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Fifth-Generation Management

  
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In today’s episode, I want to talk about an idea I call fifth-generation management.

1/ Fifth-generation management is an emerging style of management we don’t know much about because it doesn’t actually exist yet. But it is guaranteed to emerge post-Covid because historically, big sharp disruptions have reliably triggered discontinuous changes in management culture, and it is already clear that this one is doing that.

2/ The idea of generations in management, in the form I’m going to lay it out, is causally related to the idea of generations of warfare, and in particular the idea that contemporary styles of warfare strongly shape future styles of management. So if there are generations in warfare, they are going to cause generations in management. Military ideas are not the only cause of course, but I’m going to argue that historically they’ve been the strongest one. Strong enough to almost be determinative. During WW2 for instance, business and military culture became almost the same thing for a few years.

3/ This is not a universally popular idea because a significant number people find even the business-as-war metaphor distasteful, let alone the suggestion that military culture directly shapes business culture, or worst of all, that it is in fact the dominant source of business thinking. But personally, I’ll admit I’m enough of both a military nerd and a management nerd that I actually find the connection stimulating rather than depressing to think about. And I have a little bit of history here, my research during my PhD and postdoc fifteen-twenty years ago was on military command and control models, and a lot of my consulting work draws from that experience.

4/ For better or worse, the connection between military and business evolution happens to be historically solid, and seems set to remain true. In the past this was much stronger, due to a large number of men serving in wars and then entering business, and business being male-dominated. Today, the coupling mainly has to do with relative rates of technology adoption in military vs business evolution, and to a lesser extent, shared exogenous events affecting both military and business affairs.

5/ Before we get into it, a couple of caveats. First, as with any clean, linear, sequential or cyclic model applied to a messy branching, evolutionary reality, you have to apply it very tastefully. You have to think like a historical artisan, matching up the conceptual boundaries of a constructivist notion you’re working with to real history. And where they don’t line up, actual historical events should shape your thinking rather than the abstract idea of one sequence of generations driving another. Second caveat, don’t make the mistake of thinking that each generation fully displaces the previous one in either military or business. Instead, it adds a new layer, and the older layer simply gets confined to a small zone of the action. Generations accumulate like geological layers, they don’t displace each other.

6/ To understand the management version, we have to understand the military version first. The idea of generations of warfare was popularized by William S. Lind, who coined the term fourth-generation warfare around 1980. It became the dominant style in actual warfare after the Iraq War, which was probably the last major third-generation war.

7/ I have illustrated the generations in the lower half of the diagram. The story basically starts with the Peace of Westphalia in 1648, after the Thirty Years War. The first generation lasted almost 150 years. The second generation lasted about 100 years from 1815 to 1915, the third about 65 years from 1938 to 2003. The fourth, I will argue, only lasted about 15 years, from 2003 to 2020, and Covid will trigger a shift to a fifth generation.

8/ The first generation was based on final abandonment of medieval warfare, and relied on early smooth-bore muskets. It utilized uniformed, paid armies fighting for nations rather than feudal lords, or mercenary companies. It involved what is known as line-and-column warfare. Think of armies marching in long columns towards strategic targets. Maybe a little large-scale maneuvering and flanking, but lacking the communications and intelligence capabilities to do more.

9/ The second generation stretches roughly a century from the end of the Napoleonic wars, around 1815 to World War I. It was based on the development of rifled breech-loading guns, interchangeable parts, and early electronic communications with the telegraph. Technology improved steadily so that WW1 was quite different from say the war of Mexican independence. But the broad style is what’s known as attrition warfare between roughly evenly matched forces in numerical and materiel terms. Armies bogged down in trenches or extended sieges. In second generation warfare, usually the side with the greater economic resources eventually prevails, as in the US Civil War.

10/ Third-generation warfare was developed primarily by the German military in the interwar period, and is what is usually called Blitzkrieg in the historical case, or maneuver warfare in more modern terminology. It makes use of fast-moving mechanized infantry, tanks, and sophisticated local communications to move very fast behind enemy lines, maneuver and reorient rapidly in response to changing situations, and collapse the enemy from the inside.

