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Charles Handy: Management Philosopher (Part 1)

In my research for this article, I found an unreferenced remark, suggesting that it was The Economist magazine that coined the term ‘management guru’, and that they first used it as a description of Charles Handy. Handy rejects the label – and so he should. It almost belittles the breadth of his thinking. From organisational theory, to management trends, to social polemic; Handy’s thinking goes well beyond easy categorisation.

Charles Handy

Short Biography of Charles Handy

Charles Handy was born in a small town a few miles outside of Dublin, in Ireland, in 1932. He was educated in an English public school, and at Oxford University, where he gained his MA in ‘Greats’ – classical history and philosophy. He went from there to work for Shell, taking a number of operational roles around the world, where he had great autonomy as a young manager. Returning to London, he found headquarters life didn’t suit him. What did, however, was a transfer to the staff college, where he found teaching much more to his liking than corporate administration.

MIT Sloan School

Having taught himself the basics of economics earlier on, so he could take up a role at Shell, he moved briefly to Anglo American as an economist, before travelling to MIT to study at the Sloan School of Management. here he met and studied among some of the greats of US management theory: Warren Bennis, Chris Argyris, and Edgar Schein, who supervised his studies. He was greatly influenced by them all, and also by the work of Douglas McGregor, who had also worked there and died a little before Handy arrived in 1965.

He returned to London to set up the Sloan Program at the newly founded London Business School, where he became a professor in 1972. It was there that he wrote his first book, Understanding Organizations, which has remained in print pretty much ever since 1976, with new editions updating it for modern readers. It is still a first rate introductory text, of which Handy says that he wrote it to get to grips with the ideas in it. He also (famously) recommends that once you have read it, you should re-write your own version and burn the original. In part, Pocketblog is my attempt at re-writing his book, though I never plan to dispose of my trusty 1993 fourth edition!

Handy finds his Voice

Whilst Understanding Organizations is very much a compendium and synthesis, Handy’s next book introduced his own ideas. 1978 saw the publication of The Gods of Management. We’ll take a look at the ideas in this book in part 2 of this blog.

In 1977, Handy left academia, in search of a somewhat more spiritually rewarding role. He found it in an organization set up by Prince Philip the Duke of Edinburgh, and the Church of England. St George’s House is an institution that encourages business and political leaders to come together, along with faith leaders, to consider contemporary and societal issues. His post as Warden allowed Handy to marry his philosophical and commercial instincts.

Portfolio Career

However, in 1981, Handy left, to pursue a new direction in his working life. This was a direction signposted in one of his most important books, 1984’s The Future of Work. In it, he signposted the development of portfolio careers, and the downshift from high-powered corporate jobs (the rack he had been on at Shell) to lesser-paid, but more congenial lifestyle careers. He embraced this downshift through the 1980s and started his own portfolio career that has served him to this day.

Handy further developed the ideas from The Future of Work in 1989’s The Age of Unreason. This book is full of ideas that we will explore further in part 2 of this blog. At its heart is Handy’s rejection of people as human ‘resources’. In modern organizations, we will want to assert our individuality.

A Stream of Ideas

The late 1980s and early 1990s were a particularly prolific time for Handy. He contributed to Making Managers, which sparked a new focus on management as a professional discipline, rather than a simple set of tasks, and led to the growth in the UK of management qualifications, and wrote Understanding Voluntary Organizations. In 1991, he presented a BBC TV series called Inside Organisations, and published a book by the same name, which set out 21 management concepts or ideas. Handy chaired the RSA from 1988-89.

His more philosophical leanings emerged from 1994, when he wrote one of his biggest selling books, The Empty Raincoat, about the emptiness at the heart of global economic growth. In the US, it was called The Age of Paradox. This book may be the most prescient among many of his works that seem that way.

Handy has barely let up with a stream of new books with new and interesting ideas:

A Summing Up

Without a doubt, Handy is a prodigious thinker. He has done and written so much, that we have to consider him one of the few of our Management Thinkers and Doers for whom a single article is not possible. Like another great, Peter Drucker, Handy is one of our foremost commentators on the nature of organisations. And like Drucker, his ideas have ranged well beyond that field. In Part 2 of this article, we will focus entirely on some of Handy’s biggest and most important management ideas.

