9. Organizations need continuous care, not interventionist cures. That is why nursing is a better model for management than medicine and why women may ultimately make better managers than men. The French term for a medical operation is ‘intervention’. Intervening is what all surgeons and too many managers do. Managers keep operating on their systems, radically altering them in the hope of fixing them, usually by cutting things out. Then they leave the consequences of their messy business to the nurses of the corporate world.
Maybe we should try nursing as a model for management. Organizations need to be nurtured – looked after and cared for, steadily and consistently. They don’t need to be violated by some dramatic new strategic plan or some gross new reorganization every time a new chief executive happens to parachute in.
In a sense, caring is a more feminine approach to managing, although I have seen it practiced by some excellent male chief executive officers. Still, women do have an advantage, in which case the corporate world is wasting a great deal of talent. Let us, therefore, welcome more women into the executive suites as perhaps our greatest hope for coming to our senses.
A few years ago, I spent a day following around the head nurse of a surgical ward in a hospital. I say ‘following around’ because she spent almost no time in her office; she was continually on the floor. (Bear in mind that, long ago, the partners of Morgan Stanley operated on the floor, too: their desks were right on the trading floor.) …
Off the floor, at the first sign of trouble, empowerment becomes encroachment by senior managers, who, because they don’t know what is going on, have no choice but to intervene. And so the organization gets turned into a patient to be cured, even if it was not really sick in the first place. It finds itself alternating between short bouts of radical surgery and long doses of studied inattention.
Consider instead a craft style of managing. It is about inspiring, not empowering, about leadership based on mutual respect rooted in common experience and deep understanding. Craft managers get involved deeply enough to know when not to get involved. In contrast to professional managers who claim ‘hands off, brain on’, the craft manager believes that if there is no laying on of hands, the brain remains shut off.
Women complain about glass ceilings … Worse still may be concrete floors. Too many managers can’t even see what is going on at the ground level of their organizations, where the products are made and the customers are served (presumably). We need to smash up the ceilings and bust down the floors as well as break through the walls so that people can work together in that one big circle …
I guess we have now come full circle, so it is time to conclude with our last musing – about which I will add nothing.
10. The trouble with today’s management is the trouble with this article: everything has to come in short, superficial doses.
Source: Henry Mintzberg, adapted from ‘Musings on Management’, Harvard Business Review, July–August 1996. Copyright © 1996 by the Harvard Business School Publishing Corporation; all rights reserved.
The soft underbelly of hard data
The belief that strategic managers and their planning systems can be detached from the subject of their efforts is predicated on one fundamental assumption: that they can be informed in a formal way. The messy world of random noise, gossip, inference, impression, and fact must be reduced to firm data, hardened and aggregated so that they can be supplied regularly in digestible form. In other words, systems must do it, whether they go by the name of (reading back over the years) ‘information technology’, ‘strategic information systems’, ‘expert systems’, ‘total systems’, or just plain so-called ‘management information systems’ (MIS). Unfortunately, the hard data on which such systems depend often proves to have a decidedly soft underbelly:
Hard information is often limited in scope, lacking richness and often failing to encompass important noneconomic and nonquantitative factors. Much information important for strategy making never does become hard fact. The expression on a customer’s face, the mood in the factory, the tone of voice of a government official, all of this can be information for the manager but not for the formal system. That is why managers generally spend a great deal of time developing their own personal information systems, comprising networks of contacts and informers of all kinds.
Much hard information is too aggregated for effective use in strategy making. The obvious solution for a manager overloaded with information and pressed for the time necessary to process it is to have the information aggregated. General Electric before 1980 provided an excellent example of this type of thinking. First it introduced ‘Strategic Business Units’ (SBUs) over the divisions and departments and then ‘Sectors’ over the SBUs, each time seeking to increase the level of aggregation to enable top management to comprehend the necessary information quickly. The problem is that a great deal is lost in such aggregating, often the essence of the information itself. How much could aggregated data on six sectors really tell the GE chief executives about the complex organization they headed? It is fine to see forests, but only so long as nothing is going on among the trees. As Richard Neustadt, who studied the information-collecting habits of several presidents of the United States, commented: ‘It is not information of a general sort that helps a President see personal stakes; not summaries, not surveys, not the bland amalgams. Rather … it is the odds and ends of tangible detail that pieced together in his mind illuminate the underside of issues put before him… . He must become his own director of his own central intelligence’ (1960:153–154, italics added).
Much hard information arrives too late to be of use in strategy making. Information takes time to ‘harden’: time is required for trends and events and performance to appear as ‘facts’, more time for these facts to be aggregated into reports, even more time if these reports have to be presented on a predetermined schedule. But strategy making has to be an active, dynamic process, often unfolding quickly in reaction to immediate stimuli; managers cannot wait for information to harden while competitors are running off with valued customers.
