In a remarkably shoddy example of anti-market propaganda emanating from the Nottingham Business School, the Economist runs a screed that starts out with the debatable but reasonable premise that business leaders exaggerate their omniscience. It somehow ends up with the unsupported conclusion that business schools should abandon economics, finance, and the pursuit of profit for the cant trio of “sustainability,” “social responsibility,” and “leadership for all not for the few.”
The crude equivocating shifts from intellectual humility to moral humility to altruism would qualify for an F in any class on composition, much less philosophy. The vague assertions about “business excess” (entirely unsupported or even defined), the implicit attribution of these excesses to the teachings of business schools (ditto), and the wild leap at the end (replacing business school education with an agora-like setting in which sophists mingle with scientists and philosophers with philistines to figure out what are “social needs”), all conduce to a massive loss of reader brain cells per sentence. This article might be useful as a sort of mine detector–anyone who finds it congenial is best separated from responsibility for educating or commenting on business or economic issues.
NBA Commissioner David Stern recently fined the San Antonio Spurs $250,000 and severely chastised them for the decision by Gregg Popovich, their near-legendary coach, to rest his aging stars at home rather than fly them to Miami for a meaningless (but nationally televised) tilt with the defending-champion Miami Heat. Is Stern losing his grip? Does he need an intervention and/or a forced retirement as he reaches his managerial dotage? While I haven’t heard of Commissioner Queeg–whoops, Stern–clicking steel balls in his hand or searching for the keys to the strawberries, a Caine Mutiny scenario may be approaching if he continues to deteriorate. Other firms with long-term, successful “emperor” CEOs have found their later years to be problematic. See Eisner, Michael (Disney) or Olson, Kenneth (Digital Equipment Corporation) or maybe Cizik, Robert (Cooper Industries).
(Note 1: Anyone who will be offended by light-hearted discussions of the Dark Knight Rises in light of the shootings at the Aurora premier should skip to another part of the Internet. I have no intention of giving murderous attention-seekers the power to hijack all media, but I am aware that not all will agree.)
(Note 2: MINOR SPOILER ALERT)
I’ve just seen the Dark Knight Rises, which was a pretty good movie–not as good as the previous film in the trilogy, unsurprisingly, but exciting and even moving at times, with lots of little moments for each minor character to reveal his true nature and seem like a unique individual.
One minor problem: Batman is supposed to be a master strategist and tactician. He’s chosen to go underground to pursue and confront his enemy, Bane, about whom he has considerable intelligence, including Bane’s background, training, experience, and physical prowess (including his main point of weakness–a mask over his mouth that keeps Bane from suffering intense pain). He can see Bane standing in front of him, a very large individual of obvious strength and questionable agility. Batman is wearing a utility belt filled with grenades, throwing blades, sleep darts, cable launchers, and bolas. He is standing in a large cavern and is capable of operating vertically by shooting lines up to the ceiling and using built-in powered winches. In short, he is in a perfect position to remain outside Bane’s striking distance while hitting him with a variety of entangling, injuring, and even killing weapons.
Out of this cornucopia of options, what does Batman choose? Of course, a head-on bull rush, followed by a slugfest and wrestling contest. That’s the combat equivalent of Neiman-Marcus starting a price war with Wal-Mart. Macho is one thing, unbelievably stupid is another. (It’s true that in the real world, people make stupid mistakes, but in fiction we want Aristotelian probability, not literalness. And if someone does go the literal route, the character’s stupidity should at least be noted by others in the story.)
The fundamental writing problem here was actually reflected way back in the Knightfall comic book series that introduced Bane–his supposed awesomeness as a combatant simply doesn’t match his capabilities. (At least in the comic book, they gave him a device that injected a super-steroid called Venom straight into his head when he needed to pump himself up for extra fighting fury. It still wasn’t enough to make him seem that tough for any foe with speed, agility, and distance weapons, but it made for a striking visual when his veins would bulge out in expansion mode.) So the Nolans gave themselves a tough writing challenge the moment they decided to use the Bane character–another example of a particular strategy causing tough execution problems.
An earlier post described the sclerotic impact of excessive regulatory documentation requirements on real-estate development projects. it turns out that the private sector isn’t the only victim of this tendency:
- The Pentagon got concerned that it might be suffering from hyper-cephalization–too many studies and reports on every topic.
