Archive for the ‘Creating Strategy using Design Methodology’ Category

The Law of Averages guarantees someone will win, but it doesn’t say how.

Michael E. Raynor, Mumtaz Ahmed and Andrew D. Henderson, Harvard Business Review April 2009, Are “Great” Companies Just Lucky?:

Studies that examine high-performing companies to uncover the reasons for their success are both popular and influential. … But there’s a problem: The “great” companies from which these studies draw their conclusion are mostly just lucky.

The issue is about…

… the folly of attributing outcomes arising from systemic variation (the random nature of coin tosses) to the supposedly unique attributes to a few individuals, who are really just the luckiest coin flippers. Similarly, we can credibly claim that a firm is remarkable only when its performance is so unlikely that systemic variation alone cannot account for its results. Most success studies don’t address this fact, relying instead on the “self-evident” nature of exceptional performance.

Meaning: simply out-lasting one’s competitors is not a sufficient justification for claiming a firm is “great”, and that any attempt to figure out why those firms have succeeded (by “staying in the game”) will misinterpret the true causes of success.

Case in point: have you looked at the original list of “Good to Great” companies? How are they doing now?

The Management Myth

It’s simply too much fun to skewer convention, especially a convention that might be more ephemeral than we think.

Matthew Stewart in The Atlantic Online, The Management Myth:

The best business schools will tell you that management education is mainly about building skills—one of the most important of which is the ability to think (or what the M.B.A.s call “problem solving”). But do they manage to teach such skills?

What they don’t seem to teach you in business school is that “the five forces” and “the seven Cs” and every other generic framework for problem solving are heuristics: they can lead you to solutions, but they cannot make you think. Case studies may provide an effective way to think business problems through, but the point is rather lost if students come away imagining that you can go home once you’ve put all of your eggs into a two-by-two growth-share matrix.

Next to analysis, communication skills must count among the most important for future masters of the universe. To their credit, business schools do stress these skills, and force their students to engage in make-believe presentations to one another. On the whole, however, management education has been less than a boon for those who value free and meaningful speech. M.B.A.s have taken obfuscatory jargon—otherwise known as bulls***—to a level that would have made even the Scholastics blanch. As students of philosophy know, Descartes dismantled the edifice of medieval thought by writing clearly and showing that knowledge, by its nature, is intelligible, not obscure.

Spot on.

There are, however, at least two crucial differences between philosophers and their wayward cousins. The first and most important is that philosophers are much better at knowing what they don’t know. The second is money. In a sense, management theory is what happens to philosophers when you pay them too much.

Before you protest, having completed an MBA gives me the right to make fun of MBAs.

(Thanks to Will Dearman (@wtd) for the link.)

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