The Power of Myth – It Can Kill You – Collins, Thurston

by | Sep 4, 2010 | Books, Defend & Extend, In the Swamp, Leadership, Lock-in, Religion


Summary:

  • When we don’t know what works, we create myths to describe what might work
  • Much of business theory is little more than myth
  • “Good to Great” has been a best seller, but it is not helpful for good management
  • To grow business today requires abandoning management myths and aligning with changing market needs

Good to Great by Jim Collins has been a phenomenal business best seller.  Almost 10 years old, it has sold millions of copies.  It continues to be featured on end caps in book stores.  That it has sold so well, and continues selling, is a testament to a much better book by the legendary newsperson Bill Moyers with Joseph Campbell, “The Power of Myth.” (Original PBS 2001 TV show available on DVD, or get the new release this month.)

When we don’t understand something we develop theories as to how it might work.  These theories are based upon what we know, our assumptions, and our biases.  They could be right, or they might not.  Only testing determines the answer.  However, sometimes the theory is so powerfully connected to our beliefs that we don’t want to test it – don’t feel the need to test it.  And if the theory hangs around long enough, people forget it wasn’t tested.  What easily happens is that “logical” theories (based upon assumptions and beliefs) that don’t explain reality become myth.  And the myth becomes very comforting.  Over time, the myth becomes part of the assumption set – unchallenged, and actually used as a basis for building new theories.

For example, the founder of modern medicine – Galen – didn’t understand the circulatory system.  So he thought blood was oxygenated by invisible pores.  As time passed it became impossible to challenge, or even test, this theory.  Eventually, blood letting was developed as a medical practice because people thought the blood stored in the affected area had gone bad.  It was several hundred years before Harvey, through careful testing, proved there were no invisible pores – and instead blood circulated throughout the body.  Millions had perished from blood letting because of a myth.  Bad theory allowed to go unchallenged and untested. It just sounded so good, so acceptable, that people followed it.  Dangerous practice.

Thomas Thurston now gives us great insight to the popular myth developed by Jim Collins in Good to Great.  Published by Growth Science International (http//growthsci.com) “Good to Great: Good, But Not Great” Mr. Thurston puts Mr. Collins thesis to the test.  Is it a usable framework for predicting performance, and do followers actually achieve superior performance?  In other words, does the advice in Good to Great work?

Mr. Thurston’s conclusions, quoted below, are quite clear, and mirror those of academics and lay people who have studied the storied Mr. Collins’ work:

  • Even with the copious guidelines set forth by Collins, sorting CEOs into each category proved a highly subjective process.  The classification scheme was ambiguous
  • Level 5 leadership was difficult to categorize with reliability and consistency
  • Our sample [100 well known firms] did not reveal any statistically significant difference in the performance of firms led by Level 5 and Not-Level 5 leaders.  Performance in each category was approximately the same.
  • Level 5 leadership classifications were, in practice, highly subjective and not predictive of superior firm performance.
  • In other words, our results concluded that one can not predict whether a firm will perform good, great or bad based on its having a Level 5 Leader.

We like myth.  It helps us explain what we previously could not explain.  Like early Greek gods helped people explain the complex world around them.  But, when we build our behaviors on myth it becomes extremely dangerous.  We depend upon things that don’t work, and it can have serious repercussions.  Mr. Collins glorified Circuit City and Fannie Mae in his book – yet now one is gone and the other in disrepute.  Meanwhile his list of “great” companies have been proven to perform no better than average since his publication.

In Good to Great Mr. Collins offers a theory for business success that is very appealing.  Be focused on your strengths.  Get everybody on the bus to doing the same thing.  Make sure you know your core, and protect it like a hedgehog protects its home.  And make sure all leaders follow a Christ-like approach of humbleness, and leader servitude.  It sounds very appealing – in an Horatio Alger sort of way.  Work hard, be humble and good things will happen.  We want to believe.

But it just doesn’t produce superior performance.  There are no theories that have identified “great” leaders.  Success has come from all kinds of personalities.  And, despite our love for being “passionate” and “focused” on doing something really “great” there is no correlation between long-term success and the ability to understand your core and focus the organization upon it.  Thousands of businesses have been focused on their core, yet failed.

What we need is a new theory of management.  As the Assistant Managing Editor of the Wall Street Journal, Alan Murray, wrote in “The End of Management,” industrial era management theories about optimization and increased production do not help companies deal with an information era competitiveness fraught with rapid change and keen demands for flexibility.

