Management Consulting News

Meet the MasterMinds: James Hoopes Takes on the False Prophets of Management

As I scanned the morning newspaper recently, the headlines hollered out that the governor of California is so unpopular that he is subject to a recall election. Politicians up and down the state are shaking in their limos as their tightly held beliefs about the sanctity of voter elections melt away.

After hearing from James Hoopes, our featured guest this month, you may feel like one of those shaken politicians. Hoopes' ideas challenge some of our most closely held beliefs on management, corporate power and workplace democracy. And, his ideas will make you think twice about the value of consulting services focused on employee "empowerment," culture change and leadership.

With vigor and passion, Hoopes takes on the "gurus" of management thinking and argues that many of their ideas are just plain bad for business.

And thanks to Andrew Sobel, one of the industry's leading thinkers, for his article on defending your client base in perilous times. As always, Sobel's ideas are practical and ready-to-use.

Finally, it's summer in many parts of the world, so if you're heading off on a well-deserved vacation, have a look at our line-up of beach books. You're bound to find a title or two to help you unwind.

Meet the MasterMinds: James Hoopes Takes on the False Prophets of Management

In the book, Hoopes traces the roots of modern management thinking by examining the ideas and practices of leading business "gurus," past and present.

He challenges the popular movements these gurus spawned, and is sharply critical of today's gurus for perpetuating bad management practices in the name of democratic values.

A Distinguished Professor of History at Babson College, Hoopes has written a book that any student, practitioner or observer of management should read. You may not agree with Professor Hoopes, but he'll give you plenty to think about.

MCNews talked to Hoopes about how consultants can recognize the good and the bad in the gurus' ideas and develop a clear-headed approach to leadership for themselves and their clients.

Hoopes: Twenty-five years ago, I came to Babson College to teach American History. I never expected to teach business history or be in a business school, but there I was.

One of the things that interested and surprised me was the tremendous attractiveness of both the people who taught management and their ideas.

I found the whole leadership model very engaging. But over time, as I got to know that world better, it seemed to me that some of that attractiveness had been purchased at the expense of realism about the way managers have to operate.

So I decided to look for the historical roots of what seemed to me a lack of realism in some management ideas, especially about the nature of corporate power.

MCNews: In the book, you talk about what you see as the inherent conflict between corporate power and democracy. Why is it important for us to understand that conflict?

Hoopes: Democracy is a wonderful ideal that will never be perfectly realized in this world, and it probably shouldn't be. The world is not a perfect place and humans are not perfect creatures. The sad fact is that in business organizations where profit, not freedom, is the primary goal, it's top-down power that often gets the job done best.

We all need to recognize that corporations are not little models of democracy. If we cover up this reality, we can create serious problems for ourselves.

Some gurus have tried to dilute this reality by teaching managers to understate their power, over-emphasize employee participation and lead mostly by inspiration.

MCNews: Many managers follow the inspirational leadership model. Should we re-think that approach?

Hoopes: We need to be realistic about the fact that decisions in corporate life get made at the top. We like to think of ourselves as free. But, to some extent, you have to check that freedom at the door when you go to work.

If you can create an environment in which people feel free, obviously that's a wonderful thing. The trouble is, if you oversell the idea that everyone is free and that the workplace is nirvana, eventually there will be a hard landing for some disillusioned people. That can come back and hit a manager in the face.

I have talked to managers who got themselves into deep trouble by following the inspirational leadership model to such an extent that they let things get out of hand; they lost the ability to say no to the troops when no was what needed saying.

MCNews: In the book you suggest that democratizing corporations and legitimizing management is a pipe dream. Why do you think that?

Hoopes: There is a quote from James Madison that is getting a lot of play these days: "If men were angels, no government would be necessary." The same is true for our workaday lives--we wouldn't need managers if human beings were perfect. One of the reasons corporations exist is that people get themselves organized to get the job done best when somebody takes charge.

We are very lucky in America to have a mix of democratic political institutions and corporate economic institutions. That mix gives us freedom and civil rights in our political lives and lets us get wealthy from our work lives.

It's really important that we keep that balance and not try to democratize the corporation or get idealistic about it in a false way. I think it's equally important for our country's political future that we understand this difference and that we not try to corporatize or manageralize our political institutions.

We want to remain a free people, so obviously we want to keep democratic bottom-up power in our political institutions. But to get our jobs done, we need some amount of top-down direction in our economic organizations.

Hoopes: I was worried while writing the book that some people might think I was calling for authoritarianism in the workplace, but I certainly don't mean to propose such an idea at all. Bottom-up participation is vitally important. Everybody's ideas may be useful and should be considered as much as possible.

