The pundits are ageing and grey matters; having remained unchanged for a long while, belying the premise of what thought leadership or whatever that means stands for. We have no idea about this uncomfortable silence nor have clues to its causes though we can draw correlations to its time. One is the technological revolution that seems to have overwhelmed the pundit industry that has met their match as the digital gurus coin neologisms at the speed of light and speak in binary tongue that only their brethren follow. The second is the shift of the geopolitical axis decisively to the East and the rise of Asia, especially the elephant in the living room China (India is still foreseeably small to matter). The third is presumably the crisis of confidence and the ethical vacuity in celebrated enterprises whether Enron, Arthur Anderson, WorldCom, Freddy Mac Fannie May, Lehmann Brothers, and the Wall Street influence of policy and control of US treasury as much as the capitulation of the American establishment to ‘peddlers of influence’.
Good theory is like good literature, and that which is popular is interesting but stands not the test of time. Often we mistake one for the other. According to ‘Schumpeter’ the gyan gurus have remained static too long and include Clay Christensen, Chan Kim and Renee Mauborgne, Don Tapscott among others. Unlike him I am unsure of the contribution of the Indian diaspora academic like CK Prahlad or Smantra Ghoshal in schools of the West as representative of Indian thinking (thereby remarking where the Chinese thinkers are). It would however serve us well to examine what has contributed to the rise and decline of the pundit industry. We must remember that the pundit industry is tied umbilically to the management consulting industry which has itself been under eclipse for a while now, reinventing a mix of technology and business with no sharp delineation of one from the other. It is no accident that the last decade gave a scathing criticism of the consulting industry for its hubris and ethical failures. Being myself a member of the tribe (albeit a poor one) i tread with caution and state that this view is personal and possibly speculative. But to be dismissive entirely is to throw the baby and the bathwater. A clarification is due that this article addresses the purported faddishness of management ideas and does not list nor discounts the genius of genuinely grounded theories of business and organisation over the last century.
When i graduated from business school i thought like many others that i was a ‘cat’ and when i took leave of my dean he asked me two simple questions as an assessment. “What do you think Srinivas is the idea behind the cats and dogs in the BCG matrix, and second what is the assumption behind linear programming”? My answers clearly disappointed the dean and i was horrified at my ignorance just when i thought i was graduating with distinction and soon returned (probably to relearn). Most MBA students like me in those days believed that Al Ries and Jack Trout were ‘avante garde’ in Brand Positioning, and that Michael Porter originally ‘discovered’ the industry structure and that Thomas Peters and Waterman’s In Search of Excellence was one of the great books on management (closely followed by Hammer and Champy’s Reengineering the Corporation). I also believed that there could be no bigger bore than Peter Drucker and it took decades of relearning to value what was enduring. I am not claiming to have become much wiser now, just older.
Before we examine the main arguments for the guru industry let us take a historical detour. History is not a narration of facts but the selective appropriation of facts to create alternative narratives. The pundit industry had its roots in the history of consulting and as creative responses to their changing environment and revenue pressures. The consulting industry itself was born in due diligence arising out of the Glass Steagall Act in 1933 that separated commercial from investment banking (unlike the antiquated myth that it arose from Arthur D Little and Taylorism at the turn of the 20th century). With the divorce of ownership from administrative control in the American corporation, legislation required consultants to certify that the board’s actions were both legal and prudent. However in the 40s boards soon found an alternative way out through indemnity insurance (directors and officers liability insurance) precipitating consulting firms to sell advice as their primary service. This was a significant shift for consulting firms from selling legitimacy to selling knowledge transfer. After the war by the end of the fifties and under revenue pressure McKinsey discovered that Europe was still tinkering with the dead remains of Taylorism while they across the Atlantic were instituting budgetary systems, executive compensation systems and most importantly restructuring organisations into the famous multidivisional M form. When they arrived at London in the 60s by the end of the decade they had restructured Royal Dutch Shell, Beebs (BBC) and the Old Lady at Needlethread Street (Bank of England) based on the idea that “structure follows strategy”. The British claimed that if God were to redo creation, He would call in “McKinsey” which had by then become a noun or transitive verb that meant to shake up, declare redundant and reorganise. In the seventies with the oil crisis and structural changes, most consulting forms saw declining revenues and a younger upstart called Boston Consulting Group who claimed that firms need to focus on competitive strategy and not just “structure” as McKinsey seemed to suggest. They put out their BCG matrix as a generic product based on experience curves and associated analytics (never mind the exaggerated claims- nor their infamous analysis of the British Motorcycle industry). This was the birth of the Management Pundit industry and pulled the rug under McKinsey’s feet by selling a product than a custom solution. Not to be outdone McKinsey commissioned three researches that included Tom Peters and Waterman on “Excellence”, Pascale and Athos on Japanese Management, and Deal and Kennedy on Corporate Culture. McKinsey self consciously codified its own practice and evolved the 7 S framework that underscored “In Search of Excellence” and the pundit industry was well into thriving.
