Publication: SAM Advanced Management Journal
Publication Date: 22-MAR-05
Format: Online - approximately 6944 words
Delivery: Immediate Online Access
Author: Parnell, John A. ; Von Bergen, C.W. ; Soper, Barlow
Company: Enron Corp.
Article Excerpt
Dismissing past events with a "that's history" attitude can be costly to managers and their organizations because a thoughtful examination may save future mistakes. Ironically, past successes are not as instructive as mistakes, since success may hide a company's vulnerabilities and exposure to changing business environments. Instead of either ignoring past mistakes or enshrining past successes, managers should pursue Schumpeter's philosophy of "creative destruction," realizing that a past mistake may or may not be a mistake in the future, just as a past success may or may not be a guide to future success. Careful analysis of the past can help with forward-looking, innovative decisions for the future.
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"Those who cannot remember the past are condemned to repeat it."
--Santayana (1905, p. 284)
"If your company is like most, you spend thousands of hours planning an investment, millions of dollars implementing it--and nothing evaluating and learning from it."
--Gulliver (1987, p. 128)
The business world is replete with management mistakes at all levels. The Yugo was introduced in the United States in 1985, the lowest-priced automobile on the market. Four years later, however, serious quality problems and poor dealer service bankrupted Yugo's American division. In 1992, Pepsico acquired California Pizza Kitchen and launched an aggressive growth campaign, opening 60 new stores. The inability to manage quality and service in all of these stores resulted in the closure of 17, and Pepsico divested the pizza chain five years later.
Indeed, managers spend much of their time searching for ways to improve the quality of their strategic decisions and avoid such errors. Although this effort is certainly worthwhile, organizations do not always learn from their past mistakes. As the philosopher George Santayana noted--those who do not learn from their mistakes are condemned to repeat them. The same can be said for organizations.
Interestingly, the English language reinforces the notion that history is typically of little value. We commonly use the phrase "that's history" to indicate irrelevance. Even the aphorism, "History never repeats itself" suggests that knowing history is dangerous because one can be trapped into believing that the future will be the same as the past (Busby, 1999; Will, 2001). Automaker Henry Ford's remark that "history is bunk" (Bohle, 1967, p. 195) has been quoted with widespread approval in business for more than 75 years. More recently (and more subtly than Henry Ford), Pfeffer and Sutton (2000) asserted that managers should be careful of history as embodied in organizational memory, precedents, and customs and argue that memory should not be used as a substitute for thinking: "Excessive reliance on the organization's memory means that existing practices are rarely thought about, let alone questioned or examined to see if they make sense in the context of what mangers know and are trying to accomplish" (Pfeffer and Sutton, 2000, p. 70).
As argued here, a management discipline that ignores the cumulative impact of past events on present events fails to fully utilize the explanatory and interpretive potential of understanding how and why "present [theories and methods] have their particular nature by virtue of their past" (Manicas, 1987, p. 274). Theories of management typically proceed "without reference to historical context and process" (Zald, 1993, p. 82) and a perusal of the contemporary management literature suggests little has changed (Bedeian, 1998).
This a historical cast has permeated the management discipline. For example, Viteles (1959) pointed out the failure of the then relatively new job redesign movement to reference classical British studies, conducted during the 1920s, contrasting the effects of uniform versus varied tasks on output, workers' feelings, and so on. Phillips, Bedeian, and Molstad (1991) also noted a continuing neglect of these same studies. The job redesign movement is but one example of a "newer" approach that was, in fact, anticipated in earlier studies that could yet be helpful with ongoing workplace challenges. A second example involves a forerunner of today's self-managing teams. As early as the 1870s, skilled iron workers, with no foreman or contractor, managed themselves, collectively making production, pay, training, and hiring decisions (Montgomery, 1976).
More recently, Sutton, Eisenhardt, and Jucker (1986) discussing the Atari collapse and Dess and Perkins (1999) reviewing Food Lion lamented that both organizations were unable to effectively manage retrenchment in declining organizations and failed to learn a lesson that managers in the "smokestack" industries learned in the deep recession of the 1970s: adaptation in the form of new products and new marketing strategies, not layoffs, is what arrests decline (Mirvis and Berg, 1977). Both Atari and Food Lion continued to do what they were doing while reducing staff. Such an approach is consistent with Staw, Sandelands, and Dutton's (1981) threat-rigidity effect wherein people and organizations respond to problems by clinging even more tightly to what they do best while rejecting new approaches.
Additionally, Bluedorn (1986) commented that despite the quality of these writers' ideas, a disappointing amount has been forgotten and ignored over the generations in large part due to lack of appreciation of history. What has not been forgotten, ignored, or misinterpreted has not figured prominently in the more current literature. For example, Taylor established a number of principles, the first of which was "A Large Daily Task" (Taylor, 1903, p. 63). The idea was that each member of the organization should have a "clearly defined task" assigned each day, and the task should be "circumscribed carefully and completely," be neither "vague nor indefinite," and "not easy to accomplish." This principle contains a rich amount of strongly supported management ideas. Setting a "clearly defined task" is simply another way to prescribe the setting of specific goals, which has been found by contemporary researchers to be a powerful motivator (Locke and Latham, 1990). Taylor advocated setting challenging but attainable goals many years before these ideas gained prominence in goal-setting theory--but this seems to have been lost on current researchers.
Yet Taylor has become the most popular target of modern management thinkers. He is often vilified as the "epitome" of anachronistic managerial methods (Economist, 1993). Unfortunately, many who think of Taylor today "tend to think of dehumanizing time-motion studies" (Wood, 1989, pp. 71-72). The fundamental aim of Taylor's philosophy, however, was to replace rule-of-thumb opinion with scientific study in a search for the best way to manage. As explained by Locke (1993, p. 158), "today's manager has the same goal." Ironically, an appreciation of this common goal lies at the heart of Japanese managerial success. As described in the Forbes's article "A Lesson Learned and a Lesson Forgotten" (Wood, 1989), what...
NOTE: All illustrations and photos have been removed from this article.
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