Why has there been an explosion
of interest in management?
by Steve David and Susan Dwyer, SkyMark
The US mints something like 70,000 new MBA's each year. The
management literature has ballooned. Tom Peters commands
astronomical fees. Why? Because rapid specialization has big
expensive crippling side-effects which have to be dealt with
Beginnings of Specialization
Early on in human history, it must have become apparent that
some people had particular facilities and interests that made
them more adept at certain tasks than other people. Individuals
were singled out as healers, leaders, hunters, weavers, potters,
or toolmakers. For the person who excelled at making tools, it
was economical to spend time doing so if he could then trade his
tools for more food and other necessities. Given time to
practice, his toolmaking skills increased. The toolmaker's tribe
gained from his specialization, since with better tools its
people could hunt or harvest more food, erect sturdier homes, and
craft stronger wares.
At the same time, costs were entailed in the toolmaker's
specialization. The time and stress involved in bartering tools
for food were socially costly. If the toolmaker failed to
understand the needs of the hunters when conditions changed, his
work would not exactly suit them, and their hunting would lose
efficiency. If the toolmaker became too successful, an uneven
distribution of wealth would be introduced into the village,
which could bring with it envy, domination, and social
instability. If the toolmaker became so successful that he
supplanted the toolmaker in a neighboring village, the
two-village economy would bear the cost of unemployment and
retraining at least, and probably more elusive social costs as
In constructing a Force Field diagram (a tool used to
illustrate opposing factors) for this specialization scenario, we
might get something like this:
of comparative advantage
exchange of goods and services
focus on "trees," creating improvements
understanding of the "forest," communication problems
of choices for consumers
distribution of wealth
enjoyment of labor
coping with the non-survival of the unfit
The Economics of Specialization
The incremental benefits of specialization, if we could add them
up, would probably operate something like the curve shown in
At first, with a small increase in the level of
specialization, the benefits would accrue rapidly. As
specialization continued to increase, however, the marginal
increases in benefit would level off, and decline, tending
ultimately towards zero. The cumulative gross benefit to society
from specialization is shown by the area under the curve.
The marginal costs of specialization can be described by the
curve in Figure 2.
At first, the costs are minor, but as specialization
continues, the side-effects begin to snowball, and the curve
rises steeply. Total societal costs are represented by the area
under the curve.
Social welfare can thus be depicted by Figure 3, which
combines the costs and benefits of specialization.
The area between the curves represents the benefits minus the
costs, which is the cumulative net social well-being created by
increasing specialization. We want to make this "well-being" area
as big as possible, so we do not want to continue to specialize
beyond the balance point, signified by x. If we move
further to the right, we lose societal well-being.
Of course, the balance point denoted by x is
- It depends on what societies value. Do they want comfort or
challenge, peace or glory in war? Will they emphasize material
wealth or spiritual wisdom? How will wealth be distributed?
- We don't know exactly what the benefits and costs of
specialization are, nor do we understand fully how they
- Individual costs and benefits do not equal
societal costs and benefits.
- There are substantial lags between the changes themselves and
the gathering of evidence of their effects.
However, even though we don't know exactly where the balance
point is, it is still useful to try to increase the benefits and
decrease the costs of a given level of specialization, i.e. shift
the curves out further.
Indeed, many technological inventions, social programs, and
management innovations we have seen through the years have been
designed to do that very thing. For example, the introduction of
coins as the standard means of exchange reduced the costs of
transactions and facilitated further specialization. The wheel,
and much later the clipper ship, the steam engine, and the
tractor-trailer rig reduced the cost of exchanging goods. The
Pony Express and e-mail were both designed to reduce
Specialization in History
The specialization model we have described seems to be borne
out by history. Herbert Spencer, a noted social philosopher of
the nineteenth century, remarked on this:
Whether it be in the development of the
Earth, in the development of Life upon its surface, in the
development of Society, of Government, of Manufactures, of
Commerce, of Language, Literature, Science, Art, this...evolution
of the simple into the complex, through successive
differentiation, holds throughout.
