The Dawn Of The Post-Managerial Era.

In Aberrant Capitalism, Steve Denning and I chart the ascent, dominance and now decline of managerialism, the approach to running business corporations through bureaucratic systems of management control. Happily, we see the end of the managerial age and the dawn of a new post-managerial era.

Aberrant Capitalism begins with a quote from economist Ludwig von Mises:

Those who confuse entrepreneurship and management close their eyes to the economic problem. The capitalist system is not a managerial system; it is an entrepreneurial system. 

Ludwig von Mises (Human Action 1949)

Business has been confused about this problem for over 100 years. In the golden age of entrepreneurial capitalism, which we can locate in the second half of the nineteenth century, at least in the US, the great corporations were led by entrepreneurs, not managers. The unicorns of their time, these fast-growing corporations harnessed new technologies on behalf of customers to elevate the quality of life. The entrepreneurial leaders of the time saw the market-generating potential of steam engines, railroads, electricity distribution grids, oil refining, long-distance communications, mass manufacturing, packaged food, and advertising. They turned these inventions into commercial innovations and built an audience of happy customers enjoying new experiences ranging from affordable illumination to trans-continental travel. The range of goods and services available to customers expanded, quality went up, and prices went down. 

This was a pre-managerial age. The individual owners and founding partners of the great corporations were visionaries who imagined a great and happy future of high achievement and fulfilling lives for Americans. John D. Rockefeller of Standard Oil, for example, consciously aimed at producing and distributing “the best illuminator in the world at the lowest price” because “we are refining oil for the poor man, and he must have it cheap and good[1]”. He viewed the kerosene he manufactured as a civilizer, “promoting among the poorest classes …a host of evening occupations, industrial, educational and recreative …(carrying) more cheap comfort into more poor homes than almost any discovery of modern times” (The Myth of the Robber Barons, Burt Folsom)

This is the entrepreneurial mindset: placing the highest priority on customer needs and devoting the entire supply chain to their purpose. Standard Oil required staffing and organization, of course. Rockefeller paid higher than market wages and gave long vacations so that he could attract the right people and then delegate responsibility to them. He knew that good work and good ideas were priceless.

In the twentieth century, the entrepreneurs exited their businesses due to old age or death or via a sale. Professional managers took over, ushering in the managerial age. They changed the function of management from the mass production and mass distribution that made civilizing innovations and the experience of well-being available to all. They focused instead on control, which is a benefit for managers, not for customers. The tools of control included:

Central planning: managers believed that business plans and resource allocation decisions should be made by a planning and budgeting committee or group following the direction of the top officers of the company. There were some feedback loops, but they were slow and data science was not far advanced and so the feedback was low in information and high in noise. Nevertheless, central planning advanced, even though CEO’s like Reginald Jones of GE admitted that he “could not achieve the necessary in-depth understanding” of his own planning department’s plans. (Aberrant Capitalism, p37)

Hierarchy: The transmission mechanism for the centrally-developed plans was hierarchy.  The top officers told the VPs reporting to them, who communicated to their directors and managers, and front-line employees. Dissent (which we might also call creativity or what John D. Rockefeller called good ideas) was discouraged. Hierarchy was the reason for slow, noisy feedback.

Bureaucracy: To administer both the implementation of plans and the management of the hierarchical organization, management introduced bureaucracy, which had, hitherto, been a method of government rather than business. The purpose of bureaucracy was not customer service or satisfaction, or even an observable contribution to corporate profits, but compliance with rules and regulations. There are no rewards in bureaucracy for initiative or innovation. The goal is not to adapt to changes in the marketplace, but to try to constrain the marketplace to follow the bureaucracy’s rules. 

Financialization: Over the course of the twentieth century, managers became more reliant upon the financial sector for debt and credit, and delegated some of their control powers as part of the trade. The short-termism of quarterly earnings targets, the allocation of funds to share buybacks and dividends rather than to R&D investments, and the adoption of the mantra of shareholder maximization – which stands in sharp contrast to the customer-first ethic of entrepreneurship – are all consequences of ceding primacy to the financial sector. 

