Assignment 1

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p a r t 1

The World
of Innovative
Management

ch 1

After studying this chapter, you should be able to:

1. Describe five management competencies that are becoming
crucial in today’s fast-paced and rapidly changing world.

2. Define the four management functions and the type of
management activity associated with each.

3. Explain the difference between efficiency and effectiveness
and their importance for organizational performance.

4. Describe technical, human, and conceptual skills and their
relevance for managers.

5. Describe management types and the horizontal and vertical
differences among them.

6. Summarize the personal challenges involved in becoming a
new manager.

7. Define ten roles that managers perform in organizations.

8. Explain the unique characteristics of the manager’s role in
small businesses and nonprofit organizations.

Management Competencies for Today’s
World

The Basic Functions of Management
Planning
Leading

Organizing
Controlling

Organizational Performance

Management Skills
Technical Skills
Conceptual Skills

Human Skills
When Skills Fail

Management Types
Vertical Differences
Horizontal Differences

What Is a Manager’s Job Really Like?
Making the Leap: Becoming a New Manager
Manager Activities
Manager Roles

Managing in Small es and
Nonprofit Organizations

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“In the late 1980s, it seemed inconceivable that Bon Jovi would last five years,” wrote one music historian. Yet more than three decades after the rock group was founded, it is still one of the world’s top-selling bands. In 2014, Jon Bon Jovi was
ranked No. 4 on Forbes’s list of the year’s highest-paid musicians, and the December 2015
announcement of the band’s 14th album had classic rock fans eagerly anticipating another
concert tour.1 Bon Jovi has been so successful partly because its lead singer and name-
sake is a consummate manager. For example, as the group prepared for the launch of its
most recent tour, Jon Bon Jovi was hidden away in the arena at the Mohegan Sun casino
in Uncasville, Connecticut, for days, overseeing nearly 100 people organized into various
teams such as lighting, sound, and video. It is an activity that he performs again and again
when the band is touring, managing a tightly coordinated operation similar to setting up
or readjusting a production line for a manufacturing business. Yet Bon Jovi is also perform-
ing other management activities throughout the year—planning and setting goals for the
future, organizing tasks and assigning responsibilities, influencing and motivating band
members and others, monitoring operations and finances, and networking inside and out-
side the organization (in perhaps the most prestigious example, he was appointed to Presi-
dent Barack Obama’s White House Council for Community Solutions). Efficiency and
effectiveness are key words in his vocabulary. “Jon is a businessman,” said former comanager
David Munns. “He knows how to have a great-quality show, but he also knows how to be
efficient with money.”2

Jon Bon Jovi was smart enough to hire good people who could handle both production
activities and the day-to-day minutiae that go along with a global music business. However,
it took several years to develop and hone his management skills. He assumed top manage-
ment responsibilities for the band in 1992, about 10 years after founding it, because he had
a vision that his professional managers weren’t supporting. “Most of my peers wanted to be
on the cover of Circus [a magazine devoted to rock music that was published from 1966 to
2006],” he said. “I wanted to be on the cover of Time.”3

The nature of management is to motivate and coordinate others to cope with diverse
and far-reaching challenges. One surprise for many people when they first step into a man-
agement role is that they are much less in control of things than they expected to be. Many
new managers expect to have power, to be in control, and to be personally responsible for
departmental outcomes. However, managers depend on subordinates more than the re-
verse, and they are evaluated on the work of other people rather than on their own achieve-
ments. Managers set up the systems and conditions that help other people perform well.

In the past, many managers exercised tight control over employees. But the field of
management is undergoing a revolution that asks managers to do more with less, to engage
employees’ hearts and minds as well as their physical energy, to see change rather than
stability as natural, and to inspire vision and cultural values that allow people to create a
truly collaborative and productive workplace. This textbook introduces and explains the
process of management and the changing ways of thinking about the world that are critical
for managers.

Management matters, as substantiated by a McKinsey Global Institute study. In col-
laboration with the Centre for Economic Performance at the London School of Econom-
ics and partners from Stanford and Harvard Universities, McKinsey collected data over a
dozen years from roughly 14,000 organizations in more than 30 countries. The data show
that well-managed companies have higher productivity, higher market value, and greater
growth, as well as a superior ability to survive difficult conditions.4 By reviewing the ac-
tions of some successful and not-so-successful managers, you will learn the fundamentals
of management. By the end of this chapter, you will recognize some of the skills that man-
agers use to keep organizations on track, and you will begin to understand how managers
can achieve astonishing results through people. By the end of this book, you will under-
stand the fundamental management skills for planning, organizing, leading, and control-
ling a department or an entire organization.

