Just like the old saying “The king is dead. Long live the king!”, the same can be said for the change regarding the old form of management transforming into something new and better.

The ever-changing business environment made companies to question the way they had been functioning and to try to improve it in both little and bigger aspects.

That also included the change of management and leadership systems and their functions, which had to transform in order to adapt to new conditions.

They simply had to become something better, because old systems were no longer viable when it comes to managing new types of businesses and employees, who wanted their business ideas and personal work to be heard and recognized.

In this article, we are going to compare old and new types of management and leadership, we are going to talk about why the new system is considered to be better and how you can apply this knowledge in order to make your own company’s management and leadership become better.

OLD VERSUS NEW TYPE OF MANAGEMENT

One of the main trends nowadays is that a lot of successful companies tend to adopt the culture of open innovation, which is followed by new types of leadership and management.

Strict corporate hierarchy is no longer in the main focus, simply because an open approach of having excellent teams of people who can share responsibilities amongst themselves is crucial for success, because it instigates people to think of new and better ways to do their job, which leads to higher efficiency and better performance of the employees.

Let’s go over several main differences between old and new types of management.

1. Approach to Power

In the old, traditional system, the main seat of power was in the hands of one person or one singular authority, such as the director or board of directors, depending on how large and how the business was structured.

We can say this system had a very strict hierarchy, which often prevented people with good ideas to come forward and let their ideas be heard and accepted if they were good.

Apart from that, people have often been given a position of power depending on the time they had spent in the company, no matter their competence.

Of course, that doesn’t mean incompetent people were put in those positions all the time, but there could’ve been some who were more qualified, but due to the less time spent in the company, they weren’t chosen at the time.

The new type of leadership is trying to change all of that. It instigates equal participation of team members, thus sharing the power amongst several people who work together in order to achieve the same goal.

That also leads to people’s ideas to be heard and recognized by other team members, which has a really positive impact on how efficient the team is able to solve the problems ahead of them.

2. Handling Information

The greatest power you can have power over information. That is something which has always been and always will be true.

In traditional leadership system, it kind of felt like the Cold war, where people and governments were very secretive about everything.

Leaders would usually only release information to their employers on a ‘need to know’ basis, which often leads to incomplete information, which is never good to have in business.

The more you know, the better you can do your job.

However, that was one of the main ways of leaders maintaining authority and control over the business.

Modern leadership changes that and introduces a new way of distributing information.

One of the main characteristics of modern leadership is open information sharing. It is crucial because people work in teams nowadays, and the core of being a successful team is to share information amongst team members so they could be able to do their job properly.

The more information they possess, the more useful ideas they might think of, which could really help with solving the problems the company is facing.

That way you would avoid having issues like conflicting ideas, which could negatively affect the way business is done because everyone in the team would have the same information and would be able to get on the same page and decide the best course of action.

3. Getting New Ideas

Innovation is one of the most important characteristics of every successful company.

Without innovation, there is no advancement, and trust me when I say this, but you don’t want to fall behind your competitors in nowadays’ dynamic business environment.

And the key to being innovative is getting new and useful ideas that could help you improve the way you conduct your business.

In old leadership system, it was much harder to generate useful ideas, not because employers were not as smart as today, but because the system was organized that way that it prevented most of the people to share their ideas.

Yes, managers and leaders were listening to their employers and tried to recognize some of those ideas, but most of the other people weren’t able to share their opinion, because of the strict corporate hierarchy.

On the other hand, modern leadership and management system transformed the strict hierarchy into the decentralized decision-making process, which gives the opportunity to people who in the past, perhaps weren’t able to speak up their mind and let their business ideas be heard by leaders.

Today, leaders are generally more open to new ideas, and they are even trying to encourage their employers to share any thoughts they have in order to try to improve the way their business is done, which is helpful both for the company and the development of employers.

4. Solving Problems

When it comes to the old management model, problem-solving was much different.

Solutions to potential problems were usually discussed and generated amongst the top of the food chain, behind the closed doors.

Once the decision about the solution is made, it is passed on to other team members, who just had to carry out the order given to them.