Management Slack: Nobel prize-winning economist Oliver Williamson used this term to describe the discretion acquired by management organizations to use resources for their own benefit rather than for the customer or for company profits. The range of slack is wide, from oversized offices and managerial perks, to lavish salaries and pension, to the use of corporate jets. Williamson suggested that managers would deliberately add costs to hire unnecessary staff because the increased size of a department would result in more prestige and power for the department head. Management slack became a form of insider self-dealing: more for the managers and less for customers, investors and employees.

The late twentieth century demise of big, bureaucratic corporations like GE and IBM can be attributed to internal developments along these lines: the accumulation of greater weight of bureaucratic, hierarchical management eventually over-burdens the creative engineers, operators and salespeople. They can no longer function as well as they need to for the benefit of customers.

What will change in the 21st century

The end of the managerial era is a consequence of the new business models that are made possible by digital enablement. Customers are now directly connected to the firm – think of amazon or Airbnb as examples – in such a way that their wants, desires and preferences are instantly and effectively implemented. The customer is the boss, not in the sense of sitting atop an authority hierarchy, but in the sense of controlling the fate and operations of the firm. Economists have always recognized this role for customers in theory: here’s a passage from economist Ludwig von Mises in 1949:

The real bosses, in the capitalist system of the market economy, are the consumers. They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser. They make poor men rich and rich men poor. They are no easy bosses. They are full of whims and fancies, changeable and unpredictable. They do not care a whit for past merit. As soon as something is offered to them that they like better or that is cheaper, they desert their old purveyors. With them nothing counts more than their own satisfaction.

This is a passage of incredible vision. It has taken 75 years for business practice to catch up to Mises’ theory of the market system. The mechanisms for the catch-up are digital enablement of the direct connection to the customer, A.I. processing of the resulting data flow, and the interconnection of people and functions in the firm who can respond to the insights from the data flow with hyper-personalized service and precise targeted innovation.

In this digitally enabled world, there are three new dimensions of the economist’s “boss customer”:

The customer can command and receive a personalized experience

The old management method was to try to predict what customers might want in the future, by asking them questions about their dissatisfaction with today. But customers are not in a position to imagine and design the future; they don’t have the expertise or the information. 

The new method is to deduce the customer’s preferred personalized experience from their present-day behavior: the searches they conduct, the purchases they make, the websites they visit, their offline behavior as they work, shop and travel. All these activities generate behavioral data, and hyper-automation can instantly energize a supply chain to deliver on the needs highlighted by the resultant data patterns. It is digitized customer behavior data that provides the energy for the system, not their expressed attitudes or opinions.

The customer can add many layers of expectation to their desired experience.

Through their behavior, customers can express not only what they want but many other dimensions of how they want it: where and when and how fast, in what kind of packaging, using what kind of delivery method, accompanied with what level of messaging, with what kind of service wrapper (e.g. insurance), with what kind of return policy and what level of ease-of-return process. These and many more expectations are to be met, or the customer might look to alternatives on all those dimensions. The customer is the selection engine for best service and best experience, and operates with the confidence that alternatives are available.

The customer is the creator of value in the new value system.

The hyper-personalized experience plus the continuous layering and raising of expectations constitute value for the customer. It’s an ever-changing value benchmark because the customer is able to change it. They feel that they can always raise the bar. 

So now, when we talk about value creation, we must reverse the mental flow model that that term usually suggests. Value creation, traditionally, has been defined as firms creating value for customers. Today and tomorrow, customers will create value in their personalized experiences, based on their own requirements and expectations. 

The role of the digitally- enabled firm is facilitation, making the value experience easier, more convenient and closer to expectations. The concept of ’the digital friend”, a digitally enabled brand that knows the customer well and demonstrates empathy via a hyper-personalized experience, will be the model for value facilitation.

Central facilitation replaces central control.

Traditional management is a control concept. In this concept, resource allocation is controlled through the planning process, and then hierarchical organization structures and the command authority of title and position are deployed to ensure that subordinate employees follow orders to deploy the resources through implementation. Value creation resides in the plan, and the role of implementers is simply to ensure that value is not eroded through imperfect action.