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1-1 Management competencies
for Today’s World
Management is the attainment of organizational goals in an effective and efficient
manner through planning, organizing, leading, and controlling organizational re-
sources, as Jon Bon Jovi does for his rock band and as chairman of the Jon Bon
Jovi Soul Foundation, a nonprofit organization that supports community efforts
to combat poverty and homelessness. You will learn more about these four basic
management functions later in this chapter.

There are certain elements of management that are timeless, but environmental
shifts also influence the practice of management. In recent years, rapid environmen-
tal changes have caused a fundamental transformation in what is required of effective
managers. Technological advances such as social media and mobile apps, the move
to a knowledge/information-based economy, the rise of virtual work, global mar-
ket forces, the growing threat of cybercrime, and shifting employee and customer
expectations have led to a decline in organizational hierarchies and more empow-

ered workers, which calls for a new approach to management that may be quite different
from managing in the past.5 Exhibit 1.1 shows the shift from the traditional management
approach to the new management competencies that are essential in today’s environment.

Instead of being a controller, today’s effective manager is an enabler who helps people do
and be their best. Today’s managers learn to “design the rules of the game without specify-
ing the actions of the players.”6 Managers shape the cultures, systems, and conditions and
then give people the freedom to move the organization in the direction it needs to go. They
help people get what they need, remove obstacles, provide learning opportunities, and of-
fer feedback, coaching, and career guidance. Instead of “management by keeping tabs,” they
employ an empowering leadership style. Much work is done in teams rather than by indi-
viduals, so team leadership skills are crucial. People in many organizations work at scat-
tered locations, so managers can’t monitor behavior continually. Some organizations are
even experimenting with a bossless design that turns management authority and responsi-
bility over to employees. Managing relationships based on authentic conversation and col-
laboration is essential for successful outcomes. Social media is a growing tool for managers
to enhance communication and collaboration in support of empowered or bossless work

“I was once a command-
and-control guy, but
the environment’s
different today. I think
now it’s a question
of making people
feel they’re making a
contribution.”

—Joseph J. plumeri,
ForMer ChaIrMan and Ceo

oF WIllIs Group holdInGs

Management
Principle

From Traditional Approach To New Competencies

Overseeing Work From controller

Accomplishing Tasks
From supervising
individuals

Managing Relationships
From conflict and
competition

Leading From autocratic

To enabler

To leading teams

To collaboration, including use
of social media

To empowering, sometimes
bossless

To mobilizing for changeDesigning
From maintaining
stability

T

T

T
o

T

T

e x h i b i t 1.1 State-of-the-Art Management Competencies for Today’s World

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environments. In addition, managers sometimes coordinate the work of people who aren’t
under their direct control, such as those in partner organizations, and they sometimes even
work with competitors. They have to find common ground among people who might have
disparate views and agendas and align them to go in the same direction.

Also, as shown in Exhibit 1.1, today’s best managers are “future-facing.” That is, they design
the organization and culture to anticipate threats and opportunities from the environment,
challenge the status quo, and promote creativity, learning, adaptation, and innovation. Indus-
tries, technologies, economies, governments, and societies are in constant flux, and managers
are responsible for helping their organizations navigate through the unpredictable with flexi-
bility and innovation.7 Today’s world is constantly changing, but “the more unpredictable the
environment, the greater the opportunity—if [managers] have the . . . skills to capitalize on it.”8

There are managers in all types of organizations who are learning to apply the new manage-
ment skills and competencies, and you will learn about some of them throughout this textbook.
Consider how coaches of the Oregon Ducks football team are applying new management ideas.

MANAGER
SPOTLIGHT
Oregon Ducks

“It’s awesome,” the Oregon Ducks starting center told a reporter. “There’s lead-
ership everywhere you go. We call it horizontal leadership.” Hroniss grasu now
plays for the Chicago Bears of the National Football League (NFL), but he spent
four years as starting center for the university of Oregon Ducks.

