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Selected Papers * No. 26 Good Managers Don’t Make Policy Decisions By H. EDWARD WRAPP GRADUATE SCHOOL OF BUSINESS UNIVERSITY OF CHICAGO

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Page 1: Good Managers Dont Make Policy

Selected Papers * No. 26

Good ManagersDon’t MakePolicy Decisions

By H. E D W A R D W R A P P

GRADUATE SCHOOL OF BUSINESS

UNIVERSITY OF CHICAGO

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H. EDWARD WRAPP is Professor of Business Policy and

former Associate Dean for Management Programsat The University of Chicago’s Graduate School ofBusiness. A 1938 graduate of the University ofNotre Dame, he received his M.B.A. and D.C.S.degrees from Harvard in 1948 and 1952. His majorareas of interest are management development, for-mulation and implementation of corporate strategy,and judgment of managerial performance. He is amember of the board of five corporations: Imperial-Eastman of Chicago, Welch Scientific Company ofChicago, Atkins and Merrill of Boston, AutomationEngineering Laboratories of Stamford, Conn., andStandard Screw Company of Hartford, Conn. Mr.

Wrapp is a former Professor of Business Adminis-tration at Harvard University. This paper wasinitially presented at an Executive Program ClubLuncheon at the Pick-Congress Hotel , Chicago,

April 27, 1967, and appeared in the Harvard Busi-ness Review.

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Good ManagersDon’t MakePolicy Decisions

THE UPPER REACHES of management are a landof mystery and intrigue. Very few have everbeen there, and the present inhabitants fre-quently send back messages, incoherent bothto other levels of management and to theworld in general.

The fragmentary reports from the world ofthe top manager often produce caricatures ofthe hardy types who reach for the generalmanagement rungs on the ladder. For exam-ple, the literature on management producessuch widely held notions as these: that life getsless complicated as you reach the top of thepyramid. The manager at that level knowseverything that’s going on in the organiza-tion, can command whatever resources heneeds, and therefore can be more decisive.Another description pictures the general man-ager’s day taken up with making broad policydecisions; a related version is that he spendsmost of his time formulating objectives. Stillanother identifies his primary activity as con-ceptualizing long range plans; or, in a largecompany, he may be seen meditating about therole of his organization in society.

I suggest that none of these versions alone,or in combination, is an accurate portrayal ofwhat the general manager does. Perhaps stu-dents of the management process have beenoverly eager to develop a theory and a disci-pline. As one executive puts it, “I guess I dosome of the things described in the books andarticles, but the descriptions are lifeless andmy job isn’t.”

Before proceeding with my own interpreta-tions of what goes on at the general manage-

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ment level, I hasten to assure you that thispaper is based on research. My generalizationsderive from working closely with many manag-ers in many different companies. In truth, themanagers were not preselected with researchin mind. Never did I tell the manager that hewas being studied, nor was I in fact studyinghis behavior. Research was not the purpose ofour relationship. We were collaborating tosolve some real problem.

Strange Results

Researching the management process whenthe manager is aware that he is being studiedsometimes produces strange results. Rarely isa good manager able to think objectively aboutthe management process as it is exemplified inhis own methods. When he tries to explain tosomeone who is, in effect, observing him, themanager feels compelled to develop rational,systematic explanations of how he does his job,explanations which in my opinion are largelyfictional.

You cannot expect a manager to describe hismethods even if he understands them. Theyborder on manipulation, and the stigma asso-ciated with manipulation can be fatal. If everthe organization identifies you as a manipu-lator, your job becomes more difficult. No onewillingly submits to manipulation, and thosearound you organize to protect themselves.And yet every good manager is deep in thisdilemma.

