists of the simulation of higher-order thinking through computer Over the last decade a new technology has programs. begun to take hold in American business, one Information technology is likely to have its so new that its significance is still difficult to greatest impact on middle and top management. evaluate. While many aspects of this technol- In many instances it will lead to opposite con- ogy are uncertain, it seems clear that it will clusions from those dictated by the currently move into the managerial scene rapidly, with popular philosophy of "participative" manage- definite and far-reaching impact on managerial ment. Broadly, our prognostications are along organization. In this article we would like to the following lines: speculate about these effects, especially as they (1) Information technology should move the apply to medium-size and large business firms boundary between planning and performance up- of the future. ward. Just as planning was taken from the hourly The new technology does not yet have a single^ worker and given to the industrial engineer, we established name. We shall call it information now expect it to be taken from a number of middle managers and given to as yet largely nonexist- technology. It is composed of several related i techniques for processing ent specialists: "operations researchers," perhaps, parts. One includes or at middle- it is "organizational analysts." Jobs today's large amounts of information rapidly, and management level will become highly structured. epitomized by the high-speed computer. A sec- Much more of the work will be programed, i.e., ond part centers around the application of sta- covered by sets of operating rules governing the tistical and mathematical methods to decision- day-to-day decisions that are made. making problems; it is represented by techniques (2) Correlatively, we predict that large indus- i like mathematical programing, and by method- trial organizations will recentralize, that top man- I ologies like operations research. A third part is agers will take on an even larger proportion of the 41 I

42 Harvard Business Review innovating, planning, and other "creative" func- acteristically, application has not, and probably tions than they have now. will not in the future, wait on completion of (3) A radical reorganization of middle-manage- basic research. ment levels should occur, with certain classes of middle-management jobsmoving downward in sta- Distinctive Features tus and compensation (because they will require call information technology "new" be- less autonomy and skill), while other classes move We not upward into the top-management group. cause one did see much use of it until World War 11, it did not become clearly visible in (4) We suggest, too, that the line separating the and is also, top from the middle of the organization will be industry until a decade later. It new, drawn more clearly and impenetrably than ever, in that it can be differentiated from at least two much like the line drawn in the last few decades earlier industrial technologies: between hourly workers and first-line supervisors. (1) In the first two decades of this century, 1 Frederick W. Taylor's scientific management con- The New Technology stituted a new and influential technology one that took a large part in shaping the design— of Information technology has diverse roots industrial organizations. with contributions from such disparate groups— (2) Largely after World War II a second dis- as sociologists and electrical engineers. Working tinct technology, participative management, seri- independently, people from many disciplines ously overtook — and even partially displaced — worrying problems that have scientific management. Notions about decentrali- have been about zation, morale, and human relations modified and to related and cross-fertil- turned out be closely sometimes reversed earlier applications of scien- point izing. Cases in are the engineers' develop- tific management. Individual incentives, for ex- ment of servomechanisms and the related de- ample, were treated first as simple applications of velopments of general cybernetics and informa- Taylorism, but they have more recendy been re- tion theory. These ideas from the "hard" sci- vised in the light of "participative" ideas. ences all had a direct bearing on problems of processing information in particular, the de- The scientific and participative varieties both velopment of techniques—for conceptualizing and survived. One reason is that scientific manage- measuring information. ment concentrated on the hourly worker, while Related ideas have also emerged from other participative management has generally aimed disciplines. The mathematical economist came one level higher, at middle managers, so they along with game theory, a means of ordering have not conflicted. But what will happen now? and permitting analysis of strategies and tactics The new information technology has direct im- in purely competitive "think-" type games. Op- plications for middle management as well as top erations research fits in here, too; OR people management. use of evolving mathematical concepts, made Current Picture or devised their own, for solving multivariate problems without necessarily worrying about The inroads made by this technology are al- the particular context of the variables. And from ready apparent, so that our predictions are more social psychology ideas about communication