One of the grave problems in the theory and practice of management is the dominance of buzzwords, fads and humbug. Just a quick look at the management section in the local bookshop will prove this point. Management thinkers are possibly some of the most influential people of the current age. They influence, for better or worse, the lives of millions of people and have even spawned a separate language, flushed with buzzwords.
Management thinking is, due to its very nature, entrepreneurial and everybody who has an idea wants to ensure that as many people as possible read it and perhaps make a few bucks in the process. More than any other science, management ideas are primarily developed to make money, and people are willing to pay good money for them, as innovative ideas can significantly impact the bottom line.
This article briefly reviews the relationship between theory and practice in management in light of the dominance of pseudoscience in business.
Theory and Practice of Management
A problem with the theory and practice of management is that solid scientific research does not underpin many management theories. As a working manager, you need to be equipped with a pretty good ‘bullshit radar’. Looking around the management section of the average bookshop the volumes on sale do not seem to meet the rigour of academic research. Popular management books give you ‘simple solutions’ to success. Good to Great by Jim Collins is one of the best selling volumes in this genre.
The Business Pundit blog provides an excellent critique of Collins’ pseudo-scientific writing. The book is touted to be based on solid scientific analysis of data, but in fact, relies mostly on Jim’s intuition (p. 11):
“We all have a strength or two in life, and I suppose mine is the ability to take a lump of unorganized information, see patterns, and extract order from the mess – to go from chaos to concept.”
Collins did not use any advanced statistical analysis of the data, and there are no indications of the validity of his findings. Although he repeatedly emphasises the data, his interpretation of the data is not scientific but based on intuition. There is nothing wrong with using intuition to make specific decisions, but you can not call it science and generate general rules for good business management unless findings have a solid foundation. Enron, one of the companies that according to Collins went from Good to Great, but after the Global Financial Crisis, it quickly became apparent that Enron’s success was just smoke and mirrors.
The reason pseudo-scientific books like Good to Great are bestsellers is that our brains are not naturally wired to be critical thinkers. The success of a lot of business literature is based on confirmation bias and the Forer Effect. We prefer information that confirms our preconceptions. Also, most popular management theory does not go beyond self-fulfilling prophecy, and broad sweeping general statements and its popularity is in essence based on the same psychological principle that explains the success of astrology and other forms of divination.
Another problem is that the average manager does not have the capability or motivation to understand elaborate theories that underpin human behaviour fully. Managers don’t want to read complicated scientific theories. Good advice to those who seek to write a management best seller is to stay away from using any sophisticated analysis.
Management is, in essence, a social science that aims to influence human behaviour to achieve a collective goal, whether that be increasing profit or creating a great piece of orchestral music. Management seeks to change the behaviour of customers to convince them to purchase goods or services. Management tries to influence employees to ensure goal-oriented behaviour. Management theory is also about influencing or anticipating the behaviour of the external world, i.e. the stakeholders and possible competitors.
Nothing More Practical than a Good Theory
As a social science, management does not follow the strict rules of the natural sciences. There are no simple formulas to ensure staff motivation, increases sales volumes or assuring customer satisfaction. Management is about human behaviour, which is intrinsically unpredictable. Collins and other popular management writers do not use scientific methods, but there are natural limits to what the scientific method can achieve in management. All we can hope to achieve is to develop statistical models. These models do, however, not produce simple statements about friendly concepts such as ‘Level 5 Leadership’ and the ‘Hedgehog principle’. At best, the scientific analysis provides partial insights into a very specific phenomenon instead of the organisation as a whole.
There are also too many practical and ethical issues with undertaking full-scale management experiments that would be required to make the sort of claims that Collins promoted in Good to Great. Merely looking at sets of data from the past can not generate such claims because there are too many confounding variables that are not covered by the data. In other words: the principles distilled by Collins might not be the only reasons these hand-picked companies were successful.
Scientific theories do, however, remain an essential tool to regulate our intuition. Before we had a consistent theory of gravity, architects were very limited by the size of buildings they could create. As our theoretical and practical knowledge of physics increased, so did the size and complexity of structures. A theory is required to propel human knowledge and even though management is many times more complicated than skyscrapers, using only intuition will not improve our understanding of managing organisations.
In conclusion, because management is a social science, we can not rely on theoretical models alone. Working with people requires insight and intuition that can only be obtained by life experience. However, theory underpins our intuition, and in the end, there is nothing more practical than a good theory.