Finally, a surprising amount of hard information is unreliable. Soft information is supposed to be unreliable, subject to all kinds of biases. Hard information, in contrast, is supposed to be concrete and precise; it is, after all, transmitted and stored electronically. In fact, hard information can be far worse than soft information. Something is always lost in the process of quantification – before those electrons are activated. Anyone who has ever produced a quantitative measure – whether a reject count in a factory or a publication count in a university – knows just how much distortion is possible, intentional as well as unintentional. As Eli Devons (1950:Ch. 7) described in his fascinating account of planning for British aircraft production in World War II, despite the ‘arbitrary assumptions made’ in the collection of some data, ‘once a figure was put forward … it soon became accepted as the “agreed figure”, since no one was able by rational argument to demonstrate that it was wrong … And once the figures were called “statistics”, they acquired the authority and sanctity of Holy Writ’ (155).
Of course, soft information can be speculative, and distorted too. But what marketing manager faced with a choice between today’s rumor that a major customer was seen lunching with a competitor and tomorrow’s fact that the business was lost would hesitate to act on the former? Moreover, a single story from one disgruntled customer may be worth more than all those reams of market research data simply because, while the latter may identify a problem, it is the former that can suggest the solution. Overall, in our opinion, while hard data may inform the intellect, it is largely soft data that builds wisdom.
Adapted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from The Rise and Fall of Strategic Planning by Henry Mintzberg. Copyright © 1994 by Henry Mintzberg. All rights reserved.
References
Devons, E., Planning in Practice: Essays in Aircraft Planning in War-Time, Cambridge Univers
ity Press, 1950.
Neustadt, R. E., Presidential Power: The Politics of Leadership, Wiley, 1960.
To Err is Human
by Spyros G. Makridakis
… Wason (1972), a cognitive psychologist, made it his life’s goal to learn more about how people search for information and evidence. He found that as much as 90 percent of all the information we are searching for aims at supporting views, beliefs, or hypotheses that we have long cherished. Thus, if a manager thinks that a certain promotional campaign will increase his sales he will look for supportive evidence to prove that the belief (or, more precisely, hypothesis) is correct. Unfortunately, however, it is practically impossible to prove the hypothesis that the promotional campaign is effective simply by observing that sales go up, for there are many factors other than promotions that can cause sales to rise. In this case, supportive evidence can never prove the hypothesis is right. That could be done by stopping the promotional campaign for a period of time, the equivalent of getting disconfirming evidence. If the sales then go down, the hypothesis can be proved to be right. If the campaign is stopped several times in several regions, and the outcome is always the same, it can then be ascertained with confidence that the decrease in sales is not due to chance but is influenced by the decrease in advertising. Although it might be impractical to stop promotions or advertising, from a scientific view it is the only way to prove, beyond any reasonable doubt, that the hypothesis that promotions increase sales is correct. People, however, do not look for disconfirming evidence …
There is another side to the picture. We tend to remember information that confirms our beliefs far better than information that disproves them. In experiments, believers have tended to remember confirming material with 100 percent accuracy, but negative material only about 40 percent of the time. Skeptics, on the other hand, have remembered both supportive and disconfirming evidence equally well – their accuracy was 90 percent in both cases. Thus, not only do we search for supportive evidence, but once we find it we tend to remember it more accurately …
The higher up a manager is in the organization, the more the information he or she receives is filtered by several levels of subordinates, as assistants, and secretaries. They know, or think they do, what the manager wants to hear and selectively present supportive information …
Can biases be avoided if decisions are made in groups? Unfortunately not – in fact there is evidence suggesting that groups amplify bias by introducing groupthink (a phenomenon that develops when group members become supportive of their leader and each other, thus avoiding conflict and dissent during their meetings) …
Another type of judgmental bias that can threaten the effectiveness of decision-making is that of unfounded beliefs or conventional wisdom. We have grown up in a culture where we accept certain statements as true, though they may not be. For instance, we believe that the more information we have, the more accurate our decisions will be. Empirical evidence does not support such a belief. Instead, more information merely seems to increase our confidence that we are right without necessarily improving the accuracy of our decisions …
If a manager accepts the human biases I have described in this [article], he cannot assume rationality from his subordinates, superiors, or competitors. This complicates matters considerably, as all economic theories and the vast majority of managerial ones assume cold rationality. How, for instance, does a manager deal with a competitor who is driven by irrational motives? He cannot understand them or predict how they will influence the competitor’s decisions. There is no way of doing so, since irrationality cannot be predicted. Thus, another challenge facing managers is to accept the possibility of irrationality and attempt to rationalize it. That is probably the hardest of all challenges a manager must face. Worse, the lack of rationality is not limited to competitors only but exists everywhere. Jealousy, excessive ambition, fighting for no apparent reason, breakdowns in communication, and similar irrational behavior abound in any organization and must be dealt with in a sensible manner in order to neutralize or reduce their negative effects as far as is possible. The challenge is considerable, but it is one that must be confronted. We must move forward, although we know the road will not always be smooth.