Some managers--not the really good ones, but some--slip into a kind of arrogance, a feeling that they must be special, even superior, by virtue of their positions. That's one of the temptations of undemocratic power. Those who manage most successfully temper their power with a healthy dose of common sense and with personal competence; they have enough humility to realize that their power and their competence, not their charisma, are the main reasons people follow them.

If managers can hang on to a bit of humility and at the same time demonstrate competence, then they do have a chance of winning some loyalty from people. People want to follow leaders who know what they're doing.

If you start by trying to be the inspirational leader, it's easy to lose sight of competence and then you are headed for real trouble.

MCNews: Business leaders have a long history of following the advice of management gurus. What is the reason for this love affair with the gurus?

Hoopes: Well, first of all it needs to be said that gurus have done a lot of good. I don't know if I managed to say that as clearly as I might have in the book, but that's a big reason for the attraction.

The characters I wrote about in the book, most of them anyway, made important contributions to our understanding of how businesses work. At the same time, there is the danger that if the emperor is paying the guru, the guru may not mention that the emperor is not wearing any clothes.

There is an unavoidable conflict of interest built into the relationship between business leaders and the gurus advising them. The whole system is built on the best, honest intentions of both sides. But human beings are imperfect creatures, and sometimes that honesty will not be there on one side or the other. So there has been a natural tendency for the gurus to try to pretty things up and make corporate life seem more satisfactory to the democratic conscience of managers than it really is--or can be.

MCNews: In the book you say that "culture change" should be dropped as a management tool. Why is that?

Hoopes: Culture is a very ambiguous word--one that can cover up painful realities, such as the fact of power. I do believe it's possible that some corporations have something that fits the original anthropological sense of the word culture. But I also think that it's easy to use the word culture to cover up the fact that people are doing what you want because you are the boss.

If people are going along because they know this is what you, the boss, want, it can be very dangerous to kid yourself into thinking that you have changed the culture and changed people's values. In addition, you might also be engaged in a kind of manipulation that isn't very attractive.

It is very tempting, especially for young managers, to think they are going to change a company's culture and that will change people's behavior. A manager might think, well, I don't really have to address the serious issue of people's behavior directly. Instead, I can insidiously change their values so they will do what I want and they won't even notice they are being managed. So we are back to the democratic façade that isn't real.

Changing people's behaviors and attitudes is important and worth the effort, but we would do better to go back to some very old-fashioned words from the early twentieth century, like morale and procedures. Those are up-front, honest words that say we are going to change the way we do things around here, rather than talk about changing values and culture.

Given how many times culture is changed in most organizations these days, it can't be very deep "culture" in the first place.

Hoopes: Peter Drucker, who I interviewed for the book, is an extraordinarily impressive man. He is a tremendous idealist, who has addressed the moral illegitimacy of corporate life head-on throughout his career. He insisted on recognizing that managers do have power that is not consistent with a democratic society. At the same time, he was very successful as a teacher of management and as a consultant.

Through that work, Drucker brought a lot of high-level awareness to people about what corporate life is. But I think he has been disappointed. His idea has been that the corporation is morally illegitimate and it needs to become morally legitimate.

My notion, which may never be a popular one, is that we are better off accepting the moral illegitimacy of the corporation--accepting the fact that we live in this imperfect world with imperfect institutions. So I disagree with Drucker on that fundamental point, but I think he is a real hero.

Hoopes: Alfred Sloan, CEO of General Motors from the 1920's to the 1950's might be everybody's candidate for the greatest manager ever, and I certainly wouldn't disagree with that. I might disagree with some people about where his greatness lies, though.

He does fit the model I outlined in the book in that he accepted that the corporation is not a perfect institution. In fact, a couple of times in his autobiography he says that the corporation is not the most gentle institution of society and insisted on the importance of top-down executive power.

Sloan combined that understanding with a great deal of simple, human decency. He managed to keep it all in balance--his own human decency on the one hand, understanding the imperfect nature of the organization he was running, and at the same time never forgetting it was there to make money.

Some people overestimate the decency in Sloan and underestimate his moral realism. He stayed focused on making money and didn't try to become a business statesman or a social leader.

Hoopes: Elton Mayo, who is in the book, really created the human relations movement in American industry in the 1930's. While Mayo did a lot of good, he was not a totally honest thinker. He was one of the people who failed to point out the lack of clothes to the emperor.

