Writing in the Globe, the ever-brilliant and always insightful Henry Mintzberg provides a tour de force on the current crisis as a colossal collapse of something much bigger than banks, the mortgage market, or the auto industry – a monumental failure of management writ large. It’s a must-read.
We call this a financial crisis or an economic one, but, at the core, it is a crisis of management … What we have here is a monumental failure of management. American management is still revered across much of the globe for what it used to be. Now, a great deal of it is just plain rotten – detached and hubristic. Instead of rolling up their sleeves and getting engaged, too many CEOs sit in their offices and deem: They pronounce targets for others to meet, or else get fired.
And the new U.S. administration? It rushes in with dramatic actions, paying out “cash for trash,” deeming the movement of massive amounts of money around the economy, much of it to prop up dying businesses in the short run. More quick fixes for an economy brought down by quick fixes.
We have been told how productive the American economy has been. Well, check the way productively is calculated: Firing great numbers of people, and expecting those left behind to carry the load before they burn out, is productive, indeed – until the longer-term consequences show up. They have been partly showing up in the massive U.S. trade deficits. The U.S. economy is collapsing because the American enterprises – and worse still, the country’s legendary sense of enterprise – have been collapsing …
Government bailouts can’t solve this, Mintzberg argues, rather they are part and parcel of this broader management failure.
What we have is a government that palliates: It provides geriatric medicine to its oldest, sickest enterprises in a country that requires pediatric and obstetric medicine for its young and vibrant enterprises, the ones that create the jobs, not eliminate them.
Business schools are also implicated.
From where I sit, management education appears to be a significant part of this problem. For years, the business schools have been promoting an excessively analytical, detached style of management that has been dragging down organizations. Every decade, American business schools have been graduating more than a million MBAs, most of whom believe that, because they sat still for a couple of years, they are ready to manage anything. In fact, they have been prepared to manage nothing.
And, perhaps the largest management failure is evident in the hubris and institutional sclerosis that grips U.S. governance writ large.
In this, we have America’s problem in a nutshell: the utter absence of collective introspection, whether it be the current crisis, the relationship between the Vietnam and Iraq debacles, even what might have contributed to 9/11, as well as the way it has been compensating and educating its corporate “leaders.” The country seems incapable of learning from its own mistakes.
Put differently, the U.S. appears to be in social gridlock. Thanks to vested interests and their powerful lobbyists, as well as an economic, individualistic dogma that has been embraced so thoughtlessly, it is business as usual in America …
Will Barack Obama be able to change that? I hope so. I fear not. A huge infusion of money may merely stave off the financial crisis while the management crisis continues to fester, masked by this very money. … How are the perpetrators of this mess supposed to get us out of it? Maybe the rest of the world will have to wake up, finally, to the realization that continuing to follow America’s lead may be the worst possible strategy.
March 31st, 2009 at 4:01 pm
Thanks for posting, circulating, and commenting on Mintzberg’s piece. It is indeed a must read!
March 31st, 2009 at 4:11 pm
Henry has been vocal about the MBA issue for a while; however I don’t think we can blame business schools alone. Here is my perspective:
http://bizvortex.wordpress.com/2009/03/19/in-defence-of-business-schools/
March 31st, 2009 at 6:00 pm
One of the things that struck me about Germany in the 1980’s was how much the country had learned via the disaster of Nazism and the horror of the holocaust. To be sure, the country was destroyed; and I guess that’s conducive to introspection (and there was less public introspection 1945-’70, perhaps),
but it was such a contrast to the USA and Vietnam, where, after 1975, it was rarely discussed. And having the Vet’s Memorial in DC is well and good, but where was the reflection.
When I finally overcame this problem in myself in 2003, I spent days researching the Indochina War, and saw that NO independent analyst from 1945-’75 ever saw a way that the US might “win” the war, with winning defined the way the US presidents did.
Thanks for reposting this article. Why do we think 18 years ahead when it comes to a newborn kid going to college, but not the state of the climate when they enter?
March 31st, 2009 at 7:41 pm
“saw that NO independent analyst from 1945-’75 ever saw a way that the US might win the war,”
Now let us do the same thing for the Afghan war. There has been one failure after another since the first Anglo-Afghan war (1839-1842). Why should the outcome be different this time?