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Mary Parker Follett: Management Visionary

‘Ahead of her time’ seems to be the most appropriate epiphet to apply to Mary Parker Follett. And many have done so: Peter Drucker described her as a ‘prophet of management’, while Warren Bennis has said:

‘Just about everything written today about
leadership and organizations comes from
Mary Parker Follett’s lectures and writings.’

Mary Parker Follett

 

Brief Biography

Mary Parker Follett was born in 1868, into a wealthy Quaker family in Boston. She was an exceptional scholar and a polymath, attending university at Harvard (the Society for Collegiate Instruction of Women – later Radcliffe College), during which time she also spent a year at Newnham College, at Cambridge University (in England). Although denied a PhD by Harvard, she studied widely in law, economics, politics, philosophy, and history. While at Cambridge University she prepared and delivered a paper that was to become, in 1918, her first book: ‘The New State’. It was about social evolution and group-based democratic government. It was reviewed by former US president, Theodore Roosevelt and remains in print today.

After studying, Follett spent the next thirty or so years (from 1890 to 1924) focusing on voluntary social work in Boston. She innovated, being the first person in the US to use a school as an out-of-hours community centre; a model that was widely reproduced across the country.

However, what interests us most at the Management Pocketblog is her work from 1924, when she turned her focus to industry. She wrote that it is ‘the most important field of human activity’ and that:

‘management is the most fundamental element in industry’

She became an early management consultant and was much in demand by industry leaders and academic institutions. She spent her time advising and lecturing, up until her death, at a relatively young age, in  December 1933.

Sadly, her work is not widely known of in the western world, despite notable figures like Drucker, Bennis and Sir Peter Parker praising her to the rafters. This is despite the fact that she anticipated a wide range of issues and thinking that is still today presented as modern and aspirational for our large organisations.

Follett’s Visionary Thinking

Let’s count the ways that Follett was ahead of her time in the field of management. I get to eight.

1. Humanistic Approach to Organisations

Growing up in the time of FW Taylor, and ahead of the work of Elton Mayo, Follett rejected the functional approach to industry in favour of her emphasis on what we now call humanistic principle. She was a progressive, rational humanist in the management field as well as in the political and social arenas, and puts me very much in mind of George Eastman, whom I also described as a visionary. She very much anticipated the work of Douglas McGregor.

2. Empowerment

Follett rejected the idea that managers and staff have fundamentally different roles and capabilities. Instead, she saw that an organisation’s success would come from recognising the part that each has to play in delivering its services or creating its products. She advocated giving power to where it matters.

3. Joined up Business (… and hence, Re-engineering and Lean?)

This created a need for a joined up organisation, where activities, departments, functions and people are properly co-ordinated – both across the organisation and from the bottom to the top (and vice versa). She referred to the relationships between staff and managers and among functions as ‘reciprocal relating’. A leader’s role is therefore to see the whole organisation and the ‘relation between all the different factors in a situation’. Is it too much of a stretch to see this as anticipating the mission of re-engineering and lean management to close gaps in process flow? I don’t think so.

4. Group Dynamics and Team Working – Participative Leadership

The equal balance of power between management and employees leads to the need for team co-operation and that, she suggested, develops a true sense of responsibility in workers. To me, it also demands a model of leadership that Robert Greenleaf was to call ‘Servant Leadership’. Follett did not herself go as far, but identified ‘Participative Leadership’ as the style that involves a whole team in creating products and delivering services.

5. Personal Responsibility

Tying together empowerment, co-ordination and group working is the sense of responsibility they inculcate in workers. Follett again anticipated McGregor’s Theory Y, by arguing that it is this which most develops people.

6.Management Training

If we are to delegate greater responsibility to our people, we must do so well. Follett was an early advocate of management training, believing when many did not that the leadership aspects can be taught.

7. Transformational Leadership

In a paper called ‘The social construction of leadership: From theory to praxis’, Edith Rusch notes the unacknowledged similarities between James McGregor Burns’ articulation of ‘Transformational Leadership’ and Follett’s writings. She presents a compelling argument that Follett not only anticipated the ideas of transformational leadership, but that she was the first to put them forward and even used the term.

