Enlightened Management

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“Progress is sustainable, indefinitely. But only by people who engage in a particular kind of thinking and behaviour – the problem-solving and problem-creating kind characteristic of the Enlightenment. And that requires the optimism of a dynamic society” (Deutsch, 2011, p.423)


Management is the process by which people control resources, and the ultimate resource is people. So management is predominantly about how we try to influence and affect the actions of other people, typically in an organisational setting. If you want to develop your skills as managing people, you need to understand those people and how they do their jobs. Therefore a critical prerequisite for management is a broad understanding of business. This is the value of an MBA education – it gives managers the background knowledge to improve their management skills.

One of the biggest misconceptions with management is that it is a necessary component of career progression. This is because companies tend to have hierarchical structures and promotion involves moving upwards. Therefore you advance my taking on more managerial responsibilities. This is a critical mistake because there is a difference between (i) creating organisational value; and (ii) being a good manager. Good managers create organisational value, but there are plenty of other ways to create value that don’t require management. Although management requires a broad knowledge base it is a specialist skillset and not everyone wants to be or should be managers. The goal of a manager should be to develop a team that excels at their job. This will create value for the organisation, reflected in compensation for the team members, and compensation for the manager. Managers should see themselves as an enabler and developer of talent (i.e. a coach). If you are a good manager you will assemble a superb team of superstar employees who probably create more value than you do. You shouldn’t expect to earn more money than team members, or enjoy a higher status. Your broad skillset which is in large part intangible and multifaceted is adept at cultivating a winning team, but you are not the hero.

I believe that management matters, and that we can teach it. There is plenty of evidence that MBA programmes generate social value. [1] The purpose of this article is to assemble some resources to argue that management can and should more fully incorporate the principles of scientific discovery and the optimistic outlook upon which the enlightenment occurred.

According to David Deutsch the basic regulating principle of the enlightenment is the quest for good explanations. This implies that we should not judge scientific merit as being akin to accurate predictions, and also that we need should cultivate a tradition of criticism and the rejection of authority. He advocates that we deem something to be real if it is part of our best explanation of something.

The mark of a good theory is that it is hard to vary, and not if it is testable, “bad explanations are equally useless whether they are testable or not” (p.25) and “we do not test every testable theory, but only the few that we find are good explanations. Science would be impossible if it were not for the fact that the overwhelming majority of false theories can be rejected out of hand without any experiment, simply for being bad explanations” (p.25). We cannot know what constitutes truth, but we can know that it exists:

“Scientific theories are hard to vary because they correspond closely with an objective truth, which is independent of our culture, our personal preferences and our biological make-up” (p.353)

These methodological positions resonate with me because of my background in Austrian economics, and there are very important interplays between Austrian economics and strategic management.

Seeking good explanations is what constituted the enlightenment – it was “how they began to think. It is what they began to do, systematically for the first time. It is what made the momentous difference to the rate of progress of all kinds” (p.23).

The implication for management: seek good explanations and cultivate a tradition of criticism. 

Deutsch presents an optimistic scenario of where a focus on finding good explanations might lead. He refers to the beginning of infinity as “the possibility of the unlimited growth of knowledge in the future” (p.164).

Some insights for management

  1. Appreciate hierarchy

I am rabidly anti-hierarchy by instinct and entered academia in part as a means to reject the contrived formality of the workplace. I did most of my PhD dressed as a scally and although I usually lecture in a tie I very consciously rip it off as soon as I can. But as I’ve got older I have taken less pride in counter-signalling and the Curb Your Enthusiasm rip of “Casual Friday” struck a chord. I wondered if I was getting conservative with age. And then, I heard Tyler Cowen point out that in some countries business is still conducted in a suit and tie. I do in fact admire the ambition for upward mobility that I encounter in some countries, where people dress smartly, hand out business cards, and respect hierarchy. The common uniform of work is nothing to be sniffed at. We can all be our own Steve Jobs or Mark Zukerbergs and invent our own uniform, but it’s pretty conceited. And getting it right requires a lot of social awareness and human capital that should, in my opinion, would be better spent on creating value than imposing barriers for out groups to overcome. Perhaps it is indeed conservatism, but recognising and navigating hierarchies is probably an important skill.

