evenin' ramblings

So I'm sort of exhausted (yes, again), and though I may be able to embark on grand adventures of literary meaning in such states, it is the not the most conducive to analytical, scientific thinking. Yes, this does say something dissapointing about the interpretation of literature. But it is also beautiful. As is my habit, I opened up a number of articles from The Economist to occupy my mind while it loosens up and returns to sobriety. Unexpectedly, I was attracted by a headline for one of the monthly summaries of what's in the business journals. A reborn version of the European Business Forum is hoping to challengen the Harvard Business Review's preeminent position at the top of the pack. The Economist is however roundly dismissive of their aspirations:

On the evidence of this issue, [the European Business Forum] has some way to go. Teased though it sometimes is for its use of “management-speak”, the mostly eloquent HBR would never start an article thus: “One of the more interesting things about life is, precisely, things. Things bring people together.”

Now this is really neither here nor there. It was not what inspired me to write this post. It was the next summary, of an article from the Havard Business Review, that piqued my interest. The article itself is but a summary, or an excerpt, of the findings of a book published by the HBR. Let's start with the title of the book: "Results: Keep What’s Good, Fix What’s Wrong and Unlock Great Performance". Now, granted this is just the title, but is this not a bit question begging? Anyways, the article looks at one of seven types of corporate organisation (why not six? why not eight?), which the authors have named 'passive-aggresive'. The Economist summarizes:

The “passive-aggressive” type they describe in the HBR article is one that is easy to recognise. Generally free of conflict and quick to achieve consensus, firms with such an organisational structure are extremely reluctant to implement changes. One key symptom of a passive-aggressive organisation is a poorly-designed incentive scheme that fails to differentiate between good and merely adequate performers. With no way of telling who gets rewarded for what, “rituals and routines, even modes of dress, become fetishized, as though they contain the secret to the firm’s past successes.”

Having described the passive-aggressive organisation, the authors admit that rehabilitating one is “uniquely difficult”, if only becomes [sic] everything appears to be functioning smoothly. Bringing in an outsider to lead can help; unfortunately, an outsider who moves too quickly to change things might provoke more of the passive-aggressive resistance he is there to undermine.

The next summary is of an article on the correlation, or lack therof, between spending on R&D and success:

A new study by a group of consultants at Booz Allen Hamilton’s New York office has come up with the disturbing finding that “there is no relationship between R&D spending and the primary measures of economic or corporate success”. It’s not how much you spend that matters, say the authors in what they claim is “the most comprehensive effort to date to assess the influence of R&D on corporate performance,” it’s the way that you spend it.

[...]

So is it time to cut the R&D budget? For some, maybe. But not by too much. The authors found that the bottom 10% of their sample performed worse than the rest. Their advice? “Avoid being either a top or a bottom spender” on R&D, unless there is a clear and compelling reason for it.


Now, let's look at what we've learned from these two articles. Oh, wait, the next one, "Strategy and the Fat Smoker" is even better (I swear, I'm not making this stuff up).

David Maister, a former Harvard Business School professor and a leading expert on the management of professional-service firms, has an article forthcoming on his website (a related video presentation is already available) in which he compares strategy formulation to dieting—“the lesson of strategy is simple. You are either seriously in the programme, really living what you have chosen, or you are wasting your time.” As it is for Weight Watchers, “the essential question [of strategy] is which of our habits are we really prepared to change, permanently and forever?”

Mr Maister’s argument is that the secret of successful strategy lies not in theoretical analysis, nor in technique; it lies in resolve, in determination, in adopting “a managerial style of insistent patience”. Introducing strategic change is like recovering from alcoholism—“first make a lifetime commitment, then take it one day at a time.” First have the vision, the ideology; then have the patience.

Mr Maister, a self-confessed one-pack a day smoker for 37 years, gave up this year and lost 30 pounds in weight. “If I can become a fit, non-smoking exerciser,” he writes, “there’s truly no limit.”

As I can't resist, we're going to have to wade through the banalities of two more summaries. This first summary is nicely titled, "Balance is Better".

“Spreading Yourself Too Thin: the Atkins Diet and Other Fads”
The bankruptcy in July of the company founded by the late Robert Atkins, promoter of the low-carb diet and bad breath, has prompted Wharton School professors Marshall Fisher and Barbara Kahn to ponder on the nature of fadswonder products, such as Pet Rocks and bell-bottom jeans, whose meteoric rise is exceeded only by their meteoric fall. But does it have to be so? No, says Ms Kahn, some fads “have legs of their own, get accepted and become widespread”.

But most geet routed by the competition that sooner or later enters their market space. Atkins Nutritionals had to fight off “a stampede of major food manufacturers who produced thousands of low-carb products”. If they did not succeed, they could abandon them and revert to their old range of products with little loss. That option was not available to Atkins, which remained a “one-trick-pony” throughout its life.


And the last one: "Worth Remembering" from the MIT Sloan Management Review, “Managing Organisational Forgetting”. The Economist writes:

If any publication can stand comparison with the Harvard Business Review (HBR) it is the MIT Sloan Management Review. As the HBR awards a prize to the best article that a panel of outside judges decides it has published in the past year (the McKinsey prize), so the MIT Sloan Management Review awards the Richard Beckhard Memorial Prize to the authors of its best article. Named after a professor of organisational development at the school, the prize has just been awarded to an article published in the Winter 2004 issue. Written by three academics, from Canada, Spain and the UK, it argued that companies need to take “a selective, discriminating and active approach to acquiring and utilising knowledge”—ie, they must forget some things at the same time as they learn and remember others. The authors say that companies hang on to knowledge that can often be producing “dysfunctional outcomes”. Their advice? Forget it.


Now, what have we learned:

1) Pop-culture psychology has nothing interesting to tell us about how to run a company. In somewhat the same way as pop-psychology, any attempt to make its conclusions generally applicable has the result of making them either wrong or uninterestingly obvious.

2) Spend you money wisely.

3) Discipline, in terms of clarity of focus and persistence in application, lies at the heart of any attempt to effect lasting change.

4) Diversify. Have a core-business that is not subject to the whims of human frailty. Exercise some common sense.

5) Not everything you know is useful. One might wonder if the authors of that article didn't feel the slightest sense of irony as they penned their prize winning opus.

I realise now that if I was willing to whore myself out to the production of business "knowledge" (if ever there was time to put a word in quotation marks, this is it), I could have a rather lucrative career. Most of their grand insights are simply platitudes disguised in metaphors or analogies. The few that aren't so easily dismissed tend to "prove" the obvious. In real science, proving the obvious is often rather difficult, and is an admirable and important part of human progress. However Economics is not science. Business "analysis" is rarely Economics, it is in fact about as close to science as pop-psychology is to physics.