Blog: Simply Nonsense

The Maestro Myth of Managing

28 January 2019

This TWOG is from my new book, Bedtime Stories for Managers, modified from the original posting on 28 April 2016.

Picture the managerial maestro on the podium: a flick of the baton and marketing opens; a wave of the wand and sales chimes in; a grand sweep of the arms and HR, PR, and IT harmonize. It’s a manager’s dream—you can even attend leadership workshops orchestrated by conductors.

Here are three quotes about this metaphor. As you read them, we’ll play a little game. Please vote for which quote best captures your understanding of managing. But there’s a trick: you must vote after you read each, before you have read any other. There is, however, a compensating trick: you can vote up to three times!

From Peter Drucker, the guru’s guru:

This TWOG is from my new book, Bedtime Stories for Managers, modified from the original posting on 28 April 2016.

Picture the managerial maestro on the podium: a flick of the baton and marketing opens; a wave of the wand and sales chimes in; a grand sweep of the arms and HR, PR, and IT harmonize. It’s a manager’s dream—you can even attend leadership workshops orchestrated by conductors.

Here are three quotes about this metaphor. As you read them, we’ll play a little game. Please vote for which quote best captures your understanding of managing. But there’s a trick: you must vote after you read each, before you have read any other. There is, however, a compensating trick: you can vote up to three times!

From Peter Drucker, the guru’s guru:

One analogy [for the manager] is the conductor of a symphony orchestra, through whose effort, vision and leadership, individual instrumental parts that are so much noise by themselves, become the living whole of music. But the conductor has the composer’s score: he is only interpreter. The manager is both composer and conductor.   

Your vote for the manager as composer and conductor?

From Sune Carlson, a Swedish economist who carried out the first serious study of managerial work, of Swedish CEOs:

Before we made the study, I always thought of a chief executive as the conductor of an orchestra, standing aloof on his platform. Now I am in some respects inclined to see him as the puppet in the puppet-show with hundreds of people pulling the strings and forcing him to act in one way or another.

Your vote for the manager as puppet?

From Leonard Sayles, who studied middle managers in the United States:

The manager is like a symphony orchestra conductor, endeavoring to maintain a melodious performance… while the orchestra members are having various personal difficulties, stage hands are moving music stands, alternating excessive heat and cold are creating audience and instrumental problems, and the sponsor of the concert is insisting on irrational changes in the program.

Your vote for the manager in rehearsal?

Which did you choose? I have used this game with many groups of managers. The results are always the same. A few hands might go up for the first and a few more for the second, but when I read the third, all the hands go up! Managers are like orchestra conductors, all right, but away from performance, to the everyday grind. Beware of metaphors that glorify.

As for orchestra conductors, are they managers at all, even leaders? Outside of performance, certainly both, together. They select the musicians and the music and, during rehearsals, blend them into a coherent whole. But watch a conductor in performance: it is mostly that—performance. Better still, watch the musicians during performance: they barely look at the conductor—who, by the way, may be a guest conductor. Can you imagine a guest manager anywhere else? 

Who is pulling the strings: Toscanini or Tchaikovsky? Actually, the musicians do that, but each plays the notes written for his or her instrument by the composer, all together. So it is the composer who is both composer and conductor. But since the composers are dead, the conductors get the acclaim.

Maybe all the world really is a stage, with all the composers, conductors, managers, and players merely players. If so, no one manager belongs on the podium of lofty leadership.

© Henry Mintzberg 2016, 2019. For more on Bedtime Stories for Managers, or to order it, click here.

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Happy Anniversary fellow prostitutes

3 January 2019

It’s 2019, which seems innocuous enough—not a prime number, not even a leap year (i.e., divisible by 3 but not 4). In actual fact, however, 2019 is a banner year: the 25th anniversary of the declaration that we are all prostitutes. I refer to the publication in 1994 of the pivotal article “The Nature of Man”, by Michael Jensen and William Meckling, in the Journal of Applied Corporate Finance. Here is a story they told:

George Bernard Shaw, the famous playwright and social thinker, reportedly once claimed that while on an ocean voyage he asked a celebrated actress on deck one evening whether she would be willing to sleep with him for a million dollars. She was agreeable. He followed with a counterproposal: “What about ten dollars?” “What do you think I am?” she responded indignantly. He replied, “We’ve already established that—now we’re just haggling over price.”

It’s 2019, which seems innocuous enough—not a prime number, not even a leap year (i.e., divisible by 3 but not 4). In actual fact, however, 2019 is a banner year: the 25th anniversary of the declaration that we are all prostitutes. I refer to the publication in 1994 of the pivotal article “The Nature of Man”, by Michael Jensen and William Meckling, in the Journal of Applied Corporate Finance. Here is a story they told:

George Bernard Shaw, the famous playwright and social thinker, reportedly once claimed that while on an ocean voyage he asked a celebrated actress on deck one evening whether she would be willing to sleep with him for a million dollars. She was agreeable. He followed with a counterproposal: “What about ten dollars?” “What do you think I am?” she responded indignantly. He replied, “We’ve already established that—now we’re just haggling over price.”

Cute. Not so cute is the declaration that follows: “Like it or not, individuals are willing to sacrifice a little of almost anything we care to name, even reputation or morality, for a sufficiently large quantity of other desired things…” In other words, deep in our souls, or in the absence of them, we are all prostitutes.

