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julian-birkinshaw's picture

Management Ideology: The Last Bastion of American Hegemony

Here is a tricky question: How many living management gurus can you name who did not learn their trade in North America? I have asked many colleagues this question, and it's pretty hard to come up with a good list. For example, consider the individuals in last year's "Thinkers 50" ranking list. By my reckoning, there are only seven who make the cut: Richard Branson (Virgin), Kris Gopalakrishnan (Infosys), Kjell Nordstrom and Jonas Ridderstrale (Stockholm School of Economics), Lynda Gratton, Rob Goffee and Gareth Jones (London Business School).

Does this matter? I think it does.

In the years following the Second World War, the United States dominated the global business world completely--it was the major source of capital, the home of advanced manufacturing, and the source of most major technological developments. It provided the best quality management education, and it was the source of all the latest management thinking.

Today, we live in a more complex, more plural world. The US is now the world's largest debtor nation, and the biggest sources of capital are the large Sovereign Wealth Funds of the Middle East, Russia and China. Leadership in advanced manufacturing is spread across such countries as Japan, Korea, Germany and the US. Technological innovation is dispersed across the world, in countries like India, China, Singapore, Israel, Sweden and the UK, as well as North America. Top-quality business schools exist in every major market.

In short, the rest of the world has caught up. North America no longer holds a clear advantage in any of these fields of accomplishment it used to lead.

With one exception: management ideology.

What do I mean by management ideology? I mean the basic frameworks and assumptions we use to talk about the practice and profession of management; our underlying beliefs about what management is trying to achieve, and how it goes about achieving it.

There is a management ideology in existence today that took shape a hundred years ago, primarily through the ideas and practices of US-based management thinkers, and which continues to dominate the way we think about management. Its key features are:

  • Setting and delivering of objectives according to the demands of shareholders
  • Coordination of effort and activities through professional bureaucracy
  • An emphasis on efficiency and productivity as the key measures of success

Of course this ideology is not without its detractors. But the point is, this ideology is the mainstream--it is the primary way of thinking about, teaching, and executing management. And it endures primarily because there is no viable alternative. Consider a few basic facts. At London Business School, one of the top B-schools outside North America, more than 90% of the faculty gained their PhDs in North America. The same is essentially true at Insead (France), IESE (Barcelona), the Indian School of Business (Hyderabad), and CEIBS (Shanghai). The top management journals, from Fortune to Harvard Business Review to Administrative Science Quarterly, are all based in North America. The top management consultancies, from McKinsey to BCG, Bain and Booz Allen, all have deep American roots.

I know what you're thinking: the reason everyone wants to adopt the American model is simply that the American model is better. Well, there is some truth to this argument. An influential set of studies on cross-national management practices conducted by Stanford Professor Nick Bloom and colleagues sought to get to the bottom of things. These studies showed, essentially, that American firms outperformed all others. "Why American Management Rules the World" was the headline on their blog post from June 2011.

I have two responses to this argument. First, the methodology used by Bloom and colleagues, while painstaking and rigorous in its execution, was itself a product of the ideology I described above. The evaluation of success was based on such metrics as productive efficiency, consistent use of incentives, professional training, and so on. We shouldn't be too surprised to see that American companies score best on the measures of success that they themselves developed.

Second, even if the American model is genuinely better today, why would we assume that it will still be so ten or twenty years from now? Management ideology is, in essence, the last bastion of American hegemony. We continue to see the principles of shareholder capitalism, professional bureaucracy and productive efficiency as natural, inevitable and beneficial. But they can--and should--be challenged.

So how might our thinking about management evolve? There are already plenty of ideas about what an alternative to the traditional American model might look like:

  • In terms of objective-setting, why don't we put a greater focus on higher-order purpose or vision, rather than short-term financial returns? And what about giving equal emphasis to multiple stakeholders, rather than focusing singularly on shareholders?
  • In terms of coordination, can we imagine putting a greater focus on self-organisation and collective wisdom, rather than bureaucratic rules and procedures, as a way of getting things done?
  • In terms of outcomes, should we put a greater emphasis on innovation, creativity and employee engagement, rather than just productivity and efficiency?

Each of these ideas has its own body of adherents--management thinkers pushing a particular point of view, and practising executives experimenting with a different way of working. But there is little coherence to these points of view, and there is not sufficient evidence of success for the established ways of thinking to be challenged.

