Witnesses for the Prosecution

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.

The first charge against management theory—its lack of self-criticism—we happily accept. Indeed, one of the points of this book is to provide just such criticism. The second charge—that much of it is incomprehensible gobbledygook—we also happily accept. Another of the purposes of this book is to translate “managementese” into something approaching English. There seems to be something in the water in business schools or at management conferences that destroys people’s capacity to speak plainly or write clearly. Read the following paragraph, for example, written by Gary Hamel and C. K. Prahalad, two of the better gurus: [13] Wave participants involved their direct reports in the discovery process. Each wave appointed a few “linking pins” responsible for interacting the wave’s work with that of the other waves. Change team members acted as coaches to each wave. The output of every wave was thoroughly debated by the other waves and with the Leadership Council. Finally, an “integration team,” made up of some of the more “convergent thinkers” across the waves, boiled the work down to its essence and produced a draft strategic architecture that again was widely debated in the company.

Obfuscation and jargon are confined not just to the printed word. The idea for this book sprang out of a symposium held at a Swiss management forum, where a room full of German businessmen endeavored heroically to understand what an American guru was trying to say. Every direct, practical query from the floor received an ever vaguer response from the podium. Specific questions, along the lines of “How should we apply your ideas?” were answered by philosophical musings about what words such as “apply” meant and an invitation to the whole room to discuss “apply.” A few incomprehensible diagrams were produced “just as a loose framework.” The German businessmen blamed themselves for not understanding.

What, then, of the third, more substantial charge: that, underneath this convenient cloud of obfuscation, most of what the gurus say is blindingly obvious? Too often to outside eyes, management gurus seem to be dealing in applied common sense (“the customer is king”); many of their catchphrases (“total-quality management”) now seem trite. They often claim to be predicting the future when all they are doing is describing the present. Just as Lenin’s Imperialism, the Highest Stage of Capitalism (1917) predicted the outbreak of the First World War three years after it had actually happened, management gurus are forever prophesying a future that has already arrived. There is an element of truth in this, but less than critics allege. Some of the things that strike us nowadays as blindingly obvious were anything but obvious when far-sighted management theorists began to talk about them. Peter Drucker, for example, was predicting the decline of the blue-collar worker and the rise of the “knowledge worker” back in the 1950s. People have stopped preaching about total-quality management, not because quality has gone out of fashion, but because [14] everybody is striving for it. Besides, there is nothing inherently wrong with stating the obvious. One of the arguments for hiring management consultants is that they can see what is obvious to an outsider but incomprehensible to an insider.

However, the most common criticism of management theory focuses on the fourth charge: its faddishness. Management theorists have a passion for permanent revolution that would have made Leon Trotsky or Mao Zedong green with envy. Theorists are forever unveiling ideas, christened with some acronym and tarted up in scientific language, which are supposed to “guarantee competitive success.” A few months later, with the ideas tried out and “competitive success” still as illusory as ever, the theorists unveil some new idea. The names speak for themselves: theory Z, management by objectives, brainstorming, managerial grid, T groups, intrapreneureship, demassing, excellence, managing by walking around, and so on.

The fashion in theories is mirrored by a fashion in companies. Gurus are forever discovering companies that seem to have stumbled on the secret of competitive success. A few years later these miracle organizations are faltering, troubled, or even bankrupt. In 1982 In Search of Excellence identified 43 excellent American companies and tried to distill the sources of their success. But less than five years after the book’s publication two-thirds of the companies studied had ceased to be excellent. Some, such as Atari and Avon, were in serious trouble; others, like Wang and DuPont, were no longer outstanding. IBM was well-advanced in its serious decline. (On noticing the trend, Business Week produced a cover emblazoned with a single word, “Oops!”) But, rather than taking a vow of silence, Tom Peters produced yet more books, advocating different solutions to America’s problems.

These theories seem to have a large and willing (if confused) audience among managers. In 1995 a survey by Bain & Company, a consultancy, of what use managers around the world made of 25 leading management techniques found that the average company used 11.8 of these techniques in 1993 and 12.7 in 1994. The managers were on course to use 14.1 techniques in 1995.8 Although Americans are usually singled out as the worst offenders, their consumption rate (12.8) was only slightly higher than that of France (11.4) and Japan (11.5) and behind that of the biggest binger, Britain (13.7).

Management fashions seem to be growing ever more fickle: the life cycle of an idea has now shrunk from a decade to a year or less. [15] Humble businessmen trying to keep up with the latest fashion often find that by the time they have implemented the new craze, it looks outdated. The only people who win out are the theorists, who just go on getting richer and richer. Indeed, it is not hard to construct an Oliver Stone movie out of the available evidence for a concerted conspiracy. Established gurus, with jet-set lifestyles to support, are always looking for ways to update their arguments; would-be gurus, be they overworked management consultants dreaming of spending some time with their families or underemployed business professors dreaming of first-class travel, are always trying to invent the revolutionary ideas that will establish their reputations; and everybody in the business is desperate to keep the wheel turning.

