Traditionally our ideas about management have come from the United States, but, in a thought provoking blog post, London Business School’s Professor Julian Birkinshaw argues that this may not be the case in the near future. His original post is reproduced below, and you can read an expanded version of his article here in Lab Notes, the bi-monthly publication of MLab.
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.