Why Are Business Gurus Overconfident Jerks?

by Henry Farrell on September 12, 2013 · 6 comments

in Frivolity

Andrew asks me to expand on this below – as it happens, I do have some thoughts that I couldn’t shoehorn into the essay. He’s also right that my ideas are influenced by the Niall Ferguson debate. While there are some good business writers – the best ones are practical sociologists, with a lot of interesting insights into how organizations and institutions work. Still, most business writing is bad, and some is quite extravagantly bad.

My half-developed theory of this borrows from David Kreps’ famous arguments about corporate culture (institutional access required). Kreps, a game theorist, is trying to figure out why and how business reputation can be an asset. A lot of his answer has to do with corporate culture. We live in an unpredictable world, which means that firms cannot write ‘complete contracts’ e.g. with their employees, which would cover every possible contingency and eventuality. This might worry employees or contractors, who fear that in the event of an unpredictable occurrence, the firm will not stand by them. Their fears may lead them not to want to commit to the firm.

What a corporate culture does, in Kreps’ argument, is to provide you with a way to reliably resolve these kinds of ex-ante unforeseeable situations in a way that everyone understands ex-post. In plainer language, people will be less worried that the firm will cheat them in unpredictable ways, because the culture of the firm tells them how the firm is likely to behave in unforeseeable circumstances.

What Kreps doesn’t really dwell on is that maintaining, let alone changing, a corporate culture takes a lot of work. Much of the apparently pointless and painful activities of businesses – the vacuous announcements, internal propaganda and the like, are aimed at maintaining this culture, providing employees with a sense of what the company’s priorities are, how it reacts in unexpected emergencies and so on. This stuff also perhaps gets internalized, leading to greater loyalty in the East African Plains Ape brain.

And business writing plays a role in this process of cultural reproduction. When a multinational buys 20,000 copies of the latest business bestseller to distribute to its employees, it isn’t necessarily expecting them to discover new insights from the books. It is expecting them to get some sense of the corporate culture and direction of the firm are, from the fact that one particular book (rather than some other possible book) has been bought and distributed. If it’s about the Internet, managers are supposed to start getting with the Internet. If it’s about the need to build closer relations with subcontractors, managers are supposed to start thinking about how to do this. If it’s about squeezing every possible penny from employees … you get the idea.

Under this interpretation, many (possibly the vast majority) of business books are not really ‘books’ in the sense that they are intended to be read for the sake of their ideas, let alone their prose. If they are read, it is so that their maxims can be repeated to others within the firm, demonstrating loyalty. They are books only in the sense that they are physical book-like objects. Really, they are objects of ritual exchange. And business authors are less idea-crafters than hierophants, dedicated to helping senior management perpetuate the sacred mystery, or, when necessary, reinterpret it a little in congenial ways. Or, if one wants another analogy, they play the same kind of ritual purpose as did the works of Marx and his acolytes in the former Soviet Union.

Which means, if this admittedly overblown theory is right, that business writing is very nice work if you can get it. Ludicrously inflated speakers’ fees, first class airplane tickets, huge book sales, the works, all for not very much effort, and less originality. However, to the extent that the quality of the book doesn’t matter so much, the barriers of entry are low. Hence, you have a lot of people trying to win the few prizes available in an essentially arbitrary competition, encouraging them to clamor for attention as much as possible. Furthermore, hierophants, in contrast to real public intellectuals, cannot admit of any doubt in public, lest their command of the arcanum be questioned by the vulgar multitudes. The two together plausibly lead to the unattractive features of business gurus that Andrew identifies.

{ 6 comments }

Andrew Gelman September 13, 2013 at 1:24 am

Henry:

Thanks! Also, you’re better at coming up with blog post titles than I am. Perhaps you have a future as a business writer . . . ?

adrian nicholas September 13, 2013 at 6:53 am

Wonderfully entertaining article and some nice supporting examples.Surely as truthful as the the similar public presentation of govt. policy -particularly FP when compared to that loose relation to actual policy objective and both relationships relative to circumstantial or local focused reality in impartiality?

