Your CEO as a Soviet Planner

Posted by on Feb 16, 2009 in Uncategorized | 2 Comments

Ff_nuclearwar_brezhnev
Great piece in yesterday's Observer by Simon Caulkin:

"…high priests of capitalism had failed to notice that while central planning had been largely discredited at a macroeconomic level, at microeconomic level it remained alive and kicking"

Echoes of my rant against the machine-metaphor in the last chapter of HERD: this metaphor – 100 years on from Fred Taylor – still dominates much management science. Efficiency, productivity, process and optimisation etc etc – all these come from this simple but addictive idea. Which organisation doesn't plan obsessively? Which do you know is planning less nowadays? Does your CEO tell the shareholders (and the other stakeholders of the business) stuff like, "we're not sure what's going to happen…."? Probably not – certainty in what will happen and the plan to meet it are essential fictions of today's CEO.

All of which leads to the bloating of the managerial classes in any large organisation

"Central planning imposes a huge co-ordination burden – which is why there is just so much management"

Curious then, as Caulkin observes, that when coupled with a fervent commitment by the same folk to laisser faire macroeconomics, we get oh….a total mess.

What's clear is that central planning of your organisation is unlikely to get you and yours out of this mess…

2 Comments

  1. Antony Mayfield
    February 16, 2009

    Spot on, Mark – absolutely spot on…
    It seems such an obvious contradiction now, but we’ve indulged the spreadsheet fantasy of control and predictability in our companies. In fact, to be outside it is to be a heretic.
    “What are your projections for Q-whatever, FY-blah?” are questions that demand a suspension of disbelief throughout the management structure of a company and its stakeholders/investors/shareholders.
    I recommend standing to attention, staring straight ahead and appending the word “comrade” to the end of any response to such questions from now on. It’s the only sane response…
    Large organisations need to plan, but plan in a more agile way. One Truth is a lie. A spread, a loose plotting of your possible courses, and some ideas about how you would react to different scenarios…

  2. Ian
    February 17, 2009

    I wonder, though, if there really is any contradiction between believing that markets work best relatively free of central planning, and that companies work best with a high degree of planning? After all, these two institutions – the market and the company – perform complementary but different functions. To use the old truism, companies propose, markets dispose. Companies come up with services, products, ideas – markets find ways to distribute them efficiently (by and large!). To come up with profitable ideas you need to be able to look at the whole category and to think about it over the longer-term – in other words, you need to plan.
    I’d be more inclined to believe in the imperative to ‘give up control’ if I knew of real, statistical (as opposed to anecdotal) evidence that companies which do little or no ‘central planning’ do better than those that do more. Maybe there is some?