That type of decision-making doesn’t really encourage creative thinking and development of employers, but instead put a certain limit on it, by making the employers be mindless husks whose only role is to follow the rules given from the top.

Which would mean that the leader’s or board’s opinion is the only opinion that matters, despite perhaps not being the best?

In modern leadership, solutions for the problems don’t come straight from the top, but instead, they are brainstormed and generated in the actual teams, between team members.

That way, everyone is able to share their own opinion and ideas and pick the best possible solution to any problem.

This encourages employers to think harder and help with the decision-making process, thus helping them to develop their skill set and become the best version of themselves, which is something that is very important for the morale and general feeling of acceptance in the company.

5. Resource Distribution

The traditional system of resource allocation kind of reminds me of communism.

Resources were only distributed when people on the top thought it was necessary and along with that, it had to be approved by either a committee or board of directors, which often takes a lot of time and could cause a lot of stress to team members, thus moving their focus away from the work and making them do their job without the things they would usually need to do it more efficiently.

Less efficiency means lesser results, which is something that is capable of subverting clients’ expectations and completely ruin the company.

That’s why it is important to distribute resources in the best possible way, in order to reach optimal efficiency.

The new business model is based on mutual trust amongst teams in the company, thus making it possible to distribute resources proactively, which means that team leaders are able to allocate the resources and time much faster than before.

That means teams can really work at their best and provide the optimal results, by working on projects faster and finding the best solutions to the problems at hand, which helps them improve their performance, increases their productivity and boost their creativity.

6. Allocation of Responsibilities and Rules

Since the traditional leadership model had a strict hierarchy system, it had a lot of rules and regulations that people had to follow.

In this model, every person has their own responsibilities and specific work to do, while not taking into consideration what other people are doing.

So, everyone knows what is their job, what they need to do, right?

So, what is the problem then?

Well, knowing what your job is is, of course, not a problem, but not taking into consideration how it would affect other people’s work tend to be a problem, because it could lead to doing double work, due to negative effects of one job to another.

That’s why communication between team members is crucial nowadays.

Rules and responsibilities are less strict, and people are encouraged to work together as a team, which is where the best ideas and solutions to most of the problems are born.

Along with that comes all the benefits for employees, more precisely, the possibilities for development in different areas of work, which is a great plus, because when people are able to develop their skill set, they tend to be more productive, which would in return help with the increase of efficiency.

7. Resolving Issues

When we talk about traditional leadership model, issues that may occur, are usually handled on an individual level, without digging into what really caused the problem.

This system means that managers could only deal with an issue when it occurs, instead of trying to prevent it from happening at all.

But like in the fires, once something started burning, it is impossible to restore it to its original state, even if you manage to end the fire.

In the modern model, we can say that at the core of leadership and management is trust between team members and in your employers in general.

People are usually tasked with more important work, they have to make some hard and important decisions, which gives them more responsibility than in the traditional model.

In this case, leaders are much more present in the whole process, which means that if there are any issues, they can resolve it much faster than in the traditional model.

That way, it is easier to find the core of any problem and think of the best possible solution to the issue at hand, without having to worry about slowing down the working process, which is very important so the company wouldn’t stall and lose potential income.

8. Performance and Feedback

In traditional businesses performance, checks and reviews are were usually conducted once or twice a year, depending on the corporate policy of the individual company.

So what is the problem with this, you may ask?

Well, imagine an employee who had a great year, and only dropped in performance in last month or so.

If it had happened right before the annual performance check, it could mean that employee could get a negative performance review, based on that last month.

This could have a very negative impact on morale and transfer some of that negativity to the future work by adding more stress.

However, in modern leadership model, both employees and leaders are in the same basket.

They are both equally valued since they have to work with each other every day, meaning that they are able to control one another on a daily basis.

This is very important because it sends real-time feedback and opens a path for constructive criticism when it is needed, as well as praise and congratulations when they are deserved.

It is much easier to the right your wrongs if you work in a team of capable and competent people, who are willing to teach you and help you correct your mistakes.

WHY IS THE NEW TYPE OF MANAGEMENT BETTER?

Now that we had talked about all these changes in leadership and management let’s contemplate why they are so useful and how they make modern management better.

