Blog: Simply Thinking

Judgment and Jack

31 March 2016

Remember judgment? It still appears in the dictionary (in my Oxford: “1 the critical faculty, discernment… 2 good sense”). Judgment used to be a key to managing effectively, even if hidden in the dark recesses of the human brain. And then along came measurement, in the dazzling light. It was a good idea, so long as it informed judgment. Too frequently, however, it replaced judgment.

In 1981, the Business Roundtable, a grouping of the chief executives of America’s leading companies, issued their “Statement on Corporate Responsibility.”

Remember judgment? It still appears in the dictionary (in my Oxford: “1 the critical faculty, discernment… 2 good sense”). Judgment used to be a key to managing effectively, even if hidden in the dark recesses of the human brain. And then along came measurement, in the dazzling light. It was a good idea, so long as it informed judgment. Too frequently, however, it replaced judgment.

In 1981, the Business Roundtable, a grouping of the chief executives of America’s leading companies, issued their “Statement on Corporate Responsibility.”

The shareholder must receive a good return but the legitimate concerns of other constituencies (customers, employees, communities, suppliers and society at large) also must have the appropriate attention. . . . [Leading managers] believe that enlightened consideration … will best serve the interest of [the] shareholders. (quoted in Beyond Selfishness; statement since removed from www.businessroundtable.org)

In 1997, the Business Roundtable issued another statement, entitled “Statement of Corporate Governance.” This one, about “Shareholder Value”, reversed the previous one, claiming that the paramount duty of management and boards of directors is to the corporations’ stockholders. It explained:

The notion that the board must somehow balance the interests of stockholders against the interests of other stakeholders fundamentally misconstrues the role of directors. It is, moreover, an unworkable notion because it would leave the board with no criteria for resolving conflicts between the interest of stockholders and of other stakeholders or among different groups of stakeholders. (www.businessroundtable.org)

No criteria indeed—except judgment! Somehow, between 1981 and 1997, America’s most prominent CEOs lost their capacity for judgment. If you want to understand what has been behind the problems of the American economy since then, here you have it, right from the horses’ mouths. (See mintzberg.org/enterprise.)

In 2009, Jack Welch, America’s superstar CEO (of General Electric, from 1981-2001), declared famously that “On the face of it, shareholder value is the dumbest idea in the world.” But wait a minute Jack: you were a member of the Roundtable that issued that 1997 statement. In fact I have been told that you championed it (although this I cannot confirm, and you are presumably not telling).1

In any event, thank you Jack for your dumbest statement--after the damage was done, and continues to be done. Thank you on behalf of all the employees who were either “downsized” or shifted to lower wages, in the name of “productivity” (and so helped to bring on Donald Trump). Thank you on behalf of all the customers who have had to put up with appalling services and lousy products at higher prices since that 1997 statement. Thank you on behalf of all the decent companies that were destroyed so that a few CEOs could run off with “shareholder value.”

Where has all the judgment gone?

© Henry Mintzberg 2016. Follow this TWOG on Twitter @mintzberg141, or receive the blogs directly in your inbox by subscribing here.


1 Three years later, in 2012, the Business Roundtable issued this third, lame statement: “[I]t is the responsibility of the corporation to deal with its employees, customers, suppliers, and other constituencies in a fair and equitable manner and to  exemplify the highest standards of corporate citizenship.”

 

We live in times of great continuity

15 October 2015

This TWOG was first posted on 21 November, when @mintzberg141 had about 2000 followers. Now that number is approaching 7500, so this will be new to most of you and hopefully worth a revisit for some of the rest.

Actually, it’s “We live in times of great change.” Ever heard that? Or more to the point, have you ever heard a speech by a CEO, management consultant, or management professor that did not begin this way?

When you dressed this morning, as you buttoned buttons, did you say to yourself: “If we are living in times of such great change, how come we are still buttoning buttons?” After all, the modern version of the button has been around for seven centuries. And when you were driving to one of those speeches about living in times of great change, did you notice that the technology under the hood of your car was probably the same as that used in the Model T Ford (an internal combustion four-cycle engine)?

This TWOG was first posted on 21 November, when @mintzberg141 had about 2000 followers. Now that number is approaching 7500, so this will be new to most of you and hopefully worth a revisit for some of the rest.

Actually, it’s “We live in times of great change.” Ever heard that? Or more to the point, have you ever heard a speech by a CEO, management consultant, or management professor that did not begin this way?

When you dressed this morning, as you buttoned buttons, did you say to yourself: “If we are living in times of such great change, how come we are still buttoning buttons?” After all, the modern version of the button has been around for seven centuries. And when you were driving to one of those speeches about living in times of great change, did you notice that the technology under the hood of your car was probably the same as that used in the Model T Ford (an internal combustion four-cycle engine)?

The men who deliver such speeches wear ties. Do you know why? Not to keep their necks warm. It’s because such people have always worn ties. They, like the rest of us, are living in times of great continuity.

And while we’re on the subject of continuity, you should know that these claims about change haven’t changed for decades, although in the 1970s the fashionable word was “turbulence”, which in the 1980s became “hyper-turbulence.” I kid you not.1 Hyper all right, the claims at least.

With the coming of each new decade, the last one was dismissed as stable—the same one that had just been called hysterically-turbulent or whatever. But the prize for hyperbole in this regard has to go to Katz and Kahn, two otherwise intelligent professors, who wrote in 19782 that “Even before turbulence characterized many environmental sectors, organizations frequently faced new problems, for example, those created by war and economic depression.”3

Why all this nonsense? Because some people benefit from it. For the management consultants, it’s good for business: “CHANGE OR ELSE!” meaning that “for a price, we’ll help you (so long as you judge us by what we say, not what we do).” For the management professors, it’s “READ MY BOOK!” (but not my actions). And for the CEOs, it’s “I WILL LEAD YOU THROUGH THESE TURBULENT TIMES!” (as I collect my bonuses, no matter how I mess up). As for the rest of us, it’s a share of the glory: “WE’RE WHERE IT’S AT!” (not like those wimps of some previous generation who had to deal with nothing more than war and depression.)

