Management Theory? Management Madness?

Getting down to business with two journalists at The Economist, John Micklethwait and Adrian Wooldridge.

Maybe you've never paid much attention to the ideas spouted in those bestselling business bibles by management gurus like Peter Drucker and Tom Peters. But you'd better. Management consultants are the hidden brains behind downsizing, corporate restructing, and other trends that are changing your job--or eliminating it altogether.

Each year American managers and enterpreneurs shell out three-quarters of a billion dollars of business books, trolling for tips they hope will make their firms more competitive. Meanwhile, companies themselves spend $15 billion for consultants to come in and tell them what they can do to be more efficient. Trouble is, many so-called management experts are simply peddling hot air.

PSYCHOLOGY TODAY: Human behavior and motivation haven't changed much over the years. Why haven't there been more basic, universally accepted management principles that tell people what to do to get the most out of their employees?

ADRIAN WOOLDRIDGE: One reason is that management theorists are essentially divided into two groups. One group thinks that workers are basically dolts who have to be goaded into doing things, either by incentives such as pay or by punishments for not working. The other group holds the opposite set of psychological assumptions: that workers are basically creative, innovative people who want to please and do their best, and that the way to motivate them is to give them as much freedom as possible. So you have two completely incompatible psychological models, and the industry sometimes mixes the two views or switches back and forth. "Reengineering" was the last big management fad, and it was based on the idea that you treat your workers as people who need carrots and sticks above everything else. And now because people have gotten sick of that, we're veering madly toward trust and empowerment and letting people express their individuality.

PT: The title of your book, The Witch Doctors (Times Books), makes clear your skepticism about the value of many management theories. How did this incredulity develop?

AW: Every day books with titles like Leadership Lessons from Star Trek or How to Drive Your Company Like a Dirigible would arrive at my desk. And there weren't just one or two of them--there would be five, six, seven. If you see this stuff streaming out every day, it's impossible not to develop some sort of incredulity. But not all of the advice is nonsense. Some of it is extremely good.

PT: How can readers tell the bad books and bad management sciences from the good?

AW: We thought at first that we would be able to put together a list of approved gurus, but we found that the good gurus often say silly things and the bad ones sometimes say very sensible things.

JOHN MICKLETHWAIT: For example, Harvard Business School's Theodore Levitt, the world's best marketing professor, fell hook, line, and sinker for the idea that people around the world were becoming so similar that companies could sell the same product in the same way everywhere. This has worked for only a very few products, like Coca-Cola--and even then there are doubts that the Chinese look at the drink in the same way that, say, Americans do.

Less impressive gurus, meanwhile, do occasionally say some profound things. Stephen Covey's basic idea in The Seven Habits of Highly Effective People--that building a more effective company is as much about improving the performance of the individuals who make up its workforce as it is about reorganizing them into new work teams--is actually quite a good one. But he didn't need to begin the book with the words, "To my colleagues, empowered and empowering."

In any event, we can recommend a few basic rules for selecting good management books. You should ignore any book that promises far more than it can ever hope to deliver--for example, if it claims you'll be as rich as [billionaire investor] Warren Buffett if you read it. Or that if you don't read it, you're going to end up living in a cardboard box.

You should also be very suspicious of anything that is written by more than two people. When you have five or six authors, it becomes writing by committee. You get the impression that they have just chucked a hodgepodge of ideas into a collection. Also beware of anyone who claims they've found a general solution to a problem that affects everybody. What we've found about management theory is that parts of it work, that some of it is good for certain types of companies. But the chaos that spurs creativity at a software firm may not benefit a bank. The idea that there's one system that can save every company or industry is untrue.

AW: Another good principle is to avoid animal metaphors--any book that advises you to swim with the sharks, roar with the lions, or dance with the fishes. Just leave those on the shelves.

PT: One of your premises is that management theorists are the "new unacknowledged legislators of mankind." What do you mean by that?

