The Management Myth – Debunking Modern Business Philosophy’s Misconceptions
I guess most readers of my website have read books by management gurus like Jim Collins and Tom Peters, and many more have probably studied Micheal Porter’s Competitive Strategy. But the “problem” with the business theory is that it’s solely built on case studies and has not been tested scientifically.
Matthew Stewart’s The Management Myth – Debunking Modern Business Philosophy “debunks” much of the advice and strategies given by external management consultants. The book takes you through the early start of the management business 100 years ago to the current multi-billion industry it is today. In short, Stewart claims most of the management business is utter nonsense, but yet it has grown into a big business. In addition, Stewart, a philosopher by education and both a consultant and writer by trade, tells his own personal inside-story as a management consultant for almost two decades. I’m pretty sure most people think twice before ordering a consultant after reading this funny (sometimes hilarious) and well-written book. I bought the book based on a recommendation by Nassim Nicholas Taleb, and the thinking of Taleb is easily recognizable when Stewart argues that the world is too complex for most strategies, that most strategies can only be explained in hindsight (not forward) and that business studies are generally a waste of time. I bring forward one of the quotes from Taleb’s Antifragile: Accordingly, the wisdom you learn from your grandmother should be vastly superior (empirically, hence scientifically) to what you get from a class in business school. My sadness is that we have been moving farther and farther away from grandmothers.
If you don’t have time to read the book, you can have a look at my quotes further down in this article, or you can read Stewart’s own summary.
When reading the book, I remembered the insightful article by John Huber where he pointed out the fact that Warren Buffett never outsources his thinking. What a stark contrast to many other CEOs who hire consultants straight from school to be told how to run their business! And let’s not forget Charlie Munger: Tell me your problem, and I will complicate it.
I cut my own summary short because I think the quotes provided below summarize the book better than I could possibly do:
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Life is full of surprises. And that’s mostly a good thing. Every surprise is an opportunity for learning.
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It’s all about the money, of course. I was taken aback when my prospective employers offered me a starting salary of 75 000 USD. It seemed like an injudicious amount for an unemployable philosopher. It made me question the financial savvy of the firm’s partners. Yet shortly I had cause to wonder who was fooling whom.
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How can so many who know so little make so much by telling other people how to do the jobs they are paid to know how to do?
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In formal evaluations, as well as in my own estimation, those who did not have MBAs performed better, on average, than those who had MBAs.
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But in fact, telling people how (not) to run big businesses is itself a big business.
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It turns out that management consultants are able to bill themselves out at half a million dollars per year in part because they work for people who think that half a million dollars isn’t a lot of money.
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Management theorists lack depth, I realized, because they have been doing for only a century what philosophers and creative thinkers have been doing for millennia.
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Throughout the years I spent consulting, I never lost the sensation that I was just making it all up as I went along.
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The essence of his new philosophy could be condensed in the following formula: Work smarter, not harder. If you can’t measure it, you can’t manage it (on Taylor’s theories).
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As Karl Popper points out, scientific theories are interesting because they could be wrong. They are falsifiable, and this is why science as a whole is corrigible and progresses.
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…that management understood in a general sense is “the art of getting things done through people”.
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Little wonder, then, that scientific management was enthusiastically received in the Soviet Union (because management was regarded a planning theory about 100 years ago).
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Scientific management isn’t a science; it’s a business. The same may be said of the work of the consultants, the gurus, and even many of the professors who have followed in Taylor’s lucrative footsteps. Their specialty, at the end of the day, is not the management of business, but the business of management.
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…for the simple reason that figuring out how to cut costs is easier than thinking up new ways to generate revenue.
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In this way we were quite representative of a generation of MBAs, who likewise prefer to define management as the thing they are trained to do – namely, analyzing fictitious cases.
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Partners in consulting firms spend much of the time they bill to large clients looking for more ways to bill them.
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Trying to help someone twice your age grapple with a problem that you just read about on the flight over can be quite challenging.
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…..and the scariest words in the English language are, to paraphrase Ronald Reagan, “I’m from headquarters and I’m here to help”.
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Can you think of anything less improbable than taking the world’s most successful firms, leaders in their business, and hiring people just fresh out of school and telling them how to run their business and they are willing to pay millions of dollars for this advice?
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The less strategy you make, the more options you keep.
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In life and in business, the most reliable strategies follow a threefold path. The first and most important step, by far, on the path to glory is to be in the right place at the right time. There is no substitute for being born well. As Woody Allen said – perhaps intuiting a version of the Great Whale Principle – 80% of success in life is just showing up. Machiavelli figured that about half of anyone’s claim to fame comes from what he called Fortuna – and the other half comes from skill in responding to whatever Fortuna throws at you. The second step in any successful strategy, assuming you are so lucky as to find yourself in the right place at the right time, is to bet big. In fact, bet massively (especially if other peoples’s money is involved). The final step, having landed in the right place and put everything on the table, is to work very, very hard to make sure that you aren’t proved to be an idiot.
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As a rule, corporations turn to strategy when they can’t justify their existence in any other way, and they start planning when they don’t really know where they are going. Shareholders who hear the word strategy would be well advised to reach for their wallets and hold on to them very tightly.
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It is more than a coincidence that strategic planning was cradled in the quasi-socialist command economy of the military-industrial complex and it should hardly come as a surprise that the biggest customers for s