extrapolations than derivations.1 But the signifi- structures in groups began to emerge, followed cance of the new trends has been obscured by by ideas about thinking and general problem- the wave of interest in participative manage- solving processes. ment and decentralization. Information tech- I All of these developments, and many others nology seems now to show itself mostly in the I from even more diverse sources, have in com- periphery of management. Its applications ap- mon a concern about the systematic manipula- pear to be independent of central organizational tion of information in individuals, groups, or issues like communication and creativity. We machines. The relationships among the ideas have tended until now to use little pieces of the are not yet clear, nor has the wheat been ade- new technology to generate information, or to i quately separated from the chaff. It is hard to lay down limits for subtasks that can then be tell who started what, what preceded what, and used within the old structural framework. which is method and which theory. But, char- Some of this sparing use of information tech- 1 Two examples of current developments are discussed ruary 1958,p. 84; and "Two-Way Overhaul Rebuilds in "Putting Arma Back on Its Feet," Business Week, Feb- Raytheon," Business Week, February 1958, p. 91. 1

i, 22, Management in the 1980's 43 nology may be due to the fact that those of us systems that their large, centralized organizations with a large commitment to participative man- needed. Information technology should make agement have cause to resist the central impli- recentralization possible. It may also obviate cations of the new techniques. But the implica- other major reasons for decentralization. For tions are becoming harder to deny. Many busi- example, speed and flexibility will be possible ness decisions once made judgmentally now can despite large size, and top executives will be less be made better by following some simple rou- dependent on subordinates because there will tines devised by a staff man whose company ex- be fewer "experience" and "judgment" areas perience is slight, whose position on the organi- in which the junior.men have more working zation chart is still unclear, and whose skill (if knowledge. In addition, more efficient informa- any) in human relations was picked up on the tion-processing techniques can be expected to playground. For example: shorten radically the feedback loop that tests the accuracy of original observations and decisions. We have heard recently of an electric utility Some of the psychological reasons for decen- i which is considering a move to take away from tralization generating-station managers virtually all responsi- may remain as compelling as ever. bility for deciding when to use stand-by generat- For instance, decentralized organizations prob- 1 ing capacity. A typical decision facing such man- ably provide a good training ground for the; agers develops on hot summer afternoons. In an- top manager. They make better use of the whole! ticipation of heavy home air-conditioning demand man; they encourage more active cooperation. I at the close of working hours, the manager may But though interest in these advantages should put on extra capacity in late afternoon. This re- be very great indeed, it will be counterbalanced sults in additional costs, such as overtime premi- by interest in the possibilities of effective top- ums. In this particular geographical area, rapidly management control over the work done by the fronts frequent. Should such moving cold are a middle echelons. Here an analogy to Taylorism front arrive after the commitment to added capacity is made, losses are substantial. If the front seems appropriate: i fails to arrive and capacity has not been added, In perspective, and discounting the counter- power must be purchased from an adjacent system trends instigated by participative management, the at penalty rates — again resulting in losses. upshot of Taylorism seems to have been the sepa- Such decisions may soon be made centrally by rating of the hourly worker from the rest of the individuals whose technical skills are in mathe- organization, and the acceptance by both manage- matics and computer programing, with absolutely ment and the worker of the idea that the worker no experience in generating stations. need not plan and create. Whether it is psycho- logically or socially justifiable or not, his creativity Rapid Spread and ingenuity are left largely to be acted out off We believe that information technology will the job in his home or his community. One reason, then, that we expect top acceptance of spread rapidly. One important reason for ex- in- formation technology is its implicit promise to pecting fast changes current in practices is that allow the top to control the middle just as Taylor- information technology will make centralization ism allowed the middle to control the bottom. much easier. By permitting more information to be organized more simply and processed more There are other reasons for expecting fast rapidly it will, in effect, extend the thinking changes. Information technology promises to range of individuals. It will allow the top level allow fewer people to do more work. The more of management intelligently to categorize, di- it can reduce the number of middle managers, gest, and act on a wider range of problems. the more top managers will be willing to try it. Moreover, by