Our 20th-Century Thinking Is Outdated

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Tuesday, January 18, 2022
By Ashish Bhatia, Taylor Phillips, Matt Statler
Photo by iStock/EmirMemedovski
Now more than ever, business leaders need to complement analytical skills with imagination, inclusion, and qualitative judgment.
  • Scientific management theory is insufficient to address the world’s volatile, uncertain, complex, and ambiguous challenges.
  • The most successful managers will ask employees not just to optimize processes, but to imagine new solutions.
  • New research emphasizes the need for business schools to integrate the humanities, liberal arts, and aesthetics into their curricula.

Business and policy leaders might view the past 20 years as evidence that the world is becoming what many describe as volatile, uncertain, complex, and ambiguous—or VUCA. Evidence for this perception started at the turn of the century with the threat of global terrorism in the post-9/11 world. Then came the global financial crisis, where society teetered on the brink of an economic depression. Now, we face a once-in-a-century pandemic, which has disrupted nearly every aspect of our lives.

These events presented unique leadership challenges. However, more research, including our own, suggests that the problem with managing in a VUCA world stems not from our struggle to keep up with an ever-changing external environment, but from our outdated 20th-century thinking. 

Most business leaders who pursued management degrees in the 1980s and ’90s were trained in scientific management theory, a powerful philosophy that was critical to 20th-century economic development. First introduced in the early 1900s by Frederick Taylor as a way to optimize large-scale manufacturing, this foundational theory emphasizes managing inputs and outputs to ensure optimization and efficiency. This approach has benefited society greatly, because it shifted business leaders away from using haphazard guessing to drive their business decisions. It instead encouraged them to adopt evidence-based approaches that led to more effective allocation of resources.

However, many critics believe Taylor’s reliance on efficiency is unsuitable for today’s fast-moving business environment. Take, for instance, the flawed rollout of the COVID-19 vaccine. While the world’s reliance on scientific management contributed to the rapid development and deployment of the vaccines in many advanced economies, it also led to the vaccines’ erratic and inequitable global distribution.

Many business leaders have blamed VUCA for the distribution problems. But the truth is that scientific management is too narrow a tool to address problems that require ethical leadership and pragmatic imagination.

It’s time for us to revise our thinking. Scientific management is necessary, but cannot on its own support effective management and leadership in the 21st-century business environment. We must now turn to other disciplines—history, literature, philosophy, and the arts—to inform our decisions. In these disciplines, thinking is dominated not by the desire to maximize efficiency and outputs, but by the need to fully understand how the world works.

There is a reason why Leo Tolstoy’s War and Peace cannot be reduced to a tweet, just as there are reasons why great works of art can generate in us such a wide range of experiences, emotions, and ideas. If leaders are to address VUCA challenges that arise over the next century, they must adopt alternative theories. Today more than ever, the world needs its leaders to leverage far more nuanced skills. Three, in particular, are critically important: imagination, inclusion, and qualitative judgment.

Imagination—A Tool to Expand Possibilities

“How can we optimize this process?” Managers in many organizations often ask this familiar question. But while it’s an important question, it reflects only one mode of thinking. Managers also must ask their employees, “What new solutions can we imagine?”

The idea of using imagination at work might seem uncomfortable, especially for managers more familiar with taking an analytical approach to business problems. When relying on analytical methods, managers primarily use convergent thinking processes, in which they filter out ideas and reduce the complexity of problems. But in today’s business environment, managers must equally employ divergent thinking processes, in which they first generate and explore the complexity of a sufficient number of ideas before homing in on those that will create transformative value for their organizations.

Recent scholarship has recognized the value of imagination and made a case for business schools to incorporate tools that leverage divergent thinking, like design thinking in MBA curricula. Experts note that entrepreneurs and managers alike can benefit from using a creative, iterative process to explore and develop novel solutions.

While scientific management contributed to the rapid development and deployment of the COVID-19 vaccines, it also led to their erratic and inequitable global distribution.

Another area of business education where imagination and other modes of thinking are breaking from a tradition of scientific management is in entrepreneurship curricula. In a 2020 study published in Academy of Management Learning & Education, Ashish K. Bhatia, a co-author of this article, and his colleague Natalia Levina found that some business schools are employing entrepreneurial methods distinct from scientific management.

One method discussed in this research, effectuation, encourages people to begin with their resources (who they are, what they know, and who they know) and rely on pragmatism and humanism to imagine many possible solutions. This reverses a typical scientific management approach, in which they would instead begin with a singular solution and then seek out resources to achieve it.

As business schools shift their thinking, they train the next generation of leaders to leverage imagination as a way of inventing the future—rather than merely accepting the future as it comes.

