“American schools of management are spreading non-democratic processes of management around the world.”

CEEMAN President Professor Purg, deans, professors, ladies and gentlemen:

The theme of my presentation is globalization and its impact on management education.

What qualifications do I have to lecture on this subject? I have done no scientific survey whatsoever, but I have lectured to thousands of top executives in fifty-two countries and consulted in half of those countries over a period of forty years.

In addition, as my books, over time, were translated into twenty six languages, I learned that very competent translators had difficulties translating my theories of management, because there are no words in those languages for the theories I discuss. These experiences have given me insights into the state of management education and practices globally. I would like to share those insights with you today.

It is no secret that Western – mainly American – theories and practices of management are spreading around the world like wildfire. American titans of industry are putting in writing their practice of management, as Iacocca and now Welsh have done, and their books are being translated and worshiped like prayer books. Western business schools, again mainly American, are opening branches all over the world, teaching American management theories and practices as well as the functional disciplines of marketing, finance, supply chain management, etc.

I suggest, however, that what is being spread around the world is not a benign, value-free, logical, systemic process. I suggest to you that what is being spread with the theory and practice of management is a value-loaded political philosophy.

It came as a surprise to me that the word “management” has no translation in any other language – except Hebrew, I believe. Everyone uses the English word – even the French, who have made an ideology out of using only French words.

In Spanish, they have the words administracion and direcion, but again, no word for “management.” In fact, in Spanish, the word manejar (to manage) refers to the handling of horses or cars only.

Actually, the metaphor of handling cars or horses is not far-fetched.

Having searched  many English dictionaries for synonyms for the concept “to manage,” I have found that the common denominator of all of the synonyms is their assumption that management, as a process, is a one-way flow of energy: I, the manager, the executive, the leader (different words with the same elitist connotation: “I am management; you are not”), decide what the organization should do, and then I order the organization to execute those wishes. I am managing well if I choose well where to go, and if the car or the horse – those I manage –execute my plans.

My content analysis of management books, theory, and trade reinforced this observation. Here are some of the synonyms I found in those books: “to govern,” “to control,” “to handle,” “to manipulate,” “to plan for,” “to dominate,” “to decide for.” Put in this context, the concept “to motivate” is synonymous with “to manipulate”: I know what I want you to do. The only question is: How do I motivate you – i.e., how do I make you want to do what I want you to do?

So how can we define the concept of “leadership” in organizations? Here is what Dwight D. Eisenhower had to say about it: “Leadership is the art of getting someone else to do something that you want done, because he wants to do it.” (The italics are mine.) Here is what  a Japanese executive, Konosuke Matsushita says : “For you, the essence of management is getting the ideas out of the heads of the bosses – and into the hands of labor.”

Do you notice that this one-way flow of energy process is non-democratic? Those who are governed have no say about how they will be governed and who will govern them.

Listen to the words “supervisor” and “subordinate.” “Supervisor” originates from the words “superior vision,” and “subordinate” is “sub-ordinary.” Management is not only a process. It defines a class structure, too. Did you realize that the system is elitist?

Granted, with the advent of the “new economy,” the Internet, and high tech, there is pressure to depart from this elitist, non-democratic paradigm of management. “Knowledgeable workers” are the source of knowledge and initiative. They are well educated and have aspirations for self-actualization, for self-expression. The latest theories of management take this into account and prescribe less elitism and more participation. There are no “workers” anymore – only “associates.” But except for very few professional organizations such as consultants’ organizations, the essence, or the paradigm, of non-democratic elitism has not changed. Those who are managed have no say in who manages them or how.

Isn’t it ironic that American schools of management are spreading these non-democratic processes of management around the world, while at the same time thousands of American soldiers are dying in Iraq trying to spread democracy?