My definition of a good manager is a simpleone. Under competitive industry conditions,he is able to move his organization significant-ly toward the goals he has set, whether meas-ured by higher return on investment, productimprovement, development of managementtalent, faster growth in sales and earnings, orwhatevec

Remember, this definition does not refer tothe administrator whose principal role is to

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maintain the status quo in a company or in adepartment. Keeping the wheels turning in adirection already set is a relatively simple taskcompared to that of refereeing the introduc-tion of a continuing flow of changes and inno-vations, and preventing the organization fromflying apart under the pressure.

Considering this group of managers in ac-tion, on the job, what common characteristicsdo the successful ones exhibit? Do patternsseem to recur? Let me try to identify five skillsor characteristics which seem to me significant:

Keeps Informed

First, each of my heroes has a special talentfor keeping himself informed about a widerange of operating decisions being made atdifferent levels in the company. As he movesup the ladder, he develops a network of in-formation sources in many different depart-ments. He cultivates these sources and keepsthem open no matter how high he rises in theorganization. When the need arises, he by-passes the lines on the organization chart toseek more than one version of a situation.

In some instances, especially when they sus-pect he would not be in total agreement withtheir decision, his subordinates will elect to in-form him in advance, before a decision is an-nounced. In these circumstances, he is in aposition to defer the decision, or redirect it, oreven block any further action. On anotherkind of problem, the general manager maylearn after the fact that some decision has beenmade and implemented. The skillful managerwill ordinarily leave to members of his organi-zation the judgment to decide at what stagethey inform him.

Top level managers are frequently criticizedby lower levels of management, writers, andconsultants because after promotion they con-tinue to enmesh themselves in operating prob-lems rather than to withdraw to the “big pic-

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ture.” Without any doubt, some managers doget lost in a welter of detail. Not only do theydig into detail, but they insist that they makeall the decisions. Superficially, the good man-ager may seem to be caught in the same web,but his purposes are different. He knows thatonly by keeping well informed about the deci-sions being made can he avoid the sterility sooften found in those who isolate themselvesfrom operations. Many top executives whofollow the advice to free themselves fromoperations soon find themselves subsisting ona diet of abstractions with the choice of whatthey eat in the hands of their subordinates.

As Kenneth Boulding puts it, “The verypurpose of a hierarchy is to prevent informa-tion from reaching higher layers. It operates asan information filter, and there are littlewastebaskets all along the way.”

A real-life example which illustrates skillfulmanagement is that of one company presidentwho sensed that his vice presidents were in-sulating him from some of the vital issuesbeing discussed at lower levels. He accepted aproposal for a formal management develop-ment program primarily because it affordedhim an opportunity to discuss company prob-lems with middle managers several layers re-moved from him in the organization. By meet-ing with small groups of these men in an aca-demic setting, he learned much about theirpreoccupations, and also those of his vicepresidents. And in this instance he accom-plished his purposes without underminingline authority.

Certain managers seem to be able to respondalmost immediately with a well-reasoned posi-tion on most of the problems and proposalscoming to them. The explanation may rest notso much with a superior intellect as with awell-cultivated information network whichgives an early warning and permits advancepreparation.

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The second characteristic or skill of thegood manager is an ability to save his energyand hours for those few particular issues, deci-sions or problems to which he should give hispersonal attention. There is a fine and subtledistinction between keeping fully informedabout operating decisions and allowing theorganization to force you into participating inthem, or even worse, making them.

Choosing the Issues

The good manager knows that he can bringhis special talents to bear on a limited numberof matters. He therefore chooses those whichhe believes will have the greatest long-termimpact and those where his own special talentscan be most productive. Under ordinary cir-cumstances he will limit himself to three orfour major objectives during any single timeperiod.

As he spots certain situations emerging fromthe organization, he will elect to become in-volved in the decision-making process. On theothers, he will assure that the organizationkeeps him informed at various stages, but hewill refrain from active participation. Unlessthis skill is exercised with great expertise, hemay be accused of indifference to those issueswhich he keeps at arm’s length. He trains hissubordinates not to bring matters to him fordecisions. The communication to him frombelow is essentially one of “here is our sizeupand here’s what we propose to do.”