A lot of what's wrong with the leadership model in management today is descended from Mayo and the HR tradition that developed at the Harvard Business School in the 1930's. The fact that Mayo manipulated the data in the Hawthorne experiment is reason enough for consultants not to imitate him.

MCNews: What about present-day "Hall of Shame" candidates?

Hoopes: An interesting guy in the present is Kenneth Lay, former CEO of scandal-plagued Enron. The wrath against him when the Enron scandal broke was because he had been telling employees who were locked into their Enron shares that it was a great company and the future was bright, and meanwhile he was selling his shares. It made him look just horrible.

It turned out Lay's sales were margin calls, transactions he had to complete. He was forced into a sell position, but truly believed what he was telling employees, believed that their money was well invested in the company. He didn't know what was going wrong in his own company because he was a false idealist who thought he could lead the company just by inspiring the troops with their supposed bottom-up power.

He didn't have the accounting skills to keep up with the complex deals being done. The lesson we should draw from Lay's career is not so much the importance of morality but the importance of competence, or rather that the two are so directly related.

It's immoral not to do your job. He didn't do his job, and he hid his incompetence, even from himself, with his false moralism and belief that he could run the company just by being a morally inspiring leader.

MCNews: Last question: If you could give one piece of advice to somebody on managing people or managing in a corporate environment, what would it be?

Hoopes: Remember that you have necessary, but unjustifiable, power over other people's lives. They did not elect you their manager, and so you need to be as fair and careful as you can in handling their lives. The temptations of power are just as great for managers as they are for political figures.

One bit of advice to help people stay honest is to keep this in mind: no matter how good you are, you will never be good enough to deserve such power over others. As hard as it may be in the corporate world, if you can mix just an ounce of humility with your pound of power, it might help you do as good a job as you can with as much decency and fairness as possible.

"Only if managerial power is understood as an undemocratic but necessary evil in an imperfect world does moral caution have a fighting chance to engage the manager's conscience."
- James Hoopes, False Prophets

Defending Your Client Base in Perilous Times: 10 Steps to Take Today
(No duct tape required)

by Andrew Sobel

I recently asked a friend how business was going, and he e-mailed me the following: "I think it's gone from truly horrible to just plain bad." Yes, things could hardly be more uncertain around us, but it's possible to keep your head above water--if not thrive--by focusing renewed energy on building and sustaining your client relationships. Here are ten steps that will help you to defend and nurture your client base in these perilous times:

Increase your face-time immediately with your top clients. Treat your longstanding clients as if they were brand new by reaching out to them in person and by 'phone with the same energy, enthusiasm, new ideas, and conviction that you had when you were wooing them at the start of the relationship. Ask thoughtful, provocative questions, and then listen deeply as they talk about their concerns and needs.

List the top 10 to 20 contacts in your network, and get in touch with every single one over the next 30 days. Don't ask for business, but rather offer up an idea, a suggestion, an article or book, an introduction, a business opportunity--anything that might help improve that person's business.

Redefine--in one sentence--what you do for clients, expressing it as the specific, top- or bottom-line benefit that clients derive from your service or product. Start using this description in all of your sales and marketing communications. (Example: "I help sales executives raise the success rate of their proposals" versus "I teach communications skills).

Consider raising rather than cutting your price--especially if some or all of the following conditions apply: you are well-known for what you do; you have published on your area of expertise; you have one or more established competitors who are higher-priced than you; and you are able to articulate the specific value that clients receive from your services. In clients' minds, high fees are equated with high value. (Example: in the last two years, despite a wretched economy, sales of high-priced luxury products have grown).

Pretend you are a competitor, and devise a strategy to steal away one of your best clients (e.g., your competitor might develop a value-added idea or proposal, an innovative contracting approach, a new bundle of services, etc.). Now, implement that strategy yourself, with your own client.

Ask your best, most established clients for a referral--after you've helped them with something. Most professionals hesitate to ask their clients for other introductions. If you believe in what you do, you shouldn't hesitate to do this. And if your clients believe in the value of your work, they won't hesitate, either.

Trim your expenses--and reinvest the savings in strengthening current relationships and growing your sales and marketing. Many companies have cut back on their market presence. Now is the time for the strong to get stronger. Look at PC maker Dell, which has grown and increased its market share in a terrible environment. Many large professional services firms are thriving as well, by focusing on key client needs and flexibly delivering service offerings to areas of greatest need.

Reduce your client's uncertainty and risk. A dozen factors are conspiring to slow investment and postpone client purchases. Do your share to reduce this uncertainty by over-investing upfront to get to know new clients and their organizations; offering product-style guarantees for your work; showing flexibility in structuring projects and deals; offering twice as many references as usual; and creating incremental programs with frequent checkpoints.

