CHAPTER TWELVE
Can Management Ever Be a Science?
SOME TIME AGO I WAS ASKED by one of the management associations to make a speech on “Management Science in Business Planning.” I used this invitation to do something I had long intended to do, which was to scan the last four or five years of literature in the areas of management science: operational research; statistical theory and statistical decision making; systems theory, cybernetics, data processing, and information theory; econometrics, management accounting, and accounting theory; and so on. I also looked fairly closely at the management science work done in a number of businesses, either by their own staffs or by outside consultants.
No one, I am convinced, can read this literature or can survey the work done without being impressed by the potential and promise of management science. To be sure, managing will always remain somewhat of an art; the talent, experience, vision, courage, and character, of the managers will always be major factors in their performance and in that of their enterprises. But this is true of medicine and doctors, too. And, as with medicine, management and managers—especially the most highly endowed and most highly accomplished managers—will become the more effective as their foundation of organized systematic knowledge and organized systematic search grows stronger, and as their roots in a real discipline of management and entrepreneurship grow deeper. That such a discipline is possible, the work already done in management science proves.
But no one, I am also convinced, can survey the work to date without being worried at the same time. The potential is there—but it is in danger of being frittered away. Instead of a management science which supplies knowledge, concepts, and discipline to manager and entrepreneur, we may be developing a management gadget bag of techniques for the efficiency expert.
The bulk of the work today concerns itself with the sharpening of already existing tools of specific technical functions—such as quality control or inventory control, warehouse location or freight-car allocation, machine loading, maintenance scheduling, or order handling. And, in fact, a good deal of the work is little more than a refinement of industrial engineering, cost accounting, or procedures analysis. Some, though not very much, attention is given to the analysis and improvement of functional efforts—primarily those of the manufacturing function but also, to some extent, of marketing and of money management.
But there is almost no work, no organized thought, no emphasis on managing an enterprise—on the risk-making, risk-taking, decision-making job. In fact, I could find only two examples of such work: the industrial dynamics programme at Massachusetts Institute of Technology* and the operational research and synthesis work done in some parts of the General Electric Company. Throughout management science—in the literature as well as in the work in progress—the emphasis is on techniques rather than on principles, on mechanics rather than on decisions, on tools rather than on results, and, above all, on efficiency of the part rather than on performance of the whole.
However, if there is one fundamental insight underlying all management science, it is that the business enterprise is a system of the highest order: a system the “parts” of which are human beings contributing voluntarily of their knowledge, skill, and dedication to a joint venture.* And one thing characterizes all genuine systems, whether they be mechanical like the control of a missile, biological like a tree, or social like the business enterprise: it is interdependence. The whole of a system is not necessarily improved if one particular function or part is improved or made more efficient. In fact, the system may well be damaged thereby, or even destroyed. In some cases the best way to strengthen the system may be to weaken a part—to make it less precise or less efficient. For what matters in any system is the performance of the whole; this is the result of growth and of dynamic balance, adjustment, and integration rather than of mere technical efficiency.
Primary emphasis on the efficiency of parts in management science is, therefore, bound to do damage. It is bound to optimize precision of the tool at the expense of the health and performance of the whole. (That the enterprise is a social rather than a mechanical system makes the danger all the greater, for the other parts do not stand still. They either respond so as to spread the maladjustment throughout the system or organize for sabotage.)
This is hardly a hypothetical danger. The literature abounds in actual examples—inventory controls that improve production runs and cut down working capital but fail to consider the delivery expectations of the customer and the market risks of the business; machine-loading schedules that overlook the impact of the operations of one department on the rest of the plant; forecasts that assume the company’s competitors will just stand still; and so on.
Technically this is all excellent work. But therein lies its danger. The new tools are so much more powerful than the old tools of technical and functional work—the tools of trial and error and of cut and fit—that their wrong or careless use must do damage.
For management science to become a gadget bag, therefore, not only means a missed opportunity; it may also mean loss of its potential to contribute altogether, if not its degeneration into a mischief maker.