- The Pentagon commissioned a meta-study to estimate the costs of all the studies and reports.
- The Government Accounting Office performed a meta-meta-study saying that the meta-study wasn’t performed correctly according to existing rules and standards.
I think we all know what the logical response to the GAO meta-meta-study is…
Try to guess the context for this piece of writing. Is it part of a scholarly study on the history of convention centers? A tourist guidebook? Is it the catalogue to a museum display on convention-center architecture?
In order to attract growing numbers of conventions in the
second half of the twentieth century, cities incorporated
convention center construction within urban renewal and
redevelopment schemes, usually at the edge of core urban
areas where space would be available for construction of
large buildings with contiguous, flat-floor space.
The “dynamic capabilities” literature, I think, is a bit of a mess: lots of jargon, conflicting arguments (and levels of analysis) and little agreement even on a basic definition. I don’t really like to get involved in definitional debates, though I think the idea of a capability, the ability to do/accomplish something (whether individual or collective), is fundamental for strategy scholars.
Last weekend I was involved in a “microfoundations of strategy” panel (with Jay Barney and Kathy Eisenhardt). One of the questions that I raised, and find quite intriguing, is the question of how we might “grow” a capability. The intuition for “growing” something, as a form of explanation, comes from simulation and agent-based modeling. For example, Epstein has argued, “if you didn’t grow it, you didn’t explain it” (here’s the reference). I like that intuition. As I work with colleagues in engineering and computer science, this “growth” mentality seems to implicitly be there. Things are not taken for granted, but explained by “growing” them. Capabilities aren’t just the result of “history” or “experience” (a common explanation in strategy), but rather that history and experience needs to be unpacked and understood more specifically. What were the choices that led to this history? Who are the central actors? What are the incentives and forms of governance? Etc.
So, if we were to “grow” a capability, I think there are some very basic ingredients. First, I think understanding the nature, capability and choices of the individuals involved is important. Second, the nature of the interactions and aggregation matters. The interaction of individuals and actors can lead to emergent, non-linear and collective outcomes. Third, I think the structural and design-related choices (e.g., markets versus hierarchy) and factors are important in the emergence (or not) of capabilities. Those are a few of the “ingredients.”
I’m not sure that the “how do you grow a capability”-intuition is helpful in all situations. However, I do find that there is a tendency to use short-hand code words (routines, history, experience), and the growth notion requires us to open up these black boxes and to more carefully investigate the constituent parts, mechanisms and interactions that lead to the development or “growth” of capability.
When I was a grad student at UCLA, I had the great good fortune to marry a management consultant. As a result, my grad school experience was, well, richer in some ways than those of many of my fellow students.
At one point, my wife became manager on a project her firm was doing for Harley Davidson. She hopped on a plane and disappeared for several weeks, organizing work teams on the Harley assembly line.
One day, some time after her return, we were driving north on the 405 when a couple riding a Harley Road King (the big, two-seater highway bike) zoomed by. My wife said, “Maybe we should consider riding.” Needless to say, I couldn’t believe my ears. This was a sudden, unexpected, miraculous piece of good luck!
I offered a quiet prayer of thanks and replied, “Great idea! We could get a Road King and tool all over the state!”
“A Road King?”
“Yeah. We could get one and ride up the Pacific Coast Highway. Wow. It would really be a blast. Romantic!” I helpfully suggested.
“Are you planning on riding bitch [recently acquired slang from the Harley shop floor referring to a motorcycle passenger]?“
“… uhm … what …?”
“If we ride, I’ll be on my own bike!”
And, thus, began a canonical SoCal adventure. We took riding classes and purchased two brand-spanking new Super Glides, mine black and hers red. It really was a wonderful experience. We still have a number of long-standing friendships that originated within the Harley community.
During our SoCal motorcycling romps, I frequently had the following experience. Upon pulling into the parking lot of a motorcycle bar, Macdonald’s, gas station, etc., and minding my own business, some complete stranger would walk over, point to his Honda (BMW, Kawasaki, etc.), and launch into a rant about why Harleys sucked and why his Honda (BMW, Kawasaki, etc.) was totally superior. Often, these diatribes were delivered red-faced, veins popping, and spittle flying.
So much emotion. Which was puzzling. I mean, I never felt compelled to walk up to some stranger riding one of those other brands and lecture him on the inherent faults of his preferred machine. I was happy that he was happy and spent exactly 0 milliseconds agitated about his choice. I never saw anyone in our Harley group — or even anyone who happened to be riding a Harley — engage in this puzzling behavior.
