Management: What Really Works?


"A witty saying proves nothing" — Voltaire

Management is still a very young field. The lack of evidence for what really works, what doesn't, and how to effectively implement what we do know means that most people ignore Voltaire and practice management-by-aphorism. I've highlighted some books and articles over the years that I think shed some light on the right direction – using evidence and critical thinking to figure out what really works in business. Today I want to add this article (free reg. required) from The McKinsey Quarterly to the list. It isn't a panacea to corporate ills, but it does make some very good points that can set companies in the right direction.

Some of the things this study found:

…that executives should eschew simplistic organizational solutions: when applied in isolation by the companies in our database, popular techniques such as management incentives and key performance indicators (KPIs) were strikingly ineffective.

The carrots and sticks of incentives appear to be the least effective of the four options commonly used to motivate and encourage employees to perform well and stay with a company.

Command-and-control leadership-the still-popular art of telling people what to do and then checking up on them to see that they did it-is among the least effective ways to direct the efforts of an organization's people.

In other words, the way most people do business is wrong. The McKinsey research showed that many different factors mattered in business success, but that there were three key points for managers to note.

The McKinsey research unambiguously identifies the best practices for achieving these outcomes. Senior executives must provide for clear roles within a structure matched to the needs of the business (accountability), articulate a compelling vision of the future (direction), and develop an environment that encourages openness, trust, and challenge (culture).

The sad thing is that many businesses don't have even one of these three. I've seen companies where the direction is schizophrenic, accountability is non-existent, and the culture is one of backstabbing and mistrust. That is a very natural way for any group of people to interact when people have poor self-knowledge and lousy critical thinking skills.

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The article sums it up by saying… Top managers would be wise to base their actions on this evidence of proven success and not on prevailing wisdom and myths, however seductive.… I agree. New, cool, easy theories are very seductive. Accountability and trust are old and boring. For all the talk of paradigm shifts, new technologies, and various revolutions, evidence is showing that business success is still highly dependent on some of the basic skills that have been around as long as business itself.

  • Rob,

    You may enjoy this book “Principles of Scientific Management” It sheds a lot of the importance of management correctly structuring incentives and the positive effect of incentives on productivity. Plus lots lots more.

  • You write that “The McKinsey research showed that many different factors mattered in business success.” So I searched their document for the word “luck” and couldn’t find it.

    Perhaps the reason that “the way most people do business is wrong” is because nobody accounts for “luck.”
    I have seen and heard of many examples of luck, and there’s some intense academic research that says many successful businesses (at any point in time) are mostly lucky.

  • Top Manager should also listen the opinion of their field staff, and frame strategy to excute intelligence successfully. If you are operating globaly it is important to understand the cultural differences among your staff and accordingly find a way to match the tuning.