Hence the questions arise: Is it inevitable that management science become a gadget bag? Or would this be the result of something management science does today or fails to do? And what would be the requirements for a real management science that supplies the knowledge and the methodology we need?
The first clue lies, perhaps, in the origin of this new “management science” approach—and the origin is an unusual one indeed.
Every other discipline of man began with a crude attempt to define what its subject was. Then people set to work fashioning concepts and tools for its study. But management science began with the application of concepts and tools developed within a host of other disciplines for their own particular purposes. It may have started with the heady discovery that certain mathematical techniques, hitherto applied to the study of the physical universe, could also be applied to the study of business operations.
As a result, the focus of much of the work in management science has not been on such questions as: “What is the business enterprise? What is managing? What do the two do, and what do the two need?” Rather, the focus has been on: “Where can I apply my beautiful gimmick?” The emphasis has been on the hammer rather than on driving in the nail, let alone on building the house. In the literature of operational research, for instance, there are several dissertations along the lines of “155 applications of linear programming,” but I have not seen any published study on “typical business opportunities and their characteristics.”
What this indicates is a serious misunderstanding on the part of the management scientist of what “scientific” means. “Scientific” is not—as many management scientists naïvely seem to think—synonymous with quantification. If this were true, astrology would be the queen of the sciences. It is not even the application of the “scientific method.” After all, astrologers observe phenomena, derive the generalization of a hypothesis therefrom, and then test the hypothesis by further organized observation. Yet astrology is superstition rather than science because of its childish assumption that there is a real zodiac, that the signs in it really exist, and that their fancied resemblance to some such earthly creature as a fish or a lion defines their character and properties (whereas all of them are nothing but the mnemonic devices of the navigators of antiquity).
In other words “scientific” presupposes a rational definition of the universe of the science (that is, of the phenomena which it considers to be real and meaningful) as well as the formulation of basic assumptions or postulates which are appropriate, consistent, and comprehensive. This job of defining the universe of a science and of setting its basic postulates has to be done, however crudely, before the scientific method can be applied. If it is not done, or done wrongly, the scientific method cannot be applied. If it is done, and done right, the scientific method becomes applicable and, indeed, powerful.
This idea is, of course, nothing new. It goes back to the distinction between the premises that are generally valid and those that pertain to a specific discipline, made in Aristotle’s Analytica Posteriora. On the rediscovery of this principle during the last century rests the power of modern science and of its methods.*
Management science still has to do this job of defining its universe. If it does this, then all the work done so far will become fruitful—at least as preparation and training ground for real achievement. The first task for management science, if it is to be able to contribute rather than distort and mislead, is, therefore, to define the specific nature of its subject matter. This might include as a basic definition the insight that the business enterprise is a system made up of human beings. The assumptions, opinions, objectives, and even the errors of people (and especially of managers) are thus primary facts for the management scientists. Any effective work in management science really has to begin with analysis and study of them.
Starting, then, with this recognition of what there is to be studied, management science must next establish its basic assumptions and postulates—without which no science can develop proper methods. It might first include the vital fact that every business enterprise exists in economy and society; that even the mightiest is the servant of its environment by which it can be dismissed without ceremony, but that even the lowliest affects and moulds the economy and society instead of just adapting to them; in other words, that the business enterprise exists only in an economic and social ecology of great complexity.
The basic postulates might include the following ideas:
1. The business enterprise produces neither things nor ideas but humanly determined values. The most beautifully designed machine is still only so much scrap metal until it has utility for a customer.
2. Measurements in the business enterprise are such complex, not to say metaphysical, symbols as money—at the same time both highly abstract and amazingly concrete.
3. Economic activity, of necessity, is the commitment of present resources to an unknowable and uncertain future—a commitment, in other words, to expectations rather than to facts. Therefore, risk is of the essence, and risk making and risk taking constitute the basic function of enterprise. And risks are not only taken by the “general manager,” but right through the whole organization by everybody who contributes knowledge—that is, by every manager and professional specialist. This risk is something quite different from risk in the statistician’s probability; it is the risk of the unique event, the irreversible qualitative breaking of the pattern.