This control-through-command won’t survive. The customer now commands. The structure of the firm must be flat and networked so that the customer’s commands can flow to where they can influence internal functions. Those functional centers respond to the customer, not to an authority structure. 

The post-managerial era has arrived, only 75 years after economists predicted it.


The Value Creators Podcast Episode #33 Mike DeKock on Building Competitive Advantage

How do the value creation principles of subjective value, entrepreneurship and creativity apply in a highly technical rules-based environment like SOC Compliance audits. These are objective validations of data security measures based on customer-defined criteria similar to traditional financial audits but more specific and subjective.

The answer lies in the understanding of customer needs. Mike DeKock, CEO of MJD Advisors, an SOC auditing firm, has the insight: the customer seeks confidence – a feeling that they can approach their own clients with the assurance of providing the data security that they demand. Trust, reliability and commitment are the underlying values – emerging from technological rigor, at a much higher level of human need.

Mike discusses the evolution of compliance services and the changing landscape within the industry, and explains the importance of continuous compliance and how his company aims to provide ongoing support and guidance to clients throughout the year, for continuing reinforcement of the client’s feeling of confidence.

He recognizes the value of building relationships with clients, helping them navigate compliance challenges, and fostering organizational improvement. He sees value in creativity, curiosity and collaboration, and the need for continuous learning and adaptability in a rapidly changing industry. At MJD Advisors, there is a passion for helping clients find simple solutions to complex problems, emphasizing the satisfaction derived from making a meaningful difference in their businesses.


MJD Advisors:
Mike DeKock on LinkedIn:


0:00 | Intro
02:13 | SOC Compliance: Mike Shares His Business Field Growth Journey
03:21 | Regulatory Audit Requirement is Optional
05:09 | Client’s Confidence is Subjective Essence
07:51 | Value Proposition
10:08 | Confidence Area: Empathy-Driven Insight into Client Needs
12:09 | Confidence Meter: How to Measure it? 
13:49 | Trust Measurement
15:16 | Data Security
18:05 | Business Model: Client-Centric Excellence 
20:01 | Trust and Confidence: Some Companies View Audits as Mere Costs
22:08 | MJD Advisors: Exceeding Client’s Expectations 
23:07 | Hiring: Interesting People VS Hard Stats
25:27 | Helping Clients Find Simple Solutions to Complex Problems
27:32 | Future Unpredictability Adds Complexity
29:20 | Entrepreneurial Ethic
30:40 | Wrap-Up

Knowledge Capsulse:

Importance and Application of SOC Compliance:

  • SOC Compliance is a customer-driven business: the regulatory audit requirement is optional but often required by larger enterprises during due diligence processes both internally and on suppliers.
  • SOC Compliance is commonly used by small growing startup software companies to meet enterprise needs – required to cross an eligibility threshold.
  • The field of SOC Compliance is constantly changing as a result of increased awareness and education about data security.

Focus on Providing Confidence to Clients:

  • Mike emphasizes that the continuous compliance approach helps clients navigate compliance challenges.
  • Building trust and relationships through understanding and solving client needs.
  • Any company in a supplier relationship can act with confidence in communicating the robustness of their own systems.

Measuring Success and Impact:

  • There are challenges in quantifying subjective values like confidence and trust.
  • Success is measured through client feedback, reviews, and business outcomes.

Impact on Client Image and Credibility:

  • Compliance reports serve as a mark of approval and credibility.
  • Mike DeKock shares that firms can build credibility and reputation through compliance efforts.

Tremendous Growth in Compliance Space:

  • Compliance tools and support for initiatives have become more accessible and affordable. Previously, smaller companies couldn’t afford compliance measures, but now it’s more feasible.
  • Raises expectations and sets accountability throughout organizations, providing various benefits to the ecosystem.