8. Win-Win Negotiation and Conflict Management

One particular interest of Follett’s was conflict. She suggested three approaches of domination, compromise and integration, that  Kenneth Thomas and Ralph Kilmann would later refer to as competing, compromising, and collaborating. Her thinking on the benefits and mechanisms of creating integrated ‘win-win’ resolutions is rich and sophisticated. In her suggestion that we uncover the real conflict and get to each party’s deeper aims, and then seek to satisfy those, she anticipated a lot of the thinking in best-selling negotiation book, ‘Getting to Yes’.

My one Favourite concept…

from all of Follett’s writing is this: the idea of ‘circular response’. This is that our behaviour helps to create the situation to which we respond. It is the idea of a feedback loop of self reinforcing interpretations and behaviour. I don’t doubt that the essence of this very modern sounding idea goes back to the ancients and classical writings of many cultures. But her articulation of it (and of the compelling phrase ‘circular response’) is so clear, that it has got me thinking.

Thank you…

to Mary Parker Follett. Before I started researching this blog, I knew nothing of her (unlike almost all other management thinker subjects). I had hoped that, being less known, there would be little to read and writing this would be quick. Far from it. But I have gained a lot from learning about Follett, and I hope you will too.

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Henry Mintzberg: Gadfly Generalist

Henry Mintzberg is one of today’s great management thinkers, whose work is characterised by breadth, rigour, and iconoclasm. His work has so much breadth and depth that I have decided it merits two blogs, rather than one.

In this first blog, we’ll look at Mintzberg the man, and his earliest work on the nature of managerial work. In the second blog, we will look at two further big themes in his professional work: how organisations are structured, and how they create strategy.

Henry Mintzberg

Brief Biography

Henry Mintzberg was born in Montreal in 1939 and graduated from McGill University in Mechanical Engineering in 1961. He then went to work for the Canadian National Railways for two years in Operational Research, but quickly gravitated to an academic career. He won his doctorate from the MIT Sloane School of Management in 1968, and returned to McGill, where he is Cleghorn Professor of Management Studies. For much of the time, he has split his teaching and research time between there and INSEAD, the international graduate business school, based in Fontainebleau, in France.

He is a prolific writer with 16 books and over 150 articles and monographs to his name. Most recently, he has focused on a more politically oriented critique of western society and business, taking the extremes of capitalist thinking to task, much as the west took the extremes of communist thinking to task in the 1980s. His pamphlet, Rebalancing Society, is available from his website.

Mintzberg is notable as a gadfly, critic and iconoclast who is outspoken on many issues and highly quotable in the way he speaks and writes (an example is below). But he is thoughtful and rigorous too: when he disagrees with another academic or commentator, he rarely engages in an attack, but rather he gathers his data carefully, before mounting a strong – often devastating – counter-argument.

Mintzberg MonkeyMintzberg on Managerial Work

Mintzberg’s first book was The Nature of Managerial Work, published in 1973. It was followed by one of the all time most popular Harvard Business Review articles, whose tile described Mintzberg’s thesis well: The Manager’s Job: Folklore and Fact (this is one of many classic HBR articles, that, while protected by copyright, the enterprising blog reader can probably track down).

In his earliest academic work, Mintzberg set out to discover what managers actually do with their time: not what they should do, nor what they say they do. His managers went all the way up their organisations to CEOs. His results put the lie to grand theories of management behaviours – most notably Peter Drucker‘s metaphor of manager as orchestra conductor. Instead, what he found were managers constantly juggling interruptions and distractions, spending very little time on any one topic. Their big projects are delegated and all they can do is spend a few minutes here and there, engaging with one of them, before moving onto something else.

Most managers I know would, firstly, recognise this description and, secondly, fear that this is dysfunctional – not at all what they should be doing. Mintzberg gives them the confidence that they are not alone. He also found that much of what managers did in the early 1970s was ‘old fashioned’ and I suspect it still is: a lot of their time is spent dealing with people, talking, chatting, even gossiping. This gathering of ‘soft’ information is the basis of their decision making as much as or even more than the formal documenting, analysis and careful consideration that theory would prescribe.

Out of all of his observations, Mintzberg catalogued ten managerial roles, which he grouped into three clusters.

Interpersonal Roles

  • The Figurehead, whose role is to represent the team, division or organisation, formally. Often a merely symbolic role, but more frequently, a political one.
  • The Leader, whose role is to co-ordinate,unify, and motivate the team.
  • The Liaiser, whose role is to build up and maintain a network of contacts within and beyond their organisation.

