The Future of Management and Leadership Development

International Academy of Management Centennial Meeting
Prague, November 22, 2024
A Manifesto

Addressing Modern Management Needs
The Academy must address the evolving needs of management and leadership development, which were not as acutely needed a century ago when the Academy was established, and the principles of management were first articulated and taught.
 
Decision implementation is critical for a company's success. In the past, this was less of an issue because societies were authority-driven, socio-economic environments were simpler, and the pace of change was slower. Today, implementing change has become problematic as challenging authority is part of modern culture, technological advancements have increased the complexity of problems, and living in a society of abundance has made people less dependent on the company they are employed by and, consequently, less compliant.

Unfortunately, implementation issues are not addressed in the curricula of management, leadership, or administration programs. We teach how to make good decisions in areas like marketing or finance, as if assuming that a good decision will automatically be implemented. But we all know this is not true. Who makes this assumption? People with no real-world experience of management.
 
Faculty Composition Most business school faculty lack experience managing organizations. I am no exception—I went directly from high school to a master's program, then to a doctorate, and straight into teaching. My deficiency became clear to me when I was invited to consult for Bank of America, which, at the time, had $120 billion in assets. The company faced a major challenge: its culture was bureaucratic and slow to respond to market needs. When they asked me how to rejuvenate their bureaucracy, I realized I didn’t know—and worse, there was no course or literature in any curricula I reviewed on how to manage change including implementing it.

When I requested time off to research how to manage change that are effectively implemented, my department chair dismissed the idea, saying, "We are into research, not consulting."
 
How did this bias develop? Historically, when Business Schools were first established, they were viewed by the academia as "trade schools." Not serious scientific enough. To overcome this inferiority complex, business schools shifted to focus on theoretical research at the expense of practical knowledge. For example, Peter Drucker was shunned at NYU because he was considered more of a journalist than an academic. Practical expertise has been undervalued in academia, where tenure is granted based on theoretical publications rather than field-tested management solutions.
 
This academic bias has led to a decline in the perceived value of an MBA degree. Graduates often end up in staff roles like finance or strategic planning, where they are not responsible for managing change. Alternatively, they go into consulting, or investment banking leaving the actual implementation to others.
 
Redefining Promotion Criteria
Faculty composition must change to include action researchers—practitioners similar to clinical professors in medical schools. Tenure criteria should recognize publications in journals like the Harvard Business Review that focus on practical, field-tested solutions to serve client needs.
 
Redefining the Client
In the past, businesses were small and family-owned, with owners as the primary clients.  Today enterprises are community based, not global. Community standing and reputation had a role in decision making. Today, public companies still serve the shareholders, but shareholder loyalty is to stock prices—not the company or the community. If a stock underperforms, shareholders move on, forcing leadership to focus excessively on stock prices whose price is impacted by earning per share now or in the future.

This focus on profits has driven companies to destructive practices. For example:

• Exploiting developing countries by maintaining low resource and labor costs, creating political instability.
• In military-industrial companies, viewing wars as opportunities to sustain profits.
• Polluting the environment.

Modern management must redefine who is the client. Shareholders are stakeholders, not the true clients. Stakeholders, include employees, who must be satisfied if expected to cooperate. The clients' that companies should serve are not just those in the market with needs but also the environment and nature itself. Leadership development programs must embrace this broader perspective. How? By expanding leaders' minds and opening their hearts to maintain organizational health.

‍Understanding Organizational HealthThe most important things in life are understood by their absence.

• We don't value health until we are sick.
• We don't appreciate democracy until we experience dictatorship.
• We don't recognize the value of love until it's gone.

Organizational health is one of them and it's crucial for sustainable success.Health = ƒ (External Integration ÷ Internal Disintegration)Organizations are systems composed of subsystems, each changing at different speeds. For instance:

• Marketing evolves rapidly.
• Sales adapts more slowly.
• Production moves even slower.

