Management Teleology: What's Wrong with Finding What You're Looking For
The single biggest problem in management today is that managers find what they're looking for. Now, that doesn't sound like a problem, but what I mean is that managers tend to find relationships that they already believe to exist. They believe they see patterns where there aren't any, and allow their preconceived notions to drive their business, despite their potentially faulty assumptions. I call this problem management teleology: the use of the ultimate purpose to define your outcome.
Management teleology is based on a host of syndromes, almost like a disease. The primary management teleology condition is assuming correlation equals causation. For example, not too many years back, the buzz in business was market share. Managers found a correlation between market share and profitability--and many prominent management journals espoused the relationship. Accordingly, companies aggressively pursued increased market share, but the promised profits did not materialize. The correlation they had observed at the time was real, but the cause was not the relationship: market share and profitability are not analogous.
Another virulent management teleology syndrome is the "new is better" or "guru as god" syndrome. This problem manifests in management sciences too. There is a desire to have great new ideas in management science and to have them published in the most prestigious journals, but the prospect of replicating that research in order to prove it's applicability--particularly across industries--isn't given any value at all. So there's a predisposition to finding an effect and then assuming it exists everywhere, despite the extraordinary difficulty in generating new ideas that work across industries.
Finally, there is an omnipresent "gut instinct syndrome," where managers know their business, live their business, and think they know all they need to know to change and grow their business. Frequently, however, this often-lauded business instinct isn't supported by data or even customer feedback. Often managers start with what they believe to be true and then interpret the data so that it appears to provide support. The resulting solutions to problems are tailored to fit preconceived notions, not the facts.
While these syndromes might appear deliberate, or even sinister, that is almost never the case. In fact, it is impossible to completely eliminate management teleology: our brains are hard-wired for it. We want to define and simplify relationships, we want to know how things work, and we prefer simple solutions to complex problems. But executives can at least mitigate their natural tendency toward management teleology by asking some very simple questions, the first of which is "Does the data really support this, or is it something I feel?" The easiest way to answer is to confirm whether the predicted changes occurred. For example, look at a couple years' worth of data, and if you'd expected a certain profitability outcome, check to see if it happened. If it didn't, then perhaps the underlying relationships need further investigation.
A firm that can control its management teleology has a competitive advantage because executives who recognize which trends are real versus those that are just spurious correlations will know where to put their resources, where best to focus, how to motivate their employees, how to delight customers, and therefore how best to compete. It is not an easy task, but it is the best way to ensure profitability.
