A management paradigm is the way people think and act in conducting business. It consists of the values, beliefs, practices, methods, tools, etc. that members of a social group construct to integrate the thoughts and action of its members.
Paradigms typically change slowly. Science evolves as new theories are advanced. Current views are regarded as more valid and truthful. As science progresses, it shifts from one paradigm to another. Just look at the evolution in scientific thought as it changed from Copernicus to Newton to Lavosier, and then to Einstein.
The same can be said for management. Over many years we have seen the shift from craftsmen to mass production and now to lean production. This shift has caused managers to think differently, change practices, beliefs, values, and assumptions as they shift to the new paradigm. Our education system has a lot to do with our management paradigm. Business schools provide managers with beliefs about the fundamental entities of business and how those entities interact.
Three stages have been identified In making a paradigm shift in an organization. The first is normalcy and it is the stage in which managerial practices are firmly based on principles that the management believes in and where thought and action proceed as normal. The next stage is anomalies and is the stage where unexpected events challenge management’s assumptions about business and normal conditions are disrupted. The third and final stage is replacement. During this stage new theories, principles, beliefs, actions, tools replace the old way of doing things.
Now, whether the business schools or managers want it or not, a discontinuous paradigm shift in management is happening. It’s a shift from a firm-centric view of the world in which the firm’s purpose is to make money for its shareholders to a customer-centric view of the world in which the purpose of the firm is to add value for customers. Among the many factors driving the shift is the realization that the new paradigm not only makes more money for the firm than shareholder capitalism: when correctly executed, it makes tons more money. If you don’t believe this, just look at the success of Apple, Amazon, Costco, Salesforce, and many more!
This shift from a firm-centric view of the world to a customer-centric view of the world has horrendous psychological costs for managers who have perceived themselves as being in control of the workplace and the marketplace. To accept the new paradigm they would have to accept that the customer is the boss. To many this is still an unthinkable concept!