11/ This is the style that was developed and refined by John Boyd, and is roughly what lasted all the way through the Iraq War. In third-generation warfare, often an asymmetrically smaller and technologically primitive force can beat a larger, technologically superior force. This is the style that is based on the OODA loop, which we talk about a lot.

12/ This asymmetric outcome potential often creates a conundrum around how to establish the peace after the victory, because economic superiority may not line up with military superiority. In the case of WW2, eventually the Allies got better at maneuver warfare, the Germans got worse and backslid into 2nd generation to some extent, and economic superiority prevailed. And after the war, the Allies won the peace with the Marshall Plan, which was second-generation peace thinking. So in a way WW2 was actually a Generation 2.5 war.

13/ Third-generation warfare is also what is sometimes called total war, where you fight with unsentimental professional skill to win. It’s not about honor or fair-play, and deceit, cunning, and cheating are considered legitimate. This means it can get really ugly by design. In older styles of warfare, you would have a collapse of honor norms like “giving quarter,” but for third-generation warfare, which is an extremely rational kind of warfare, you had to have things like the United Nations laws and the idea of war crimes and trials. Because everything from gas chambers to concentration camps is otherwise on the table.

14/ Now fourth-generation warfare is best defined not by how war is fought, but by who fights the war. In some ways the Vietnam War for the US, and the Afghanistan War for the Soviet Union, were both early fourth-generation wars. But proper fourth-generation warfare requires non-state actors who can operate with near capability parity on many fronts, which requires the internet and cellphones. It also often has non-state actors with more legitimacy than mere third-generation terrorist groups, and state actors that have much less legitimacy than they used to in the past. In a way, the Peace of Westphalia made states the legitimate combatants, and the Great Weirding is reversing that legitimacy after almost 400 years.

15/ Of course, as we’ve all learned by now, fourth-generation warfare, since about 2003, also means dank memes, influence operations, fake news, and disruption of political processes, especially democratic ones like elections, using social media. A good example is modern conflict like Syria involves both state forces, in this case Syria and Russia, as well as ISIS and a people’s resistance. Or Ukraine. It is what is sometimes called hybrid or nonlinear war, and Russia has been the leading practitioner of it. Arguably, the West has been subject to a fourth-generation war attack for four years from Russia.

16/ And of course this mix has always been present in warfare in some form, but what distinguishes 4th-generation warfare is that guerrilla goals shape the conflict via leveraged high-tech digital means, instead of just being subject to first, second, or third generation logic, or limited to violent terror tactics. This also means guerrilla goals become top-level political goals, instead of being subsidiary to the goals of a sponsor state. Guerrilla goals are what Henry Kissinger described with his famous line: “The conventional army loses if it does not win. The guerrilla wins if he does not lose.”

17/ In other words, fourth-generation warfare brings guerrilla goals to the political table directly. It is not total war, but what I call infinite war: it brings infinite-game war goals, into the picture, the goal being to continue the game rather than win it (infinite game in the sense of James Carse). It’s a true fourth-generation war if at least one top-level combatant is fighting with the guerrilla goal of simply staying in the game, rather than trying to win formally in the sense of a declared war, getting the opponent to surrender, and doing so without a state sponsor. Sometimes of course, the guerrilla actually wins in a conventional sense, in which case they often struggle to transition from a stateless actor to a state actor, as with the Taliban.

18/ Okay, now that we have our four generations lined up, let’s talk about how that connects to generations of business management. To do that, I want to talk about an episode you may have heard of, called the Millennium War Games, but you probably haven’t heard anything like my spin on it.