Here is where I think it gets interesting. Everyone can see that the balance of power in the business world is shifting to the East. We now look to Asia as a source of finance, for advanced manufacturing, for technological innovation and for well-educated workers. Is it likely that we will in the future look to Asia as a source of management ideology?

Up to now, most Asian companies have been happy to play catch-up, by incorporating the best of the American model of management into their working environment. But once they are competitive, there is no reason for them to stop there. India and China have highly-distinctive cultures and rich traditions on which their own distinctive management ideologies might be built.

Already, there is some evidence of a distinctive Indian model of management emerging. Peter Cappelli and his colleagues recently published a book, The India Way. They focus on "holistic engagement with employees", "improvisation and adaptability" and "broad mission and purpose" as the defining features that make the Indian model different to the American model. These features, they claim, are inspired partly from ancient writings, such as the Bhagavad Gita, and partly from the experience Indian executives had growing up in the chaotic post-war years.

And it seems surely just a matter of time before a "China Way" emerges. Chinese companies now have a level of self-assurance and success on the world stage that is allowing them to experiment with their own ways of working, and they are well placed to bring together the best of the American model with the best of their own unique cultural heritage.

Culture is a complex thing, but we do know a few things about how to characterise the cultures of different countries. For example, the Anglo-American world is relatively individualistic and it has a relatively short-term orientation. Most Asian countries, in contrast, have a more collective orientation and a relatively long-term orientation. So if we go back to the elements of the "alternative" model I sketched out above, with its emphasis on purpose and a stakeholder-based approach to capitalism, it seems pretty clear that these elements have a natural affinity with the Asian cultural norms around collectivism and long-term orientation. To the extent that the American management ideology is going to be challenged, Asian companies with Asian values are well placed to do the challenging.

What do you think an Indian or Chinese model of management will look like? Can you suggest any management thinkers who didn't learn their trade in North America? Will we ever see the currently dominant "American" ideology be challenged?

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alastair-dryburgh's picture
Julian,

If you are getting into definitions of hegemony, I'd like to add the word paradigm.

As you explain, hegemony is a way for a ruling minority to persuade the rest of a society that arrangements which benefit the the minority are simply the natural order of things, or do in fact benefit the majority (even when, on inspection, they very clearly don't). It's a sneaky manoeuvre designed to maintain power.

A paradigm, on the other hand, is the the set of practices, assumptions and working methods that define a scientific discipline at any particular period of time.(Thomas Kuhn, The Structure of Scientific Revolutions).  It's an honest thing, aimed at discovering truth, essential to doing any sort of science.

So is the management ideology you describe a paradigm, or a tool of hegemony? The answer is important. If it is a paradigm, it is showing signs of strain and needs to be overhauled or replaced. If it is a tool of hegemony there will be very powerful forces arrayed against change, however deficient it is as a  description of reality

santosh-kr-sharma's picture


It’s a great post where you have
discussed about the America way, the India way and the China way. Of course we
are moving from the individualistic regime to the inclusive regime because that
mirrors the natural behaviour of the Universe.  The difference arose because of the divergence
in the basic assumptions between the Americans and the Indians or Chinese pertaining
to understanding of self, life, purpose, Universe etc. The American model has understood
this superficially or in a materialistic manner so it became a hundred meter
race for them when it is actually is a marathon. There are inherent designing
limitations in the American way as it is not compatible with the Universe and
everything in it. On the other hand there is inbuilt designing intelligence in
the Indian or the Chinese model but still we have just scratched the tip of the
iceberg. The Indian model is much deeper than what the Indians have themselves understood,
used or practiced. This is what i am doing my research on. And this gave me the
idea “Thinking out of the box is not enough . . . Dissolve the box and reposition
to lead the hot, crowded and the dynamic flat world”. It’s now in the form of a
book “Next What’s In”. Restricting that Universal intelligence as the Indian
way would be restricting the scope so i call it the Universal Way because it is
congruent to the Universe and is compatible with everything in the Universe.
And when something is compatible, it is natural. It would be great to have your
views. Let’s share our works as knowledge sharing will bring out many more
things.


The book is listed in Amazon in the
Kindle/e-book format. You may find it interesting and helpful.

 

alastair-dryburgh's picture
Julian

I would like to reframe the question slightly differently. There is a problem with management orthodoxy, but I'd see it less as a clash between different regions and cultures and more as a struggle between an existing, dominant paradigm which is running out of steam, and newer ideas.

