The Puritan Gift

Triumph, collapse and revival of an American Dream

Kenneth Hopper & William Hopper

Reviewed by Olivier Dardalhon

Forewords (1)

I read the Puritan Gift in 2008 after watching an interview of one of the authors.

It was at the beginning of the financial crisis that threatened a total collapse of the economy, especially the US companies.

I wanted to understand what was wrong in the business of the 21st century. How was it possible that a country so powerful as the USA after WWII was on the edge of collapsing 50 years later.

I had some clues about it like the short sight view of western organizations but it was only when I came through the book that I had a real and well-documented insight how what had made the US organizations so performing in the past.

Forewords (2)

The book topic is not about religion as the title might induce. It is about a state of mind that was brought by the Puritans in the 17th

century and spread throughout the country until the 1960’s.

This state of mind produced one of the most efficient management system that allowed the USA to become the first economic power after WWI and win a war on 2 fronts during WWII. After the war these principles were successfully adopted by Japanese companies like Sony or Toyota.

Unfortunately the principles of good management were abandoned in the 1960’s. The result was a progressive deliquescence of the entire society: companies, education, military or healthcare systems that led to the 2007 crisis.

Forewords (3)

In this slideshow I have basically tried to sum up the 25 management principles.

These principles are divided in sections:

• Systems and routines

• Structure and hierarchy

• Decision making

• Finance

• Training

• Employment

25 Principles of management

• 25 principles underlying good practice from the golden age of management in the USA.

• Still accurate in the 21st century.

• Declined from a certain “Puritan” mentality but applicable to any cultural environment.

• Originally designed for the industry but adaptable to any business.

SYSTEMS AND ROUTINE

SYSTEMS AND ROUTINE

1/ All successful organizations, however simple, consist of systems within a system.

This is the Master Principle.

The organization itself is the Grand System. Once its objectives have been defined, the next task is to create, and to determine the objectives of the sub-systems.

The approach of any manager to his/her work has therefore to be systemic.

SYSTEMS AND ROUTINE

2/ All systems are nurtured by routines, which must be regularly reviewed and refreshed.

Routines liberate : when they are functioning smoothly, the manager can concentrate on those key activities that cannot be subjected to routine, like the design of new products or closing complex deal with a customer.

No good systemic routines = employees burnout

STRUCTURE AND HIERARCHY

STRUCTURE AND HIERARCHY

3/ The most important sub-system in any organization is the managerial hierarchy.

Hierarchies permit the systematic delegation of functions, roles and tasks.

Delegation never means delegation of responsibility : “Always remember, your man’s failure is your failure”.

Hierarchy doesn’t inhibit the creation of cross-departmental teams. In fact these teams can only be effective if they report to a person whose position in the hierarchy is strong enough to ensure that their recommandations are put into effects.

STRUCTURE AND HIERARCHY

4/ The best type of hierarchy is “bottom-up”.

“Bottom-up” management goes far beyond the simple delegation of tasks to appropriate levels.

This means it superimposes an additional, informal structure which permits de facto operational responsibility to be pushed down to the lowest level capable of accepting it.

In a crisis or when a major change of direction is required, this allows a senior manager to reassert control over a subordinate at the drop of a hat and without upsetting the relationship.

STRUCTURE AND HIERARCHY

5/ Leadership should as far as possible be collective or “collegiate”.

At the very top of the managerial ladder it is good to find what the Japanese call “two men in a box”.

STRUCTURE AND HIERARCHY

6/ The middle manager is the keystone of the managerial arch.

The middle managers are best positioned to :

• Ensure that the first-level managers are behaving as they should,

• Act as an intermediary in the exchange of information between top and bottom,

• Act as the organization’s “corporate memory” – at least for long-serving middle managers – making it unnecessary to address problems that have been solved in the past,

• Constitute a reservoir of tested talents from which future senior executives could be drawn.

STRUCTURE AND HIERARCHY

7/ “One person, one boss”.

Without this principle there cannot be a proper line of command.

Only if each executive reports to one single person can the information flow freely up and down the line of command.

Matrix management = Conflict and Confusion

DECISION MAKING

DECISION MAKING

8/ Meetings are “the medium of management work”

Meetings should be as long or as short as the agenda requires.

DECISION MAKING

9/ “Integrated decision-making” leads to right conclusions

The implication of any important policy are to be worked out in great detail before a decision is taken to proceed or not.

