Book Review: The Management Myth

The schism between management theory and economics is profound, and one of the reasons is the study of management theory is relatively young compared to its older sibling economics, which dates back hundreds of years. In their piercing book The Witch Doctors: What Management Gurus Are Saying and Why It Matters, John Micklethwait and Adrian Wooldridge, two staff editors for The Economist, level this charge against the immature discipline of management theory:

Management theory, according to the case against it, has four defects: it is constitutionally incapable of self-criticism; its terminology usually confuses rather than educates; it rarely rises above basic common sense; and it is faddish and bedeviled by contradictions that would not be allowed in more rigorous disciplines. The implication of all four charges is that management gurus are con artists, the witch doctors of our age, playing on business people's anxieties in order to sell snake oil. The gurus, many of whom have sprung suspiciously from the "great university of life" rather than any orthodox academic discipline, exist largely because people let them get away with it. Modern management theory is no more reliable than tribal medicine. Witch doctors, after all, often got it right--by luck, by instinct, or by trial and error.

This book gave voice to the backlash against the "profession" known as consulting. The four defects of the witch doctors of our age are mortally accurate. The profession has yet to refute successfully the charges against it, so eloquently articulated in this book. I thought I'd never see another book as good this one on the shortcomings of consultants.

Until, that is, The Management Myth by Matthew Stewart, which is destined to become a classic, advancing tremendously The Witch Doctors criticisms and shortcomings of the consulting industry with the added bonus of taking on business education in general, and the ridiculous idea that management needs to be a profession.

Whereas The Witch Doctors pulled its punches, Stewart is fearless, equating consultants to viruses and their clients as hosts.

Even though Stewart was hired by a consulting firm in 1988, his real passion is philosophy, in which he holds a PhD, specializing in 19th century German Philosophy. This focus on philosophy and the humanities shines through this work, adding an impressive dimension to his case against consultancy and the myth of management science. He writes:

Gradually it dawned on me that management is indeed a neglected branch of the humanities, and that the study of management belongs, if anywhere, to the history of philosophy. Management theories lack depth, I realized, because they have been doing for only a century what philosophers and creative thinkers have been doing for millennia. This explains why future business leaders are better off reading histories, philosophical essays, or just a good novel than pursuing degrees in business.

Stewart lays out his bold and ambitious purpose of the book this way:

...the modern idea of management is right enough to be dangerously wrong and it has led us seriously astray. It has sent us on a mistaken quest to seek scientific answers to unscientific questions. It offers pretended technological solutions to what are, at bottom, moral and political problems.

My aim in this book is to trace the genealogy of this idea, to expose its flaws, and to replace it.

The management idol, I hope to show, stands in need of a good, hard knock.

Stewart indeed punches hard, taking down, one by one, the gurus of management, beginning with historical icons Frederick Taylor and Elton Mayo, to the modern titans, such as Michael Porter, Jim Collins, Tom Peters, and yes, even Peter Drucker.

Intertwined with Stewart's deconstruction of the management myth is his personal story of his experiences in the consulting industry, and the founding of his new firm during the Dot.com boom which grew from 140 to 700 employees and $50 million to $250 million in revenues, in four years. It's a fascinating and suspenseful story, eloquently retold by Stewart, giving life to his many criticisms of the industry.

Taking Down the Gurus

Stewart's first victim is Frederick Winslow Taylor, the father of Scientific Management. He shows that there was never any evidence that Bethlehem Steel realized any significant benefits from Taylor's Pig-Iron (Tall) Tale. Taylor "became famous for the idea of what he was supposed to have achieved--not for what he actually achieved."

There's no such thing as a universal science of efficiency, a point Thomas Sowell and economists have made so well for centuries. Efficiency is inextricably linked to your purpose and what you are willing to pay for. Positing a universal science of efficiency as Taylor did was nonsense, as Stewart humorously illustrates:

One can go grocery shopping with a scientific attitude. But it does not follow that there is a science of grocery shopping.

