“Are There No Workhouses?”

 

I was reminded of the quote in this blog’s title from Dicken’s A Christmas Carol (that actual line of dialogue is from the ghost of Christmas Present – he’s throwing a paraphrase of one of Scrooge’s previous assertions back in his face) while attempting to get a handle on all of the business model pathologies that have been inflicted by our friends, the Asset Managers, by the acceptance of the axiom that the point of all management is to “maximize shareholder wealth,” with its accompanying metric, the Return on Investment (ROI). Of all of the ironies attached to the ability of this management worldview to misdirect, one of the most profound has to be that the tenets of Project Management actually provide the best remedy, the best hope for those advancements in the management sciences needed in an ever-advancing, technology-driven business world.

The idea that the prominent (if not only) litmus test for evaluating a given business strategy ought to be how it impacts the organization’s equity probably pre-dates Luca Pacioli’s seminal work in bookkeeping, published in the late 1400s[i]. I would go so far as to speculate that the double-entry bookkeeping method, already the basis for assessing profit and, therefore, tax revenue, became truly accelerated into management philosophy preeminence as the industrial revolution spread across the world, necessitating heavier and more complex interactions with the banking and finance sectors. Now, don’t misunderstand: I’m not saying that all, or even most of the theories, techniques and practices emanating from Asset Management arena are invalid, or harmful. What I am suggesting is that, when those theories, techniques, and practices are employed outside of the Asset Managers’ appropriate purview, they create business model pathologies that not only can detract from the organization’s ability to achieve its mission or goals, they can actually harm the organizations’ members, or even the management science realm writ large.

To support this bold assertion, let’s return to A Christmas Carol for Exhibit A. Two “portly” gentlemen are appealing to Scrooge for charity dollars, to help feed and clothe the poor. While not said explicitly, it’s safe to infer that Scrooge refuses them on the basis that (a) the poor have recourse to other, non-charity resources, ones that require no sacrifice on his part (hence the quote in the title), and (b) there’s absolutely nothing for him to gain by engaging in charity. To Scrooge, every shilling donated is a total loss – no return on investment, and a negative ROI. Of course, by the end of the story he has reversed this world-view, but only through the extraordinary intervention of the three spirits.

My next example comes from the publishing industry. It’s been said that Frank Herbert’s novel Dune was rejected by over twenty different publishers before Chilton Books picked it up, and they were better known for printing automobile repair books. While I’m sure that each of those twenty publishers had subject and thematic bases behind their manuscript evaluation process, I’m also pretty sure that the major criterion for accepting or rejecting a given work was its predicted ROI. But this only points to a major failure of the ”maximize shareholder wealth” paradigm, as well as the failure of ROI to return a reliable quantification: there are simply too many variables to recognize, much less accurately quantify.

Besides leading to poor managerial decisions, overuse of Asset Management approaches can introduce business model pathologies into the organization. I had a dear Uncle who had worked as a Vice President at a utility supply company. Most of the employees were paid a regular salary, but the sales staff was paid based on commission. Once, one of the other veeps became upset upon learning that one of the sale staff had received a larger paycheck than the veep. In his mind, his placement in the organization’s hierarchy above the sales person should have precluded this event. My Uncle pointed out that the sales person in question was only paid more because he had brought in more business for the company, which was good for the entire organization. But the thought that human resources ought to be renumerated based on their placement within the organizational structure rather than actual contribution had permeated the company. And when I say that this represents a business model pathology, consider the “remedies” to the perceived problem: either raise the ignorant veep’s salary (a mistake), or lower the performing sales person’s renumeration (a huge mistake).

In contrast, Project Management theory focuses on attaining a specific outcome, accomplishing set scope. To engage in a bit of hyperbole, if the Project Team accomplishes this goal on-time, on-budget, we PM-types really don’t care if they did so by working fewer hours, or if their renumeration was better than our own. Those are elements of Asset Management, with its infernally over-used Return on Investment calculation. In short, as long as we’re attaining scope on-time and on-budget, we’re actually happy that the personnel didn’t have to exhaust themselves in a workhouse-like environment.

So, I’ll pose this question: does pre-enlightened Scrooge present as a Project Manager, or as an Asset Manager?

[i] Wikipedia contributors. (2021, November 24). Luca Pacioli. In Wikipedia, The Free Encyclopedia. Retrieved 19:14, December 13, 2021, from https://en.wikipedia.org/w/index.php?title=Luca_Pacioli&oldid=1057012804