It is another new year. Some would even argue it is the real start of the new millennium. But whatever your view, there are fundamental management issues that need to be dealt with. In some cases our view of how business works has grown completely outdated. And in some cases it is fundamental management structures that simply no longer work. In all cases we need to bring our thinking into line with what is happening and what is required.

The first is the dear old structure of management decision-making. All that stuff that a previous generation inherited from their army or national service experience has long been discredited. What could any of us possibly need a command and control structure for? No one with any management credibility has been able to argue this one for years. Instead everyone warbles on about short lines of communication, flat organisations and lateral structures. This was supposed to bring about consensus, teamwork, targets and incentives, all of which largely meant that people would understand what was required of them and do it without their managers having to give orders or appear to actually run the business.

This sort of thing works well in small advertising agencies, for example. They bumble along with no one quite under-standing why they are successful, or unsuccessful, but convinced they are doing the right thing. If they turn in a good profit and pay out good bonuses then they are even happier and presume that their management methods and structure must be right.

But the great disasters at the end of 2000 gave the lie to that. There was one consistent connecting thread through the whole sorry saga of collapsing rail infrastructure, floods and all the other near-Biblical plagues that beset the land. There was no one in command. Everywhere there were people laying sandbags, relaying railway lines, realigning timetables or simply trying to find someone who knew which day platform seven might see another train. But the activity masked the essential vacuum at the centre.

There was no connecting management. A generation of getting rid of all-embracing management structures had taken its toll. Everyone was doing their own little bit but no one was in a position to oversee and take decisions based on an understanding of how it all inter-connected. The battle of Waterloo (railways this time) was being fought by innumerable generals, none of whom had met the others or knew what the others were up to. The same was true of the crisis management processes to deal with the prolonged flooding. What is required in the future is for people to grasp the simple truth that certain organisations need flat and loveable management structures while others still need strong and swift command and control systems.

The other side-effect of all this was the unmasking of outsourcing as a disaster beyond description. The result of successive governments outsourcing work on massive computer systems came home to roost at the Inland Revenue. The railways discovered that bringing in outside companies to handle the running and maintenance of chunks of the business was a disaster. And many a multinational, though they would never admit it in public, rued the day when they gave away their accounting functions to someone else.

This is the strangest of all. At a time when the ownership of responsibilities was seen as a paramount objective, there was a concurrent fashion for giving the ownership to people who had no responsibilities within the business. The link between the job you were doing, the pride you felt in the organisation, and your loyalty to it, was broken. No wonder it all ended in tears.

But the biggest change during the year was much more central. It became apparent that the traditional large quoted company had no future. All the comment about, for example, Marks & Spencer having lost its understanding of what fashions might sell, was the froth. The reality is no such companies can survive - and it is nothing to do with the market. It is to do with the changing purpose of companies.

Under current trends, share prices have to be ramped at all costs. This is to secure the directors' options and to maintain a company's credibility in the market. Unless, by a constant flux of deals, mergers, break-ups, restructurings, and all the rest of the finance director's armoury, you can grow by 20% or so a year, your share price starts to slide. This has nothing to do with ordinary business - the selling of a product at a price that more than covers the costs - but everything to do with image and fashion. And all this in the midst of research showing that in the long term such manoeuvrings nearly always end in disaster.

The old link with shareholders has gone. Institutional investors are more and more frustrated. But the chancellor of the exchequer has wiped 20% off possible dividend income in any case. The only people who earn real money from companies are now no longer the shareholders, they are the directors and senior employees. They no longer see a purpose in working on behalf of shareholders. The link has gone. They don't see why the fruits of their labours should go to anyone but themselves. The traditional model has broken down.

What we are seeing is a return to Victorian capitalism. The people you meet who are making an absolute fortune are no longer in large companies but small organisations you have never heard of that are exploiting a particular niche or a technological breakthrough. Only small private companies are making real money. All this FTSE100 stuff is good soap opera. But it has nothing to do with real business anymore.