quantifying more information it We have not yet mentioned what may well will extend top management's control over the be the most compelling reason of all: the pres- decision processes of subordinates. sure on management to cope with increasingly If centralization becomes easier to implement, complicated engineering, logistics, and market- managers will probably revert to it. Decentrali- ing problems. The temporal distance between zation has, after all, been largely negatively the discovery of new knowledge and its practi- motivated. Top managers have backed into it cal application has been shrinking rapidly, per- because they have been unable to keep up with haps at a geometric rate. The pressure to re- size and technology. They could not design and organize in order to deal with the complicating, maintain the huge and complex communication speeding world should become very great in the i r* \

44 Harvard Business Review next decade. Improvisations and "adjustments" tus in the company, and possibly even out of within present organizational frameworks are their jobs. likely to prove quite inadequate; radical rethink- On a broader social scale one can conceive ing of organizational ideas is to be expected. of large problems outside the firm, that affect many institutions ancillary to industry. Thus: Revolutionary Effects What about education for management? How Speculating a little more, one can imagine " do we educate people for routinized middle- some radical effects of an accelerating develop- management jobs, especially if the path from ment of information technology — effects war- those jobs up to top management gets much ranting the adjective "revolutionary." rockier? Within the organization, for example, many " To what extent do business schools stop train- middle-management jobs may change in a man- ing specialists and start training generalists ner reminiscent of (but faster than) the transi- to move direcdy into top management? tion from shoemaker to stitcher, from old-time " To what extent do schools start training new craftsman to today's hourly worker. As we have kinds of specialists? drawn an organizational class line between the " What happens to the traditional apprentice hourly worker and the foreman, we may expect system of training within managerial ranks? a new line to be drawn heavily, though jag- What will happen to American class struc- gedly, between "top management" and "middle " ture? Do we end up with a new kind of management," with some vice presidents and managerial elite? Will technical knowledge be many ambitious suburban juniorexecutives fall- the major criterion for membership? ing on the lower side. Will technical knowledge become obsolete so In one respect, the picture we might paint for " fast that managers themselves will become ob- the 1980's bears a strong resemblance to the solete within the time span of their industrial organizations of certain other societies — e.g., to careers? the family-dominated organizations of Italy and other parts of Europe, and even to a small num- Middle-Management Changes I ber of such firms in our own country. There will be many fewer middle managers, and most Some jobsin industrial organizations are more of those who remain are likely to be routine programed than others. The job that has been technicians rather than thinkers. This similarity subjected to micromotion analysis, for instance, will be superficial, of course, for the changes we has been highly programed; rules about what is forecast here will be generated from quite dif- to be done, in what order, and by what proc- ferent origins. esses, are all specified. What organizational and social problems are Characteristically, the jobs of today's hourly likely to come up as by-products of suchchanges? , workers tend to be highly programed an ef- One can imagine major psychological problems fect of Taylorism. Conversely, the jobs— shown arising from the depersonalization of relation- at the tops of organization charts are often ships within management and the greater dis- largely unprogramed. They are "think" jobs tance between people at different levels. Major hard to define and describe operationally. Jobs— resistances should be expected in the process that appear in thebig middle area of the organi- of converting relatively autonomous and unpro- zation chart tend to be programed in part, with gramed middle-management jobs to highly rou- some specificrules to be followed, but with vary- tinized programs. ing amounts of room for judgment and auton- These problems may be of the same order as j omy.2 One major effect of information_echnol- some of those that were influential in the de- ogy is likely to be intensive programing of many velopment of American unions and in focusing jobsnow held by middle managers and the con- middle management's interest on techniques for comitant "deprograming" of others. overcoming the hourly workers' resistance to As organizations have proliferated in size and change. This time it will be the top executive specialization, the problem of control and inte- who is directly concerned, and the problems of gration of supervisory and staff levels has be- resistance to change will occur among those come increasingly worrisome. The best answer middle managers who are programed out of * See Robert N. McMurry, "The Case for Benevolent their autonomy, perhaps out of their current sta- Autocracy," HBR January-February 1958, p. 82.

