Monday, March 31, 2008

Management theory, management practice

For some now-forgotten reason, I printed out a copy of Sumantra Ghoshal's Bad Management Theories Are Destroying Good Management Practice some time ago to read. Last night, I discovered it and took the time to read it.

If you are a manager or a management educator, I encourage you to do the same. It's not something to force yourself to read today, for it likely won't tell you anything you need to do a better job on your current project. It is something to read and not ignore. It will, I hope, make all of us think.

Here's an example of his ideas (pp. 79-80). It's often said that the job of a public company is to make the maximum profit for the owners. As he notes, stockholders don't really own a corporation; they simply contribute capital in exchange for a share of certain cash flows. Employees contribute their work in exchange for their livelihood. If we were to maximize the gains of a corporation to benefit those who have invested a stake in its success, we would have to focus those gains in service of a much wider group of people. Employees would seem to have a much bigger influence than stockholders, for they typically can't change jobs nearly as easily as stockholders can buy and sell stock, and their contributions are typically much more individualized than the fungible resources stockholders provide (cash).

For another, he claims that much management theory (and thus practice) today is based on an assumption that people will try to take advantage of companies (pp. 82 ff.). Yet, he claims, experiments and evidence shows that such a belief is incorrect and tends to create a self-fulfilling prophecy (which makes me glad to have been part of the company Bill and Dave founded).

His concerns focus on two areas. First, management theories have focused (out of "physics envy") on "a narrow version of positivism together with relatively unsophisticated scientific methods" (p. 86). Second, for ideological reasons, management theory has focused efforts on "containing the costs of human imperfections" rather than on working with the broader, more complex, true nature of people.

The challenge in management sciences lies in what he calls a "double hermeneutic" (p. 77). While bad theories in physics don't change the path of electrons (they can't read, and, if they could, they wouldn't change simply because elite scientists said they should), bad theories in the social sciences (of which management is one) are read by practitioners and turned into practice.

Finally, he notes (pp. 86 ff.) that falsification, which is fundamental to to the positivism to which some aspire, is very hard to apply in the social sciences. As "many different and mutually inconsistent theories explain the same phenomenon ... nothing can be weeded out."

He has explained his ideas much more effectively than I have in this brief summary, and I do encourage you to read it and consider how it might apply to your practice of management. If you deal in any of the social sciences, I also encourage you to think about the nature of falsification as he describes it and how that applies to how one knows what one knows.

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