The Industrial Revolution brought the decline of small-scale, cottage production and the rise of large, integrated businesses; Adam Smith's invisible hand was replaced with what business historian Alfred D. Chandler Jr., called the "visible hand"of management. But now that pendulum appears to be swinging the other way -to a system of loose networks, virtual businesses and peer-to-peer interactions. A supposed hallmark of the new economy has been the decline of managerial authority. Management gurus, consultants and pundits have proclaimed that hierarchy is out. Modern organizations such as online retailer Zappos have come to favor flat hierarchies with widely distributed authority. And yet, given the demands of the current environment, authors Nicholai J. Foss and Peter G. Klein argue that managerial authority is still essential in situations where (1) decisions are time-sensitive; (2) key knowledge is concentrated within the management team; and (3) there is need for internal coordination. Such conditions, they observe, are also hallmarks of our networked, knowledge-intensive and hypercompetitive economy. While it is true that many knowledge workers no longer need a boss to direct them to tasks or monitor their day-to-day progress, the authors contend that the role of managers and the definition of "authority"needs to change. Managers need to move away from specifying methods and processes in favor of defining the principles they want people to apply or the goals they want people to meet. In other words, the main task for top management is to define and implement the organizational rules of the game. To be sure, procedures for defining rules and frameworks can themselves be delegated and nested. Indeed, when a company's key assets are knowledge workers whose skills and behaviors are difficult to assess objectively, companies will need to increasingly rely on more subjective assessments of performance, which must be carried out by managers.

For ten years, Jeff Patterson's firm, Flynn Fuller Consulting, has worked on projects for financial services giant GloBank. Now Jeff's contact, Bill Holland, says another project is imminent--good news for the recession-battered consultancy--but there's just one problem: GloBank has an enigmatic new CEO, H. Frank Maloney III. Brought in to restore profitability, Maloney has been examining GloBank's bottom line, looking for places to cut. The new CEO wants to slash GloBank's extensive use of consultants, which means that division presidents like Bill must justify major consulting projects. Worse, firms like Flynn Fuller must sell themselves again to GloBank. Jeff will have just one hour to try to sway Maloney, or his client will disappear. How can Jeff persuade Maloney that outside consultants are worth the cost? Jeff's presentation isn't a progress report or a pitch to a new client; rather, it's a defense of Flynn Fuller's continuing added value. Jeff pulls together a team to make the case, but he hears as many approaches as there are people in the room. In R0302A and R0302Z, commentators P. William Bane, a recently retired vice-president and director at Mercer Management Consulting; Tom Van Berkel, the president and CEO of insurance firm Main Street America Group; Peter Klein, the senior vice-president of strategy and business development for Gillette; and Tricia Stone, a founding partner of Stone Communications, offer advice in this fictional case study.

For ten years, Jeff Patterson's firm, Flynn Fuller Consulting, has worked on projects for financial services giant GloBank. Now Jeff's contact, Bill Holland, says another project is imminent--good news for the recession-battered consultancy--but there's just one problem: GloBank has an enigmatic new CEO, H. Frank Maloney III. Brought in to restore profitability, Maloney has been examining GloBank's bottom line, looking for places to cut. The new CEO wants to slash GloBank's extensive use of consultants, which means that division presidents like Bill must justify major consulting projects. Worse, firms like Flynn Fuller must sell themselves again to GloBank. Jeff will have just one hour to try to sway Maloney, or his client will disappear. How can Jeff persuade Maloney that outside consultants are worth the cost? Jeff's presentation isn't a progress report or a pitch to a new client; rather, it's a defense of Flynn Fuller's continuing added value. Jeff pulls together a team to make the case, but he hears as many approaches as there are people in the room. In R0303A and R0303Z, commentators P. William Bane, a recently retired vice-president and director at Mercer Management Consulting; Tom Van Berkel, the president and CEO of insurance firm Main Street America Group; Peter Klein, the senior vice-president of strategy and business development for Gillette; and Tricia Stone, a founding partner of Stone Communications, offer advice on this fictional case study.