Classical Management Foundations for the Future of Management Education Ellen S. O’Connor, Ph.D., M.B.A. Philosophie & Management ( Brussels, June 23, 2014

What must be done? What must be done? 1. Recover forgotten knowledge 2. Understand Why it was forgotten 2. Understand Why it was forgotten 3. Build on this knowledge Mary P. Follett Mary P. Follett Chester Barnard Chester Barnard

Industrialization & the new organizational form Unlike familiar forms (church, state & military) Relating to (discovery) & applying basic science (exploitation) Converting to scale reliably & continuously (formal organizing) Spreading quickly Unlike familiar forms (church, state & military) Relating to (discovery) & applying basic science (exploitation) Converting to scale reliably & continuously (formal organizing) Spreading quickly

More artificial More artificial New organizational form More fictitious More fictitious More ephemeral More ephemeral More complex More complex Potentially Very large scale Potentially Very large scale Potentially generating massive wealth Potentially generating massive wealth

Education gap for the new industry “Business” schools: Clerks Colleges: Gentlemen Scientific schools: engineers “Business” schools: Clerks Colleges: Gentlemen Scientific schools: engineers Wealthy industrialists look for new institutions

Accelerating factors Panic of 1873 Credit mobilier fraud 1870’s Great railroad strike 1877 Injunctions against unions 1877 Pennsylvania state militia fires

Modern industry requires us to organize under single leaders… great amounts of capital & numbers of laborers The fruits of organized labor must be properly divided among capitalist, leader & workman The importance of educating men to combine their energies for the accomplishment of any desirable object, and the principles upon which such combinations should be effected First Collegiate school of business curriculum Joseph Wharton Joseph Wharton

Instill new values Wharton’s agendas Wharton’s agendas Make new discoveries Teach new subjects

Decentralization New organizational form (deeper) New organizational form (deeper) Suboptimization Regimentation Uncertainty

New organizational form’s consequences  New individual, collectivity & interdependencies  New knowledge But no institutional support for generating & growing that knowledge  New individual, collectivity & interdependencies  New knowledge But no institutional support for generating & growing that knowledge

Missed opportunities: the 4 crises 1881 Wharton Collegiate School of business 1881 Wharton Collegiate School of business 1919 Harvard Business School 1919 Harvard Business School 1890 New York University College 1890 New York University College 1948 Carnegie Graduate School of Industrial Admin Carnegie Graduate School of Industrial Admin.

Comprenhensive knowledge transfer (Barnard & Harvard in 1930’s-40’s); Simon’s seminars on Barnard in late 40’s) Basic science of collective value(s) creation Follett (1924) Basic science of collective value(s) creation Follett (1924) General theory of organization Barnard (1938) General theory of organization Barnard (1938) The Classics’ contribution The Classics’ contribution

Exerting centripetal force Securing creative contribution of all Building an interdependence culture The Classics’ Key managerial roles The Classics’ Key managerial roles

Microeconomics Corporate strategy Shareholder value theory Neoclassical economics No pursuit of problems & solutions identified by classical management Agenda: Short-Term Wealth Maximization

Next steps? 1.Recover forgotten knowledge Educate educators 1.Recover forgotten knowledge Educate educators 2. Understand why it was forgotten Developing historical sensibility 2. Understand why it was forgotten Developing historical sensibility 3. Build on classical management theories & findings Research Rigorous testing Living case method 3. Build on classical management theories & findings Research Rigorous testing Living case method

Classical Management for today A workshop Ellen S. O’Connor, Ph.D., M.B.A. Philosophie & Management ( Brussels, June 24, 2014

Purpose of management education Develop members & leaders of formal organization who master the tool of organization, in pursuit of individual & collective value(s) creation at the highest level, continuously, and in the long run Develop members & leaders of formal organization who master the tool of organization, in pursuit of individual & collective value(s) creation at the highest level, continuously, and in the long run

Develop members and leaders of formal organization who master the tool of organization, in pursuit of individual and collective value(s) creation at the highest level, continuously, and in the long run. This calls for a higher-order institution with the knowledge to provide that education. Need for a higher-order institution with the knowledge to provide that education

What We Know So Far Names & titles Names & titles Living insights Living insights Historical figures Historical figures Educational experiments Educational experiments Key findings Key findings

“Failed” educational experiments: the 4 crises 1881 Wharton Collegiate School of business 1881 Wharton Collegiate School of business 1919 Harvard Business School 1919 Harvard Business School 1890 New York University College 1890 New York University College 1948 Carnegie Graduate School of Industrial Admin Carnegie Graduate School of Industrial Admin.

Wharton ( ) Wharton ( ) Fayol ( ) Fayol ( ) Taylor ( ) Taylor ( ) Follett ( ) Follett ( ) Rowntree ( ) Rowntree ( ) Donham ( ) Donham ( ) Barnard ( ) Barnard ( )

Key Findings Core knowledge grown piecemeal in a small group of scientifically & developmentally minded executives Core knowledge grown piecemeal in a small group of scientifically & developmentally minded executives Key findings Business schools: so far organized to serve academic & technical specialists Science based on individual experience “in the physiological condition of personal responsibility” in formal organization Science based on individual experience “in the physiological condition of personal responsibility” in formal organization

Comprenhensive knowledge transfer (Barnard & Harvard in 1930’s-40’s); Simon’s seminars on Barnard in late 40’s) Basic science of collective value(s) creation Follett (1924) Basic science of collective value(s) creation Follett (1924) General theory of organization Barnard (1938) General theory of organization Barnard (1938) Living Insights (key classics’ contributions) Living Insights (key classics’ contributions)

Management Value(s) creation pivot multiplier, in pursuit of creative tension between conflicting forces (sensed within) Management Value(s) creation pivot multiplier, in pursuit of creative tension between conflicting forces (sensed within) Centrifugal v. Centripetal Centrifugal v. Centripetal Discovery v. Exploitation Discovery v. Exploitation Individual v. Group Individual v. Group Individual v. Regimentation Individual v. Regimentation Freedom v. Subordination Freedom v. Subordination Contributing v. Witholding Contributing v. Witholding

The Conflicting and Creative Forces Organization: Centrifugal v. centripedal Organization: Discovery v. exploitation Organization: The individual v. the group Individual: Individualism v. regimentation Individual: Freedom v. subordination Individual: Contributing v. withholding Management Value(s) creation pivot multiplier, in pursuit of creative tension between conflicting forces (sensed within) Management Value(s) creation pivot multiplier, in pursuit of creative tension between conflicting forces (sensed within) Centrifugal v. Centripetal Centrifugal v. Centripetal Discovery v. Exploitation Discovery v. Exploitation Individual v. Group Individual v. Group Individual v. Regimentation Individual v. Regimentation Freedom v. Subordination Freedom v. Subordination Contributing v. Witholding Contributing v. Witholding

Executives exert centripetal force Executives exert centripetal force (re)invent purposes (re)invent purposes (re)invent moral codes (re)invent moral codes integrate internally integrate internally integrate externally integrate externally incarnate through own person (Subordination, predictability & sincerity) incarnate through own person (Subordination, predictability & sincerity)