Help past clients who are in need. All of us know past or prospective clients who may be in-between jobs or otherwise down-and-out, but we gravitate towards the winners--the executives who are riding high. You build your long-term network, however, by being helpful to all your contacts and clients. Help a client in need by reviewing his resume, or perhaps by making some introductions to prospective employers and headhunters. Check in every so often to see how he's doing and to offer your personal help. A client in need is a client indeed.

Sharpen--and shorten--your communications to clients. We are bombarded by hundreds of messages every day. Our time for reflection has been hijacked by voice mail, e-mail, and bloated internal meetings. Whatever document you're writing, or message you're crafting for a client--cut it by 50%. Then cut it again by 20%. Your clarity and directness will seem refreshing and different.

Andrew Sobel is the leading authority on client relationships and the skills and strategies required to earn enduring client loyalty. He is the author of Making Rain: The Secrets of Building Lifelong Client Loyalty and Clients for Life. His web site, www.andrewsobel.com, contains several assessment tools for testing your ability to build long-term client relationships.

* * * *

According to strategic advising firm, AMR Research, companies are expected to spend $2.5 billion in 2003 to comply with the Sarbanes-Oxley Act (SOA). SOA, which was signed into law in July 2002, puts CEOs and CFOs on the hot seat with regard to the accuracy and integrity of financial filings with the US Securities and Exchange Commission (SEC).

While the new law and subsequent directives from the SEC are sure to create headaches, SOA provides new opportunities for consultants to help clients understand their risks, design disclosure controls and evaluate the soundness of these programs.

AMR reports that nearly 77% of companies expect to spend more this year on IT, business process change, corporate restructuring and consulting to comply with SOA provisions. And, more than 61% of companies are looking for external assistance with these undertakings. (http://www.amrresearch.com/Content/view.asp?pmillid=15883&docid=10754)

A new study by market intelligence firm, IDC, reveals that IT spending by US healthcare providers will increase from $15.1 billion to $17.3 billion by the year 2007. The projected 3-4% yearly growth in such spending is good news for healthcare consultants.

The IDC study suggests that Healthcare providers will focus over half of their investments on business processes and systems that improve patient care, rather than administrative functions. Hospitals and healthcare systems will also explore outsourcing solutions so they can focus on treating patients.

Technology investments in these areas will drive the need for consultants who can help untangle the notoriously complex systems and processes in use at most healthcare providers. And those consultants who can help sort out the myriad of outsourcing options should be well positioned to help. (http://www.idc.com/getdoc.jhtml?containerId=29722)

ITSMA, a marketing consultancy serving technology (IT) and professional services firms, recently asked 400 executives to name the most important attributes for providers of IT services. The answers shed light on what clients value, no matter what type of service you provide:

1. Follows through on promises (4.8 on a five-point scale)
2. Has industry expertise (4.6)
3. Works collaboratively with customers (4.5)
4. Transfers knowledge to customers (4.5)

The same report suggests that buyers of IT services have a strong preference for IT professional service providers that are technology-neutral, which bodes well for those consultants competing against the technology giants. (http://www.itsma.com)

On August 14, 1959, US satellite, Explorer VI, transmitted the first picture of Earth from space. Before that, we had pictures of our planet drawn only from imagination and scientific data. (http://grin.hq.nasa.gov/ABSTRACTS/GPN-2002-000200.html)

On August 22, 1911, Leonardo da Vinci's famous painting, the Mona Lisa, was stolen from the Louvre Museum. The painting, which is considered the prototype of the Renaissance portrait, was rediscovered in a hotel in Florence two years later. What a story that must be. (http://www.ibiblio.org/wm/paint/auth/vinci/joconde/)

August 24, 1853 is the day potato chips were invented. Chef George Crum, who worked at the Moon Lake Lodge Resort in Saratoga Springs, New York, responded to a complaint from a fussy diner that the French fries were too thick by slicing them so thin they could not be eaten with a fork. Crum's exasperated "I'll give you thin" response was a hit, and potato chips were born. (http://www.history.rochester.edu/Scientific_American/mystery/crum.htm)

If public speaking is so important to success, why are most speeches so forgettable? Next month, we'll pose that question to Nick Morgan, editor of the Harvard Management Communication Letter, and author of Working the Room: How to Move People to Action through Audience-Centered Speaking.

In our interview, Morgan draws from his twenty years of experience as a communications coach to serve up practical tips for getting the most from every speech you give. So, tune in next month.

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." - Winston Churchill

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