Week 1 - Discussion 2

I1'you want to pinpoint a plac,: and tinre that the lirst glinl.s of the Manragernent Century appeared on the horizon, you could do 'worse than Chicag,c, Va), 1ti86"

'fhere, tc, the re:cen1.ly fonmr:d American Societv of Mechanical Engineers, I-lenry R. Towne, a coli:runder of the Yale I.ock Manufacturing Comprany. delrivered att address ti.tled "''l'he Engineer as ran Econornist."

Towle argued that therc were good engincerrs arxl qo,rd businessnlenL. bul seld,onr were they one and the same. I{e went on to asseft that ''ther manugement o;f'works hils become a rnatter c,f such great and far-reracrhing in,portancer as perhaJrs to.jus;ti1'y its classifir;ation also as one of the: modem arts."

Towne's speech heralded a ncw reality in al least thrcc rcspects. Call the llrst. conLsciousness raisirrg: Managenrent was to be viewcd aLs a set ollpractices theLt c<.rul,C be studied and improved. It was to be rooted in econornics, which to lhis cro'wd nreirnt achieving maximum eflic,icncy with the resources pro'vided. And the nrembers of'the audience wcrc cngineers. In the rJecades to come, such maste:rs of the material univerrse, from frrcdcrick Szinslorv'l'aylor to Irlicliael Pofter, Tom Pcters, and lVlichacl I Iarnmcr, would have il disproportionate: el'f'ect on rnilnagement's history.

J'owne was catching a wave. During the ccnturl'rLhat lbllowed. managr:ment alj we know it would come into beirLg and shape the wc,rld in ri,hich we vyork. 'l-hree eras pu,ncturate the period liom the 1880s urrtil loday. ln the llrst, tl-re;lears until World War II, aspirations to scicntific exaclitude gave vrings to thc ambitions c,f a new, 5slf'-proclaimed manzLgerial e litc. 'fhe second. from the late l')4,0s until about 1980. was n'lanagr:rialisrn's cra of good f-eelings. its apogee of self-confidence and v',idcsprcad public sr"rpport.'Ihc third and ongoing era has been mzrrked by a kind of retreat -in1o spccialization, servitucle to rnarket fcrrces, and cleclining rnor:al ermbitions. But it has also been an cra o1'global triurnph, measurecl b]l agreement on ccrtain key ideas, steadily improving productivity, the w'orldwide march ol'the MIl,,\ degrce, and a general elevation ol-expectations about how workers shoulcl be trr:ated.

Americans and a l'ew othcr Anglophoncs dominatecl managernent's carlv hislory" in lhe scnsc that their idcas orr thc sub.jcct gainecl the grcatcsl. cLlrrenc).'l'herc wcre cxccptionrs: In 1908 Henri Irayol, an engineerr who had ruln onc o1'lirancc's largcst mining compauics. crrrrmcrated a list of management pr:inciples, which included a hierarchical chain 01'command. a scparation o1' functions, and an cmllhasis on planning and budg,erting, Still, his 19115 nragnunl opus. Administration lrrdustrielle et G6n6rale. took der;ades to b,e translated zLnd to have much effect beyond France, A,lthough globalization promises morc-di'verse sources o1'thinl<ing on management, nnost o1'our story sc-r far talles plac,r irr thc lJnitcd St,ates. (See thc sidebar "Saving Ourselves fronr Cilobal Provincialism.")

The Age ol' oolicientific Managenlentl'

In the last two decades ol-the l9th century, the [J.Sl. was srhifiing- urreasily--1iom a loosely connected world o1'small towns, small businesseis, and agriculturc to an industrialized network of cities, factories, a.nd large companies linlked by rail. A rising midclle class was professionalizing--early incarnations of the:American M,:dical Asscr,ciation arrd the ,A.rnerican Bar Association date from this era-and m<lunling a progressive push against corrupt political

bosses and the l'rnance capitalists, who were bttslr c,onsr:tlidlating indus;tries such as oil and steel in

the best robber-baron style.