The Contradictory Corporation

All the complaints about faddism miss the point. There is nothing necessarily wrong about trying out ideas. Rather like jogging or pumping iron, a new theory forces companies to exercise their corporate muscles. (General Electric’s Jack Welch even dubs one of his management systems “workout,” implying that managerial change is good for corporate health.) The problem comes when these ideas contradict each other. The real problem with management theory is that it is pulling institutions and individuals in conflicting directions.

For every theory dragging companies one way, there are two other theories dragging it in another. One moment, the gurus are preaching total-quality management and the importance of checking quality and reducing defects; the next, they are insisting that what matters is speed (which means being a little less painstaking about checking quality). One moment, they are saying that what gives a company its edge is its corporate culture, the more distinctive the better; the next, they are ordering companies to become more “multicultural” in order to be able to hold a mirror up to the rest of society. One moment, companies are urged to agree upon and then follow a single strong “vision”; the next, they are being warned that they live in an “age of uncertainty” where following any single vision can be suicidal. Most management theorists have not worked out whether it is important to be global or local, to be big or small, to be run in the interests of shareholders or stakeholders. Usually, they end up telling managers to do both.

[16] The contradictions are particularly poisonous when they involve a company’s relations with its staff. One of the more fashionable words in management theory is “trust”—it is this, the theory holds, that will keep “knowledge workers” loyal and inspire them to come up with ideas. Yet all the gurus also preach the virtue of “flexibility,” which is usually shorthand for firing people. Indeed, there is a growing contradiction between the interests of companies and those of their employees. What companies do to make themselves secure—laying off workers, putting them on short-term contracts, or introducing flexible work schedules—is precisely what makes those workers feel insecure. Meanwhile, the only person who could sort out these contradictions is the one who—thanks to all that delayering—has the least time to do it: the boss.

These contradictions within firms reflect a deeper intellectual confusion at the heart of management theory, which has left it not so much a coherent discipline as a battleground between two radically opposed philosophies. Management theorists usually belong to one of two rival schools, each of which is inspired by a different philosophy of human nature; and management practice has oscillated wildly between these two positions. Scientific management is based on the idea that the average worker is a lazy slob who is only redeemed by greed. The job of the manager is to break down jobs into their component parts, so that even the dumbest persons can master them, and design incentive systems, so that even the laziest will exert themselves. Humanistic management, on the other-hand, is based on the idea that the average worker is a model human being, intelligent, creative, and self-motivating. The job of the manager is to ensure that work is interesting enough to bring out the best in the firm’s employees, by dint of devolving decisions to shop-floor workers, creating self-managing teams, and encouraging workers to make suggestions about how the company might be improved. This, in essence, is the debate: between “hard” and “soft” management.

The first theory held sway until the Second World War, in the guise of scientific management; the seed gained ground in the 1950s and 1960s under the banner of the “human-relations movement.” In the 1980s the humanists pointed to Japan, as a country that devolved power to workers and eschewed scientific management. This soft approach was increasingly overshadowed by hard realities: for all their kind words, companies everywhere began to cut back staff. By the [17] early 1990s the dominant management theory was reengineering, which tried to adapt Taylorism to the age of the computer.

The Contradictory Corporation has had two alarming effects. The first has been to reinforce anxiety, from the boardroom down. American managers have an acronym that captures the effect of all the changes: BOHICA—or bend over, here it comes again. Business Week quoted one American manager delivering his verdict on management fashion: “Last year it was quality circles . . . this year it will be zero inventories. The truth is, one more fad and we will all go nuts.”9 That was in 1986, and since then the velocity of fads—and their ability to contradict one another—has increased considerably.

The second effect concerns language and commitment. As contradictory theories zip past them, managers have learned how to pay lip service to theories without really understanding them, let alone bothering to implement them. Many managers are rather like the Soviet bureaucrats of old, living in a dual world: the real world and the world of officially sanctioned ideology. Thus they talk about “empowerment” but habitually hoard power, or proclaim that they are “reengineering” their organizations when they are really just firing a few of the more lackluster workers.

This doublespeak matters because management theory is the language of the international elite. An increasing number of people who rule companies and countries speak in its terms. For the young and ambitious, a business school education is looking more and more like a necessity (and a spell at a consulting firm more of a probability). Eavesdrop in the business-class lounge of any airport from Shanghai to San Francisco and you will hear a familiar vernacular. In politics, the old battles between left and right no longer seem to matter. There is no ideological gulf between the Clintonites and Doleites. Instead, the battleground has become one of managerial efficiency: who will “manage” the economy, who will “restructure” government, who has the necessary “leadership skills,” and so on. If this debate is carried out in terms that are contradictory or empty, then everyone suffers.