A cynic’s history of strategic management and consulting

Citation

Schaffir, W.B. (2010), "A cynic’s history of strategic management and consulting", Strategy & Leadership, Vol. 38 No. 3. https://doi.org/10.1108/sl.2010.26138cae.001

A cynic’s history of strategic management and consulting

Article Type: The strategist’s bookshelf From: Strategy & Leadership, Volume 38, Issue 3

The Management Myth

Matthew Stewart (W.W. Norton & Company, 2009)

Matthew Stewart has written a comprehensive and analytical history of management and management consulting. Regrettably, he has used his considerable intellectual prowess to trash major developments in this area, the good with the bad. His story is interspersed with his recollections of his career as a senior partner in a major consulting firm dominated by big egos, selfishness, and backstabbing. Throughout the book, Stewart combines a scholarly discussion with cynical personal insights to assess the failings of the practice of management.

Unfortunately, strategic management is a bit of an easy target. I know because over the past five decades I saw a lot of highly touted management theories and practices go from fad to catastrophe. This happened over and over because, as Stewart points out, strategic management is neither a science nor a profession. It does not have the predictive power demanded by a science. Nor does it demand proof of qualifications and a licensing authority that characterize other professions.

Peter Drucker taught at NYU's Stern Management Departmnet from 1950 to 1970

In its defense, however, the practice of strategic management has been advanced considerably over the past few decades by numerous outstanding scholars, thinkers, and executive practitioners – for example, Peter Drucker, Michael Porter and Adrian Slywotzky. By any measure, Peter Drucker exhibited tremendous insights into business and management. He had a great intuitive feel for the position and prospects of various businesses and the emergence of trends that reshaped industries. As a Director of Corporate Planning I had the pleasure of working with him some fifty years ago and had nothing but admiration for the tough way he was able to handle our company’s chief executive. (After a session in which they exchanged opposing opinions, Drucker told the CEO that he couldn’t work with him and left without accepting a fee. A few months later Drucker was invited back for lunch, took a check and gave us his report.)

The invention of tools

No academic is more respected by practitioners than Michael Porter, whose brilliant analysis of sustainable competitive advantage and the value chain has stood the test of time. And Adrian Slywotzky’s analysis of profit patterns resulting from various industry forces still offers practitioners truly valuable insights.

Stewart, from his vantage point, thinks a lot of management ideas are hokum and need exposing. But take the example of The Boston Consulting Group’s matrix of market share versus growth, a tool that was widely applied and then fell out of favor. The BCG matrix helps corporate managers look at their business portfolios. Its four quadrants represent cash cows, high growth/profit opportunities, businesses warranting benign neglect or sale and opportunities that appear promising but need to be further studied. The painful truth is that too often such management tools, including BCG’s experience curve, have been used to produce simplistic analysis and misleading conclusions. Sometimes the fault lay with consultants who over promised and sometimes the consultants were seduced by clients looking for quick fixes

I’ve been privileged to watch planning evolve over the past five decades. I’ve seen the various planning societies get formed, grow rapidly, and then struggle to evolve with the needs of practitioners, as evidenced by their many name changes – from long range planning to corporate planning, to strategic planning, to strategic management, to strategic leadership.

A wrong turn

As the practice of strategy evolved in major corporations, it took a disastrous wrong turn in the 70s and 80s when many senior managers, often supported by management consultants, concluded naively that planning was merely a staff specialty. As a result every respectable business created a position of director or vice-president of corporate or strategic planning, some with large staffs. These individuals – often some of the best and the brightest managers – assumed that it was their job to think about where the business might be heading and present ideas to their corporate and business unit management. The heads of the corporate units listened to (and sometimes ridiculed) these proposals and then went back to doing business as usual.

Equally fruitless was the subsequent attempt by planning departments to create a system of corporate/strategic planning by devising forms and procedures to elicit contributions from various elements of the organization that hopefully would add up to a corporate/strategic plan. These forms were then dutifully completed by each organizational unit. Such units often created a planning position of their own. Responses were then circulated for comments and review. This activity was often augmented by the corporate planning head visiting the business units and interviewing their senior managers. The net result: when the exercise was over everybody went back to doing business as usual.

This mechanical approach to corporate/strategic planning never worked. At best, it produced some good ideas that suffered from lack of implementation. Inevitably, it left the corporate planning manager out in the cold. I know. I was one of them. Even all-star consultants called in to help often suffered a similar fate.

It finally dawned upon management and consultants that, to be meaningful and actionable, a strategic plan has to be owned by the management team that is to implement it. Up until this realization hit many senior management teams had never joined around a table to discuss anything other than budgetary, production, and personnel problems. In Peter Drucker’s words such discussions were usually about how to do things right, rather than doing the right thing – that is, about doing things more efficiently, rather than about moving in the best direction.

For planning to work, its underlying issues and options have to be surfaced, debated, and agreed upon to make things happen. Individual senior managers that had their own ideas about the direction and long-term promise of the business needed to have them hammered out by the management team.

Asking smarter questions

As managers struggled to put an end to two decades of all kinds of strategy rituals and rain dances and instead adopt a negotiated, team-based strategy, there emerged a new kind of management consultant. Rather than promote a particular managerial dogma, this consultant acted as the Socrates of management. By raising questions until there was a valid and actionable consensus, he or she encouraged client managers to come to their own conclusions. This put the onus on the members of the management team to identify, research and resolve the critical issues and to agree on an action plan for which each member of the management team assumed appropriate responsibility. Most importantly such consultants provided a methodology, a rational logic flow for taking a fresh look at the business and agreeing on an actionable strategy. Knowing the right questions to ask became the best practice, and largely replaced the era of the all-knowing management gurus.

So Matthew Stewart’s The Management Myth is right as far as it goes. The past five decades of management thinking have produced both a lot of bunk and little genius. However, if today strategy is no longer the mystery it once seemed it is not because it is less important or less valued but rather because its underlying concepts have been absorbed into the fabric of management. Today’s executives think easily in terms of competitive, technological, and other threats; their organization’s strengths and limitations; the few critical issues that really matter. I agree with Stewart that broad humanism, integrity, trustworthiness, and understanding of how the world works are at the heart of the effective executive. But this is not all. Executives also need a managerial framework to organize their tasks. It is in this combination of personal characteristics championed by Stewart and an organized framework of strategic thinking that the art of management continues to thrive.

Walter B. SchaffirNow retired, was President of Growth Dynamics, a New York City-based consulting firm (Schaffir@yahoo.com). He is well known throughout the strategic planning community as the organizer and director for many years of the Conference Board’s strategic management conferences in New York, Los Angeles, London, Vienna and Hong Kong.