This elitist, non-democratic paradigm of management emerged because the founding fathers of management theory derived their insights about the process from their own experiences with hierarchically structured, non-democratically managed industrial or military organizations. It is true that the human relations school of management introduced by Elton Mayo initiated concern for the human element, and from that emerged the field of behavioral science. But it did not change the paradigm. None of the subsequent gurus, theory leaders, and practicing geniuses changed the paradigm, either. It is still essentially a one-directional flow of energy: I am management and you are hereby being managed. You have no institutional way to choose whether I will be your leader or not, nor do you have the right to influence how I exercise my authority over you. You can’t even replace me – but I can replace you.

In other words, the system is, at best, benign authoritarianism. This whole framework, I suggest, resembles parent-child relations, and this might explain why management theory seemed familiar rather than odd as it was developed and taught, and as it is currently being practiced.

Exporting non-democratic processes

What are the repercussions of globalizing this paradigm?

I suggest to you that practicing this paradigm in a country in transition, or in a developing country that was once a colony, could undermine the country’s emerging political democratic process. To start, people in these emerging economies do not feel they are part of the organization they work for, because the organization was once owned either by the government or by foreigners. The workers had no voice. Why would they now, all at once, believe that they can affect the macro political environment, when in the past and still, at present, they are muted, impotent, and deprived of influence and a vote about their own immediate environment, where they spend most of their waking hours?

Practicing an elitist, non-democratic process reinforces their sense of alienation.

Granted, there is evidence that common people rise to demand democracy and are ready to die for it, but this tends to occur only after extreme, prolonged oppression. A single violent reaction to dictatorship is not an adequate substitute for sustainable, institutionalized participation in political processes, which will nurture a democratizing cultural transformation.

Management, as taught and practiced, does not nourish this transformation. On the contrary, and as discussed so far, it undermines it. Moreover, elitist management promotes class distinctions and polarization. It promotes a rewards system in which executives might be paid one hundred times the salary of a worker.

In the United States, where there is a significant and politically involved middle class, this practice might have only a marginal political impact. In emerging economies, however, it establishes a system in which those who have, have lots, and see themselves as politically powerful; whereas those who have little, if any, perceive themselves as marginalized and impotent, without the power to promote their own interests democratically.

And the repercussions? Widespread depression and apathy of the masses, who are doomed to pain and hopelessness. Violence and disruption is the only vehicle available to create change or manifest some power.

Of course, current management practice has characteristics beyond elitism and non-democratic processes.

Management theory and practice, especially in the United States, is based on the “hidden hand” theory of Adam Smith, which states that competition – adversarial relations, in a free market – will in time produce the optimal allocation of resources. This framework does not factor in the cost of human emotions. It is pure materialistic economics, consistent with Hobbes’ philosophy that “Man is a wolf to other men.” Adversity is not only tolerated but seen as legitimate; the system takes it for granted that management and workers will be at odds with each other.

A rich country like the United States can afford disruptions such as strikes, but for a budding economy, an adversarial culture that might temporarily paralyze the country with a nationwide strike can be prohibitive.

Tradition of individualism

But developing countries and countries in transition are not only importing elitism, adversarial relations, and a non-democratic philosophy and practice. There is more to it. Western theory and practice of management is based on the American culture of individualism: The individual entrepreneur takes the risk of starting a company to fulfill his/her dream. Since this individual takes the risks as an individual, s/he also has the authority, as an individual, to make decisions. Although public companies can emerge from those start-ups, in which ownership is separated from management and boards of directors make decisions as a group, the paradigm of individualism has not changed. Now it’s the CEO, elected by the board and reporting to the board, who still has an individual responsibility to produce results or else be replaced.

This individual accountability permeates all the way down to the last person in a managerial position. Participation in decision-making is not a cornerstone of American culture. In this culture, more than any other (the Chinese are catching up rapidly), “Time is money” – and since participative management takes time, it is perceived at best as a necessary evil.

What is wrong with the tradition of individualism?

Individualism fosters loneliness – and not only at the top. It permeates, by and large, all the managerial ranks. In a rapidly changing environment, which by definition means rapidly emerging new problems that need to be dealt with, loneliness means continuous and relentless stress.