Business Model Approach:

  • The approach focuses on becoming an extension of the client’s compliance team.
  • Embraces a continuous compliance approach throughout the year, providing guidance and assistance

Complex Problems Simplified:

  • Mike shares how his company celebrates the beauty of simplicity in solving complex problems and how they help clients find simple solutions to complex problems.
  • At MJD Advisors, a collaborative approach is used, focusing on asking probing questions and learning from clients.
  • Compliance is a shared process.

The Value Creators Podcast Episode #14. Josefine Campbell on The Personal Energy Of Agile

Agile is the most important and most impactful management innovation of the 21st Century. It’s the approach of stripping away all bureaucratic and processual obstacles to fast delivery of superior customer experiences. Agile emerged from the sneakers-and-jeans world of software development and overwhelmed and obviated the suit-and-tie world of management control and hierarchy. It’s an organizational breakthrough that opened up a whole new realm of productivity. 
The principles of agility can apply at the individual level as well as the organizational level. Our guest Josefine Campbell delivers agility as an act of self-awareness and self-management.

Find her book, Power Barometer, here, and benefit from the major points she shared with us on The Value Creators Podcast Episode 14.


Power Barometer: Manage Personal Energy For Business Success.

Knowledge Capsule:

Practice Personal Energy Management:

  • At the fundamental level, spend some time learning about the role of the amygdala in the brain’s fight-flight-freeze response.
  • This response impacts both behavior and bodily functions.
  • Raising your awareness helps control reactions and behaviors.

Action: Be aware of your personal energy level and actively manage it.

Use The Power Barometer:

  • The “power barometer” is a tool for quantifying personal energy levels.
  • Use it both individually and within teams.
  • Experience the benefits of monitoring energy levels, such as improved meeting efficiency and better team dynamics.

Action: Every act of management can be improved by using tools. Find one that works for you.

Identify Your Own Top Values:

  • There’s great significance in identifying and living in alignment with top values.
  • Select two or three core values for personal and professional life.
  • Living by these values can prevent energy drain and contribute to well-being and success.

Action: Know your own values and apply them in everything you do.

Live Forward and Reflect:

  • Life is lived forward, and understood better in hindsight.
  • Challenging experiences lead to valuable lessons and personal growth.
  • Reflection and learning from past experiences guides personal development.

Action: Entrepreneurship is action. Learning comes via feedback loops.

Navigate Change:

  • Acknowledge people’s resistance to change, especially when it requires substantial energy.
  • Manage change in a way that individuals can absorb it.
  • Infuse change initiatives with energy to facilitate smoother transitions.

Action: Continuous change is necessary, but often hard on people who prefer stability. Help them to feel comfortable, without loss of commitment.

Build Organizational Culture:

  • It is absolutely possible to build an organizational culture that embraces energy management.
  • Josefine’s book presents an extensive case study illustrating successful integration of energy management into the culture.
  • Focus on those who embrace the change to create a positive movement within the organization.

Action: Culture is emergent from people and their interactions, but it can be guided with positive energy.

The Value Creators Podcast: Episode #13. Ben Johnson On The Evolution of Software Entrepreneurship

It is evident that in today’s economy, AI & software are extremely powerful tools in business, creative pursuits, and innovation. 
In this episode, Ben Johnson, co-founder of Particle41 and other successful software companies, joins to discuss the integration of AI from enhancing customer support to aiding software development, the ethical considerations of AI usage, and its simulation of empathy.


Ben Johnson on LinkedIn

Knowledge Capsule:

Agile and Lean Methodologies in Software Development:

  • The adoption of agile and lean methodologies in software development has enabled faster and more efficient processes.
  • These methodologies involve iterative development, user feedback, and continuous improvement to align with market demands.
  • Continuous adaptation and flexibility are crucial components, as they allow software to evolve according to user needs.

Action: Observe software development in action, and ask how you can transfer its methods to other parts of management.

Challenges and Rewards of Continuous Improvement:

  • Embracing continuous improvement in software development requires a thick skin, humility, and openness to user feedback.
  • While it can be intimidating and unstable, the process focuses on efficiently achieving business goals rather than merely creating perfect products.
  • Businesses must be prepared to adapt and evolve software as long as it remains relevant to users’ needs.