With the first "agricultural revolution," the planting and
harvesting of crops, came a great leap in specialization.
Corfield and Keene observed that "...the emergence of permanent
towns, regular trade, and settled agriculture marked a
significant consolidation of occupational and locational
specialization." This specialization happened throughout much of
the world, and gave rise to the first cities (that we know of) in
the great river valleys of China, India, Egypt, and Iraq.
Many labor-saving devices -- windmills, watermills, levers,
wheels, pulleys, screws, sails -- were in wide use long before
the 17th century. These technologies were adopted by individual
craftsmen or guilds to improve their work. They supported a
considerable degree of specialization in agriculture, milling,
mining, transport, and many other industries.
The Industrial Revolution, catalyzed by the power of steam,
built on this technological base. The importance of machinery
grew relative to the importance of skilled labor. Technology grew
in scale and price, and factories expanded, dramatically altering
the production of goods and services, and thus society. Skilled
workers became more specialized, subdividing into groups of
mechanics, engineers, toolmakers.
For the individual entrepreneur, the benefits of
industrialization were enormous; it allowed a producer to create
a greater supply of goods at lower cost, to distribute them
widely, and to amass wealth and power. There were also societal
benefits from this new level of specialization: the quality of
output was standardized, cost of production per item dropped,
greater variety of goods and services were made available, new
techniques were perfected, and slavery became less
Yet some of the side-effects of industrial specialization were
intolerable, creating intense pressure for social welfare
legislation, trade unions, universal suffrage, child labor laws,
pollution controls and other attempts to shift the cost
Specialization and Taylor
As the Industrial Revolution rolled on into the late
nineteenth century, an influential
machinist-turned-industrial-engineer Frederick W. Taylor
developed the practice of "scientific management", furthering
specialization in the context of work. Taylor believed that most
factory workers did not have the knowledge needed to manage their
own work. Instead, trained industrial planners were responsible
for analyzing work scientifically, with time and motion studies,
and designing tasks based on the results. Motivation for the
worker was derived solely from his paycheck which, according to
Taylor, was all that workers cared about.
Taylor's system worked. The specialization benefits curve
shifted upwards, and productivity rose sharply, as scientific
management was widely adopted as the way to organize
business. Indeed, practices based on scientific management are
still being used in many industries today.
As with most changes in specialization, the initial benefits
were quickly realized, while the resultant changes in the costs
curve were not apparent for some time. Yet those specialization
costs were very real. The bad side-effects of Taylorist
organization began to dog the U.S. economy, imperceptibly at
first, but in increasingly high-profile ways at least as early as
the 1950's. As Thomas Stuelpnagel says,
Top managers lost their hands-on feel for
their products and, as a result, got too far away from their
customers. This change occurred when businesses grew
and...functions within the companies gained enough power to
assume more importance than the products. The change was
accelerated when control passed to second- and third-generation
managers who had financial and marketing backgrounds rather than
engineering and production backgrounds.
There were other bad effects: hardening of labor-management
division, boredom, resentment at externally-determined standards,
and the miscommunication and complexity that came with growth.
According to Joseph Juran,
A further mighty development during this
century has been the growth of public suspicions and fears
relative to the negative side of industrial progress.
In sum, it was these side-effects which pointed out the need
for new ways of thinking and acting. It is the failings of one
paradigm that spurs the search for a new one.
Metacraftsmanship as Response to Specialization
There is an old Oriental proverb that says, "When the student
is ready, a teacher will appear."
The degree of specialization which we have in modern economies
is higher than ever before. The benefits of this have been
realized, and the bad side-effects are surfacing. The students
The teachers are appearing. The pioneers of the newest
management philosophy were mostly industrial engineers and
industrial psychologists working in large companies. Shewhart,
Deming, Juran, and Lewin all worked for AT&T Western
Electric. Ishikawa worked for Kawasaki, and Taguchi for Nippon
Telephone and Telegraph. Perhaps the weaknesses of Taylorist work
models became visible earlier in very large companies. Perhaps
these companies simply had the wherewithal to hire the best minds
and to turn them loose.
