Capitalist Philosophers : The Geniuses of Modern Business - Their Lives, Times and Ideas

by Gabor, Andrea

• ISBN13: 9780812928204
• ISBN10: 0812928202
• Format: Hardcover
• Copyright: 2000-04-18
• Publisher: Crown Business
• More Book Details
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Summary

InThe Capitalist Philosophers, critically acclaimed writer Andrea Gabor tells the epic story of American business through the lives, times, and ideas of the great thinkers who defined the art and science of business. It is a book full of colorful stories and brilliant insights into why the business world is the way it is today. People in business are constantly besieged by supposedly revolutionary ideas. Any company that went on a crash diet in response to the trendy precepts ofReengineering the Corporationfelt the enormous impact still exercised by one of the first capitalist philosophers, Frederick Taylor. By going back to the source, Gabor helps businesspeople make smart, informed decisions about the future. Featured in The Capitalist Philosophers are:Frederick Taylor: "Production went to his head and filled his sleepless nerves like liquor or women on a Saturday night." Mary Parker Follett, who understood that "only so far as business leaders . . . can identify themselves with the underlying social impulses of their time can they hope to plan and build great organizations." Chester Barnard, the philosopher king, who believed that management's job is to get things done by persuasion. Fritz RoethlisbergerandElton Mayo, the creative misfits who "invented" human relations and put Harvard Business School on the map. Robert McNamara, the "Whiz Kid," whose pioneering work in control and quantitative methods at Ford and the Department of Defense have had such a great influence on American management. Abraham MaslowandDouglas McGregor, the pathfinders of humanistic management. W. Edwards Deming, "the man who discovered quality" and the prophet of the learning organization. Herbert Simon, Nobel laureate, pioneer in artificial intelligence and cognitive psychology, renegade economist and management pathbreaker, whose ideas on decision making have been vastly influential. Alfred Chandler, who laid the basis for the way we think about corporate strategy, and Alfred Sloan, whoseMy Years at General Motorsis the most important business book ever published. Peter Drucker, who "gives you thoughts that are large." As Andrea Gabor notes in her Introduction, "Contrary to common wisdom, it is possible for individuals to have a major impact on history. Just as FDR and Margaret Sanger changed the way we think about, respectively, politics and sexuality, so the capitalist philosophers have changed the way we look at the dominant institution in our society--the corporation."

Author Biography

Andrea Gabor is the author of <i>The Man Who Discovered Quality</i> and <i>Einstein's Wife</i>. She has been a senior editor at <i>U.S. News & World Report </i>and a staff editor in corporate strategy and technology at <i>Business Week</i>. Gabor has taught at Columbia University's Graduate School of Journalism and is currently a professor at Baruch College/CUNY. She lives in New York City with her husband and two daughters.

Table of Contents

Introduction	xi
The Father of Scientific Management	3	(42)
Frederick Winslow Taylor
The Mother of Postscientific Management	45	(22)
Mary Parker Follett
The Philosopher King of American Management	67	(18)
Chester Barnard
Two Creative Misfits Who Invented ``Human Relations'' (and Put the Harvard Business School on the Map)	85	(46)
Fritz Roethlisberger
Elton Mayo
The ``Bean Counters'' Usher in a New Era of Scientific Management	131	(22)
Robert S. McNamara
From Human Relations to the Frontiers of System Dynamics	153	(34)
Abraham Maslow
Douglas McGregor
The Prophets of the Quality Movement and the Learning Organization	187	(38)
W. Edwards Deming
The Needle and the Haystack	225	(34)
Herbert A. Simon
The Historian and the CEO	259	(32)
Alfred Du Pont Chandler
Alfred Sloan
The Big Idea Man	291	(36)
Peter F. Drucker
Epilogue	327	(4)
Acknowledgments	331	(2)
Notes	333	(26)
Selected Bibliography	359	(8)
Index	367

Excerpts

Frederick Winslow Taylor

The Father of Scientific Management

The year 1899 marked the dawn of the American Century. Across the vast continent, the railroad barons were laying track that would weave distant towns together into the world's largest consumer market. On both coasts, immigrants came ashore, bringing with them a hunger for opportunity and the energy to fuel a young nation's growth. And at Bethlehem, Pennsylvania, Frederick Winslow Taylor was at work on what is remembered as his most famous industrial experiment--one that would define both the struggle and terms of industrial productivity for the coming century.

The focus of Taylor's experiment was the immigrant laborers themselves--Hungarians and Germans, most of them--whose job it was to haul bars of pig iron weighing ninety-two pounds each onto railroad cars. For two days, Taylor and two deputies observed ten men as they lugged bars of pig iron from the Bethlehem Steel yard to the railcars. Laboring at a backbreaking pace, Taylor's ten "Hungarians" each loaded an average of seventy-five tons of pig iron per day, nearly six times the previous rate.

