Big businesses struggle to innovate, in part because of bloated management structures. If you're a middle manager in a large corporation, you don't need to do well to keep your job; you simply need to not do poorly.
A recent paper, The Dark Side of Analyst Coverage: The Case of Innovation, zooms in on the underlying problem: The more that analysts cover a company, the less likely it is that the company will innovate, because if it does, its share price might drop. For upper management, strong share prices are the measure of success, and the key to better compensation and job security, while poor share prices lead to hostile takeovers or bankruptcy.
Bottom line: Managers are not producers
Large corporations have huge numbers of managers whose job is to guide producers rather than be producers. But companies that have applied the principles of agile to management favor products over process, and therefore favor software engineers over managers. Scrum, the most popular agile system today, focuses on product owners, teams, and scrum masters?not managers. With self-directed teams, many agile companies find themselves wondering why they should bother with managers at all.
In 2012, a leaked copy of gaming company Valve Corp.'s Handbook for New Employees revealed that it has no managers. Valve Corp. is a big company, with greater profits per employee than Microsoft or Apple. However, they're not alone in their "managerless" success. Github, the top choice for software developers who want to share and collaborate on their projects, has fought for years to not have managers. Basecamp, Medium, and many other successful companies are either getting rid of managers or never had them in the first place. What's going on? How can these companies function without managers? Four reasons:
And there it is.
The middle is falling away
The move toward managerless companies is here to stay. This trend mostly affects middle management: the C-suite roles will remain, but top managers will increasingly allow the real producers?the teams?to run their own affairs.
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