Informational Roles

  • The Monitor, whose role is to gather and evaluate information from all sources.
  • The Disseminator, whose role is to transmit the information across the organisation and to their team members.
  • The Spokesperson, whose role is to give information to the outside world, from within the organisation.

Decision-making Roles

  • The Entrepreneur, whose role is to design, initiate, and propagate change within the organisation.
  • The Disturbance Handler, whose role is to deal with the unexpected.
  • The Resource Allocator,whose role is to make decisions about how the organisation’s resources can best be deployed.
  • The Negotiator,  whose role is negotiate for resources internally and externally.

The first thing that strikes me is that there is little here about getting things done – the job of a manager is to manage: not to do. The second thing is how much of this is reactive to events – very little of this smacks of careful consideration and planning. The risk here is one of superficiality and quick fixes, so a manager must guard against these, by learning to be adept at spotting what is important from among the vast amount of distracting dross.

Finally, I cannot help worrying about ‘the magic number trap’. Here we see a perfect ten roles. I do hope the younger Mintzberg – now the rigorous gadfly – did not succumb to the temptation to simplify in search of neatness. What roles may he have missed, or conflated?

Next week… Part 2: Henry Mintzberg: Management Thinker

If general management is your thing, you may like…

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12 Blogs for Christmas

Holly&Ivy

This has been a great year for the Pocketblog, seeing reading figures rise substantially and reaching the milestone of our 100th blog posting.

So, with Christmas coming at the end of the week, let’s do a round-up of some personal favourites from among this year’s Pocketblogs.

Here is something for each of the twelve days.  Enjoy!

1. Start as you mean to go on: Happiness

After some New Year’s Resolutions to start the year off, we dived into the subject of Happiness, with ‘Happiness – as simple as ABC?’ about Albert Ellis’s Rational Emotive Behavior Therapy – the fore-runner of CBT.

2. … and Start Topical

We then moved into a subject that was much in the news in February; and still is.  With ‘Bankers’ Bonuses and Brain Biology’, we looked at recent neuroscience and how that relates to Adams’ Equity Theory.

3. Generations

In February too, I wrote two blogs about sociological ‘Generations X, Y & Z’ and ‘Generation Y at work’.  I followed this up by another about what comes ‘After Generation Y?’.

4. The Gemba

In May, inspiration waned for a week, so where did I go to find it?  ‘The Gemba’.  I got it back, and later that month, got idealistic in ‘Reciprocity and Expectation’ looking at the Pay it Forward ideal and the realities of Game Theory.

5. Why do we do what we do?

In the first of two blogs on how to predict human behaviour, I looked at ‘How to Understand your Toddler’ (mine actually) and Icek Ajzen’s Theory of Planned Behaviour.  Later in the year, in ‘Predicting Behaviour’, I looked at whether a simple equation (hypothesised by Kurt Lewin) could predict all behaviour.

6. One of the Best Business Books of the Year

… according to the Journal Strategy & Business is Richard Rumelt’s Good Strategy/Bad Strategy: The difference and why it matters.  In ‘What Makes a Good Business Strategy’ we looked at some of his ideas.

7. The Apprentice

This year, I have been a big fan of both series and have written my own episode by episode analysis of both The Apprentice and Young Apprentice.  I also did one blog on each for Pocketblog: ‘The Apprentice and Five Levels of Leadership’ and, for Young Apprentice, ‘Decision Failure’.

8. Drucker Triptych

Has any one individual been as influential in establishing management as a pragmatic academic discipline as Peter Drucker?  To recognise his various achievements, I wrote a triptych of blogs over the summer:

  1. The Man who Invented Management
  2. Management by Objectives
  3. R.I.P. Corporate Clone: Arise Insightful Executive

And one of Drucker’s direct contemporaries was W Edwards Deming, so I also took a look at ‘Demings’ System of Profound Knowledge’.

9. Crazy Times

Will history look on Tom Peters with the respect that it holds for Drucker and Deming?  Who knows?  But without a doubt, Peters has been influential, insightful and provocative for thirty years or more, and I am sure many of his ideas will survive.  In ‘Crazy Times Again’, I drew a line from FW Taylor (father of ‘Scientific Management’) to Peters.

