Strategic analysis of strategist certification

At the recent Strategic Management Society meetings in Miami, I attended a session devoted to creating an SMS strategy certificate. (Apparently this is an ongoing initiative that started a year ago or so, although I hadn’t been paying attention.) The idea is to offer a written exam that consultants can take (for a fee) in order to become SMS-certified strategists. (I would put in links to the SMS website for all this–they even have a forum where members can view the tentative list of exam topics and leave comments–but the hamsters that power the site appear either to be on strike or allergic to Chrome.)

My first reaction to this proposed exam was to be reminded of the old story about the grocer who observes a shopper sniffing the meat for freshness and responds, “Lady, could you pass that test?” They had a laundry list of topics forming a kind of core and then planned “electives” in different specialized areas of strategy. Many of the topics are things I’ve heard of but don’t know much about. Others are things that I know about but believe to be vacuous or fatally flawed. It looked like a flat-file version of one of those giant multicolored management textbooks used by undergraduate business majors, which have always depressed me with their pretension and lack of coherence. I’m not sure if I espied Miles and Snow’s categories among the topics flashing by on the Powerpoint, but they did have SWOT analysis, generic strategies, the BCG matrix, vision/mission statements, and a variety of other forms of management Laetrile. Can you imagine being certified in SWOT? In vision statements? It’s almost as embarrassing as Louisiana’s tests for licensing flower arrangers that were mostly repealed under pressure from the Institute for Justice.

Perhaps to maintain buy-in from the heavily academic constituency of SMS, the program is being sold as having no effect on academic curricula or research. The influence is supposed to go entirely from academia to consulting and practice, with no one’s course being pressured to meet the certification content.

It was a peculiar meeting in the Neptune room of the Loews. A working group had been beavering away on a proposed curriculum for a year and was ostensibly soliciting our feedback, but 1) didn’t want to engage in the specifics of what they had come up with and 2) didn’t really want to address the basic question of whether the whole enterprise makes sense. Those in charge took notes on what the people in the room said but it felt like one of those government “request for public comment” setups, where the fix is in and no meaningful reconsideration of the project is possible. One person told me afterward that he had never been in a meeting with such an undercurrent of fear and suppressed tension. There was indeed a whiff of preference falsification in the air.

I was as diplomatic as possible, but expressed some of my concerns. Afterwards, a few people commented to me that they thought that this was a terrible idea but had expected/hoped that its intrinsic hideousness would have killed it off by now. I see no signs of such a spontaneous abortion. Rather, the meetings keep going on and the “process” keeps rolling forward, despite the instantaneously queasy feeling it causes in everyone with whom I discuss it.

Why would the SMS want to do this?

1. Money? Supposedly the Project Management Institute is a for-profit firm that makes real money certifying project managers. Maybe SMS wants to get in on that action. But the folks in charge of this initiative deny that that’s the motive. OK…let’s stipulate that. We’ll still be able to get to the demand questions when we address the other possibilities.

2. Status? In principle, if you become the gatekeeper to a valuable credential, you are looked upon as more important, an individual or group with expertise and authority. It seems that there are different sorts of status shifts being contemplated here. First, making strategy as a field more prestigious relative to other disciplines. Second, making the SMS more important than other management or strategy organizations. Third, making those with an academic orientation to the field (not necessarily professors, but consultants who are closer to academic theory) more important relative to self-taught or seat-of-the-pants types. But:

a) Certification doesn’t seem to have done much for the project management field’s status. Even licensing requirements in many jurisdictions have not done much for hair stylists’ status. The issue may be that pass rates are too high in these fields. But I don’t see the SMS being able to pull off the kind of thing the Society of Actuaries gets away with, making the test so hard to pass that it really restricts the number of Fellows. For one thing, a really hard test would raise the specter that most academics wouldn’t be able to pass it, undermining the key political constituency needed to grant legitimacy to the certificate. For another, given the squishiness of the material, a really hard test would have intrinsic legitimacy problems. Do we really think we could justify failing someone for not knowing the difference between the GE and BCG matrices?