Progressives clair:ned special wisdom roo,ted irL s,;ience and captur,:d in llrocelsses. Fre-derick

Taylor, who wrotrt that "the best manage:ment is a. true science, res;ting upon clearly defined laws,

rules, and principlles," clearly counted hirnsclf in their camp (fans such tts Louis llrandeis and Ida

Tarbell agreed). I-tis stated goal was the "muximurn prosperity lor the ernplol'er, coupled with the

maximum prosperity for each employee,"'through "a lar nnore equal ,Civision o{'the responsibility

between the meLnzLgenrent and the worknren." lfritnslation (lest the reerder r)verestimale'['aylor's

respect for workers' protential contributic,ns): 'J'h,o laborer should work according to a prooess

analyzed and d,::signeC by management llor oplimum efficiency'. "the onc: best r'vav," alJ'ov;ing

him to do as mruch as hun-ranly'possible rvitlrin a s;pecifrc time period

The publication, in l!)l l, of l-aylor's Principles of'Scicntillc Managenlent ,rriginally a paper presented to thlt sam,J American Society of Mechanical F,nginecl:;-_set c,lf a century-long quest for the right balance |etween the "things of prodLuclion" and the "hurnatritv of- production," as thc

Englishman Olivr:r Sheldon put it in 1923. Or. oS s,0lt10 w,luld hai,e irt, bclr.veen lhe "numbers people" and the "people people." It's thc key lens;ion ttrat has dcfined rnanag(Jlnent thinking.

The cartoon version of management history dep:icts the htrman relatirlns rnovcment, be gun in the

1920s and l9.lrls. as 3 rcaction to Taylor's relcnllle,ss, reductive cnrpl'rasis on the quantifiable. A

better view regar,ls the two as complemi:nt1ry. .r\s cr,'idence . consider the rcsearch of [llton Mayo

and the other men behin<J the pathbreaking H;u,r,thorne studies. 'fheir work shaLres'l'ayllor^s

overarching anrbition to improve produc,tiviity and cooperation rvith managefil,3rt through the

application of lscience,lhough in this oas;c the science was psychologly and, trl a le'sser cxllent,

sociology.

'fhe studies, which r.l,ere mostly conducted at Wcs;rtr:rn f]lectric's llawthclrne plant in Cliccro,

Illinois, began in1924 and ran through [932; evr:ntually thcy inv,clr,ed other factories and other

companies. T'h.e snalysis was largely tlone at llaLn,arcl llusincss St:hool, including otttposts such

as its Fatigue La|. (lf tircd u,orkers were the problent, ho'w to dcsiigrr operrations to lessert

exhaustion bu1 slill achicve maximum output'?) I'hc tlawthorne studies were e asily the most

important social science research ever done on rinrlustry. 'fhe projcct is worth unpacking a bit, if

oniy to dispel thi: popular myth about rvhat was learncd. ri"'l'hc1' turrLed the lights up, productivity

improved. Ttrey turncd the lights clown. sarne thirrg,. .Any sign of attcntion lrom managernent was

enough to impiove productivity.") l:issentiarll),' t]hc slttclicsr progres;secl through a succcssion o1'

hypolheses, ,iirr,,uniting each one. Neither chanEres in physical ccr,nditions (better illurninLation).

nor in work schedules (more rest breaksr). nor e'ven in inc,:ntive s'r'str:nts couldl lully explain why

productivity stiea.dily improved among ar set of )/oLung u/omen-=allwaLys labeled "the girls'"-

assembling parts; in a test room.

The principles 6.f Scientific t\[anagemenl (1911) r;e,t offa century-long quest to balance "the

things of production" and "the humanit'y of prodtlction'"

After years 6f'experiments it began to dawn on J\4tt1'o" an Australian psychologist who had joined

the IIBS faculty,,ihal at least two factors u,ere r1niv'irrg the results. Firs1, ithe women had lbrged

thLemselves into a group, and group dynarnics--mernbers erncourag;ing,cne, another--were

proving a strong cleterminant of output. Second, "rthe girls" hild bet:n r:ons,ulted b1'the rese,archers

a1. every step of the way: 1'he intention of'the eKpelimertl hLad been explairred to,them, and their

suggestions hadi been solioited. From suclh heady s1.u1T'rvere ilistillc,d the basic insights of the

human relations; srlhool-that workers were not rnerr3 atttornatons 10 bre measurr:d and goosed u,ith a stopwatch;that it was probably helpful to inquirr: alter whartthey knew'and felt; and that a group had subsl.arrLtial control over hovr much it r,vas prepared to produce.

