In this episode, we examine the emergence of the modern industrial enterprise and professionalization of middle management by discussing Alfred Chandler’s award-winning book, The Visible Hand: The Managerial Revolution in American Business, published by Belknap Press in 1977. This is a very different (and very long) book that provides an excellent summary of the history of American commerce from the pre-industrial era to the mid-20th century, and how new technologies and a changing society led to the creation of the modern industrial enterprise. The “visible hand” refers to the transparency and prominence of this new class of manager that was seen as the central figure of coordination and control of these growing enterprises, replacing the “invisible hand” of the market from the pre-industrial era — a time when business was done at a very personal level.

The book shows the progression over time, beginning with the “traditional” model of commerce in the early 19th century, which Chandler explains was little different from that of 16th century Europe. But beginning with the railroads and telegraph and continuing with the develop of means for mass production and mass distribution of goods, there emerged a need of dedicated professionals focused on the necessary activities of coordination and administration to make it all work. Professionals in engineering, finance, business administration, and others emerged as the owners and executives slowly (but often reluctantly) stepped back and focused on grand strategy. Vertical integration was shown to be the path to success for these early industrial enterprises — successful competition hinged on exercising control over the full supply chain from raw materials to the final product delivered to the consumer. This proved to be true across many different types of industries — clothing, rubber, tobacco, metal products, household and farm machines, food and drink, and many others.

In our discussion, however, we found it interesting to consider how 1977 marked a watershed moment for middle management as it began to decline soon thereafter. Chastised as bureaucratic and a target for downsizing, middle management has been under continuous scrutiny and pressure to the present day. What might Chandler have said about this? Listen and find out!

Read with us:

Chandler, A. D. (1977). The visible hand: The managerial revolution in American business. Cambridge, MA: Belknap Press.

To Learn More:

Davis, G. F. (2011). Managed by the markets: How finance re-shaped America. Oxford University Press.

Other Talking About Organizations Podcast episodes referenced:

Episode 18. Gig economy, labor relations, and algorithmic management.

Episode 40. Symposium on the Gig Economy LIVE.

Episode 63. Remote operations — The Hudson’s Bay Company.

Episode 68. Globalization and culture clashes — Modern Factory.