I Management in the igBo's 45 until now has been participative management. interest and activity in the new techniques now But information technology promises better an- apparent in academic and research settings. swers. It promises to eliminate the risk of less New journals are appearing, and new societies than adequate decisions arising from garbled are springing up, like the Operations Research communications, from misconceptions of goals, Society of America (established in 1946), and and from unsatisfactory measurement of partial the Institute of Management Sciences (estab- contributions on the part of dozens of line and lished in 1954), both of which publish journals. staff specialists. The number of mathematicians and economic Good illustrations of this programing process analysts who are being taken into industry is are not common in middle management, but impressive, as is the development within indus- they do exist, mostly on the production side try, often on the personal staffs of top manage- of the business. For example, the programmers ment, of individuals or groups with new labels have had some successes in displacing the judg- like "operations researchers," "organization an- ment and experience of production schedulers alysts," or simply "special assistants for plan- (although the scheduler is still likely to be there ning." These new people are a cue to the emer- to act out the routines) and in displacing the gence of information technology. Just as pro- weekly scheduling meetings of production, sales, graming the operations of hourly workers cre- and supply people. Programs are also being ated the industrial engineer, so should informa- worked out in increasing numbers to yield de- tion technology, as planning is withdrawn from cisions about product mixes, warehousing, capi- middle levels, create new planners 3 with new tal budgeting, and so forth. names at the top level. Predicting the Impact So much for work becoming more routinized. At least two classes of middle jobs should move We have noted that not all middle-manage- upward toward deprogramedness: 7 ment jobswill be affected alikeby the new technology. What kinds of jobs will become more (1) The programmers themselves, the new in- routinized, and what kinds less? What factors formation engineers, should move up. They should will make the difference? appear increasingly in staff roles close to the top. The impact of change is likely to be deter- (2) We would also expect jobs in research and I mined by three criteria: development to go in that direction, for innovation and creativity will become increasingly important 1 . Ease of measurement —It is easier, at this to top management as the rate of obsolescence of stage, to apply the new techniques to jobs in and things and of information increases. Application around production than in, say, labor relations, of new techniques to scanning and analyzing the one reason being that quantitative measurement is business environment is bound to increase therange easier in the former realms. and number of possibilities for profitable produc- 2. Economic pressure Jobs that call for big tion. Competition between firms should center money decisions will tend—to get earlier invest- more and more around their capacities to innovate. ments in exploratory programing than others. 3. The acceptability of programing by the pres- Thus, in effect, we think that the horizontal ent jobholder — For some classes of jobs and of slice of the current organization chart that we people, the advent of impersonal rules call may offer middle managementwill break in two, with 1 protection or relief from frustration. We recently the larger portion shrinking and sinking a I heard, into for example, of efforts to program a main- more highly programed state and the smaller tenance by foreman's decisions providing rules for portion proliferating rising to a allocating priorities in maintenance and emergency and level where more creative is seem, repairs. The foreman supported this fully. He thinking needed. There to be signs was a harried and much blamed man, and pro- that such a split is already occurring. graming promised relief. The growth of literature on the organization of research activities in industry is one indication.4 Such factors should accelerate the use of pro- Many social scientists and industrial research graming in certain areas. So should the great managers, as well as some general managers, * See the journals, Operations Research and Manage- Business of the University of Chicago, October 1956, ment Science. p. 261; and also 1 Donald C. Pelz, "Some Social Fac- Much of the work in this area is still unpublished. tors Related to Performance in a Research Organiza- However, for some examples, see Herbert A. Shepard, tion," Administrative Science Quarterly, December 1956, "Superiors and Subordinates in Research," Journal of p. 310.

