Why Management 2.0 Is Inevitable
by Steve Denning

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In my post, “The Revolutionary Tenets of Management 2.0”, I described five fundamental shifts that firms must master to navigate the transition to the new management ecosystem of Management 2.0.


In my TEDx talk in Oslo last month, I explained in more detail why the transition to Management 2.0 is not merely desirable: it is inevitable.


In the talk, I examine the epic shift in power in the marketplace from the seller to the buyer, that flows from Peter Drucker’s foundational insight in 1973: “There is only one valid definition of business purpose: to create a customer.”


The shift in power has had devastating consequences for hierarchical bureaucracies, which have been insufficiently agile to cope with the more dynamic marketplace. They have experienced steadily decreasing returns on their assets and on invested capital.


By contrast, firms such as Apple [AAPL] and Salesforce [CRM] that have focused totally on delighting the customer have been hugely profitable.


Management 2.0 amounts to a paradigm shift in the strict sense of the phrase as used by Thomas Kuhn: a new mental model of the world and how management operates within it.


Because it generates markedly superior profitability as well as a more satisfying workplace and a more congenial experience for customers, the question is not whether it will happen, but when.


A full transcript of the talk is available here.

Steve Denning’s latest book is The Leader’s Guide to Radical Management (Jossey-Bass, 2010). It describes management principles and practices required to reinvent management to promote innovation and adaptation. He is also the author of The Leader’s Guide to Storytelling (2011) and The Secret Language of Leadership (2007). His website is www.stevedenning.com and his Forbes column on radical management is at http://blogs.forbes.com/stevedenning/.

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