And it isn’t only executives who suffer from stress. Workers suffer too, from the lack of genuine attention to their needs. New, “fresh out of school” trained MBA managers have very limited, if any, experience of what it means to sweat it on the line. If they interned anywhere before becoming managers, it was in serving management, not in doing the actual work.

In developed countries, organizations are large and physically scattered. Workers are merely a name and a number, and school-trained managers who have never worked rarely have empathy for those they manage. They are more sensitive to the financial variations, which they endlessly labored on at school. If they do have some sensitivity to workers, I have observed that it is a learned trait and is thus cerebral; it does not come genuinely from the heart and soul.

The result of all this is a culture comprising a mad dash for the dollar, a pressured environment to meet ever-rising goals, adversarial relations both in the market and in the workplace, loneliness at the top as well as throughout managerial ranks, and a lack of genuine sensitivity to those managed. And what I have just described does not end at the workplace. It migrates to the social and personal environment as well.

So what is being exported is more than the new word “management.” What is being imported is a culture and political process that impacts families, friendships, and the social fabric of society – and is often called “Americanization.”

Quality of life issues

Although in the United States the standard of living is higher than in developing countries, I have observed that the quality of life is lower. People do not have the time to enjoy each other’s company, to celebrate each other. Starbuck’s is a pale substitute for the European coffee shop, where people socialize for hours and socializing is considered a purpose in itself. As a result, we Americans do not affiliate enough, and this basic need is inadequately fulfilled. In spite of having three cars in the garage and more than one chicken in the pot, people are lonely.

Depression is the most prevalent mental disease of developed countries. In emerging countries, on the other hand, if they are not at war, people may be poor but you often see genuine smiles and genuine interest and joy at being with each other. I hear much more laughter and many more sing-alongs.

Thus, our management education promotes a culture that increases economic bounty but at the expense of emotional and social fulfillment; and does not promote democracy.

There is another problem with management education. It is based on economic and political conditions that are prevalent in developed economies (primarily in the West), but significantly different from the emerging countries to which we export that education.

One day I was lecturing to top management in New Delhi, India. The subject was marketing: how to gain competitive advantage in the marketplace. During the break, an executive came over to explain something: “Marketing strategy is important for you Americans,” he said, “but is not as critical for us here. For us, knowing how the government operates is much more critical than knowing the market. Government and its bureaucracy can be the biggest and best barrier to competition. Knowing how to work with a bureaucracy gives us a competitive advantage. It is much more critical than competitive posturing in the marketplace.”

Do management schools in emerging economies teach anything about government relations, about networking, about the ethical issues of lobbying government, about how to work with and around a bureaucracy?

In emerging economies, capital markets are not very efficient. Market intelligence is not available. Trained labor is not easily accessible. Since access to information is limited and the court system is ineffective or corrupt, people will not do business with you in these countries till they trust you, or until someone they trust vouches for you. For them, trust is critical for success, while in the West, instead of trust, organizations rely on lawyers and contracts and the court system to guarantee that they get what was agreed upon.

Are we teaching how to create and nurture circles of trust, which are indispensable factors for success in developing countries and those in transition – or do we translate, copy, and take brief junkets to such countries just to teach the same stuff we teach, say, at Harvard? How arrogant can we be?

One size does not fit all

What about decision-making? Different cultures decide differently, and the American custom does not fit all cultures. In the United States, for example, it is usually possible to discuss problems openly. With the Chinese, the same discussion would be perceived as criticism, perhaps even public humiliation, of top management. In China, encouraging open discussion of problems can backfire.

Here is another difference: In Italy or Greece, if there is disagreement during decision-making meetings, it will be expressed right away. People will not be silent. In those two countries, if people are silent you can assume that they agree with what is being said.