Those insights sound humane, and they were. Still.,lle aim ol'the oxperiments rn'as always to discover how psyr;hology could be used 1.o raise prorCuctivity, resislt unionizaticrl'I, ilnd increase

workers' cooperal.ion with mar-ragement. Bel-rind the efTort of'Taylor and the so-called "Harvard

Clircle" was an elitisrrr, a class arrogance, ahnost incomprehensitrle bly today's standards. Dean

Wallace []. Donham, who founded FIEtR. ardenlly' bclieve,J that an. ecl.ucated managerial cadre-a "new managirrEl c[ass"--was the answer to the nation's pr,oblems: to tfre Depression, tc, inept

government, to s<t,cial upheaval. He and others on 1.hc banks of the Charles loolied down on the

1,,'pical worker as a lersser being, onc to bc manipulated in service of highcr purposcs (<,rr a.s

T'aylor saicl of'the type ol'marr bcst suite<lto loacl prili:. ir,on. "so stu;rid ancl so phrlcgrnatic that he

more nearly rescnlbles in his mental mak.e-up the ox").

Management Triumphant

l'hen into these sl.uffl,rooms blew a blast o1'tieshL, cleansing air. Call it I lumicilne Druckcr. F,ersonal conf'r:ssion: Although l, like e\/ery othcr right-thinking student of management, have

long tugged nty lirrelock in ritual homage to the glreat rnan, I nevcr fullS' appreciatcd w'hat a

revolutionary thinkcr he was until I steeped myself in the work o1'hii; predcccssors.

tfhe application oI humanistic psychologl' to social institutions.

Ilegilning with Concept of the Corporation (lc)4ti) and continuinplthrrough'l'hc Practice of

tvlanagement (1954) 'and Managing fcrr Results (1964), Peter Druc;ker laid out a vision of the

corpoiation as a s;ocial institution -indeccl. a social network in,,vhich thc capacity and potential of evoryc,ne involved were to be rcspccted. Out with tl're vocabulary (and mincl-set) of "boss,"

"forelnan," and "wclrker"; in with "marrager" and "r3tttployce." lf lDruckcr didn't invent the

r:oncept of "manitgen:rent." he did more than &tty1'v111' else to introducr: thc "nl" rvord and all its

iterations into how we think about running organi,zations.

Drucker didn'1. fbment the mzrnageriai revolution alone. Frit:z Roethlisberger, in his masterly

1937 summation of the llawthorne experiments, cle s;cr'ibed organizaliotts as "social systerns."

JManagement's job, hre stated, was to maintain their eqr-rilibriunt. In tlhe 1950s Drucker began to

rreviye interest in the work o1'Mary Parker Fotlett., a langeiy lbrgotten figurc fiom thc l9ll0s .whose ideas allout managemenl-"powrJr with" r'ather than "powr3r over." "oo'nstructive

,confrontation," a.nd the pursuit of "win-win" s<lltrli,ons--{buLnd new resonancer in the postwar era.

Others chimed in. D6uglas McGregor, first as a management professor at Ml [''s Sloan School,

then as the presi{ent ofAntioch College, drerv on. the hurnanistic psychology of'Abraharn

Maslow--he gf 1he trierarchy of human needs---lo propoun<l the lbmous Thecry X (peoprle are

inherently lazy it"nd v,'ill shirk their duties if they itren't closely p<lliced; and'lheory y (people want to find meaninlg in their work and will contribute in positive ways if the rvork is well designed). X and Y, McGregor took pains to assert. were "<lif1'erent cosrnologlies fthar: is. beliefs about the nature of nnanl...br"rt not manageriaI strategi,3s." '['o his dis;nray. nobgdl' much listened to him on that delai-.

The overall thrul;t of'the postwar managerial thinhcrs.was to elevate thr: ''humanity of' production." Wc,rkers will be most productive. the reasoning wenLt, if thcry'rc respected a.nd if managers rely on them to motivate themselves and srolve problenrs on thcir orvn.

"The developrnent, srtrengthening, and multiplicat.ir:rr of socially rnincled business men is the central problern of business."-I)san Wallace []. Il)onhanr

Not that the old order wcnt down without a fight. lr.lter researching General N4otors lbr Concept of thc Corporation, I)rucker persuaded rising (il\{ e.r:ecutive Charlie Wilson to propose a set oi refbrms including greatcr autonomy for plant manill-l,ers and what we'd call "w6rker 'empowerrnent"' toda'y.

'l'wo fbrces killed the idea. (Jne was lhe rerst of'GM manergentent, including CEO ratlfre:d P. Sloan. l-he other was thc t-lniited Autp V/orkcrs, in thc person ol- Waltcr Reuther, who waLnted no blurring o1-the line bctwecrl rnallagcment and labor.

