Friends,
I hope that all is well with you and yours, and that this e-mail finds you on a boat with shoddy connection, in the tropics, three months after I sent it.
Now accepting keynotes for 23Q4-24Q2
Every year, I create three main presentations. For 2024, they are:
What to Do When You Don’t Know What to Do: Adaptive strategy in an age of uncertainty.
Regression Toward the Meme: Why modern leadership falls into old traps - and what to do about it.
The Efficiency Illusion: Uncovering the hidden costs of digital commerce.
If you want to book me for your event, workshop, or corporate speaking slot, just send me an email. To make sure I am available, however, please do so at your earliest convenience; my schedule is filling up fast - and I will be raising my prices on January 1.
More information can be found here.
A couple of updates before we go-go
First of all, apologies for the tardy newsletter. The last couple of days have been a blur with all kinds of family matters that needed to be addressed (no need to worry though; all is well on the Western front).
As I wrote last week, webinar number two is approaching fast. On Thursday, November 16, at 10am Central European Time (CET), Steve and I will discuss the second part of What to Do When You Don’t Know What to Do, namely the everyday practical problems of strategy and strategic management.
If you want to join, just send us an email and we will provide the link before the event.
The last webinar was both well attended and well reviewed, but this one should be on another level for those interested in more pragmatic challenges. We do hope to see you there.
Moving on.
From Taylorism to corporatism
Regaining humanity?
Last week, we discussed the central figure in strategic management history and efficiency optimization that was Frederick Winslow Taylor. Regardless of what you may think of him (and opinions vary dramatically), his impact on modern organizational theory is indisputable.
We know why, of course. Taylor’s work entered the collegiate curriculum just as higher education was becoming a prerequisite for professional success. The attraction was as instant as it was inevitable, partly because his concepts had convenient practical implications for the syllabus, but mainly because they came with a purported theoretical heft. Business education had previously been looked down upon by more academically respectable fields, but suddenly found both a perceived rigor and potential for a larger edifice, applicable to any institution.
Between 1910 and the end of the second World War, a blend between the accounting model and scientific management became the basis of the practical curriculum in almost all US universities. Most business students (and many engineering students) were, in other words, taught the tenets of Taylorism and provided a formula for management defined in instantly recognizable terms: a systematic, rational undertaking characterized by an idealized scientist’s perspective on economic activity.
Beyond the academic promises, however, scientific management came with a rather attractive implication for management. Paramount to Taylor’s philosophy was a separation of work between the (clever) thinkers and the (dumb) doers. By centralizing power to the smart people in the room, his acolytes argued, the business as a whole would work better.
It soon became obvious that it did not. As the distance between the manager and the managed grew, so too did corporate bureaucracy, abuse of power, and managerial ignorance of operational practicalities (all of which will undoubtedly sound familiar). It was not entirely surprising, therefore, that a countermovement of sorts began to emerge in the 1940s. Although it had many champions, one stood head and shoulders above the rest: Peter Drucker, an Austrian-born scholar and consultant.
Drucker’s career had taken off after the publication of his second book, The Future of Industrial Man (1942). Written against the backdrop of an increasingly industrial second World War, it was a direct assault on scientific management which, as far as Drucker was concerned, contained little actual novelty in what many considered to be a groundbreaking automation of industrial mass production.
If there was innovation, he argued, it laid in a vision of the worker “as an efficient, automatic, standardized machine”. Before Taylor, “the most skilled, the most highly trained worker was the most efficient, the most productive, the most valuable worker”. After, the very same qualities that had made good craftsmen had become “obstacles to efficiency and productivity”, and the social status of the individual laborer was no longer acknowledged; they were but “sloppily designed machines”. This new technique, Drucker ascertained, demanded “standardized, freely interchangeable, atomic labor without status, without function, without individuality”.
In other words, Drucker rose to fame as an outspoken critic of his predecessor’s work. His own that followed (e.g., Landmarks of Tomorrow (1959) and The Effective Executive (1967)) sought to create a new, more humanistic paradigm. Autonomy, not control, was to become the main feature of the corporate reality. So-called knowledge workers (a term he coined) could not be supervised in detail; they consequently had to direct themselves. The firms that they worked for, meanwhile, were no mere means of assembly and process, but social entities with multiple goals, targets, and objectives, all centered on making things, not just making money.
It is, one may argue, a much more modern view of the organization - and Drucker is also typically discussed in more endearing terms than Taylor - but, true to form, there is a but. Indeed, a rather sizable but.
Key to Drucker’s new form of corporatism was “management by objectives and self-control” (or “MBO”). Contrary to popular belief, the technique was not actually of his own making; many before him (not least Alfred Sloan at GM) had used similar approaches for decades. What Drucker did, more than anything, was to convert it into a system for managing leaders and knowledge workers.
In short, managers were responsible for the strategy, which in turn relied on careful market analysis. Once established, it would be translated into operational objectives and “negotiated” with knowledge workers to ensure legitimization as well as commitment. In order to enable superiors to hold their subordinates “strictly accountable” for the quality of their eventual work, a measurement system was subsequently set up, including rewards and punishments to be handed out as deemed necessary.
MBO became high corporate fashion. In the 1970s, almost half of all Fortune 500 companies claimed that they used it. But, as we know, what people say and what they do are two different things. In reality, far fewer firms actually did, and only a fraction considered it a success of any kind.
It soon became apparent that managers preferred predictable performance to peak performance. In their value equation, control was of greater importance than results; the old way, as flawed as it may have been, at least provided a sense of it. Thus, as much as they would praise the modern approach in public, managers opted for what they were used to behind closed office doors.
And what Drucker did as a result, which we will discuss next week, was something that most people either are unaware of or conveniently ignore - but will make your head spin.
Until then, have the loveliest of weekends.
Onwards and upwards,
JP
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