Whilst, i could not possibly comment on corporate culture for current personal self-interested diplomatic reasons – the only observation is that such Guru’s are lauded and elevated possibly because they elevate the corporate’s own ambition and narrow self interest presented both externally and internally and vindicated by usually been ironically and contrary to real objective financial biased purpose – depict a ‘moral’ veneer of socio-economic ‘outcome’ of mission objective and public readable strategy.

Indeed, the typical corporate ‘Mission statement’ provides such supporting examples.
Surely the point of paying above going rate for a ‘guru’ is that the senior execs can then mutually cite such wider sector peer ‘respect’ -which is similarly those same people in other or ‘benchmark’ competitors ‘justifying’ firstly their own financial and social value and status – to reassure those similar other execs in their own corporates and indicate a paternalistic modern form of ‘noblesse oblige’ and a reinforced socio-economic hierarichal monolith acceptence to the public – which unless paid or incentivized to ‘like’ looks at the universalist form of ‘emperors new clothes’ with either indifference or cynical disdain – excepting where a ‘celebrity’ is rather tenuously ‘hired’ to personally endorse the life changing qualities engendered by following both the cited Guru & obviously the corporates & its products or services.

Post 1980′s and increasing obviously post 1992 – As a UK citizen when might observe the rather more market liberalist motivational techniques and performance efficiency identikit facsimiles as the across sector template new ‘bible’?

That such suits the mutual objectives of both the Washington Consensus (D.Held revision) and market liberalism as the prioritized security and then economic partnership in universal export and indeed, consensus – given that this has replaced both the social democratic Western European former political consensus and nascent redress of liberalism by use of positive liberty and publicly funded means. Rawls between 1973 & 1994 seems to go through a similar re-ordering of socio-economic liberal rights prioritization and hierarchy subordination that suits such political and corporate elites within globalism – noting how the liberal representative democratic governance establishment ideal is now similarly consensus held to require a pre-condition of market liberalism as a basis for former third world or semi authoritarian transition to representational democracy.

The point by Henry Farrell – that such corporate culture resembles uncanny resemblance to declared Marx by Stalin & his acolytes – and indeed the same might culturally be said of ‘Faith’ within the Syrian & wider regional context with militias as the local power corporate identity model imposed.

However, at a base level – most people like to have their ego’s flattered ‘officially’ or by others in public – with status/power similarly being therefore publicly acknowledged and ‘justified ‘ by notional tenuous reference to what appears to the actual public as seemingly serious acedemic credibility so bestowed onto these power relationship confirmation and ego status confirmed as ‘benign’ or patronizers of the subordinate public.
The assumption being that only serious important men can appreciate or understand the crud pseudo sychophancy so conveniently presented in motivational or a tenous sub branch of economic analysis.

Chad September 13, 2013 at 7:44 am

Very clever; I’m convinced.

Note that this is common in education as well. Teacher inservice days at K-12 schools and faculty development programs at some liberal arts colleges (ahem) are dominated by exactly these kinds of vacuous pop-psych education theory hucksters.

Tracy Lightcap September 13, 2013 at 11:10 am

Yesssss. It’s especially common now in post-secondary administration. There has to be some reason(s) for the proliferation of administrators at colleges and the attendant expense. But, in general, there aren’t. Understandable, this, since most of what they are doing is advertising, fundraising, and resort management. Still, there are plenty of books out there about “What’s Wrong With Our Colleges!” Most of these are as vacuous as any business book; read anything by Derek Bok if you don’t believe me.

What we are dealing with here are discourses, not descriptions of reality. They are entirely utilitarian; i.e. there’s a reason for the fundraising et al. but it has next to nothing to do with the core technology of the institutions involved. Hence, the almost complete lack of either coherent arguments (again, read anything by Bok) and the relentless assertions of the need to do something NOW! about what are actually a quite efficient, albeit non-market, set of organizations doing a pretty good job.

I gave a paper about this up at APSA recently. It’s very hard to resist and quite detrimental to collegiate governance.

chris September 13, 2013 at 12:16 pm

HF
well played! EV, is right. you are on fire! having read my fair share of business blather (and sadly, created some), i must say that my increasing dissatisfaction with that genre led me to come back for real training at GWU as a PhD. I surely didn’t come back for the money.

O R Vests September 13, 2013 at 12:24 pm

So who are the good business writers you had in mind in the first paragraph?

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