10. The Circle Chart

In ‘Going Round in Circles’ I returned to management models and one of my all time favourites: Fisher and Ury’s Circle Chart. I applied it to problem solving rather than, as they did, to negotiation.

Fisher and Ury are experts on conflict resolution, as is Morton Deutsch. In ‘Conflict: As simple as AEIOU’, I looked at a fabulously simple conflict resolution model that originated in Deutsch’s International Centre for Cooperation and Conflict Resolution.

11. Two Notable Events

Two notable events made the autumn memorable for Pocketblog: one sad and one happy.

  1. In ‘A Bigger Bite’ we marked Steve Jobs’ passing
  2. With ‘Three ways to get it wrong’, we marked our hundredth blog, by looking at one of the towering social psychologists of today, Daniel Kahneman

12. And finally, our most popular topic

Tuckman’s model for group formation has proved to be our most popular topic by far this year.  We have returned to it three times, each time looking at a particular facet:

  1. ‘Swift Trust: Why some teams don’t Storm’
  2. ‘Team Performance Beyond Tuckman’
  3. ‘Tuckman Plus’ is the first of two posts.  It is the last topic post of 2011 and its companion (‘Part 2: Transforming’) will be the first of 2012

So here’s the deal

  • Have a very merry and peaceful Christmas.
  • Have a very happy and healthy New Year.
  • Be good, have fun, stay safe, and prosper.

From all at Management Pocketbooks,
our colleagues at Teacher’s Pocketbooks too,
and from me particularly.

Mike

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Deming's System of Profound Knowledge

I recently did three blogs about towering management thinker, Peter Drucker:

  1. The Man who Invented Management
  2. Management by Objectives
  3. R.I.P. Corporate Clone: Arise Insightful Executive

Another hugely influential management thinker and a direct contemporary of Drucker’s was W Edwards Deming.

W. Edwards Deming

imageDeming was a mathematician and Physicist, who turned to statistics and management. In so doing, he became the most influential non-Japanese thinker in within Japanese industry, and a leader in the subject of quality – arguably the founder of TQM, Total Quality Management.

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On the subject of quality, he asserted that:

When people and organizations focus primarily on quality, quality tends to increase and costs fall over time.

However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

Profound Knowledge

Deming and Drucker were at one on the matter of knowledge.  Both believed deeply that managers need a wide knowledge over a broad spectrum of topics.  Deming went further than Drucker, in articulating this as a fundamental principle of management.

Deming said that managers need to have a ‘system of profound knowledge’.  The layout of profound knowledge has four parts, all related to one another:

  1. Appreciation for the system that they are a part of
    (What, today, we would call ‘systems thinking’)
  2. Knowledge about variation
    What drives quality and how to measure cause and effect statistically (as we do today, with processes such as Six Sigma)
  3. Theory of knowledge
    Understanding critical thinking processes and what we can and cannot know about a system.  His most famous single contribution is popularising the ‘Deming Cycle’ (which was actually invented by Walter Shewhart).
    Plan – Do – Check – Act
  4. Psychology
    How human beings respond in different situations

Challenge

This seems to me to be an excellent syllabus for a management programme, but I wonder how many managers are really learning about all four of these elements.  This system creates a synthesis of the management thesis and antithesis of the 20th Century:

Scientific Management versus People Management

14 Points for Management

In so doing, Deming articulated his 14 Points for Management.  These, whilst many have become commonplace today, still resonate well.

  1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
  2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
  3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
  4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
  5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
  6. Institute training on the job.
  7. Institute leadership (see Point 12 and Ch. 8). The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
  8. Drive out fear, so that everyone may work effectively for the company (see Ch. 3).
  9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
  10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
  11. a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
    b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
  12. a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
    b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective (see Ch. 3).
  13. Institute a vigorous program of education and self-improvement.
  14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

Management Pocketbooks you might Enjoy

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R.I.P. Corporate Clone: Arise Insightful Executive

This is the third in my Triptych of blogs about the work of Peter Drucker.  The first two were about Drucker, himself, and about Management by Objectives.  This one is about another concept he started to develop in his 1954 book,The Practice of Management.