March 31st, 2009 at 11:24 pm
Isn’t it stating the obvious to say that the core management failure has been in government? If the US hadn’t backed off fuel and emission standards in the 1980’s, the car industry wouldn’t have been building junk and trying to extend the 1950’s. If it hadn’t dropped regulation of financial institutions, letting AIG be (hilariously) treated as a “thrift” and derivatives go unexamined, the banks wouldn’t be collapsing.
Government is society’s management and when it doesn’t do its job, as it hasn’t for almost 30 years, the society can’t function well. “The Market” can only work when the society provides a solid framework. Alan Greenspan was “shocked, shocked” to learn that bankers would put profit before the common good. Come on, what did he think Ayn Rand was teaching anyway?
The incompetence and venality of the Bushies certainly made it all crash faster, but we’ve been going down this road for a long time. Obama is criticized for trying to do too many things, but he’s dealing with decades of physical, economic and social deferred maintenance.
Business schools are a distraction. They can teach how to manage, but if their graduates don’t follow good practices it really doesn’t matter.
March 31st, 2009 at 11:31 pm
The myth that individual self-interest can somehow always (or even half the time) translate into collective overall self-interest has never been proven and has recently been shown to be entirely false.
The folks who think that the Free Market is always right are sounding more and more like a cult to me. They believe, but without evidence and reject any evidence to the contrary of their pre-ordained beliefs.
April 1st, 2009 at 8:11 am
I know the exact time and date that I soured on B-schools. I was sitting at a bar, talking to a Michigan State alum, who was bragging about his degree, how prestigeous it was, how many high execs had a degree from there, etc. etc. etc.
Now, this guy worked for Ford, and I was trying to sell into there, so I couldn’t say anything, but I just thought to myself, “how many Ford execs are Spartan MBAs? How’s that working for them?”
I had planned on going back to school for an MBA, part time. I already have a Masters of Engineering, which took me 5 brutal years to obtain, part time.
But the longer I’m in the workforce, the more I learn just by working. I see people who got MBAs, and they don’t know any more than I do. I may still do the MBA, but its appeal is much less than it used to be. Now that I have kids, it might not even be possible (although there is a weekend MBA at Purdue that I could probably fit in… maybe).
April 1st, 2009 at 11:02 am
Buzzcut,
You’re probably better off looking at the MBA with some life and work experience. I did one of those 2 week intensives at Harvard B-school in my 30s and was very impressed with the knowledge I got. But I wondered how much I would have gotten out of it if I were 21 — probably not much, I wouldn’t have had any context to put it into.
Since you have the Masters already the degree itself probably doesn’t do much more for you. I’d look at what information or knowledge would you get that you’ll need in the new economy? A program that gives solid basics in finance and new ways of thinking is probably better than one that hasn’t changed its curriculum in 20 years. Shopping for a relevant program is probably more important than convenience. I think there are some good online programs.
GW Bush has an MBA, Bill Gates doesn’t. The knowledge and ability to apply it is more important than the title.
April 1st, 2009 at 11:22 am
Michael, I was considering just taking some accounting classes online at a local community college. Cheap, and make the best use of my time. I’d hope that I could get the most out of classes like that.
When you think about it, the history of the MBA was that it started as a way to “boot camp” engineers into management. It was not the step up degree for business majors. And even now, undergrad business majors pass out of a great deal of the classes. So what business classes could I just take at a community college, and get the most information at the least cost?
I got the Masters at the Illinois Institute of Technology, which had an awesome distance learning program. They broadcast their classes throughout the Chicago area, and my employer had a little room with a closed circuit television where I’d watch the class. I could call in with any questions. They had a courier to pick up and deliver homework and tests.
So it was about as easy to get as possible… but it was still brutal. 5 years is a LOOOOOOOONG time.
April 1st, 2009 at 12:42 pm
It’s not a failure of management – plenty of people “manage” things. It’s a failure of leadership – engaged, long-term, visionary activities that guide and make things. We’ve got plenty of managers, but far fewer leaders.
You need engaged people who can see the past and plan for the future to lead, and judging by this article’s conclusion (and the financial meltdown) we don’t have enough of them.
