With hindsight, we can see the absurdity. We don’t imagine a winning football coach switching to basketball, nor a concert pianist becoming a symphony violinist. We don’t think an orthopedic surgeon would automatically make a good psychiatrist. We recognize that differences in talent, temperament, knowledge and experience make some people good at some things and not at others. Somehow, managers were supposed to be immune to this logic.
They aren’t, of course. Indeed, the people who have created great businesses in recent decades typically confirm the logic. They have not been all-purpose executives, casually changing jobs and succeeding on the strength of dazzling analysis. Instead, they have been semi-fanatics who doggedly pursued a few good ideas. People like Sam Walton (Wal-Mart), Ray Kroc (McDonald’s), William McGowan (MCI) and Bill Gates (Microsoft).
What seems astonishing is how such a bad idea survived so long. Our infatuation with it partly reflected Americans’ optimism that all problems are amenable to reason. In 1914, Frederick Winslow Taylor’s “The Principles of Scientific Management” appeared and set a tone. Taylor pioneered time-and-motion studies, which analyzed how specific jobs might be done more efficiently. But his larger purpose was to “prove that the best management is a true science, resting upon clearly defined laws. . .”
Up to a point, who can quarrel with the resort to reason? The trouble is that it was taken too far and became selfdestructive. The problem was not that freelance managers constantly jumped between companies, although that happened. The problem was that the style of running big companies changed for the worse. The belief that all problems could be solved by analysis favored the rise of executives who were adept with numbers and making slick presentations. Huge staffs of analysts served these executives, who created conglomerates on the theory that a good manager could manage anything.
With bigger bureaucracies, companies couldn’t respond quickly to market changes–new technologies, competitors or customer needs. The more powerful top executives became, the less they knew. Their information was filtered through staff reports and statistical tables. Some executives developed what consultant Mel Stuckey calls a phobia of manufacturing: they didn’t know what happened in factories and feared exposing their ignorance.*
Roger Smith, GM’s chairman between 1981 and 1990, exemplified this sort of know-nothing executive. When asked by Fortune to explain what went wrong, he answered: “I don’t know. It’s a mysterious thing.” To fathom what went wrong, Smith truly had to understand how automobiles are designed and made; he apparently never did, despite a career at GM. As a society, we have spent the past decade paying for mistakes like Smith’s. Inept management, though not the only cause of corporate turmoil, has been a major contributor. “Downsizing” and “restructuring” are but the catch phrases for the harsh process by which companies seek to regain their edge.
Consider General Electric. A decade ago, it was “choking on its nit-picking system of formal reviews … which delayed decisions … and often made GE a laggard at bringing new products to market,” write Noel Tichy and Stratford Sherman in a new book.** The “mastery of arduous procedures had become an art form” necessary for executive advancement. GE chairman John Welch Jr. fired thousands and sold 19 major businesses. Profits rose from $1.7 billion in 1981 to $4.7 billion in 1992, but GE’s payroll shrank from 404,000 to 268,000.
Such have been the ultimate social consequences of a bad idea. But is the muddled notion of “management” truly dead? You can object on two grounds. First, some generalists still ascend to the top of big companies; the naming of Louis Gerstner-who knows little of computers-to head IBM is a case in point. Well, maybe. But these executives are often specialists of a different sort; they specialize in dismantling conglomerates or top-heavy bureaucracies. Welch plays precisely this role at GE; and Christopher Steffen intended to do the same at Kodak (page 54).
The second objection is more serious: it is that business schools still aim to produce general managers. The present notion of the M.B.A. (Master of Business Administration) is foolish. It is impossible to take people in their mid-20swithout much business experience-and educate them as “managers.” Yet business schools cling to the notion, because to do otherwise would jeopardize their tuition revenues. What’s lost is the opportunity for these bright young people to learn something of value-a specific business, a foreign language, an engineering skill-instead of the pseudoskills taught in business school.
Until this changes, we shall miseducate a large part of the talent pool for America’s business leadership. The one hopeful sign is that the subject now seems open for discussion. Indeed, the Harvard Business Review recently conducted a debate about the M.B.A. degree. Most contributors agreed it is not very useful. M.B.A. graduates are “glib and quick-witted,” wrote Henry Mintzberg of McGill University, but are not committed to “particular industries … but to management as a means of personal advancement.”
A recent M.B.A. graduate said it better. “My main reason for obtaining an M.B.A.,” she admitted, “was not necessarily to improve my business skills but because the degree is required to ‘get in the door’.” When the Harvard Business School can acknowledge that-and act upon it-American management will have taken a huge stride forward.