b) There’s a danger of establishing a “counter-signaling” equilibrium, where only low-status people flaunt the credential. For example, in U.S. academia, insistence on the title “doctor” by non-medical holders of doctorates is a clear indicator of low status. (Where you went to school and who you trained with matter, but mere possession of a degree neven comes up.) High-status people just assume that everyone in their faculty environment has a doctorate; uncertainty about that historically was confined to the lower tiers of academia. Really smart successful people like to brag about their lack of credentials: c.f. Bill Gates, famed college dropout, and Freeman Dyson, proud non-doctor. The danger of counter-signaling equilibria is raised by making the certificate easy to get.

It is notable that economists, the profession most often pointed to with social envy by management scholars, very rarely pull rank in public discussions by resorting to their credentials or authority. Partly this goes back to the tradition of Adam Smith and David Hume who sought to persuade readers by force of logic; contemporary economists are still legendary for their love of monotonously proselytizing on subjects like free trade, trying to get their audience to “think like economists” without appeal to authority. I’ve seen numerous political scientists, journalists, etc. referred to as “economists” in their article credit lines and by moderators on panels. I’ve never seen an “official” credentialed economist complain about this, except possibly Paul Krugman.

c) As far as acing out the American Planning Society or American Management Association, who cares? SMS’s academic tilt differentiates it both vertically and horizontally from these other societies. If these groups set up their own certifications, SMS members could probably pick up a lot of credibility by shooting them to pieces.

d) Giving credibility to consultants who’ve taken or taught strategy courses, or who have maintained contact with the academic literature, is only a good thing in status terms if it turns out that these consultants are the successful ones. If the non-certified types get the clients and make the money, then certification will make the SMS and strategy academics appear even more marginal and irrelevant.

3. Protecting strategy customers? The idea here is that clients are getting hornswoggled by Fred MacMurray-style Music Men (more google bait for the younger folks) who don’t know anything about True Strategy. Clients are making bad decisions based on the advice of these charlatans and losing untold zillions of dollars, euros, cruzeiros, etc. (Interestingly, no one proposed a market for lemons justification–that asymmetric information about consultant quality was causing inefficiently low levels of consulting to be transacted in the market. That’s probably a good thing, since the model is a poor fit to the context.) But:

a) I would be surprised if merely passing a test of “strategy literacy” (a term I proposed in the session to describe what appears to be contemplated) significantly increases the chances that a consultant will be helpful to the organization that hires him or her. One wise senior scholar suggested that any useful test would have to be not one of rote memorization of concepts but rather the ability to diagnose problems and apply good analytics based on that diagnosis. Both of these points are fatal to the multiple-choice test, touch-the-bases approach that this initiative is pursuing. (This individual also pointed out that most of what we actually know about is eliminating fallacies and errors in strategic thinking, i.e. reducing inferior performance rather than improving the best-of-breed. That would imply being able to puncture the fads and BS so common in management, some of them unfortunately included in the proposed certificate curriculum.)

b) Are the consumers of strategy consulting really so uninformed? Or are they getting exactly the kind of astrology they want? Rumelt’s Good Strategy/Bad Strategy has a memorable anecdote about a client who wanted his own anti-strategic prejudices reinforced. It’s a commonplace that consultants are often hired to ratify actions that management has already decided to take. Perhaps there is third-party protection involved for shareholders when managers hire consultants, much as the licensing of civil engineers is intended to protect parties other than those who pay for a building or bridge. But I have a hard time believing that shareholders would feel protected by a company policy of only hiring SMS-certified consultants.

c) The most important part of a true professional certification in strategy might be an ethical one. Besides abiding by all the non-disclosure agreements one signs, a consultant could be argued to have an ethical obligation to tell the client what he really thinks rather than what the client wants to hear. He would be required to state clearly any limits to or doubts about his analysis. In short, he would have to commit not to be a hired gun. That commitment would provide some protection to third parties, would also make the job far more satisfying, and might, in the long run, cause people to treat the certified as more credible than the non-certified.