But in Germany and Scandinavia, silence does not mean agreement at all. Just the opposite: If there is silence, that means there is general disagreement, because people in those countries are not accustomed to expressing disagreement in open discussion. As multinational corporations evolve, they have more and more difficulty integrating the different cultures and managerial practices they encounter. The “one-size-fits-all” American system is not the answer.

Here is another point about culture. In totalitarian regimes, everything is prohibited unless specifically permitted. In market economies and democracies, everything is permitted unless specifically forbidden.

In countries in transition, those people who made the transition early made a lot of money and emerged as the new entrepreneurial elite. Those who could not, found themselves economically trapped.

Question: Are business schools in countries in transition helping their students to make these major cultural and psychological adjustments, or do they straightforwardly teach Western theories and practices, assuming their students are already adjusted?

So far I have been focusing on management as an integrative process, not as a functional discipline. But the same analysis applies to functional management. Granted, finance is finance, but it’s crucial to pay attention to local financial markets and needs and teach micro-banking, for instance, rather than derivative financial vehicles. And I wonder how much value we really add by teaching sophisticated supply-chain management processes and mathematical models of inventory control in countries where collusion and corruption dominate the supply chain. Instead of teaching Markoff chains, we should first and above all delegitimize collusion, showing students how corruption destroys a system and teaching them how to eradicate corruption.

But do we know how to do that? Are we teaching what people need to know, or just what we know?

Cultural colonialism

What is happening, I suggest, is a form of cultural colonialism, and management schools are one of its major “carriers” (the other one being the media). I do not believe it is planned or even intentional. Most people are simply unaware of the cultural, political, and social dimensions hidden in Western management training.

Why are Western – again, mainly American – theories and practices of management so welcome worldwide? Why is American management theory spreading exponentially?

Despite all the criticism and resistance to America, I have observed that the world is in awe of the American success. The word “America” evokes images of Cadillacs and villas with swimming pools; easily available sex; freedom to speak out; and freedom to advance without being limited by age, color, gender, or ethnic affiliation. America is synonymous with freedom and material abundance, and “America” and “California” are emotionally loaded words.

Everyone criticizes America, but given the choice they would love to have an American degree, an American passport, and for sure the American standard of living. I believe that, enchanted with “America,” the world believes that America’s success must have something to do with how its companies are managed.

But let me tell you something: Some American companies are so badly managed, even though their leaders have MBAs from leading universities – so badly (and I have personal experience of this), that anywhere else in the world they would go bankrupt. They could not withstand the difficulties and challenges. In America, they survive in spite of bad management, because America is an enormously big market that can “forgive” mistakes for a while, and the capital system works. The stock market works. Transportation works. Telephones work. And the economy is somewhat predictable. So these managers succeed in spite of themselves. As they say in the Silicon Valley: “In a typhoon, even turkeys fly.”

In developing countries or those in transition, in contrast, the electricity and the phone service stop from time to time. Corruption, starting with the court system, is widespread. Bureaucracy rules. Universal education is still a dream. Inflation can be rampant. Government can freeze corporate cash assets in the banks, as they did in Brazil. Unpredictable changes in import quotas and widely fluctuating exchange rates are like shock treatments that cause prolonged “managerial dizziness.”

Managing in that environment requires ingenuity, intelligence, creativity, courage, resoluteness, and much more original thinking and resilience than what is required in an established market like the United States.

I suggest that Western management education does not provide the real life know-how that the graduates of emerging countries need in order to succeed. I suggest that America’s greatest success is not its management system but its market economy and its democratic system, which allows and nurtures constructive diversity.

The managerial practices we teach and export neither nurture democracy nor support constructive diversity of styles and interests. On the contrary, what we teach, practice, and spread around the world undermines democracy by teaching benevolent dictatorship.

A paradigm shift

A new paradigm of management theory is needed: a universal theory that is culture-free, industry-neutral, non-elitist, nurtures democratic processes and social relations, and (P)roduces superior economic results as well.