, 46 Harvard Business Review are worrying more and more about problems of We can guess that the top will focus even more creativity and authority in industrial research intensively on "horizon" problems, on problems organizations. Even some highly conservative of innovation and change. We can forecast, too, company presidents have been forced to break that in dealing with such problems the top will time-honored policies (such as the one relating continue for a while to fly by the seat of its salary and status to organizational rank) in deal- pants, that it will remain largely unprogramed. ing with their researchers. But even this is quite uncertain. Current research on the machine simulation of higher Individual Problems mental processes suggests that we will be able As the programing idea grows, some old hu- to program much of the top job before too many man relations problems may be redefined. Re- decades have passed. There is good authority definition will not necessarily solve the prob- for the prediction that within ten years a digital lems, but it may obviate some and give new computer will be the world's chess champion, priorities to others. and that another will discover and prove an im- Thus, the issue of morale versus productivity portant new mathematical theorem; and that in that now worries us may pale as programing the somewhat more distant future "the way moves in. The morale of programed personnel is open to deal scientifically with ill-structured may be of less central concern because less (or problems — to make the computer coextensive 5 at least a different sort of) productivity will be with the human mind." demanded of them. The execution of control- Meanwhile, we expect top management to be- lable routine acts does not require great enthusi- come more abstract, more search-and-research- asm by the actors. oriented and correspondingly less directly in- Another current issue may also take a new volved in the making of routine decisions. Allen form: the debate about the social advantages or Newell recently suggested to one of the authors disadvantages of "conformity." The stereotype that the wave of top-management game playing of the conforming junior executive, more inter- may be one manifestation of such change. Top ested in beingwell liked than in working, should management of the 1980's may indeed spend a become far less significant in a highly deper- good deal of money and time playing games, sonalized, highly programed, and more machine- trying to simulate its own behavior in hypothet- like middle-management world. Of course, the ical future environments. pressures in one sense to conform will become Room Innovators more intense, for the individual will be required for to stay within the limits of the routines that are As the work of the middle manager is pro- set for him. But the constant behavioral pres- gramed, the top manager should be freed more sure to be a "good guy," to get along, will have than ever from internal detail. But the top will less reason for existence. not only be released to think; it will be forced As for individualism, our .suspicion. is... that to think. We doubt that many large companies the average middle manager, willJhaveiQ satisfy in the 1980's will be able to survive for even his personal needs and aspirations off the job, a decade without major changes in products, largely as we have forced the hourly worker to methods, or internal organization. The rate of do. In this case, the Park Forest of the future obsolescence and the atmosphere of continuous may be an even more interesting phenomenon change which now characterize industries like than it is now. chemicals and pharmaceuticals should spread rapidly to other industries, pressuring them to- rapid Changes at the Top ward technical and organizational change. These ideas lead one to expect that research- If the new technology tends to split middle ers, or people like researchers, will sit closer to management thin it, simplify it, program it, the top floor of American companies in larger and separate —a large part of it more rigorously numbers; and that highly creative people will from the top what compensatory changes be more sought after and more highly valued might one expect— within the top group? than at present. But since researchers may be This is a much harder question to answer. as interested in technical problems and profes- See Herbert A. Simon and Allen Newell, "Heuristic search," Operations Research, January-February 1958, Problem' Solving: The Next Advance in Operations Re- p. 9. 1 Management in the igBo's 47 sional affiliations as in progress up the organi- with the increasing complexity of their tasks. zational ladder, we might expect more imper- The committor may be forced increasingly to sonal, problem-oriented behavior at the top, with have the top men operate as a committee, which less emphasis on loyalty to the firm and more on would mean that the precise individual locus of relatively rational concern with solving difficult decision may become even more obscure than problems. it is today. The small-group psychologists, the Again, top staff people may follow their prob- researchers on creativity, the clinicians all lems from firm to firm much more closely than should find a surfeit of work at that level.