On the basis of those observations, Taylor established a production quota. To complete a fair day's work, he determined, each worker would have to haul forty-five tons per day--an output level still about three times as high as the average output before Taylor appeared on the scene. To be sure, Taylor offered to pay men who met the quota a higher wage. But to the Bethlehem laborers, Taylor was simply asking too much. In the ensuing weeks it became clear that some of the men were physically incapable of meeting the quota. Others simply refused to try. Either way, the Bethlehem workers lost their jobs by the dozen. By some accounts, Taylor was so deeply hated by the men that he had to walk home under armed guard for fear of an attack on his life. Years later, Taylor, referring to his unhappy relationships with his workers, said, "It's a horrid life for any man to live, not being able to look any workman in the face without seeing hostility."

Into this tinderbox stepped "Schmidt," a German immigrant of "sluggish" intelligence but possessing the power and stamina of a forklift truck. Schmidt, according to Taylor, had just the "ox-like" mentality needed to do the brutish physical labor that Taylor demanded of his workers. Uncomplaining and apparently indefatigable, Schmidt met Taylor's quota, happy to collect a few cents of extra pay at the end of each day.

The story of Schmidt would become the defining allegory of scientific management, even though Taylor scholars point out that the story is misleading in almost every respect. The name Schmidt itself was a pseudonym, and most of the character traits imputed to the fictional Schmidt were invented by Taylor for dramatic effect. Moreover, according to Daniel Nelson, a leading Taylor scholar, the story was inaccurate in its description of "the nature of Taylor's contributions and the character of scientific management." For one thing, the Schmidt story failed to convey the power of Taylor's thinking: his rigorous analysis of processes and his maniacal efforts to systematize work, his pioneering studies of manufacturing processes, his penchant for invention, and his very real contributions to the science of steel fabrication.

The Schmidt story did, however, capture two important aspects of Taylorism: First, it conveyed "the essence" of Taylor's combative personality, including both his considerable class prejudices and his autocratic management style. Second, it revealed his utter inability to understand human nature, a shortcoming that became embedded in his ideas and carried into twentieth-century management practice. Yet for his time, Taylor was every bit as much of a maverick as Bill Gates and Thomas J. Watson. At a time when the work practices of individual laborers were more art than science, he raised fundamental questions about work processes and control. Achieving high productivity, he realized, would require standardizing tools and production techniques and imposing a level of control over labor that had never been attempted before.

Although he is best known for his attempts to make labor more productive, his work on tool steel, which revolutionized the use and fabrication of steel, were in many respects more successful. With the birth of large-scale manufacturing at the beginning of the century, his work on tool steel was every bit as important as the development of user-friendly software would be to the information age at the end of the twentieth century. Because his innovations with tool steel made it possible to dramatically speed up production, they helped to create the manufacturing conditions that demanded greater precision and control over labor. And it was his work on tool steel that won him legitimacy in the factory and explained why manufacturers backed his divisive attempts to increase labor productivity and overlooked his eccentric and difficult personality. "If Taylor preferred to see high-speed steel as a footnote to the larger cause he championed, out in the real world the influence often went the other way," writes Robert Kanigel, Taylor's biographer. High-speed steel provided the "opening into which the earth-moving wedge of the Taylor system could be slipped."

Taylor's life and Weltanschauung (of which the Schmidt story was a representative theme) were, in fact, emblematic of the rationalist spirit of the turn of the century and proved pivotal to defining modern industry as we know it today. Taylor's greatest contribution was in recognizing that scientific method was key to the success of industrialization, especially in running the new enterprises that were of a scale and scope heretofore unimaginable--factories so large they used small railroads to transport men around them, factories peopled by thousands of workers operating enormous, power-driven machines. The new manufacturing behemoths could not be managed with the casual methods and supervision of the relatively small plants of the so-called first factory period.

Taylor's effort to develop a science of management had a profound impact on American industry. Decades later, the key ideas and trends in management have sped along the tracks that Taylor laid. Henry Ford's assembly line was a logical extension of Taylor's efforts to break up and speed up individual production tasks. The detailed measurement of processes and systems of Robert McNamara's Whiz Kids, at both Ford and the Pentagon, represented a sophisticated, high-technology spin on scientific management. Similarly, the decades-long search for the Holy Grail of employee productivity--and the quest for the perfect incentive pay formula--can be traced back to Taylor's attempt to develop the first scientifically based formula for determining a labor rate that would produce the greatest output. Most recently, the reengineering craze of the 1980s, in which so-called turnaround experts gutted company payrolls in an employee-be-damned frenzy, echoed the excesses of Taylorism.

Indeed, Taylor was perfectly at home with the technology of industrialization and its logistical challenges. Where he was often completely out of his element was in his relations with people, especially those outside his class and immediate social circle. Thus, his most troublesome legacy involved his solutions to the "labor problem," which for a long time threatened to swamp the advances made by industrialization.

For the enterprising and the fortunate, the turn of the century represented a world of opportunity. But for the vast majority, the workplace was filled with peril. In Taylor's day, the average worker possessed little more than his capacity to work and his tools. Yet setting foot into a factory was fraught with risks that could end his livelihood any day. In heat-treating plants, such as steel foundries, the rate of serious and fatal injuries was well over 1 percent of the workforce each year. On the railroads, it was higher. Those who escaped with their lives intact worked in brick mausoleums with little natural light or ventilation and breathed the smoke and foul odors of hundreds of candles and kerosene lanterns. Toilets and water fountains were a rarity.