April 1st, 2009 at 3:24 pm
Buzzcut,
You’ve hit one of my buttons. Yes, take as much accounting as you can! The place most managers and businesspeople get in trouble is not understanding their finances, which puts them at the mercy of their bookkeepers or worse. From the way you describe your work, you’ll need not only financial accounting but management accounting. Financial is for reporting to others (taxes, shareholders, lenders). Management is for internal use, running your business — especially in manufacturing. Financial accounting is generally a prerequisite for management accounting. Also look at Finance, which is different from accounting.
If you haven’t got it already, beginning accounting at a community college is going to give you everything you’d get at Yale. You may have to go to a 4 year college to get higher level classes. And if you’re thinking of the MBA, see what classes it requires and which you can transfer.
The other classes to look at are human resources and even things like public speaking and psychology. I was just talking to an executive coach and he said the higher you go in organizations, the more important people skills are. That when hiring executives, that’s what companies look for more than the MBA stuff.
April 2nd, 2009 at 7:57 am
Michael, thanks for the guidance, I appreciate it.
You know, this is an underanalyzed topic. How does the motivated individual get an MBA quality education without getting an MBA? What minimum classes do you really need?
April 2nd, 2009 at 10:11 am
You know, I expect it depends on what you want and need. If you’re wanting to break into corporate boardrooms a degree may help, although my observation is more top executives have law degrees than MBA’s. If you’re wanting your own business, the degree probably doesn’t matter much. But also don’t expect that your career will go in a straight line or where you’re thinking about today.
My prejudice is to go heavy on accounting to start. It’s not going to change fundamentally, is vital to management regardless of where you go, and puts you in a position of knowledge and control — you may never end up doing books but if you can read them, talk knowledgeably to the accountants, and use it for your own planning and strategy, you’re in a position to control your own life.
Second as above, I’d look at things that build people skills.
Then I’d look at how the world is changing. I agree with Richard, the economy is undergoing a fundamental shift. Where do you think its going and what will you need to know to thrive? This is probably different for everyone. Some of it is what makes you happy, fascinates you, adds to your well-being? There’s no reason to do anything that doesn’t fulfill you and improve the world for your children.
Finally, you could do worse than to read Peter Drucker. He basically invented modern management and many of his insights are timeless.
April 2nd, 2009 at 11:01 am
p.s. I would add sales training. I was thinking in the shower and every successful businessperson I know is good at selling. I’m not sure how much you can learn in a classroom, and some of it is personality, but it can be learned and is invaluable. It’s the basis for negotiation as well as moving product.
April 2nd, 2009 at 1:26 pm
You know what’s good for the people skills? Leadership positions in service organizations. I got involved in Rotary, and they were just begging for treasurers, secretary’s, etc. Got as high as VP before I moved and left the organization. I would have been President had I not moved. I got to interact with lots of really high performing people, as well as local muckety mucks.
People oftentimes are so career focused that they don’t realize that it is these types of organizations that can really hook you up with the right skills. I was really lucky that I started with Rotary while I was still in my 20’s.
Before Rotary, I started a Habitat for Humanity chapter, that was an awesome experience as well. Again, I moved for work and had to leave that organization.
April 2nd, 2009 at 1:28 pm
Back to the original topic, I’ve said for about 10 years now that just about every institution in our society is disfunctional. Government, corporations, and religion are all severely damaged. The only large organization that can get it done is the Marines. Seriously. And they’re good because they’re relentlessly focused on one thing: killing bad guys.
April 2nd, 2009 at 2:14 pm
Interesting where these converge. The son of some neighbors is a Captain in the Marines. When he was home on leave last summer we were talking and his scorn and distain for Bush, Cheney and Rumfeld was stronger than many armchair liberals. But then they’re not being asked to kill or be killed.
The irony is that his parents were Peace Corps volunteers in Afghanistan in the ’60’s. He may be going to some of the same villages they worked in.
April 4th, 2009 at 9:44 am
[i]Back to the original topic, I’ve said for about 10 years now that just about every institution in our society is disfunctional. Government, corporations, and religion are all severely damaged.[/i]
You know, I’ve got to agree with this. Let’s also add media into the mix. Basically all these people that Buzzcut listed are on the make.