Is management still relevant as a course of study today?
Posted by Robert Norton on
Of course. Anytime people are needed, management is a required skill, or more accurately a required art. It is also a philosophy which generates the culture of a company that should be appropriate to its own market circumstances.
And yes, I agree with Elon Musk and others that our university system cranking out MBAs is not a solution. Colleges and universities are failing to adapt to the new world. There are now so many specialties, industries, and skills that few programs provide the practical learning needed to be a successful Entrepreneur or manager. That is why I created The CEO & Entrepreneur Boot Camp in 2004.
People change on an evolutionary timescale, and almost all still need to be managed. No amount of technology will replace the need for managers and management. At least 80% of people need to be guided in their work. And they always will. Because most people are followers, not leaders. They do not want to take risk, think that hard and lack the creativity or vision to create new things.
It is true that with the gig economy and certain remote technologies more people are working as independent contractors, “Consultants” (most that call themselves thus are really not though, it is a misused title). Usually they are contractors or freelancers. A consultant is a top expert in a narrow area. This means they will "manage themselves" to some degree. Many will fail at this because they lack the discipline, or require the structural, social interaction and support of a company office environment. Or because their jobs are not appropriate for this kind of work.
You would need to study much material to understand what is encompassed by the term “management” today. Then also consider leadership and culture which good management generates. There are many functions of management that are invisible to, and not appreciated by, most employees. Here are just a few:
- The creation of company strategy which can generate sustainable, long-term competitive advantage. A discipline requiring vast knowledge and experience to do well. Likely the most complex process and decisions in any company.
- The acquisition of capital to fund a company’s start, development and new products. And the processes of budgeting and finance to control expenses, cash, debt, stock/equity and profit generation. These are legally required functions and take some experience. I have seen people destroy companies by not doing them well.
- Corporate governance in compliance with laws, outside perspective, independent expertise and opinions. This gets more complex when a company reaches more than a few million in revenue, or over about 50 employees. By the way, I am not considering a single person selling their time to be a “Company” really, though it may be a legal entity technically. That is just a freelancer. Not requiring multidisciplinary work to coordinate sales, marketing, finance, operations and product development.
- The creation of an organizational structure, which will evolve over time due to outside market circumstances, as well as internal growth, better systematization, changing technology and many other factors. This is called Organizational Development (OD) and also Organizational Change Management (OCM).
- The defining and final decisions on “Marketing” which determines the target market, pricing, products, promotion, price (4Ps) and many other factors. Peter Drucker said that the two main functions of a corporation are innovation and marketing. These are where most competitive advantage can be generated.
- The cadence of communications, goal setting and assigning authority and keeping people accountable, often called Management By Objective (“MBO” -or OKR, see my course on http://www.udemy.com) which has been shown by independent research to increase corporate value creation by 56%. Compound that figure annually, and you have the difference between a market leader and a total loser. This is often also called Objectives and Key Results (OKR) today, but that is just a rip-off and newer name for Peter Drucker’s MBO.
- The development of people. Few people, especially in the information driven society we have today, can afford to be stagnant in their learning and development. Good organizations invest in their people, especially Management Development (MD). Management is an art that takes at least five years of experience to become good at, and when you consider executive level skills another five years after that. And to reach the level of a good CEO another 5–10 years after that. They must understand the strategies and languages of: Marketing, Sales, Operations, Customer Service, Product Development, Finance, Management, Leadership and far more. Good managers also understand psychology, technology, have deep domain experience in their industry (technical) and far more.
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This answer could go on and on forever, and that is why we have universities to teach the basics of Management and give out MBAs, though these things are learned experimentally, not from just books and study. After getting that foundation of structural knowledge, a person can embark on the never-ending journey of becoming a good Manager, Executive, and ultimately a CEO, Entrepreneur or business owner. You do not graduate from art school as a great artist. Just one ready to begin practicing in art. Same for most things.
I always recommend Malcolm Gladwell’s great book “Blink” on this topic to understand that it takes 10,000+ hours of practice to learn most arts. I said the same in my CEO Boot Camp materials in 2004 before that book was published in what I call the “Wisdom Pyramid” here:
Although there are many famous examples, like Bill Gates and Mark Zuckerberg, of people who launched a company at a very young age, there are no doubt a thousand times more examples of utter failure and bankruptcy due to the impatience, hubris and ignorance of thinking that lots of learning is not required first. And when you look at any success, you always see that there were many years of preparation (at that company or others) for the entrepreneur to be ready. You will also see they hired more experienced people than themselves to get there.
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Only about 20% of new companies survive and prosper beyond five years. Most of these hired lots of highly experience gray hair, or "adult supervision" as venture capitalists call it. No one gets there alone, or by reinventing the wheel. And you will not get any funding, except for friends and family, unless you have that experience and are coachable. This happened in the dot com bubble pre-2001, but the venture capitalists learned their lessons, losing billions by financing ventures with a business plan on a napkin, always trying to find that grand slam “idea” or next blue ocean market to generate the 10,000X returns of the rare Google, Facebook and Amazon ventures. These exceptions are extremely rare, and the vast majority of people are better off working for a company willing to train and mentor them for the first 5 to 10 years of their career. Then they may have a decent chance of starting a company and succeeding. In fact, it has been shown that the more experience a person has, the greater their chances of success starting a new company.
Here is another diagram showing the levels of management and the systems and disciplines needed to do it well. Diagrams here are copyright C-Level Enterprises, Inc.
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Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
Call (619) SCALE06 or email info@AirTightMgt.com for a complementary strategic consultation.
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