Henry Mintzberg on Managing Our Way into Crisis

As I write this, CBC's Sunday Edition is airing an interview with Henry Mintzberg. Mintzberg, Canada's leading management academic, is arguing that our current crisis is one of management and not economics, and that in particular it is a product of the failure of business schools to adequately equip the current management cadre with the tools for effective leadership.

(In its usual elitist fashion, the host, Michael Enright, has posted no links to or references for Mintzberg's work. Nor is there a podcast. What can we expect for a paltry multibillion dollar budget.)

Much of the thrust of Mintzberg's argument can be found in a recent Globe & Mail opionion piece entitled America's Monumental Failure of Management. He summarizes his argument as follows:

We call this a financial crisis or an economic one, but, at the core, it is a crisis of management. To understand this, consider the mortgage debacle.

How could these mortgages have come to exist in the first place and, worse, how could they have spread to so many of the bluest of blue-chip financial institutions? The answers seem readily apparent. Those who promoted these mortgages were intent on driving up sales as quickly as possible for the benefit of their own bonuses, the ultimate consequences be damned. In fact, they sold off these mortgages as quickly possible.

But how could any serious financial institution have bought this junk - or, more to the point, tolerated a culture of people too lazy or disinterested to realize it was junk? That, too, is simple: These companies were not being managed. They were being "led" - heroically, no doubt - for short-term spectacular performance. The executives didn't know, and the employees didn't care.

What we have here is a monumental failure of management. American management is still revered across much of the globe for what it used to be. Now, a great deal of it is just plain rotten - detached and hubristic. Instead of rolling up their sleeves and getting engaged, too many CEOs sit in their offices and deem: They pronounce targets for others to meet, or else get fired.

And he follows this by laying the blame for management failure squarely at the feet of managment schools, particularly the elite schools:

Management is a practice, learned in context. No manager, let alone leader, has ever been created in a classroom. Programs that claim to do so promote hubris instead. And that has been carried from the business schools into corporate America on a massive scale.

Harvard Business School, according to its MBA website, is "focused on one purpose - developing leaders." At Harvard, you become such a leader by reading hundreds of brief case studies, each the day before you or your colleagues are called on to pronounce on what that company should do. Yesterday, you knew nothing about Acme Inc.; today, you're pretending to decide its future. What kind of leader does that create?

Harvard prides itself on how many of its graduates make it to the executive suites. Learning how to present arguments in a classroom certainly helps. But how do these people perform once they get to those suites? Harvard does not ask. So we took a look.

Joseph Lampel and I found a list of Harvard Business School superstars, published in a 1990 book by a long-term insider. We tracked the performance of the 19 corporate chief executives on that list, many of them famous, across more than a decade. Ten were outright failures (the company went bankrupt, the CEO was fired, a major merger backfired etc.); another four had questionable records at best. Five out of the 19 seemed to do fine. These figures, limited as they were, sounded pretty damning. (When we published our results, there was nary a peep. No one really cared.)

In other words, as Mintzberg demonstrates in this video, the leadership function of management is not, and cannot be something that is effectively taught out of context in business schools. And to the extent that we draw elites from these schools they will not only be fallibe but both hubristic and excessively error prone.