Don’t get me wrong, I was always interested in chatting with folks who sincerely explained why they liked their choice of bike (and did not try to use the explanation as a pretext to launch a vicious attack on my character). Much can be learned from such friendly exchanges and, indeed, there were several occasions on which much was.
I was reminded of these experiences when I read Teppo’s Freakonomics post the other day. The link is to a rant by a couple of statisticians cataloging the technical faults of an economist writing popular tracts for a nontechnical audience (and you don’t have to be Sherlock Holmes to detect the vitriol directed at economists as a whole). I often get this as well. Non-economists berating me on the post-modern philosophical failings of my methods, non-modelers excoriating me about the pointlessness of using math in the social sciences, and so on.
So much emotion. Guys, go write Freakostatics or something. Seriously. We’re fine with that. You get on with your ride and we’ll get on with ours.
Here is the WIRED link: EV Startup Aptera Motors Pulls the Plug: “The company that brought us a three-wheeled sperm-shaped two-wheeler shuts its doors after four years.” More here: The 190 MPG Aptera electric care that never was.
No kidding. My faith in government bureaucrats to make successful commercialization picks is, as we used to say in Nevada, lower than a snakes belly in a wagon rut. How many Department of Something-or-Other types do you think have the slightest idea of what Porter’s Five Forces are? And that’s a 30-year-old framework in strategy. Don’t even get me started on the open invitation to political corruption that these policies tend to create.
Those who worry about our dependence on foreign oil – a worry I share, by the way – often cite historic examples of government projects that successfully developed new technologies that would never have seen the light of day (or, at best, would have seen it decades later) had the country relied on the private sector to do it. The Manhattan Project to develop the nuclear bomb during WWII is a favorite citation.
The problem we are seeing today is that the government is presently throwing money at firms claiming they can commercialize green technologies that, in reality, have not yet passed the basic development stage. You can’t get private investors to ante up when taxpayers are shouldering half the risk? That’s a very strong signal that those who spend their lives evaluating such things believe your technology is not ready for prime time. There is a big difference between government involvement in basic technology and government involvement in its commercialization.
Now, if folks are really serious about a Manhattan Project-style effort to, say, develop an efficient electric car, then let’s do it right! Get the smartest scientists from the top schools, fence them in at a top-secret facility in the middle of some desert, and don’t let them out until they succeed. I think that might work. And, I’m pretty sure the scientists’ home institutions would go for it.
Then, turn the technology over to the VCs to compete in the commercialization stage.
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?
No matter how annoying the European debt-crisis soap opera has become–reminding me of the old Saturday Night Live Weekend Update routine about Generalissimo Francisco Franco still being dead–there’s no way to pretend that it isn’t going to cost us here in the land of the free and the home of the brave. Even before the Euro leaders huddled and brought forth their bailout mouse (getting their banks to “voluntarily” take a 50% haircut on Greek debt so as to avoid triggering the credit-default swaps that a formal default would entail, then promising to make the banks whole with taxpayer money), skeptics were predicting its failure. Now the PASOK government in Greece has scheduled a referendum on its austerity end of the bargain, and the likelihood of a rejection by Greek voters has spooked the markets more. New Eurozone manufacturing numbers are dire, suggesting another slowdown, lower tax revenues, increased deficits, rivers turning to blood, cats and dogs living together, and so on.
“So what?” you ask, with a Gallic shrug or perhaps some Teutonic schadenfreude. Well, the IMF, heavily backed with U.S. tax dollars, is in on the deal and will probably be hit up for more money later. What’s more, some of our banks have exposure to European sovereign debt and I’m not confident that equity or loss reserves will turn out to be adequate in all cases, given our past experience here with regulatory diligence (and given the regulators’ professional courtesy toward fellow governments, treating sovereign debt as “safer” than, say, bonds from cash-laden private companies). And finally, a big recession-and-default contagion in Europe is guaranteed to chop into the profits of U.S. and Asian firms, crippling confidence, investment, and hiring.
The central bankers and technocrats and politicians are not going to be able to stop this; they’ll ride out the crisis and take credit if everything works out and duck the blame if it doesn’t.
But fear not. Because I Have a Plan.