Action: Make continuous improvement a commitment in all parts of business management. Set challenging goals and don’t be deterred.

DevOps and AI Integration:

  • DevOps involves platform engineering and continuous integration/deployment, streamlining software development and deployment processes.
  • Infrastructure as code and robust assembly line processes are key components of DevOps.
  • AI, especially natural language processing, is being integrated into customer support and development workflows to enhance efficiency and provide novel solutions.

Action: Make use of DevOps experts like Particle41 for robust provision of digital operations.

Ethical Considerations of AI:

  • Businesses must establish policies around AI usage, especially when sensitive or private information is involved.
  • Integrating AI tools requires a thorough understanding of how they work to ensure quality control and ethical use.
  • The use of AI for customer interactions and support should be accompanied by clear communication and expectations.

Action: A.I. is coming. Develop policies in advance.

Empathy and AI:

  • While AI can simulate empathy through language patterns, it’s essential to understand that AI’s responses are correlated patterns rather than genuine emotions.
  • AI’s capacity for simulating empathy and emotions is a tool, not an end in itself, and users should be educated on its limitations.

Action: Entrepreneurship is subjective, empathic, human-to-human. Use A.I. to help, but not for human-to-human understanding.

Innovation and Economic Changes:

  • The current shift in venture capital dynamics could impact innovation and startup culture.
  • Smaller companies might need to adopt cash flow-based models similar to historical entrepreneurship, favoring incremental growth and learning.
  • Larger corporations could potentially support smaller startups to foster innovation, possibly through divisional startups or collaborations.

Action: The VC funding world often chases fashions and fads. You may have to spread your net wider for funding if you are not part of the current fad.

The Value Creators Podcast: Episode #12. Mark McGrath On Adaptive Entrepreneurial Management

Mark McGrath of AGLX has developed a management approach he calls The Adaptive Entrepreneurial Method. He combines the insights of John Boyd and the entrepreneurial principles of Austrian economics. 

Boyd was a prolific writer on strategy, particularly famous for his development of the OODA Loop model of decision-making under uncertainty, feedback, and responsive re-orientation, as well as the author of a vast body of work on strategy. 

Austrian economics overlaps in the area of entrepreneurial judgment, which is purposeful action under uncertainty, and dynamic responsiveness to the resultant marketplace signals (ie. feedback loops) that action generates.

He joined The Value Creators podcast to explore the intersection of John Boyd and Austrian economics.



Mark’s podcast: No Way Out

Mark’s Substack: The Whirl Of Reorientation

Knowledge Capsule:

1. Austrian entrepreneurship is a Human-Centered Approach:

  • Boyd’s theories emphasize prioritizing people in decision-making.
  • Human-centered approach over technology-centric focus.
  • Recognizing the role of consumers, employees, and stakeholders.

John Boyd’s insights underscore the significance of placing human understanding and interaction at the heart of decision-making processes. Rather than fixating on technological advancements, his theories advocate for acknowledging the central role of people within any system. This approach emphasizes the vital connections between consumers, employees, stakeholders, and their collective impact on the overall success of an endeavor. The equivalent space in Austrian economics is subjective value.

Action: Always place human values at the center of all business strategizing and decision-making.

2. Continuous Learning and Adaptation:

  • Adaptation and flexibility in ever-changing environments.
  • Shaping strategies based on evolving circumstances.
  • Emphasis on continuous learning to respond to changes.

A core tenet of John Boyd’s philosophy is the value of perpetual learning and adaptability within dynamic environments. His approach encourages a constant re-evaluation and adjustment of strategies in response to evolving circumstances. Instead of adhering to rigid plans, Boyd’s philosophy advocates for organizations to actively engage in continuous learning, enabling them to proactively address shifts and remain relevant. This is perfectly consistent with Austrian principles of continuous change and dynamic efficiency (as opposed to the static equilibrium approach of conventional economics).

Action: Your firm’s knowledge accumulation plan – i.e. learning – is its first priority.

3. Interaction and Isolation Dynamics:

  • Balance between interaction with allies and isolating competitors.
  • Drawing allies through effective engagement.
  • Isolating competitors to disrupt cohesion and effectiveness.