4. Inside and outside the business enterprise there is constant irreversible change; indeed, the business enterprise exists as the agent of change in an industrial society, and it must be capable both of purposeful evolution to adapt to new conditions and of purposeful innovation to change the conditions.
Some of this is often said in the preface of books on management science. It generally stays in the preface, however. Yet for management science to contribute to business understanding, let alone become a science, postulates like the foregoing ought to be the fabric of its work. Of course we need quantification—though it tends to come fairly late in the development of a discipline (only now, for instance, can scientists really quantify in biology). We need the scientific method. And we need work on specific areas and operations—careful, meticulous detail work. But, above all, we need to recognize the particular character of business enterprise and the unique postulates necessary for its study. It is on this vision that we must build.
The first need of a management science is, then, that it respect itself sufficiently as a distinct and genuine discipline.
The second clue to what is lacking in management science as applied today is the emphasis throughout its literature and throughout its work on “minimizing risk” or even on “eliminating risk” as the goal and ultimate purpose of its work.
To try to eliminate risk in business enterprise is futile. Risk is inherent in the commitment of present resources to future expectations. Indeed, economic progress can be defined as the ability to take greater risks. The attempt to eliminate risks, even the attempt to minimize them, can only make them irrational and unbearable. It can only result in that greatest risk of all: rigidity.
The main goal of a management science must be to enable business to take the right risk. Indeed, it must be to enable business to take greater risks—by providing knowledge and understanding of alternative risks and alternative expectations; by identifying the resources and efforts needed for desired results and by mobilizing energies for the greatest contribution; and by measuring results against expectations, thereby providing means for early correction of wrong or inadequate decisions.
All this may sound like mere quibbling over terms. Yet the terminology of “risk minimization” does induce a decided animus against risk taking and risk making—that is, against business enterprise—in the literature of management science. Much of it echoes the tone of the technocrats of a generation ago, for it wants to subordinate business to technique, and it seems to see economic activity as a sphere of physical determination rather than as an affirmation and exercise of responsible freedom and decision.
This is worse than being wrong. This is lack of respect for one’s subject matter—the one thing no science can afford and no scientist can survive. Even the best and most serious work of good and serious people—and there is no lack of them in management science—is bound to be vitiated by it.
The second requirement for a management science is, then, that it take its subject matter seriously.
There would be little reason for concern about the trend of management science if we did not need so badly a genuine discipline of entrepreneurship and business management.
We need a systematic supply of organized knowledge for the risk-making and risk-taking decisions of business enterprise in our complex and rapidly changing technology, economy, and society; tools for the measurement of expectations and results; effective means for common vision and communication among the many functional and professional specialists—each with his own knowledge, his own logic, and his own language—whose combined efforts are needed to make the right business decisions, to make them effective, and to produce results. We need something teachable and learnable if only because we need far too many people with managerial vision and competence to depend on the intuition of a few “natural-born” geniuses; and only the generalizations and concepts of a discipline can really be learned or taught.
We know that these are urgent needs. In fact, the future of the free enterprise system may depend on our ability to make major managerial and entrepreneurial decisions more rationally, and to make more people capable of making and of understanding such decisions.
There would be little reason for concern here if management science had not demonstrated its great potential to fill our need. Of course, it is only in its infancy; real knowledge and understanding in vitally important areas may be decades away–may, indeed, never be obtained. But the work already done is exicting and powerfull, and the talent at work is of a high order of competence, ability, and dedication.
All this, however, may come to nought if management science permits itself to become a management gadget bag. The opportunity will be lost, the need will go unfulfilled, and the promise will be blighted unless management science learns to respect both itself and its subject.
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An address delivered at the Fiftieth Anniversary Conference of the Harvard Business School, September 1958.