The long-term impact of management theory and management consulting: dying companies and a weakened, imbalanced economy overall.
It’s widely agreed that Modern Management theory and practice was birthed by Peter Drucker in the late 1950s. His work to define the Concept of the Corporation and classify the different roles within an organization led to an explosion of thinking about business. In 1963 Bruce Henderson founded what was to become the Boston Consulting Group and extended management theory to define Corporate Strategy. Since then, a succession of other theorists and practitioners like Michael Porter, Tom Peters and Bob Waterman have continued to add to and deepen our collective understanding of business.
Their theories have been put into practice through successive generations of MBA graduates who have taken leadership roles within business. And most significantly, through the creation and expansion of the modern Management Consulting industry which placed its Alumni at the highest levels of leadership in global business, global finance, global academia and global government. It’s fair to say that Management Theory and Management Consulting have fundamentally reshaped business and the economy as a whole over the past 50 years.
One might assume that the professionalization of management and our increased study and understanding of business would, as in other industries like healthcare, have led to benefits like decreased mortality and increased health and vitality of business overall. But in fact, the exact opposite has happened. Over the past 50 years, the average lifespan of companies has declined from over 60 years in 1950 to less than 20 years today. This appalling statistic masks deeper, fundamental weaknesses within business and the economy. Companies aren’t just dying sooner, they’re being birthed at a much lower rate; and power, talent and wealth are concentrating at a smaller and smaller group of mega-corporations, leading to deep inequality in business and the economy as a whole.
But during this same period, the Management Consulting industry has experienced rude health. Growing from just a handful of companies into an industry worth hundreds of billions of dollars a year. Merging with, absorbing and spitting out adjacent industries like accounting, human resources and technology consulting in the process. It is now metastasizing into creative fields of design and marketing. All the while generating more and more management theory that enriches itself while continuing to weaken its hosts.
Is this the great legacy of Modern Management and the Management Consulting industry it spawned? A massively weakened economy, dismal survival rates for most businesses and deep, structural problems that impact the livelihood of billions of people around the world? A captive audience of increasingly handicapped corporations who need their services ever more?
In the next three posts, my partners at Zeus Jones break down what modern business really needs, why management consultancies aren’t up for the challenge, and what we think the answer for successful business growth is. We don’t believe the answer lies in a playbook — but instead our basic human ability to be ingenious and creative, over and again.