JM: What we're saying is that these are people who affect our lives very deeply. Management gurus can eliminate your job if they advise a company to downsize. They can also change the way you work in your job. Suddenly you get pushed onto a series of work teams. Or maybe "hot-decking" gets introduced and you no longer have your own permanent desk. You can also be subjected to something called "360-degree evaluation," a semimalicious system in which people are asked to criticize their bosses. All of these things change the way people spend their days.

Management theory also affects you as a customer. For instance, in the old days when you called your bank you used to get through to your local branch. Now you get through to someone miles away at a customer service center that's been outsourced--contracted to an outside company. In some ways, this sort of thing makes more of a difference in your life than the laws the government legislates. There's remarkably little that [the President] can do to your job, but there's a great deal Peter Drucker can do.

PT: The faddishness of the management field is both fascinating and disturbing. Managers run from one guru or theory to the next like headless chickens.

JM: People buy these books and attend seminars out of fear, and that's what creates the fads. Middle managers are often very frightened individuals. They're worried about being downsized. They're worried about one of these techniques being used on them. Then they see books with titles that promise relief. The titles advise you to Control Your Destiny or Somebody Else Will, or they ask if you're In Search of Excellence. And they give the impression that everything will be okay once you've read them. People often feel better when they buy these books, but they seldom do when they read them.

PT: Is there a parallel between the popularity of management books and the self-help books that tell people how to be happy, lose weight in 30 days, and achieve triple orgasms?

JM: Well, there is a section of the management field that has gone into self-help. Or maybe a section of the self-help industry has gone into management theory. Steven Covey was a professor of management and organizational behavior at Brigham Young University when he decided to write about the self-help tradition in America, and then he began to apply these ideas to management. He said that companies had achieved as much efficiency as possible from an organizational perspective; they had to go beyond that and have employees work to become more efficient, better time managers, that sort of thing. So there is a blurring of boundaries between self-help and management.

AW: For what it's worth, Convey's clients have included Newt Gingrich, Bill Clinton, and Princess Diana. His trademark is making people walk across hot coals, although whether he's done that with any of the aforementioned people, we don't know.

Somebody who is considerably less credible than Covey is Anthony Robbins, who writes books with titles like Awaken the Giant Within. He calls himself a business motivation guru. His basic message is self-help with a little bit of business sprinkled in. Usually there's just enough business to persuade companies to pay vast amounts of money to hear him speak.

JM: The purveyors of these books never say that reading them alone is enough, because they've got other things to sell. After reading the books, they want you to go to their seminars or, as with Covey, to workshops that last a week and involve a range of activities from sitting in classes to climbing mountains and camping overnight at the top.

PT: One guru you do have kind words for is Peter Drucker.

AW: Drucker is an amazing thinker. He has the capacity to spot major shifts in the economy before anybody else and understand what their implications are for the way companies are run. But as we point out in the book, he does occasionally get some things wrong or muddled. What's slightly sad about Drucker is that because this discipline is so full of charlatans, other academics haven't given him the attention he deserves.

At a lot of American business schools, people specialize in ever-narrower areas, and they produce a lot of journal articles but not much wisdom. Drucker has avoided that. He really is a general thinker.

JM: In the book we rather pretentiously describe him as the last of the human encyclopedias. As a boy he sat on Freud's knee, he had a brief career in investment banking, he was a political theorist and an economist, and it's out of that kind of variety that something interesting comes.

PT: One of your biggest pet peeves is management theory's insensitivity to language.

JM: There is something remarkably flatulent about management language. Take Competing for the Future, by Gary Hamel and C.K. Prahalad. If you read it, it's just a complete mess of mixed metaphors. It's very difficult to work out what they're saying. There aren't many people in this field who stand up and say, "For God's sake, write more clearly."