The Ducks are known for doing things differently. Instead of a hierarchical
organization with the head coach at the top, Ducks coaches, administrators, and
players are considered equals and collaborators. When head coach Mark Helfrich
was asked about the team’s leadership, he quickly mentioned about ten names
of players who had stepped forward as vocal leaders. A freshman can call out
a senior just as easily as a senior star can challenge a new player. The lowliest
graduate assistant is treated with the same respect and esteem as a high-level
staff member. “It’s so different here,” said player Bralon Addison. “Everybody’s
just ‘one’ and I like that so much about this team.”

Another way in which the Ducks are different is that coaches have done away with
the traditional approach of yelling at players in favor of a softer, more caring method
of correction and motivation. “When you put your arm around a guy and say, ‘This is
how it could be done better,’ they understand you care about them and you just want
what’s best for the team,” said Marcus Mariota, the Duck’s Heisman Trophy–winning
former quarterback. “Those guys already understand that they did wrong.”

Former defensive coordinator Nick Aliotti says things weren’t that way when he
coached for the Ducks. “I would raise my voice at times,” he admits. “But society
has changed.” By the end of his career with Oregon, Aliotti says he rarely raised his
voice because players were no longer responding to that kind of communication.9

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The approach the Oregon Ducks coaches use to interact with a new generation of
football players is also being used more often in other types of organizations. Research has
found that the “drill sergeant approach” doesn’t go over well with the “Millennial” genera-
tion (those born in the 1980s and 1990s), so managers in all types of organizations are
using a softer, more collaborative style of management.10

The shift to a new way of managing isn’t easy for traditional managers who are accus-
tomed to being “in charge,” making all the decisions, and knowing where their subordinates
are and what they’re doing at every moment. Even more changes and challenges are on the
horizon for organizations and managers. This is an exciting and challenging time to be enter-
ing the field of management. Throughout this book, you will learn much more about the new
workplace, about the new and dynamic roles that managers are playing in the twenty-first
century, and about how you can be an effective manager in a complex, ever-changing world.

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1-2 The Basic Functions of Management
Every day, managers solve difficult problems, turn organizations around, and
achieve astonishing performances. To be successful, every organization needs good
managers. The famed management theorist Peter Drucker (1909–2005), often
credited with creating the modern study of management, summed up the job
of the manager by specifying five tasks, as outlined in Exhibit 1.2.11 In essence,
managers set goals, organize activities, motivate and communicate, measure per-
formance, and develop people. These five manager activities apply not only to top
executives such as Mark Zuckerberg at Facebook, Ginny Rometty at IBM, and
Kenneth Chenault at American Express, but also to the manager of a restaurant
in your hometown, the leader of an airport security team, a supervisor at a Web
hosting service, or the director of sales and marketing for a local business.

The activities outlined in Exhibit 1.2 fall into four fundamental management
functions: planning (setting goals and deciding activities), organizing (organi zing
activities and people), leading (motivating, communicating with, and develop-
ing people), and controlling (establishing targets and measuring performance).
Depending on their job situation, managers perform numerous and varied tasks,
but they all can be categorized within these four primary functions.

Exhibit 1.3 illustrates the process of how managers use resources to attain or-
ganizational goals through the functions of planning, organizing, leading, and con-

trolling. Chapters of this book are devoted to the multiple activities and skills associated
with each function, as well as to the environment, global competitiveness, and ethics that
influence how managers perform these functions.

1-2A Planning
Planning means identifying goals for future organizational performance and deciding on
the tasks and use of resources needed to attain them. In other words, managerial planning
defines where the organization wants to be in the future and how to get there. A good ex-
ample of planning comes from General Electric (GE), where managers have sold divisions
such as plastics, insurance, and media to focus company resources on four key business
areas: energy, aircraft engines, health care, and financial services. GE used to relocate senior

●● Managers get things done by coordinating and
motivating other people.

●● Management is often a different experience from what
people expect.

●● Management is defined as the attainment of
organizational goals in an effective and efficient manner
through planning, organizing, leading, and controlling
organizational resources.

●● Turbulent environmental forces have caused a
significant shift in the competencies required for
effective managers.

●● Traditional management competencies could include
a command-and-control leadership style, a focus on
individual tasks, and a standardization of procedures
to maintain stability.

●● New management competencies include being
an enabler rather than a controller, using an
empowering leadership style, encouraging
collaboration, leading teams, and mobilizing
for change and innovation.

●● The Oregon Ducks football team illustrates some
of the new management competencies.

R e m e m b e R T h i s

“Good management
is the art of making
problems so interesting
and their solutions
so constructive that
everyone wants to get
to work and deal with
them.”

