Lecture The evolution of management thought (6th edition) - Chapter 19: Management theory and practice

General management theory reawakened as organizations grew more complex and needed more broadly educated general managers. Drucker and others emphasized the need to improve the practice of management. General management also grew through a resurgence in industrial/organizational economics. Business policy evolved to strategic management.

THE EVOLUTION OF MANAGEMENT

THOUGHT, 6TH

EDITION

Electronic Resource by:

Regina Greenwood and Julia Teahen

The Modern Era

Part Four

http://www.bigphoto.com/themes/traffic/railway

Management Theory and Practice

Chapter Nineteen

The Modern Era

 The Renaissance of General Management

 Fayol’s Intellectual Heirs

 Management Education

 Other Views of Managerial Work

 Peter Drucker: The Guru of Management

 From Business Policy to Strategic

Management

 Markets and Hierarchies

 Governance and Agency Issues

 Management as an Integrating and Innovating Task

 Strategy and Views of the Firm

 Strategic Leadership and Evolutionary

Dynamics

The Renaissance of General

Management

 Henri Fayol – the first to propose a general theory of management

 The elements of management describing what managers did (plan, organize, command,

coordinate, and control).

 The principles, which were lighthouses, or guides, to how to manage.

Fayol’s Intellectual Heirs

 William Newman (1909-2002) – “the basic objectives of the firm should define its place

or niche in the industry, define its social

philosophy as a business ‘citizen,’ and serve

to establish the general managerial

philosophy of the company” (Wren text)

 George Terry (1909-1979)– first to call his book Principles of Management

 Harold Koontz (1908-1984) and Cyril

O’Donnell (1900-1976) – defined

management as “the function of getting

things done through others” in their popular text

Management Education

 The Gordon and Howell Report 1959

 Asked: What are we teaching in

business schools and does this prepare our students for a career in a changing environment?

 Cited the need for more courses in:

 The humanities and liberal arts

 Mathematics

 The behavioral and social sciences

Compare a pre-1959 Business school curriculum to the current requirements in this business program.

Business School Curriculum

Management Theory Jungle

 Six Different Schools – management process, empirical, human behavior, social system,

decision theory, mathematical schools.

 Each can contribute, but some are “tools.”

 Causes of confusion and the “jungle warfare”

 “The semantics jungle”

 Problems in defining management as a body of knowledge

 The misunderstanding of principles through trying

to disprove an entire framework of principles

when one principle was violated in practice

 Inability or unwillingness of management theorists

to understand each other.

Other Views of Managerial Work

 Henry Mintzberg

(1939- observed five executives and concluded mangers perform ten roles within three categories: interpersonal,

informational, and decisional.

Henry Mintzberg Courtesy of McGill University

Other Views of Managerial Work

 Rosemary Stewart examined the

"demands," "constraints," and "choices”

of a managers job.

 John Kotter's studies of general

managers and his finding of certain

"demands" or regularities in all general managers' jobs that resemble traditional management functions Note, also, the factors that cause these to vary.

Other Views of Managerial Work

 Fred Luthans, Richard Hodgetts, and Stuart

Rosenkrantz studied 44 managers, recording activities and behaviors

 In Real Managers,

1988, they note four categories:

Routine communication, traditional

management, networking, and human resource management

Richard M Hodgetts

The Search for Excellence

 Thomas Peters

and Robert Waterman identified eight attributes of corporate excellence in their best selling book, In Search of Excellence.

 Peters and Waterman relied solely on financial measures in

determining success.

Management Education

Revisited

 Harold Koontz revisited the

management theory jungle and

expanded it from 6 to 11 approaches.

 Called for leading managers to narrow the gap between professional practice and

business schools

 Lyman Porter and Lawrence McKibbin

surveyed management education for the AACSB.

 Called for professors to be more broadly educated and possess relevant work

experience

Peter Drucker (1909 – 2005)

Guru of Management Practice

 Drucker achieved prominence through his writings and consulting.

customer buy?

customer consider value?

be?

be?

 Management by Objectives

Peter Drucker (1909 – 2005)

Guru of Management Practice

 Drucker’s focus

on managerial practice asks the lingering

question: “Can our academic research have rigor and also be relevant to the practice of

management?”

From Business Policy to Strategic

Management

earlier economists such as Say and Marshall, who saw management as a factor of production and able to provide competitive

advantage,

Ronald Coase , in a

1937 article, asked why have business firms?

an alternative to the market with certain advantages in

allocating resources.

Ronald Coase

From Business Policy to Strategic Management

 Oliver Williamson

(1932-) and the “new

institutional

economics” saw the

hierarchy of the firm

being typically more

efficient than markets

because firms could

From Business Policy to Strategic

Management

 Governance and Agency Issues

 If the firm, through management, is more efficient than the market, then the actions

of those who govern the firm becomes

more significant

 A number of individuals, such as Michael Jensen, criticize the behavior of those in the managerial hierarchy who serve their own interests rather than those of their shareholders

 The separation of ownership and control is

an evergreen issue to catch the

conscience that lies within

From Business Policy to Strategic

How do our assumptions about the behavior of others influence how we manage?

Assumptions

Management as an Integrating and Innovative Task

strategist.

 Arch Shaw 1962) pioneered the study of business policy as a academic subject at

(1876-Northwestern University

Henri Fayol

Management as an Integrating and

Innovative Task

heritage of “strategy”

in Barnard, Newman, Drucker, and

Chandler.

management has emerged as the

“new” view of business policy and long range planning

Alfred D Chandler,

Courtesy of Harvard Business School

From Business Policy to Strategic

From Business Policy to Strategic

Management

 Strategy and Views of the Firm

 Edith Penrose (1914-1996) asked why

firms differed in performance, providing seminal insights for the resource based and the knowledge based views of the

firm

 SWOT— In 1960s HBS policy group began use of the term

 Important developments in “core

competencies” and “distinctive

competencies” followed through the work

of Wernerfelt, Rumelt, Barney, Prahalad, and Hamel

From Business Policy to Strategic

 Organizational learning to “unbound”

rationality and move to new and

innovative forms of competitive

advantage

 Strategic leadership—the bridge to

general management theory

 General management theory

reawakened as organizations grew more complex and needed more broadly

educated general managers.

 Drucker and others emphasized the

need to improve the practice of

management.

 General management also grew through

a resurgence in industrial/organizational economics.

 Business policy evolved to strategic

management.