2. Go easy on motivation

I like motivational sayings but mainly the ones that I have written for myself. Ones that are meaningful. I sometimes hear other people’s sayings and they resonate with me, but this is rare. I feel that corporate slogans are worrying purely because they seek to impose their meaning on you. And I have a deeper concern, which is that slogans are a form of propaganda, and serves to stifle freedom of thought. In Imperium, Ryszard Kapuscinski writes about how “interrogative language was appropriated by the police” (p.146), leading to people asking fewer and fewer questions:

“In their place appeared an infinite number of sayings, catch words, and turns of phrase expressing approval of that which is, or at least indifference, lack of surprise, humble consent, resignation… A civilization that does not ask questions, one that banishes from within its compass the entire world of anxiety, criticism, and exploration – the world that expresses itself precisely through questions – is a civilization standing in place, paralyzed, immobile. And that is what the people in the Kremlin were after, because it is easiest to rule over a motionless and mute world” (p.146)

3. Go easy on meetings

Why do large companies have so many meetings?

I think it has something to do with a movements from hierarchical organisation to network organisation, and (clumsy) efforts to maintain monitoring because incentive structures have become anachronistic. Here are some excellent comments from the team at 37 signals.

4. Make time for quiet

If we want people to think we must give them time and space to do so. An FT article points out:

Executives are paid to think. It is the most important thing they do, but they almost never have time. We slam from one meeting into another, interlaced with phone calls, emails and corridor conversations, trying to make mental notes that we will assemble when we get the time, which never arrives.

Of course good executives do create time to think but often it’s away from the office. So blocking out  quiet time could be beneficial.

5. Be grumpy, sometimes

Happinesses is neither an attainable nor noble goal. Life is suffering. First, we must endure. We are motivated into action through dissatisfaction and complacency is the enemy of material progress. If you are always happy and/or striving for happiness then you are naive and potentially a fool.

There is also evidence that grumpiness leads to clarity of thought:

“An Australian psychology expert who has been studying emotions has found being grumpy makes us think more clearly.

In contrast to those annoying happy types, miserable people are better at decision-making and less gullible, his experiments showed.” Source.

That said, too much negativity can feed on itself and be destructive. At heart I’m on optimist. So I’m considering attempting 21 Days without Moaning (also see Tim Ferris’s attempt).

6. Don’t be afraid to contradict yourself

We penalise politicians who “flip flop” because we want to know what we are voting for. Hence consistency is valued. But as individuals our goal should be learning, and we cannot learn if we’re not willing to change our views. Over time we should expect to contradict ourselves.

7. Encourage dissent

“Groups that tolerate dissent generate more ideas, and good ideas, than groups that don’t… This holds true even if those dissenting views turn out to be completely wrong. The mere presence of dissent – even if wrongheaded – improves creative performance.” Weiner, 2016, p.171

8. Plan

I tend to dislike plans but I like the mental clarity that comes when planning. Behaviour gap have a wonderful article on the distinction between the two:

Think of this as the difference between a flight plan and the actual flight. Flight plans are really just the pilot’s best guess about things like the weather. No matter how much time the pilot spend planning, things don’t always go according to the plan.

In fact, I bet they rarely go just the way the pilot planned. There are just too many variables. So while the plan is important, the key to arriving safely is the pilot’s ability to make the small and consistent course corrections. It is about the course corrections, not the plan.

9. Choose the right filters

We are living in an information age, and as T.S. Eliot said,

Where is the wisdom we have lost in knowledge?

Where is the knowledge we have lost in information?

According to James Gleick, “Strategies emerge for coping. There are many, but in essence they all boil down to two: filter and search”  (see Gleick, 2011, p.409-412). The blog I co founded in January 2004 was called “The Filter” and our slogan was “the Liver on the web”. This was a homage to the city of our adoption and affection, but also the function we intended to provide. One of my best academic publications was on the differences between search and browse. The main point was that search theory was trivial because people actually acquire information through browsing. But you can only browse things that have been filtered.

Note that Apple music is about curating. Newspapers are about editing. We wish to browse content that has been filtered. We don’t search for information, we browse.

As Clay Shirkey has pointed out, the modern problem is not information overload but filter failure. We need to spend time choosing the right filters.

Final thought:

Management is important because it improves organisational performance, and creative enterprise creates wealth.


The key texts for Enlightened Management are here.


Footnotes:

[1]

  • “companies that use the most widely accepted management techniques, of the sort that are taught in business schools, outperform their peers in all the measures that matter, such as productivity, sales growth and return on capital.” The Economist
  • Some 98% of corporate employers report that they are satisfied with their MBA hires, a figure that has not changed since 1998.” The Economist

Updated: August 2017; previous version cross posted to LinkedIn.