Management by the Numbers

30 November 2006 at 10:17 am 2 comments

| Peter Klein |

Many principles of “scientific management,” such as Harold Geneen’s concept of “management by the numbers,” are considered outdated, remnants of the Big Science era of the 1960s and early 1970s (the Cold War, the Apollo Project, conglomerates, etc.). Today’s management theorists and practitioners favor more holistic, less quantitative, and presumably more “dynamic” approaches. Organizations should be flexible, “lean and mean,” and focused on people and processes, not numbers.

The newest issue of Strategic Organization (4:4, November 2006) features a paper challenging this conventional wisdom. In “The Power of Numbers in Strategizing,” Jean-Louis Denis, Ann Langley, and Linda Rouleau defend the use of quantitative analysis.

This article draws on a detailed case study of a complex decision process in a public healthcare system to consider the role and potential power of numbers in strategizing. Because of their association with precision and accuracy, numbers may seem at first sight to be unlikely tools for decision making in contexts characterized by ambiguous goals and diffuse authority. Yet in the case described in this article, managers successfully mobilized a system of numbers to make an extremely controversial strategic decision. . . . Though contested, numbers can under certain conditions come to acquire and provide authority in organizations where power is diffuse. This is most likely when the number systems enable the reconciliation of diverse values and interests, when they are embedded in shared systems of meaning, and when they are coupled with and activated by particular micro-practices that support the legitimacy of their promoters as disinterested advocates for the collective good.

Despite references to “shared systems of meaning,” numbers as social constructs, power relations, “pluralism,” and the like — which might seem to warrant inclusion in our Pomo Periscope series — the paper provides a useful overview of the basic issues and some interesting case discussion.

NB: Watch out for some numbers.

Entry filed under: - Klein -, Management Theory, Strategic Management.

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2 Comments Add your own

  • 1. Bo  |  30 November 2006 at 12:09 pm

    I think J-F Hennart would agree. In a recent commentary in Journal of Management Studies (2006) he comments on a very critical article about the nature of JV/alliance research. The original article (by Bell et al.) basically argues for a holistic, qualitative process-oriented approach and concludes that current research falls short of filling both the academic and the managerial gap. Bell, being the VP of Alliances for Philips is of course concerned with managerial application…

    anyways, in the comment, Hennart basically proposes to reduce complexity in our analyses and he states that “perhaps 80% of what happens in alliances can be predicted by from a careful analysis of their initial structure, and if the structure is defective, subsequent effort by managers to build trust or to improve communication are unlikely to make much difference”. In Hennarts world, processes really do not mattert much – it all comes down to the initial structuring (governance) of the relationships – although he does adopt a somewhat broad definition of structure to encompass type, scope, contractual stipulations and even goals and aspirations..

  • 2. Peter Klein  |  30 November 2006 at 12:15 pm

    Thanks Bo! Here’s the piece by Bell et al.:

    And here’s Hennart’s response:

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