One of John Boyd’s pivotal concepts revolves around the interplay of interaction and isolation. The strategy for success involves effectively engaging allies while simultaneously isolating competitors to weaken their cohesion. This dynamic equilibrium plays a critical role in influencing outcomes and securing advantages within competitive environments.

Action: Choose the right partners as allies and isolate your competitors from these relationships.

4. Strategy as a Mental Tapestry:

  • Strategy as a dynamic mental tapestry of changing intentions.
  • Emphasis on self-awareness and situational awareness.
  • Continuous evolution of strategies based on circumstances.

John Boyd’s approach to strategy departs from conventional thinking by framing it as a dynamic mental tapestry of evolving intentions. He underscores the importance of self-awareness and situational awareness, advocating for strategies that continuously evolve in response to changing contexts. Unlike static planning, Boyd’s philosophy aligns with the adaptive nature of complex systems.

Action: Don’t plan – adapt.

5. Embracing Complexity and Distributed Leadership:

  • Embracing complexity over linear solutions.
  • Acknowledging distributed leadership in multifaceted challenges.
  • Orchestrating interactions to adapt to evolving contexts.

Boyd’s theories encourage a departure from linear problem-solving towards embracing the intricacies of complexity. By recognizing the multifaceted nature of challenges, Boyd’s philosophy promotes distributed leadership. This approach involves orchestrating interactions and collaboration among diverse elements, enabling organizations to respond nimbly to evolving contexts and foster innovation. Austrian economics, in the same way, is complexity-aware and orchestrates through value creation.

Action: Use value as the attractor in a complex business world.

The Value Creators Podcast: Episode #11. James Burstall On The Flexible Method

There’s a considerable debate among consultants and academics regarding the definition of management: what is it? Is it a science, is it a process, is it a set of tools that business schools teach us how to use? 

In this episode, James Burstall comes on to explain his perspective on management as a mindset (the interacting mindsets of many different people in many different circumstances in fact)  as proposed in his new book titled The Flexible Method: Prepare To Prosper In the Next Global Crisis.


James Burstall’s Production Group – Argonon

James Burstall’s Book: The Flexible Method: Prepare To Prosper In The Next Global Crisis

Knowledge Capsule:

  1. Introduction to the Flexible Method:
  • “Flexible Method” is an approach tailored to managing uncertainties in business.
  • Central components include adaptability and radical determination, combined to form a powerful decision-making framework.
  • This method encourages an open-minded approach to research, teamwork, and resolute action for decision-making.

Action: Elevate responsiveness to change over planning.

  1. Radical Determination and Decision-Making:
  • Making and committing to decisions is crucial in the Flexible Method.
  • Teams need to reach a consensus and show unwavering determination.
  • Tough decisions are embraced and executed with full resolve.

Action: Don’t just make decisions, commit to them, and get team commitment.

  1. Adaptiveness and Scanning for Opportunities:
  • Radical determination is about executing decisions; adaptiveness involves identifying opportunities.
  • Scanning the horizon for changing circumstances is vital.
  • A case from the credit crunch illustrates the need to be open to new avenues.

Action: Where possible, anticipate change in the form of an opportunity space.

  1. Cash Flow as a Critical Metric:
  • Cash flow is the most critical business health metric, needing respect and management.
  • Managing finances during crises involves making tough decisions.
  • Strategies to retain relationships and sustain the business are discussed.

Action: Measure your business’s health with cash flow and cash availability.

  1. Entrepreneurial Mindset and Restlessness:
  • Organizations in crisis operate like startups.
  • Restlessness is essential for fostering an entrepreneurial mindset.
  • Embracing change, creativity, and innovation is emphasized.

Action: All business is entrepreneurial, not managerial.

  1.  Leadership, Care for People, and Reflection:
  • Leadership involves emotional intelligence, authenticity, and prioritizing people.
  • Values like diversity, inclusion, and environmental responsibility are retained.
  • Gratitude, rewards, and reflection play a role in the Flexible Method.

Action: Caring brings resilience to business.