Rather than being a falsifiable theory, Taylorism was a tautology: "An efficient shop is more productive than an inefficient shop." Stewart rightly points out that Scientific Management was never a science; it was, and is, a business, today reincarnated as Lean and Six-Sigma and other dogmas peddled by consultants. Even Peter Drucker, Gary Hamel, and a lot of others pay homage to Taylor, recognizing him as the world's first management consultant. Stewart proves he lied and fudged his experiments.

In a skillful twist of the McKinsey Maxim--If you can measure it, you can manage it--Stewart says the consultants motto might as well be "If you can't manage it, measure it!" This measurement for measurement sake is endemic among organizations and consultants, thanks to Taylor's obsession with time-and-motion studies.

Stewart's next victim is Elton Mayo, father of the infamous Hawthorne experiment, which his posthumous critics described as "worthless scientifically" and "scientifically illiterate." Stewart writes that Mayo's Hawthorne experiments proved a tautology:

If you are nice to people, they will usually be nice back to you. But this is a timeless precept, grounded in ethics...It is not and never will be a "scientific" finding.

Even Peter Drucker fell for Mayo's work, citing the Hawhthorne experiments in his 1954 book, The Practice of Management, and declaring:

the reports of [Elton Mayo and his associates] on the work at Hawthorne are still the best, the most advanced and the most complete work on the subject of [human relations].

Douglas McGregor's Theory X and Theory Y are also knocked down, as they depend on Theory U according to Stewart--for utopian.

Even Michael Porter, the academic father of business strategy, is not immune to Stewart's indictment. He recounts a meeting at Boston Consulting Group wherein founder Bruce Henderson was trying to decide how to compete with McKinsey. They needed to specialize, but in what?

"What about business strategy?" Henderson proposed. 

Robert Mainer, another partner at the meeting, objected "That's too vague. Most executives won't know what we're talking about."

"That's the beauty of it," Henderson replied. "We'll define it."

Stewart defines strategy consulting as "extremely expensive," before critiquing Porter's work. His major indictment is Porter's use of "frameworks" as opposed to "models." A model makes predictions about the future, which is the ultimate test of its value. A framework merely justifies its utility, as Porter says, "if it helps practitioners change the world in positive ways."

This test is far too weak, as astrological charts and voodoo dolls have high utility for many people as well.

Porter's framework claims that there are three generically successful business strategies, and that strategy making processes should aim at the singular goal of excess profits. Stewart believes these hypotheses are mostly false or unsubstantiated. Another tautology according to Stewart:

To say that a company has a "sustainable competitive advantage" is thus merely to restate the fact that it makes excess profits. ...[Porter's] framework may explain excess profits, it does nothing to predict them.

The self-contradicting Tom Peters is delivered many body blows by Stewart. He cites Peters admitting that In Search of Excellence was "phony baloney."

Jim Collins of Good to Great fame is also taken down, with Stewart observing that the "384 million bytes of computer data consists chiefly of press clippings."

You have to love Stewart's wit here:

Reading through the guru's favorite companies from the past two and half decades is like watching a parade of homecoming queens from years past. The sad procession serves mainly to prove that time destroys every conceit.

Best of all, Stewart doesn't spare Peter Drucker, who claims to have established management as a discipline and as a field of study. Here is what Stewart writes:

In fact, neither [Drucker] nor his successors established a discipline; they merely asserted the idea of a discipline. (And, for what it's worth, it was Taylor, not Drucker, who had the idea first).

This is by no means an exhaustive list of gurus that Stewart deconstructs in the book, and he even mentions in the Bibliographical Appendix "there is a large population of gurus on whom no comment should be offered. They are best left in the trash can of history."

5 Easy Steps to Becoming a Guru

Amusingly, but poignantly, Stewart lays out five easy steps to establishing a popular management religion, citing the gurus major achievement as transforming the religion of management into a demotic one--a people's religion:

  1. We are all going to die! The guru's obsession with the instability of the present--that is, a dynamic capitalist society.
  2. The bureaucracy is killing us! An expression of the democratic and egalitarian instincts of American culture, and it can serve as an important check on the excessive concentration of power.
  3. There is good news in America! The necessity of a happy ending.
  4. You have the power! We are all CEOs now. Presumably it's just our paychecks that have to catch up.
  5. Just look at me! What the medieval theologians called "the argument from authority."

