Is it time for a Nobel Prize for management?

21 March 2016 -

Simon Caulkin presents the case for recognising practice-based achievements

Simon Caulkin

Should there be a Nobel Prize for management? Of course there should!

Although much less in the public eye and very much junior in the unofficial social science hierarchy, management is just as important as Nobel-garlanded economics, affecting every person who works.

A management Nobel would level things up a bit – and perhaps put some needed oomph behind a management research agenda that has barely shifted in decades.

But what kind of research would it reward? Looking back, it’s arguable that the anointing of economics with a Memorial award in 1969 has been counterproductive.

To be blunt , the prestige and influence the prize confers may have lured the profession up a blind alley. To the Queen’s celebrated question in 2008 – how come no one saw the crisis coming? – the only convincing answer is that economists were (as ever) looking in the wrong place.

In his acceptance of the 1974 economics prize, Friedrich Hayek confessed that if the profession had failed to provide useful policy guidance, had “made a mess of things”, the reason was ‘physics envy’: the desire to turn economics into a provable, testable science.

But the application of scientific formulae to human phenomena was a glaring category error he called “the pretence of knowledge”.

Management has been guilty of the same besetting sin.

In thrall to economics, as economics is to physics, it has desperately courted academic respectability by trying to reduce the variables it deals with to numbers and equations.

Yet this has been the cause not only of massive numerical error and accompanying value-destruction (as in 2008) but also untold human misery – witness the zero-job-security culture of the City and many menial jobs and the awful levels of engagement even among workers with full-time employment.

By making performance management by numbers ever more easy and tempting, today’s digital revolution only reinforces the mathematical tendency, perilously boosting management’s own pretence of knowledge.

A Nobel Prize that privileges observation-lite theorising, seemingly the preferred method of moving economics forward, would do nothing to make the world of work a better place and could quite conceivably make it worse.

The irony is that management has urgent issues to face up to that could usefully mobilise social science’s most penetrating brainpower.

One speaker at the 2015 Global Peter Drucker Forum noted that “we don’t actually know very much about management”.

This is both embarrassing and frustrating, but not surprising. As MIT’s Don Sull explains, while most management education assumes that business is governed by universal laws, that is only true in finance: “In management, context, timing, personality and history are everything. The challenge lies in developing judgment, knowing which tool to use rather than reaching for the hammer every time.”

The problem is compounded by management’s slippery nature.

Precisely because so much of it resists the testing and proving that is a feature of the physical sciences, management theories proliferate rather than narrow down.

Leadership is the subject of a monstrous and ever-expanding literature, yet without consensus even on what it is.

Is there a way out? Yes, there is – and it starts (another paradox) from the frank admission of ignorance.

Management is a craft, and there is no substitute for practice and judgment. But in many areas there is a nucleus of evidence based on empirical research as to what works on the ground.

Some of it seems humdrum and it does not carry huge prestige. It is surprisingly little-used, and much of it runs counter to today’s practice.

Building on these nuclei and constructing a theory of management out of the practice – now that really would be worth a Nobel Prize.