Corporate Teleology

Corporate Teleology

When I was in business school I rarely attended lectures in something called strategic planning, a required course, and when I showed my face in class, I did not listen for a nanosecond to what was said there; did not even buy the books. There is something about the common sense of student culture; we knew that it was all babble. I passed the required classes in management by confusing the professors, playing with complicated logics, and I felt it intellectually dishonest to enroll in more classes than the strictly necessary.

Corporations are in love with the idea of the strategic plan. They need to pay to figure out where they are going. Yet there is no evidence that strategic planning works—we even seem to have evidence against it. A management scholar, William Starbuck, has published a few papers debunking the effectiveness of planning—it makes the corporation option-blind, as it gets locked into a non-opportunistic course of action.

Almost everything theoretical in management, from Taylorism to all productivity stories, upon empirical testing, has been exposed as pseudoscience—and like most economic theories, lives in a world parallel to the evidence. Matthew Stewart, who, trained as a philosopher, found himself in a management consultant job, gives a pretty revolting, if funny, inside story in The Management Myth. It is similar to the self-serving approach of bankers. Abrahamson and Friedman, in their beautiful book A Perfect Mess, also debunk many of these neat, crisp, teleological approaches. It turns out, strategic planning is just superstitious babble.

For an illustration of business drift, rational and opportunistic business drift, take the following. Coca-Cola began as a pharmaceutical product. Tiffany & Co., the fancy jewelry store company, started life as a stationery store. The last two examples are close, perhaps, but consider next: Raytheon, which made the first missile guidance system, was a refrigerator maker (one of the founders was no other than Vannevar Bush, who conceived the teleological linear model of science; go figure). Now, worse: Nokia, who used to be the top mobile phone maker, began as a paper mill (at some stage they were into rubber shoes). DuPont, now famous for Teflon nonstick cooking pans, Corian countertops, and the durable fabric Kevlar, actually started out as an explosives company. Avon, the cosmetics company, started out in door-to-door book sales. And, the strangest of all, Oneida Silversmiths was a community religious cult but for regulatory reasons they needed to use as cover a joint stock company.