The History of Management Tought

1. The History of Management
Thought
By
Julia Teahen and Regina
Greenwood
Based on The History of Management Thought, 5th edition, 2005 by Daniel A. Wren

2. Part Four
The Modern Era

3. Chapter Nineteen
Management Theory and Practice

4. The Modern Era
 The Renaissance of General Management
 Fayol’s Intellectual Heirs
 Management Education
 Other Views of Managerial Work
 Peter Drucker: The Guru of Management
 From Business Policy to Strategic Management
 Markets and Hierarchies
 Governance and Agency Issues
 Management as an Integrating and Innovating Task
 Strategy and Views of the Firm
 Strategic Leadership and Evolutionary Dynamics

5. The Renaissance of General
Management
 Henri Fayol – the first
to propose a general
theory of
management
 The elements of
management describing
what managers did
(plan, organize,
command, coordinate,
and control).
 The principles, which
were lighthouses, or
guides, to how to
manage.
Henri Fayol

6. Fayol’s Intellectual Heirs
 William Newman (1909-2002) – “the basic objectives
of the firm should define its place or niche in the
industry, define its social philosophy as a business
‘citizen,’ and serve to establish the general
managerial philosophy of the company” (Wren text)
 George Terry (1909-1979)– first to call his book
Principles of Management
 Harold Koontz (1908-1984) and Cyril O’Donnell
(1900-1976) – defined management as “the function
of getting things done through others” in their
popular text.

7. Management Education
 The Gordon and Howell Report 1959:
 Asked: What are we teaching in business schools
and does this prepare our students for a career in
a changing environment?
 Cited the need for more courses in:
 The humanities and liberal arts.
 Mathematics.
 The behavioral and social sciences.
 Compare a pre-1959 B-school curriculum to your
current requirements.

8. Management Theory Jungle –
Harold Koontz (1908-1984)
 Six Different Schools – management process,
empirical, human behavior, social system, decision
theory, mathematical schools.
 Each can contribute, but some are “tools.”
 Causes of confusion and the “jungle warfare”
 “The semantics jungle”
 Problems in defining management as a body of
knowledge
 The misunderstanding of principles through trying to
disprove an entire framework of principles when one
principle was violated in practice
 Inability or unwillingness of management theorists to
understand each other.

9. Other Views of
Managerial Work
 Henry Mintzberg (1939-
observed five
executives and
concluded mangers
perform ten roles within
three categories:
interpersonal,
informational, and
decisional.
Henry Mintzberg,
courtesy of the University of Western
Ontario

10. Other Views of
Managerial Work
 Rosemary Stewart examined the "demands,"
"constraints," and "choices“of a managers
job.
 John Kotter's studies of general managers
and his finding of certain "demands" or
regularities in all general managers' jobs that
resemble traditional management functions.
Note, also, the factors that cause these to
vary.

11. Other Views of
Managerial Work
 Fred Luthans, Richard
Hodgetts, and Stuart
Rosenkrantz studied 44
managers, recording
activities and behaviors.
 In Real Managers they
note four categories:
routine communication,
traditional management,
networking, and human
resource management.
Richard M. Hodgetts

12. The Search for Excellence
 Thomas Peters and
Robert Waterman
identified eight
attributes of corporate
excellence in their best
selling book, In Search
of Excellence.
 Peters and Waterman
relied solely on financial
measures in
determining success.

13. Management Education
Revisited
 Harold Koontz revisited the management theory
jungle and expanded it from 6 to 11
approaches.
 Called for leading managers to narrow the gap
between professional practice and business
schools.
 Lyman Porter and Lawrence McKibbin surveyed
management education for the AACSB.
 Called for professors to be more broadly educated
and possess relevant work experience.

14. Peter Drucker (1909 –
Guru of Management Practice
 Drucker achieved
prominence through his
writings and consulting.
 He asks:
 What is our business?
 Who I the customer?
 What does the
customer buy?
 What does the
customer consider
value?
 What will our business
be?
 And what should it be?
Peter F. Drucker

15. Peter Drucker (1909 –
Guru of Management Practice
 Importance on Innovation
 Key areas for setting objectives and evaluating
results
 Fortune magazine publishes a survey of the most
“admired” corporations. The areas that Fortune
uses bear a strong resemblance to Drucker’s key
areas.
 Management by Objectives

16. Peter Drucker (1909 –
Guru of Management Practice
 Drucker’s focus on
managerial practice
asks the lingering
question: “Can our
academic research have
rigor and also be
relevant to the
practice of
management?”

17. From Business Policy to
Strategic Management
 Markets and hierarchy
 Echoing the work of earlier economists such
as Say and Marshall, who saw management
as a factor of production and able to provide
competitive advantage, Ronald Coase, in a
1937 article, asked why have business firms?
 Coase saw the firm as an alternative to the
market with certain advantages in allocating
resources.

18. From Business Policy to
Strategic Management
 Markets and hierarchy
 Echoing the work of
earlier economists such
as Say and Marshall, who
saw management as a
factor of production and
able to provide
competitive advantage,
Ronald Coase, in a 1937
article, asked why have
business firms?
 Coase saw the firm as an
alternative to the market
with certain advantages
in allocating resources.
Ronald Coase

19. From Business Policy to
Strategic Management
 Oliver Williamson
(1932-) and the “new
institutional economics”
saw the hierarchy of
the firm being typically
more efficient than
markets because firms
could internalize
transaction costs
(remember Commons?)
and provide monitoring
mechanisms to thwart,
hopefully, opportunism. Oliver Williamson

20. From Business Policy to
Strategic Management
 Governance and Agency Issues
 If the firm, through management, is more efficient
than the market, then the actions of those who
govern the firm becomes more significant.
 A number of individuals, such as Michael Jensen,
criticize the behavior of those in the managerial
hierarchy who serve their own interests rather
than those of their shareholders.
 The separation of ownership and control is an
evergreen issue to catch the conscience that lies
within.

