||[Aug. 3rd, 2006|12:50 pm]
sorry about the delay, had the small matter of moving house and starting new job. Below is an interesting chat I had via email with a good mate of mine who dabbles in management consulting. read from the bottom:
Interesting stuff - thanks for that.
I think another part of the problem is trying to copy-and-paste an idea from one organisation to another. It's a bit like development
economics: its all the rage in some circles to argue that the US &
Western Europe are rich countries, and they have good property rights
and the rule of law, so that's what Africa needs.
I think Africa does need good property rights and the rule of law, but that alone isn't going to lead to economic development overnight. And the same is true of anything else. The West has good education/good physical infrastructure/higher level of human capital/greater stock of knowledge/whatever but no one thing is the answer to African development. It would be nice if it was, but sadly it's more complicated than that.
So too with managerial ideas. General Electric (about the best
performing company in the US over last 15-20 years) had a focus on
being no 1 or 2 in every market, ranked every employee and fired the
bottom 10% every year, invented `six sigma' which is all about ensuring zero errors in every process, and so on. Which one is the magic bullet? None - it's the combination, and probably a bit more. Just like military history, it's not just about adding up the arsenal and manpower at your disposal and you know who is going to win - the military culture and the ability of the key leaders to identify when, where and how to strike, and to motivate their troops (Henry V might have been talked up a bit by Shakespeare but the point is correct) is also critical. You can't just cut and paste what the British SAS do well into any other special forces unit with the same number of men and the same sort of weapons.
There are of course lessons, and consultants and their clients should
try and understand those lessons, and work out where, when and how they can apply them. But the idea that you can revolutionise a business every year or two is nonsense. You can try and transform something over a number of years, if you're really focused on it, and are prepared to run a bunch of different initiatives - some of which will probably fail, but the old line about losing battles but winning wars is apt - you have to try a few things, and if the odd one doesn't do very well, acknowledge it early and honestly, then shut it down, and learn the lesson from it.
I think part of the problem is people don't really understand risks and mistakes very well. Business ventures are a risky thing - if it was so obvious that the right thing to do is X then your rivals will all get there before you. What may be a good decision ex ante may not be such a good decision ex post. Beta was a better product than VHS, according to most accounts, but that doesn't mean Beta won out. VHS managed to become the dominant technology. Does that mean the people who invented Beta were 'wrong' - or the people who bought it? Not really - it was uncertain at the time they made there decisions, and it panned out the right way. If we toss a coin, it comes up heads and I win, I'm not any smarter than you. Of course, you can do more in business (or in war) to influence the probabilities, but things don't always work out the way you hope. Sometimes you get lucky, sometimes you don't. Good managers and good generals probably get 'lucky' more often because they are better at planning, leading, reacting, being prepared to react to new information, etc, etc... but sometimes they also just get lucky.
I think management 'science' (which deserves the apostrophes, as much
as I hate it when people usually do that) is not very good at working
out when people were a bit lucky and when they were brilliant. I'm sure there are good military examples of a small bunch of soldiers doing something extraordinary and getting lots of praise, but when you look at it you think 'that's actually pretty dumb, and while it worked this time, that's no way to run a war day in, day out'.
Hmm... I'd better get on with some exam revision. One last thought
though - I read a phrase 'quantophrenia' the other day, not sure where.
Not even sure if it's the right phrase/spelling. It means giving
inordinate weight to numerical data, even if the numbers are not very
reliable or informative.
I saw it a bit when I was working. One really shocking example was when we were supposed to be helping a multi-national improve its human resources departments (they had one in every country) to better support the business. As part of that, we worked out how the ratio of how many HR staff they had, relative to normal staff. The 'wisdom' is 1:100 is
about right. One office had more like 1:50, so on the numbers they had about twice as many HR staff as 'best practice' and a lot more than most other offices.
But when I spent 2 hours on the phone to the CEO of the local office,
he waxed lyrical about how good his HR staff were, said they were a
massive asset, and had done heaps to improve the business and improve
profits. They had even won some HR awards in their country as an
excellent HR department.
But the fuckwit project manager was fixated with the 1:100 ratio -
"they are too fat", "they should downsize" blah blah blah. But every
other country wanted a better HR department who provided more support, but admitted that their current staff were too busy to do much more...
but the one dept that the business was actually happy with was clearly too big! Happily the fuckwit project manager was moved along, and yours truly put in her place, but it was frightening how she was just fixated with numerical data, because it's much easier to digest and make some recommendations on. The article I read suggested America had more quantophrenia than most countries - maybe so, maybe not, but it is probably true among mgt 'gurus' and the US is the home of the management guru and indeed management science/mgt theory. Which causes the other is an interesting question. The problem is mgt theory tends to rely on very rubbery numbers.
One caveat - I'm on slightly thin ice - because I regard a lot of the
theory with contempt, I don't read much of it, so I'm basing this on
impressions not a detailed understanding - but that's never stopped us having opinions now, has it?
Enjoyed the thoughts re Rumsfeld, etc. It was always my biggest
reservation about Iraq. Obviously didn't want Saddam to stay, and think Iraqis deserve a shot at democracy as much as everyone else. I
suspected the US would knock off the Iraqi army pretty quickly (though not as quickly as they did), but worried about how they'd go at actually rebuilding the country. Jury is still out, but I think it's fair to say they could have done a whole lot better. I also thought they should have waited longer, and sorted Afghanistan out more thoroughly, including getting the economy off opium, etc, etc. In hindsight, with no WMDs maybe that's more obviously true than at the time, but I was always a bit of a WMD sceptic. Anyway, that's for
Patrick Porter wrote:
Mate if I may, I will anonymously quote some of that, its too interesting just to be read by me. You have put in a more intimate way the problems that the article identified.