—paul hawken,
envIronMenTalIsT, enTrepreneur, and

auThor oF Natural Capitalism

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5. Develop People
Recognize the value of
employees and develop
this critical organizational
asset

ople
he value of
and develop
organizational

1. Set Objectives
Establish goals for the
group and decide what
must be done to
achieve them

ish goals for the
and decide what

be done to
e them

asset

4. Measure
Set targets and
standards; appraise
performance

2. Organize
Divide work into
manageable activities
and select people to
accomplish tasks

g
and select people to
accomplish tasks

3. Motivate and
Communicate
Create teamwork via
decisions on pay,
promotions, etc., and
through communication

e x h i b i t 1.2 What Do Managers Do?

SOuRCE: Based on “What Do Managers Do?” The Wall Street Journal Online, http://guides.wsj.com
/management/developing-a-leadership-style/what-do-managers-do/ (accessed August 11, 2010),
article adapted from Alan Murray, The Wall Street Journal Essential Guide to Management (New York:
Harper , 2010).

executives every few years to different divisions so that they developed a broad, general
expertise. In line with recent strategic refocusing, the company now keeps people in their
business units longer so they can gain a deeper understanding of the products and custom-
ers within each of the four core businesses.12

Management Functions

Planning
Select goals and

ways to attain them

Leading
Use influence to

motivate employees

Controlling
Monitor activities

and make corrections

Performance
Attain goals
Products
Services
Efficiency
Effectiveness

Resources
Human
Financial
Raw materials
Technological
Information

Organizing
Assign

responsibility for task
accomplishment

e x h i b i t 1.3 The Process of Management

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1-2B Organizing
Organizing typically follows planning and reflects how the organization tries to accomplish
the plan. Organizing involves assigning tasks, grouping tasks into departments, delegating
authority, and allocating resources across the organization. In recent years, organizations
as diverse as IBM, the Catholic Church, Estée Lauder, and the Federal Bureau of Inves-
tigation (FBI) have undergone structural reorganization to accommodate their changing
plans. Organizing was a key task for Oprah Winfrey as she tried to turn around her strug-
gling start-up cable network, OWN. She took over as CEO of the company, repositioned
some executives and hired new ones, and cut jobs to reduce costs and streamline the com-
pany. Along with programming changes, such as the comedy series Tyler Perry’s For Better
or Worse and the drama series The Haves and the Have Nots, structural changes brought
a lean, entrepreneurial approach that helped put OWN on solid ground. Winfrey said, “I
prided myself on leanness,” referring to the early days of her TV talk show. “ The opposite
was done here.”13

1-2C leading
Leading is the use of influence to motivate employees to achieve organizational goals. Lead-
ing means creating a shared culture and values, communicating goals to people throughout
the organization, and infusing employees with the desire to perform at a high level. As
CEO of Fiat Chrysler Automobiles, Sergio Marchionne spends about two weeks a month
in Michigan meeting with executive teams from sales, marketing, and industrial opera-
tions to talk about his plans and motivate people to accomplish ambitious goals for Chrys-
ler. Marchionne, who spends half his time in Italy running Fiat, rejected the 15th-floor
executive suite at Chrysler headquarters so he could provide more hands-on leadership
from an office close to the engineering center.14 One doesn’t have to be a top manager of a
big corporation to be an exceptional leader. Many managers working quietly in both large
and small organizations around the world provide strong leadership within departments,
teams, nonprofit organizations, and small businesses.

1-2D COntrOlling
Controlling is the fourth function in the management process. Controlling means monitor-
ing employees’ activities, determining whether the organization is moving toward its goals,
and making corrections as necessary. One trend in recent years is for companies to place less
emphasis on top-down control and more emphasis on training employees to monitor and
correct themselves. However, the ultimate responsibility for control still rests with managers.

John Stonecipher finds that as the president and CEO of
guidance Aviation, a high-altitude flight school in Prescott,
Arizona, his job involves all four management functions. Once
he’s charted the course for the operation (planning) and put all
the necessary policies, procedures, and structural mechanisms
in place (organizing), he supports and encourages his 50+
employees (leading) and makes sure that nothing falls through
the cracks (controlling). Thanks to his strengths in all of
these areas, the u.S. Small Administration named
Stonecipher a National Small Person of the Year.