AW: One problem is that this is a discipline which aspires to be a science without really being one, so as a psychological compensation, management gurus use lots of scientific-sounding words. They never use a clear English word when they can use an abstract one like "reengineering," because it gives the impression that what they're doing is preordained by logic.

JM: If you buy the argument that the lingo of management theory is the language by which the business world now communicates, the language by which people run companies and governments run countries, then it's no small thing when that language doesn't make sense. Companies end up doing contradictory things, like preaching trust and loyalty at the same time they're talking about flexibility. "Trust and loyalty" usually mean that they're trying to make people feel good about the company. But "flexibility" usually means that they're getting ready to fire people.

PT: Is it part of the problem that management theorists are like doctors--they never criticize each other's work?

AW: That's true. One reason is that it's an industry as well as an academic field. So you have people producing ideas that very quickly become products--books and seminars. And you're unlikely to find anybody in a consulting firm criticizing their company's latest product. Economics, on the other hand, is a pretty pure academic subject; economists certainly make money, but they also have academic debates over each other's ideas.

JM: You would imagine that management professors would police the frontiers and enforce intellectual standards, but they don't. The reason is that they, too, get seduced by money. They all want to write the next book that tops the best-seller lists.

PT: The Japanese seem to have made management theories work better than some other countries.

AW: They were in appalling shape after World War II. Their industry had been devastated, they had huge shortages of raw materials, and they had exceptionally bad labor relations. They were desperate for radical ideas, and they began developing something called lean production, a system based on constantly checking product quality and involving the workers more in production control. But they originally based the system on American ideas: Gurus like W. Edwards Deming, after being spurned in the United States, went over there in the 1950s and found an interested audience.

JM: That said, I think American firms have gotten much more sophisticated at applying management theory. It's true they're more willing to use harsh business methods, such as laying people off, but they're also better than Japanese firms at letting young workers develop their careers.

PT: What kind of feedback have you gotten about The Witch Doctors from the gurus themselves?

AW: It's very bizarre. Consultants rush up and say, "Fantastic book, you're absolutely right. I can't tell you how much I agree with you that all of these guys are useless." They're almost in denial--they always think that the criticism applies to everybody but them.

PT: Maybe now you're witch doctors yourselves.

AW: I was interviewed by a radio station in San Diego, and they asked if we've been sued by any real witch doctors annoyed at being compared with the charlatans in the management theory industry That hasn't happened yet.

THE GOOD, THE BAD, AND THE SILLY: A GUIDE TO MANAGEMENT BOOKS

Which management tomes are really worth your time and money? We asked John Micklethwait and Adrian Wooldridge, business and management editors at The Economist.

BOOK: The Seven Habits of Highly Effective People (1989), by Steven Covey

MESSAGE: In order to reach your full potential, you have to build character.

VERDICT: "Some insights buried amid mountains of New-Age speak."

BOOK: Reengineering the Firm (1992), by James Champy and Michael Hammer

MESSAGE: Companies should dismantle their traditional departments (marketing, research, etc.) and reorganize into teams that include people from each specialty.

VERDICT: "Launched a fad, but its harsh message now looks old."

BOOK: Awaken the Giant Within (1991), by Anthony Robbins

MESSAGE: You can achieve anything you want to with the right attitude.

VERDICT: "Open the checkbook within."

BOOK: Managing in a Time of Great Change (1995), by Peter Drucker

MESSAGE: Managers spend too much time tinkering with their businesses when they should be reinventing them.

VERDICT: "Uneven, but then he is nearly 90."

BOOK: Competing for the Future (1994), by Gary Hamel and C.K. Prahald

MESSAGE: Imagine what your industry will be like in 10 years and then focus your efforts on getting there.

VERDICT: "Jargon prone, but the most influential current book."

BOOK: Thriving on Chaos (1987), by Tom Peters

MESSAGE: Embrace turmoil; reorganize your company every six to 12 months.

VERDICT: "Anarchist's bible--okay for Silicon Valley, less so for Main Street."