(the concluding part of our management philosophy piece)

Firms need to measure and guide people to achieve, but it does not mean that you have to pile theories endlessly in courses on them. Those theories are structured based on a monolithic understanding of management. That happens to be the problem. It assumes that those concepts are great but it prevents freedom to innovative management.

The world has become much fragmentized and leadership evolution points to disparity in concept. You cannot have creative disruption of firms under most of our management theories because it is based on preservation and nurture. That capacity to carefully destroy and invent a firm is not that prominent in these programs both in schools and firms. We like the status quo but technology will not support us here.

Recall that some of the best companies on earth are not managed by these management czars. Apple ranks among the best in innovation. Yet, Jobs rarely finished school. Oracle’s Ellison, Microsoft’s Gates, Dell’s Dell, are other examples.

So instead of wasting time much time on offsite management training, firms should spend time on giving potential future captains responsibilities and measure them under a practical mentoring system. And how you decide who gets chosen must be broad and untangled because the same metric that worked for turbine business may not be best for a social business. Arguably, there is need for order and management must provide that through organic practical process that does not disconnect from responsibilities.

There is need for mutability in management. We have to destroy to recreate it today. Wall Street will hire all the top MBA students and yet will get messed up. The problem is the education is focusing on concepts and structures and few of the students have opportunities to be free in thinking. Coupled with the fact that the tools they use to evaluate their performances are obsolete, we come to see firms collapse under these management systems. Why not? MBA is about building; rarely teach disruptive mutation of firms. In reality, firms are supposed to grow and grow. But when growth stops, understanding how to transmute becomes a challenge.

I am not writing about M&A, I am talking about carefully destroying firms so as to re-invent them. It is mutation where a better firm emerges internally and organically. I call it Intelligent Mutability Management because you do not allow it to become a process that is not under control.

They praise icons like Jack Welsh of GE because he was firing 10% of bottom performers. Unfortunately, I will not be happy to hire people I will fire. Why not hire those that are good so you have no need to fire. There is nothing good in spending less time during hiring and then wait to fire. I will hail the boss who does not fire the bottom 10% of staff because he does not have under-performers. Remember these have been introduced as management constructs in American capitalism where firms hire and fire anyhow to shareholders’ delights.

We have a system where firms fail to understand that a staff makes bottom 10% in a department does not mean it cannot make best 10% in another department. But we fire staff to appease shareholders when firing could have been seen as poor management.

The same applies to when firms hire entrepreneurial minded staff who wants to get things done than waste time on protocols. They lose the human content and you fire them. After five years, their firms become your main competitors.

This is exactly what happens throughout the life of Steve Jobs where he was fired in his firm because his mindset was different to the executives. But they brought him back and he engineered Apple into a renaissance. The management that examines the traits is flawed because they missed them.

My concern is the system that measures those traits is flawed because man can find more than 35 traits for management and/or leadership. But in most cases, the human resources department use only the most important they think which may not be that important. GE measures five growth traits: external focus, clear thinking, imagination, inclusiveness and expertise. That seems very balanced. But I will add entrepreneurial, not for GE but for those smaller firms. If you miss that energy, you will be bought over in months.

So the big question is this? Does management education give bloated ego that makes common sense wasted sense? Read the Distinguished Professor of Risk Engineering, New York University, Nassim Taleb, the author of Black Swam: “Humans can be extremely rational in ordinary circumstances. The minute you give them MBA, though, they start using these forecasts and these financial tools in ways that contradict their own behavior”

To conclude this piece, May 23, 2010 edition of Bloomberg Businessweek reported S&P 500 CEOs as per undergraduate alma mater; the result has those that attended School of Hard Knocks (euphemism for dropouts) tied at 12 CEOs with University of California. Harvard has 11 and Princeton 8 CEOs. This means that life struggles produce more CEOs than any of the top universities in the US, except University of California (clusters of schools though).

The world needs a new management philosophy which I am calling Intelligent Mutability Management (IMM). It is what will help the world, private and public, to understand that we can rebuild by destroying. Holding on to the past when the future is here creates a resistance that deprives the world growth and innovation. If we can understand how to intelligently and carefully allow some old era industries to collapse in order to make way for new ones, we will navigate out of our present economic crises better. A philosophy that looks at strength in learning how to destroy to succeed is what will help. We need intelligent mutability in managing the global affairs.