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Wednesday, January 4, 2012

Executive and Business Coaching and Counseling

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Doing Well by Doing Good:
Marketing and Management Science in the 21st Century
by Samuel Sewell    sams@bestselfusa.com    (239) 591-4565

The business community in America has, at best, a tenuous grasp on the indisputable principle that honorable conduct is a prerequisite for abundant profit! Benjamin Franklin understood the benefits of enlightened and ethical business practices when he advised, “Do well by doing good.”  

Throughout the history of capitalism many entrepreneurs have prospered through application of this principle. A selected review of early industrialists makes the point that these entrepreneurs were driven by their own personal philosophy; that doing “good” for their people means that their business will also do “well.”

But it wasn’t until the 1960s that modern management science began to teach students that they can create stable wealth by doing “good” for their employees, their customers, and their communities. Finally, a fundamental truth that guides the creation of sustainable wealth was available to business students.

Today there is excellent data, both qualitative and quantitative, showing that a company’s successful relationship with people as well as ethical business practices is positively related to its financial performance.

Four scholars, from divergent fields, deserve the credit for developing the established principles that produce optimal wealth. Let’s take a brief look at these pioneers.

Maslow, Drucker, McGregor, and Nash is not a law firm. MDMN is an acronym created to serve as a reference point for this discussion on modern marketing and management science.

Abraham Maslow, through his books and teachings, brought us the psychology of business. The father of modern management, in his book, Maslow on Management, states that “The good society is one in which virtue pays.” In an ideal society prosperity is the natural consequence of “doing good.” 

Peter Drucker’s primary academic career was spent at Sarah Lawrence College. He also published 39 books on management which were translated into 30 languages. In 1995 Peter Drucker stated, “I became an immediate convert: Maslow’s evidence is overwhelming. But to date, very few people have paid much attention. He (Maslow) wrote Eupsychian Management to bring McGregor and me down to earth."  Here in the 21st century it remains true that very few people are aware of the contribution of MDMN.

Douglas McGregor, PhD in psychology from Harvard University, was a management professor at the MIT Sloan School of Management, where he created and developed the ' X' and 'Y' theories of human motivation and management.  These theories describe two contrasting models, coming from two opposing sets of general assumptions about workforce motivation. Theory X stresses the importance of strict supervision, external rewards, and penalties. It’s all about control by management. In contrast, Theory Y has a profoundly more profitable influence in the motivating role of job satisfaction, by encouraging workers to approach tasks without direct supervision.

McGregor’s book, The Human Side of Enterprise (1960) had a significant influence on the relationship between management and employees.  He pointed out that “The ingenuity of the average worker is sufficient to outwit any system of controls devised by management.” Like all natural systems, human behavior cannot be controlled; however it can be managed. McGregor went on to say that “Any attempt by management to enforce behavior that is contrary to human nature is preordained to fail. Conversely, management methods that compliment human nature are sure to provide wealth and well being for all concerned.”

John Nash, in the hit movie A Beautiful Mind, is at a bar with three other friends when he begins to develop a theory of what is now called Nash Equalibria, the idea that won him the Nobel Prize and the respect of his colleagues and loved ones, despite his schizophrenia.

At the bar, he and his three friends begin to compete for the beautiful blonde in a group of five women. “If we all go for the blonde” Nash says, “we block each other; not a single one of us is going to get her…and we insult the other girls. But, what if no one goes for the blonde? We don’t get in each others’ way, and we don’t insult the other girls. It’s the only way to win….the best result comes from everyone in the room doing what’s best for himself and for the group.”

The two most important conclusions gleaned from John Nash’s equations are;

1. More profit is created through cooperation than through competition.

2. Nice guys finish first.

For more background we suggest becoming familiar with the works of Peter Drucker and Abraham Maslow, as well as Douglas McGregor, and find out why John Nash won the Nobel Prize for Economics in 1994.

One can hardly complete a business course on the college level without being introduced to the difference between the “X” and “Y” theories of management, as well as Maslow’s needs hierarchy. These classes however do not provide adequate familiarization with modern management science, nor do they really explain Maslow in relationship to management.

Most courses fail to convey adequately the idea that profits are maximized when respect for the “human side of enterprise” is obvious. Maybe an additional problem is that students of business do the same thing with their subjects that I did with Algebra. I did whatever math was necessary to graduate, and have never worked another algebra problem for the rest of my life.

While the MDMN ideas are slow to catch on, a small group of today’s upper echelon management professionals strive to find creative applications for these principles. Because of intellectual competition and academic hubris, the contributions of MDMN are rarely available in a single source, no matter what college you attend. Best Self USA management curriculum includes the contributions of MDMN in its marketing and management training program for individuals and organizations. 

I hope this helps remind business people of their college days, and encourages them to use proven profit enhancement principles based on “good guys finish first.”