ManagementSpeak: You don’t know the history of this.
Translation: You aren’t choosing sides.
This week’s anonymous contributor chose to be on our side.
Month: October 2006
On the verge of collapse
Jared Diamond’s Collapse: How societies choose to fail or succeed is arguably the most important book of the decade. Also the most depressing. It’s about the factors that caused five past societies to collapse (hence the title) and their application to modern societies, including our own. His account avoids both the facile (because people are stupid, rapacious, short-sighted, or insert your preferred character flaw here) and the one dimensional.
Try this: Monday and Wednesday read Collapse. Tuesday and Thursday read the best book you can find from the business press. On Friday you’ll recognize two undeniable facts. The first is the difference between real genius and the limited imitation that passes for it in the world of commerce.
The second is that, compared to actual science, management science is little more than unsupported hand-waving.
Diamond could explain the collapse of (for example) Anasazi society with considerable confidence because he had access to knowledge amassed over decades by dozens of patient, dedicated researchers in (to provide a partial list): archaeology, anthropology, physics (for radiocarbon dating), dendrochronology, ethology (for the analysis of packrat middens), and palynology.
When, in contrast, Jim Collins studied the success of his Good to Great companies and its absence in their rivals, the only information available to him beyond the interviews he and his team conducted was a few decades of stock prices and financial statements.
Why is that?
Palynology — one of the intellectual resources Diamond mined — isn’t what you might call a “money field.” Nobody becomes wealthy from the painstaking analysis of pollen samples in lakebed cores. At best, they make a modest living from their salaries as college professors, with research funding measured in tens of thousands of dollars, all spent to pay for travel, equipment, and the austere lifestyle “enjoyed” by graduate students.
The world of commerce generates so much more money that a single CEO like Bill McGuire, until recently of United Healthcare, could amass a fortune that exceeds the total annual spending in all of the aforementioned fields, even excluding what he got from backdated stock options.
We know much more about paleobotany than we do about what leads to business success. With so much more money at stake, can’t we do better than the Harvard Business Review?
Apparently not, and the reason isn’t difficult to figure out.
Imagine you’re a high-SAT sort of person who is fascinated by how the universe came to be. Your career choices are clear. You’ll become an astrophysicist, or a string theorist, or a quantum mechanic (the person you call when your quantum breaks down). It’s the only way to make a living while doing what you want to do with your life.
Now imagine you’re an equally bright individual who is fascinated by what it is that makes businesses successful. What’s your career? Management, of course, because if that’s your interest, you’re going to want to (a) put your ideas into practice; and (b) make money doing it.
That isn’t surprising. What’s somewhat more surprising is that the business world hasn’t invested more in business research, to make the pursuit of what is called “management science” but is really “management strongly held, thinly supported opinions” more attractive to the type of individual who could help sort out what works from what doesn’t.
I don’t know why this is. Neither does anyone else. My hypothesis is that nobody really wants to know.
If you were on a board of directors and business theory was as solid as quantum electrodynamics, you’d either have to understand and apply the knowledge, or else resign and not get paid for the dozen days of work each year that boards of directors generally work in exchange for their salaries.
If you were a CEO, the board would require you to have and apply this knowledge or your multi-million-dollar compensation package would go to someone who did and could.
If you were a venture capitalist, you wouldn’t invest in the acquisition of knowledge that might benefit the next generation of venture capitalists and the generation after that, but not you.
And if you’re any of the above, there’s a decent chance you have, shall we say, a healthy ego and strongly held opinions on the subject of what leads to business success. The absence of solid knowledge makes holding your strongly held opinions a lot safer.
Because if it existed, boards of directors, CEOs and venture capitalists would be held to the standards usually reserved for some who report to those who report to those who report to them:
People who learn and apply what scientists discover, like architects, engineers, and IT professionals.