Managers for the Twenty-first Century

Managers for the Twenty-first Century by Lester Thurow

If an organization’s central command is “steady as she goes,” the organization needs an administrator, not a manager. A manager’s central role is facilitating organizational or social change. She or he is a change agent. Where there is no need for change, there is no need for management.

The MIT Sloan School of Management strongly believes that its purpose is to give students the tools they will need to be effective change agents in the rest of their careers. To do this it is necessary to start off with an understanding of the essential driving forces that will be forcing organizations to change. Change is not random, there are underlying processes. Three central driving forces—the growth of the world economy, the changing nature of the work force, and the arrival of genuine technological competition—are now at work.

Historical developments of the past half century and the invention of modern

telecommunication and transportation technologies have created a world economy. Effectively the American economy has died and been replaced by a world economy.

In the future there is no such thing as being an American manager. Even someone who spends an entire management career in Kansas City is in international management. He or she will compete with foreign firms, buy from foreign firms, sell to foreign firms, or acquire financing from foreign banks.

The globalization of the world’s capital market that has occurred in the past 10 years will be replicated right across the economy in the next decade. An international perspective has become central to management. Without it managers are operating in ignorance and cannot understand what is happening to them and their firms.

Partly because of globalization and partly because of demography, the work forces of the next century are going to be very different from those of the last century. Most firms will be

employing more foreign nationals. More likely than not, you and your boss will not be of the same nationality. Demography and changing social mores mean that white males will become a smaller fraction of the work force as women and minorities grow in importance. All of these factors will require changes in the traditional methods of managing the work force.

In addition, the need to produce goods and services at quality levels previously thought

impossible to obtain in mass production and the spreading use of participatory management techniques will require a work force with much higher levels of education and skills. Production workers must be able to do statistical quality control; production workers must to be able to do just-in-time inventories. Managers are increasingly shifting from a “don’t think, do what you are told” to a “think, I am not going to tell you what to do” style of management.

This shift is occurring not because today’s managers are more enlightened than yesterday’s managers but because the evidence is rapidly mounting that the second style of management is

more productive than the first style of management. But this means that problems of training and motivating the work force both become more central and require different modes of behavior.

To be on top of this situation, tomorrow’s managers will have to have a strong background in organizational psychology, human relations, and labor economics. The MIT Sloan School of Management attempts to advance our understanding in these areas through research and then quickly brings the fruits of this new research to our students so that they can be leading-edge managers when it comes to the human side of the equation.

The first three decades after World War II were unusual in that the United States had a huge technological lead over all of the rest in the world. In a very real sense the world was not technologically competitive. American firms did not have to worry about their technological competitiveness because they were superior.

Those in marketing or finance did not have to worry about technology because they could rest assured that the products they were attempting to finance or sell were superior. Conversely, firms in the rest of the world could not hope to compete with American firms technologically. They had to look for niches where the most advanced technology was not central to success. But the world has disappeared. Today we live in a world where American firms no longer have automatic technological superiority. In some areas they are still ahead, in some areas they are average, and in some areas they are behind, but no average they are average.

What this means is that American managers have to understand the forces of technical change in ways that were not necessary in the past. Conversely, managers from the rest of the world know that it is now possible for them to dominate their American competitors if they understand the forces of technical change better than their American competitors do. In the world of tomorrow managers cannot be technologically illiterate regardless of their functional tasks within the firm. They don’t have to be scientists or engineers inventing new technologies, but they have to be managers who understand when to bet and when not to bet on new technologies. If they don’t understand what is going on and technology effectively becomes a black box, they will fail to make the changes that those who do understand what is going on inside the black box make. They will be losers, not winners.

Today’s CEOs are those who solved the central problems facing their companies 20 years ago. Tomorrow’s CEOs will be those who solve the central problems facing their companies today. Sloan hopes to produce a generation of managers who will be solving today’s and tomorrow’s problems and because they are successful in doing so they will become tomorrow’s captains of business.

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