In the knowledge economy it all comes down to ambiguity.
In the industrial economy if you were a front line worker or even a manager, it was pretty easy to see if you were doing a good job. Production was production and it was counted and reported on by the minute. No questions how much was done and quality control could tell you your error rates.
Very simple to know whether or not you were doing your job properly or not.
But in the knowledge economy, how do you know?
Take for an example a book editor (I have a friend with this problem). How do you measure quality in editing? What is too little editing or too much? How much should the manager review the work and even how would you do it. Where is the defined output? How do you know how much time you should spend on each book?
Managing a book editor is highly emotionally charged, ambiguous and interrelationships are much more important.
How does the book editor know she has done her job properly at the end of the day?
This is one of the many challenge of leadership in the knowledge economy. If you think ambiguity is hard to work with, try managing it.
You are very right. A software developer can be working very hard but not productive at all. The problem is manager needs some basic knowledge to manage.