Concept Connection

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For example, Jeff Bezos, founder and CEO of Amazon, is taking a hands-on approach to
control in his efforts to transform The Washington Post into a fast-moving digital news opera-
tion. After buying the Post for $250 million a few years ago, Bezos has largely stayed out of
editorial matters but he holds hour-long teleconferences with the paper’s top managers every
two weeks to get briefings on distribution strategy, the status of technology upgrades, and
other issues related to the digital makeover. For example, after receiving a complaint from a
reader about the time it took for the mobile app to load, Bezos ordered managers to improve
the load time to milliseconds and even suggested an idea for making it happen.15

Ineffective control can damage an organization. A good example comes from the
U.S. Secret Service, which has been embroiled in a public relations nightmare for several
years, partly due to a breakdown of managerial control. For example, in March 2015,
after a night out drinking, two senior agents in a government car hit a security barrier at
an active bomb investigation near the White House. Although officers on duty wanted
to administer a sobriety test, a supervisor told the officers to let the offending agents
go home. This event, combined with numerous other allegations of agent misconduct
and “morally repugnant behavior,” has put the Secret Service in a harsh spotlight. Two
directors have resigned under pressure, and numerous agents and top executives have
been fired or demoted. One response from managers has been to create stricter rules of
conduct, rules that apply even when agents are off duty.16

●● Managers perform a wide variety of activities that fall
within four primary management functions.

●● Planning is the management function concerned
with defining goals for future performance and how
to attain them.

●● Organizing involves assigning tasks, grouping tasks into
departments, and allocating resources.

●● Leading means using influence to motivate employees
to achieve the organization’s goals.

●● Controlling is concerned with monitoring employees’
activities, keeping the organization on track toward
meeting its goals and making corrections as necessary.

●● Recent U.S. Secret Service agency scandals can be traced
partly to a breakdown of management control.

R e m e m b e R T h i s

1-3 Organizational Performance
The definition of management also encompasses the idea of attaining organizational goals
in an efficient and effective manner. Management is so important because organizations
are so important. In an industrialized society where complex technologies dominate, or-
ganizations bring together knowledge, people, and raw materials to perform tasks that no
individual could do alone. Without organizations, how could technology be provided that
enables us to share information around the world in an instant; electricity be produced from
huge dams and nuclear power plants; and millions of songs, videos, and games be available
for our entertainment at any time and place? Organizations pervade our society, and manag-
ers are responsible for seeing that resources are used wisely to attain organizational goals.

Our formal definition of an organization is a social entity that is goal-directed and
deliberately structured. Social entity means being made up of two or more people. Goal di-
rected means designed to achieve some outcome, such as make a profit (Target Stores), win
pay increases for members (United Food & Commercial Workers), meet spiritual needs
(Lutheran Church), or provide social satisfaction (college sorority Alpha Delta Pi). Delib-
erately structured means that tasks are divided, and responsibility for their performance is
assigned to organization members. This definition applies to all organizations, including

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both for-profit and nonprofit ones. Small, offbeat, and nonprofit organizations are more
numerous than large, visible corporations—and just as important to society.

Based on our definition of management, the manager’s responsibility is to coordinate
resources in an effective and efficient manner to accomplish the organization’s goals. Or-
ganizational effectiveness is the degree to which the organization achieves a stated goal, or
succeeds in accomplishing what it tries to do. Organizational effectiveness means providing
a product or service that customers value. Organizational efficiency refers to the amount
of resources used to achieve an organizational goal. It is based on how much raw material,
money, and people are necessary for producing a given volume of output. Efficiency can be
defined as the amount of resources used to produce a product or service. Efficiency and
effectiveness can both be high in the same organization.

Many managers are using mobile apps to increase efficiency, and in some cases, the apps
can enhance effectiveness as well.17 For example, Square is revolutionizing small business by en-
abling any smartphone to become a point-of-sale (POS) terminal that allows the user to accept
credit card payments. Millions of small businesses and entrepreneurs in the United States and
Canada who once had to turn customers away because they couldn’t afford the fees charged by
credit card companies can now use Square to process credit cards. Customers get their need to
pay with a card met, and businesses get a sale that they might have missed.18

All managers have to pay attention to costs, but severe cost cutting to improve
efficiency—whether it is by using cutting-edge technology or old-fashioned frugality—can
sometimes hurt organizational effectiveness. The ultimate responsibility of managers is to
achieve high performance, which is the attainment of organizational goals by using re-
sources in an efficient …