But such a commitment would be impossible to enforce either before or after the fact, so the certification would in fact fail at this function–behavioral limits must be socialized and enforced by some sort of discipline, not tested for on a multiple-choice instrument.. In any event, consultants should be careful what they wish for–would they really want to incur civil liability for not using all the frameworks incorporated in the certification?

4. Restraint of trade? If the certification were to take off in the market and SMS-linked consultants control the pass rate on the certification exam, then we would have a nifty entry barrier and would be on our way to raising consulting rates. Thus, the SMS membership could benefit financially without the certificate itself being a profit center. But:

a) See 1a above for the unrealism of making a hard-to-pass test.

b) Restraint of trade is anti-social. Given all the huffing and puffing at this (and seemingly every) conference about our alleged failure to meet our obligations by inculcating better ethics in our students, we could add hypocrisy to anti-social greed as reasons not to embark on the program.

c) The actuaries get away with their game because defined-benefit pension plans and life-insurance plans are a lot like bridges–lots of innocent citizens use them and have to count on experts to make sure that they are designed properly. They are regulated, and an actuary’s sign-off on a plan is seen as essential for public financial safety. So they can argue that not just anybody should be able to pronounce on the soundness of an insurance company’s balance sheet.

The situation in strategy is completely different. Good strategy often involves taking on large risks and gambling on innovations. Given that, failed strategies are not signs of malpractice or design flaws but rather the ex post outcomes of acknowledged uncertainty.


9 Comments on “Strategic analysis of strategist certification”

  1. Nice post, Steve, but I detect that you’re secretly itching to be the Most Illustrious Grand Poobah of the Order of the Strategist!

  2. Interesting comments, Steve. In the almost twenty years that I have been a member of SMS, it has gone from being an actual organization of “A’s, B’s, and C’s” to one of “A’s” with < 10% B's and C's. . .and a ton of churn in the latter.

    Since you seem to have great doubts about the nascent SMS 'certification,' what do you recommend to (a) enhance the numbers of B's and 'C's in SMS, and (b) minimize the churn? Or do you want SMS to be, in essence, a mirror of the BPS Division of AoM?

    • srp says:

      I don’t if any of the following ideas are practical or feasible, but off the top of my head:

      -Try to develop “semi-public-good” databases using company data, and prepare white papers giving broad overviews of the findings.
      -Create idea exchange fora where consultants can let us know what they’re seeing of corporate practice and/or consulting trends and we can let them know about research findings and methods that might be relevant.
      -Identify gaps in the set of available teaching cases and work with businesses or consultants to fill them.
      -Produce short “consumer guides” to commonly used strategy frameworks and evaluate new ones, with an emphasis on weeding out the chaff.
      -Launch a “consulting competition” with real or simulated problems and give publicized prizes to the winners.
      -Have smaller conferences that are more focused on specific “middle-level” issues and are titled with more bite, e.g., “Sense and Nonsense in Outsourcing,” or “Social Media and Strategy.”

      I’m sure there are a lot more, and probably better, ideas for creating quality, mutually beneficial interactions with the Bs and Cs, but these just popped up in my first five minutes.

      (Also, I don’t agree with your premise that the presence of Bs and Cs is the only thing justifying SMS’s existence given the existence of the BPS division of AoM. If nothing else, being an organization focused entirely on strategy and having its own journals differentiates it. And a little friendly competition and choice is not a terrible thing even without much differentiation.)

      • Thank you, Steve. That’s extremely helpful.