The manager is in a position to delay acourse of action when he is informed prior toaction, but in practice he seldom does hold upwhat his subordinates propose to do. Hishearty encouragement is reserved for thoseprojects which hold superior promise of a con-tribution to total corporate strategy. He simplyacknowledges receipt of information on mostmatters. When he sees a problem where the

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organization needs his help, he finds ways totransmit his know-how short of giving orders,usually by asking perceptive questions.

Power Structure

The third skill is the manager’s sensitivityto the power structure in the organization. Inconsidering any one of the major and currentproposals, he can plot the position of the vari-ous individuals and units in the organizationon a scale ranging from complete, outspokensupport down to determined, sometimes bitterand oftentimes well cloaked opposition. In themiddle of the scale is an area of comparativeindifference. Usually, several aspects of a pro-posal will fall into this area, and here is thearea where the manager can operate. Heassesses the depth and nature of the blocs inthe organization. His perception permits himto move through what I call corridors of com-parative indifference. He seldom challengeswhen a corridor is blocked, preferring to pauseuntil it has opened up.

Related to this particular skill is the goodmanager’s recognition of the need for a fewtrial balloon launchers in the organization. Heknows that the organization will tolerate onlya certain number of proposals which emanatefrom the apex of the pyramid. No matter howsorely he may be tempted to stimulate theorganization with a flow of his own ideas, herecognizes the advantages of cultivating trialballoon launchers or idea men in differentparts of the organization. As he studies the re-actions of key individuals and groups to theballoons these men send up, he is able to makea better assessment of how to limit the emascu-lation of the various proposals.

Seldom, too, does he find a proposal which issupported by all quarters of the organization.The emergence of strong support in certainquarters is almost certain to evoke strongopposition in others.

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Consider this example of a vice presidentwho for some time had been convinced thathis company lacked a sense of direction andneeded a formal long-range planning activityto fill the void. Up to now, his soft overturesto top management had been rebuffed. Andthen, he spotted an opening.

A management development committee hadproposed a series of week-end meetings forsecond-level officers in the company. After ex-tensive debate, but for reasons not announced,the president rejected this proposal. The mem-bers of the management development com-mittee openly resented what seemed to theman arbitrary rejection. The vice president,sensing a tense situation, suggested that thesame officers who were to have attended theweek-end management development seminarsbe organized into a long-range planning com-mittee. The timing of his suggestion was per-fect. The president, looking for a bone to tossthe committee, acquiesced immediately, andthe management development committee inits next meeting enthusiastically endorsed theidea.

This vice president had been conducting akind of continuing market research to discoverhow to sell his long-range planning proposal.His previous probes of the “market” had toldhim that the president’s earlier rejections ofhis proposals were not so final as to precludean eventual shift in the corridors. He caughtthe committee in a similar conciliatory moodand his proposal rode through with colors fly-ing.

As a good manager stands at a point intime, he can identify a set of goals, albeit theoutline may be pretty hazy at times. His time-table, which is also pretty hazy, suggests thatsome must be accomplished sooner thanothers; and that some may be safely posrponedfor several months or years. But at this pointthe manager has a still hazier notion of how

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he can reach these goals. He assesses key indi-viduals and groups. He knows that each hasits own set of goals, some of which he under-stands rather thoroughly, others which he canonly speculate about. He knows also that theseindividuals and groups represent blocks to cer-tain programs or projects and that these pointsof opposition must be taken into account. Asthe day-today operating decisions are made,and as proposals are responded to both by in-dividuals and groups, the manager perceivesmore clearly where the corridors of compara-tive indifference are.

Avoiding Specifics

The fourth skill is the ability of the man-ager to satisfy the organization that it has asense of direction, but without ever gettinghimself committed publicly to a specific set ofobjectives. This is not to say that the goodmanager does not have objectives, both per-sonal and corporate, long term and short term.They are significant guides to his thinking,and he modifies them continually as he betterunderstands the resources he is working with,the competition, and the changing market de-mands.