— they do now, so that ideas about executive turn- Our references to a small oligarchy at the top over and compensation may change along with may be misleading. There is no reason to be- ideas about tying people down with pension lieve that the absolute numbers of creative re- plans. Higher turnover at this level may prove search people or programmers will shrink; if advantageous to companies, for innovators can anything, thereverse will be true. It is the head burn out fast. We may see more brain picking men in these areas who will probably operate of the kind which is now supposedly character- as a little oligarchy, with subgroups and sub- istic of Madison Avenue. At this creating and subgroups of researchers and programmers re- innovating level, all the current work on organi- porting to them. But the optimal structural zation and communication in research groups shape of these unprogramed groups will not may find its payoff. necessarily be pyramidal. It is more likely to be Besides innovators and creators, new top- shifting and somewhat amorphous, while the management bodies will need programmers who operating, programed portions of the structure will focus on the internal organization itself. ought to be more clearly pyramidal than ever. These will be the operations researchers, mathe- The organization chart of the future may matical programmers, computer experts, and the look something like a football balanced upon like. It is not clear where these kinds of people the point of a church bell. Within the football are being located on organization charts today, (the top staff organization), problems of co- but our guess is that the programmer will find ordination, individual autonomy, group decision a place close to the top. He will probably re- making, and so on should arise more intensely main relatively free to innovate and to carry out than ever. We expect they will be dealt with his own applied research on what and how to quite independently of the bell portion of the program (although he may eventually settle into company, with distinctly different methods of using some stable repertory of techniques as has remuneration, control, and communication. the industrial engineer). Innovators and programmers will need to bfe Changes supplemented by "committors." Committors art; in Practices people who take on the role of approving oi- With the emergence decisions. of information technol- vetoing They will commit the organic ogy, radical changes in certain zation's resources to a particular course of ac- administrative practices may also be expected. Without at- tion the course chosen from some alterna- tempting to present the logic for the state- tives —provided by innovators and programmers. ments, we list a few changes that we foresee: The current notion that managers .ought to be "coordinators" should flower in the 1980's, but « With the organization of management into at the top rather than the middle; and the peo- corps (supervisors, programmers, creators, commit- ple to be coordinated will be top staff groups. tors), multiple entry points into the organization will become increasingly common. Tight Litde Oligarchy « Multiple sources of potential managers will We surmise that the "groupthink" which is develop, with training institutions outside the firm frightening some people today will a com- specializing along the lines of the new organiza- be tional structure. monplace in top management of thefuture. For while the innovators and the programmers may C Apprenticeship as a basis for training mana- maintain or even increase their autonomy, and gers will be used less and less since movement up while the committor may be more independent through the line will become increasingly unlikely. than ever of lower-line levels, the interdepend- « Top-management training will be taken over ence of the top-staff oligarchy should increase increasingly by universities, with on-the-job train- 48 Harvard Business Review ing done through jobs like that of assistant to a ed from similar relationships in connection with senior executive. the physical sciences. can organiza- managementperformance (2) They re-examine their own « Appraisal of higher information Many will be handled through some devices little used at tions for lost technologists. companies undoubtedly have such people, but not all present, such as evaluation by peers. of the top executives seem to know it. fl Appraisal of the new middle managers will (3) They can make an early study and reassess- become much more precise than present rating ment of some of the organizationally fuzzy groups techniques make possible, with the development in their own companies. Operations research de- of new methods attaching specific values to input- partments, departments of organization, statistical output parameters. analysis sections, perhaps even personnel depart- staff con- C Individual compensation for top staff groups ments, and other "odd-ball" groups often will be more strongly influenced by market forces tain people whose knowledge and ideas in this than ever before, given the increased mobility of realm have not been recognized. Such people pro- all kinds of managers. vide a potential nucleus for serious major efforts to plan for the inroads of information technology. C With the new organizational structure new kinds of compensation practices such as team Perhaps the biggest step managers need to bonuses will appear. — take is an internal, psychological one. In view — of the fact that information technology will Immediate Measures challenge many long-established practices and If the probability seems high that some of our doctrines, we will need to rethink some of the predictions are correct, what can businessmen attitudes and values which we have taken for do to prepare for them? A number of steps are granted. In particular, we may have to reap- inexpensive and relatively easy. Managers can, praise our traditional notions about the worth for example, explore these areas: of the individual as opposed to the organization, young (1) They can locate and work up closer liaison and about the mobility rights of men on with appropriate research organizations, academic the make. This kind of inquiry may be pain- and otherwise, just as many companies have profit- fully difficult, but will be increasingly necessary.