So what are we to make of all this? Two things. First, that we can be awfully narcissistic, and boring—frozen in the past while making great pronouncements about the present. And second, that while we do notice what is changing—something’s always changing—we don’t notice the great many things that are not.4 But be careful of these, because we can’t manage change without managing continuity. There’s a word for change without continuity: anarchy. Would you like to live in times of great anarchy?

We might get the chance. As a management professor, I can at least end this rant where so many of my colleagues have started theirs. All this hype about change could well become a self-fulfilling prophecy. By believing that we are living in times of great change, we could be driving ourselves crazy, and so end up living in times of great anarchy. To escape this, don’t believe everything you hear. But do tell your friends to READ MY TWOG!

1 See my book The Rise and Fall of Strategic Planning (Free Press, 1994), pages 203-209.

2 D.Katz and R.L. Kahn, The Social Psychology of Organizations (Wiley, 1978), page 132.

3 I began this TWOG by trying to adapt an op-ed piece that I wrote exactly 15 years ago—in December 1999—but never published. It was called “Marching backward into the new millennium.” I can’t resist including here an excerpt from the opening: “It has not been a bad millennium, as millennia go. True, we didn’t come up with anything big, like fire or the wheel. But the printing press wasn’t bad, not to mention computers…. Anyway, we have learned in the last moments of this millennium that the past is irrelevant. History is dead, gone finished…. Now the new millennium is upon us. TIME TO CHANGE. Again…. At the stroke of midnight January 1, 2000.”

4 Exception: there is one thing changing that we prefer not to notice—global warming—so that we won’t have to change our habits. Here the line is “Let the others live in times of great change.”

A quote for this TWOG (cover your eyes at the end):

“Few phenomena are more remarkable, yet few have been less remarked, than the degree in which material civilization—the progress of mankind in all those contrivances which oil the wheels and promote the comfort of daily life—has been concentrated in the last half century. It is not too much to say that in these respects more has been done, richer and more prolific discoveries have been made, grander achievements have been realized, in the course of the 50 years of our own lifetime than in all the previous lifetimes of the race. It is in the three momentous matters of light, locomotion and communication that the progress effected in this generation contrasts surprisingly with the aggregate of the progress effected in all generations put together since the earliest dawn of authentic history.” (This is from the magazine Scientific American—in 1868.)

© 2014, 2015 with minor editing, by Henry Mintzberg

 

The Extraordinary Power of Ordinary Creativity

5 March 2015

It is thrilling to listen to Tchaikovsky’s Violin Concerto. The creativity is amazing; how many people are capable of that? But there is another kind of creativity of which we are all capable. It’s quite ordinary, in fact, although the results can be extraordinary: it can change the world.

Let’s start with a joke I heard. “I’d like to die like my grandfather died—quietly, in his sleep. Not like those other people in the car who died yelling and screaming.” We picture grandpa in his bed, but he was actually behind the wheel. It’s just a little switch really, as is found in many jokes.

Jokes, of course, don’t change the world. (Nor did Tchaikovsky’s Violin Concerto for that matter, although it has produced great joy in the world—as have so many jokes.) But how about this for a little switch:

It is thrilling to listen to Tchaikovsky’s Violin Concerto. The creativity is amazing; how many people are capable of that? But there is another kind of creativity of which we are all capable. It’s quite ordinary, in fact, although the results can be extraordinary: it can change the world.

Let’s start with a joke I heard. “I’d like to die like my grandfather died—quietly, in his sleep. Not like those other people in the car who died yelling and screaming.” We picture grandpa in his bed, but he was actually behind the wheel. It’s just a little switch really, as is found in many jokes.

Jokes, of course, don’t change the world. (Nor did Tchaikovsky’s Violin Concerto for that matter, although it has produced great joy in the world—as have so many jokes.) But how about this for a little switch:

In 1928, Alexander Fleming was researching anti-bacterial agents in his London laboratory. Returning there after vacation, he noticed that mold had killed some particular bacteria in one of his petri plates. “That’s funny” he said. Standard practice was to discard such samples and carry on, which Fleming in fact did. But following a conversation with a colleague, he took that sample out of the trash, asking himself if this mold could be used to kill destructive bacteria in the human body. That was the critical moment, the key little switch. What was trash to other researchers suddenly became opportunity for him.

Fleming studied the mold and published an article about it a year later. But not much happened for a while, and then it took years of effort, by him and others, before what he initially called “penicillin” was used in the treatment of infections. Looking back on this, he said: "When I woke up just after dawn on September 28, 1928, I certainly didn't plan to revolutionize all medicine by discovering the world's first antibiotic, or bacteria killer." But that is what happened, and it changed the world.

What made all this effort possible was that one little switch by one person—from the trash to the bench, and, in his mind, into the human body. It was a simple switch really, even if its consequences were monumental.

Here’s another simple switch, that changed an industry. A worker at IKEA had to take the legs off a table, to get it into his car. This switch was the realization that if this one employee had to do it, so did the IKEA customers. Consequently the company worked out a new business model: the selling of furniture unassembled so that people could take it home in their cars. And that changed the furniture industry.

By the way, this too required enormous effort, 15 years I’ve been told. But again, it all happened because of that one little switch, thanks to that one experience with a table.

Maybe you have never created a great violin concerto. But I’ll bet you have come up with your share of little jokes. Well then, by switching that talent to something more serious, you could start a process that might change an industry, even the world.

© Henry Mintzberg 2015