These differing speeds create gaps, or internal disintegration, which manifest as "problems." Internal disintegration consumes energy, leaving the company with less energy to address external challenges.PAEI: The Essential Managerial FunctionsThrough fieldwork, I identified four essential managerial functions that perform the functions necessary for organizational health. They need to be continuously aligned not to experience chronic disintegration:

1. P – (P)roductivity: for Effectiveness in the short term.
2. A – (A)dministration: for Efficiency in the short term.
3. E – (E)ntrepreneurship: for Effectiveness in the long term.
4. I – (I)ntegration: for Efficiency in the long term.

The roles are in conflict

• (P) vs. (A): Focusing on effectiveness can harm efficiency.
• Short-term focus (P, A) can harm long-term focus (E, I).

No single individual can excel in performing all the roles simultaneously.The solution? Complementary teams, where different styles perform different functions working together.What is blocking it? Lack of effective protocols to handle conflict of styles and addiction to individualism.Managerial styles when they perform only one PAEI function:

• Type 00E0 – The Arsonist: Big ideas, constantly changing. "It’s too late for you to disagree with me—I’ve already changed my mind." They are seldom right but never in doubt.
• Type 0A00 – The Bureaucrat: Focused solely on efficiency, they are highly organized and precise but often rigid. They are "precisely wrong" rather than "approximately right." Plans are strictly adhered to, even when those plans are obsolete.
• Type P000 – The Firefighter: Completely short-term focused. Their mantra is, "Why waste time in meetings? Act first, ask questions later."
• Type 000I – The Soaped Fish: Prioritizes harmony and consensus. Their behavior is marked by statements like, "Let’s see what everyone thinks," or "You misunderstood what I meant to say."

Building Trust and RespectGood management involves having a complementary team that works without destructive conflict. How? After 50 years of research, I’ve concluded:

• If there is mutual trust and respect, conflict is constructive.
• If there is no mutual trust and respect, conflict is destructive—in marriage, in business, in a country or in any relationship.

Examples on Country levels
Why has Switzerland not fallen apart, while Yugoslavia did? Switzerland is composed of Germans, Italians, and French, which should create chaos. However, Switzerland thrives because of a culture of mutual trust and respect.

Despite lacking natural resources, Switzerland has two major industries: banking, which relies on trust, and pharmaceuticals, which thrives on respect. Their culture of mutual trust and respect is their most valuable resource. Compare it to Yugoslavia which had a variety of religions and ethnic groups who had no respect nor trust for each other. The country fell apart. And in the Middle East there will be no sustainable peace until mutual trust and respect is established.
 
Management curricula does not teach the necessary protocols that build mutual trust and respect. Organizational Development and Coaching by and large apply psychological variables in promoting trust and respect. I found them to be insufficiently effective and disappointing in managing change

Addiction to Individualism
Management development has changed its title and focus over the years:

1. Initially called “administration” (Graduate School of Business Administration).
2. Then renamed “management.” (Graduate School of Management) 
3. Later referred to as "executive programs."
4. Now, it is about "leadership."

Why those changes? Because what we were teaching did not produce the desired results. Why? The common denominator to all the programs: We aimed to develop individuals capable of excelling in all roles necessary for managing change. Since no single person can perform all these roles, changing titles and curricula could not achieve the desired outcomes.

What’s needed is to break free from Western society's bias toward individualism and need to train how to compose complementary teams and how to co-lead without destructive conflicts.

Organizational Structure Matters
For sustainable organizational health and thus success the four PAEI roles need to be positioned in the organizational structure correctly. 

1. Marketing not reporting to sales: Marketing should focus on long-term market conditions, while sales is short-term oriented to achieve immediate results. When marketing reports to sales, the short-term wins, and the company becomes disconnected from the market.
2. When Engineering reports to production, engineering becomes limited to maintenance serving production rather than driving innovation.
3. CFO/CAO Consolidation: Centralizing finance, accounting, human resources, IT, legal, and other administrative functions under one person concentrates power in a way that blocks change. It creates a fortress of status quo protectors, those performing the (A) function, making change management necessary for survival nearly impossible to implement.

Organizational architecture which is critical for managing change, because it defines how power and authority should be allocated, is not taught at all. 