The Man who Invented Management

Management by Objectives

The Knowledge Worker

Drucker first coined this term in his 1959 book, Landmarks of Tomorrow, saying that:

‘management’s new role is to
make knowledge more productive’

In his earlier book, however, he had started to see the manager’s role as understanding, interpreting and making decisions about the information they can access.

But it was two later works that crystallised his thinking and made him the clear progenitor of how we now interpret the term.

The Effective Executive (1966)

In The Effective Executive, Drucker argues that knowledge workers are executive in that they use knowledge to effect (or execute) changes.  He identifies five habits of an effective executive and, in passing, I note that he used the chapter title ‘First things First’ 23 years before Stephen Covey did, when he used it as one of his seven habits.  Executives must:

  1. know how their time is being spent.
  2. on results rather than the work.
  3. build on strengths first, and then give attention to weaknesses.
  4. focus on the key areas where superior performance will produce outstanding results.
  5. make effective decisions.

The Age of Discontinuity (1969)

Peter F DruckerThe Age of Discontinuity’ is the book where Drucker really develops the concept of the knowledge worker, as a breed of thoughtful, intelligent executive, every bit as much a professional as a lawyer, engineer or teacher.  They are paid to acquire and apply knowledge, make informed judgements and take responsibility for leadership.

Dull, conforming corporate clones would thenceforth be no longer needed.  Instead, knowledge will be the source of economic power – all of which came 20 years before Sir Tim Berners-Lee made his first formal proposal for what is now the World-wide Web.

Subsequent Thinking

From the early 1990s, management thinkers and futurists seized upon the concept of the knowledge worker and have spun theories, models and predictions out of it.  Indeed, this coincided with the arrival of Generation X in the workplace.  Drucker too, continued writing about the phenomenon, notably in his 1992 book, ‘Managing for the Future’;

‘The world is becoming not labour intensive,
not materials intensive, not energy intensive,
but knowledge intensive.’

We may feel energy and materials intensive in a world that seems to be running out of each, but despite being far from running out of knowledge (take a look at the fantastic web info-graphic below) there is absolutely no doubt that the world is becoming more and more knowledge intensive.

State of the Internet 2011
Created by: OnlineSchools.org

Management Pocketbooks you might Enjoy

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Peter Drucker: Management by Objectives

Last week, we looked at the profound influence Peter Drucker had on management.  This week, let’s look at one of his biggest contributions: Management by Objectives (MBO).

Drucker’s biographer asserts that he first heard the term while studying practices at General Motors, during the Second World War.  It certainly seems like a concept that an engineer like GM’s CEO, Alfred Sloane, would have favoured.  Indeed, in more modern times, MBO has been a main stay of corporations like the much-admired Hewlett Packard.  One of its founders, Bill Packard, said of MBO:

‘No operating policy has contributed more to Hewlett-Packard’s success ‘

He went on to describe it as ‘the antithesis of management by control. The latter refers to a tightly controlled system of management of the military type [while] Management by objectives, on the other hand, refers to a system in which overall objectives are clearly stated and agreed upon, and which gives people the flexibility to work toward those goals in ways they determine best for their own areas of responsibility.’

The MBO Cycle

image

Management by Objectives is often represented as a cycle with five stages:

  1. Review the organisational context.  This is often seen as the weak point of MBO, as this is sometimes poorly understood.  Drucker, himself, has said: ‘Management by objectives works if you know the objectives: 90% of the time you don’t.’
  2. Reflect the organisation’s objectives in those you set to your team members.  Within the context of the objectives they are set, staff become self-directing, hence Packard’s distinction between MBO and control.
  3. Monitor people’s performance against the objectives you have set, and give regular, effective feedback.  Ideally, provide rapid feedback mechanisms, so that each staff member can assess their performance constantly.
  4. Assess performance against objectives, and then be sure to…
  5. Recognise and reward good performance.

‘What gets Measured, gets Managed’

This is another critique of MBO: if you measure the wrong thing, people will manage their performance to achieve it.  Drucker, as ever, was more subtle than simple descriptions of his ideas suggest and so was ahead of us here.  He noted that employees need four powers to do their jobs well:

  1. the freedom to challenge everything
  2. regular training and development
  3. the ability to achieve the objectives they are set, and see the results
  4. understanding of their organisation’s real purpose
This last means that managers and employees can set objectives that lead to the right behaviours being measured – and hence managed and delivered.

