Management

Many management theories, even if influential, become outdated – but the most innovative thinking on how to run organisations recognises the constantly changing nature of business, says Andrew Hill

Peter Drucker, who did more than most to promote the study of modern management, once pointed out that when Karl Marx’s collaborator Friedrich Engels was running a mill in the 19th century, its 300 employees had no managers as such, only “charge hands” who enforced discipline on “proletarians”.

As Drucker wrote in The New Realities (1989) management’s “fundamental task” is to “make people capable of joint performance through common goals, common values, the right structure, and the training and development they need to perform and to respond to change”. Management, he continued, explains why “for the first time in human history, we can employ large numbers of knowledgeable, skilled people in productive work”.

In other words, “management” has a fair claim to be the most revolutionary business idea of the past 150 years – if only managers could pin it down and apply it.

Harvard Business Review has dubbed the years between 1911 – when Frederick Winslow Taylor published his book The Principles of Scientific Management – and 2011 “The Management Century”. Taylor’s breakthrough was to see that production line productivity could be improved by using “scientific” methods of organisation.

The approach has been criticised for imposing a mechanistic regime on workers in the interests of pure efficiency, but it triggered more research into psychological and sociological ways to make manufacturing more productive.

Plenty of management techniques have helped to improve the ability of managers to fulfil their fundamental task. China-based car manufacturers, for example, are using the production line efficiency methods pioneered by Japan’s Toyota and others.

But the overarching management ideas that have shaped the way in which people run any large organisation – and plenty of small ones – are mostly broader and more changeable.

The FT judges chose leadership, ethics, strategic management and the spread of business educators and advisers for the list of the 50 big business ideas. But we steered clear of singling out individual management theories.

Even successful management theories, such as those espoused by Tom Peters and Robert Waterman in In Search of Excellence or by Jim Collins and Jerry Porras in Built to Last, tarnish with time, as the companies studied fail to keep up with the latest business trends.

Management writers would love to think that their ideas shape business. Some theories, including those mentioned above, did affect managers’ thinking and practice, particularly between 1990 and 2000 as globalisation took hold. But unlike solid inventions that can be installed and put to work until the next upgrade – such as fibre optics, robotics or the microchip – “management” is a concept which users must constantly reshape to meet new organisational challenges.

As Charles Handy, the veteran management thinker, now in his 80s, told the FT in a recent interview: “The most that I can do is to cast [managers’] problems and opportunities in a different light so they see them more clearly. But what they do about it and what the answers are, no, I don’t have them. So I’m never going to have three rules for success, or this is the answer to leadership… that’s impertinent and bound to be wrong anyway most of the time because… every problem is different.”