Whatever the case, these thought leaders worked on real-world
problems and ran experiments to test their new theories. As they
gained understanding, they began to teach and publish their new
methods. They explored ways to tap the creativity of their
workers, and to encourage the flow of information through their
organizations. They focused on quality circles, ongoing
education, statistical process control, and continuous process
improvement. They learned from one another, and gradually pieced
together a new organizational fabric, commonly called Total
Quality Management (TQM).
Japanese companies were the early devotees of the new
philosophy, starting in the 1950's. The striking success of
Japanese firms has been the dominant economic news story of the
past forty years. In electronics, automobiles, shipbuilding and
other industries, Japanese manufacturers got more, better
production from a lower capital investment than American
companies were getting. They seemed also to achieve this with
lower social costs and higher social benefits.
Most Western companies were not generally tuned in to the
ideas of quality management. They proposed various reasons for
poor results - older plants, less cooperative workers, unequal
terms of trade. But Japanese companies opened factories overseas,
and soon their managers got the same results in older buildings
with American and European workers as they were getting in
The difference was clearly in management. Some Western
companies awoke to this fact, and started to make changes of
their own, modeling their Japanese counterparts. Most of those
that acted promptly survived. The complacent firms did not.
There is, of course, a caveat. TQM has its detractors and
skeptics, and there have been many failures in its
implementation. Consultants with little understanding jumped on
the bandwagon, leading to expensive failures. Companies have
rolled out TQM programs, trained people in its methods, and
raised expectations without really making basic changes in
values, behaviors or work practices. TQM withered in these
situations, and as a result, there is in many places a suspicion
of and distaste for it.
Yet, where it has been well-executed, TQM has worked very well
indeed. It works in America, in Europe, in industry, in
healthcare, in government. The quality of products and services
has increased sharply, design cycle times are reduced, and
customers get more opportunities to be heard.
We are certainly not at an end-state; we haven't mastered TQM.
We shouldn't really expect to; its whole emphasis is on
continuous improvement. Yet even at this relatively early stage,
we are inclined to agree with Joel Barker, who in his famous book
"Paradigms", calls TQM the most important paradigm shift of the
The Organization as Metacraftsman
The dissemination of TQM ideas in the U.S. since 1980 has
unleashed a flood of interest, research, practice, and results.
Ideas from different disciplines have been extracted, weighed,
and combined to advance the original theories. Some old ideas
from the ancient Greeks, Henry Ford, and John Dewey have been
revived. Variations and extensions include CQI, re-engineering,
systems thinking, and hoshin planning. The movement that began
with TQM has grown and changed.
A more encompassing philosophy is taking shape today that
enables us to cope with specialization and systemic complexity.
The dust is far from settled, and many innovations doubtless lie
ahead, but the outlines are emerging. William O'Brien, in an
essay in "The Fifth Discipline Fieldbook" says, "Now, I
believe, a new wave is forming: the beginning of a twenty-first
century era which is yet unnamed." Brian Joiner also perceives
this new wave, calling it "Fourth Generation Management", having
superseded 1) management by doing, 2) Taylorism and 3) management
I believe that the underlying aim of modern management is to
help a large complex organization function as if it were one
craftsman. Craftsmanship is an old concept, but one which is
appreciated in all cultures, and which is rich enough to hold
many of the new ideas which are coming together in the 1990's. In
craftsmanship, we see art and technology harmoniously combined,
and the worker finding self-actualization in the work.
When we have many people aligned in working towards
craftsmanship, we have chosen to call it metacraftsmanship.
"Meta" is one of those prefixes that people bandy about without
being quite sure what it means. We sought help from The American
Heritage Dictionary, which offers 10 definitions. Here's the one
Meta = Beyond; transcending;
Together, "meta" and "craftsmanship" imply some transcendence
or enrichment of the work of the traditional craftsman. We see
Fourth Generation Management, or metacraftsmanship as an
essential weapon in the struggle to improve our businesses, our
society, and ourselves.
For an overview of the principles of
Metacraftsmanship, follow this link.