The same group of people has to be involved in all four phases of managerial process: planning, decision-making, execution and follow-up.

Careful provision has to be made aigainst the contingency that some of the original asumptions might be incorrect.

The makers of the decision (and only them) have to be recognized as being responsible for its success or failure.

DECISION MAKING

10/ Planning should be for the short term (say 1 to 4 years), the medium term (say 5 to 8 years) and the long term (say 9 years up)

Success in achieving the objectives of the plan would not be measured simply in terms of profit and loss account but by looking at a whole range of indicators, including rising cash balances and satisfying the customer.

DECISION MAKING

11/ You should make a careful study of the mistakes and successes of the pioneers in your field and learn from them.

Pay particular attention to your competitors mistakes as well as your own.

DECISION MAKING

12/ Excellent internal communications in all directions – but above all upwards – are necessary in any successful organizations.

The upward flow is not only the most important; the entire structure of a good managed company is geared to it.

DECISION MAKING

13/ The manager must be a leader in both a practical and a moral sense.

Managers cannot be dull, gray administrators, they must be able to lead.

DECISION MAKING

14/ You should use consultants sparingly – and “strategic” consultants never.

There are proper uses for consultants – for example, to perform one-off tasks for which it is inappropriate to hire permanent staff or to teach a skill that new circumstances require and that is not availalble within the existing organization.

However, a dangerous frontier is crossed when consultants are asked to determine, or even discuss, what the strategy of a company should be.

DECISION MAKING

15/ A manager should be aware of his/her responsibilities to society as a whole, including to his company’s employees as human being.

People are not commodities to be bought and sold like a pound of sugar.

DECISION MAKING

16/ If it ain’t broke, you should try to make it work better.

A passionate desire to do and make things better is one of the most abiding characteristics of American society.

The Japanese have a name for it: kaizen, or continuous improvement.

FINANCE

FINANCE

17/ Avoid debt like the plague – or, if that is impossible, use it sparingly.

Debt-free balance sheet enables your company to “roll with the punches”, paying large dividends in good times and little or none in bad.

The assumption is that an organization should be designed for survival and that bad times might be around the corner.

TRAINING

TRAINING

18/ A manager should possess, or acquire a “domain knowledge”.

Domain knowledge = profound understanding of the technology and business of his/her company, which can normally be gained only through a long apprenticeship in that company or in the same industry.

Management is not a skill that can be learned from a theoretical point of view in an academic setting (ie Business Schools) and thereafter exercised in any kind of organization.

TRAINING

19/ The testing and training of managers should be pragmatic and continuous.

Psychometric testing leads to select “high flyers” only good at passing tests.

Those selected “high flyers” promoted quickly into a senior position are not adequately prepared by a period of training in a lower position.

TRAINING

20/ Managers who wish to reach the top should start at or near the bottom

Meritocracy.

Even graduates start at the bottom, often as foremen mixing with the non-graduate foremen, and then work their way towards the top. Only this way could they acquire the thorough familiarity with the business that is required if they are to occupy the highest positions.

TRAINING

21/ Job rotation (or intra-company mobility) is desirable to create “rounded” executive

A rising executive has to pass through all or most of the organization departments.

If he/she reaches the top, he/she will have a full overview all the implications of his/her decisions.

EMPLOYMENT

EMPLOYMENT

22/ Employment should in general be for the long term – by which is meant, at least 8 and, if possible, 10 years.

A long term commitment has 3 advantages:

1. The manager can build up a sufficient knowledge of his/her company’s business for him to be able to play a useful role.

2. The expense of training could not be justified if he/she is expected to leave within a short period of time.

3. The company has time to know an employee well enough to decide whether he/she is suitable for promotion.

EMPLOYMENT

23/ Complementarity is one of the keys to making appointments

Each manager has his/her strengths and his/her weaknesses.

Even a “rounded” manager cannot reach perfection.

Hence the doctrine of complementarity. This means among other things, building teams to balance skills.

EMPLOYMENT

24/ The remuneration system should promote and reward group effort.

Incentive systems that over-reward senior executives have no place in any company that practices collegiate decision-making –and/or “bottom-up” management; where much of real responsibility is passed down the line, so should much of the reward.

EMPLOYMENT

25/ Avoid ostentation like the plague.

A good manager must be aware that any success he/she achieves is due to his/her entire team.