19/ Briefly, the Millennium War Games were games held in 2002 in which the Blue Team, operating by a doctrine called Network Centric Warfare or NCW, was defeated by Red Team, led by Marine Corps Lt. Gen Paul Van Riper, operating by standard third-generation Boydian doctrines. NCW was basically a very high-tech model, using satellites and surveillance and tight synchronization. Basically “how would we fight a war with the internet on our side.”

20/ Van Riper avoided electronic communications and instead used motorcycle messengers to communicate, and attacks with fishing boats to destroy the Blue Team. Basically, using relatively low-tech and irregular forces to operate in the blind-spot of the high-tech larger adversary that was overconfident in its technological ability. Classic OODA loop style conflict.

21/ The normal interpretation of the outcome is that low-tech with superior strategic thinking beats high-tech with weaker strategic thinking, but this is simplistic. It also doesn’t explain why, 50 years after Blitzkrieg was recognized around the world, the Blue Team would operate against the logic of third-generation warfare. The key point to note here is that the war games were primarily naval, and NCW was a doctrine that emerged out of the US Navy and its relationship to technology, specifically from an essay by Admiral William Owens in 1996.

22/ This is not an irrelevant fact. Navies have historically been the highest-tech branch of the military, but not in the sense of adopting the newest, shiniest tech. They are the highest tech in the sense of using the most technology, in the most complete and systematic way, to vertically integrate operations all the way from satellites to bullets. They are platforms. Today for example, the US Navy operates carrier groups, the most advanced version of this thinking.

23/ Aircraft carriers are obviously the most sophisticated technology in military use. They run actual little air forces and missile defense and offense that are superior to the entire militaries of small nations. They use satellites. They have destroyers, submarines, anti-submarine capabilities, all operating in coordination. And this has been true going back centuries. Large capital ships were hugely expensive technological marvels even in the age of sailing ships, and money and technological superiority can overwhelm a historic maritime tradition sometimes, as happened in the 18th century when France under Jean-Baptiste Colbert’s administrative leadership briefly pulled ahead of more naval nations like the UK and the Dutch in capability.

24/ On the other hand, prototypical third-generation warfare is best exemplified by the US Marine Corps. It’s not exactly a low-tech force, but you could say it selectively uses a few really high-tech bits in an otherwise low-tech style of fighting. The same is true of special forces, but to a greater degree of tech early-adoption. Third-generation warfare you could say is an early-adopter of technology that uses it in a small-scale but highly leveraged and strategic way. It’s the military equivalent of a startup, while navies are the military equivalents of large enterprises.

25/ These military startups don’t just use new technology, they rapidly evolve tactics through trial-and-error in actual conflict, and build out strategies and doctrines bottom-up, in real-time, adapted to the current conflict. And this is not because they’re smarter than navies, but because they play a different role: usually offensive, high-speed, messy and ground level.

26/ Navies on the other hand, usually play a very different role. Their firepower is primarily deployed from a distance and with overwhelming scale, in what’s called stand-off mode. A modern carrier group will park itself outside a battlespace and send hundreds of sorties into the warzone, launch hundreds of missiles, conduct economic blockades or humanitarian activities, and in general create a sort of boundary condition for the rest of the war. Their job is to create and maintain boundaries, not maneuver within them.

27/ In fact, historically, navies have been most powerful when they simply stood off to the side and did nothing. This is one takeaway from Alfred Thayer Mahan’s classic The Influence of Sea Power Upon History. It also applies to nuclear power, which has a similar effect (so nuclear deterrence enforcing the peace). Notably, Boydian thinking emerged out of fighter warfare and doesn’t have much to say about that side of warfare. The point is that complex, systemic technological capability is just a very different sort of weapon, and you have to apply generational thinking separately to it.

28/ Sometimes navies play a more active, maneuvering type third-generation role, as in the Atlantic war against U-Boats, but in general, you could say that navies play a late-adopter, complex systems platform technology role in warfare, while marines and special forces play an early adopter, startup role. If you want to apply the four-generations model to navies, you have to do it separately. I won’t get into how to apply the four-generation model to these boundary-condition parts of the military, but it’s possible.