But as the organization clamors for state-ment of objectives, these are samples of whatthey get back:

“Our company aims to be number one in itsindustry”

“Our objective is growth with profit”“We seek the maximum return on invest-ment”

“Management’s goal is to meet its responsi-bilities to stockholders, employees and thepublic”

In my opinion, statements such as theseprovide almost no guidance to the variouslevels of management, and yet they are quitereadily accepted as objectives by large num-bers of intelligent people.

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Why does the good manager shy away fromprecise statements of his objectives for theorganization? There are many good reasonsfor not being more precise. The main reasonis that he finds it impossible to set down spe-cific objectives which will be relevant for anyreasonable period into the future. Conditionsin business change continually and rapidly,and corporate strategy must be revised to takethe changes into account. The more definitethe statement of strategy for the organization,the more difficult it becomes to persuade theorganization to turn to different goals. Evenif management were capable of this kind ofmaster planning, before it could get the objec-tives comprehended by the organization, thetargets would have shifted.

The public and the stockholders must per-ceive the organization as having a well-definedset of objectives and a clear sense of direction.But in reality the good top manager is seldomso certain of the direction in which he shouldtake the organization. Better than anyoneelse, he senses the many, many threats to hiscompany, threats which lie in the economy,the actions of competitors, and not least with-in his own organization. Better than anyoneelse, too, he knows that he is continually onthe tenterhooks of whether to pause and re-evaluate or to forge ahead.

Communication by Consistency

The skillful manager also knows that objec-tives are impossible to state clearly enough sothat everyone in the organization understandswhat they mean. They get communicated onlyover time by a consistency or pattern in oper-ating decisions. In instances where precise ob-jectives are spelled out, the organization inter-prets them so they fit its own needs.

The subordinates who keep pressing formore precise objectives are in truth workingagainst their own best interests. Each time the

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objectives are stated more specifically, the sub-ordinate’s range of possibilities for operatingis reduced. The narrower field means lessroom to roam and to accommodate the flow ofideas coming up from his part of the organiza-tion.

The good manager’s reluctance extends intothe area of policy decisions. He seldom makesa forthright statement of policy. Some execu-tives spend more time in arbitrating disputescaused by stated policies than in moving thecompany forward. The management textbookscontend that well-defined policies are thesine qua n o n of a well-managed company. Myresearch does not bear out this contention.

The president of one company deliberatelyleaves the assignments of his top officersvague and refuses to define policies for them.He passes out new assignments with seeminglyno pattern in mind and consciously sets upcompetitive ventures among his subordinates.His methods, though they would never besanctioned by a classical organization planner,are deliberate and, incidentally, quite effec-tive.

Evolving Policies

Since good managers don’t make policy de-cisions, does this mean that well-managed com-panies operate without policies? Certainly not,but the policies are those which evolve overtime from an indescribable mix of operatingdecisions. From any single operating decisionmight have come a very minor dimension ofthe policy as the organization now understandsit. It’s the patterns as they emerge from aseries of decisions which set up guidelines forvarious levels of the organization.

The skillful manager resists the urge towrite a company creed or to compile a policymanual. Preoccupation with detailed state-ments of corporate objectives and depart-mental goals, comprehensive organization

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charts and job descriptions-this is often thefirst symptom of an organization in the earlystages of atrophy.

The “management by objectives” school, sowidely heralded in recent years, suggests thatdetailed objectives be spelled out at all levelsin the organization. This method is feasible atlower levels of management, but it becomesunworkable at the upper levels. In his ownmind, the good top manager must think outobjectives in detail, but ordinarily some of theobjectives must be withheld, or at least com-municated to the organization in modest doses.A conditioning process, which may stretchover months or years, is necessary in order toprepare the organization for radical depar-tures from what it is already striving to attain.