Reference
Wason, P.C. and Johnson-Laird P.N., Psychology of Reasoning: Structure and Content, Batsford, 1972.
Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster Inc., from Forecasting, Planning, and Strategy for the 21st Century by Spyros G. Makridakis. Copyright © 1990 by Spyros G. Makridakis. All rights reserved.
CEOs: Some gamblers
by Henry Mintzberg
Gambling is a popular metaphor among CEOs, especially in the United States. So let’s use this metaphor to consider CEO compensation, since CEOs today gamble in a very particular way.
First, CEO gamblers play with other people’s money. That’s nice work if you can get it. Second, CEO gamblers collect, not when they win, but when they seem to be winning. In CEO gambling, it’s never quite clear what will be a winning hand in the end. Never mind: the CEOs collect in the midst of the game. It’s like taking in the pot with a couple of aces on the table while the rest of the hand is closed. Poker players call the effort to do this a semi-bluff. CEOs just do it – no semi. The trick, of course, is to make sure the best cards are showing on the table. If the rest of the hand is not great, they can hightail it out of there.
Third, CEO gamblers collect when they have lost too. In other words, they collect as they are hightailing it out of there. This, I assure you, does not happen in real gambling, which has yet to adopt the golden parachute. If it did, imagine the bets those gamblers would make. They’d be ‘all in’ all the time – the whole pile. Indeed, don’t imagine: Check the Chapter 11 records for the bets CEO gamblers have made. In this kind of gambling, wouldn’t you be a great ‘risktaker’ too?
Fourth, CEO gamblers sometimes collect just for drawing cards. No need even to show those aces, or to hightail it out of there (just yet). While CEO gamblers are not always the most resourceful in actively managing their companies, they can be awfully clever in coming up with new ways to collect winnings. For example, some get a bonus for signing a big acquisition, long before anyone can know if it will work out. (Most, by the way, don’t.) Not a single card has been turned over, but here comes the cash.
Fifth, CEO gamblers are now able to collect merely for not leaving the table. This is the greatest boondoggle of them all. It’s called a ‘retention bonus’ – you may have heard about it recently. Not only do these CEOs get paid for doing the job (so to speak); they also get paid for not stopping to do the job. Now that is really nice work, if you can get it.
I must point out here that in one respect all of this is like real gambling: the financial payoffs come now, the economic and social consequences trickle in later, after the players have left the table.
If such gambling is so wonderful, shouldn’t it be extended to everyone in the company? I believe it must be a mandatory accompaniment of any such CEO compensation package. Especially enthusiastic about this will be the compensation consultants, who must be getting tired of being in bed only with the executives.
Should any board of directors hesitate to embrace this marvelous proposal, I offer another. (When it comes to executive compensation, I suspect that corporate boards are finally ready to take a stand on something – anything.)
This proposal is win–win. Dismiss out of hand, without one second’s hesitation, any candidate for a CEO position who seeks a compensation package that would single him or her way out from everyone else in the company. In fact, terminate discussions immediately at the mere mention of the word ‘bonus’, since this constitutes definitive proof that the candidate has no business running a business of co-operating human beings. (Should this person not comprehend, cite his or her mention a few moments earlier of the importance of ‘teamwork’, and how ‘people are a company’s greatest asset’.)
This proposal will save tons of money and send a positive signal to everyone else in the company for a change, while the firm might just end up with a CEO who is a real leader. Imagine that.
One last thing. If the new CEO wishes truly to gamble, point him or her to the nearest casino.
Source: It’s time to call the bluff of those highrolling CEOs’ by Henry Mintzberg, Friday, April 3, 2009, www.theglobeandmail.com, © Copyright 2009 Bell Globemedia Publishing Inc. All Rights Reserved.
To be sure of hitting the target, shoot first and, whatever you hit, call it the target.
Ashleigh Brilliant
CHAPTER 5
* * *
MAXIMS OF MANAGING
Dave’s Law of Advice: Those with the best advice offer no advice.
[Anon]
Maxims are not myths – not quite. (Check your dictionary.) But they can sure lead you down the garden path too. Dave’s opening quote of this chapter is just one of many maxims, from A to Z, in our first reading. The second takes us to the grand-daddy of all this management maxim-ising: Parkinson’s law. Here Professor C. Northcote Parkinson, with tongue utterly in cheek, explains the mechanics about how ‘work expands so as to fill the time available for its completion’.
This takes us into a discussion of a book by Jeffrey Pfeffer and Robert Sutton that challenges management’s more popular axioms – about incentive pay, layoffs, mergers and work–life balance.
Lucy Kellaway is great for providing openings and closings to these issues. In this chapter, it’s a closing: seven of her own maxims about how to get away with foisting maxims on everyone else.
Management- It's Not What You Think! Page 9