by Christian Rivera
In his article, The End of Management, Alan Murray argues that there is a pressing need to rethink the methods of implementing management in the 21st century. Murray provides a detailed synopsis of the history of industry and corporate culture, and he references several historic milestones. He also strongly emphasizes the significant impact that market forces have on the way resources are allocated. Murray correctly points out that corporate culture as it is known today is stagnant with bureaucracy, and that many corporate cultures are losing relevance to the ever-changing tides of the modern global market. “The greatest management stories in recent years,” Murray argues, “have not been triumphs of the corporation, but triumphs over the corporation.” I agree.
In fact, the only thing I found to be disagreeable in this article is that Murray reasons that advances made as a result of the industrial revolution have essentially rendered Adam Smith’s vision of prosperity outlined in Wealth of Nations to be “quaint.” I find this assertion to be quite paradoxical, considering that it is due to Adam Smith’s vision that such advances could be made in the first place. Additionally, the article omits another looming concern entirely: government intervention.
Now, more than ever, is the time to return the wisdom of basic economic principles of the free market to the way we manage.
This author contends that a major problem in modern management is a double-edged sword. It lies not only in self-interested bureaucrats who grind their own organizations to a standstill, as Murray suggests, but also in the increase of government interference in the markets, and the farce known as the Federal Reserve. Unnecessary government over-regulation, coupled with artificially fixed prices, equates to misallocation of resources and lots of red tape; hence, a major contributing factor to the convolution that we see in the way we do business today. It follows that the amount of government interference and over-regulation in our markets has a direct relationship to the level of bureaucracy in our businesses. More often than not, the more bureaucratic a business becomes, the more inefficient it becomes.
In simpler times, sustained inefficiency would lead to the ultimate demise of an organization unless an effective contingency plan was implemented. If the plan failed, the business would most likely fail—and no business was “too big to fail.” Consequently, outdated and inefficient goods and services made way for more innovative and efficient products and services—as well as more efficient and innovative ways of producing them. The market would allocate scarce resources accordingly; people and capital would go naturally where they were needed most. Managers learned from their experiences, and would hopefully refrain from repeating mistakes again in the future.
In contemporary times, however, the government is here to bail out inefficient businesses. It seems that instead of incentivizing innovation and sound business practices, the government is subsidizing inefficiency and recklessness—on the taxpayers’ dime. Managers of corporations like General Motors and AIG probably would have taken an entirely different approach to the way they managed had they have not had the prospect of a taxpayer bailout.
In this world, the only thing that’s constant is change. Good managers are cognizant of this fact, and are willing to prove their ability to adapt to and overcome the challenges that they face—without any help from the government. They recruit the best and the brightest, and empower them to turn the challenges of today into the innovations of tomorrow.
In short, we don’t need “mass collaboration” or government bailouts to run our businesses; we just need a bit of common sense, a good moral compass, personal accountability, good intuition, and of course, a truly free market.
As Alan Murray correctly points out, “change, innovation, and adaptability all have become orders of the day.” Unfortunately, under the current system, any advances that are made in the way we manage our industries will have to be made with the millstone of a leviathan government around our necks.