The Management Myth | Matthew Stewart

Summary of: The Management Myth: Debunking Modern Business Philosophy
By: Matthew Stewart

Introduction

Embark on an insightful journey as we explore the book summary of ‘The Management Myth: Debunking Modern Business Philosophy’, authored by Matthew Stewart. This eye-opening read challenges the validity of management theories that have pervaded the business world, uncovering their often dubious origins and debunking their implications on organizational success. From Frederick Winslow Taylor and his management science invention to the impact of management gurus like Elton Mayo and Michael Porter, we unravel how their ideas have been propagated and the potential damage they can do.

Business Is Not a Science

Despite the high number of people earning MBAs each year, those with business degrees tend to perform worse in business than those without. This is due in part to the influx of management consultants, new MBAs who invent theories and practices that are often false. Business is not a science, technology, or profession, but a complex entity with no guaranteed formula for success. False prophets mislead organizations and society by obscuring what truly makes organizations successful.

The Myth of Scientific Management

Frederick Winslow Taylor is often credited with inventing management science over a century ago. His ideas, including measuring worker productivity and offering incentives to increase it, became the basis for new MBA programs. However, Taylor’s scientific approach was not rooted in hard data and often relied on guesswork. His principles emphasized strict adherence to managers’ orders and discouraged worker initiative. Taylor’s reputation was largely based on exaggerated anecdotes, and he overlooked the complexity involved in managing people and running successful businesses. His narrow focus on efficiency led to unworkable solutions that no organization has ever implemented. In fact, Bethlehem Steel fired Taylor and shut down all his experiments. The author argues that while the gurus of management may not be good at predicting the future, they excel at reinterpreting the past.

The Power of Pareto Principle

Taylor’s pioneering work in management consulting focuses on identifying top drivers for a business to achieve optimal performance. By analyzing data and designing insightful slides with Pareto charts, consultants help clients focus the majority of their efforts on the 20% drivers, accounting for 80% profits. Taylor highlights the importance of employee satisfaction and teamwork in an effective manager’s job. Clients often sign long-term contracts for implementing sweeping changes based on the consultants’ recommendations, resulting in the transfer of experienced consultants to boost performance. Taylor’s work forms the foundation of modern management consulting.

Mayo’s Revolutionary Approach

Elton Mayo, an Australian immigrant, rejected Taylor’s idea that workers could turn into predictable machines and instead proposed that psychology could improve performance and contentment in companies. Mayo scared industrial leaders by insisting that if they did not adopt “industrial psychology,” worker revolutions similar to Russia’s would spread worldwide. Despite the poor structure ruling out proper interpretation, Mayo implemented a workplace experiment, which he later claimed resulted in astounding productivity gains from psychoanalysis. Even though academics debunked Mayo’s findings, his wisdom survives as McGregor’s Theory Y. Mayo’s arguments continue to be “rediscovered” by business leaders seeking managerial humanism.

The False Truth of Happy Workers

There is a false notion that a happy workforce leads to better results, which certain consultants perpetuate as if it is a newly discovered truth. However, the idea that treating people well leads to reciprocation has been preached in religions and explained by philosophers for centuries. This is philosophy, not science. The author explains that you can’t engineer trust in an organization, you must earn it. Removing managers and expecting self-organizing teams to work perfectly is unrealistic. People need referees because conflict will always exist, even in the best conditions.

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