Please note: Most Managerism articles are currently available in German only. The articles available in English are underlined.
Rediscovering the Proper Purpose of The Corporation
For the past forty years, stock-exchange listed public companies (capital corporations) have been managed as "profit machines" and assets to be bought or sold. The Shareholder Value Theory (SHV) justified this management behavior. SHV argues that top managers of a company must primarily have the interests of shareholders in mind when making decisions. The higher the shareholder value, the better it is for the company and management. This was a simple idea, easy to understand, and was adopted by many corporate managers. However, in a "revolutionary" statement on corporate governance in 2019, top U.S. CEOs pledged to renounce SHV. This thinkpiece exposes the gap between rhetoric and reality – and suggests how that gap could be closed.
Some academic socio-political ideas that arose twenty years ago are now an issue for corporate managements.
These ideas, which often originated in the USA, are also propagated by US-dominated parabusiness firms (providers of professional services for corporate management). Today management consultants and the Big 4 auditing firms are promoting a diversity and inclusion debate.
This is a front for a symbiotic business strategy: firstly, convince corporate executives they need a corporate diversity and inclusion (D&I) policy; secondly, they need D&I reporting, and thirdly, they need D&I certification. These parabusiness firms then claim to be the experts in those fields.
Management consultants, like McKinsey, even claim a causal relationship between diversity and business success. Read this essay and decide yourself.
A conglomerate is a form of multi-industry business corporation long discounted by capital markets. Rightly so? This thinkpiece reviews the history of conglomerates and considers their momentary status – focusing on the drawbacks of these business groups and their corporate culture. The Siemens group is a modern case-study in de-conglomeration.
On 5 November 2021 the U.S. Congress summoned McKinsey to disclose its "business practices, conflict of interest and management standards" linked to the Opioid crisis (so far over 800,000 deaths caused by this addictive pain reliever). This was the first cross-party challenge to the most powerful management consulting firm in the world. This essay illuminates and exposes McKinsey and tracks the McKinseyfication of states and corporations – with Germany as a case study.
Incentivization is not a rational concept it is self-privilege: Incentivization and the assumption of liability are in an asymmetrical relationship. This is because corporate CEOs are temporary company officers who are entitled to a fair remuneration; they are NOT entitled to extraordinary remuneration with the greatest possible exclusion of liability. In any case, the risk of liability of executive managers is often covered by a comprehensive liability insurance (D&O) paid for by their employer – the corporation. The common practice, introduced by corporate executives for corporate executives, of ensuring 'maximum remuneration with minimum risk' is the unmistakable proof of self-privilege.
The first industrial revolution and business philanthropy
Are social justice issues – equality, inclusion and diversity the responsibility of corporate managers? What would the factory owners of the industrial revolution think of contemporary business ethics and moral management?
Can a business have a moral purpose? This piece looks at the first industrial pioneers and their business ethos. Did they have one? Can lessons be learned for today? More
Wrong turnings: The one-sided management theories of the past 50 years
This is a reckoning with a type of management that has caused enormous harm over the past twenty years, by usurping the proven practice of business management. It is a criticism of capital-market orientation and Management by Administrators (MBAs).
The honest merchant, the trustworthy banker, the true tradesman, the responsible entrepreneur are traditional descriptors (in certain Western countries) of respectable and virtuous business behavior. Today in the world of corporate management – focused on capital markets and digitalization – there is urgent need for entrepreneurs and managers who are decent and trustworthy; whose purpose goes beyond short-term profit and stock prices. This Thinkpiece challenges executive managers to readopt forgotten ethical standards of professional behavior, which are a common good whose absence damages social cohesion.
Managerism is a deformation of good corporate management, which emerged in the late 1970s in the USA. This thinkpiece describes how managerism spread to other countries. It provides thought-provoking insights, including why German corporates were particularly susceptible to this ideology
CEOs and their methods
The GE-Boeing malady began twenty years ago. Boeing is suffering from a managerial disease, at first latent, then progressive, and now perhaps fatal. The 737 MAX crashes were sure signs of a sick management culture. Boeing executives and shareholders will be hoping that too-big-to-fail status and the coronavirus pandemic would justify US government intervention if necessary.
