I started drafting a blog post about the self-defeating effects of micro-management when I came across this interview response (from Yahoo CEO Carol Bartz) which sums it up perfectly:
What classic mistakes do you see managers making over and over?
"Setting a goal is one thing. Telling people how to do it step-by-step is another thing. That's what happens especially with new managers. They not only tell the result that's supposed to happen but they also tell them how to do it, which is such an insult. People just friggin' shut down--I guess I'm not going to do it well enough. I'll just wait to have you tell me how to do it."
I've seen teams "shut down" for this exact reason, and the result is a loss for everyone.
When faced with continual "managerial vetoes" and micro-management, teams stop delivering the value they are capable of. They no longer seek the best solutions -- they no longer listen to their customers. By not delegating and trusting their team, these managers have created more work for themselves! And the odds are pretty good that whatever comes out of this process will be sub-par.
The idea raises an interesting perspective on the evaluation of new products and services: If the solution is sub-par, was it for lack of ability on the part of the implementation team? Or was it lack of ability on the part of their management?
On a related note, I highly recommend "The Effective Executive" by Peter Drucker if you happen to be new to management (or, in this case, have under-performing teams.) "Reflections on Management: How to Manage Your Software Projects, Your Teams, Your Boss, and Yourself" by Watts Humphrey has some nice views on this issue as well.