I am proud to report to you that I have been developing a new paradigm theory over the last thirty or forty years, and I have tested it in more than fifty-two countries, in both industrial and non-industrial and commercial environments, such as performing arts organizations, governments, health delivery systems, and educational institutions. Thousands of people all over the world have been trained and are practicing it, and several hundreds are certified to teach it. This methodology is transferable and (P)roduces predictable superior economic results. (See www.adizes.com for testimonials and references.)

This new paradigm management theory and practice is covered in my books, videos, and audios, as well as in thousands of pages of manuals, and has been recognized by several educational institutions, which have awarded me honorary doctorates.

Let me give you some insight as to what it is. Necessarily I will have to be brief.

Let me start with a definition of “management,” a definition that is free of cultural bias or limitations of size and even of goals. It is applicable to both for-profit and not-for-profit organizations. Furthermore, it is also non-specific to any particular industry.

What is management? It is a process people practice to make the organization effective and efficient in the short and in the long run. If the entity being managed is not effective or efficient – now or in the future – then it is not being managed well. (Some languages have no literal translation for either word: Russian has no literal translation for “efficiency”; in Hebrew, no word for “effectiveness.”)

Now please note that whoever causes the organization to be effective or efficient now and in the future takes part in management. Management is a function, not an elite class distinction. For instance, workers on the line, salesman and others, often know what the clients want better than management does. Their involvement and commitment are indispensable for making the organization effective. They are the ones who are on the front line satisfying the clients’ needs – for which the organization exists.

I have discovered that there are four roles of management that, if performed well, will make the organization effective and efficient, now and in the future. These roles are:

(P), for (P)roducing the results for which the organization exists, which by definition means that the organization is effective in the short run.

To be efficient in the short run, the organization must be organized, systematized, and programmed, so that no energy is wasted reinventing the wheel. That is the role of (A)dministration.

To be effective in the long run, the organization has to be proactive. That means that it needs to predict the future needs of its present and future clients, and then it needs to prepare now to serve those needs in that uncertain future. That entails risk-taking, because no one knows for sure what the future holds. To be proactive requires the (E) role, (E)ntrepreneuring. (Here again it is interesting that some languages – Swedish, for instance – do not have a word that means (E)ntrepreneuring; and in other cultures, the word exists but has negative connotations. Under Communism, (E)ntrepreneurship was tantamount to speculation and the sabotaging of the state, and was a punishable offense.)

Finally, to be efficient in the long run, the organization should not rely on any single individual for its survival. It should be (I)ntegrated. Here we pay attention to the human element: how people work together and why.

No perfect manager

What I have also discovered is that no individual manager, executive, leader, or parent can perform all four roles at the same time and excel in them all. In other words, the “ideal” executive that organizations need to be successful, in the short and in the long run, does not and cannot exist.

My discovery is that (what a surprise!!!!) no one is perfect. We are all mismanagers. Some more, some less. We are all human, with strengths and weaknesses. The managerial process is far too complicated for any single individual to excel in it all.

The present paradigm of management education is based on the mistaken assumption that the ideal manager can be developed or trained; that an individual, all by him/herself, can manage well. Billions of dollars are being spent in trying to (P)roduce hens’ teeth. We should stop training individuals in a vacuum and start training them as members of a complementary team.

Please note that I am not referring to “collaborative leadership,” which is a newly emerging fad. “Collaborative leadership” takes the position that you do not know it all, so you need to work with people who know what you don’t know. But I am not talking about knowing. I am talking about being. We need different personal styles working together.

Why? Because the person who excels in the (E)ntrepreneurial role is a risk-taker. S/he moves fast and thinks in generalities. This role is necessary for keeping the organization innovative and flexible – but it can also destroy an organization and take it into bankruptcy. How? (E)ntrepreneurs are usually not detail-oriented, and as we know, the Devil is often in the details. What an (E)ntrepreneur needs is a cool-headed, slow-thinking, complementary co-leader who is risk-averse. Together they will make a much better decision than either of them could make alone.