On the 'silver bullet' point, it reminds me of the critiqe of Rumsfeld's mentality - obsessed with a sexy, slimmed down, high tech armed force that would not only paralyse america's enemies but create a more economical way of war, he didn't want to hear that the aftermath of the conventional war might erupt into a civil war and an insurgency.
Hence, his refusal to entertain post-war planning beyond a very limited degree. Advisers and military officers couldn't even use the word for a long time. Violence in postbellum Iraq, he assumed, was just fleeting low-level crime. Its not that he thought Iraqis were universally keen to democratise. He just didn't take the postwar logistical and strategic issues seriously as a defence-related issue.
Essentially, he just wanted to wield his finely tuned, expensive toy (the military), showcase its awesomeness, and then fuck off home without long-term commitments. In the new 'Cobra' account of the war, it makes clear that Rumsfeld spent almost all of his time pestering Tommy Franks to make the expeditionary force smaller and faster. Almost no word on electricity, banking, policing, interim political arrangements, language skills for the army, water supply, what to do with the Baathist organs of police/military etc, almost nothing.
In a bizarre sort of way, in his complacency he embraced elements of some leftist critiques of the war against terrorism - that terrorism/insurgencies are just a law-enforcement issue, rather than a form of warfare. Which then contributed to a lowering of morale, as combatants going to Iraq were expecting to act as policemen rather than as warriors.
All of this meant that America failed to cultivate many people who might actively help them against the jihadists/Baathists, who are otherwise skeptical and silent. The best tactical and strategic insights have actually come from the heads of various combat divisions who had to develop their own local knowledge.
The real problem for the Administration was as follows: you have a President who in my view is strong on ideas but unbelievably uninterested in logistics, practicalities, details and policy-implementation (I'm almost the only bloke I know who listens seriously to Bush's speeches); and a Defence Secretary who only was willing to apply his greater administrative skill to transforming the way America fights conventional wars, rather than preparing it to combat guerillas.
Getting back to your point, the slavish addiction to feeling like you speak for a revolutionary new idea rather than asking 'what would work' can blind you to uncomfortable information and realities. Obviously we can't always divorce ourselves from ideology and assumptions, and they are sometimes useful, but its necessary to try and temper it with open-minded receptiveness to the data. Come to think of it, managerial issues are just as relevant in war stuff.
I think that it's right to be a very sceptical about a lot of management theory. Much of the scholarship is shit. It's not a very easy area to research, because people are only really interested in the here and now, so you don't get much interest in a good study of Ford in 1914-1918 in the way military history does. I imagine that most historians would caution that trying to write a history of the Iraq invasion right now would be problematic - perhaps not - but I think you could describe a lot about what happened but it would be more difficult to set it accurately in the broader context of the historical forces shaping the time... maybe that's a load of crap... sounds like it as I read back on it.
I'll try critiquing it by comparing it to something I actually know
something about: the real problem with management theory (in the view of an economist) is that a lot of it falls between the two groups of economic research. The 'theory' stuff isn't as (mathematically) rigorous as economic theory - it's more 'common sense' and catchy anagrams. The empirical stuff just doesn't have any where near enough data to be rigorous: they compare 5 companies (with massive questions about selection bias) or look at one company over 4 years or similar - stuff that would make any econometrician's blood turn cold. It's kind of like 'I know all Americans are stupid, cos I once sat next to an idiot on the plane...' Methodologically very unsound. It stems from the problem of trying to have the next new big idea - no-one gets much credit for going back and saying 'actually that idea from 1973 made a lot of sense...' -
not unless they can repackage it and market it as sexy and themselves as a new guru.
I don't think he's the only one who's sceptical about the value of an MBA - I was actively discouraged from doing one by the managing partner in Australia (who has an MBA). When I said I was tossing up between economics and politics, he thought I should go for politics. We recruit people like x because they are often a lot better of thinking for themselves and don't just want to roll out some MBA framework.
In terms of the value of management consultants, I think the main ones are:1) A team of people who will spend 4-8 weeks focused on one particular problem. Senior managers are always extremely busy with a million things to do, including lots of short-term problems. They don't have time to just lock themselves away, gather data, interview people, etc and really analyse a problem for a month or two.
2) Expertise in areas the client doesn't know much about. There is a
fair bit of criticism (some, perhaps even a lot) of consultants who
'borrow your watch and tell you the time'. There are a lot of situations though, like a merger of two companies, where managers will never have been involved in a merger before, let alone tried to co-ordinate one. A team of consultants who have worked on multiple mergers before can be a real help.
3) Outside perspective. People always build up biases about certain
ideas or ways of doing things. Being challenged by an outside
perspective can be valuable... even if it's called something stupid like 'out of the box' thinking.
As you say, getting smart enthusiastic people is important - they are willing to work long hours and challenge the status quo. Clients have lots of smart people too, but they find it harder to challenge the status quo, and to get a mandate to interview people, collect data, etc to be able to do the same analysis consultants can do.
Having some frameworks, theories, etc can be useful for helping think about different issues, but there is a huge amount of faddish searching for the new trend, and the new 'silver bullet' that will make a badly under-performing company suddenly become a superstar. Decent consultants should be very realistic with their clients about what they actually hope to achieve - but everyone needs to sell their services so a bit of hyperbole is inevitable. Unfortunately it often turns into bullshit. I think that's particularly true of some of the smaller consultants (possibly like the bloke who wrote the article) - x company is hardly perfect, but the brand name means there is less pressure to try and convince people to hire you. If your one of a million small boutiques, you've got to have a pretty good story.