For many years now, I have been interested in the business of business schools. In 1999, my then Simon School colleague Glenn MacDonald and I wrote a piece entitled, “A Proposal for Transforming the Simon School,” in which we identified several systemic problems looming on the horizon and suggested proactive solutions. Since then, the looming problems have arrived and, by the look of things, could get much worse.
I have written more recently about these issues here and here. My concerns echo those of Glenn Reynolds and others who raise the possibility that we are presently living through a higher education tuition bubble, pointing out that higher education shares some salient features with the pre-collapse housing market. See The Economist andThe Chronicle of Higher Education for related views.
The central question for those of us @strategyprofs.net is: what is the successful business model in which research faculty (i.e., people like us) deliver MBA education? Up until now, I would argue that b-schools have ridden the explosion in demand for MBAs with reckless abandon. After all, when the next class is always larger and willing to fork over higher fees, why trouble oneself over complex questions like this? However, if the wave we’ve been riding is a bubble and if that bubble bursts, then providing an answer to this question will become a matter of some urgency.
Even if the bubble alarm is overblown, there are plenty of reasons to conclude that the flow of cash spouting from the MBA spigot is in danger of running dry anyway. First, worldwide capacity is expanding at a rapid rate. Not only do existing programs continue to add seats apace, but foreign competitors are working furiously to improve quality and make their programs attractive to domestic candidates (India and China come to mind and Europe already has several programs that rival those of the best US institutions). Second, competition is sprouting up from non-traditional sources, such as “in-house MBAs” offered by businesses and online programs and courses (some of which are offered by places like Stanford). Third, young people are beginning to question the value of the degree (and point to the large percentage of hight-tech moguls who happen to also be college dropouts).
At Rotman, we try to keep student quality up by recruiting heavily from overseas. Even so, the admissions distribution dips further to the left than we’d like. Add to this the fact that we are putting the finishing touches on a building that requires us to increase the number of students by almost 50%. Contrary to the persistent denials of our senior management team, we all know from which side of the distribution that increase must come. Now, if you add to that a smaller population of interested foreign candidates, and things start looking a bit worrisome. Thing is, I don’t think our situation is exceptional. In a industry of high fixed costs, low marginal costs, and softening demand … well, it doesn’t take a Nobel prize in economics to figure out where that ends up.
Over the last several decades — during which tuition money rained from the sky regardless of what we did — we’ve gotten sloppy with our educational strategies. Those running the show seem genuinely confused about the service we are providing. We are here to provide networking opportunities, or signaling value, or interview skills, or “practical” experience. Students have been framed as “customers;” content has been relentlessly dumbed down; grades have been inflated; clubs, parties, case competitions, networking events and a host of other distractions have been granted equal status to academic pursuits.
I raise the question again: what is the successful business model in which research faculty deliver an MBA education? The research faculty model operates at a cost disadvantage to its alternatives because research faculty require time to do research. So, what is our value proposition? We are not the efficient providers of networking services, pseudo-experience, interview training and so on. If you think about it long enough, I’m fairly sure the answer you inevitably come to is that we must provide an education in which our research plays a central role. That’s the one thing we are uniquely efficient at providing.
Of course, any model build around a research-based education will require that students be treated as students, faculty take their certification role seriously, content and academic standards be raised to a level befitting graduate study, and recruiters and students be brought to understand why state-of-the-art, general academic principles are valuable in practice.
Mike makes some interesting points in his post. I’m not sure if I should debate him on it, because that seems like it would cause an infinite recursion of meta-posts, so I’ll just lay out some areas for clarification:
1. On the live-debate format with audience votes, I don’t think anybody sees those votes as having even straw-poll relevance. “Losing” or “winning” one of these debates in voting terms is inconsequential. It’s just an audience=participation device (not that successful, as far as I can tell) and really doesn’t say anything about the field.
2. As for the “debate” format itself, where people explain their conflicting points of view and try to say why their view seems more reasonable/plausible/believable/useful, it represents a rare opportunity to actually confront ideas with which one disagrees, articulate why, and hear responses from the proponents of opposing views. Perhaps journals should allow or encourage more back-and-forth arguing in print, which would put less of a premium on speed and agility of thought. But strategy already has too much public deference to dubious ideas.