By the end of the decade of the eighties pundits of every hue and calling like evangelists were preaching from every pulpit across America. They included among others Michael Porter whose books Competitive Strategy and Competitive Advantage which became scripture of strategy students, spawning an entire industry across the globe and much revenue to Monitor Consulting (headed by Porter). There is however also a parallel narrative going on which involves the cyclical foregrounding of management functions. The decade of the 60s was really dominated by Marketing and Organisational theory (especially bounded rationality, information processing and organisational design). The seventies by finance as a result of the structural problems of the oil crisis and a growing number of mergers and acquisitions (just when ITT and Geneen were celebrated for their diversification others were hailed for ‘sticking to the knitting’). The eighties were really that of manufacturing as the US was challenged by Japanese imports and a string of researches like those of MIT propounded Japanese Manufacturing practice that spanned TQM (resuscitating Deming and Juran from the dead), Toyota Production Systems (JIT, Kanban) MRP, TPM, and much later into Six Sigma etc. Towards the end of the eighties MIT also published a landmark study on Information Technology that launched the evangelical careers of James Champy and Michael Hammer to reengineer business processes that dominated the nineties in time with the IT revolution and Internet. IT services were the profitable practice of the Big 6 accounting firms in the eighties, who had kept a distance from consulting practice but with a series of mergers had returned to them along with IBM’s return to consulting. By the early nineties the Securites Exchange Commission was alarmed by auditors no longer independent from corporate clients given the size of consulting revenues or sensitivity to conflict of interest that it pressured their separation (of audit and consulting). The manufacturing resurgence also initiated a rethinking on cost accounting long languishing at the margins and spawned their own gurus on activity based and strategic cost accounting including the balanced score card (ABC viz. Kaplan, Norton, Johnson, Varadarajan). By the end of the decade, manufacturing focus transformed into Logistics and Supply Chain Management with its own obscure gurus with MRPII transmogrifying into ERP. The new gurus came from so many fractured specialities including those like Kanter on Change Management which was back to basics administrative theory; in so many sizes that it ranged from incremental change to disruptive innovation championed by Clay Christensen that dovetailed into IT as disruptive technology. The nineties also heralded globalisation and its own species of pundits (including but not restricted to Porter). Stewart and Stern another firm came up with EVA (or NOPAT minus cost of capital) as a synoptic management system. If you did not know where to begin, you would start by “Benchmarking “as though imitation was the best defence. By now the guru market was overcrowded into a bewildering acronym filled alphabet soup, much to the amusement of Dilbert (Scott Adams).