More-enlightencd mranagerial attitudes conrbined r,,'ith othcr fbrccs--a democratization of .American societ'g following World War II; an cxplrcsion o1'defbrred demand firr econonric lgoods-to usher in t'wo decacles of good spirits arrcl :;eoming contr:ntment wittr corporations and tLheirconduct.'flLe numberof strikes and olhcr.fotr ac,tions dropped prrecipitously liom thc nasty .lcvels seen just al1er thc war; union membcrship, ilis it percentaglc ol'the rvorklirrce, peakcd anci tlhcn began the lc,ng, slow decline that continues t,o this day. (lVlanLagerial solicitude was probably rstimulated by, an unemployment rate that lcll below 3o/o in 1953.)

'The rise of strategic thinking.

lln addition to its more-enlightened attiludes towardL employees. the postwar period brouElht a heightened scnse of v,'hat managers could accomp,lish. IIere again Dnrc:kcr lecLthe wa'1.

lFrom our perch in th,o 21st century', rvhen every colnpany has a stnatr;g1,and evory cxccutivc a set of key objectives, it's difflcult to comprehend the lack of'direction that is said tc, have r:haracterized earlier generations. Ilut, as Drucker Jrointed out in'['he: ])ractice of Managemcnt. "the early ecclnomist" and, by implication, other :,;t:udents of rnanaglenlent---"cr)nceived of the businessman ancl his behavior as purell,passive : sucrtess in business me-ant rapid and intclligent adaptationto events occurringoutside, in an cconorry shaped by rimpersonal.,cb.iectiv,e firrces 1.hat were neither controlled by the businessmiin rron inf'luenced b1'his reerctionLto them." (.Whether real-1i','e businesspeople felt quite ttrat porverless is debirtable.)

'fhis was not good enough, Drucker proclaimed. '"[\zl]anagement lhasi to manage. And ma.naging is not just passivrt, aclaptive behaviour." Manager:; lhad to take chaLrgr;; they should be ''attempting 1.o change the economic environment...constantly puLshing back the lirnitations of economic

circumstances onthe enterprise's freedclm of erction."'l-o aid in the effbr-t. he argued. nlanagers should have ob.jer:tives and should manage accorclirLp to them.

'''Organizations endure, however, in proportion to the breadth o1'the rnorality b1, which they are govemed."--Cherster Barnard

I)rucker's 1964 book, Managing frrr Results, set the bar higher. argu:ing that "businesses exist to Jrroduce results" and that managers should systemat.ically scan their rnarkets for opportunities to grow the enteryrrise. In a 1985 preface to a new ecliti,cn, the author would claim that the book was the first one on busin,oss "strategy" but also recalltir;aLt he and his putrlisher haclbeen dissrraded fiom using that r,r,ord,

Consultants feltnLo such hcsitation. In 1963 Brucc Ilenderson, a fcrrmer Westinghouse cxccutive aLnd a true American original, starl.ed what was to bec;ome the Bostonr Consulting Group. In short crrder the firm rvould take as its mission delining cory.torule strctteSiy--,belbre then the 1.enn had trarell'been used anrd bringing thc light of its gor;pcl 1o corporzrtions.

l-his was no mere) shift in vocabula.ry. T'hc rise of <;orporate stratcgiy rcpresentccl a bolcl new reach by thosc concerned with the "things of prodr-rction." llCG's building-block conccpls-the e,xperience curve. thc growth-share matrix -\'crc cnor-mously influential. but r:ven more important was the analytical passion that lay unclenleath. 'l'he coni;ulrtants insisted on deh'ing into the numbers behind costs, customcrs. and competitors rlo a dcpth that I-ew cornpanies had prlumbed before. lStrat"egy's constant cornpanion ancl ['a,;ilitator was vrhat I've clservhcrc called Grealcr 1'aylorisrn-1.he imperative to take a sharp penr:il and a stoprvatch not.iust 1o some poor schlub's daily labor b,ut to every aspect of the comLpzul)"s operations.

Sitrategy was aggressiive.'fhe point of gathering all those numbers was to figure out where you stood in relation 1.o compctitors and how you rnighrt sei:ze advant.agle over them. With graphs and cliagrams, BCG relentlessly brougtrt horne thc imporlance of beinil number on(J or number two in

1'our line of busirress.