This thinkpiece Part 2 investigates the causes and the causers. More
How a disastrous corporate culture grounded Boeing
Why the Boeing 737 MAX dream machine became a nightmare. This Thinkpiece (Part 1) hosts comments by insiders and observers on the total failure of a once renowned and exemplary corporation. More
This opinion piece considers innovation, the life-blood of Siemens, and Germany as a business location.
It also appraises the era of Joe Kaeser as CEO of Siemens; calmly, critically and constructively, and — in contrast to Twitter messages and the mainstream media — concludes on a hopeful note.
There is now, belatedly, recognition that digitalization has radically shifted the relationship between users/consumers and service providers. It has even gone so far as to marginalize the private sphere. Almost without being noticed, digitalization, which is supposedly a neutral factor, has become the most powerful instrument for controlling the economy and society. This part (following Thinkpiece 35) of a three-part essay on the Post-Industrial Revolution focuses on the power of digitalization in the economy of the future.
Previous industrial revolutions had unique characteristics. But what is supposed to be Industry 4.0 or the Fourth Industrial Revolution is just more of the same, but now "faster, networked, more digital". What really is revolutionary is the attempt to force a digital hegemony upon industry. That is more than enough justification to reappraise the role of industry in the economy and society. This thinkpiece offers some starting points.
Being big can make you big-headed and, as the saying goes, pride comes before a fall. That is also true of some German public companies. Each DAX corporation is different, yet they all have some things in common. It took a long time before observers noticed that the earlier shine had gone and these big corporations were now lagging not leading. The responsibility for this lies with their management and supervisory boards, who wanted to do things 'the American way' — above all U.S.-style executive pay and U.S.-style management methods, but also staying 'German' when it benefited their image. Today in Germany, while the hidden champions are overperforming, the DAX concerns are underperforming. This thinkpiece uncovers the three main reasons.
Since the 1990s, McKinsey has evolved into a global management consulting business, which is purely capital oriented. It′s clients include major corporations and banks and increasingly national goverments. How this transformation happened and how to prevent the further proliferation of this questionable business model is explained in this thinkpiece.
Many German public companies are currently in a state of significant restructuring. Mostly this is caused by activist investors who are inducing a reorganization of business units with the aim of increasing short-term shareholder value. Who are these players; what interests are they pursuing; and what will be the foreseeable outcome? This thinkpiece focuses on these questions.
If limited liability did not exist, would you invent it? It creates business uncertainty, corporate failure and loss of trust in managers; has no commercial or economic benefit; private gain but great public cost; it is unjust and inefficient; serving the interests of capital owners and managerists but not the common good. Some remedies are proposed. More
Limited liability in truth means — No liability. The limited liability corporation is a business model that harms others. Corporate managers are incentivized by bonuses to take unreasonable risks that can lead to bankruptcy. Risk and accountability have become detached. In nineteenth-century Britain, bankers and factory owners opposed limited liability. What is a limited liability law for? Who is it for? More
Upcoming - Limited Liability (Part 2): The Total Cost
Dr. Bodo Eidenmüller, a doyen of Industrial and systems engineering, calls for a collective and positive response by business, politics and education to the ongoing transformation of the working environment. For a country like Germany, which excels in the automotive and machine tools sectors, but less so in information and communications technology, there is a lot to play for. This overview focuses on crucial factors: a deficit of knowledge workers, an excess of redundant personnel, and data security.
Hyperbole and hubris are twins that are usually short-lived. However in the case of GE, a tradition-rich US industrial business, it took an extraordinarily long time before their nimbus faded away. Why that managerial hubris survived for so long but finally had to end are succinctly analyzed in this essay. More
The message of this Thinkpiece is in the title. The justification is deep in the character of the founder, CEO and President of this media concern, who famously claimed that Facebook is just a technology company and not a media business. More than any of the other Big Five from Silicon Valley, Facebook's behavior is written in it's DNA. This essay explains how Facebook became a sinister company. The appeasement policy of looking away has to end.
