Avoid making specific statements, for starters.
The long-running Selected Papers series features notable work by University of Chicago faculty and other business leaders. This essay is an edited excerpt; the original was presented in 1967.
The upper reaches of management are a land of mystery and intrigue. Very few have ever been there, and the present inhabitants frequently send back messages, incoherent both to other levels of management and to the world in general.
The fragmentary reports from the world of the top manager often produce caricatures of the hardy types who reach for the general management rungs on the ladder. For example, the literature on management produces such widely held notions as these: That life gets less complicated as you reach the top of the pyramid. The manager at that level knows everything that’s going on in the organization, can command whatever resources he needs, and therefore can be more decisive. Another description pictures the general manager’s day taken up with making broad policy decisions; a related version is that he spends most of his time formulating objectives. Still another identifies his primary activity as conceptualizing long-range plans; or, in a large company, he may be seen meditating about the role of his organization in society.
I suggest that none of these versions alone, or in combination, is an accurate portrayal of what the general manager does. Perhaps students of the management process have been overly eager to develop a theory and a discipline. As one executive puts it, “I guess I do some of the things described in the books and articles, but the descriptions are lifeless, and my job isn’t.”
My definition of a good manager is a simple one. Under competitive industry conditions, he is able to move his organization significantly toward the goals he has set, whether measured by higher return on investment, product improvement, development of management talent, faster growth in sales and earnings, or whatever.
Remember, this definition does not refer to the administrator whose principal role is to maintain the status quo in a company or in a department. Keeping the wheels turning in a direction already set is a relatively simple task compared to that of refereeing the introduction of a continuing flow of changes and innovations, and preventing the organization from flying apart under the pressure.
Considering this group of managers in action, on the job, what common characteristics do the successful ones exhibit? Do patterns seem to recur? Let me try to identify five skills or characteristics that seem to me significant:
First, each of my heroes has a special talent for keeping himself informed about a wide range of operating decisions being made at different levels in the company. As he moves up the ladder, he develops a network of information sources in many different departments. He cultivates these sources and keeps them open no matter how high he rises in the organization. When the need arises, he bypasses the lines on the organization chart to seek more than one version of a situation.
In some instances, especially when they suspect he would not be in total agreement with their decision, his subordinates will elect to inform him in advance, before a decision is announced. In these circumstances, he is in a position to defer the decision, or redirect it, or even block any further action. On another kind of problem, the general manager may learn after the fact that some decision has been made and implemented. The skillful manager will ordinarily leave to members of his organization the judgment to decide at what stage they inform him.
Top-level managers are frequently criticized by lower levels of management, writers, and consultants because after promotion they continue to enmesh themselves in operating problems rather than withdraw to the “big picture.” Without any doubt, some managers do get lost in a welter of detail. Not only do they dig into detail, but they insist that they make all the decisions. Superficially, the good manager may seem to be caught in the same web, but his purposes are different. He knows that only by keeping well informed about the decisions being made can he avoid the sterility so often found in those who isolate themselves from operations. Many top executives who follow the advice to free themselves from operations soon find themselves subsisting on a diet of abstractions with the choice of what they eat in the hands of their subordinates.
The good manager knows that he can bring his special talents to bear on a limited number of matters.
As [economist] Kenneth Boulding puts it, “The very purpose of a hierarchy is to prevent information from reaching higher layers. It operates as an information filter, and there are little wastebaskets all along the way.”
A real-life example illustrating skillful management is that of one company president who sensed that his vice presidents were insulating him from some of the vital issues being discussed at lower levels. He accepted a proposal for a formal management development program primarily because it afforded him an opportunity to discuss company problems with middle managers several layers removed from him in the organization. By meeting with small groups in an academic setting, he learned much about their preoccupations, and also those of his vice presidents. And in this instance, he accomplished his purposes without undermining line authority.
Certain managers seem to be able to respond almost immediately with a well-reasoned position on most of the problems and proposals coming to them. The explanation may rest not so much with a superior intellect as with a well-cultivated information network that gives an early warning and permits advance preparation.