        Given the general state of research budgets around the world–one that I don’t expect to change anytime soon – in fact, it’ll probably get worse–and in light of the fact that serious questions are being raised by serious people about the present value of a college education, given that tuition hikes have far outstripped inflation and increases in about everything else, research support is going to have to come from the business community, if indeed it comes from anywhere. I actually heard someone say @ the SMS conference in Rome that SMS “doesn’t need B’s and C’s.” I cackled and said, “One of these days, you’re going to be strapped for research funding. When you are, be sure to remember what you just said.” He gave me the thousand-mile stare in the four-foot room.

        In light of the churn in membership of B’s and C’s, it seems to me that there needs to be some “hooks” that keep their dues money flowing. A rigorous certification strikes me as an incredibly sensible idea in that regard, not to mention the fact that, IMHO, if there’s any academic discipline that needs an ongoing bridge to practice, surely that field is strategic management. Of course, I’ll believe SMS is serious about increasing the relative presence of B’s and C’s when (a) there is significant representation of B’s and C’s on the Board and in the hierarchy of every Interest Group, (b) SMJ/SEG/GSJ each gives an annual award for the paper making the greatest contribution to practice, (c) there is a section in each of those three journals devoted to “Papers from Practice,” and (d) there is a ‘practitioner track’ at every SMS conference and mini-conference.

        It would also be extremely helpful if the absurd centralization and secrecy that blocks direct communications among SMS members is opened up the way it should be. The current nonsense reminds me of practices in the old Soviet Union.

        I’ll have more to say tomorrow – too tired right now.

  3. Bee says:

    I find the notion of certification completely ridiculous. It smacks of an elite who propose to tell us what’s good and bad. Given the current state of strategy I find it almost amusing that a group would propose such a foolish idea. Our state of certainty has never been higher and a group comes along ang proposes certification. Sheer nonsense.

  4. Bee says:

    I hold a doctorate from a top school but work in industry

  5. Spoken like a true doctorate-holder, Bee.

    • Let me clarify that tacky comment I just made. I was reacting to “Bee’s” continuing insistence on remaining anonymous. Sorry.

      I have nothing but the highest respect for those holding doctorates in strategic management, esp. those who come out of rigorous programs. However, I am left to infer that the Ph.D.s who have commented negatively on the SMS certification must feel threatened or something; maybe that’s what Steve
      s colleague had in mind with the reference to an “undercurrent of fear and suppressed tension.” I just don’t see the problem, esp. given that the SMS trumpets being an organization of “A’s, B’s, and C’s.”

      Yet, over the last two decades, the A’s have not only taken over SMS. Many have done their damnedest to make those who are NOT terminal degree-holder seem like lepers. Again, the churn in B’s and C’s is a primary indicator that they don’t feel welcome, don’t see relevance in the SMS. . .or both.

      In particular, the arrogance I saw at the 2009 Rome session about the SMS certification was simply breathtaking. It made Barney Frank look humble. Perhaps I failed to recognize that what I was really seeing was an earlier version of that “undercurrent of fear” Steve mentioned.

      What’s to be afraid of? Are doctorate-holders apprehensive about being challenged by a second ‘credential’ in the strategy field? If so, what’s the problem with some competition, as Steve said?

      Segue: I have an SMS colleague who works for a major consulting firm. He has an MBA from an excellent school. He says that he is concerned about being able to “sell the relevance of SMS” to his employer and that a rigorous certification would be a big step in a positive direction in that regard.

      Most important, it seems to me, is the continuing resistance of many in the academy and even more in the practitioner community to any cross-fertilization that would result from having a bridge connecting them. If there is any discipline in business that ought to have a dynamite-proof bridge to practice, surely that discipline is strategic management. I, for one, will continue to advocate for a rigorous testing regimen underpinning any certification. I see the credential as the healthiest and most effective way to get that bridge built. I see that as an essential step to strengthening the world’s teetering economy through the sharing of rigorous and relevant knowledge as well as continuing interactions between the academy and the business community.

      Goodness knows both sides need each other. But neither will ever figure that out without that bridge. How else can the SMS stand for “reflective practice and thoughtful scholarship”?


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