The Practice of Management

In last week’s blog, I laudedThe Practice of Management’.  It was the visionary book that kick-started the management book industry.  In it, Peter Drucker identified seven tasks for the manager of tomorrow (writing in 1954).  They all seem very much of the now, except, perhaps, one, which seems a little… pedestrian: ‘manage by objectives’.

Despite its critiques and detractors, maybe we should listen to the man who also advocated, over 50 years ago, in the same book, that we:

  • devolve risk-taking and decision-making down our organisations
  • prioritise strategic thinking
  • integrate teams of diverse members
  • motivate employees, gain their commitment and participation (‘engage’ them) with quick, clear communication
  • see your organisation as a whole
  • see your organisation and its activities in a wide perspective of society

Not a Management Pocketbook

Peter Drucker, 1909-2005I have found Robert Heller’s book on Peter Drucker to be excellent and recommend it to all Pocketblog readers.

For an introduction to Drucker’s thinking, how about The Essential Drucker, and for daily inspiration, how about The Daily Drucker?

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Peter Drucker: The Man who Invented Management

image

Peter F Drucker is a towering figure among management thinkers.

His thinking, consulting, teaching and writing won him many accolades and his ideas have become so mainstream, that some are considered to be purely ‘received wisdom’.

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Drucker is also paradoxical in many way, and perhaps this is why his work is so good: it remains pleasingly simple, whilst it refuses to be simplistic.

Corporate or Individual

Drucker is primarily known for his ideas about how individual managers can work best, but he made his first big mark studying a huge corporation, General Motors.  In 1942, he was invited into the company to study it and report on findings, by the Board.  His observations are captured in a business classic: ‘Concept of the Corporation’.  Ironically, the Board and its CEO, Alfred P Sloane repudiated just about all of Drucker’s findings.

Management as a Science or an Art

Drucker was influenced in his earliest thinking by ideas of ‘scientific management’, but rejected them as too rigid.  Instead, he saw management as an art – and continued to do so for all of his life.  People who met him often commented on his erudition and love of the liberal arts – he was foremost a thinker and intellectual, and a management thinker second.  It was his rejection of scientific approaches to management that caused GM to reject his findings and, many years later, in 1956, Sloane’s own book, ‘My Years with General Motors’ provided a riposte to Drucker’s.

Invention of Management

As the 1950s began, there was almost nothing written explicitly about the practice of management: what a manager should do, day-to-day, to manage. That changed in 1954, when Drucker wrote ‘The Practice of Management.’  Drucker claimed, in 1982, that, with this book, he had invented management.  Perhaps this was hyperbole, but it is fair to suggest that he did invent the management book.  Arguably, without Drucker, no Management Pocketbooks.

To the response, without Drucker, someone else would have come along, the only answer is to acknowledge the truth of this but note that we still revere other innovators like Newton, Darwin, Edison – even though each had competitors doing much the same, at around the same time.

What is in ‘The Practice of Management’?

Using case studies from organisations like IBM, Sears and Ford, Drucker lays out the basics of a fundamental management curriculum:

  • What is management?
  • How to manage staff
  • How to manage a business
  • How to manage managers
  • How to structure management

It is hard to believe that some of his themes are over 50 years old – they remain fresh and relevant today.  the need for managers to:

  • make strategic decisions
  • take risks
  • build integrated teams
  • communicate information effectively
  • see their business in the context of its ecosystem

Drucker’s Influence

Drucker’s influence is huge: ‘The Practice of Management’ sets out for the first time, Management by Objectives, and not as a fluffy catch phrase, but as a robustly developed set of ideas and processes – perhaps his last nod to scientific management.  Since the 50’s he has been the originator of much business thinking that has endured, and predicting the rise of the knowledge worker (that’s me) as early as 1959.

Drucker gave his name to Claremont University’s business school, where he taught for thirty years.  The Drucker Institute’s website has a lot of biographical information about Peter Drucker, and a link to an interesting blog, the Drucker Exchange.

More on Drucker…

in our companion articles:

Management Pocketbooks you Might Enjoy

Drucker’s work has infused so much management thinking, you’ll find it in many of our Pocketbooks.  Here are some you might like:

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