Stumbling and Mumbling

Author: chris dillow   |   Latest post: Sat, 17 Mar 2018, 01:00 PM


Management vs managerialism

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Stian Westlake made a very good point yesterday:

Attacks on managerialism sometimes (often?) become a sort of wholesale denial of the importance of management (which IMO is a mistake).

He's right. Good management makes a big difference to productivity, wealth and even happiness.

We should, therefore, distinguish between management and managerialism. I'll list just five such differences: these might be rather stylized and I'm perhaps exaggerating to make a point.

1. Managerialism contains elements of magical thinking and a Messiah complex: it believes that if the right man is in charge, success is assured. We see this in an extreme form in the "Wenger out" demands. What this fails to ask is: what exactly is the mechanism whereby bosses improve organizations?

Good management answers this question. It does not look for Messiahs: "hire a genius" is not a sustainable business model. Instead, it puts round pegs into round holes. If a company's problem is an engineering one, you hire an engineer as a boss. If it's a marketing one, you get a marketing man. Boris Groysberg has shown (pdf) that what determines firms' success isn't so much the ability of a boss so much as having the right man in the right job.

2. Managerialism believes there is a distinct skill of management that can be applied everywhere: we see this in the careers of people like Adam Crozier or Rona Fairhead who have jumped from industry to industry. As Protherough and Pick said:

Rightly we honour the memory of managers such as Jesse Boot, Dr Bernardo, Florence Nightingale, Thomas Cook, the Joseph Rowntrees or W.H.Smith...[But] the notion that they had in common a single talent which can be identified as "managerial skill", capable of ready transference between their different callings, is pure fantasy. That Dr Bernardo could equally well have run a chain of newsagents, or that Thomas Cook could just as readily have run a chocolate factory, is manifestly absurd. Yet the modern world believes as fervently in the transferability of management as it believes that management skills are separate and identifiable realities. (Managing Britannia, p 13)

Good management, by contrast, realizes that context matters. In The Tyranny of Metrics, Jerry Muller points out that the best performance indicators "are embedded into a larger institutional culture."

3. Managerialism imposes targets and discipline from the top down.

Good management, by contrast, listens to those on the ground. As Henry Mintzberg says:

Among the most important qualities of managers who truly lead is a captivating capacity to listen, really listen.

For example, Muller notes that performance measures work best when they are devised in cooperation with those who'll be guided by them. To take his example, in hospitals they are based on collaboration with doctors.

4. Managerialism operates, in Protherough and Pick's words at "a high level of mental abstraction"; it talks of strategy and vision.

Good management, by contrast, is sceptical of this. It heeds Rosewell and Ormerod's point that firms cannot know much about the long-term. Instead, it focuses upon facts and evidence. The measures of good management used by Van Reenen and his colleagues focus upon processes for measuring performance and responding to feedback.

5. Managerialism has an element of totalitarianism; it tries to apply its methods everywhere. It ignores the old medical saying, "the dose is the poison".

Universities offer a good example of this. These were one of the UK's very few world class industries even back in the 1970s and 80s. They should, therefore, have been left more or less alone to carry on. Managerialism didn't do this. The upshot has been increasingly expensive administration and demotivated academics.

Good management, by contrast, knows its limits. It knows that badly designed incentives can encourage people to game the system - for example when teachers "teach to the test" - or can crowd out intrinsic motivations such as professional pride. It knows, thanks to John Kay, that the direct path to a goal can sometimes be inferior to an oblique approach. And it knows what Jeffrey Nielsen said in The Myth of Leadership - that management can sometimes demotivate employees as they look to the top for guidance rather than use their own initiative.

It also knows that organizational capital and path dependence matter. When these are strong and favourable, a sensible manager will preside rather than rule. But when they are weak or adverse, even the best managers might fail. Warren Buffett has said:

When a management with reputation for brilliance gets hooked up with a business with a reputation for bad economics, it's the reputation of the business that remains intact.

He's also said that if you have a great business even your idiot nephew could run it. Perhaps (and this is just a tentative hypothesis) it is only in intermediate cases that management makes a big difference.

Good management also knows that some things in particular respond badly to heavy-handed bosses. One of these is long-term work. Muller gives the example of the intelligence analysts tasked with catching Osama bin Laden. For years these had zero productivity and a 100% failure rate. Short-term targets would have shown them to be hopeless. Until they finally succeeded.

Another is creativity (pdf). Toru Iwatani, the creator of Pac Man, has said:

Japanese game companies used to be places of total freedom. We had almost no orders, except to make fun games.

That's anti-managerialist. But it's good management.

Now, I don't intend this to be a complete list, nor a full definition of managerialism. I hope, though, that it's made clear that there's a big distinction between good management and managerialism. How we can get more of the former and less of the latter is a political project that doesn't get the attention it deserves.

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