Playing To Win
Ways of Understanding
Occasionally, someone sends me an article that really gets me thinking, which happened a couple of weeks ago (thanks again, Brendan). The article helped me understand why I felt like a fish out of water for my entire 21-year academic career, links nicely to my prior piece, Heuristics, Management & Strategy, and contains the seeds of some important practitioner insights. So, I have decided to dedicate my 46th Year III Playing to Win/Practitioner Insights piece to: Ways of Understanding: Channeling Drucker & Einstein. You can find the previous 156 PTW/PI here.
A Background Story
In mid-2000s, I was a member of the Visiting Committee of Harvard Business School (HBS). For those not in the arcane world of academia, many universities have the practice of utilizing a group of outside academic experts to provide advice to the deans of their faculties. Typically, the Visiting Committee is overseen by the provost of the university to provide unbiased outside advice to the dean’s boss as well as the dean in question. Generally, the visit entails receiving presentations from senior administrators of the faculty on accomplishments and challenges in their respective areas, whether faculty, students, curriculum, research, funding, etc.
I served on the Visiting Committee for five years (I think) and I will always remember my final meeting in 2008. The presentations were mainly sweetness and light — HBS doesn’t lack for self-esteem — but the one thing that was causing HBS a major concern was the decline in case-writing by younger faculty. HBS is, of course, famous for using the case method of teaching. While most think that is a distinctive feature of HBS, it isn’t. Almost all business schools teach using HBS cases extensively in their programs. HBS just uses them more heavily than all but the handful of business schools that mimic HBS as much as they can.
What makes HBS actually unique is case-based research not teaching. HBS professors historically spent the bulk of their research time on case-writing. HBS professors teach the cases to their students, and HBS sells them to other business schools (a very good business!). Production of new cases is critical to HBS, otherwise its professors would be stuck teaching increasingly dated cases, plus the attractiveness to other schools of its (aging) cases would decline.
Despite the central importance of case-based research to HBS, younger professors were spending more and more of their time doing research aimed at producing articles for peer-reviewed academic journals. If the trend continued, HBS wouldn’t produce enough new cases to keep its business model going. The Senior Associate Dean for Faculty outlined his plan to provide more encouragement and incentives for junior faculty to switch back to a heavier weighting of case-based research.
I didn’t think it was a very compelling solution and felt there was a more potent way of thinking about the challenge. Taking my Visiting Committee membership seriously, I set out to write what turned out to be a 5-page/2500-word memo on my diagnosis and prescription.
I outlined the two kinds of research that factor into the identified problem. On one hand is conventional scientific research methodology (CSRM) — analyzing a statistically significant sample of a phenomenon to form a conclusion as to what is operative, while on the other is case-based research — studying a single company in depth to derive a valuable lesson. Across the business academy, the former was winning, and the latter losing. That is, an ever-tinier number of the world’s business professors were writing cases while the vast majority did CSRM work. That was making HBS more and more of an isolated academic island (a trend that is continuing to this day).
Without a doubt, HBS junior professors were hedging their bets by doing CSRM work and publishing peer-reviewed articles. Case-based research has zero value to almost all US business schools (HBS and Darden are the only consequential exceptions). Hence if a junior faculty member at HBS didn’t achieve tenure there (and most don’t), all their case-based research would count for zero in their attempt to secure a tenure-stream position elsewhere. Only by publishing peer-reviewed articles would they have an attractive CV for other schools.
In my memo, I argued that some phenomena can be best studied with case method — new ones for which there isn’t a large sample yet — while others can be studied with CSRM — because the phenomenon is older and more established. Using the terms of my Heuristics, Management & Strategy post, the case method can be used to study mysteries in search of a heuristic, while CSRM is perfect for studying well-developed heuristics to push them toward algorithm. I argued that HBS had allowed case research to focus on the latter domain in which it has an irresolvable competitive disadvantage versus CSRM, while not focusing nearly enough on the former, where case-based research has a substantial advantage. Smart junior professors had figured that out and opted out of the losing battle and into CSRM — moral suasion and monetary incentives weren’t going to change that.
I sent my memo to then Dean Jay Light and to the Chair of the Visiting Committee, whose name I can’t remember because he was a truly forgettable man. The response? Nothing — not even an acknowledgement of receipt by either gentleman. The penny dropped for me. I realized that I was sadly naïve in thinking that HBS wanted our advice. No, it just wanted the appearance of wanting advice and my memo missed the true point of the Visiting Committee — to provide praise and sympathy. So, I left the Committee.
That story brings me to the article How to Conduct Research like Drucker and Einstein: Why Analytical Research Starts with the Unknown and Proceeds to the Known by William Cohen, which gave me a more sophisticated way to understand what I had observed over time.
