A Road Map Back to Business Basics

By John A. Byrne


How It Works and

Why It's Everyone's Business

By Joan Magretta with Nan Stone

Free Press -- 244pp -- $25

Part of the fallout from Enron Corp.'s meltdown is the near-total collapse of the management guru market. Business book sales have plummeted. The lecture circuit for management speakers has fallen apart. And there's no new Big Idea that consulting firms can trot out to generate much enthusiasm or business.

The slump in the market for management ideas is a natural outcome of the cynicism that pervades today's business world. But it can also be attributed to the lousy track record of management thinkers, whose buzzwords and half-baked theories have often proved little more than fads. The praise heaped on Enron by so many self-styled management sages only served to undermine their credibility further. The last big idea, e-business, greatly underdelivered on its promise, largely because too many organizations misapplied the technology. It hasn't helped that in recent years the literature of management has neatly fallen into one of two trash bins: densely written, unedited abstraction or, even worse, trite and irrelevant parables created for brain-dead managers.

Into this unwelcoming market comes What Management Is, a slim volume with a dull-looking cover and an unappetizing title. Its release could not have been more timely. At a moment when many are disillusioned by the blatant self-interest of outrageously paid business leaders, this book is an urgent call to get back to the basics. It reminds us why the discipline of management truly matters. It rejects the notion that a simple fad can make a meaningful difference.

Rarely has anyone so succinctly and engagingly presented the core principles of managing in a single book. Written by Joan Magretta with Nan Stone, both former Harvard Business Review editors, this text is a model of clarity and thoroughness.

Readers are taken on a relatively jargon-free journey through the wisdom and ideas of some of the world's greatest management savants and their landmark thinking, from Peter Drucker to Michael Porter. We visit a wide range of successful companies--eBay Inc. (EBAY ) and Toyota Motor Corp. (TM ), to name just two. And along the way, readers gain an understanding of the essentials: why and how people work together, and what role management plays.

The author's take on getting the most from employees is remarkably perceptive. Most people, she notes, are deeply and rightly resistant to being managed. "In fact, the real insight about managing people is that, ultimately, you don't. The best performers are people who know enough and care enough to manage themselves," Magretta writes. It's why culture, trust in leadership, and respect for the individual are so important to any organization.

Magretta also makes the point that all organizations must match their design to their missions. Consider India's Aravind Eye Hospital in Madurai, which performs 180,000 cataract operations each year at $10 a procedure--a fraction of the $1,650 cost in the U.S. The hospital's mission and organization are comparable to Henry Ford's high-volume, superefficient assembly-line process that produced the Model T. From patient screening to the surgery itself, every step has been standardized to provide high-quality, low-cost eye care, and the hospital created its own lab to make intraocular lenses, needed for these procedures. The result is that the organization's design allowed it to fulfill its mission of providing affordable eye care to the masses.

After all, Magretta points out, there is no one best way to organize. Scale, scope, and structure all depend on what an organization is trying to do. Organizations are the means to ends, writes Magretta, not ends in themselves. They exist to serve the needs of people who are outside them. They are where we come together to accomplish something that none of us could achieve alone. This is a simple concept, but one that was forgotten by many in the boom of the late 1990s.

The author also explains that performance is all about realizing the mission of a company. That's why it is so critical to define performance in a way that makes an organization's objective clear to everyone. Nonprofit foundations, she notes, often report the number of grants they've awarded rather than the outcome those grants are designed to produce, a measure directly related to performance.

The New York Police Dept. had to learn the same lesson. In years past, the NYPD measured its performance by tracking such things as the number of officers walking the neighborhood beats or the number of emergency calls answered. Neither measure could tell the city's leaders whether the department was achieving its goal of reducing crime. Then, new measures, implemented in the 1990s, counted the proportion of people arrested and searched in connection with misdemeanors, and correlated those numbers with actual crime rates. This proved a much better way to gauge effectiveness.

What Management Is won't tell you how to manage better in the next hour. It won't make anyone a one-minute manager. But it will help leaders understand better how the ideas that form the foundation of good management have, in Magretta's words, "powerfully altered our economy and our lives." That's a potent message in this disillusioning time.

Senior Writer Byrne covers management issues.

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