Increased flexibility and success can be assured.  If companies make some critical changes

  1. Plan for the future, not from the past.  Do more scenario planning and less “core” planning
  2. Obsess about competition – and listen less to customers
  3. Be disruptive.  Don’t focus on optimization and continuous improvement
  4. Embrace White Space to develop new solutions linked to changing market needs

This does work.  Every time.

update links on Thomas Thurston 5/2014:

http://startupreport.com/thomas-thurston-on-innovation-malpractice-and-the-dangers-of-theory-via-startupreport-com/

http://newsle.com/person/thomasthurston/2870934#reloaded

http://thomasthurston.com/

The End of Management – Wall Street Journal

by | Aug 31, 2010 | Current Affairs, Defend & Extend, In the Whirlpool, Innovation, Leadership, Lock-in, Quotes


Summary:

  • The Wall Street Journal is calling for a dramatic shift in how business is managed
  • Most corporations are designed for the industrial age, and thus not well suited for today’s competition
  • Change is happening more quickly, and organizations must become more agile
  • CEOs today are concerned about dealing with rapid, chronic change – and obsolescence
  • Resource deployment, from financial to people, must be tied more closely to market needs and not defending historical strengths

A FANTASTIC article in the Wall Street Journal entitled “The End of Management” by Alan Murray, If you have time, I encourage you to click the link and read the entire thing.  Below are some insightful quotes from the article I hope you enjoy as much as I did:

  • Corporations, whose leaders portray themselves as champions of the free
    market, were in fact created to circumvent that market. They were an
    answer to the challenge of organizing thousands of people in different
    places and with different skills to perform large and complex tasks,
    like building automobiles or providing nationwide telephone service.
  • the managed corporation—an answer to the central problem of the industrial age.
  • Corporations are bureaucracies and managers are bureaucrats. Their
    fundamental tendency is toward self-perpetuation… They were designed and tasked, not with
    reinforcing market forces, but with supplanting and even resisting the
    market.
  • it took radio 38 years and television 13 years to reach audiences of 50
    million people, while it took the Internet only four years, the iPod
    three years and Facebook two years to do the same.
  • It’s no surprise that
    fewer than 100 of the companies in the S&P 500 stock index were
    around when that index started in 1957.
  • When I asked members of The Wall Street Journal’s CEO Council… to name the most influential business book they had read,
    many cited Clayton Christensen’s “The Innovator’s Dilemma.” That book
    documents how market-leading companies have missed game-changing
    transformations in industry after industry
  • They allocated capital to the innovations that promised the largest
    returns. And in the process, they missed disruptive innovations that
    opened up new customers and markets for lower-margin, blockbuster
    products.
  • the ability of human beings on different continents and with vastly
    different skills and interests to work together and coordinate complex
    tasks has taken quantum leaps. Complicated enterprises, like maintaining
    Wikipedia or building a Linux operating system, now can be accomplished
    with little or no corporate management structure at all.
  • the trends here are big and undeniable. Change is rapidly accelerating.
    Transaction costs are rapidly diminishing. And as a result, everything
    we learned in the last century about managing large corporations is in
    need of a serious rethink. We have both a need [for]… a new science of
    management, that can deal with the breakneck realities of 21st century
    change.
  • The new model will have to be more like the marketplace, and less like
    corporations of the past. It will need to be flexible, agile, able to
    quickly adjust to market developments, and ruthless in reallocating
    resources to new opportunities.
  • big companies… failed, not…
    because they didn’t see the coming innovations, but because they failed
    to adequately invest in those innovations    . To avoid this problem, the
    people who control large pools of capital need to act more like venture
    capitalists, and less like corporate finance departments… make lots of bets, not just a few big ones, and… be willing
    to cut their losses.
  • have to push power and decision-making down the organization as much as
    possible, rather than leave it concentrated at the top. Traditional
    bureaucratic structures will have to be replaced with something more
    like ad-hoc teams of peers, who come together to tackle individual
    projects, and then disband
  • New mechanisms will have to be created for harnessing the “wisdom of
    crowds.” Feedback loops will need to be built that allow products and
    services to constantly evolve in response to new information. Change,
    innovation, adaptability, all have to become orders of the day.

Well said.  Traditional management best practices were designed for the industrial age.  For bringing people together to efficiently build planes, trains and automobiles.  This is now the information age.  Organizations must be more agile, more flexible, and tightly aligned with market needs – while eschewing focus on “core” capabilities. 

Companies must understand Lock-in, and how to manage it.  Instead of planning for yesterday to continue, we must develop future scenarios and prepare for different likely outcomes.  We have to understand competitors, and how quickly they can move to rob us of sales and profits.  We have to be willing to disrupt our patterns of behavior, and our markets, in order to drive for higher value creation.  And we must understand that constantly creating and implementing White Space teams that are focused on new opportunities is a key to long-term success.

With an endorsement for change from nothing less than the stodgy Wall Street Journal, perhaps more leaders and managers will begin moving forward, implementing The Phoenix Principle, so they can recapture a growth agenda and rebuild profitability.