Jensen and Meckling used the term “Shareholder Value” in the article, which has everything to do with maximizing personal wealth and nothing to do with enhancing human values. (Notice their use of the term “large quantity”. These two professors were trained in economics, a field that teaches a lot more about quantities than qualities. Oscar Wilde wrote about a cynic as ''a man who knows the price of everything and the value of nothing.'')

Shareholder Value went on to become a celebrated orthodoxy, at least in stock markets, executive suites, and business schools. Jensen himself went on to the Harvard Business School, to teach his value of Value to many of the future captains of business, in what became the most popular elective course in the place. Many of these captains, however, went on to fail. Excessive Value and inadequate values?

A prostitute can be defined as anyone who sells a cherished resource indiscriminately. Thus, a poor woman who sells her body to feed a starving child is not a prostitute, whereas a rich celebrity who sells his reputation by endorsing a product he cares nothing about is a prostitute. And so too are the beneficiaries of Shareholder Value who have enabled pharmaceutical companies to set prices so that sick people die for want of medicines that could be affordable, and suitably profitable, likewise the university professors who take research grants from such companies to do their bidding. Prostitution is running rampant in this world of Sodom and Gomorrah.

There are many decent professors at the Harvard Business School now singing the praises of corporate social responsibility (CSR), just as there are many decent executives in corporations pursuing it. Even Jensen has since offered his share of mea culpa, much as Jack Welch, the exalted CEO of General Electric who championed Shareholder Value, later called it “the dumbest idea in the world.” (What does that make you Jack?) Too late, the damage was done, and continues: corporate social irresponsibility (CSI) runs rampant too. As Tom Lehrer sang in his off-color song about the republicans in the Spanish Civil War: “Though [Franco] may have won all the battles, we had all the good songs.”

Enough of the songs; it’s time for action. How about making 2019 the year that we throw off the yoke of Shareholder Value, for the sake of human values?

© Henry Mintzberg 2019. A few days ago, Federica Mancinelli (@Mancinelli2020) tweeted: “Will 2019 be the year of #communityship?'' Sounds good to me!

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Gambling CEO Style: Always All-In

16 March 2018

Gambling is a popular metaphor among CEOs—"doubling down” and all that stuff. So let’s use it to consider the compensation of those CEOs who gamble with their bonuses.

First, CEOs gamble with other people’s money. This is nice work, if you can get it.

Second, CEO gamblers collect, not when they win, but when they appear to be winning. Since it takes time to know a winning hand, the CEO gamblers usually collect in the midst of the game. This is like taking the pot with a couple of aces on the table, while the rest of the hand remains closed. Poker players call this kind of thing a semi-bluff. No semi for these CEOs! Just make sure that the best cards shown.

Gambling is a popular metaphor among CEOs—"doubling down” and all that stuff. So let’s use it to consider the compensation of those CEOs who gamble with their bonuses.

First, CEOs gamble with other people’s money. This is nice work, if you can get it.

Second, CEO gamblers collect, not when they win, but when they appear to be winning. Since it takes time to know a winning hand, the CEO gamblers usually collect in the midst of the game. This is like taking the pot with a couple of aces on the table, while the rest of the hand remains closed. Poker players call this kind of thing a semi-bluff. No semi for these CEOs! Just make sure that the best cards shown.

Third, CEO gamblers also collect when they lose. This, I assure you, does not happen in real gambling, which has yet to adopt golden parachutes. If it did, the real gamblers would be all-in all the time—every single chip. Just like those CEOs who casually bet their companies.

Fourth, some CEO gamblers collect just for drawing cards. No need even to show those aces. CEOs who are not much good at managing the company can be brilliant at managing the compensation. For example, some get a bonus for signing a big acquisition, long before anyone can have any idea if it will work. (Most, by the way, don’t). Some risk-takers!

Fifth, CEO gamblers can also collect for staying at the table. This is the greatest boondoggle of them all. It’s called a “retention bonus.” Not only do these CEOs get paid for doing the job (so to speak); they also get paid for not leaving the job. Now that is really nice work, if you can get it.

Back at home, check the beds of these CEOs. You will find them rather crowded. Cozying up are the compensation consultants, who join the CEOs in screwing everyone else. And don’t forget the board directors—voyeurs in these beds—who explain that, after all, everyone else is doing the same kind of screwing. This kind of followership they call leadership.

I must add that, in one respect all of this is like real gambling: win or lose, the game is played now while the social consequences trickle in later. So, board directors,  how about this instead, no gambling involved, just a win-win for the society and the economy:

Dismiss out of hand all candidates for the CEO position who seek a compensation package that would set them apart from everyone else in the company. (You can say: “Didn’t you just give us a spiel about ‘teamwork’?”) Indeed, terminate the interview at the mere mention of the word “bonus”, definitive proof that the candidate has no concern for the company, indeed no business running a business of cooperating human beings. (“You just said that ‘Human resources are a company’s greatest asset.’”) Turn the tables upside down and strike a blow for responsible gamesmanship.

© Henry Mintzberg 2018, who gambles with a bit of his own money in www.CoachingOurselves.com. An earlier version of this appeared in the Globe & Mail (3 April 2009). Guess which one in the photo is the CEO.