For over thirty years now, business management teaching – while claiming to be professional and scientific – has simply been a follower of fashions and trends. It is surprizing how many managers, organizations and well-established corporations have been fooled. This essay gives a first-hand account of the guru game: it exposes the guilty gurus, their disciples, the willing victims, and most important – offers essential, unique and valuable lessons for today`s executive managers. More
Despite good results, the Siemens group is heading for trouble. The cause is overcapacity in its Power Generation division. Around ten years ago, Siemens overcame a similar problem by exiting its entire telecommunications business. Today the safeguarding of domestic jobs has gained in importance, especially for German politicians. However, this essay asks a more fundamental question: what strategy is Joe Kaeser, CEO of Siemens, really following? Some readers will find the answer quite surprizing.
When businesses reach the limits of size and complexity, the solution proposed
is structural change. How the solidarity and affiliation of employees are to be safeguarded is left out, although businesses are, above all else, communities.
Frequently, customized organization models and management concepts will fail, because they are the wrong cultural fit. Those are the themes of this extended essay. For readers in a hurry, we recommend the summary and Siemens case study.
A performance culture is shaped by the way managers and employees are appraised and rewarded. The performance culture and working world are changing as we move from the industrial to a digital age. Recent studies in the USA and Europe have shown that this new digital age is already upon us. And performance culture: how far has a reorientation happened, what are the guiding principles, which methods lead the way? These issues are considered in this essay.
In 1976, sociologist Daniel Bell wrote the classic book The Coming of Postindustrial Society. In many U.S. regions that predicted deindustrialization has become rusty reality. Meanwhile parabusiness, which provides support and services to management, has proliferated. The leading players and profiteers of this new global industry are mostly U.S. firms. This Thinkpiece explains how parabusiness has grown, the threat it poses, and why it should be resisted.
The consulting business for the public sector is booming in Germany. There are many reasons for this. First, their clients in government and administration have allowed crises to develop, for example, the non-registration of ‘refugees’, the year-long delay in database comparison between government ministries and federal states, or their inability to reform the labor market and pensions policy. Second, consultants themselves create a demand for their services by developing and propagating threat scenarios which only they can master. This essay explains what is wrong and how to fix it.
Parasitic embrace and wealth extraction by consultants, investment bankers, auditors and other 'helpers'. Organic growth is sustainable and healthy, whereas tumor growth is parasitic. This can progress in different ways: by using processes and systems purposely made increasingly complex, by using constantly changing concepts, by willfuly destroying that of proven worth. One kind of tumor growth is parabusiness: what this includes, what business models are used, and how the entire parabusiness branch can be trimmed to a healthy size, are dealt with in this Thinkpiece. Further essays on the topic will follow. More
Ethical behavior is having a hard time, especially within the harsh constraints of a globalizing and increasingly nominal economy. The risks of misconduct are much higher for (too) big companies and conglomerates. Reports of unethical business practice are on the rise. This essay describes the action that management must take. More
It is well-known that technical change can be a curse as well as a blessing. Digitalization (including the internet, big data and artificial intelligence) is a well-spring of both. So that the curse does not exceed the benefit, we need a strong "visible hand", which firmly recognizes that people are the purpose and technology merely the means, and that human-scale technology is essential. This essay is a call for action and a helpful roadmap.
The buying and selling of businesses and business units — using the Siemens group as a case study. Siemens lost its compass long ago. Although its managers appear to justify each and every transaction, overall its innovative power has suffered. For the first time in the long history of Siemens, these transactions are closely examined. So what is the best course? There are lessons to be learned — also by other big corporations.
Innovative strength decides whether an enterprise is competitive leader or also-ran. Siemens, like many other conglomerates, began to lose its innovative dynamism in the mid-1990s, after subscribing to the shareholder-value model. The upcoming 200th birthday of the firm’s founder, Werner von Siemens, is the right moment to recall his historic mandate.