Stewart thinks the management religion is a form of false consciousness:

Although it promises freedom, it in fact delivers a more refined form of servitude. As the semiestablished church of our times, its global effect is to perpetuate rather than to challenge managerial authority.

If religion is the opium of the people, as Marx suggested, then management theory should probably count as a kind of amphetamine. It causes agitation and hyperactivity. It does have the unfortunate side effect, however, of making people feel much more efficient than they actually are.

Should Business be a Profession?

Stewart points out that the "professionalization" [of business] project rests on a fatal misunderstanding about the ethical foundations of a profession, pointing out that trust is a critical component of a profession, along with standards of admission, licensing requirements, and disciplinary procedures.

Scholars have long agreed that there are, primarily, three necessary characteristics to be a profession: A common body of knowledge. Autonomy. And a Spirit of Service. Business management only meets the last of these, as any one can be labeled a "manager." This is also why journalism is not a profession.

As Stewart rightly points out about the new Harvard Business School pledge to consider oneself a "professional":

Most managers, to be sure, are good people; and it seems unlikely that a couple of years of pseudovocational training will spoil them. But it is foolish to imagine that they will behave well merely because they are told in business school that they should regard themselves as professionals.

Insofar, as an education can have any effect on the ethical life of the individual, it can do so only by forming intellect and character. For that purpose, the study of obtuse textbooks on organizational behavior will always rate as a very feeble alternative to the study of Aristotle or Shakespeare.

The movement to make management a profession is not only misguided and misinformed, it's not necessary. Business is all about serving the public within an ethical and moral framework.

In fact, as Michael Novak as argued so compellingly in Business as a Calling, business is a serious moral enterprise, since it teaches many virtues--risk-taking, prudence, accountability, serving strangers (i.e., customers), etc.

Trying to elevate it to the level of a profession would be asking something of it which it is not capable. Business is based on creative destruction, not the slow, plodding progress of most professions.
 

The Future of Management Education

Businesses routinely confuse "training" with "education." We train our pets, but human beings are educated. Stewart offers some very innovative thinking with respect to what should happen with management education in the future:

After 100 years of fruitless attempts to produce such a discipline, it should be clear that it does not exist. Preparing managers to manage, in fact, is not different from preparing people to live in a civilized world. Managers do not need to be trained; they need to be educated.

If business schools would drop the pretense of providing practical training and engage in disinterested, critical study of business and management practices and culture, they might actually make a significant contribution to society.

The fact that business schools pander to its customers--the students--is not a new charge, but Stewart makes another compelling case:

At the end of the game, the business schools will be all business and no school. "Customer satisfaction" is a good way to sell shoes; but it is a bad way to relieve ignorance. It is fundamentally stupid to base the content of an education on what the as-yet uneducated person decides is best.

Stewart goes on to illustrate the number of functions that a business school performs that has nothing to do with knowledge: recruiting festival; signaling device; status symbol; language school; and network maker. Economists have been pointing out these functions of college degrees for decades.

I also wholeheartedly agree with Stewart's conclusions:

The central insights of management theory are, in fact, the stock in trade of the humanities disciplines.

Management theory, in fact, is already a branch of the humanities--it just may not know it yet.

The questions that the management theorists raise and the insights that they offer belong not to a speciously practical discipline of management, but to the history of philosophy, and they should be taught and studied as such.

By this definition, of course, a good manager is nothing more or less than a good and well-educated person.

In all fairness, Peter Drucker did believe that business was a branch of the humanities.

This is not to say I agree with everything Stewart writes. He seems to have an inherent trust in government regulation, stating that markets aren't born free, they are made free. Made free by government? Is he kidding? I'll take liberty and occasional abuses over the loss of liberty due to the stifling foot of a nanny-state government trying to protect us from ourselves.

Disagreements aside, this is a masterful book. Stewart's book has laid out a compelling case against management consultants, just as The Witch Doctors did 13 years ago.

My conjecture is the gurus will ignore The Management Myth, not having the intellectual firepower to counter its arguments.

Those who hire consultants, however, can't afford to ignore this book.

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