In one episode, when I got involved in winding up the failed subsidiary of a large European bank, I noticed on the expense ledger that a rival consulting firm had racked up $5 million in fees from the same subsidiary. “They were supposed to save the business,” said one client manager, rolling his eyes. “Actually,” he corrected himself, “they were supposed to keep the illusion going long enough for the boss to find a new job.” Was my competitor held to account for failing to turn around the business and/or violating the rock-solid ethical standards of consulting firms? On the contrary, it was ringing up even higher fees over in another wing of the same organization.
And so was I. In fact, we kind of liked failing businesses: there was usually plenty of money to be made in propping them up before they finally went under. After Enron, true enough, Arthur Andersen sank. But what happened to such stalwarts as McKinsey, which generated millions in fees from Enron and supplied it with its CEO? The Enron story wasn’t just about bad deeds or false accounts; it was about confusing sound business practices with faddish management ideas, celebrated with gusto by the leading lights of the management world all the way to the end of the party.
If you believed our chief of recruiting, the consulting firm I helped to found represented a complete revolution from the Taylorist practices of conventional organizations. Our firm wasn’t about bureaucratic control and robotic efficiency in the pursuit of profit. It was about love.
We were very much of the moment. In the 1990s, the gurus were unanimous in their conviction that the world was about to bring forth an entirely new mode of human cooperation, which they identified variously as the “information-based organization,” the “intellectual holding company,” the “learning organization,” and the “perpetually creative organization.” “R-I-P. Rip, shred, tear, mutilate, destroy that hierarchy,” said über-guru Tom Peters, with characteristic understatement. The “end of bureaucracy” is nigh, wrote Gifford Pinchot of “intrapreneuring” fame. According to all the experts, the enemy of the “new” organization was lurking in every episode of Leave It to Beaver.
Many good things can be said about the “new” organization of the 1990s. And who would want to take a stand against creativity, freedom, empowerment, and—yes, let’s call it by its name—love? One thing that cannot be said of the “new” organization, however, is that it is new.
In 1983, a Harvard Business School professor, Rosabeth Moss Kanter, beat the would-be revolutionaries of the nineties to the punch when she argued that rigid “segmentalist” corporate bureaucracies were in the process of giving way to new “integrative” organizations, which were “informal” and “change-oriented.” But Kanter was just summarizing a view that had currency at least as early as 1961, when Tom Burns and G. M. Stalker published an influential book criticizing the old, “mechanistic” organization and championing the new, “organic” one. In language that eerily anticipated many a dot-com prospectus, they described how innovative firms benefited from “lateral” versus “vertical” information flows, the use of “ad hoc” centers of coordination, and the continuous redefinition of jobs. The “flat” organization was first explicitly celebrated by James C. Worthy, in his study of Sears in the 1940s, and W. B. Given coined the term “bottom-up management” in 1949. And then there was Mary Parker Follett, who in the 1920s attacked “departmentalized” thinking, praised change-oriented and informal structures, and—Rosabeth Moss Kanter fans please take note—advocated the “integrative” organization.