And they might even need a third person, a (P)roducer who is action-oriented, who wants to see results, movement – not just the excitement of creating something new and analyzing the risks involved.

And maybe, if these three team members lack sensitivity to people, they will need a fourth person – an (I)ntegrator – who will bring that sensitivity to bear on the decisions being made.

Successful management is not and cannot be performed by an individual. It is a team process. Like parenting. In our management schools, we need to teach that in order to succeed, managers need to complement themselves. They need people whose style is different from theirs. They, as individuals, cannot excel at managing, regardless of how well they succeeded in solving cases at school.

Each member of the team is as important as another. True, one is the leader, primus inter pares, but without the others, his/her decisions will eventually lead the organization to failure, because those decisions are necessarily biased by style. It is the joint judgment of different and complementary styles that creates the necessary balance for making the organization effective and efficient in the present and in the future.

Worker participation

Furthermore, organizations, to succeed, need the workers’ cooperation. In this tested and practiced methodology, workers should sit on the board and on lower management committees, thus sharing the responsibility for leading the company. We need to work together, consider each other’s interests, and deal with them proactively, rather than reactively when there is already a crisis. When workers share the interests of the owners and thus cooperate, the company will make successful changes faster. That is critical for a company operating in a changing environment. Workers should be part of the managerial process even though they are not considered part of the managerial ranks. In this case, those in the managerial role are different – but please note: They are not special.

Our future leaders have to recognize that by definition, a complementary team composed of different styles and different interests will be loaded with conflicts. Conflicts are to be expected and can be constructive rather than destructive when there is a culture of mutual trust and respect (MT&R): trust that common interests do exist in the long run although in the short run there might be none; and the respect to hear and learn from people who, because of their different styles, disagree with us.

Good managers know their style limitations, work well with others who are different from them, and are not afraid of conflict. They surround themselves with people they trust and are open to hearing out what those people disagree about. They create a climate of MT&R.

We need to teach how to build and nurture such a culture. For that, a common vision and common values are needed, as well as an organizational architecture that nurtures diversity of styles. Those learning to become managers need to learn how to lead decision-making sessions in which people with different styles have to jointly make a decision. They must also learn whom to hire to design a complementary team with the correct components.

They should know how to convert conflict from being destructive to being constructive, control their own egos, and create teamwork. In other words, what makes a good manager is not what s/he knows but what s/he is, and for that, a person who commands and grants trust and respect and humility is indispensable. That should be common training in all countries.

Indigenous training

In addition, each country should develop an indigenous training that uses its own strengths to overcome the weaknesses in its culture. In Israel, I suggested they teach more (A)dministration: systems, order, procedures, rules, discipline – skills that (E)ntrepreneurs are weak at.

To the Japanese, on the other hand, I proposed that they learn individual (E)ntrepreneurship. They need to revamp their whole educational system, which is based on learning to know, and replace it with knowing how to learn. They need to develop individual creativity and learn to tolerate dissension.

What about the Balkans and the Middle East? We know that one characteristic of those cultures is paranoia. It would be amusing, if it weren’t so sad, to watch their executives explain a problem to you: There is always collusion somewhere. There is always a villain rather than a systemic cause. In the Balkans and the Middle East, it is critical to develop training that nurtures MT&R.

Management education of leaders in different countries should not simply be copied from a culture that does not resemble their own culture. It has to fit the needs of the country in which they operate, and if it is a multinational company, a universal theory of management is needed: how to work in multicultural teams, not in spite of being different, but because we are different. Differences enrich us with knowledge we do not have; moreover, they improve our judgment, since deciding alone is naturally biased.

Working with MT&R, we enrich each other with our differences, experience the essence of democracy, (P)roduce better and more sustainable economic results, and work in an environment that enriches us emotionally and socially as well as economically.

I thank you for your attention.

Sincerely,

Dr. Ichak Kalderon Adizes