I was always somewhat perplexed that even though Peter Drucker is arguably the most important management thinker of all time, his work is not taught by any tenure-stream business professor of which I am aware. Undoubtedly there is someone in that category out there who does — I just haven’t seen it. Of course, there are innumerable adjunct professors, lecturers, and professors of practice who teach his work to the great delight of and benefit to students.
I knew that Drucker never did CSRM. But his approach was far more rigorous than single case studies. He enlightened us all by identifying important patterns across businesses and those insights were so profound that he became very famous — which is of course a very big driver of hatred in the business academy.
But the article creates greater clarity (at least for me) on the structure of his research methodology, which Cohen describes as ‘analytical.’ Drucker started from the unknown, observed the world, analyzed those observations to reach a conclusion, and only then posited a theory. In contrast, CSRM starts with a theory — which, of course, is called a hypothesis — collects data to test the hypothesis and draws a conclusion as to the validity of the theory based on the data analysis.
To business academics, the rigor of Drucker’s methodology is irrelevant. As with the less rigorous case-study research approach, Drucker’s methodology is deemed unacceptable. CSRM is deemed to be ‘scientific’ while Drucker’s approach is categorized as ‘unscientific.’
That sets the stage for the truly most fascinating aspect of the article. It points out that Albert Einstein utilized the same research methodology as Drucker. Cohen points out that this is not speculation or reverse-engineering of how Einstein worked. Einstein himself laid out in detail his research approach in a letter to The Times (of London) in 1919. So, the greatest scientist of the modern era was not devoted to CSRM — which the business academy ruthlessly enforces as the only acceptable research methodology. Whether or not Drucker was familiar with the article (we don’t know), he adopted a research approach that was essentially identical.
The Sad Truth
The business academy’s rejection of the research method of Drucker and Einstein is sad because it hampers the advancement of knowledge. And it is really quite stunning given that the two giants are, respectively, the greatest management scholar of all time and the greatest natural scientist of the modern era.
CSRM isn’t good at exploring mysteries because the requirement for initiation of the methodology is a known hypothesis. But a mystery is one in which we don’t yet know how to think about it. Interestingly, the academic world has little to say about where hypotheses come from or by what process they are generated. The reason is clear. Modern academics are trained in doctoral programs, and one can find thousands of PhD courses on the later parts of CSRM — data collection and analysis. But I still haven’t found a single one on the creation of a hypothesis — and friendly professors tell me to stop looking because I won’t find one. As a result, tens of thousands of business professors use, and in fact are feverishly dedicated to, a methodology for research that starts with a step for which they have zero training.
When I ask professors how they come up with a hypothesis to initiate their research process, they say they read the available literature on the topic — a classic self-sealing loop. That is no way to solve a mystery. Its only use is in refining heuristics — way down the Knowledge Funnel. CSRM-obsessed professors need a Peter Drucker or Albert Einstein to provide them with heuristics for them to refine. Their method fills a blind spot in CSRM and should be appreciated, not held in contempt by CSRM acolytes.
The other sobering truth that Cohen’s article helped me understood is why I was a fish out of water for the entirety of my 21 years inside the academy, even though I was a chaired tenured full professor. My method is that of Drucker. I explore management mysteries by observing, analyzing, concluding, and producing theory. But that is not acceptable academic behavior in the modern business academy — at all. I am now happy to know that it is additionally the method of Einstein, so I can fully reject the critique that it is unscientific.
I am, of course, neither a Drucker nor an Einstein. But it is always helpful to stand on the shoulders of giants. In this case, I only found out on whose shoulders I was standing long after I had planted my feet!
Each one of you lives in a business world in which only one process for gaining understanding is acceptable. You were taught that in business school (or in economics or engineering if that was your educational path). It is being reinforced and will continue to be reinforced every day of your business life.
But take courage from Drucker and Einstein. There is another path to greater understanding of our world. Tackle mysteries by living in the world and observing it thoughtfully and rigorously. Analyze your observations, draw conclusions, and create new theories. Recognize that the development of a strategy is just that — the creation of a theory to guide you into the future.
In that task, don’t underestimate the role of imagination. On this front, the article helped me make a link from Einstein to Aristotle (my favorite philosopher of all-time). Einstein used imaginary observations (famously imagining himself riding a beam of light) in addition to real observations from which to draw conclusions. Similarly, as I have written before, Aristotle urged the imagination of possibilities to create a future that does not now exist — an essential component of strategy formulation.
If you are challenged by those enforcing the orthodoxy, ask them how they come up with their hypotheses. Be prepared for them to be either defensive — ‘none of your business’ — or derivative — ‘I read the literature.’ Don’t try to convince them to change — because they won’t.
But politely, though firmly, ask them to leave you alone!