Dysfunctional universal management development. Developing nations are ongoing developing in spite of all the support of other nations because their management culture has not evolved. Historically, agricultural societies focused solely on (P)roductivity. The Administrative function (A) and the entrepreneurship (E) function, born during the industrial revolution, were, in many cases, in developing nations provided by the colonial powers. The colonialist left and took with them the (A) and (E) functions making the developing countries deficient in (A) and (E). Consulting for President Vicente Fox of Mexico I pointed how the whole executive branch of government is deficient in delivering both (A) and (E). Same with Ghana and India. 

Developing nations will remain stuck developing unless their educational systems are revamped—from nursery schools onward—to develop the (A) and (E) roles. Management development programs exported from developed nations are often dysfunctional because they address the needs for management development of the exporting country for (I) and (P)  rather than those of the host country in need of (A) and (E).

Leadership with a Heart
Expanding the mind by understanding the role management has to keep the organization healthy, by creating and nurturing an organizational culture of mutual respect and trust is not enough. We need to develop the heart as well. Why?

The evolution of leadership mirrors human development:

1. In nomadic societies, the strongest hunter was the leader.
2. In agricultural societies, the person with the most sheep became the leader. The common denominator: possession, power, muscle. 
3. During the industrial revolution, intelligence became the key to leadership. The emphasis moved from muscles to brain. 
4. Today we live in the information era where brain power is the most critical variable for success. 

But now, we are entering a new era. Artificial intelligence is replacing the human brain. What’s next? The heart. AI has none. Companies that lead with their heart will gain a competitive advantage.

A Practical Example
In Mexico, one of my clients operated stores in poor neighborhoods. I suggested:

• Clean up areas in the neighborhood that are neglected, full of trash. 
• Convince suppliers to donate a basketball court for local kids.
• Have store employees volunteer two hours a week to play with the kids.

The result?

• Suppliers benefited from brand promotion.
• The company gained customer loyalty worth millions because the best way to gain loyalty of someone is to take care of their kids.
• The community thrived. After one year, one million children had participated in cleaning up their neighborhoods.

Leadership Development CurriculumIn cooperation with the Bar Ilan University, Adizes Institute has developed a leadership development curriculum designed to address these challenges. The proposed undergraduate program spans three years:

1. Year One: Following Aristotle's belief that a good leader is a philosopher classes on the philosophy of various disciplines: sociology, political science, technology, mathematics, history, psychology, ethics, etc.  are being offered. This broadens students' perspectives beyond money-making.
2. Year Two: Classes in core business disciplines like marketing, accounting, statistics, and microeconomics are being offered.
3. Year Three: Is dedicated to change management and leadership, including the following courses:

• Diagnosing organizational problems caused by change, with a focus on life cycles.
• Learning the protocols how to solve strategic chronic problems in a complementary team setting with mutual trust and respect.
• Developing effective energy flows within organizations, institutionalizing bottom-up flow.
• Defining missions for every organizational unit by identifying both internal and external clients and their needs
• Structuring organizations for both short- and long-term effectiveness based on their life cycle stage.
• Mining accounting data to enhance managerial accountability and flexibility through decentralization.
• Strategic planning, contingent on the company's life cycle stage, with a focus on productivity and structural readiness.
• Designing rewards and compensation systems appropriate for each life cycle stage.
• Learning the protocols for building a culture of mutual trust and respect to minimize internal energy waste and maximize external competitiveness.

Additionally, students are obliged to intern throughout the program with nonprofit organizations managing a project that impacts the quality of life of needy people. The purpose is to cultivate empathy, compassion, and heart-centered leadership.

An Offer The Adizes Institute has already developed and is teaching the third year courses in its Executive Development program. It tested the material taught across industries and cultures worldwide in 52 countries over the last fifty years, see testimonials www.adizes.com. With 26 books published in 36 languages the Institute is ready to collaborate with any university interested in this curriculum. Contact Rufat@adizes.com.

Closing Thoughts
The world stands at a crossroads. One path leads to increasing conflict and destruction; the other, to growth through diversity and relationships based on mutual trust and respect.

We need leaders and managers who share this vision—leaders who can address modern complexities for sustainability, with empathy, and responsibility for the well-being of our planet.

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