It's an issue because the dominant paradigm seems does seem to be running out steam - witness for example Andrew Hill's recent column in the Financial Times suggesting that future developments will be at best incremental. Practising managers I speak to in the course of my consulting work, even those who one would expect to be quite conservative, feel strongly that we need something different.

Characterising the conflict as one of region or culture ignores the fact that there is a lot of communication between the different camps. There is no shortage of Indian or Chinese students at US business schools, and there is also interest in communication in the other direction. To quote something I reported elsewhere on this site:

"One of my clients recently went to a dinner of very senior people from the largest UK companies. At my instigation, he asked as many people as he could, "where do you expect to get the ideas move your business forward?" This is the summary of what they said:

'...the best minds from their emerging markets (and I confirmed, they were non-MBA educated) were their best source of new and different ideas.   Unsurprisingly, they also shared that the somewhat trying times made those ideas more important than ever.  Looking critically at the west from the east was the theme.'"

I am so glad that someone has come out and said that the existing paradigm is well into the area of diminishing returns, but worry that characterising the problem as a clash of cultures or regions  risks polarising positions and making it harder to arrive at the synthesis of ideas we need to create a new paradigm.

julian-birkinshaw's picture
A quick response to Alistair's comments, as well as earlier ones from Faly, Alberto and others.  By positioning this blog against the "American" management ideology, I attracted quite a lot of interest, but I also risked being misunderstood!  I think there are three conflated strands of thinking in what I wrote. The first might be a nationalistic argument, suggesting that there is something specific to the US about the traditional model that is no longer fit-for-purpose. I actually don't believe that is the case - partly because the traditional model already involved more than just Americans; partly because management ideology often transcends the national institutional setting in which it is located.

The second strand of thinking was cultural (as several people noted), the argument being that there are some well-established generalisations available (from Hofstede, Trompenaars, House and others) about the underlying values and belief systems that vary by country or region.  Here, the argument is simply that the Anglo-American "cluster" of countries are typically more individualistic and short-term oriented than India and China, and these characteristics make it harder for such countries to move towards a more collectivist or long-term oriented management ideology.

The third and perhaps most important strand of thinking in the article was the idea that there is a "hegemony" of thought about management in the rich, English-speaking world, i.e. there is a state of affairs where the "dominant class impose their world view as if it were natural, inevitable, and beneficial to every social class" (Wikipedia's definition of Hegemony). Now, this is still a US dominated view, as the data on where people get their PhDs in management shows, but what matters most here is that it is not natural, inevitable and beneficial to all. When we see, for example, Chinese companies seeking to incorporate all our old-style management thinking into their new operations, I cannot help feeling we are doing them a disservice.  Just as some developing countries were able to leap straight into mobile telephony, without going through fixed-line copper wire first, I would like to think they can move straight into a "modern" version of management without learning and then unlearning the archaic version of management our companies are trying to shed.

faly-ranaivoson's picture
When Julian made the comment about the Anglo-American world being inclined to be more individualistic while most Asian countries tend to have a more collective orientation, I immediately thought of the cow, chicken & grass test mentioned in this blog post by Dave Snowden: 
 
"There are a whole range of experiments, mainly comparing American and Chinese, or American and Japanese subjects. The overall conclusion is that American students have a tendency to focus on the objects in a picture, whereas Asian's look at the whole context." 
(...) 
"The Cow, Chicken and Grass test is simple one. Richard Nisbett, author of The Geography of Thought: How Asians and Westerners Think Differently, reports that the majority of Americans will choose grass, while Asians choose chicken. The reason suggested is that Americans come from the Aristotelian tradition of categorisation and grass is a vegetable while the other two are animals. In contrast Asians see things in terms of relationships, and the cow has a relationship with grass." 
 
Snowden continues: 
"I can report that the Asian-American split tends to be 60:40 and the groups who exclude chicken include Afrian, Southern Europe, Latin American and the Celtic Countries of Europe. In contrast, exclusion of grass is the norm in North America, England and Northern-Europe - in other words Anglo-Saxon. (...) I think this may relate to the difference between atomistic societies which emphasise the individual, and individual rights (including social contract theory) and those which are more collective in nature, focusing on relationships and obligations. You can also see a religious difference here: Catholic/Hindu/Animism etc form one pattern, while Protestantism, with its emphasis on an individual relationship to God is in the categorisation school." 
 
However, if we want to support the evolution of management thinking, I believe investigating the concept of worldview - or the overall perspective from which one sees and interprets the world - might bring stronger insights than merely exploring national/regional cultural differences. 
 