The second characteristic or skill of the good manager is an ability to save his energy and hours for those few particular issues, decisions, or problems to which he should give his personal attention. There is a fine and subtle distinction between keeping fully informed about operating decisions and allowing the organization to force you into participating in them, or even worse, making them.
The good manager knows that he can bring his special talents to bear on a limited number of matters. He therefore chooses those that he believes will have the greatest long-term impact and those where his own special talents can be most productive. Under ordinary circumstances, he will limit himself to three or four major objectives during any single time period.
As he spots certain situations emerging from the organization, he will elect to become involved in the decision-making process. On the others, he will assure that the organization keeps him informed at various stages, but he will refrain from active participation. Unless this skill is exercised with great expertise, he may be accused of indifference to those issues that he keeps at arm’s length. He trains his subordinates not to bring matters to him for decisions. The communication to him from below is essentially one of “here is our sizeup and here’s what we propose to do.”
The manager is in a position to delay a course of action when he is informed prior to action, but in practice he seldom does hold up what his subordinates propose to do. His hearty encouragement is reserved for those projects that hold superior promise of a contribution to total corporate strategy. He simply acknowledges receipt of information on most matters. When he sees a problem where the organization needs his help, he finds ways to transmit his know-how short of giving orders, usually by asking perceptive questions.
The third skill is the manager’s sensitivity to the power structure in the organization. In considering any one of the major and current proposals, he can plot the position of the various individuals and units in the organization on a scale ranging from complete, outspoken support down to determined, sometimes bitter, and oftentimes well-cloaked opposition. In the middle of the scale is an area of comparative indifference. Usually, several aspects of a proposal will fall into this area, and here is the area where the manager can operate. He assesses the depth and nature of the blocs in the organization. His perception permits him to move through what I call corridors of comparative indifference. He seldom challenges when a corridor is blocked, preferring to pause until it has opened up.
Related to this particular skill is the good manager’s recognition of the need for a few trial balloon launchers in the organization. He knows that the organization will tolerate only a certain number of proposals that emanate from the apex of the pyramid. No matter how sorely he may be tempted to stimulate the organization with a flow of his own ideas, he recognizes the advantages of cultivating trial balloon launchers or idea men in different parts of the organization. As he studies the reactions of key individuals and groups to the balloons these men send up, he is able to make a better assessment of how to limit the emasculation of the various proposals.
Seldom, too, does he find a proposal that is supported by all quarters of the organization. The emergence of strong support in certain quarters is almost certain to evoke strong opposition in others.
The fourth skill is the ability of the manager to satisfy the organization that it has a sense of direction, but without ever getting himself committed publicly to a specific set of objectives. This is not to say that the good manager does not have objectives, both personal and corporate, long term and short term. They are significant guides to his thinking, and he modifies them continually as he better understands the resources he is working with, the competition, and the changing market demands.
But as the organization clamors for statement of objectives, these are samples of what they get back: “Our company aims to be No. 1 in its industry.” “Our objective is growth with profit.” “We seek the maximum return on investment.” “Management’s goal is to meet its responsibilities to stockholders, employees, and the public.”
In my opinion, statements such as these provide almost no guidance to the various levels of management, and yet they are quite readily accepted as objectives by large numbers of intelligent people.
If the manager has built a solid organization, it will be difficult for him to come up with an idea that no one in the organization has ever thought of before.
Why does the good manager shy away from precise statements of his objectives for the organization? There are many good reasons for not being more precise. The main reason is that he finds it impossible to set down specific objectives that will be relevant for any reasonable period into the future. Conditions in business change continually and rapidly, and corporate strategy must be revised to take the changes into account. The more definite the statement of strategy for the organization, the more difficult it becomes to persuade the organization to turn to different goals. Even if management were capable of this kind of master planning, before it could get the objectives comprehended by the organization, the targets would have shifted.