Management consulting has many fads and crazes. It is not too hard to distinguish between these and what is really meaningful. The clues are found first by reconsidering the many previous management trends, the second is the type of language used, and the third is any apparent contradiction between claims and reality. All three are clearly present in the case of Culture Change, as is demonstrated in this Thinkpiece.
It is said one should learn from history: in Germany there were dynamic periods when national government undertook to selectively and powerfully encourage innovation. The same applies to the federal states and municipalities, which can be especially innovative themselves. If politicians look too much to problem-solving and fixing what exists today, as at present, then innovation for the future will languish. This Thinkpiece argues that change has to come.
Germany was famous for its industrial startups (the Founder Generation) over a hundred years ago – when universities excelled, entrepreneurs were highly regarded, banks were financiers for startup entrepreneurs, and the state was a light regulator.
Germany is no longer an economy of startups. In fact, startup concepts are imported from the USA, venture capitalists are hesitant, angst of failure is widespread, and the first seed financer is the state. Find out how this came about, and why it must change.
Major corporations have undoubted advantages due to their market power. However apart from a few exceptions they have an inbuilt disadvantage: they are not innovative enough – despite what they want us to believe. More
As a leading expert on the production economy, Prof. Dr. B. Eidenmüller, strongly advocates Germany as a location for high-quality production. He exposes deficits, outlines the direction of future developments, and identifies the often overlooked need for simple occupations.
Managers must relearn how not to do virtually anything that promises power and profit. Value extraction and value creation, as outcomes of corporate leadership, are compared and contrasted. The time is ripe for the state to launch a social-market economy 2.0. Government economic policy is not a relic of the past; economic governance is still an imperative for a successful economy. See abbreviated version
Directors' pay is in the headlines. It should remain a matter of social and political concern until things change. Why? What needs changing? Local and contemporary issues are important ― but this perspective covers more. More
Abuse of trust is always shameful, wherever and whenever it happens. But there are different degrees of abuse. It is especially scandalous when leaders of organizations are involved: trust abused by those claiming to be custodians for their clients. Take a look at this hidden, unbelievable story. More
Can America re-industrialize? It is doubtful whether it can, even if, for the first time in decades, industrial jobs were a topic in a presidential election campaign. This overview by Manfred Hoefle explains the remarkable decline of the US production sector, and why it is difficult to reverse the trend. What lessons can Europe learn from the US experience? More
This is the brief story of what was – second only to EADS – the biggest industrial joint-venture in Europe. The causes of decline are analyzed and lessons learned from the failure of a promising project. It is sobering to witness the final pillar in a traditional German industry collapsing. It is disheartening that hardly anyone cares. More
Unlike hardly any other discipline, business studies have come to reflect the proliferation, leveling down, and regimentation of the education system. To this negative list can be added Americanization, loss of reality, over-emphasis on the nominal economy, and 'value-free' objectivity. How this came about and why business studies/management theory ignores the crisis affecting the real world of business is explained. However, still more important, practical proposals are made for reforming the discipline. Plenty of material for a short Thinkpiece. More
Is Siemens too big? Which companies are too big to fail? This Thinkpiece looks at manageability, the overlooked disadvantages of size, analyzes the underlying assumptions and restraints, and asks whether big really is better. Most importantly, suggestions are made on the limitation of size. More
Too little is known about why ICT is declining in Germany. Even less is known about the impact. Read – in this 20-page summary – about the decline of a historically key German industry, the reasons, and lessons to be learned. More
A thought-provoking essay on corporate supervision: an issue that concerns us all. The responsible actors/CEOs are named, while case studies of DaimlerChrysler and Siemens clarify the events, causes, and suggest reforms. More
Outsourcing should be second choice. Unsatisfactory justifications are exposed and realistic alternative solutions are proposed. corporate supervision: an issue that concerns us all. The responsible actors/CEOs are named, while case studies of DaimlerChrysler and Siemens clarify the events, causes, and suggest reforms. More
The time is ripe for Non-Budgeting and Lean Planning. Business Planning and Budgeting is based on false assumptions. What matters is agility, action-oriented and rational behavior: in short, everything must focus on the purpose of the enterprise. More
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