While the next section will address the essential details of the history of the different types of management theory, it's important to have a basic understanding of why management theory was such an important and innovative idea. The industrial revolution is at the heart of management theory. From the end of the 18th century to the beginning of the 20th century, the Industrial Revolution brought about an extraordinary change in the workplace and forever transformed the way companies operate. To take advantage of new technologies, a different approach to organizational structure and management was required.
To coordinate these larger organizations, the owners had to rely on others, whom economists call “agents” and the rest of us “managers”. As this was a new concept, research, observations, experiments, and trial and error were used to find new and better ways to manage employees. However, while AI will lose some jobs, many others will emerge that will require a new level of management experience. 21st century managers must face challenges that their counterparts a few years ago could barely imagine.
In the 1970s, Tom Peters and Robert Waterman traveled the world exploring the current best management practices of the time. Before the industrial revolution, of course, there wasn't much “administration” at all, meaning that no one but the owner of a company was responsible for tasks such as coordination, planning, control, reward and resource allocation. He argued that with more informed management practices, such as providing clear goals to employees and giving them the freedom to achieve them, the objectives of the organization and those of the employees could be achieved simultaneously (Koplelman, Prottas, & Davis, 200). Each of these opportunities requires a new degree of managerial competence that, in turn, creates opportunities for the modern manager.
The middle of the 20th century was a period of remarkable growth in management theories and in the guru-industrial complex. For the first time, managers had to find new and innovative ways to motivate significant numbers of employees to perform. When all the value of an organization is lost every night, a management contract different from the command-and-control mentality that prevails in execution-type jobs is required. Henri Fayol, a Frenchman, is credited with developing the management concepts of planning, organization, coordination, command and control (Fayol, 194), which were the forerunners of the four basic principles of current management: plan, organize, direct and control.
In addition, many management theories have been developed since the end of the Industrial Revolution as society continues to evolve. But even though these old ideas are still being used (and, in fact, still being taught), management as practiced by the most thoughtful executives evolves.