Take, for example, the president who isconvinced that his company must phase outof the principal business it has been in forthirty-five years. Although this has becomeone of his objectives, he cannot disclose iteven to his vice presidents, whose total know-how is in the present business. A blunt an-nouncement that the company was changinghorses would be too great a shock for mostof them to bear. And so he begins movingtoward the objective of altering the existingbusiness, but without a disclosure to his man-agement group.

If the manager attempts to spell out hisobjectives in detail, a task which is almost im-possible to accomplish, perhaps his major ac-complishment will be to complicate the taskof reaching those objectives. Specific, detailedobjectives simply give the opposition an op-portunity to organize its defenses.

And now we come to the fifth and mostimportant skill, the ability to discern oppor-tunities and relationships in the stream ofoperating decisions which flow past the gen-eral manager each day. In reviewing the ac-tivities of the organization, he suggests mod-

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est alterations which move the organization insmall increments toward the goals he has set.He understands the concept of marginal in-crements which was introduced to businessmanagement by the economist. He recog-nizes the futility of trying to push total pack-ages or programs through the organization.He is willing to take less than total acceptancein order to achieve modest progress towardhis goals.

Piecing Particles

The good manager then, avoiding debateson principles, tries to piece together particles,which may appear to be incidentals, into aprogram which moves at least partially towardhis objectives. His attitude is based uponoptimism and persistence. Over and over, hesays to himself, “there must be some parts ofthis proposal on which we can capitalize.”

Whenever the manager identifies relation-ships among the different proposals beforehim, he knows that they present opportunitiesfor combination and restructuring. It followsthat the good manager is a man of wide rang-ing interests and curiosities. The more thingshe knows about, the more opportunities hewill have to discover parts which are related.This process does not require great intellec-tual brilliance or unusual creativity. Thewider ranging his interests, the more likelyhe will be able to tie together several unre-lated proposals. He is skilled as an analyst,but even more talented as a conceptualizer.

If the manager has built a solid organiza-tion, it will be difficult for him to come upwith an idea which no one in the organiza-tion has ever thought of before. His most sig-nificant contribution may be that he can seerelationships which no one else has seen.

Take this example of a division managerwho had set as one of his objectives, at thestart of a year, an improvement in product

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quality. At the end of the year, in reviewinghis progress toward this objective, he couldidentify three significant events which hadbrought about a perceptible improvement.

Early in the year, the head of the qualitycontrol group, a long-service manager whowas doing only an adequate job, asked forassignment to a new research group. Oppor-tunity number one permitted the divisionmanager to install a promising young engi-neer in this key spot.

A few months later, opportunity numbertwo came along. The personnel departmentproposed a continuous program of checkingthe effectiveness of training methods for newemployees. The proposal was acceptable tothe manufacturing group. The division man-ager’s only contribution was to suggest thatthe program should include a heavy emphasison the employee’s attitude toward quality.

A third opportunity came along when oneof the division’s best customers discoveredthat the wrong material had been used for alarge lot of parts. The heat generated by thiscomplaint made it possible to institute acompletely new system of procedures for in-specting and testing raw materials.

As the division manager reviewed the year’sprogress on product quality, these were thethree most important developments. Noneof them could have been predicted at thestart of the year, but the division manager wasquick to see the potential in each as it poppedup in the day-to-day operating routines.

Change Essential

The good manager can function effectivelyonly in an environment of continual change.A cartoonist in Saturday Review has caughtthe idea as he pictures an executive seatedat a massive desk instructing his secretary to“send in a deal. I feel like wheelin’.” Onlywith many changes in the works can the

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manager discover new combinations of opportunities and open up new corridors ofcomparative indifference. His stimulation tocreativity comes from trying to make some-thing useful of the proposal or idea in frontof him. He will make strategic change a wayof life in the organization and continuallyreview the strategy even though current re-sults are good.