Ily l1)67, whcn John Kcnneth Galbraith published'l'hc Ncu'lndustrial Statc. some had bcgun to worrv that American companies and their lcadcrslLip had perhaps lDecome /oo aggressivc. Galbraith decried the fact that firms had grown so large and succcssful-- by I (,t7,1 the ll00 largest IJ.S. manufacturing companies corrtrolled two-thirds; ollthe country's; manufhcturitrg assets and rnore than three-fifthr; of its sales, employment, and incorne. He argucd that social goals increasingly were adapted to corporate goals. A largely'anonynloLrs "technostructure" of business leaders could dictate to consumers what to buy an,C. implicitly, how to li'u'e-or so the theory rvent.

'fhe Era of'Nervous Globalism

r\fter two decades without serious recession, the oil s;h,rclks of ttre 1970s and an accompanying econ<rmic malaisr: put paid to the notion of managerjLalisnn triumpliarrt . A 1966Ilarris poll had {bund 55% ol'l\nreri<;ans voicing "a great deal of confide:nce" itt the leaders of large companies. I)y 1975 the percentage had droppred to 15.

Irorces for change.

Itdultiple new firrces confionted American executi'ves, unleashing heightened cornpetition and e,ventually disrupting the relative amity thal. had prerzailed among business, 1ab,or, and €lovernment.

In an attempt to fight runaway inflation, U.S. Presicl:,nl Jimmy Carter launched eflbrts to cleregulate airlines, ra.ilroads, and trucking. His suocessors would leap onto the deregulatory trandwagon, tuming their attention to telecomrnunicalionls and financ:e. Meanr,vhile, U.S. attempts to encourage global tradc u'ere succeeding all too u,ell. A.s impcirlr:d cars. steel" and consumer electronics piled into domestic markets. doubts snucl,r in, too: "Cclulcl it bc that a bunch o1' fbreigners, particularlly the Japanese, know more a"bout managerneint than we doll"

1cchnology', espc,cially computer technology. steadily :increased the calculating power available to thernumbers pcopl,:, in the form of'the integrated rircr"rit ('late 1950s), thc minicomputer (mid 1960s), the mic:roprooessor (early n970s), and then the microcnmput,3r (nrid 1970s). soon to rnorph into the ubiqu'itous PC. Grcatcr'faylorism" launched in the era o1'slidc rules, hald lbund the means to create e'r'er more precise nrode ls ol'hovu a business sliould pcrlbrrn.

l\s stocks began 1.o hi:at up again in 1982-it had 1.a1,:en the Dou,.lonr:s Industrial Averagc 10 1'ears to crawl ba,;k to its 197'.). high olf 1 ,000 --a livclty markct fitr corportrtc control deveiloped. Old constraints algainst hostilc takcovr:rs fell away, ncvv sourocs of firnds bccarlc availablc to potential acquirers (think.iunk bonds), and financiers realized there was mone\/ to be rrracle in buying up companies that had a dog's breakfast of-busrinesses and sclling off the parts More than 21.5o/o<>f the firms on the lioftune 500 list in 1980 vrer,e acquired br, 19t19.

'''There is only one vaLlid clefinition o1'business purpose : 'l'o create a customer." Peter I)ruckcr

lihareholder cirpitalism's ascenl; over stakeholder capitalism.

During this period of intense change, the purpose of strategy, and indeed o1'corporate rnanagement, took on new clarity: It was to create r,vcalth for sharr:holders. To be sure that idea had always been around, dating back to the buccane,r:ring t'inanciers,rf thc l9th century. llut during management's era of good feeliings, a more irrolusive notion krad taken root in some cluarters. As Michael Lind notes in Lamtl o'l' Promist: his recent econrf,mic history of the tlnited litates, in 1951 the chLairman of Standard Oil of Ncu'Jersey had proclainted, "'l'he job of managentent is to ma.intain an equitab,le and workinp, balilnce among, the claims of'the various directly afTected interest groups...stockholders. ernplo'ye,rs. customers, ancl thc public at large." fiometimes labeled "stakeholder capitalism," lhis br,ra<ler-mincled co'nception would be steadily chipped away at by partisans of "shar,eholder capitali.srn," to the point that il allnlost disappearecl liom discussions of c:orporate purpose.

lManagement thinkers responded to the new pressurcs besetting crlrporations by sharpr;ning their

lbcus. With his 1980 book, Competitive Strategy, yllglha,el Porter did more than anyone else to give strategy an academic rigor it sometimes lack,:d arnollg consultants. I{is next bool't, (Jompetitive Adr,antage ( 198.5), u,oul,i arm compani,.rs with conccrptti such as the valuc chain,

enabling them to breal< down ever)i stage of their opelal.ions into units that could be costed out, b,:nchmarked, and measured for cornpetitiveness.

