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#480: Regularly Rethink What You Know About Management Theory

Posted By Mark Haas CMC FIMC, Friday, January 14, 2011
Updated: Friday, January 14, 2011
As a consultant, I find it troubling to see the vigorous debate about fundamental flaws in what we all have assumed are the legitimate bases of management theory. Why isn't the consulting profession leading this discussion instead of staying on the sidelines?

I assume you are talking about Sumantra Ghoshal's 2005 paper Bad Management Theories Are Destroying Good Management Practices, which has been simmering for several years. Ghoshal laid out a cogent argument that the underpinnings of management and, derivatively, management consulting, are based on fundamental flaws in logic that lead to poor management priorities and practices. The consequences are destruction of capital, violations of ethics and perversion of employment practices. The "common wisdom" goals of maximizing shareholder wealth, only managing what can be measured, and characterizing people as self-interested profit maximizers are all unsupported by empirical and theoretical studies, yet we continue to teach them to managers and consultants.

My area of concern is ethical behavior and Ghoshal's premise leads to an unavoidable conclusion that we are seeing the behaviors that we have created by these false management theories. If we tell executives that their job is to maximize income, should we be surprised that financial manipulation to achieve that goal results in dozens of executives being charged with ethics violations and the evaporation of hundreds of billions of dollars of wealth as a consequence? To answer your question about why the consulting profession is not addressing these issues, it is generally not the place of consultants to recreate social or economic theories, although we should be more active in questioning why what we are selling to our clients is not having the effects it should on their performance.

Tip: Read Ghoshal's paper and many of the reactions of management theoreticians, economists, and social scientists over the past few years. It should shake your confidence in your understanding of management theory and the real wisdom of what you likely have been telling your clients about their business. Consider what you have you learned about management and spend some time exploring just how strongly it is supported by theory or facts.

© 2011 Institute of Management Consultants USA

Tags:  consultant role  ethics  guidance  intellectual property  management theory  professionalism  recommendations  roles and responsibilities 

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