Charles Lindblom has written an articlewith an engaging title “The Science of Mud-dling Through.” In this paper he describeswhat he calls “the rational comprehensivemethod” of decision-making. The essence ofthis method is that the decision-maker, foreach of his problems, proceeds deliberatelyand one step at a time to collect completedata, to analyze the data thoroughly, to studya wide range of alternatives, each with itsown. risks and consequences, and finally toformulate a detailed course of action. Lind-blom immediately dismisses “the rationalcomprehensive method” in favor of what hecalls “successive limited comparisons.” Hesees the decision-maker as comparing the al-ternatives which are open to him to see whichmost closely meets the objectives he has inmind. Since this is not so much a rationalprocess as an opportunistic one, he sees themanager as a muddler, but a muddler with apurpose.

Ansoff in his book on corporate strategyespouses a similar notion as he describes whathe calls the “cascade approach.” In his view,possible decision rules are formulated in grossterms and are successively refined throughseveral stages as the emergence of a solutionproceeds. This process gives the appearanceof solving the problem several times over, butwith successively more precise results.

Both of these authors are moving us closerto an understanding of how managers reallythink. The process is not highly abstract, as

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a manager searches for means of drawing in-to a pattern the thousands of incidents whichmake up the day-to-day life of a growing com-pany-

Leadership Concept

It is interesting to notice, in the writingsof several students of management, the emer-gence of the concept that, rather than to makedecisions, the leader’s principal task is tomaintain operating conditions which permitthe various decision-making systems to func-tion effectively. The supporters of this theory,it seems to me, overlook the subtle turns ofdirection which the leader can provide. Hecannot structure their balanced judgments ifhe simply rubber-stamps the decisions of hissubordinates. He must have weighed the is-sues and reached his own decision.

Cyert and March contend that in real lifemanagers do not consider several possiblecourses of action, that their search ends oncethey have found a satisfactory alternative. Mysample of good managers is not guilty of suchmyopic thinking. Unless they were mulling awide range of possibilities, they could notcome up with the imaginative combinationsof ideas which characterize their work.

Ordinarily, the manager needs time in or-der to fit the pieces together. While his sub-ordinates may attribute the delays to pro-crastination or indecision, in fact a skillfulmanager may be at work.

Many of the articles about successful execu-tives picture them as great thinkers who sitat their desks drafting master blueprints fortheir companies. The successful top execu-tives I have seen at work do not operate thisway. Rather than produce a full-grown de-cision tree, they start with a twig, help itgrow, and ease themselves out on the limbsonly after they have tested to see how muchweight the limbs can stand.

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My picture of the general manager has himas sitting in the midst of a continuous streamof operating problems. His organization pre-sents him with a flow of proposals to dealwith the problems. Some of the proposals arecontained in voluminous, well-documented,formal reports; some are as fleeting as thewalk-in visit from a subordinate whose latestinspiration came during the morning’s coffeebreak. Feeling no compulsion to classify hisproblems, he knows how meaningless it is tosay, “This is a finance problem, or that is acommunications problem.” He is, in fact, un-dismayed by a problem that defies classifica-tion. As the late Gary Steiner put it, “he hasa high tolerance for ambiguity.”

In considering each proposal, the generalmanager tests it against at least three criteria:First, will the total proposal, or more oftenwill some part of the proposal, move the or-ganization toward the objectives he has inmind? Second, how will the whole or partsof the proposal be received by the variousgroups and subgroups in the organization?Where will the strongest opposition comefrom, which group will furnish the strongestsupport, and which will be neutral or indif-ferent?

Third, how does the proposal relate to pro-grams already in process or currently pro-posed? Can some parts of the proposal nowin front of him be added on to a program al-ready under way or can they be combinedwith all or parts of other proposals in a pack-age which can be steered through the organi-zation?

Manager at Work

As another example of a general managerat work, let me describe for you the train ofevents which led to a parent company presi-dent’s decision to attempt to consolidate twoof his divisions. We’ll call him Mr. Brown.

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The story began when the manager ofDivision A came to him with a proposal thathis division acquire a company whose founderand president we’ll call Johansson. Johansson’srecord of inventing new products was phe-nomenal, but earnings in his company hadbeen less than phenomenal. Johansson’s ask-ing price for his company was high whenevaluated against the earnings record.