21. From Business Policy to
Strategic Management
 Agency theory,
 assuming it is a theory, creates situations that
lead to opportunistic behavior.
 Assumes that everyone will engage in
opportunistic behavior—leading to contracts and
other means of monitoring behavior.
 Involves issues of trust, fidelity, and other
appropriate behaviors in contrast to the
assumptions of agency theory.
 How do our assumptions about the behavior of
others influence how we manage?

22. Management as an Integrating
and Innovative Task
 Henri Fayol was a
strategist. (See quote in
Wren text.)
 Arch Shaw (1876-1962)
pioneered the study of
business policy as a
academic subject at
Northwestern
University.
Henri Fayol

23. Management as an Integrating
and Innovative Task
 There is a rich heritage
of “strategy” in
Barnard, Newman,
Drucker, and Chandler.
 Strategic management
has emerged as the
“new” view of business
policy and long range
planning.
Alfred D. Chandler,
Courtesy of Harvard Business School

24. From Business Policy to
Strategic Management
 Strategy and Views
of the Firm
 Michael Porter (and
others) in
industrial/organizatio
nal economics made
key contributions to
strategy.
 Porter’s “five forces”
framework, value
chain and “generic”
strategies. Michael E. Porter,
Courtesy of Harvard Business School

25. From Business Policy to
Strategic Management
 Strategy and Views of the Firm
 Edith Penrose (1914-1996)asked why firms
differed in performance, providing seminal
insights for the resource based and the
knowledge based views of the firm.
 SWOT— In 1960s HBS policy group began
use of the term.
 Important developments in “core
competencies” and “distinctive competencies”
followed through the work of Wernerfelt,
Rumelt, Barney, Prahalad, and Hamel.

26. From Business Policy to
Strategic Management
 Strategic Leadership and Evolutionary
Dynamics
 “Evolutionary economics”—how to create and gain
competitive advantages through innovation.
 Organizational learning to “unbound” rationality
and move to new and innovative forms of
competitive advantage.
 Strategic leadership—the bridge to general
management theory.

27. Summary
 General management theory reawakened as
organizations grew more complex and needed
more broadly educated general managers.
 Drucker and others emphasized the need to
improve the practice of management.
 General management also grew through a
resurgence in industrial/organizational
economics.
 Business policy evolved to strategic
management.

28. Internet Resources
 Academy of Management – Management History Division Website
http://www.aomhistory.baker.edu/departments/leadership/mgthistory/links.html
 List of Internet Resources compiled by Charles Booth
http://www.jiscmail.ac.uk/files/MANAGEMENT-HISTORY/links.htm
 Western Libraries Business Library – Biographies of Gurus
http://www.lib.uwo.ca/business/gurus.html
 Henry Mintzberg
http://www.henrymintzberg.com/
 Thought Leaders Forum – Mintzberg
http://www.pfdf.org/leaderbooks/mintzberg/
 Rensis Likert
http://www.accel-team.com/human_relations/hrels_04_likert.html
 David C. McClelland
http://www.accel-team.com/human_relations/hrels_06_mcclelland.html
 Peter Drucker Interview
http://www.cio.com/archive/091597_interview_content.html

29. Internet Resources
 Drucker - Leader to Leader Institute
http://www.leadertoleader.org/
 Ludwig von Bertalanffy (1901--1972)
http://www.isss.org/lumLVB.htm
 Chris Argyris
http://www.accel-team.com/motivation/chris_argyris_00.html
 Douglas McGregor
http://www.accel-team.com/human_relations/hrels_03_mcgregor.html
 Frederick Herzberg
 http://www.accel-team.com/human_relations/hrels_05_herzberg.html
 Victor Vroom
http://www.som.yale.edu/Faculty/vhv1/
 Edwin A. Locke
http://www.edwinlocke.com/
http://www.rhsmith.umd.edu/mao/faculty/elocke/
 Fred Fiedler
http://www.thoemmes.com/dictionaries/bdm_fiedler.htm
 Joan Woodward
http://www.lib.uwo.ca/business/WOODWARD.html

30. Internet Resources
 Joan Woodward
http://www.lib.uwo.ca/business/WOODWARD.html
 P.M.S. Blackett
http://www.nobel.se/physics/laureates/1948/blackett-bio.html
 Deming Institute
http://www.deming.org/
 Ludwig von Bertalanffy
http://www.isss.org/lumLVB.htm
 Norbert Wiener
http://www-groups.dcs.st-
and.ac.uk/~history/Mathematicians/Wiener_Norbert.html
 What are Cybernetics?
http://pespmc1.vub.ac.be/CYBSWHAT.html
 Death of the Slide Rule
http://www.xnumber.com/xnumber/hp.htm
 John Vincent Atanasoff
http://www.cs.iastate.edu/jva/jva-archive.shtml
 David Ricardo
http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/ricardo/

31. Internet Resources
 Geert Hofstede
http://spitswww.uvt.nl/web/iric/hofstede/
 Managing Oneself by Peter F. Drucker
http://www.pfdf.org/conferences/drucker99.html
 Ansoff Matrix
http://www.quickmba.com/strategy/matrix/ansoff/