A.s the econom),quicl.:encd and the deal making and orr:itement orrL S/all Strect mounted, more people sought toioin the ranks;of'managemenl--'or at |:ast to obtain the entry r:redential, the NIBA. whose lustr:r was burnished by the salaries pairl degree-holclierr; by investment brlnk.s and management consulting firms. Some 26.000 MIIAs h;ad b,;en awarded in the llnited Str,rtes in 1970;by 1985 the number was up to 67.000.

A,t business schools, stratcgy experts such as Porter c[ispla"ced the faculty who had been teaching "lbusiness policy." Professors of {inance assumed greater pride of ;rlar:e, sl-roving towarrJ the periphery teachen; of the "softer" subiects human brr;:[3vi61-, organiz:ational dypnlllics---once c,gntral to Donhanr's aLnd Mayo's visions of managenlent r:ducation. l\crrtss the board, both in the c,orporate world and in academics, the numbers people seemed to be'winning. bringing greater quantitative precision to itrcreasingly specialized domains of expeftise.

Biut they weren''t nece,ssarily winning the hearls o1'thr: rvitler mana.gerial population. In 1 982 two N{cKinsey consultants, Tom Pelers and Bob \\iaterrlan, published [n Search ol'l]xccllc,nce. It v/as a paean to [hr: importance of culturc in organi:ralions, an attac]< on stratcg] as a merely quantitative exercise, and a celebration o1'the human elemcnt in making compttt-tics sur:cessful. "Soft is hard," Peters obscrvecl. I'hLe book sold morc than 6 rlillior:Lcopies, astc,nishing its authors and allerting the publishing industry,lo thc c:xistcnce r:rf a hugc audiencc lbr books on managerial vrisdgm. It didn't hurl. that f]xcellence extolled LI.Si. r:ornpranies and their practices, this shortly beforc President l{onald Reagan wtuld announce "lt's morning aStain in America" and wcll after everyone outsicleJapan had grou,n tired of being leclur,od on the superiority of that country's management m etl-rodsi.

For ttre ncxt 30 yoars. right down 1.rl our own day, thc trrucl, strains of thought thc Itumbers- d.riven push for greater profitabilitl,, ancl the cry' for nrore respect ibr the "huntanity ol- prroduction"-lvould coexist in uneasy tension. And notiust on thc c,rmmanding heighrts of nnanagement thor-rght. where ideas, books, gurus, a,ncl a,lademics battllc filr attcntion.

'l']ne ,Jebate

hLasatrsotakenpla.ceincon{'erenceroomsandrlfllc,es-ztncl inthemindsof'executives Cleliberating tough choices--where the f-atcs of busirr,;sses. and people, arc decidcrJ.

Irueled by tax cuts and detlcit spending under President Ilieagan. tire [J.S. cconom)' surger,l ahead

arfter 1982. But, u.nlike in the I 95C)s, this rising tidr: clidn't lifi all boats. In the trame of beating fbreign competition, (completing (or avoiding) takcol,ers. and servinEithe interr:sts of srhareholders, i1 becarnc acceptable to sellolf businessers that didn t fit thc new corporate strategy

zrnd to lay off battalic,ns of workels. Most f'amously at rGenerral [rlectric under.[ack We,lcLL, the old

employer-employee contract, wittr its irnplicit assurance of something like lifetirne employment,

rvas ripped up. And tlhe stock marhet cheered, as dlid rnany an indlvidual investor lurecl back into

the aciiip by rising slhare prices and a dazzlittgvarie,tLy of'rnutual lunds, 401(k) plans, ancl individual retirenrent accounts.

I\4anlgement literature provided the intellectual urrdi:rllirCing for Lhe new aggtessivenr:ss. Since

the 1960s, strategists had soundecll a wake-up call abr:rut the need t0 h:lou' your competition, an

arljuration almost totally neglected by the big thinkers; c,f the prior,era.. Exploiting tools such as the Freedom of Information Act ( I 966) and databases; such as LexisNlexis ( 1 970s), consultants helped clients fill in the details; to see how their sil.uar;ions lit the frinmeworks der,ised by Porter and others.