Not until Mr. Brown began to speculateon how Johansson might supply fresh vigorfor new products in Division A did it appearthat perhaps a premium price could be justi-fied. For several years Brown had been un-successful in stimulating his division man-ager to see that he must bring in some newproducts to replace those that were losingtheir place in the market.

The next idea which came to Brown wasthat Johansson might invent not only forDivision A but also for Division B. As Brownanalyzed how this might be worked out or-ganizationally, he began to think about themarkets being served by Divisions A and B.Over the years, several basic but gradualchanges in marketing patterns had occurredand today the marketing considerations whichhad dictated the establishment of separatedivisions no longer prevailed. Why continueto support the duplicated overhead expensesin the two divisions? As Brown weighed theissues, he concluded that by consolidating thetwo divisions he could also shift responsibili-ties in the management groups in ways thatwould strengthen them overall.

If you were asked to evaluate Mr. Brown’scapabilities how would you respond? Puttingaside the objection that the information istoo sketchy, the tendency would be to criti-cize Brown. Why did he not identify thechanging market patterns in his continuingreview of company position? Why did he not

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force the issue when the division managerfailed to do something about new productdevelopment?

As I analyzed the gyrations in Brown’sthinking, one characteristic kept reappearing.He kept searching for the follow-on oppor-tunities which he could fashion out of theoriginal proposal, opportunities which wouldstand up against the criteria mentioned, name-ly: his objectives for the organization; theloci of opposition, support, indifference; andthe relationships between the various elementsin this new proposal and the things alreadybeing done in day-to-day operations.

Search for Opportunities

In my book, Brown would rate as an ex-tremely skillful general manager. And remem-ber that my narrative has taken us only to apoint where he had made a decision as to whathe thought would be best for the company.He has not disclosed his conclusions to anyone else. Now begins the search for opportu-nities that will permit him to bring off theconsolidation. For example, he suspects that adirect proposal from him would be rejected.On the other hand, he believes that discussionof the acquisition might very well provideexposures which would bring other membersof the organization to the same conclusion ashis.

Reviewing briefly the five skills of the gen-eral manager:

Skill One: Keeping open many pipelinesof information. No one will quarrel with thedesirability of an early warning system whichprovides varied viewpoints on an issue. Thedifficulty comes in that very few managersknow how to practice this skill, and the bookson management add precious little to ourunderstanding of the techniques which makeit practicable.

Skill Two: Concentrating on a limited

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number of significant issues. No matter howskillful the manager is in concentrating hisenergies and talents, he is inevitably caughtup in a number of inconsequential duties.Active leadership of an organization demandsa high level of personal involvement, andpersonal involvement brings with it manytime-consuming activities which have an in-finitesimal impact on corporate strategy.

Skill Three: Identifying the corridors ofcomparative indifference. Are there inferenceshere that the good manager has no ideas ofhis own, stands by until his organization pro-poses solutions, that he never uses his au-thority to force a proposal through the or-ganization? Such inferences are not intended.The key message is that a good organizationwill tolerate only so much direction from thetop; the good manager therefore is adept atsensing how hard he can push.

Skill Four: Giving the organization a senseof direction with open-ended objectives. Inassessing this skill, keep in mind that I amtalking about top levels of management. Atlower levels, managers should be encouragedto write down their objectives if for no otherreason than to ascertain if their objectivesare consistent with corporate strategy.

Skill Five: Spotting opportunities and re-lationships in the stream of operating prob-lems and decisions. Lest you may have con-cluded from the description of this skill thatthe good manager is more an improviser thana planner, let me assure you that he is a plan-ner and that he encourages planning by hissubordinates.