The public and the stockholders must perceive the organization as having a well-defined set of objectives and a clear sense of direction. But in reality, the good top manager is seldom so certain of the direction in which he should take the organization. Better than anyone else, he senses the many, many threats to his company, threats that lie in the economy, the actions of competitors, and not least, within his own organization. Better than anyone else, too, he knows that he is continually on the tenterhooks of whether to pause and reevaluate or to forge ahead.
The skillful manager also knows that objectives are impossible to state clearly enough so that everyone in the organization understands what they mean. They get communicated only over time by a consistency or pattern in operating decisions. In instances where precise objectives are spelled out, the organization interprets them so they fit its own needs.
The subordinates who keep pressing for more precise objectives are in truth working against their own best interests. Each time the objectives are stated more specifically, the subordinate’s range of possibilities for operating is reduced. The narrower field means less room to roam and to accommodate the flow of ideas coming up from his part of the organization.
The good manager’s reluctance extends into the area of policy decisions. He seldom makes a forthright statement of policy. Some executives spend more time in arbitrating disputes caused by stated policies than in moving the company forward. The management textbooks contend that well-defined policies are the sine qua non of a well-managed company. My research does not bear out this contention. The president of one company deliberately leaves the assignments of his top officers vague and refuses to define policies for them. He passes out new assignments with seemingly no pattern in mind and consciously sets up competitive ventures among his subordinates. His methods, though they would never be sanctioned by a classical organization planner, are deliberate and, incidentally, quite effective.
Since good managers don’t make policy decisions, does this mean that well-managed companies operate without policies? Certainly not, but the policies are those that evolve over time from an indescribable mix of operating decisions. From any single operating decision might have come a very minor dimension of the policy as the organization now understands it. It’s the patterns as they emerge from a series of decisions that set up guidelines for various levels of the organization.
The skillful manager resists the urge to write a company creed or to compile a policy manual. Preoccupation with detailed statements of corporate objectives and departmental goals, comprehensive organization charts and job descriptions—this is often the first symptom of an organization in the early stages of atrophy.
The “management by objectives” school, so widely heralded in recent years, suggests that detailed objectives be spelled out at all levels in the organization. This method is feasible at lower levels of management, but it becomes unworkable at the upper levels. In his own mind, the good top manager must think out objectives in detail, but ordinarily some of the objectives must be withheld, or at least communicated to the organization in modest doses. A conditioning process, which may stretch over months or years, is necessary in order to prepare the organization for radical departures from what it is already striving to attain.
And now we come to the fifth and most important skill, the ability to discern opportunities and relationships in the stream of operating decisions that flow past the general manager each day. In reviewing the activities of the organization, he suggests modest alterations that move the organization in small increments toward the goals he has set. He understands the concept of marginal increments that was introduced to business management by the economist. He recognizes the futility of trying to push total packages or programs through the organization. He is willing to take less than total acceptance in order to achieve modest progress toward his goals.
The good manager then, avoiding debates on principles, tries to piece together particles, which may appear to be incidentals, into a program that moves at least partially toward his objectives. His attitude is based upon optimism and persistence. Over and over, he says to himself, “there must be some parts of this proposal on which we can capitalize.”
Whenever the manager identifies relationships among the different proposals before him, he knows that they present opportunities for combination and restructuring. It follows that the good manager is a man of wide-ranging interests and curiosities. The more things he knows about, the more opportunities he will have to discover parts that are related. This process does not require great intellectual brilliance or unusual creativity. The wider ranging his interests, the more likely he will be able to tie together several unrelated proposals. He is skilled as an analyst, but even more talented as a conceptualizer.
If the manager has built a solid organization, it will be difficult for him to come up with an idea that no one in the organization has ever thought of before. His most significant contribution may be that he can see relationships that no one else has seen.
H. Edward Wrapp was professor of business policy, associate dean for management programs, and director of the Executive MBA Program at Chicago Booth. He died in 2009.
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