Our national encounter with optimism is “well and truly over”, according to Mortimer Zuckerman, chairman and editor in chief of U.S. News & World Report, from the pages of the this morning’s Wall Street Journal.
He cites the usual litany of problems that the US economy is facing:
- The greatest fiscal and monetary stimulus in modern times has proven impotent.
- The economy has stopped generating jobs.
- Nothing is working the way it normally had in all our previous crises.
- We are experiencing the weakest revival in recorded history.
- We are encountering a a vicious cycle of defaults that in turn would produce credit tightening and still more economic weakness.
- We have a gross mismatch of available skills and demonstrable needs. Businesses struggle to find the skills and talents that are needed to compete in this new world.
- Millions drawing the dole to sit around should be in training for the jobs of the future that require higher educational skills.
- Instead of welcoming highly educated immigrants, the US is sending them back home.
- Higher education is in decline.
- Neither Democrats nor Republicans can find common ground to address the ongoing employment crisis.
Zuckerman’s one ray of hope—make it easier for highly educated immigrants to get US visas—is a positive idea, but a moment’s thought would show that it is totally inadequate to solve the array of problems he has just described, which affect most people in the economy. The solution must lie in something that can raise the overall level of the economy so as to “lift all boats”, not just benefit a few highly educated people.
What is missing in the article? Zuckerman fails to mention a root cause of most of the problems he cites—a cause he would discover if he only looked in the mirror: the US management system is failing to grow the real economy. When the real economy doesn’t grow, there are no jobs. When the real economy doesn’t grow, there is no money to fund education. And when the real economy doesn’t grow, politicians spend their time squabbling about who should get what share of a pie that is steadily getting smaller.
The data is now abundant and rock solid. A massive study of 20,000 US companies discussed in the wonderful new book, The Power of Pull , has produced some startling statistics of longer term trends—trends that are often missed in the confusion of short-term business cycles and the mystifications of clever accounting tricks. The findings?
- The rate of return on assets is a quarter of what it was in 1965.
- The life expectancy of a firm in the Fortune 500 has declined from around 50 years to around 15 years, and is heading towards 5 years, unless something changes.
- Only one in five workers is fully engaged in his or her work--a crippling handicap in the knowledge economy where performance is dependent on drawing on the full talents and ingenuity of the work force.
This is startling stuff. Putting more educated workers into this management system isn’t going to fix the economy . On the contrary, it will produce more of the same. Worse, the management system has now infected the education system so that it is systematically destroying creativity, as a recent Newsweek article pointed out.
What is needed is a radical re-think of the US management system. For most of the last 150 years, the US management system was the wonder of the world. But the economic and social context has changed. That system once so productive has simply stopped delivering.
It needs to be replaced with a radically different kind of management that can generate—simultaneously—high productivity, continuous innovation, deep job satisfaction and client delight. The good news is that a whole host of firms are already implementing a radical new approach that does exactly that. These firms are being run in a way that is very different from what is taught in business schools, described in management textbooks and lauded in the very management journals that bewail our economic ills.
What is needed is for the official organs of management—business leaders, business schools and journals, textbook writers—to recognize the principles of traditional management as a root cause of our current social and economic ills and join together to reinvent the workplace for the 21st Century with a radically different kind of management.
To learn more about radical management and firms that are practicing it, go to: