Has Management Theory (Me?!) Let Us Down?

Yes. And no.

I've been in a funk, beyond immediate concerns over human suffering, about New Orleans: (1) I "do" management, and have so done for 40 years. (2) New Orleans was a failure of down-and-dirty management as much or more than a failure of sublime leadership. If systems and processes had worked as we imagined or hoped they might, it wouldn't have mattered whether Mr Bush, for instance, was in Crawford or Timbuktu. Wal*Mart did its part—and none of us except Mrs Scott has a clue as to where her husband Lee, Wal*Mart CEO, was at the time, right?

So, why hasn't the work of Drucker, Peters, the Harvard Business School, et al. averted the likes of the N.O. nightmare?

This is not an apologia, or at least I hope not, but here is one abiding reason, I believe, for the problem—and it is in the end unfixable.

As usual in enterprise, public or private, much of the issue boils down to the eternal struggle between centralization and decentralization. Centralize, and aspects of coordination increase. (The King or Mussolini, who after all did make the Italian trains run on time, can chop off the heads of those who don't deliver). But the price is innovation and initiative—or, in the case of government, democracy itself. Our premier student of government, the conservative professor James Q. Wilson, in his magisterial book, Bureaucracy, tells us bluntly that government is intentionally not designed to work ... as in work "efficiently." The genius of the Constitution, and its so far successful 228-year run, is that the forces of contention that preserve Democracy (among other things, the tensions between local + state + federal gov'ts that flummoxed New Orleans) do not entirely keep us from muddling through on the efficiency/trains-run-on-time side of the equation.

What we're seeing in the wake of New Orleans is what we see in the wake of all disasters: calls for "strong" coordination through centralization. Immediately after 9/11 we jerry-rigged the Department of Homeland Security to "coordinate our response to terrorism" (the diminishment of FEMA by DHS, ironically, contributed to Federal failures in N.O.). The 9/11 Commission answered intelligence failures by calling for (and getting) centralization of intelligence affairs. Will DHS or the new intelligence structure help avert future crises? The jury is out (and that's understatement).

Interestingly, and with very high long-term stakes, the private sector is going through the same sort of examination/re-examination. Hammered by the Japanese in the '80s, industry went on a process-improvement binge. The goal: become as efficient as the (centralized/trains-run-on time) Japanese. Then along came China (more "efficient"—low cost—than anyone could have imagined), and industry is now agog over "fighting back" via innovation, which is an unabashed byproduct of decentralization. Nowhere is this more evident than at GE. CEO Jeff Immelt is attempting mightily to restore GE's historical emphasis on risk-taking and big-bet innovation, after years of Jack Welch's (successful) cries for operational efficiencies.

In enterprise, and indeed government, the truth is that there is no truth. Human institutions of all shapes and sizes need high doses of freedom and imagination, as well as discipline and efficiency. Hence there is—and will be and should be—perpetual warfare between centralizers and decentralizers. And usually it's "worked out" by alternating periods of over-correction in one direction and then the other (from cowboy capitalism on Wall Street in the '90s to Sarbanes-Oxley in the '00s, etc).

New Orleans notwithstanding, I've always stood "left of center;" that is, in favor of leaning toward decentralization. My reasoning in the main is quite simple: It's always easier to restrict freedom than to reclaim it after restriction. I admit this central tenet may need a bit of rethinking in the age of terrorism; the downside of helter-skelter preparation for or response to a big terrorist event may require leaning toward centralization. But then that thought is upstaged by an immediate "whoops": Do we really think we're safer because the Department of Homeland Security has merged/"centralized" several dozen massive bureaucracies?

Processes can and must be improved, no doubt. But in the end the centralization-decentralization issue is not resolvable, and never will be. Wal*Mart responded well in N.O., and deserves our unstinting praise. But do we really, in the end, want government (or all of industry, for that matter) to be like Wal*Mart?

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FYI: This battle rages on at every level. Headline in today's Wall Street Journal: "As Gulf Prepares to Rebuild, Tensions Mount Over Control: With Federal Dollars on Way, Washington Ponders Czar and Locals Seek Autonomy." (NB: For me, at least, the thought of Michael Chertoff—or Jack Welch or Rudy Giuliani or Donald Trump or Martha Stewart—as central planner for economic revival of the Gulf Coast chills the heart!) Take two: Shouldn't we all be nervous whenever we hear, even in jest, the word "czar" being bandied about? My "Tom's Dictionary" definition of CZAR: sounds comforting, never works, causes untold suffering—and the closer it comes to "working," the more the suffering. You'll never find "Elect Joe Stalin" bumper stickers on my car!

Hmmm: Back to my starting point. I guess visible leadership does matter. If the balance of centralization and decentralization is destined to be forever in flux, we will by definition never "get it right." Thence we will always be "reduced" to muddling through. If that's the fact, then we do indeed need that "strong leader"—at times of crisis—to momentarily bring the perception of order to messy human affairs, in order to get folks marching in the same direction. No "system" could—or should!—do that.

FYI redux: BusinessWeek's 19 September cover story, "The Next Big One," is the best piece I've read on what—pragmatically—needs to be done to deal with our increasingly unstable world. Speaking of chilling, their piece-within-a-piece on the consequences of an avian flu epidemic is, well, chilling.