29/ The quick version is that both have a role to play in modern warfare, just as both startups and large companies have a role to play in the tech economy. If your takeaway from the Van Riper Millennium war games episode is that you should give up high-tech complex military capabilities and network-centric operations, and run a cheap military using motorcycle messengers, and fishing boats, you learned exactly the wrong lesson.

30/ In fact all the conflict since 2002 shows the opposite. Network-centric warfare is what’s actually dominating war zones, though not in the doctrinal sense Admiral Owens imagined. Russia, ISIS, China, and other actors who are good at this all operate in a network-centric way. It’s just not in the form that the US NCW doctrine envisioned, but much messier and bottom-up. Missing this point is like thinking all companies should be small startups and that the Googles and Amazons can’t possible work.

31/ A better way to think about it is that you should pursue hot military objectives with marines style startup action, but consolidate victories and preserve the peace with navy style network-centric type systemic capabilities. Both have a role to play in every generation of warfare. You could say marines win wars while navies preserve the peace. Though of course in modern conditions, there is never really clear hot war or cold peace, or cold war and hot peace, but a continuous partial warm chaotic conflict.

32/ Okay, that was a very long preamble, which was unfortunately necessary because most people make military-to-business connections without knowing much of the relevant military history. But we’re now ready to make the connection to business management generations. I’m going to state it in the form of two laws, and then describe the four generations in relation to the top half of the diagram.

33/ The first law is: On average, business management generations lag military generations by one.

34/ This is an average in two ways. The first is across branches of the military. Military startups, marines and special forces, might be 1.5 generations ahead of management cultur, innovating tactics based on the most promising new technologies. Air forces and armies might be 1 generation ahead, using more proven technology, and navies might be 0.5 generations ahead, deploying the most proven technology at the most complex scale.

35/ The second is across time. You may have heard the line that generals are always prepared to fight the last war. This means, every significant new war causes a paradigm shift. It’s like a staircase evolution, and on average, military management culture is ahead. And in a world like ours, where we’re nearly continuously at war somewhere, the saying actually is pretty meaningless.

36/ The second law is: The evolution of business management is driven by more frequent, but smaller magnitude, exogenous events. So it has a much smoother evolutionary profile. Every war is an exogenous disruption to business, but not every exogenous business disruption drives evolution in warfare. Business is also driven by political events, economic crises, financial crashes, and many more technologies than warfare. Every military crisis is a business crisis, but not every business crisis is a military crisis.

37/ For those of you who follow the computer industry, an analogy to laptops and phones versus gaming consoles is useful here. Gaming consoles are like military technology, they have sudden jumps in capabilities every few years, as specialized chips are designed and launched. But phones and laptops evolve more smoothly with smaller jumps. They eventually catch up and even briefly overtake the console market. But then the consoles jump ahead again.

38/ So if you apply these two laws, you get a description of four generations of management that loosely correspond to the four generations of warfare, but with roughly a lag of 1 generation, and a smoother evolutionary profile. So let’s take them in order, as shown in the diagram.

39/ First-generation management, which is roughly the mercantile era, overlaps with the first generation of warfare in time, but resembles medieval warfare in structure. It is a little longer by about 25 years, about 1648 to 1854, the London Crystal Palace World Fair. It relies on ways of running businesses that would be familiar to people in the 15th and 16th centuries. Medieval management.

40/ Second-generation management, which is roughly the Robber Baron era, roughly 1870 to 1930, loosely resembled first-generation warfare. It features paycheck employees, a traditional column and line type approach to business operations, and leadership that looked a bit like 17th century military leadership. It established large business empires that resembled colonial empires, and used relatively primitive communications based on mail and telegraph to maneuver a little but, but not a lot.