One of the favorite pastimes at gatherings of management scholars is the panel debate. Generally, this takes the form of two teams, each made up of a couple or more academics, which take turns arguing their side of some pre-specified issue. Usually, an audience vote is taken on the “motion” before arguments and then following them to see which team was more persuasive.
As an audience member, I have always found these spectacles entertaining and amusing to watch. The best ones involve good-natured banter by smart colleagues. Debates have the positive quality of breaking up the typical “H2a” monotony that can quickly develop at these meetings.
As a result authoring the 2010 piece in SO! (jointly with 20+ coauthors from the Strategy Research Initiative) — which challenges the editorial norms presently governing our management journals — I was invited to participate in a number of such debates. Not surprisingly, being an active participant forced me to think more carefully about the purposes and consequences of these things than I ever had in the past.
Let’s establish up-front that I am a terrible debate panelist. I’m not very good on my feet and am additionally weighed down by the stubborn belief that important arguments must be won by facts and force of logic rather than clever rhetorical razzle-dazzle. As a result, I always lose … and I mean lose big. (A recent such experience involved a debate in which my esteemed colleague and co-blogger Steve Postrel opened up a can of whoop-ass on me at the AoM — ouchies!)
My conclusion is that, in addition to being a fun way to pass some conference time, our conference debates are symptomatic of a strong anti-scientific bent that tends to permeate management scholarship. Indeed, the big debate issues typically boil down to whether management scholars should strive to be more scientific in the traditional sense of that enterprise. In those, the “controversial” position is always the one in favor of some conventional scientific method — and that position is always gleefully voted down in favor of some postmodern alternative by an overwhelming majority (check out the DRUID debate history and you will quickly see what I mean).
At one point during a recent debate, I wondered whether the people in the natural sciences ever allocate valuable conference time to philosophical debates over basic scientific method. When geneticists hold their big annual conference, is the keynote activity a debate over whether data should be used to refute theory (the topic at a recent management conference)? Do physicists find it useful to debate whether they should dump mathematical models in favor of natural language theories (because math forces one to oversimplify the complexities of the universe)? Do mathematicians get together to debate the one “correct” definition of a topology (insert “competitive advantage” and you have a strategy debate topic)? No? Why not? Is it that those folks are too busy actually advancing knowledge to waste their time with philosophy parlor games?
When the final audience vote is tallied, what do we accomplish? What do you think we accomplish? Science does not advance via consensus vote (historically, quite the opposite). What culture do we foster by giving these debates prime billing in our academic conferences?
(If you would like me to debate this controversial topic at your conference, please write: firstname.lastname@example.org, or tweet me @mdryall.)
For me Steve’s post raises the age-old question of whether the “greats” are geniuses or simply products of their time. As the wiki entry for “great man theory” highlights, this question has been around for some time (for Thomas Carlyle history was the “biography of great men,” while both Tolstoy and Herbert Spencer cited social complexity and ridiculed Carlyle).
There are many reincarnations of this debate. One of the more interesting ones focuses on the great ones of music, the likes of Mozart, Beethoven and Haydn. Sociologist Tia DeNora wrote a provocative book that said the greats were (essentially accidental) products of their context (see her book Beethoven and the ‘construction’ of genius). Others, like Rutgers Peter Kivvy, argue for the genius itself (see his book, the possessor and the possessed about Mozart).
This is a quite relevant debate in strategy, essentially, individual versus collective effects/heterogeneity. There’s a decomposition, variance-components type question here, similar to the firm versus industry debate. Of course, you can imagine that variance exists both at the individual and collective levels. But I think this is a question that continues to be worth tackling. (I’ve published some research related to this but I’ll spare the reader, for now.)
There’s a deeper discussion here about the social construction of hero-ness as well but I’ll leave that for another time.
What is problematic to me is the hand-waving that I see about how invention is, oh, all about context, social complexity, history, etc. That type of explanation is simply shorthand and an admission that we have no clue what actually happened. Don’t just say that it is complex. Rather, explain the complexity. Reminds me of this Jewkes et al quote from their 1969 book The Sources of Invention:
it is the practice of some writers to present a fuzzy picture of invention as a “social process”; to suggest that, if one inventor had not done what he did when he did, someone else would have done it. . . . this attitude—that nothing can be understood unless all is understood, that by piling one unresolved enigma upon another some all-comprehending solution is made the more likely—involves the error of “seeing depth in mere darkness”, as Sir Isaiah Berlin once put it (26–27).