the "determinists" in administrative theory and in this category fall Amongmost of those who call themselves behaviorists —the notion is widely held that what an individual institution may be able to accomplish— is controlled by the general environment in which it operates. I suppose a certain amount of support may be secured for this position by an oversimplified reading of biology as well as of psychology and sociology. But the behaviorists are wrong. They are wrong not because what they assume lacks truth but because they leave out of consideration the contriving factors in man's intelligence. . . . Or putting the matter more positively, what we have to assume in administration is that man, being intelligent, is capable of a growing amount of free will. That he can help to determine his environment and not merely be bound by it and conform to it. And if you think that this is an idle notion, how else can you explain the American tradition, with the self-confidence and daring that our pio- neers exhibited, their lusty proclivity to take chances and to experiment, their insolent disregard for convention and for the shibboleths of the Old World which would have tied them to the rule of privilege and the powerful? Do we want at this stage in our national history to turn our backs on all this the chief virtue that has given us what success as a nation we have achieved? — Marshall E. Dimock, A Philosophy of Administration pp. 21-22. I New York, Harper & Brothers, 1958, Graduate School of Industrial Administration William Larimer Founder

Carnegie Institute of Technology Pittsburgh 13, Pennsylvania

REPRINT SERIES

1. Management Models and Industrial Applications of Linear Programming, by Abraham Charnes and William W. Cooper. Management October 1957. Additional copies, each. 2. Party legislative Representation as a Function of Election Results, by James G. March. Public Opinion Quarterly, Winter 1957-1958. 3. Decision Rules for Allocating Inventory to Lots and Cost Functions for Making Aggregate Inventory Decisions, by Charles C. Holt. Journal of Industrial Engineering, January- February 1958. 4. Heuristic Problem Solving: The Next Advance inOperations Research, by Herbert A. Simon and Allen Newell. Operations Research, January-February 1958. 5. Queuing with Preemptive Priorities or with Breakdown, by Harrison White and Lee S. Christie. Operations Research, January-February 1958. 6. Inflation in Perspective, by G. L. Bach. HarvardBusiness Review, January-February 1958. 7. Forecasting Uses of Anticipatory Data on Investment and Sales, by Franco Modiglianiand H. M. Weingartner. Quarterly Journal of Economics, February 1958. 8. Notes on Railroad Productivity and Efficiency Measures, by Edwin Mansfield and Harold H. Wein. Land Economics, February 1958. 9. Environment as an Influence on ManagerialAutonomy, by William R. Dill. Administrative Science Quarterly. March 1958. 10. Linear Decision Rules and Freight Yard Operations, by Edwin Mansfield and Harold H. Wein. Journal of Industrial Engineering, March 1958. 11. A Regression Control Chart for by Edwin Mansfield and Harold H. Wein. Applied Statistics, March 1958. 12. Mathematics for Production Scheduling, by Melvin Anshen, Charles C. Holt, Franco Modig- liani, John F. Muth, and Herbert A. Simon. Harvard Business Review, March-April 1958. 13. A Modelfor theLocation of a Railroad Classification Yard,by Edwin Mansfield and Harold H. Wein. Management April 1958. 14. Cost Horizons and Certainty Equivalents: An Approach to StochasticProgramming of Heat- ing Oil, by Abraham William W. Cooper, and G. H. Symonds. Management Science, April 1958. 15. Selective Perception: A Note on the DepartmentalIdentification of Executives, by DeWitt C. Dearborn and Herbert A. Simon. Sociometry, June 1958. 16. Elements of a Theory of Human Problem Solving,by Allen Newell, J. C. Shaw, and Herbert A. Simon. Psychological Review, May 1958. 17. TheCost of Capital,Corporation Finance and the Theory of Investment,by Franco Modig- liani and Merton H. Miller. American EconomicReview, June 1958. 18. New Developments on the OligopolyFront, by Franco Modigliani. Journal of Political Economy, June 1958. 19. Some Observations on the Business School of Tomorrow, by G. L. Bach. Management Jury 1958. 20. The Size Distribution of Business Firms, by Herbert A. Simon and Charles P. Bonini. American Economic Review, September 1958. 21. A Study of Decision-Making Within the Firm, by Edwin Mansfield and Harold H. Wein. Quarterly Journal of Economics, November 1958. 22. A Comment on Market Price and Stabilization Policy, by Allan H. Meltzer. Review of Economics and November 1958. (Continued on back cover)

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Statistics, The present series begins with articles written by the faculty of the Graduate School of Industrial Administration and published during the 1957-58 academic year. Single copies may be secured free of charge from: Reprint Editor, G_J JU CarnegieInstitute ofTechnology,Pittsburgh Pa. Additional copies are 25 eentaeach, unlessotherwise noted. y

(Continued) 23. Managementinthe 1980's, by Harold J. Leavitt and Thomas L. Whisler. Harvard Business Review, November-December 1858. 24. Extremal Principles for Simulating Traffic Flow in a Network, by Abraham Charnes and William W. Cooper- Proceedingsof the National Academy of February 1958. 25. Determining the "Best Possible" Inventory Levels, by Kalman Joseph Cohen. Industrial Quality Control, October 1958.

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