In the mid eighties a series of class action lawsuits in the US against board members changed the interpretation of the liability law, swinging the consulting profession back to selling legitimacy of management decisions rather than knowledge transfer, often for exorbitant fees. With the fall of Enron in 2001 McKinsey’s default on corporate governance with full knowledge of conflict of interest by serving on the board and being consultant was even more damaging than Andersen shredding documents at midnight; though Andersen took the fall. With the beginning of the new millennium the digital age was already in its high noon and had eclipsed the pundit industry and had already appropriated unto themselves the vocabulary of the management consultant. The IT consultant spoke like the management consultant and the management consultant championed technology enabled change. Some returned to the simplicity of the “Excellence” days like Jim Collins et al ‘Built to Last’ and ‘Good to Great’ that suffered the same retrospective and causal fallacies that Tom Peters was accused of. Newer disciplines emerged at the seams like Information Economics that used Institutional Economics just as Michael Porter had used Industrial Economics. There was also an attempt to examine unknown market spaces untainted by competition called Blue Ocean markets (Kim and Mauborgne). The distinctions between technology and management had blurred and advances in computing power and proliferation of customer data points scoured the long tail for even more discrete segmentation of consumer preferences making Big Analytics look for tiny deviations. The management gurus had been quiet for a while occasionally emerging like the dormouse from its slumber at the Mad Hatters tea party. It sounded increasingly so much like old wine in new bottles that many (including myself) gave up drinking. Schumpeter does not mourn but mocks the twilight of the gurus and their age where many would wonder what next; none more worried than those lower down the organisation that had to manage the several bewildering initiatives to please their vexed bosses at their elusive panacea.
What makes the gurus so successful or rather impervious to failure? Advice unlike other goods (like search or experience goods) is a credence good whose utility impact is difficult to ascertain by the consumer even after consumption. This ambiguity in assessing the true impact of advice gives rise to the two views that collide. The functionalist view is that the gurus are knowledge brokers, economic agents that enable organisations; the other view is the critical view that they are charlatans, persuasive opinion makers who foster faddishness in management creating a false sense of urgency when none is needed. That brings us finally to reflect upon what a good theory is and why it is so elusive that we substitute speculation on a smaller domain to extrapolate it on a large scale. A good theory must be sufficient to provide an explanatory framework of a phenomenon; must establish its causal efficacy, and then predict behaviour of outcomes to changes in variables. It can be descriptive which is what most management theory is. What is uncertain is how normative (or prescriptive) it is, blurring boundaries between hypotheses, generalised conjecture and even speculation from theory. The guru and the consulting industry is not necessarily a charlatan nor is the client naive. The guru frames ambiguous information surrounding an organisational problem in new terms and sharpens the interpretive consciousness in a firm; they are interpreters and theorists of an individual case or firm. After some intervention they then codify and commoditize the idea for diffusion, making claims on knowledge and communicative performance bringing, to foreground their credible stories (which are few). It is difficult to establish large scale efficacy and validity of their solutions. It is the belief in the efficacy of solutions rather than proven efficacy that leads to action. Since efficacy of a set of ideas cannot be objectively determined these ideas are directed at the organisational environment of collective practice in a manner persuasive enough to believe in. It is the belief in the efficiency of a practice that lends legitimacy and the ideas thus legitimised get institutionalised. In markets for advice and consulting i.e credence goods it is not features of product but signalling that highlights quality. Signalling is what the prestige of big consulting practice brings; they signal status quality and reliability. If the guru cannot prove the efficacy of an idea prior to or even after consumption, he resorts to signalling the input i.e. pedigree of the guru from an Ivy League business school such as Harvard, Wharton, INSEAD or the Big consulting practice etc. By doing this he or she decouples reputation and legitimacy from the actual economic decision. This reduces the information asymmetry between the buyer and seller though it still favours the guru. It is this ambiguity that rankles the critics though providing some solace however temporary to the client.
Management is a practitioner’s art and its view is governed by what the Greeks call Praxis (practice) as opposed to Theoria (contemplative theory). We need insight into both though we must weigh on the side of praxis. The gurus have not gone away nor have the charlatans, for as long as we desire salvation or solution to an organisational problem we shall seek them out and if they do not come to us we shall go to find them. It is the Guru’s job to simplify the clutter and focus on the essential and framing the question in terms that are acceptable. Had not the Buddha told Malunkyaputta ‘if you have been shot by an arrow would it profit you to speculate what material it is made of or what the caste of the archer was or would you repair to pull it out?’If the Buddha is alive we must ask him clarify our doubts. If the Buddha were dying we must heed the dictum of the Buddha to Ananda on his deathbed “seek not refuge in anyone other than yourself” and “be a light unto yourself” (attadipo bhava). It has been 2500 years since the parinirvana of the Buddha: have the gurus ceased?
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