For their trouble, most industrial workers were paid barely enough to survive while they were working. Few laborers owned their own homes. And there was no safety net for those who were injured or those who were laid off during inevitable slowdowns. (While a few craft unions flourished in trades such as printing, mass production reduced the dependence of U.S. firms on skilled labor.)

Such conditions gave rise to the Socialist Party in 1901 and to the American labor movement. Although many European businessmen saw unions as an antidote to labor unrest, in the United States the mantra of individualism and free enterprise made unions anathema to most American companies. In fact, U.S. industrialists sometimes met the threat of labor unions with guns. And shoot-outs between factory owners and union organizers became another frequent cause of death, injury, and unemployment.

Like many of his peers, Taylor was an ardent opponent of unions. He understood, however, that workers at the turn of the century were not being paid fairly and that companies would have to pay higher wages to improve productivity. "The fundamental principle upon which industry seems now to be run in this country," he wrote, "is that the employer shall pay just as low wages as he can and that the workman shall retaliate by doing just as little work as he can. Industry is thus a warfare, in which both sides, instead of giving out the best that is in them, seem determined to give out the worst."

Taylor sensed the destructive force of labor-management antagonism, and sought to bring peace to the industrial battlefield. However, while he walked among the workers, his vantage point was wholly that of a Philadelphia Brahmin. His unquestioning allegiance to the aristocratic values with which he had been raised hampered his judgment when it came to finding solutions to the "labor problem." In the end, his methods and pronouncements about the human side of enterprise only served to increase the distrust and divisiveness between labor and management.

The scion of a prominent Quaker family, Taylor carried the rigid rationalist values of his class into the messy working-class milieu of the nineteenth-century factory. In the spirit of Adam Smith, he believed in the proposition that men are motivated largely by financial gain; thus, he could justify almost any productivity-enhancing measure as long as it improved wages. He was wrong, however, in assuming that men would willingly sacrifice their souls for a bigger paycheck. He pressured workers into producing quantum leaps in efficiency in exchange for incremental increases in pay. In the process, he may have contributed more to labor unrest than AFL founder Samuel Gompers and Socialist Party founder Eugene V. Debs combined.

More than perhaps any other thinker of the early twentieth century, Taylor's work embodied both the progress and the pain that define periods of torrid economic development. An energetic and creative innovator, his production methods helped create the highest standard of living the world had ever seen. His ideas were embraced by such leaders of the Progressive movement as Walter Lippmann and Louis Brandeis, who was known as "the people's lawyer" before he became a Supreme Court justice. For better or worse, wrote Robert Kanigel in The One Best Way, a biography of Taylor, "it's not just industry that bears his imprint today but all of modern life."

To Taylor's detractors, Taylorism was the essence of the mechanistic, alienating character of modern industrialism. Under Taylor, standardization and managerial control, professionalism and scientific method were championed as never before. A new cadre of slide rule- and stopwatch-wielding experts commandeered the factory floor.

Along the way, scientific management changed the way of life of the expanding ranks of industrial workers. The most skilled among them saw the Taylorites break their work down into its component parts so that men with little skill or training could master it. Bit by bit the factory worker lost control of his tools, the process of production, even the way he moved his body as he worked.

Half a century later, a new generation of management experts, including industrial psychologists and quality experts, would see wisdom in capturing the knowledge and know-how of the workers on an ongoing basis (see Chapters 6 and 7). But Taylor, a man whose personality and innovations provoked legendary battles on the factory floor, saw workers as particularly noisome cogs in a much larger machine.

While he respected many of the skilled workers he encountered in the factory, especially during his apprenticeship, Taylor never broke with the elite attitudes of the society into which he had been born. Indeed, in his commitment to "dumbing down" labor and creating elaborate shop-floor hierarchies, he far surpassed the antilabor sentiments of many of the industrialists of his day. For instance, he was incapable of empathizing with the men who worked for him, which helps explain his use of what now seem like shockingly crude stereotypes to describe the Schmidts of his world. An aficionado of amateur theatricals ever since he was a boy, he undoubtedly embellished Schmidt's personality for effect. Yet it is clear from his ideas and teachings that for him, workers were to a large extent all "Schmidts" of his own creation, crude creatures to be made productive or discarded; they were not real men of brain and brawn who would have to be grappled with.

Whatever the source of Taylor's social limitations, they had a profound impact on the shape not only of Taylorism but of the entire management legacy that he passed on to modern industry. As he developed it, scientific management became technology-centered, hierarchical, and highly bureaucratic--a legacy that industry has only recently sought to shake off. It is interesting to speculate how differently the character of management and especially of industrial work might have evolved if someone with a more democratic conception of the workplace, or one more in tune with the new psychological theories of work and motivation that were coming to the fore, especially after World War I, had written the gospel of scientific management.


From the Trade Paperback edition.

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Excerpted from The Capitalist Philosophers: The Geniuses of Modern Business - Their Lives, Times and Ideas by Andrea Gabor
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