Today, the dominant management ideology or worldview is still the (old) scientific one. Under this worldview, businesses will keep thinking and acting along the old and enduring features outlined in the original post. 
 
Yet management science keeps evolving. Yesterday, it was systems dynamics, the day before it was old scientific management. Today, complexity theory seems to lead the way (It's interesting to note that the September issue of HBR was focused on Embracing Complexity). 
 
I believe business leaders need to catch up with insights provided by a complexity worldview. When they'll do so, terms such as self-organisation, collective wisdom, and adaptability will be part of their daily language and soon of corporate cultures. 
 
So, to me the question is not so much about challenging an American ideology as it is about challenging the old scientific management worldview. And the cultural nuances between countries are still important but not so much in terms of thinking of country xyz as being a model, but rather in terms of developing the ability to manage across borders.
alberto-blanco's picture
Julian,

Very interesting article, I love it!

What if emerges a sort of milkshake management way? One that contains bits of ideology from both Asia and America but no one can tell for sure where the killer ingredient comes from and, in consequence, no region could be able to claim it as its own? It could be something like an open and global management way... What do you think?

Al

alfredo-bregni's picture
To Greg Stevenson:
US will NOT ponder about the "Occupy Wall Street Movement".  They did NOT with 9/11.
NOT a single neuron was used to guess "...why?".
 
greg-stevenson's picture
@alfredo I purposefully stated the occupy movement as opposed to the occupy wall street protests. This is a global issue and due to the free movement people and capital has to be solved globally. Private ownership of central banks combined with fractional reserve banking have made a farce of democracy as it was ideologically intended. Abraham Lincoln made a good fist of a remedy. He was killed. The "system" causes good people to do bad things. (See Deming on that point)
 
We are talking ideology. The world has not seen, true democracy, true capitalism, and for that matter true communism according to their ideologies and never will. If however we could make a shift to the system that pragmatically embeds elements of each ideology, we may just survive to enjoy another day.
 
This goes especially for businesses, some of which are bigger than many sovereign states, as they are the true change agents of society.
joseph-manuel's picture
The dominant stream of management thinking, Indian or Chinese is borrowed from the american version. This will not continue for long. Given the democratic and cultural context of both countries India is more likely than China to break away from the classic double bind of ground realities not supporting the so called edge in management thinking. But for confirmation bias, there is noting much to endorse the claim that amercan managemnt is ahead of the rest. Classic example is Edward Deming vs. Peter Drucker. Deming started where Drucker left off towards the end, managing oneself and personal transformation. We know what happened as a consequence
 
greg-stevenson's picture
Edwards Deming, somewhat ignored in his homeland offered an ideology in the form of a 14 point philosophy to Japan. They embraced his practical teaching and thrived under its adoption. Like North America, the deeper, esoteric ramifications were lost in the exuberance of material progress.
 
Two fundamental ideas of Deming have been set aside due to them being too hard. If they hadn't been we wouldn't have the global crisis we have today.
 
What Deming had to say on remuneration is the last thing corporations wanted.
 
More importantly, and intimately related was his 8th philosophical point. "Drive out Fear where ever it exists in your Organization" has clearly not been followed.
 
The world is in a crisis of Trust. Fear and Trust are joined at the hip. Suffice to say the opposite of Fear is Love.
 
His 8th point could equally have read "Drive in Love whereever you have the opportunity within your Organization"
 
I believe he couldn't couch it in such words as his sell was difficult enough as it was.
 
I put it to you if his ideology had been followed back in the 50s we wouldn't be in the crisis we are today.
 
The "Occupy Movement" may yet give us cause to ponder this reality.
 
 
alfredo-bregni's picture
I used to argue, some 20 years ago, against:
-  The McK financial thinking --  "finance optimally distributes risk" -- stating that finance seemed to me more like gambling...;
-  The McK managerial thinking, capable -- in MGI -- of comparing the US and Japanes food industries, while forgetting to compare the US and the Japanese food...;
-  More generally, the McK managerial thinking as  "ideology driven" (in Italy we have stupidly privatized infrastructures like telecommunications and highways, following some ...economic mantras).
A former ambassador of ours once stated that US "export crises" (it did it well before subprimes...).
I'd like US to pay for the global damage they caused, and cause, with the Iraqi war (oil prices), some repeated financial bubbles and busts, and the energy consumption level (global warming).
I'm ideologically against the US ideology.  With some factual evidence.