How a $250 Billion Industry Lost Its Bad Reputation

  Looks like a lot of rubbish in its conclusions! (hfk)

Date: 02-11-2016
Source: The Wall Street Journal

kipping-bookA new book charts the evolution of management consulting

Frederick Winslow Taylor popularized the notion of restructuring factory operations to strip out wasted movements. Taylorism was widely used to optimize work processes. Above, assembly-line workers inside the Ford factory in Dearborn, Mich., in 1928.

Before the term “management” referred to a multibillion-dollar industry with enormous influence over business practices, it applied to women’s skills overseeing their households. The first management best seller was “Beeton’s Book of Household Management,” a cookbook published in 1861.

Today, management advice is everywhere—taught in business schools, practiced by consulting firms, and disseminated by Harvard Business Review and The Wall Street Journal. Even the Vatican engaged McKinsey & Co. and other consulting firms recently.

Yet it wasn’t always certain that an industry built around running enterprises would have so much authority or cachet, according to “Defining Management,” a new book that charts the industry’s evolution.

Early in the last century, the profession’s reputation was so dim that one management consultant in the 1930s was too embarrassed to tell his mother about his work. Instead, he said he was working as a pianist in a brothel, said Matthias Kipping, a business historian at York University in Canada and a co-author of the book with Lars Engwall of Sweden’s Uppsala University and Behlül Üsdikenof Sabanci University in Turkey.

A $250 billion industry in the U.S. alone, management consulting was born from two distinct fields, engineering and accounting. At the turn of the last century, mechanical engineer Frederick Winslow Taylor popularized the notion of restructuring factory operations to strip out wasted movements and prioritize efficiency above all. His ideas about optimizing work processes—dubbed Taylorism—were soon adapted from the shop floor to offices and government activities.

Around that same time, accountants were getting more involved in business operations, especially as they helped big companies through bankruptcies during the Great Depression.

The American model of management consulting—which involved privatizing, packaging and selling advice—gained traction after World War II, said Mr. Kipping. U.S. firms had been hired for military and government projects during the war, and the American victory helped legitimize the role of these outside advisers, particularly the U.S. consultants.

That dominance continued even when the advice the firms were dispensing originated elsewhere, said Mr. Kipping. “Even when everyone wanted to learn about Japan, they still hired Boston Consulting Group instead of Japanese consulting firms.”

The authors note that some management advice goes in and out of fashion, only to come back again. In the 1970s, business schools and consultancies pushed firms to diversify, resulting in conglomerates like LTV Corp. When enthusiasm for that strategy waned in the 1970s, paid advisers urged companies to get smaller and focus on their core competency.

Even today, the term management often seems vague and detached from some stable set of principles, Mr. Kipping said. “That’s the beauty of the term. It’s so generic.”

Mr. Kipping and his co-authors float the possibility that consulting and b-schools will return to the kind of social mission that business schools once had, which was to create more enlightened managers and “better” people, who would then make socially responsible business decisions. For example, firms like health-care consultancy Advisory Board Co. are offering more pro bono and nonprofit work to appeal to younger employees.

Mr. Kipping remains skeptical of the management industry, though he believes the competition among firms offering advice and ideas results in greater innovation for companies across industries.

“Management probably has made the world a better place, but sometimes you have to ask, can it be applied the same way everywhere?” he said. “Maybe customer focus is a great idea to introduce in government but are all the principles you apply to private firms valid in other contexts?”

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