Waste, or The Survival of Nonsense

Why are corrective management books like this necessary? How is it that managers have the freedom to waste precious company resources pursuing management fads that don't work? In principle, one might expect wasteful management fads to be weeded out by the pressure of market competition.

Some possible explanations:

  1. It's not actually all that wasteful. (I doubt this.)
  2. The actual market is nowhere near a competitive equilibrium. (I consider this probable but I think it can be broken down into many contributing factors.)
  3. The market conditions are changing all the time, keeping the market from reaching equilibrium.
  4. Companies differ from other companies by many factors, and management stupidity at one company may in effect be subsidized by excellence in some other aspect of the company. It can take a long time separate out the producers within a company from the parasites and saboteurs.
  5. Government favor may be permanently impeding competition, permanently subsidizing management stupidity in favored companies.
  6. Perfect alignment of selfish interests and company interests is never possible, and the pursuit of management fads may be a permanent cost of doing business even in equilibrium much as theft of office supplies is a permanent cost of doing business. Management fads may tend to benefit their instigators at the expense of everyone else.
  7. Management fads may be a corporate form of ritual and superstition, so the explanations of ritual and superstition may be transferrable to management fads.
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Management fads may be a

Management fads may be a corporate form of ritual and superstition, so the explanations of ritual and superstition may be transferrable to management fads

Bingo.

Also, I would guess that highly successful managers don't read that sort of thing. The struggling startup I worked at operating out of a suburban basement had a few management and self-improvement book fans. The Investment Bank I worked at with its own high-rise overlooking the Potomac had none.

Consider it with magnets, charms, and tonics that promise to cure what ails you.

The book criticizes conventional wisdom

The book criticizes not just obvious fads but conventional wisdom which a lot of major companies base their practices on but which an evidence-based approach shows to be misguided. The situation is similar to the situation with evidence-based medicine, which has overturned some of the conventional wisdom that had previously passed as legitimate medicine. I used the term "fads" but I was asking a more general question about erroneous practices.

For instance, the authors criticize the widespread practice of financial performance incentives. The authors conclude based on evidence from studies that financial incentives are a net benefit in certain very specific circumstances (essentially, in non-collaborative work), but that in knowledge work that relies on collaboration it can be not only useless but poisonous.

I think it's 4) with a

I think it's 4) with a twist. There is a lot of randomness involved in the success of businesses, management fads do not have so much effect, positive or negative. In the end the bad one will be weeded out, but it takes a long time, simply because the success or failure of ventures carry little information about the effectiveness of a particular management style. Add in a pinch of 7).