New management and leadership model improved the old one on almost every level, but these are the most important positive changes:

  1. From top-down to bottom-up decision making;
  2. From the status quo to the game of disruption;
  3. From prioritizing results to prioritizing people;
  4. Leaders are more involved in all areas;
  5. Teamwork over individual competence.

The biggest and the most positive change of all was probably the change from centralized to decentralized management and leadership, which completely changed the way decisions are being made in the company.

This trend is not characteristic only for smaller, but also big companies as well.

One of the most notable names are Johnson & Johnson, which has over 200 autonomous units, and Valve, which completely removed all job titles and allowed their employees to show some initiative and start their own projects.

What modern leaders tend to do is not keeping the status quo, but trying to motivate people to do more.

It can be done by ramping up the tension and push people to function outside their comfort zone because it is one of the main ways to help them grow.

Sometimes, the results won’t be as satisfying as you wanted them to be, but eventually, this tactic always works out.

Apart from pushing your team members to be the best version of themselves, it is imperative to motivate them to take the initiative in order to boost their self-confidence.

One of the best ways of doing that is to let people take an active leadership role on some number of important projects, depending on their skill level.

That way, their self-confidence would improve because you would put your trust in them and their abilities.

At the same time, it would be very beneficial for their self-development as well, because they would have to make some tough decisions and really get a good grasp of what it means to be a good leader.

ADVANTAGES OF DECENTRALIZED LEADERSHIP

Change from top-down to bottom-up management is one of the crucial differences between traditional and modern leadership models.

Let’s examine some of the main advantages it has compared to the old traditional model.

1. It Encourages Employees to Make Difficult Decisions

One of the most important characteristics of decentralized leadership is that people on different levels are able to make different decisions, thus giving the employees more freedom and more responsibilities, making them capable of dealing with potential issues that might occur.

Another very useful note about this is that when every-day decisions are split between a large number of people, it is much easier for the higher-ups to focus on the big picture, the actions, and strategy they could use to improve their business.

Giving people more responsibilities is pretty handy when it comes to finding the people who are very capable.

If they could prove themselves of being trustworthy to handle some difficult situations, they could be offered a promotion in the future.

This is a very good opportunity for employees who normally wouldn’t give the chance of making decisions on their own and show their qualities.

Some people may be better at one thing, some at other things.

The best way of finding the perfect people for specific jobs is to give your employees more responsibilities.

Some may know more about sales, some about recruiting new people. If the leader manages to find the right people and match them with the most suitable job for them, he or she would really benefit by taking some weight off the shoulders.

2. It Allows Making Faster Decisions

We have been hearing a lot about how dynamic the modern business environment is, and it is completely true.

In order for the company to become successful and keep up with its competitors, it has to be flexible and highly adaptable to changes in the environment.

One of the best ways of doing that is to have an effective way of making decisions, which can only be done if employees are trusted enough and put in a position from which they are able to make fast decisions.

So, if you had to ask for approval for every little thing from the top, the business would stall, and your company would fall back behind its competitors, which is, of course, not a good thing at all.

3. It Helps with Personal Growth of Employees

One of the most important changes in modern management is that focus is no longer on making a profit by disregarding employees’ personal growth.

Nowadays, it is more important to nurture a good relationship with your employees and help them grow and develop their personal skills.

That way, they would be more willing to stay loyal to the company, which played a significant part in their personal development.

In decentralized leadership model, employees, especially managers need to make their own decisions due to the increased responsibility, which is done so they would get out of their safety zone and push themselves to reach the optimum version of their abilities.

That independence also leads to the larger number of useful ideas, because while solving the problems at hand, employees will have to think about what would be the best thing to do in order to solve some issue, whether to use this strategy or that, how to sell that product, whether to include some product upgrades.

It is all part of learning and acquiring more experience in different areas of business.

FINAL WORD

That would be all folks! We learned what are the main differences between the traditional and modern, collaborative type of leadership and management.

We went over some facts which proves why the modern type is superior nowadays and what are its advantages.

Now, what remains is that you, as a leader, think about everything that was written here and apply some of those things to improve the management in your own company.

How You Can Restructure Your Company's Management Into 21st Century Leadership

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