Frustration for Planners

Interestingly, professional planners may beirritated by a good general manager. Perhapsin this paper they can find a partial explana-tion for their frustrations. Most of them com-plain about the lack of vision of top manage-

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ment. The planners devise a master plan, butthe president seems to ignore it, or to give itminimum acknowledgment by borrowing bitsand pieces for implementation.

Many planners seem to think that theyneed only to draw up a master plan and pre-sent it to top management, and its power willbe obvious to everyone and its implementa-tion automatic. The general managementlevel executive, however, knows that even ifthe plan is sound and imaginative, the jobis only begun. The long, painful task of im-plementation will depend upon his skill, notthat of the planner.

In conclusion, if this analysis of how skill-ful general managers think and operate hasvalidity, then it is of significance for severalgroups in business as well as for educatorswho are training men and women for man-agement.

The investment community is giving in-creasing attention to sizing up the manage-ment of a company being appraised. Thusfar, the analysts rely mainly on results or per-formance rather than on a probe of manage-ment skills. Current performance can be af-fected by many variables, both favorable andunfavorable, and is a dangerous base forpredicting what the management of a com-pany will produce in the future. Testing thekey managers of a company against the fiveskills holds promise for evaluating the caliberof a management group.

Why Acquisition?

In today’s frenzy of acquisitions and merg-ers, why does a management usually prefer toacquire a company rather than to develop anew product and build an organization tomake and sell it? One of the reasons can befound in the way a general manager thinksand operates. He finds it difficult to sit andspeculate theoretically into the future as he

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and his subordinates fashion a plan to ex-ploit a new product. He is much more athome in taking over a going concern, eventhough he anticipates he will inherit manythings he doesn’t want. In the day-to-day op-eration of a going concern, he finds the milieuto maneuver and conceptualize.

Incidentally, I believe that both the man-ager who is building his own company andthe man who is moving up through the hier-archy of a larger organization require essen-tially the same capabilities for success. Thefive skills are fundamental to the managerwith commitment in either situation.

Scarcely any manager in any business canescape the acutely painful responsibility toidentify men with potential for growth inmanagement and to devise methods for de-veloping them for broader responsibilities. Fewline managers or staff professionals havegenuine confidence in the yardsticks and de-vices they use now. The five skills offer pos-sibilities for raising an additional set of ques-tions about management appraisal methods,job rotation practices, on-the-job developmentassignments, and the curricula of formal in-house management development programs.

One group of distinguished executives ig-nores with alarming regularity the implica-tions of the five skills. These are the presi-dents of multi-division companies who pro-mote successful division managers to the par-ent company level as staff officers. These“promotions” frequently put line managerson the sidelines and out of the game for therest of their careers. Removed from the tu-mult of operations, the environment which Icontend is critical for their success, they maynever become effective in their new roles.

Does this recurring phenomenon of organi-zational arrangements at the parent level inwell managed companies cast doubt on thevalidity of my theory? I think not. TO the

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contrary, the strongest supporting evidencefor my thesis can be found in the careers ofthese ex-line managers who wither away intheir high status posts as senior counselors.

My final needle is reserved for the educa-tors. I am struck by how often a man whois rising rapidly in business turns in an ordi-nary performance when he enrolls in formalbusiness courses. The abilities which permithim to excel in management fail him whenhe gets to the classroom. This discrepancy re-quires further investigation. I am not yetfully persuaded that in today’s graduateschools of business we are teaching the thingswhich will produce a super breed of managersfor the future.

In the drive to intellectualize business, thetendency has been to develop independentdisciplines which ignore the manager in hisoperating environment. Conceivably, severalimportant elements are being left out of themix. Hardly a handful of courses in graduateschools of business come close to teaching theskills and attitudes described in this paper. Iam convinced that the skills can be taught,that course materials which will make theseconcepts meaningful for managers can bedeveloped.

It should come as no surprise to learn thatfor several minutes now you have been lis-tening, with varying degrees of patience, tothe catalog description of my course, Strategyin Operating Decisions, lengthened from thecustomary one paragraph to twenty-one type-written pages.