Inclusion—A Tool to Let the Human Experience Thrive

Many large organizations are adopting policies that are more inclusive of people of different backgrounds—but a key question is whether the ethos of inclusion is really sinking into business leaders’ decision making. Businesses are diligently working to create diversity-focused resources, expand multicultural awareness to staff and suppliers, and communicate social justice messages to employees and customers. Even so, their leaders often fail to reflect on what value they place on other human beings.

Consider the following scenario: A leader surveys members of his business development team to understand what features contribute to their success. He asks scientific management-based questions to discover the qualities that make sales associates most effective.

In turn, his organization uses these findings to select new employees with the same qualities—maybe they graduated from similar schools or have similar work experience—in order to optimize its success. But are the attributes identified in such a survey the only means to effect success? Should the manager also consider that some employees are high-performing because they have had the greatest advantages, perhaps by virtue of being white, male, or wealthy?

By following the manager’s approach, the organization might continue to achieve only the type of success it has already had. It might simultaneously limit its potential to attract new customers or enter different market segments.

Moreover, by hiring the same types of star players, the organization is likely to be less prepared for changes in a VUCA business context. Studies show that when employees are valued merely for the instrumental gains they achieve—rather than for their unique, human qualities—they suffer more at work.

Scientific management acknowledges that such suffering is problematic because it reduces productivity and increases turnover. But truly inclusive thinking suggests something more radical: Managers might want to alleviate their employees’ suffering just because it’s a good thing to do. In other words, inclusive thinking offers a more humanist mode of thought for business leaders of the future.

Qualitative Judgment—A Tool to Go Beyond the Measurable

If we assume that “we cannot manage what we cannot measure,” as many business experts argue, we tend to focus on what can be easily measured; we ignore things that remain difficult, if not impossible, to measure. By emphasizing scientific management over the last 50 years, business schools have effectively marginalized other harder-to-quantify aspects of business, such as ethics and aesthetics.

Similarly, if we always assume that value can be quantified—whether in terms of GDP at the macro level, profits and losses at the firm level, or personal preferences at the individual level—then we tend to forget about the qualities of what we value. It’s true that management researchers have developed much useful and important practical knowledge based on such assumptions. But it’s just as true that leaders can greatly broaden their understanding if they develop qualitative judgment about ethical and aesthetic value.

An emphasis on qualitative judgment doesn’t require us to forget about quantity, measurement, and predictive hypotheses. Instead, it asks us to admit that science is insufficient to support effective management.

This revitalized emphasis on qualitative judgment doesn’t require us to forget about quantity, measurement, and predictive hypotheses. Instead, it asks us to admit that science is insufficient to support effective management. Managers who object to this suggestion would do well to recall that 18th-century Scottish economist Adam Smith’s position at the University of Glasgow was Chair of Moral Philosophy. They should remember that Aristotle valued both the study of the sciences and the study of ethics and politics, because he thought human affairs were impossible to understand through deductive reasoning or mathematical methods alone.

If these classical roots of management rationality seem rather dusty, skeptical managers also can reference contemporary scholarship that emphasizes the integration of the humanities, liberal arts, and aesthetics into the business school curriculum. See, for example, special issues published in 2020 by Academy of Management Learning and Education and in 2021 by Management Learning.

Another example can be found in the presentations and dialogues taking place each summer at the Aspen Institute Undergraduate Consortium. This group was founded ten years ago on the notion that business students needed to expand their conceptual toolbox. Its members emphasize that qualitative judgment is now part of our “new normal”—that it’s a mainstream approach for leaders who want to understand and engage effectively in the practice of management.

It’s Time to Update Our Thinking

These developments in business education give us hope that the next generation of managers will be prepared to solve complex 21st-century problems. They will be able to navigate a pandemic and thrive in a VUCA world. But managers who are part of the current generation still face a significant challenge: They must update how they think about the world and their place in it.

Scientific management has been an important tool that has inspired many valuable solutions. But business and policy leaders now must complement their analytical thinking with imagination, inclusion, and qualitative judgment. Only then will they be able to advance solutions that address today’s challenges.

Future global challenges are unlikely to resemble those that came before. Yes, leaders must continue to apply tools that help organizations improve production and maximize efficiencies. But they also will need to expand their capacity for pragmatism, humanity, and ethics. That is the only way they will be able to advance solutions that address the needs of a 21st-century world.

Authors
Ashish Bhatia
Clinical Associate Professor of Management & Entrepreneurship and Academic Director of the BS in Business, Technology & Entrepreneurship, NYU Stern School of Business
Taylor Phillips
Assistant Professor of Management & Organizations, NYU Stern School of Business
Matt Statler
Richman Family Director of Business Ethics & Social Impact Programming and Clinical Professor of Business & Society, NYU Stern School of Business
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