"Strategy is aboul making choices. trade-ofls: it's ab,cut deliberately ,;hoosing to be dilferent."-- N{ichael Porter

In two notable I{f}R a.fticles irr the 1980s, Michael Je,nsen resunected agency theory, pror,'iding a rationale for takeover activity. The idea held that altturtrgh companies; existed to enrich slhareholders, too often their managers developed interests of their ouzn, particularly if fhey didn't have il sufficientl;r large ownership stake in the enterprise. 'l'o keep ttreir eyes on the ptize, they needcd both the stick of potentially being acquired and th,o carrot of incentives linked to stock price.

Clonvcniently,in 199:t thet-l.S.Congrcsschangcdth,:rtaxoodctocncouragcthcgrantol's;lock options as executive conrpensatior-1. As l.ind point,.;out, b'y the encl of'thc dccaclc nrclre than half the payout to the lypir:al lioftune 500 executive took l.hat librni. So what il'thc ratio of CE{) pay to that of the humble ,cubicle rvorker was climbing tc, Olynlpian he ights? 'fhinl,r o1'all thc value the CEO was crearting,.OK, perhaps this wasn't the kind of moral lcarlership that Walltrce Donham had had in mind for the rnanagerial class, br,rt lhe was lontr1 d,;ad. his voice largr;ely firrgotten.

With the reengine:ering moverncnt, the imporatir,'c to exploil the latest inlormal.ion techrnology turbochargcd thLe push for cfliciency and compctitivctrc'ss. Obliteratc your existing proocsscs, admonishcd Mictrael I lammer in il celebrated | 990 tltRR arlicle and tlhcn with cc,author .lames Champy in a best-selling book. Re:design therl wilh your ultimatc custot.t.tcr in view, ttre s;ight lrine provided by the rvonclers of ncw clectronic communications. lljot't'tptutics 11ocked trr reengineering's banner, but too often merely as a loft'v-sounding justilication I'or layoff.s. [iventually so nlany corporate innocents had been slautrlhlered in ils name that the mol'erncnt was dliscri:dited, to be held up later as a chief-exarnplc,of r,t ma.nagement fad gone horribly \,ryrong.

llhe shift toward leadership and innovation.

l\clvocates for l.her hurnanitl'of pr:oduction, meantvhilc. plrrsucd a lblu.rrier linc. Within a couplc

6f years of the publication of In Search of tixcelle nce, []usinessWcetri reported that a tliird of the c;ompanies helct up in the book no longer met lhe erulhors'' criteria for superiority.

-lhis

embarrassment suggested a more 1{eneral conlusic,n t}rat rrvas to dog thc humanists nttmely, just rvhat were the managerial practices that would bring out rlhe best liorn employees, and how were they to be measured and their value to the company callcr-rlatedl'

titratcgy at least had a fairly clear paradigm and set of lia.meworks 1or successive generalions of thinkers to build on. rCharnpions o1'shareholder va.lui: glloried in their single yardstick, the stock

price, as the meariure of all things By comparisot't, sl.udents of human behavior in organi:zations ivere all over the lanclscape. Sch,cllars in the field clecried what one o.f thern. Jeffrey Pfi:fft:r,

called its "fairll' low L:vel of paradigm development'" and the fact that they couldn't agree among tlLemselves about whir:h problems:most needed to be irddr,essed.

Such eclecticisrn, to put it charitably, wzrs mirrored on the list of busirness best sel.lc-rs. Ilooks on how to be a learning organization .iostled with onesr on the wisdom of teams, the llower of corporate loyalt.y, the necessilr of core competences, the importance ,cf delightirlg custiDmers, and the imperative to navigate change, as in figuring r:rut rvho'd move:d your cheese.

11'the thinking on the human side c,oalesced at all, it v','as around tr,l'o l.hemes: leadership and innovation. Over the last two decades o1'the 20th centlur:y, businesr'; schools revisecl theiir rnission fi'om "educatintrl g,eneral nranagers" to "helping lea"derrs de:'u'elop." [Jnlortunately. despitLe s;ome inspiring writing on how lcaderrs differ liom managcrs, nc, consensus has lormcd on exaclly what c,rnstitutes a lea.der or how lhc,se exalted beings conlrl 1rl erxist. ('l'he current do'wnturn ltas raised questions about corporate leaders' sources of authorit';' as well. Ser: the sidebar "'*/ho lv4arjc You the Boss?")

