The Decision Impact of the New Middle Manager But as the new middle people are knowledge professional,

their actions and decisions are intended to have direct and major impact on the business, its ability to perform, and its direction. Here are some fairly typical examples. The product manager in companies such as Procter & Gambles soap and detergent business, in Unilevers food business, or in the radio and TV business of Philips of Hol- land, is definitely middle management by rank and compensation. He has no command authority. The work is being carried out by people who report to their respective functional bosses, the manufacturing manager, the sales manager, the head of the chemical and development laboratories, and so on. But he is held responsible for the development, the introduction, and the performance of a product in the marketplace. He decides very largely whether a new product should indeed be developed. He decides what its specifica- tions should be. He determines its price. He decides where and how to test-market it. And he decides the sales goals. He does not have any direct command authority and cannot issue an order. But he controls directly a major determinant of performance and success for a branded consumer product, the advertising and promotion budget. The quality control engineer in a machine tool company also has no command author- ity and has no one, except junior quality engineers, reporting to him. But he decides the design and structure of the manufacturing process. His quality control standards largely decide the costs of the manufacturing process and the performance of the manufacturing plant. The manufacturing manager or the plant manager does indeed make the decisions. But the quality control man can veto them. The tax accountant also has no command, can give no orders, and often has no one re- porting to him except his secretary. Yet, in effect, he has a veto power over even top- management decisions. His opinion on the tax consequences of a course of action often determines both what a company can do and how it must do it. The industry specialist in a large commercial bank, e.g., the man who is the expert on retail trade, is not supposed to make loans on his own authority. But the lending officers, in turn, are not supposed to make loans to a retail chain without his approval. And when a retail store customer of the bank gets into difficulties, it is the retail specialist who takes over. The retail specialist in the bank is also expected to determine on his own responsi- bility and based on his own knowledge whether the bank

should, at any given time, ex- pand or contract its lending to retail stores. He is expected to determine what the criteria for loans to retail stores should be. And if he sees a loan to a retail chain which, to him, seems dubious, he is not expected to go upstairs. He picks up the telephone and calls the lending officer in charge of the account. He cannot order the lending officer to call the loan or to cut it back. Still, the lending officer, who may well outrank the retail-trade specialist will not say, I was advised by the specialist to cut back this loan. He will say, I was told by the specialist. The product manager at Procter & Gamble, the quality engineer, and the tax account- ant are not line managers. But neither are they staff. Their function is not advice and middle-management people, the people at the top, such as the German Unternehmer, tended to conclude that management was concerned with routine operations rather than with crucial decisions and that, therefore, man- agement was for them and not for us. 309 teaching. They do operating work. Yet they have top-management impacts even though they are not top management in rank, compensation, or function. To be sure, they cannot make some of the key decisionswhat our business is and what it should be; what its objectives are; what the priorities are and should be; where to allocate key resources of capital and people. But even with respect to these decisions they contribute the essential knowledge without which the key decision cannot be made, at least not effectively. And the key decisions cannot become effective unless these new middle managers build them into their own knowledge and work on their own responsibil- ity and on their own authority. In an earlier chapter (Chapter 30) it was argued that the knowledge professional is a manager even though no one reports to him. Now we see that in his impacts and responsibilities he is top management even though he may be five or six organizational levels down