HBR Ideacast released a podcast interview with Richard Adelstein, professor of economics at Wesleyan University and author of The Rise of Planning in Industrial America, 1864-1914. The rise of the mega-corporations started in the 1870’s to deal with the problems of coordination between industrial factories, suppliers, retailers, and mass machinery. People did not know how to manage at this scale, and management theory began with Frederick Winslow Taylor at the turn of the 20th century. Taylor promoted his “scientific management” which tried to turn management into a science. Factory managers would find the best worker, figure out how s/he did the task, and make everyone copy this “one best method” from this worker so as to eliminate inefficiencies.
Adelstein says this industrialization meant the adoption of new methods of production to the detriment of traditional means where business operated in smaller units where everyone was more equal to each other and there was “greater opportunity to exercise control and start businesses and become more adept at self-governance and therefore, as Jefferson though, better citizens.” The trade-off was between profit-maximization and the “elements of autonomy which many cherished and believed was the animating value of the American expression of responsible self-government.”
In fact, there was large debate about the pros and cons of industrialization, with voices like William Jennings Bryan and Louis Brandeis weighing in to make people think about what they were giving up (“autonomy and responsibility”) for the sake of greater profits. Brandeis was worried that if we robbed people of the ability to take initiative, people would not only “become spectators” in the realm of work but also in the realm of politics.
Adelstein believes we’ve mostly bought into the trends of industrialization. “Before it was possible to talk about values that compete with the pursuit of material wealth,” but now we’ve become a nation that is much more materialistic, profit-oriented, GDP-focused, etc — we have become focused on the how much.
Although there is no going back, we have begun to attempt remedies of the ills of the hyper-hierarchical and hyper-efficient industrial age and its ways of management in a way that evokes the era before the 1870’s. We are beginning to really understand the value of giving people autonomy and responsibility to take initiative (“giving trust away”) and to distrust the notion that there is always “one best way” of doing things, which is why we place a primacy on innovation. Since “innovation” is a moving target, as whatever cutting-edge product or service you have (or “what” you produce) can easily become commoditized, the real imperative is innovating in “how” we work together (as we have written elsewhere before for Business Week), that is, how do we re-fashion the structure of the workplace or capitalism at large so that it is held together not just by the isolated goal of profit-maximization or scientific efficiency, but also by relationships and moral glue. What is at stake is not just innovation but a shift in the formation of identities, from churning out teachable robots to full humans who are free to bring their character and creativity to work.
If the experiment of the 20th century was to choose profit-maximization over other competing values, we’ve come to see that in the long run, there is no substantive trade-off between financial performance and living sustainable values. The experiment has more or less concluded: the path to sustainable wealth is paved by the bricks of values.
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