41/ Third-generation management, which is roughly the familiar modern managerial era in the old economy, resembles second-generation warfare. It stretched from roughly the Great Depression to 1997, and has two clear phases. In the first phase, about 1935 to 1980, we had a heavily state-regulated corporatist environment, and in the second phase, from 1980 to about 1997, we had a deregulated environment. But despite the differences, the key feature is that professional managers ran the show, and the competition had some of the trench warfare attrition characteristics of WW1. Competitors were roughly evenly matched and were trying to wear each other out in the market.

42/ Finally, getting into modern times, fourth-generation management, which is roughly the entrepreneurial era, resembles third generation warfare. It stretches from the dotcom boom and the rise of Clayton Christensen’s disruption model, which is really maneuver warfare for business settings, all the way to 2020. It features charismatic founder-entrepreneurs, rather than professional managers, setting the agenda. Just like third-generation warfare, it puts marines/special forces type startups in the center, and navy-like systemic capabilities on the margins. In the fourth-generation, HBR, Michael Porter and McKinsey took a backseat, while Silicon Valley and the VC blogosphere was in the spotlight.

43/ There’s a lot more to be said, but that’s the basic model. Take the military generations, subtract one, adjust boundaries, smoothen the evolutionary curve, and you get management culture.

44/ Which brings us to fifth-generation management. Obviously, Covid and what I call the Great Weirding have been a huge disruption for both military and business. Obviously, climate action is already starting to shape the agenda in a very significant way, and business-to-business or military-vs-military competition is almost taking a backseat while society-to-nature competition is front and center. We are fighting a two front war, with the virus on one front and climate on the other. Neither will be the same coming out the other end. So what can we expect?

45/ First, military affairs are in uncharted territory. The US military for instance, is dealing with dangerously unstable domestic politics where they might become a factor for the first time since the Civil War. Syria and Ukraine were fourth-generation wars, but already fifth-generation situations are cropping up all over the place, like the urban conflicts in Western cities, detention camps for refugees, and so on. I won’t go deep into military futures here.

46/ But business affairs are in somewhat of a clearer situation. By applying the first law, we can already predict that fifth-generation business will look at least partly like fourth-generation warfare, 2003-20. In other words, like Syria or Ukraine. Just as non-state actors shape fourth-generation warfare, non-business entities will shape fifth-generation business. This includes culture war groups fighting for social justice, climate action nonprofits, governments administering post-Covid recovery funds, and so on.

47/ There is also stuff that’s already been recognized, ranging from open-source communities and the gig economy, to the blockchain economy, and various moves towards home-based economic activity and work-from-home that is outside the financial economy.

48/ But the big thing is that there are a large number of reckonings that have to be dealt with. Besides climate, we have the trade war, we have China turning into a new kind of evil empire and surveillance state, we have the techlash, we have financialization on Wall Street, we have a world awash in fiscal responses to Covid. And in the middle of all this, we have supply chains breaking down, wildfires, and other climate-related disruptions.

49/ A lot of what I write about on this newsletter is looking at various aspects of all this. The three main projects I have going here all are about researching the background context against which fifth-generation management is emerging, though that’s not the main motivation. In the Great Weirding series, I’m looking at how the equilibrium has been destabilized over the last five years. In the Clockless Clock project, I’m looking at how new temporalities are displacing the clock-based temporality that has coincided with all four generations of war and business, since the invention of the pendulum clock in 1657. In the After Westphalia project, I’m looking at the future of the nation-state.

50/ Trying to figure out how to manage military or economic affairs against this complex backdrop is the task of fifth-generation management in both domains, and it will be probably take us all the rest of our lives to figure it out. But at least we now have a starting point and a sense of the nature of the challenge. A lot of this thinking came out of my last few years of consulting work, with clients who are already practicing fifth-generation management, and I’m currently trying to put together an online course based on this material. So if that interests you, stay tuned. There will be an update on that front soon.

This has been one of the occasional free podcast issues of the Breaking Smart newsletter, where I send out an essay a week. Usually an installment of one of my longer series projects, which I just mentioned, and occasionally one-off stand-alone essays. So if you liked the ideas in this issue, do subscribe.

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