IS MANAGEMENT really a profession? Doctors, lawyers, engineers and accountants are always aggregating knowledge, finding new and better answers to tough problems. But for managers, the dilemmas keep changing and knowledge quickly turns obsolete. Yesterday's brilliant solution can be today's management disaster, unlike what happens with other professions.
Examples include computer company Dell, once the market darling and model of supply chain efficiency that got overtaken by competitive forces. As a result, Dell this year announced that it was cutting its workforce by 10% to try to simplify the business and increase efficiency.
Or in Australia, there's Foster's which, according to Merrill Lynch, is shooting itself in the foot by using a beer strategy on a wine business. True, in Australia's protected beer market, Foster's has a magnificently simple strategy.
It's a manufacturer's dream where you exploit economies of scale and make monster profits by raising prices. But wine isn't beer. It's a fragmented industry and, unlike beer, it's no commodity. Wine buyers are confronted with enormous choice. Furthermore, the retailers are big enough to exploit the fragmentation. As a result, retailers have a huge say in directing consumer preferences. A great game plan for beer does not work for wine.
In professions, the rules are usually universal and hold hard and fast. Dell and Foster's have shown that is not the case with management. The reality is management is no more a profession than it is a science. It is a meeting of art, based on such components as insight, intuition and vision, and a craft that comes of practice and experience, with a bit of science thrown in. Besides, doctors and lawyers are a closed club. In this country, all you need is a few hundred dollars to register a company and manage it.
But if management is not a profession or science, what does it then say about the institutions that are pretending it is? Have business schools lost their way? Do they produce managers who can go out and establish companies with unique competitive advantages? Are MBAs worth the paper they are printed on?
Business school critics argue that these institutions produce bad management practices. Henry Mintzberg, a professor of management at Canada's McGill University and a leading management thinker, says MBAs are usually taken up by the wrong people; the kind who are selected for their records as individual performers rather than their willingness to make the sacrifices to learn management from the bottom up. The schools confuse their zest for business with the will to dirty their hands with the messy job of managing. That's why so many of them go on to be investment bankers, financial analysts and consultants.
MBA means little if it's all business without management
Email Print Normal font Large font AdvertisementLeon Gettler
May 28, 2008
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IS MANAGEMENT really a profession? Doctors, lawyers, engineers and accountants are always aggregating knowledge, finding new and better answers to tough problems. But for managers, the dilemmas keep changing and knowledge quickly turns obsolete. Yesterday's brilliant solution can be today's management disaster, unlike what happens with other professions.
Examples include computer company Dell, once the market darling and model of supply chain efficiency that got overtaken by competitive forces. As a result, Dell this year announced that it was cutting its workforce by 10% to try to simplify the business and increase efficiency.
Or in Australia, there's Foster's which, according to Merrill Lynch, is shooting itself in the foot by using a beer strategy on a wine business. True, in Australia's protected beer market, Foster's has a magnificently simple strategy.
It's a manufacturer's dream where you exploit economies of scale and make monster profits by raising prices. But wine isn't beer. It's a fragmented industry and, unlike beer, it's no commodity. Wine buyers are confronted with enormous choice. Furthermore, the retailers are big enough to exploit the fragmentation. As a result, retailers have a huge say in directing consumer preferences. A great game plan for beer does not work for wine.
In professions, the rules are usually universal and hold hard and fast. Dell and Foster's have shown that is not the case with management. The reality is management is no more a profession than it is a science. It is a meeting of art, based on such components as insight, intuition and vision, and a craft that comes of practice and experience, with a bit of science thrown in. Besides, doctors and lawyers are a closed club. In this country, all you need is a few hundred dollars to register a company and manage it.
But if management is not a profession or science, what does it then say about the institutions that are pretending it is? Have business schools lost their way? Do they produce managers who can go out and establish companies with unique competitive advantages? Are MBAs worth the paper they are printed on?
Business school critics argue that these institutions produce bad management practices. Henry Mintzberg, a professor of management at Canada's McGill University and a leading management thinker, says MBAs are usually taken up by the wrong people; the kind who are selected for their records as individual performers rather than their willingness to make the sacrifices to learn management from the bottom up. The schools confuse their zest for business with the will to dirty their hands with the messy job of managing. That's why so many of them go on to be investment bankers, financial analysts and consultants.
Mintzberg is guilty of generalisation and his attack is unfair to many MBA students, particularly the ones who come from non-profits and the public sector. Still, he does raise valid questions about the effectiveness of business schools.
In his latest book, From Higher Aims to Hired Hands, Rakesh Khurana, a professor of organisational behaviour at Harvard, takes a similar line to Mintzberg. He argues that business schools started out with the purpose of creating a profession that served society's interests and set the moral agenda. But because they lacked a coherent framework, they found themselves sidetracked into narrower horizons, and forever finding new shallows to plumb. In the '50s and '60s, scientific management and technocratic methods produced the "organisation man" with the job for life.
But from the '70s, business schools got subsumed by transaction cost economics and agency theory, which essentially recast management as an agent of the principal, the shareholders, who used the agent to realise their interests by maximising the company's share price. That also involved paying managers with shares and options, so principals and agents possessed exactly the same incentives. The irony, according to Khurana, is that this shift is fundamentally anti-management and anti-professional by doing away with notions of collective responsibility and delegitimising the power of managers.
It has also turned the new professional MBA manager into a professional mercenary "ready and willing to fight any war and to do so coolly and systematically, but without asking the tough pathfinding questions: Is this war worth fighting? Is it the right war? Is the cause just? Do I believe in it?" Hence the "hired hands" of the title, which does raise questions whether an MBA is worth it when it's more about sending a signal to employers that you are part of an elite, than about gaining practical knowledge.
The problem is that most businesses tend do just two things: they make or produce stuff and they sell it. As a rule, most companies are not about pure marketing, analysing, planning and controlling. Trouble is, that's what a lot of business schools teach. The result: specialists who either take positions in the staff (strategic planning, information technology, human resources), or go into the specialised functions of marketing and finance.
Khurana argues the real aim of business education should not be about getting ahead, but about making the organisation a better place. But that would not only change the business of business schools and academia. It would also challenge businesses to take management development more seriously.