Itrnovation invitesl lcsrs contror,€rs)'. Both humiinisls artd numbers pcc,ple recognize its ,;ri1.ical,

c,ompany-saving impoftance in an erra whcn ncw rivals can cmerge surddenly fiorn nowhcre. industry leadership ca.n change hands iin a tricer, an,J cornpetitive arlvantages once thou1lht

unassailable are eroded in months' Books by [?'icharcl Foster and c]la)uton clhristensen dcmonstratcd to a wicle managcrial audicncc how ne'uv l.echnologics systcmaticallLy' displacc old ones, in the process overtltrou'intr1 the pecking order ,:rf cntire indu:;trie s.

"If you only do what worked in thr: past, you r.vill ,r,'alie up one da), zrncl llnd that you've becn passetl by."-ClaytonL Christenscn

Innovation is u,he,rc satislying thc llercc dcmands of-thc rnarket dr::pends. as never befcrre. on

eliciting the bcs;t liom tl-re humanity o1''Jrroduclion. ]{o rJnc \zct appctlr:s ttl havc been ab,le tlo autonrate thc invention ol-the nc\ry r)r to come up vrith rnachine-replic:ablc sr-rbstitutes firr the

spark of human irnagiLnation. Pcrhaps thc biggest rnanatgcrial chall,;nge lacing the lllst-century

company will be ttnding ways to free that spark. resi<Jcnt in emplcryccs, liom the orgarrization's tidal pull to keerp doirrg the same old things.'fhc aplc of'managenrent iisn't over. of coursc.

llanagement thought is spreading to rvherever capil.ali:;n and more-or-less liee rnarke[s f ind a

hLome. By some counts that home l'ras welconl'::d 3 b'ilLli'on new inhabilants ovcr the past tr'vo

ilecacles, with tlhe lall of Soviet communism and the, ecrlnomio libr,:ralization ol'Clhina r,incl India' Capitalism and th.e managerial ideas that strug,gle'lo, nrake i1. more prr:ductive ha"ze indisputably

rendered the w6rld richer and better educated. And not just thc capitalist ancl nreLnaLgerial elite,

including the estimated half million people awardecl ran IVIBA or itis lloreign cquirralent lasrt year:

llhe ;lercentage, of pe,cple worldr,virle living belou'the por,'efiy linc has droppcd dramalicallly in

the past 50 years, while literacy ra.l.es hal'e steadilv cl[innbed.

In the world ofolfices, factories. stores, and even cu.lbir:lerfiLrms, Jrarl.icularll'those of large

orgalizations, people, expect to tre treated with fairrt,:,ssr and respect (even i1'their long-term job

seiurity is less assured). Illatant sr3xism, nake,J bulli'ing. and outnlge,ous morlsgerial beharvior are

rnore likely to 6e called out, even i1'ttrey haven't be,en totalLy eIinrinated. [Jporr going lhrcugh the

firont door of a compa.ny almost anrywhere in the cap:Ltal,isrl world, ii visitor can typicall), assume that certain rule,s'will be followed, certain procedures observed.

1'rue, managerialism hasn't sc,lvecX all the protrlems irr the workplace. Most nol.atrlv, it has;n't figured out a way to employ everyone who wants rn job, though achieving that goal probably r,equires the effirfl.s of'governrnent and economists as w,ell, along r,vith a public consensus. Ironies, occasionally ,cruel, have accompanied manap,erialism's rii;e. As Pcter l)rucker observed, vvhen he was a boy growing up in Vienna the peoprle who put in tlre longest hours wer$ thiose at tkre b<lttom of the economic ladder--the lady's; nlaid ,i:xpe,cted to wait up 1br her rnistre,ss to r,3turn home from the opera. Nowerdays it's thc execuli,u'c elite, fieldirrg 300 e-rnails a clay and calls tiom around the world, who toil into the nieht.

hnd managerialism's work is not finished. Ile,cause nnanagenlent iLs, finally. about hou'to make humans and the:ir organizatiorrs more effcctive, and bercaLuse humans stubborrLly cling to their propensity to be, well, human-there will ncv,:r bt: "1hc one best \'r'o),.' But thcre:'s;alnrost alway s a bctter way. I\4anagement will keep looliint fbr it.